Form 8-K, Other Events — Customers Bancorp, Inc. (October 27, 2022)

Summary

In this Form 8-K under Item 8.01, Customers Bancorp, Inc. reports that on October 27, 2022 its subsidiary Customers Bank entered into a Settlement and Release Agreement with Kabbage, Inc., d/b/a KServicing, to settle disputes that arose from the parties' participation in the Paycheck Protection Program. The Agreement needs the approval of the US Bankruptcy Court for the District of Delaware, where KServicing filed voluntary Chapter 11 petitions on October 3, 2022. If approved, approximately $65.5 million in previously accrued fees payable by the Bank to KServicing would be reduced to $58 million, less previously accrued amounts due from KServicing. KServicing would take commercially reasonable efforts to maintain PPP loan servicing through March 31, 2023, and each party would release the other from claims related to the disputes. Carla A. Leibold signed on November 1, 2022.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the

Securities Exchange Act of 1934

Date of Report (date of earliest event reported): October 27, 2022

(Exact name of registrant as specified in its charter)

Customers Bancorp, Inc.
Pennsylvania | 001-35542 | 27-2290659
(State or other jurisdiction of incorporation) | (Commission File number) | (IRS Employer Identification No.)

701 Reading Avenue

West Reading PA 19611

(Address of principal executive offices, including zip code)

( 610 ) 933-2000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instructions A.2. below):

☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbols | Name of each exchange on which registered
Voting Common Stock, par value $1.00 per share | CUBI | New York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series E, par value $1.00 per share | CUBI/PE | New York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, par value $1.00 per share | CUBI/PF | New York Stock Exchange
5.375% Subordinated Notes due 2034 | CUBB | New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 8.01 Other Events.

On October 27, 2022, Customers Bank (the “Bank”), the wholly-owned subsidiary of Customers Bancorp, Inc., entered into a Settlement and Release Agreement (“Agreement”) with Kabbage, Inc., d/b/a KServicing (“KServicing”) intended to settle certain ongoing disputes between the Bank and KServicing that arose in connection with the parties’ participation in the Paycheck Protection Program (“PPP”). On October 3, 2022, KServicing filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code with the US Bankruptcy Court for the District of Delaware (“Court”), and the effectiveness of the Agreement is subject to approval of the Court.

If approved by the Court, the Agreement will provide for, among other things:

• A reduction of the approximately $65.5 million in previously accrued fees payable by the Bank to KServicing to $58 million, less previously accrued amounts due from KServicing to the Bank. All amounts are subject to a reconciliation process.

• KServicing will take commercially reasonable efforts to maintain current levels of PPP loan servicing to the Bank and its borrowers through March 31, 2023 (or such earlier date as servicing of the Bank’s PPP loans is transferred to an alternative servicer); and

• Each party will provide the other with a release from any claims or damages related to the disputes, their contractual agreements and the PPP.

The Bank believes that the Agreement represents a fair and reasonable settlement, and that it is in the best interests of all parties for the Court to approve the Agreement. As the amounts described above have been accrued for previously, the final settlement of this matter is not expected to have a material financial impact on the Bank’s financial position or operating results.

“Safe Harbor” Statement

The matters described herein contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “project,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: the impact of the ongoing pandemic on the U.S. economy and customer behavior, the impact that changes in the economy have on the performance of our loan and lease portfolio, the market value of our investment securities, the continued success and acceptance of our blockchain payments system, the demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply, actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships, higher inflation and its impacts, and the effects of any changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2021, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.

++++++++++++++++++++++++++++++

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

CUSTOMERS BANCORP, INC.
By: /s/ Carla A. Leibold
Name: Carla A. Leibold
Title: Executive Vice President - Chief Financial Officer

Date: November 1, 2022

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