WEST READING, PA — Customers Bancorp, Inc. (NYSE: CUBI), a leading bank holding company, has announced cash dividends for its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stocks Series E (NYSE: CUBIPrE) and Series F (NYSE: CUBIPrF). The announcement includes a significant update regarding the reference rate used to determine the dividend rate.
The Board of Directors has declared a quarterly cash dividend of $0.68163044 per share for Series E and $0.65774294 per share for Series F. Both dividends will be paid on March 15, 2024, to shareholders of record as of February 29, 2024.
In an important development that aligns with Federal Reserve Board rules, Customers Bancorp has ceased using the three-month LIBOR as a reference rate for determining the dividend rate of its preferred stocks after June 30, 2023. This change impacts both the Series E Preferred Stock and Series F Preferred Stock.
Instead, the company has adopted a new reference rate in accordance with the Adjustable Interest Rate (the “LIBOR Act”) as dictated by the Federal Reserve Board. The three-month LIBOR has been replaced with the CME Term SOFR Reference Rate published for a three-month tenor.
The new reference rate, administered by CME Group Benchmark Administration Ltd., also includes an additional 0.26161 percent. This shift reflects changing regulatory standards and the ongoing transition away from LIBOR in the financial industry.
Starting with the dividend payment scheduled for March 15, 2024, the calculation agent will determine the dividend rate by adding a spread to this new reference rate. For the Series E Preferred Stock, the spread is 5.14% per annum, while for the Series F Preferred Stock, it’s 4.762% per annum.
While the shift in reference rate may seem complex, it is a routine adjustment that many banks are making in response to the global phase-out of LIBOR. It does not change the inherent value of Customers Bancorp’s preferred stocks or the company’s commitment to returning capital to shareholders through regular dividend payments.
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