Notice is hereby given that a specialthe 2018 annual meeting (the "Meeting") of stockholders (the "Special Meeting") of THE BANCORP, INC., a Delaware corporation (the "Company"), will be held at 409 Silverside Road Suite 105, Wilmington, Delaware 19809 on Thursday, September 29, 2016Wednesday, May 16, 2018 at 9:1:00 A.M.P.M., Delaware time.  Attime, for the Special Meeting, our stockholders will be asked to consider and vote to:following purposes:

These items of business are more fully described in the Proxy Statement accompanying this Notice of Special Meeting of Stockholders. The record date for the Special Meeting is August 15, 2016. Only stockholders of record on the books of the Company at the close of business on the record date mayMarch 20, 2018 will be entitled to notice of and to vote at the meetingMeeting or at any adjournmentadjournments thereof. A list of stockholders eligibleentitled to vote at the meetingMeeting will be available for review for any purpose relating toinspection at the meeting during our regular business hoursMeeting and at ourthe offices of the Company at 409 Silverside Road Suite 105, Wilmington, Delaware 19809 for the ten days prior to the meeting.19809.

PurposeThis statement is furnished in connection with the solicitation by the Board of Meeting

There are two proposals scheduledThis proxy statement and the accompanying form of proxy will be sent on or about April 6, 2018 to be voted on at the meeting:stockholders of record as of March 20, 2018.

If your shares of Common Stock are registered directly in your name with our transfer agent, American Stock Transfer and Trust Company, on the Record Date, you are considered, with respect to those shares, to be the stockholder of record. As the stockholder of record, you have the right to vote in person at the Special Meeting.

The cost of soliciting proxies will be borne by the Company.  Directors, officers and regular employees of the Company may solicit proxies either personally, by letter or by telephone, but will not be specifically compensated for soliciting such proxies.

The Company's Annual Report to Stockholders, including the financial statements and management's discussion and analysis of financial condition and results of operations for the year ended December 31, 2017, is being sent to stockholders of record as of March 20, 2018.   Stockholders of record as of March 20, 2018, and beneficial owners of the Company's Common Stock.Shares on that date, may obtain from the Company, without charge, a copy of the Company's Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission (the "SEC"), by a request therefor in writing. Any such request from a beneficial owner of the Company's Common Shares must set forth a good faith representation that, as of the record date for this solicitation, March 20, 2018, the person making the request was the beneficial owner of the Company's Common Shares. Such written requests should be directed to The Bancorp, Inc., Attention: Paul Frenkiel, 409 Silverside Road, Suite 105, Wilmington, Delaware 19809.

APPROVAL, FOR PURPOSE OF NASDAQ RULE §5635(D)Stockholders sharing an address with another stockholder may receive only one annual report or one set of proxy materials at that address unless they have provided contrary instructions. Any such stockholder who wishes to receive a separate copy of the annual report or a separate set of proxy materials now or in the future may write or call the Company to request a separate copy of these materials from the Company at The Bancorp, Inc., OF THE CONVERSION OF THE SERIES C MANDATORILY CONVERTIBLE CUMULATIVE NON-VOTING PERPETUAL PREFERRED STOCK AND THE ISSUANCE OF THE COMPANY'S COMMON STOCK UPON SUCH CONVERSIONAttention: Andres Viroslav, 409 Silverside Road, Wilmington, Delaware 19809, telephone number (215) 861-7990. The Company will promptly deliver a copy of the requested materials.

At the 8% level, which required approximately $74 million in additional equity capital.  The Company then began to work closely with Piper Jaffray & Co. to explore capital raising opportunities for purposes of raising the capital ratios, and for general corporate purposes. In June 2016, the Company, after receiving Board approval, commenced the offeringMeeting, only those holders of Common Stock and Series C Preferred StockShares at the close of business on March 20, 2018, the record date, will be entitled to accredited investors, in a private placement exempt from registration pursuant to Rule 506 of Regulation D under the Securities Act of 1933, amended.

The net proceedspresence at the Meeting in person or by proxy of holders of outstanding Common Shares entitled to uscast a majority of all the votes entitled to be cast at the Meeting will constitute a quorum. The presence of a quorum for any proposal establishes a quorum for all of the proposals, even if holders of outstanding Common Shares entitled to cast a majority of all the votes entitled to be cast at the Meeting do not vote on all of the proposals.

A failure by brokers to vote Common Shares held by them in nominee name will mean that such Common Shares will not be counted for the purposes of establishing a quorum and will not be voted.  If a broker does not receive voting instructions from the issuancebeneficial owner of the Common StockShares on a particular matter and Series C Preferred Stock are approximately $70.3 million, after deducting the Placement Agent's fees, structuring fees and other fees and expenses payable by us in connection with the Private Placement. The Company expects to use the proceeds for to raise its capital ratios and for general corporate purposes.

