Customers in Pa. to restate 2017 results after material weakness found
Customers Bancorp in Wyomissing, Pa., plans to restate its financial results for 2017 and the first half of this year after identifying a material weakness in its internal controls.
The $11 billion-asset company disclosed in a regulatory filing Tuesday that the restatement will correct how it classified cash flow activities tied to its commercial mortgage warehouse lending activities.
Customers said related loan balances were incorrectly classified as held for sale, rather than held for investment, on its consolidated balance sheets.
The company said that since the third quarter of 2012 it had classified its commercial mortgage warehouse lending activities as held for sale.
While preparing third-quarter financials, Customers and its accounting firm decided that commercial mortgage warehouse loans should be classified as held for investment. The decision was based on a review of industry practices, guidance from the Office of the Comptroller of the Currency and applicable accounting literature, the filing said.
Customers said it will detail plans to address the material weakness when it submits its third-quarter filing with the Securities and Exchange Commission.
The company disclosed last month that it was putting a proposed spinoff of its digital bank on hold after complications arose with the regulatory process. The company is expected to shrink its balance sheet to get below $10 billion in assets, which would allow it to delay caps on interchange fees under the Durbin amendment.