Customers Bancorp (CUBB) prices $100M 6.875% fixed-to-floating subordinated notes
Rhea-AI Filing Summary
Customers Bancorp, Inc. entered into a Second Supplemental Indenture with Wilmington Trust to issue $100,000,000 of 6.875% Fixed-to-Floating Rate Subordinated Notes due 2036. These Notes are subordinated obligations of the company, ranking below its senior and secured debt and structurally below all liabilities of its subsidiaries.
The Notes pay a fixed interest rate of 6.875% per year from issuance to, but excluding, January 15, 2031, with semi-annual payments each January 15 and July 15, starting July 15, 2026. From January 15, 2031 to January 15, 2036, interest resets quarterly to a floating rate equal to a Benchmark rate, expected to be Three-Month Term SOFR, plus 342 basis points, with quarterly payments each January 15, April 15, July 15 and October 15.
The company may redeem the Notes at par plus accrued interest, at its option, beginning on January 15, 2031 and on any interest payment date thereafter. The Indenture includes covenants that restrict certain actions involving equity and debt of material subsidiaries, including Customers Bank, and sets customary events of default and other standard terms.
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Insights
Customers Bancorp adds $100M in long-dated subordinated debt with fixed-to-floating terms.
Customers Bancorp, Inc. has issued $100,000,000 of subordinated Notes due 2036 at a 6.875% fixed coupon that later converts to a floating rate based on a Benchmark, expected to be Three-Month Term SOFR, plus 342 basis points. This type of instrument typically sits below senior debt in the capital structure and can support longer-term funding needs because of its subordination and maturity profile.
The Notes are structurally subordinated to obligations of subsidiaries, including Customers Bank and its 6.125% Fixed-to-Floating Rate Subordinated Notes due 2029, and are not guaranteed by those subsidiaries. The Indenture covenants limit certain equity issuances, secured debt incurrences, and merger or consolidation actions involving material subsidiaries, which frames how the group can reorganize or pledge subsidiary equity.
Optional redemption starting on January 15, 2031 at 100% of principal plus accrued interest gives the company flexibility to refinance if market conditions or its funding needs change. Actual effects on funding costs and capital structure will depend on how this subordinated layer interacts with existing and future senior and secured liabilities.
8-K Event Classification
FAQ
What new debt did Customers Bancorp, Inc. (CUBB) issue?
Customers Bancorp, Inc. issued $100,000,000 aggregate principal amount of 6.875% Fixed-to-Floating Rate Subordinated Notes due 2036 under a Second Supplemental Indenture with Wilmington Trust.
How is interest on Customers Bancorps new 6.875% Notes structured?
From issuance to, but excluding, January 15, 2031, the Notes pay a fixed rate of 6.875% per year with semi-annual payments. From January 15, 2031 to January 15, 2036, they pay a floating rate equal to a Benchmark, expected to be Three-Month Term SOFR, plus 342 basis points, with quarterly payments.
When can Customers Bancorp redeem the new subordinated Notes?
The Notes are redeemable at the companys option beginning on January 15, 2031 and on any interest payment date thereafter, at 100% of the principal amount plus accrued and unpaid interest to, but excluding, the redemption date.
Where do the new 6.875% Notes rank in Customers Bancorps capital structure?
The Notes are subordinated obligations of Customers Bancorp, Inc., ranking junior to all existing and future senior indebtedness and effectively junior to secured indebtedness to the extent of collateral value. They are structurally subordinated to all liabilities of subsidiaries and are not guaranteed by any subsidiary.
What covenants apply to Customers Bancorps material subsidiaries under the Indenture?
The Indenture limits the company and any material subsidiary from selling or pledging certain equity of material subsidiaries, restricts certain equity issuances by those subsidiaries, and constrains their ability to merge, consolidate or take similar actions, subject to various exceptions and qualifications.
Who acts as trustee for Customers Bancorps new subordinated Notes?
Wilmington Trust, National Association serves as Trustee under the Base Indenture dated December 9, 2019 and the Second Supplemental Indenture dated December 22, 2025 relating to the new Notes.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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CURRENT REPORT
Pursuant to Section 13 or 15(d)
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Securities Exchange Act of 1934
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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):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
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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
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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 1.01 |
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Entry into a Material Definitive Agreement. |
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On December 22, 2025, Customers Bancorp, Inc. (the “Company”) and Wilmington Trust, National Association (the “Trustee”) entered into a Second Supplemental Indenture (the “Second Supplemental Indenture” and together with the Base Indenture (as defined herein), the “Indenture”) relating to the issuance of $100,000,000 aggregate principal amount of 6.875% Fixed-to-Floating Rate Subordinated Notes due 2036 (the “Notes”), which supplements that certain Indenture, dated as of December 9, 2019 between the Company and the Trustee (as may be further amended, supplemented or otherwise modified from time to time, the “Base Indenture”).
