Customers Bancorp in West Reading, Pa., has sold a $500 million portfolio of unsecured consumer installment loans.
The $20.3 billion-asset company disclosed in a regulatory filing that the loans were sold to an entity managed by a global asset manager with more than $100 billion in historical investment activity. The loans were sold at 99.5% of par value.
Customers will continue to act as master servicer for the sold loans.
Customers said its bank also bought $400 million of senior notes from a securitization collateralized by the loans that were sold.
“The transaction removes potential and perceived credit risk and reduces reinvestment risk by way of Customers … holding the senior notes in the securitization,” the filing said.
Following the sale, the credit profile of Customers’ remaining consumer installment portfolio strengthened, with a weighted average FICO score of 736 on Aug. 31.
Customer said the loan sale also reduced its risk-weighted assets, provided capital relief under current risk-based capital rules and will result in a significant CECL reserve release.
Morgan Stanley and Stradley Ronon Stevens & Young advised Customers.