Crypto-friendly Customers Bancorp falls during sector sell-off

CUSTOMERS Bancorp, a regional lender that rode the crypto wave last year, fell 24 per cent on Monday (Mar 13) amid a wider sell-off of financial stocks stemming from the collapse of Silicon Valley Bank.

Shares of the Pennsylvania-based bank plunged by nearly 70 per cent before paring losses. They closed at US$17.43 Monday, down 38.5 per cent so far this year and more than 70 per cent from its peak in January 2022.

Regional bank stocks were pummelled on Monday — tripping multiple trading halts along the way — after the seizure of SVB Financial Group’s Silicon Valley Bank on Friday, the closure of Signature Bank by New York state financial regulators over the weekend and the failure of fellow crypto-friendly bank Silvergate Capital last week.

Customers Bancorp has pushed into serving crypto clients in recent years, launching a real-time payments platform in 2021 that caters to crypto-trading firms, exchanges and institutional investors. After the collapse of FTX, the bank saw an increase in deposits from clients using the payments network, which rose to US$2.3 billion as of the end of December from US$1.85 billion in mid-November.

Stablecoin issuer Circle Internet Financial holds US$1 billion of USD Coin reserves at Customers Bank, Circle chief executive officer Jeremy Allaire said on Saturday. USD Coin depegged over the weekend as Circle disclosed about US$3.3 billion of reserves were held at failed Silicon Valley Bank.

Customers Bank had about US$8.9 billion in uninsured deposits at the end of December, data from its latest call report shows. That was about half of the total deposits at domestic offices. That’s different from Signature, with roughly 90 per cent of deposits uninsured and about 93 per cent of domestic deposits at SVB.

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Jay S Sidhu, chairman Customers Bancorp, bought US$499,950 of shares on Monday, according to a filing with the US Securities & Exchange Commission.

A representative from Customers didn’t respond to requests for comments. BLOOMBERG