The Notes are the Company’s subordinated obligations and will rank junior to all of the Company’s existing and future senior indebtedness. In addition, the Subordinated Notes will be effectively subordinated to all of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness. The Notes will be structurally subordinated to all of the existing and future liabilities and obligations of the Company’s existing and future subsidiaries, including, without limitation, Customers Bank’s depositors, liabilities to general creditors, liabilities arising in the ordinary course of business or otherwise and the Customers Bank’s outstanding 6.125% Fixed-to-Floating Rate Subordinated Notes due 2029 (the “2029 Subordinated Notes”). The Notes will be obligations of Customers Bancorp, Inc. only and will not be obligations of, and will not be guaranteed by, any of the Company’s subsidiaries, including Customers Bank.
From and including the date of original issuance to, but excluding, January 15, 2031 or the date of earlier redemption (the “fixed rate period”), interest on the notes will accrue at the rate of 6.875% per annum. Interest on the notes will be payable semi-annually in arrears on January 15 and July 15 of each year (each, a “fixed rate interest payment date”), commencing on July 15, 2026. From and including January 15, 2031 to, but excluding, January 15, 2036 or the date of earlier redemption (the “floating rate period”), the notes will bear interest at a floating rate per annum equal to benchmark rate (which is expected to be Three-Month Term SOFR) (the “Benchmark”) plus 342 basis points for each quarterly interest period during the floating rate period, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year (each, a “floating rate interest payment date,” and, together with the fixed rate interest payment dates, the “interest payment dates”), commencing on April 15, 2031. Notwithstanding the foregoing, if the Benchmark rate is less than zero, the Benchmark rate shall be deemed to be zero.
The interest payable on the Notes during the fixed rate period and floating rate period will be paid to the person in whose name such Note is registered at the close of business on the 1st day of the month (whether or not a business day) of the applicable interest payment date.
The Notes are redeemable, at the Company's option, beginning on January 15, 2031, and on any interest payment date thereafter, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but excluding, the date of redemption. The Notes will not be subject to repayment at the option of the holder at any time prior to maturity.
The Indenture contains several covenants which, among other things, limit the Company’s and any material subsidiary’s (as defined below) ability to sell or otherwise dispose of certain of such material subsidiary’s equity securities or incur debt secured by certain of such material subsidiary’s equity securities, and, in addition, limits such material subsidiary’s ability to issue certain of its equity securities and its ability to merge, consolidate or take similar actions. A “material subsidiary” means Customers Bank or any successor thereof, or any of the Company’s subsidiaries that is a depository institution and that has consolidated assets equal to 30% or more of the Company’s consolidated assets. The Indenture also contains a number of other customary terms, covenants and events of default. These and other provisions in the Indenture are subject to a number of exceptions, qualifications and limitations.
The foregoing descriptions of the Base Indenture and the Second Supplemental Indenture do not purport to be complete and are qualified in their entirety by reference to the full text of such documents. For a complete description of the Base Indenture and the Second Supplemental Indenture, which includes the form of the Note, please refer to the Base Indenture, attached as Exhibit 4.1 and the Second Supplemental Indenture, attached as Exhibit 4.2 to this Current Report on Form 8-K, which are incorporated herein by reference. The form of the Note is included in Exhibit 4.3 and is incorporated herein by reference.
Stradley Ronon Stevens & Young, LLP, counsel to the Company, delivered an opinion as to legality of the issuance and sale of the Notes, a copy of which is filed as Exhibit 5.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.03 |
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information required by this Item 2.03 is contained in Item 1.01 above and is incorporated by reference herein.
Item 9.01 |
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Financial Statements and Exhibits. |
(d) Exhibits.
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Exhibit No. |
Description | |
| 4.1 |
Indenture, dated as of December 9, 2019, between Customers Bancorp, Inc., as Issuer and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed December 9, 2019).
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4.2 |
Second Supplemental Indenture dated as of December 22, 2025 between Customers Bancorp, Inc., as Issuer, and Wilmington Trust, National Association, as Trustee.
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| 4.3 | Form of 6.875% Fixed-to-Floating Rate Subordinated Note (included in Exhibit 4.2). | |
| 5.1 | Opinion of Stradley Ronon Stevens & Young, LLP. | |
| 23.1 | Consent of Stradley Ronon Stevens & Young, LLP (included in Exhibit 5.1). | |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. | |
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.
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CUSTOMERS BANCORP, INC.
By: /s/ Mark R. McCollom Name: Mark R. McCollom Title: Chief Financial Officer |
Date: December 22, 2025