Potential Market EffectsProposal 1. The number of Failurevotes required in order to Pay Series C Dividends.be elected as a director is dependent on whether an election is contested or uncontested. The Company's bylaws define an election as "contested" if the number of nominees exceeds the number of directors to be elected. As no Company stockholders have provided proper notice to the Company of an intention to nominate one or more candidates to compete with any dividend, there is no assurance that we will be able to pay the dividends onBoard of Directors nominees, the Series C Preferred Stock.  Additionally, we may neither declare nor pay any dividends from and after the date which is 180 days from the date of issuance of the Series C Preferred Stock without prior consultation with, and non-objection by, the FRB. If we are unable to pay such dividends as scheduled, the market perception could have a serious adverse impact on the price of our Common Stock.

RankProposal 2. Our Series C Preferred Stock ranks with respect to dividend rights and rights upon our liquidation, winding-up or dissolution:

Proposal 3. The affirmative vote of at least a majority of the votes cast at the Meeting is required to our Series C Preferred Stock, if any such class or series is authorized in the future,approve The Bancorp, Inc. 2018 Equity Incentive Plan.

Any proxy not specifying to the Special Meeting. Abstentions will be counted toward the vote total for the proposalcontrary, and will have the same effectnot designated as an "Against" vote for this proposal. Shares represented by executed proxies that do not indicate a vote "For," "Against" or "Abstain"broker non-vote, will be voted FOR:

The Bylaws of the Company provide that the number of directors shall be fixed by the proxy holders "For"Board of Directors. The Board of Directors has fixed the adoptionnumber of directors at eleven. All directors are elected for a term of one year or until their successors are elected and qualified. The Board of Directors, upon the recommendation of its Nominating and Governance Committee, has nominated Daniel G. Cohen, Walter T. Beach, Michael J. Bradley, John C. Chrystal, Matthew Cohn, John M. Eggemeyer, Hersh Kozlov, Damian M. Kozlowski, William H. Lamb, James J. McEntee III and Mei-Mei Tuan, for election at the Meeting for a term to expire at the annual meeting to be held in 2019 or until their successors are elected or appointed.

It is the intention of the resolution. If you own sharespersons named in the enclosed proxy, in the absence of a contrary direction, to vote for the election of all of the current directors. Should any of the nominees become unable or refuse to accept nomination or election as a director, the persons named as proxies intend to vote for the election of such other person as the Nominating and Governance Committee of the Board of Directors may recommend. The Board of Directors knows of no reason why any of the nominees might be unable or refuse to accept nomination or election. Information is set forth below regarding the principal occupation of each nominee. There are no family relationships among the directors, nominees and executive officers of the Company.

Daniel G. Cohen, age 48, currently serves as the Chairman of The Bancorp, Inc. (NASDAQ: TBBK) and the head of its executive committee. He has held both positions since 1999.  In addition, he was also named Chairman of the Board of Directors of The Bancorp's wholly owned subsidiary, The Bancorp Bank, effective January 1, 2015. In addition, Mr. Cohen's responsibilities include the management of The Bancorp Inc's Commercial Real Estate CMBS (Commercial Mortgage Backed Securities) group. Mr. Cohen had served as the Chief Executive Officer of The Bancorp from its creation in 1999 through 2001. Mr. Cohen is the founder of Cohen and Company, Inc. (NYSE: COHN), a financial services company since 2013, and where he currently serves as the Vice Chairman and the Head of Europe, for which he had served as Chairman, and Chief Executive Officer since 1999.  Mr. Cohen served since September 2013 as President and Chief Executive Officer of all businesses of Institutional Financial Markets, Inc. (IFMI) arising out of or related to Europe.  He served as Chief Executive Officer and Chief Investment Officer of IFMI from December 2009 through September 2013.  Mr. Cohen was Chairman of Prince Ridge, LLC when it was consolidated with JVB Financial Group LLC into a single broker-dealer subsidiary of IFMI in October 2013.  Mr. Cohen served as a director of Star Asia, a joint venture investing in Asian commercial real estate, from February 2007 to February 2014.  Mr. Cohen is the CEO and a director of FinTech Acquisition Corp. II (NASDAQ: FNTE), a Special Purpose Acquisition Corporation (SPAC), and was previously a director of FinTech Acquisition Corp. (formerly NASDAQ: FNTC), a SPAC, from November 2013 until July 2016, FinTech I's President and Chief Executive Officer from August 2014 until July 2016, and FinTech I's Executive Vice President from July 2014 through August 2014.  FinTech I merged with CardConnect (formerly NASDAQ: CCN) in July of 2016. Mr. Cohen previously served as Chief Executive Officer of RAIT Financial Trust (NYSE: RAS), a real estate finance company focused on the commercial real estate industry, from December 2006 when it merged with Taberna Realty Finance Trust to February 2009, and served as a trustee from the date RAIT acquired Taberna in 2006 until his resignation from that position on February 26, 2010. Mr. Cohen was Chairman of the board of trustees of Taberna Realty Finance Trust from its inception in March 2005 until December 2006 and its Chief Executive Officer from March 2005 to December 2006. From 1998 to 2000, Mr. Cohen served as the Chief Operating Officer of Resource America Inc., a publicly traded asset management company with interests in energy, real estate and financial services. Mr. Cohen was a director of Jefferson Bank of Pennsylvania, a commercial bank acquired by Hudson United Bancorp in 1999. Mr. Cohen is a member of the Academy of the University of Pennsylvania, a member of the Visiting Committees for the Humanities of the University of Chicago, and a member of the board for the Paris Center of Columbia University. He is also a Trustee and the head of the Audit Committee of the American Academy in Rome, and a Trustee of the Arete Foundation.

