fbpx
Connect with us

Know

Flagship Community Bank’s deal for BankMobile suspended

Margie Manning

Published

on

Flagship Community Bank in Clearwater, from Google Maps

A Pennsylvania bank has decided to keep its digital banking operation for now, rather than sell it to Flagship Community Bank in Clearwater.

Customers Bancorp Inc. (NYSE: CUBI) will keep BankMobile for the next two or three years, evaluating that decision on an annual basis, Jay Sidhu, chairman and CEO, said Monday at an analyst day.

Customers is renegotiating its contract with Flagship, Sidhu said. He left open the possibility of selling BankMobile to Flagship at a later date, or acquiring Flagship outright.

Frank Burke, chairman, president and CEO of Flagship, was not immediately available for comment, but said he would be able to talk after board meetings this week.

Flagship is a $126 million bank with two offices in Clearwater and Oldsmar. It would have become one of the largest banks in the Tampa Bay area under the deal with Customers, an $11.1 billion bank headquartered in Wyomissing, Pennsylvania.

The complex deal, which initially was announced in November 2017, called for Customers to spin off BankMobile, a Customers’ subsidiary with about $732 million in deposits that historically has focused on younger and underbanked customers. BankMobile then would have merged with Flagship. Flagship would have changed its name to BankMobile, retained its Clearwater headquarters and become a publicly traded company.

The deal was contingent on Flagship raising $100 million in new capital and getting regulatory approval.

The U.S. Securities and Exchange Commission and the Federal Deposit Insurance Corp. approved the deal, Sidhu said, but the Federal Reserve “threw a curveball at us.” The Federal Reserve said the overlap between shareholders at Customers and at the combined BankMobile/Flagship company effectively would have made BankMobile/Flagship an affiliate of Customers.

The deal is not dead, Sidhu said in response to an analyst’s question.

Customers and Flagship “are engaged in potentially renegotiating our contract, which gives us the two to three years, and at the same time gives us more options. Those options are we could either do a spin-merge with them for BankMobile or we could acquire them,” Sidhu said.

Customers has put $1 million in an escrow account that is reserved for payment to Flagship if the agreement is terminated, according to a filing with the U.S. Securities and Exchange Commission.

“In the agreement we had, we will bear their costs, legal and filing and all that stuff,” Sidhu told analysts. “That’s been capitalized, because their shareholders in an IPO would have taken that on … Whatever that number is, if this agreement gets terminated, we’ll take that as a busted deal change. My best guess is it’s a $2-$3 million range.”

Customers also announced that BankMobile has a new “white label partnership” with T-Mobile (NASDAQ: TMUS). The company did not go into details but previously said it was seeking white-label partnership in which BankMobile would provide a service that its partner will rebrand to make it appear as if it were their own.

2 Shares
Continue Reading
1 Comment

Leave a Reply

The St. Pete Catalyst

The Catalyst honors its name by aggregating & curating the sparks that propel the St Pete engine.  It is a modern news platform, powered by community sourced content and augmented with directed coverage.  Bring your news, your perspective and your spark to the St Pete Catalyst and take your seat at the table.

Email us: spark@stpetecatalyst.com

Subscribe for Free

Share with friend

Please enter email address you want to share this article with