Customers Bank Announces Purchase of FDIC Interest in Fintech Investment Fund

Rhea-AI Summary

Customers Bank, a $22 billion asset subsidiary of Customers Bancorp (NYSE:CUBI), has purchased a minority partnership interest in a fintech investment fund for $5 million, achieving a 70% discount on the original cost. This is the bank's sixth venture fund investment and aligns with its strategic focus on venture banking and early-stage companies. The bank's president and CEO, Sam Sidhu, highlighted the investment's role in strengthening the bank's position in the venture community and enhancing its client base. Earlier in June 2023, Customers Bank acquired a $631 million legacy Signature Bank loan portfolio from the FDIC, integrating around 30 experienced venture bankers.

Positive

• Customers Bank purchased a fintech investment fund interest at a 70% discount.
• The bank's venture banking client base has quadrupled in 2023.
• Integration of approximately 30 experienced venture bankers with national presence.
• Strategic growth in venture tech and startup sectors.
• Ranked No. 5 on American Banker 2023 list of top-performing banks.
• Ranked No. 29 on Forbes 2024 Best Banks list.
• Ranked No. 52 on Investor’s Business Daily 100 Best Stocks for 2023.

Negative

• The $5 million investment is a minority partnership, which may have control and influence over fund decisions.
• The bank's heavy focus on venture banking could expose it to high-risk investments.
• The success of the investment hinges on the performance of the fintech sector, which can be volatile.

Insights

Financial Analyst

Customers Bank's purchase of the FDIC interest in a fintech investment fund at a 70% discount demonstrates a strategic move to bolster its presence in the venture banking sector. Acquiring a minority limited partnership interest for $5 million allows the bank to strengthen its connections within the venture tech and startup ecosystem. This acquisition complements the bank's prior investments, notably the purchase of a $631 million loan portfolio from Signature Bank. The purchase price, significantly lower than the original investment cost, implies an astute capital allocation strategy that could potentially lead to high returns on investment.

From a financial perspective, the bank's ability to secure deals at considerable discounts represents efficient asset management and reinforces its financial stability. This acquisition could enhance the bank's earnings potential, attract new clients and provide opportunities for cross-selling other banking services. However, the venture banking sector is inherently risky and the success of this investment hinges on the performance of the underlying startups and fintech companies. Short-term challenges might include integration risks and the volatility in the tech startup space, while long-term benefits could include substantial growth and market positioning advantages.

Tech Expert

For Customers Bank, the integration of technology partners derived from venture investments is crucial. The bank has successfully quadrupled its portfolio of clients within the venture and tech communities, indicating an effective synergy between its banking and technological capabilities. The expertise and resources acquired through these investments can drive innovation in the bank's product offerings, enhance operational efficiencies and contribute to a competitive advantage in the evolving fintech landscape.

The bank's approach of integrating experienced venture bankers with national presence can also facilitate better client relationships and deeper market penetration. However, the dynamic nature of the tech sector requires continuous adaptation and innovation. The bank's strategy must therefore include robust mechanisms to address the rapid changes and potential disruptions typical of the tech industry. This strategic investment signifies confidence in their venture banking roadmap and a commitment to providing tailored solutions to meet the specific needs of tech startups and entrepreneurs.

Furthers Commitment to Venture Banking and Early-Stage Companies

WEST READING, Pa.--(BUSINESS WIRE)-- Customers Bank, the $22 billion asset subsidiary of Customers Bancorp (NYSE:CUBI), is furthering its commitment as a leading partner to the venture banking and startup communities through its sixth overall venture fund investment.

After submitting a winning bid to the Federal Deposit Insurance Corporation, Customers Bank purchased a minority limited partnership interest for $5 million in the fund at an approximate 70% discount to the original cost of investment.

“This investment further solidifies Customers Bank’s position as a leading partner to the venture community,” said Customers Bank president and CEO, Sam Sidhu. “It also provides access to deal, partner and client flow in the venture tech and startup sectors, both areas of strategic growth for the Bank. Investments like these have increased the size of Customers’ venture banking client base and helped source technology partners for the Bank’s operational and technology roadmap.”

Through Customers Bank’s June 2023 purchase of a $631 million legacy Signature Bank loan portfolio from the FDIC and the integration of approximately 30 highly experienced venture bankers with a national presence, it continues to support and provide resources to entrepreneurs and the markets they operate in across the U.S.

Customers Bank’s 2023 investments, and the related stability provided to venture and tech communities, enabled the Bank to quadruple its portfolio of clients served in the space.

Institutional Background

Customers Bancorp, Inc. (NYSE:CUBI) is one of the nation’s top-performing banking companies with nearly $22 billion in assets, making it one of the 80 largest bank holding companies in the U.S. Customers Bank’s commercial and consumer clients benefit from a full suite of technology-enabled tailored product experiences delivered by best-in-class customer service distinguished by a Single Point of Contact approach. In addition to traditional lines such as C&I lending, commercial real estate lending and multifamily lending, Customers Bank also provides a number of national corporate banking services to specialized lending clients. Major accolades include:

• No. 5 on American Banker 2023 list of top-performing banks with $10B to $50B in assets
• No. 29 out of the 100 largest publicly traded banks in 2024 Forbes Best Banks list
• No. 52 on Investor’s Business Daily 100 Best Stocks for 2023

A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender. Learn more: www.customersbank.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240515395502/en/

David Patti

Communications Director

(610) 451-9452

dpatti@customersbank.com

Source: Customers Bank

FAQ

What investment did Customers Bank make in 2023?

Customers Bank acquired a minority partnership interest in a fintech investment fund for $5 million.

What discount did Customers Bank achieve on its fintech investment?

Customers Bank purchased the fintech investment fund interest at a 70% discount to the original cost of investment.

How has Customers Bank expanded its venture banking client base in 2023?

Customers Bank quadrupled its venture banking client base through strategic investments and integration of experienced venture bankers.

What significant acquisition did Customers Bank make in June 2023?

In June 2023, Customers Bank acquired a $631 million legacy Signature Bank loan portfolio from the FDIC.

What rankings did Customers Bank achieve in 2023 and 2024?

Customers Bank was ranked No. 5 on American Banker's 2023 top-performing banks list, No. 29 on Forbes 2024 Best Banks list, and No. 52 on Investor’s Business Daily 100 Best Stocks for 2023.

What is the stock symbol for Customers Bancorp?

The stock symbol for Customers Bancorp is NYSE:CUBI.

How much did Customers Bank invest in the fintech investment fund?

Customers Bank invested $5 million in the fintech investment fund.