The Board of Directors has not adopted specific minimum qualifications for service on the board, but rather seeks a mixture of skills that are relevant to the Company's business as a bank brokerholding company and the business of its subsidiary bank.  The following presents a brief summary of the attributes of each director that led to the conclusion that he or she should serve as such:

Mr. Cohen has served as a director of, and in other holdersignificant management capacities, with a number of record, you must instruct yourfinancial companies.   In addition to experience in commercial real estate, he has considerable experience in securities, investment management and capital markets.

Mr. Lamb has extensive experience as a director of public bank broker orholding companies, beginning in 1974.  Additionally, he has significant legal experience with respect to business and financial matters and has particular knowledge of the southeastern region of Pennsylvania, which is one of the primary markets served by the Company.

Ms. Tuan has significant experience in financing real estate projects and a variety of other holderinvestment banking experience. She has served as a Chief Financial Officer and Chief Operating Officer and holds an M.B.A. from Harvard Business School.

The number of votes required in order to be elected as a director depends on whether an election is contested or uncontested. An election is uncontested if no stockholder provides proper notice of an intention to nominate one or more candidates to compete with the Board of Directors' nominees in a director election, or if any such stockholders have withdrawn all such nominations at least five days prior to the mailing of notice of the meeting to stockholders. As no such notice has been provided, the director election described in this Proposal 1 is an uncontested election. In order to be elected as a director in an uncontested election, each director is elected by a majority of votes cast with respect to such director nominee. A "majority of votes cast" means that the number of votes cast "for" a director's election exceeds the number of votes cast "against" that director's election. Votes "cast" include votes "for" and votes "against," but excludes abstentions with respect to a director's election or with respect to the election of directors in general.

If an incumbent director nominated for themelection as a director receives a greater number of "against" votes for his or her election than votes "for" such election, then that director, as a holdover director, must tender an offer of his or her resignation to the Board of Directors for consideration promptly following the certification of the vote. The Nominating and Governance Committee must promptly consider any resignation offer so tendered and a range of possible responses, based on any facts or circumstances they consider relevant, and make a recommendation to the Board of Directors as to the response to the resignation offer. If each member of the Nominating and Governance Committee received a majority against vote your shares soat the same election, then the independent directors who did not receive a majority against vote must appoint a committee among themselves to consider the resignation offers and to recommend to the Board of Directors a response to the resignation offers. The Board of Directors must take action on the Nominating and Governance Committee's recommendation (or committee of independent directors' recommendation) within 90 days following certification of the stockholder vote. Any director whose resignation is under consideration must abstain from participating in any board or committee deliberations regarding the acceptance of his or her offer of resignation or the offer of resignation of any other director tendered because that your vote candirector received a majority against vote.

If an incumbent director's offer of resignation is accepted by the Board of Directors, then such director will cease to be counted on this proposal.a member of the Board of Directors upon the effective date of acceptance by the Board of Directors of the offer of resignation. If an incumbent director's offer of resignation is not accepted by the Board of Directors, then such director will continue to serve until the earlier of the next annual meeting and until his or her successor is elected and qualifies and his or her subsequent resignation or removal.

The following table sets forth the number and percentage of ourthe Company's Common StockShares owned as of July 31, 2016,March 20, 2018, by each of ourthe Company's directors and executive officers, all of the directors and executive officers as a group and other persons who beneficially own more than 5% of ourthe Company's outstanding voting securities. This information is reported in accordance with the beneficial ownership rules of the SEC under which a person is deemed to be the beneficial owner of a security, if that person has or shares voting power or investment power with respect to such security, or has the right to acquire such ownership within 60 days. Shares issuable pursuant to options or warrants are deemed to be outstanding for purposes of computing the percentage of the person or group holding such options or warrants, but are not deemed to be outstanding for purposes of computing the percentage of any other person.

In connection with Proposal 2, theThe Company is required to provide information regarding the compensation program in place for its Chief Executive Officer, Chief Financial Officer and its three other most highly compensated executive officers. The Company must also provide compensation information for up to two additional individuals who would have been included but for the fact that they were not executive officers at the end of the fiscal year. This discussion refers to the Company's Chief Executive Officer, Chief Financial Officer and the other three most highly-compensated executive officers as the "Named Executive Officers" or "NEOs." This discussion should be read in conjunction with the detailed tables and narrative descriptions under "Executive and Director Compensation."

