Customers Bancorp acquires $631 million loan portfolio from FDIC at discount
Reuters
Published Jun 16, 2023 09:41AM ET
Updated Jun 16, 2023 12:26PM ET
By Manya Saini and Saeed Azhar
(Reuters) -Customers Bancorp said on Friday it acquired a $631 million venture banking loan portfolio from U.S. regulator Federal Deposit Insurance Corporation (FDIC) at about 85% of the book value.
The portfolio belonged to failed lender Signature Bank (OTC:SBNY), which was put under FDIC receivership in March, a source familiar with the matter told Reuters.
Customers Bancorp (NYSE:CUBI) shares rose on the news to their highest level since early March, and were up 3.3% at $30.23 at midday.
The FDIC did not immediately respond to a request for comment.
Customers Bancorp has also recruited 30 team members from the group that originated these loans, who will help expand the bank's venture capital coverage in major cities including Austin, Boston, Southern California and Chicago.
Loans to the technology and life sciences sector will be combined with Customer Bancorp's technology and venture capital business based in Boston, the bank said.
"We view this deal and team addition as a fairly low-risk transaction to accelerate CUBI's (Customer Bancorp's) presence in a high-growth" market and it has the potential to improve deposit funding, said Michael Perito, banking analyst at Keefe Bruyette & Woods, in a note.
The 15% discount on the acquired loans provides a cushion to absorb some losses, particularly for capital call loans, or revolving lines of credit, to private equity and venture capital firms, Perito said.
A unit based in New York and Chicago will manage the capital call loans.
On March 12, state regulators closed New York-based Signature Bank, marking this year's second high-profile bank collapse sparked by an exodus of depositors seeking higher returns and safer institutions.
Later that month, New York Community Bancorp (NYSE:NYCB) entered into an agreement with the FDIC to buy substantially all deposits and certain loan portfolios, and all 40 of Signature Bank's former branches.
Following the bank's closure, the FDIC had announced in April the marketing process for the roughly $60-billion loan portfolio retained in receivership from Signature Bank.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.