Customers plans to divest all-digital banking offshoot
The marriage between BankMobile and its Florida suitor appears to be back on track.
After hitting a snag in June, Flagship Community Bank of Florida hopes to move forward again with plans to buy the all-digital offshoot of Customers Bancorp - just not directly from Customers, as originally planned.
The new plan calls for Customers to divest BankMobile from its main banking business in what is expected to be a tax-free spin-off to its shareholders, according to a recent notice filed with the Securities and Exchange Commission. Flagship would then merge with BankMobile, with Customers' shareholders trading their new BankMobile shares for shares in the new company.
BankMobile is the all-digital division of Berks County-based Customers Bancorp. It has about 220 employees across the U.S, including several at an innovation lab in Lancaster. Customers announced plans in March to sell the subsidiary to Flagship, but the deal stalled in June when Flagship failed to raise the money needed for the planned $175 million purchase.
Customers CEO Jay Sidhu said at the time that they could restructure the deal in a way that would let Flagship continue with the acquisition with significantly less money up front - and that is exactly what Customers and Flagship now plan to do through the new arrangement.
If approved, BankMobile shareholders would collectively own more than half of Flagship's stock, worth about $110 million, after the merger, according to the filing. Customers hopes to close the transaction in mid-2018.
BankMobile had two other potential buyers waiting in the wings should the Flagship purchase fall through, Sidhu said in June, but the most recent regulatory filing makes no mention of them.
Customers created BankMobile a little less than three years ago, marketing the branchless, all-digital offshoot to millennials and the under-banked. BankMobile has grown significantly since then, thanks largely to white-label relationships with colleges and universities.
This growth is the reason BankMobile is looking for a new home. Customers Bancorp, which also owns Customers Bank, is nearing $10 billion in assets - a line that, if it crosses, will subject the bank to more regulatory oversight. If the divestiture happens as planned, Customers and BankMobile can put off that transition a little longer.