The Compensation Committee is responsible for formulating and presenting recommendations to the Board of Directors with respect to the compensation of the Company's NEOs. The Compensation Committee is also responsible for administering the Company's employee benefit plans, including incentive plans. The Compensation Committee is comprised solely of independent directors.

The Company's compensation policies are intended to provide appropriate compensation packages to motivate, reward, attract and retain talented and experienced executive officers, while atand support the same time controllingmanagement succession plan. The policies are also intended to manage the Company's compensation costs. The primary components of the Company's executive compensation program have historically been base pay and equity-based compensation. In 2017, the Compensation Committee awarded cash bonuses to several NEO's to balance base salary and equity compensation with short term incentives. The Compensation Committee generally determines compensation amounts for individual NEOs for 12 month periods beginning on particular review dates.

In 2017, the Compensation Committee determined that a return on equity in excess of 11% was achieved, after exclusion of the impact of a change in federal tax law which required the reversal of deferred tax assets and did not impact pre-tax income, which was the primary consideration. A five year history of pre-tax income for continuing operations shown under "Determination of Compensation Amounts" below, shows that 2017 income was approximately double the highest income in any of the most recent five years. The Compensation Committee did not reviewconsidered that this turnaround from a loss in 2016 exceeded the NEOs'Board of Directors' budget expectations. The Compensation Committee concluded that this performance warranted additional compensation for certain officers in 2015, accordingly, there were noaddition to base salary, changes, bonuses oras an incentive to sustain and further increase profitability, especially return on equity. The Compensation Committee determined the amount of the equity compensation grantedand bonuses based on the specific efforts and accomplishments of the officers to NEOswhom they were awarded. The Compensation Committee noted several additional factors in 2015. Additionally,granting the equity compensation standards and criteria discussed below remain unchanged from those establishedcash bonuses. Pre-tax income had been increased through expense reductions and non-interest expense was reduced by 22% in 2017 compared to 2016. In addition to permanent reductions in staffing in certain areas, the Compensation Committee determined that these reductions are sustainable because the Company's organizational structure had been made more efficient by eliminating certain levels of management within the organization and consolidating others. These efforts were reflected in 2014.an increase in revenue per employee from approximately $219,000 in 2016 to $377,000 in 2017, a 72% increase.  Renegotiation or termination of significant data processing contracts and leases also resulted in long term savings which should also support sustainability of earnings gains. Additionally, the BSA lookback contract which had disproportionately increased expense in 2016 and prior years was fully concluded, partially as a result of additional management and staff efforts. Notwithstanding the personnel changes, revenue momentum was strong and loan growth for security backed lines of credit (SBLOC), leasing and small business lending were increased 16%, 9% and 9%, respectively, by year end 2017 over the prior year. Net interest margin grew in excess of 18% reflecting that loan growth.  The prepaid division grew fee income, and the value of its low cost prepaid deposits increased as the Federal Reserve increased rates to a more normalized rate environment.

In establishing compensation for the Company's NEOs, the Compensation Committee focuses on performance- basedperformance-based compensation ("pay for performance") and weights cash bonuses and stock option and restricted stock grants accordingly. The Compensation Committee utilizes criteria which it believes will create long term shareholder value and is forward looking. It evaluates the overall performance of the Company, the performance of the Company relative to the performance of the national and regional economies, the performance of the Company in comparison with its peers and the contributions of the respective NEOs to the Company's performance. Base salary reflects ongoing performance and level of achievement. In addition, the Compensation Committee evaluates the NEOs' base salary relative to the base salary paid for similar positions within a peer group of institutions, seeking to maintain a competitive advantage in light of the NEO's performance. The Compensation Committee believes that, by focusing on a NEO's overall performance rather than pre-set criteria, the Company substantially lessens the risk of an NEO taking actions to increase his or her compensation without due regard for potential adverse impacts on the Company.

The Compensation Committee believes that an appropriate compensation program should draw a balance between providing rewards to executive officers while at the same time effectively controlling compensation costs. Executive officers are rewarded in order to attract and retain highly qualified individuals and to motivate them to perform in a manner that maximizes corporate performance.

Generally, the Compensation Committee annually reviews the Company's mix of short-term performance incentives versus longer-term incentives.  It primarily focuses compensation on base salary and equity incentives.incentives with additional consideration for cash bonuses. The Compensation Committee has not established set percentages of short-term versus long-term incentives. Instead, it looks to provide a reasonable balance ofbetween those incentives while emphasizing stock options to promote pay for performance.and base salary. The Compensation Committee's policy for allocating between long-term and currently paid compensation is to set base compensation at levels adequate to attract and retain personnel, while providing incentives to maximize long-term shareholder value for the Company and its stockholders. As discussed in "Specific Elements of the Compensation Program," below, the Company provides cash compensation in the form of base salary to meet competitive salary norms. The Company also provides non-cash equity compensation to align this form of compensation with shareholder interests and the Company's long-term strategic goals. Historically,Cash bonuses are considered by the Company hasCommittee to provide a shorter term incentive which may align with competitive norms, acknowledge and reward specific accomplishments and assist in compensation expense management. As a result of performance generally in years prior to 2017, cash bonuses were not awarded bonuses.paid. As a result of improved earnings, especially in pre-tax income reflecting revenue growth and sustainable expense reductions, cash bonuses were paid to selected named executive officers in 2017. The cash bonuses reflected specific successful efforts on the part of those officers in revenue generation and expense reduction. The revenue generation and expense reduction combined to substantially increase income before taxes in 2017 as shown in "Determination of Compensation Amounts" below.

