Customers Bancorp Inc. Sells a Preferred Issue

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Regional bank Customers Bancorp Inc. (NYSE:CUBI) sold a new preferred stock offering that now is trading on the OTC Grey Market under a temporary ticker, CUBUP.


As a banking company, Customers Bancorp’s new issue is required to be non-cumulative, meaning if dividends are not declared that they are gone forever. The non-investment grade issue is unrated and the shares are perpetual, so they have no maturity date.



This issue features a “fixed-to-floating rate” preferred offering. This means that the coupon is initially fixed at 6.5% until March 14, 2021, when the coupon converts to a floating rate that is calculated with a three-month LIBOR rate, plus a spread of 5.09% that is calculated each quarter.


The floating rate coupon on this issue may reduce share price volatility in the future in a period of rising interest rates, since there is some assurance that the coupon rate may move higher as interest rates rise.


The issue has the normal five-year optional redemption, so the company can redeemthe shares at its option as early as March 15, 2021. Typically, the issuer will redeem the shares in what is known as a “refinancing” transaction on the optional redemption date, if the company can issue new shares at a coupon at least ¼ to ½% below the coupon on these shares.


Complete details on this issue are available here.



Customers Bancorp Inc. has a 7% fixed-to-floating issue currently trading.


For those interested in buying on the OTC Grey Market we have a “primer” on the process which you can access at this link.


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Tim McPartland
Tim McPartland is a private investor with over 45 years of investing experience. His analysis, research and writing is devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
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