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The bank, led by ex-Sovereign chief Jay Sidhu, cited uncertain market conditions.
May 8 -
Jay Sidhu has stepped down as the chairman of Atlantic Coast Financial because he believes the Jacksonville, Fla., company was failing to “mitigate or significantly reduce risks facing the bank.”
May 4 -
Customers Bancorp, led by Jay Sidhu, is set to go public. The one-time Sovereign Bank chief and others say he has learned from the past about how to balance internal growth and acquisitions.
May 3
It was a busy few days for veteran banker Jay Sidhu.
On Tuesday, Sidhu decided to
A week earlier, Sidhu
Sidhu is well-known for growing the assets at Sovereign Bancorp from $500 million to more than $90 billion over two decades at the helm. Sidhu resigned as the chairman and CEO of that company in 2006 as credit concerns and integration issues multiplied. Sovereign was sold to Banco Santander (STD) in 2009.
Sidhu still holds out hope for an IPO at Customers, possibly in the fourth quarter or early next year, though he is also entertaining the notion of luring private equity investment into the company. Sidhu discussed these decisions during a wide-ranging interview Thursday.
Here is an excerpt of that interview.
Why did you decide to pull the Customers Bancorp IPO?
JAY SIDHU: It's really the market conditions. Customers is a very low-risk, high-growth bank. The employment numbers reported on Friday [U.S. employers added fewer workers than projected in April], combined with the European crisis, really spooked the market. So we decided to postpone it.
We're a company that's shooting for somewhere between [0.9%] to a 1% return on assets over the next two to three quarters. We're a very high-performing bank, with in excess of 10% return on equity. We're extremely confident about our growth prospects, so we saw no need to try to force it and get an IPO done in these extremely turmoil-filled markets.
It would not have been prudent, when — when we're seeing such good growth in our income sheet and in our balance sheet — to dilute our existing shareholders' value.
There is no question about it; we would have gotten it done, because the demand exceeded our expectations. But we're looking at growth capital. We don't need capital just for the sake of having capital.
Growth capital must come at a price that's not dilutive to existing shareholders and that's based on expectations of future growth. We think we'll do some private equity raises in the next quarter or two, and we expect to come back to the market as a very strong earner.
That will happen in either the fourth quarter or the first quarter of 2013.
Customers' leverage ratio of roughly 7.5% is
We're not just pursuing an acquisition-oriented [growth] strategy. Ours is 75% organic growth. That is our strategy. We don't believe it will alter the growth prospects for the company. We will look at acquisitions if they can be done at or below book value, and if they can't be done then we will pass.
No. That just proves that our decision is the right one. But it didn't affect our decision. Those banks needed to raise capital, but they did it in a way that diluted their existing shareholders. We were raising capital for selective M&A growth and for organic growth.
Can you discuss your decision to leave your post at Atlantic Coast?
My concerns are with the board. The board is very entrenched. They're acting more as if they were still running a mutual institution or a credit union. [Atlantic Coast was established in 1939 as a credit union, converted to a mutual in 2000 and became a stock holding company in February 2011.]
In my opinion, those are the kinds of actions which have resulted in a significant loss in shareholder value. I completely disagree with them when they say that all the suggestions made by some of the board members were not in the best interest of shareholders. That was an example of them not being shareholder-oriented.
My philosophy is that we have got to do everything in the best short-term and long-term interests of the shareholders. The board did not share that philosophy.