 

The Compensation Committee also "benchmarks" the Company's compensation programs to a peer group of banking institutions based upon its review of financial statements and other publicly available data. TheCompensation was reviewed in 2017 as described in "Determination of Compensation Amounts".  In 2017, as a result of the specific improvements in profitability and expense management, equity grants and cash bonuses were awarded to certain named executive officers. Base salary increases were made to certain officers with the rationales and conclusions noted in "Determination of Compensation Amounts".  No cash bonuses were paid in 2016 and equity awards were made to certain named executive officers in that year. No equity awards or cash bonuses were made in 2015 as the Compensation Committee did not review the NEOs' compensation in 2015.that year.  In 2014,2017, the Compensation Committee utilized regional banks with total assets in the $3$4.9 billion to $4$6.9 billion range as a peer group.group for the Chief Executive Officer. The Company's total assets fell at the lower end of total assets of this group as of December 31, 2016, as four of these peers exceeded $6 billion in total assets. However, the Compensation Committee also considered the added complexity and earnings stream resulting from the payments line of business unique to the Company. While the Company's payment processing business differentiates it from these institutions, this peer group represented one source for comparisons. The level of an institution's total assets and its regional location are primary factors the Compensation Committee considered in establishing the peer group. The peer group institutions consist of the following:and total CEO compensation are as follows : The Dime Savings Bank,Bank- $1,768,326, S&T Bancorp,Bancorp-$1,538,460, Flushing Financial (Flushing Savings),-$2,223,185, TrustCo Bank,Bank-$1,931,613, WSFS FinancialFinancial-$1,216,501 and Beneficial Mutual. While NEO's wereMutual-$8,628,545.  Of the six peers, five had CEOs whose total compensation exceeded the total compensation for the Company's CEO, which amounted to $1,513,106 in 2017. For the other NEOs, the Compensation Committee utilized a survey which generally includes more than twenty five comparative institutions. The Company did not reviewedutilize an outside compensation consultant in 2015, benchmarks were used in prior years.assessing compensation.

Although considerable knowledge about the competitiveness of the Company's compensation programs is gained through the benchmarking process, the Compensation Committee recognizes that each financial institution is unique and that significant differences between institutions in regard to executive compensation practices exist. The Compensation Committee believes that the combination of short and long-term compensation that the Company provides fulfills its objectives of providing a competitive level of compensation and benefits in order to attract and retain key executives. The Compensation Committee also believes that the Company's incentive programs appropriately reward performance to achieve profitability and growth while at the same time allowing the Company to maintain controls over its compensation costs.

The Compensation Committee ordinarily determines compensation amounts for individual NEOs for 12 month periods. The Chief Executive Officer typically provides the Compensation Committee with key elements of both the Company's and the NEOs' (other than the Chief Executive Officer's) performance as well as recommendations to assist it in determining compensation levels. In the case bonuses, if any, theThe Compensation Committee determines the amount of equity awards basedand cash bonuses, if any, at its discretion and reviews the then concluded fiscal year. The Compensation Committee has the discretion to issue compensation awards at other times during the fiscal year. In 2013 and 2014, the Compensation Committee reviewedprior year's performance during the first quarter of those years. The NEOs were not reviewed in 2015. There wereeach year except for 2015 when no salary increases, bonuses or stock compensation granted to NEOs in 2015 or 2014.review was performed.

Below are the specific elements of the Company's compensation program for executive officers.

Base Salary. The Company believes that it is important to maintain a competitive salary structure in order to retain its existing qualified executive officers and a base pay structure consistent with similarly situated executives at similarly sized banking institutions. The Company believes that a key objective of its salary structure is to maintain reasonable "fixed" compensation costs by targeting base salaries at a competitive average, taking into account the Company's and the individual's performance.  For 2017, the annual base salaries of the Chief Executive Officer, Chief Administrative Officer and Chief Operating Officer were, respectively, $900,000, $400,000 and $300,000. These officers were hired in June 2016 and their annual salaries were unchanged in 2017. The Chief Financial Officer's annual salary of $308,077 in 2016 was increased to $310,000 in 2017, an increase of approximately 1%. The salary for Mr. Kuiper, Head of Payment Solutions, of $494,927 in 2016 was increased to $600,000 annually for 2017. The increase reflected the significantly increased value of the low cost deposits generated by Mr. Kuiper as the rate environment continued to normalize, the 25% compound growth of fee income over an extended multiyear period. Further, merchant acquiring and ACH, which had previously reported to another officer, had been successfully integrated into his department. A chart comparing 2017 base salary to 2016 is as follows:

Base salaries are paid to executive officers on a bi-weekly basis, and are generally reviewed annually by the Compensation Committee as described in "Compensation Methodology," above. The Compensation Committee determines if any base pay changes should be made for executive officers. Base pay change, if any, is normally determined after considering:

For 2017, there were base salary increases to specified NEOs as described in "Determination of Compensation Amounts" and specified NEOs received increases in 2016.  In 2015 and 2014, the Compensation Committee awarded no increases in base salary.

