Customers Bancorp is launching a second effort to sell off its BankMobile unit, but isn't taking the quick and easy route.

The Wyomissing, Pa., firm is forgoing cash offers in favor of a more complicated plan that involves spinning the unit off to shareholders, who will then trade their stakes for shares in a Clearwater, Fla., community bank in a tax-free exchange.

The bank, $114 million-asset Flagship Community Bank, will pay roughly $10 million to purchase BankMobile’s deposits in a separate transaction.

Jay Sidhu, chairman and CEO of Customers Bancorp.
"We concluded that a spin-off and merger transaction provides the greatest value to Customers’ shareholders,” said Jay Sidhu, Customers’ chairman and CEO.

For Customers, the deal, which was announced late Thursday, is more attractive than a simple sale because it gives shareholders an opportunity to reap more of the benefits of BankMobile’s business plan over the next few years.

“After studying and exploring alternative ways to separate the BankMobile business from Customers and maintain BankMobile’s low-fee model, we concluded that a spin-off and merger transaction provides the greatest value to Customers’ shareholders,” said Jay Sidhu, Customers’ chairman and CEO, in a press release.

In documents filed with the Securities and Exchange Commission, Customers added that “an outright sale forfeits shareholders’ ability to participate in potential future BankMobile valuation increases as its model is proven.”

Under terms of the deal, Customers shareholders would receive Flagship shares worth $110 million, which would give them ownership of more than 50% of the merged company. The company would take the BankMobile name.

Customers did not provide a projected closing date.

The deal represents Flagship’s second effort to buy BankMobile. In February, it agreed to pay $175 million for the subsidiary, but the transaction fell through when Flagship was not able raise enough cash to close the deal.

In May, Customers disclosed that it was weighing two all-cash offers for BankMobile — but it said also that it might seek to re-set its deal with Flagship.

The $10.9 billion-asset Customers has been eager to sell BankMobile, noting the Durbin Amendment’s cap on interchange fees for debit cards has made it difficult to operate the company profitably. The cap on interchange fees only applies to banks with assets of $10 billion or more, allowing the smaller Flagship to avoid falling under the statute.

All but $3 million of BankMobile’s $780 million of deposits are in non-interest-bearing checking accounts.

According to Customers, BankMobile generated $35.7 million of revenue through the first six months of 2017. In addition to offering online banking services, BankMobile also has a business line that disburses financial aid to students. Since it acquired the disbursement business in June 2016, Customers said it has added more than 325,000 new accounts.

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