Customers Bancorp: Flagship could raise capital in IPO transaction in 1H18
Customers Bancorp, the parent company of Customers Bank, provided updates on its planned spin-off and merger of its BankMobile business and progress at the core bank. Additionally, this morning Customers disclosed the execution of the definitive agreement relating to the spin-off and merger with Flagship Community Bank in a Form 8-K filing with the SEC. The spin-off and merger are currently expected to close in mid-2018. Customers expects that Flagship could raise capital in an IPO transaction in the first half of 2018. Compared to a private placement, an IPO structure would offer investors greater transparency with a publicly filed registration statement, reduces execution risk, and likely narrows the window of time for investors between committing capital and owning an exchange traded security. After closing, Customers Bancorp shareholders are expected to own over 50% of outstanding shares in BankMobile/Flagship. Customers also commented that it is already operating with approximately $10B in total assets, on track with its plans. Customers expects December 31, 2017 total assets to be below $10B, allowing the company to strengthen its capital ratios, and continue to qualify as a small issuer of debit cards and maintain our current interchange revenues through June 30, 2019. "We expect that the reduction in assets, coupled with retained earnings should result in a sequential increase of at least 50 basis points in all capital ratios during the fourth quarter, making our capital ratios much stronger; however, we expect that the temporary reduction in assets will have a short-term adverse effect on Q4 earnings," commented Jay Sidhu, Chairman and CEO of Customers Bancorp, Inc.