Cash Bonus. While historically the Compensation Committee has not awarded bonuses because it generally prefers long-term equity incentive compensation (discussed below), it retains the discretion to do so.  In determining whether a bonus award for one or more officersNEOs would be appropriate, the Compensation Committee considers the Company's financial performance, including return on equity, net income, return on assets, return on equity, the efficiency ratio and earnings per share and would particularly focus on the contribution made to the Company by the NEO under consideration. As with base salary, the Compensation Committee also considers national and regional economic conditions. The Chief Executive Officer makes recommendations to the Compensation Committee with respect to annual bonuses for the other executive officers, based on their respective contributions to the performance of the areas for which they are responsible. Generally,As a result of improved financial performance in 2017, cash bonuses were awarded, but none were awarded in either 2016 or 2015. The primary factor in the cash bonus awards in 2017 was the significant increase in pre-tax income as shown in the chart under "Determination of Compensation Amounts" below. The pre-tax income from continuing operations for 2017 increased to approximately $40 million and was approximately double the highest pre-tax income in the most recent  five year period. The Compensation Committee utilizes non-cash equity compensationalso considered the cash bonus as a percentage of base salary. For the Chief Executive Officer and Chief Operating Officer, the cash bonus represented approximately 33% of base salary and for the Chief Administrative Officer it represented 25% of base salary. The cash bonus for the Head of Payment Solutions amounted to 50% of his base salary. The higher percentage reflected recognition for the $53 million fee revenue in 2017 and a 25% historical compounded rate of growth in such revenue for an extended multiyear period. As with the other executive officers, the Head of Payment Solutions had not been paid a cash bonuses as the primary non-base salary form of compensation. There were no bonusesbonus in 20142016 or 2015.

Long-Term Incentive Compensation. Long-term incentives are provided to executive officers through The Bancorp, Inc. Stock Option and Equitythe 2013 Plan of 2013 (the "2013 Plan") and similar prior plans. The plans permit the grant of stock options, restricted stock awards, stock appreciation rights and phantom units. Stock options are granted to executive officers at exercise prices equal to the then current market price of the Company's shares of Common Stock.Shares. Options and restricted stock awards under the 2013 Plan are granted on a discretionary basis taking into account the Company's financial performance and each executive's contribution to such performance. Overall, the objective of long-term incentive compensation awards is to tie the interests of executive officers directly to increases in stockholder value.  Stock optionsIn 2017, awards were made as described in "Determination of Compensation Amounts" and stock grantsin 2016 awards were awardedmade to each NEO, in varying amounts, in 2010 through 2013.specified officers. There were no stock options or other awards granted in 2014 or 2015. For the Chief Executive Officer and Chief Operating Officer, the Compensation Committee concluded that the grant would be based upon a dollar amount equivalent to the cash bonus as discussed above.  For the Head of Payment Solutions, the Compensation Committee had concluded that it was in the best interests of shareholders to grant a significant ownership position, due to the related $53 million fee income stream, which had grown at a 25% compounded growth rate. For the Chief Administrative Officer, the grant reflected a commitment made at the time of hire in June 2016, to replace foregone equity at another institution.

As a financial holding company regulated by the Federal Reserve Bank, which has a subsidiary bank regulated by the FDIC and the State of Delaware, the Company adheres to defined risk guidelines, practices and controls to ensure the safety and soundness of the institution.  The Company's management and Board of Directors conduct regular reviews of its business to ensure that it is operating within appropriate regulatory guidelines and with appropriate practices, supplemented by its internal audit function.

During 2014,2017, the Compensation Committee reviewed the Company's compensation practices to ensuredetermine that (1) base salaries are appropriately competitive in light of overall compensation; (2) the Company's use of equity grants provides appropriate long term incentives; and (3) the Company offered an appropriate mix of cash and equity compensation to facilitate the alignment of the interests of the Company's senior executives with those of the Company and its stockholders.stockholders; and (4) cash bonuses are balanced with other compensation to incent financial performance and safety and soundness while managing compensation expense.  In light of regulatory releases, the ultimate goal of the review was to assess the design, governance, policies and procedures of the Company's compensation structure to ensure that, as designed and executed, it does not motivate excessive risk-taking that could adversely impact the long-term value of the Company.

After conducting the review, the Compensation Committee concluded that the Company's incentive programs do not motivate or encourage unnecessary or excessive risk taking.  This conclusion reflected a review of the Company's structure to determine that credit and other new business approvals are independent of new business efforts.  Other factors, such as fostering an appropriate risk management culture, were also considered. The Company will continue to review and monitor its compensation programs to ensure that they continue to not motivate excessive risk taking that could adversely impact the long-term value of the Company.

The Compensation Committee did not reviewconsider the NEOs'impact of the 2017 tax law change in its determination of compensation in 2015; accordingly, there were no salary changes, bonuses or equity compensation grantedamounts, as the resulting reversal of deferred tax assets was unrelated to NEOs in 2015. In 2014,management performance. The primary focus of the Compensation Committee reviewedwas on income before taxes from continuing operations. As shown in the compensationchart below, 2017 income before taxes was approximately double that of the NEOshighest amount in the most recent five years. Pre-tax income of approximately $40 million for evaluation of the management team hired in June 2016 reflected a rapid turnaround from the loss in the prior year and was approximately double the highest income amount in the most recent five year period. Pre-tax income had been increased through expense reductions and non-interest expense was reduced by 22% in 2017 compared to 2016. These efforts were reflected in an increase in revenue per employee from approximately $219,000 in 2016 to $377,000 in 2017, a 72% increase.  Renegotiation or termination of significant data processing contracts and leases also resulted in long term savings which should also support sustainability of earnings gains. Additionally, the BSA lookback contract which had disproportionately increased expense in 2016 and prior years was fully concluded, partially as a result of additional management and staff efforts. Notwithstanding the personnel changes, revenue momentum was strong and loan growth for security backed lines of credit (SBLOC), leasing and small business lending were increased 16%, 9% and 9%, respectively, by year end 2017 over the prior year. Net interest margin grew in excess of 18% reflecting that loan growth.  The prepaid division grew fee income, and the value of its low cost prepaid deposits increased as the Federal Reserve increased rates to a more normalized rate environment.

The Compensation Committee concluded that continuing operations earnings before taxes should be emphasized in its analysis.  In the first quarterfull year for which Mr. Kozlowski served since his June 2016 hire date, income before taxes for continuing operations was almost double the highest previous year in the most recent five year period. The Compensation Committee also noted non-interest expense was reduced by 22% in 2017 compared to 2016. The Compensation Committee determined that these reductions are sustainable for the following reasons.

The Compensation Committee concluded that based on these results since the Chief Executive Officer's June 2016 hire date, actual performance had exceeded related budgetary expectations. The new Chief Executive Officer's proven success in growing revenues while achieving operational efficiency and reducing expenses at previous institutions, resulted in similar performance at the Company. Additionally, qualitative Compensation Committee expectations had also been satisfied, as the Chief Executive Officer acted to reduce risk in a number of 2014. After consideration,key areas. In addition to the sale of foreign prepaid operations and health savings accounts, he oversaw progress in addressing regulatory issues.

The base salary of Jeremy Kuiper, the Executive Vice President and Head of Payment Solutions, was increased to $600,000 in 2017 from $495,000 in 2016. Additionally, Mr. Kuiper was awarded $2.1 million of restricted stock units, vesting over three years, and a $300,000 cash bonus. In 2017, the Compensation Committee concluded that it was in the best interests of the Company to award a significant ownership stake in the Company to Mr. Kuiper. The Compensation Committee recognized the key role of the payments business in the financial performance of the Company, as it is the primary driver of non-interest income. The Compensation Committee also recognized Mr. Kuiper's key role in creating and building that franchise over the past ten years. Mr. Kuiper was significantly responsible for building the payments franchise from approximately $8 million in fee revenue in 2009, to approximately $53 million in fee revenue in 2017, a compounded growth rate in excess of 25%. Another significant financial contribution of the payments franchise built by Mr. Kuiper are the low cost and stable deposits generated from these accounts. The economic and market value of these deposits has grown significantly as the Federal Reserve has increased market interest rates, while the cost of funds on these deposits has remained low. Reflecting these low costs, the Company's net interest margin has continued to increase and reached 3% in 2017. The impact of these contributions to fee income and net interest margin had increased significantly, and were reflected in the substantial increases to pre-tax income as shown in the chart above. Additionally, Mr. Kuiper was given additional responsibilities and a leadership position in liquidity and other financial planning. Further, merchant acquiring and ACH, which had previously reported to another officer, had been successfully integrated into his department.

Dr. John Leto, Executive Vice President and Chief Administrative Officer, assumed his position in June 2016. His annual base salary was set at $400,000 per year. He was awarded no salary increases,bonus or equity compensation in 2016. In 2017, he was awarded $454,196 of restricted stock compensation or bonuses shouldunits, vesting over three years, to replace those he had foregone at another institution, as an incentive to accept employment with the Company. This commitment was made in 2016 when Dr. Leto was hired, with the understanding that the grants would be awardedmade the following year after measuring progress to date.  One of Dr. Leto's primary responsibilities was to work closely with the Chief Executive Officer and staff to effectuate significant cost reductions. Dr. Leto implemented changes in 2014. In 2013, the Compensation CommitteeBank's organizational structures which significantly improved efficiency, by reducing or consolidating certain levels of management and right sizing staffing levels. These efforts were reflected in an increase in revenue per employee from approximately $219,000 in 2016 to $377,000 in 2017, a 72% increase. These reductions in expense had awardedimmediate impact on performance and salary expense in 2017 was reduced by $6 million compared to 2016. These indirect measures of progress were validated by their impact on pre-tax income, which increased substantially in 2017, compared to prior years, as shown in the chart above.  These were primary considerations in replacing Dr. Leto's foregone equity, after results of his efforts became apparent, and in the award of a $100,000 increase tocash bonus. Dr. Leto's base salary for the then Chiefwas not increased in 2017.

Mr. Hugh McFadden, Executive Officer, which amounted to 8.7% of the total compensation of all types received in 2012.  No bonus was awarded to the Chief Executive Officer in 2013. In 2014, the Compensation Committee also concluded that no salary increase, stock compensation or bonus should be awarded to any of the other NEOs. In 2013, the Chief Financial Officer received a $35,000 increase, the thenVice President and Chief Operating Officer, receivedassumed his position in June 2016. His annual base salary was set at $300,000 per year. He was awarded no bonus or equity compensation in 2016. In 2017, he was awarded $100,000 of restricted stock units, vesting over three years, and a $75,000 increase,$100,000 cash bonus. In addition to significant participation in cost reductions related to operations, Mr. McFadden created an infrastructure which managed all outstanding regulatory issues and made personnel changes necessary to accelerate related progress. Such accelerated progress was acknowledged by the then Executive Vice President-Commercial Loans received a $20,000 increase,Compensation Committee. Mr. McFadden's contributions were not immediately reflected in financial results. However, the Senior Vice PresidentBoard of Director's commitment to resolving its regulatory issues and General Counsel received a $17,500 increasethe related progress under Mr. McFadden, warranted this additional compensation.  These were primary considerations in the restricted stock and no bonuses were awarded. Options and share awards were also granted to NEOscash bonus awards. Mr. McFadden's base salary was not increased in 2013 to continue to align management with long term shareholder value and to balance issues of profitability and appropriate risk management. All options and share awards vest over a four year period to further shareholder and management alignment and to emphasize long term risk management. The Compensation Committee decided to forego any bonuses to the Chief Executive Officer or NEOs for 2010 through 2014. As noted previously, no compensation of any form was modified in 2015.2017.

*The efficiency ratio is an industry wide measurement of long term compensation equity awardsthe expenses necessary to derive revenue and lower percentages indicate greater efficiency. It is to tie interestscomputed by dividing non-interest expense into the sum of NEOs to increasing shareholder value. In 2014, the Compensation Committee reviewed performance during the first quarter of 2014. The committee concluded that long term shareholder growth was enhanced by low cost deposit growth notwithstanding that such growth depressed return on assets in the short term, in the current below normal rate environment.   Additionally, the Compensation Committee considered progress made in executing management's strategy emphasizingnet interest income and non-interest income over interest income principally through the development of its prepaid, or stored value, card division.  Further, the Compensation Committee considered statistics which continue to show that contracts(less securities gains and new relationships for prepaid card fees, which is the most significant element of non-interest income

growth, require multiple year periods in which expense is incurred, prior to generating revenue. The Compensation Committee also reviewed the continuing costsoversees an annual compensation evaluation of the prepaid card-related infrastructure buildout, which represented significant fixed costs which can be usedBoard of Directors. A survey of twenty four institutions was performed to generate larger fee growth. Related historical statistics were reviewed which validated the Compensation Committee's view. Expansionconfirm that Board of compliance infrastructure had continued. Additionally, the Company continued to execute its strategy of growing low cost deposits and, as a result, its interest costs continued to be lower than its peers.Director compensation fell within appropriate peer ranges based on that survey. The Compensation Committee reviewedgranted equity with a market value at date of grant of approximately $75,000 to independent directors in 2017, to align their interests with other shareholders. The $75,000 was added to cash compensation and that total was compared to the strategy for increased growth in leases, SBA loans and security backed linessurvey of credit, noting that additional progress had been made. Accordingly, the Compensation Committee concluded that a balanced view of long term shareholder value versus current stock price should be considered in its decisions. After consideration, the Compensation Committee did not award any salary increases, stock compensation or bonuses in 2014. In 2015, NEOs were not reviewed. The Compensation Committee also determined to continue to monitor progress in managing the growth in non-interest income's impact on operating earnings and net income, which would be a primary determinant of any future bonus awards.other institutions.

 

The Compensation Committee reiterated its previously approved compensation recoupment policy as follows:

The Compensation Committee then will take such actions as it deems necessary or appropriate, depending on all the facts and circumstances as determined during its review, including (i) the recoupment of all or part of any such excess compensation, (ii) recommending disciplinary actions to the Board of Directors, up to and including termination, and/or (iii) the pursuit of other available remedies.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis above and has discussed that analysis with management. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.2017. 

The following table provides information concerning total compensation earned or paid to the NEOs for the years ended December 31, 2015, 20142017, 2016 and 2013.2015.