Now that Customers Bank, which manages $3.5 billion in loans and investments from a handful of branches in Berks, Bucks and Chester Counties, plus outposts near Trenton and New York, has raised $100 million from Fidelity, Wellington and other big investors in a Nasdaq stock offering last week, founder Jay S. Sidhu is preparing to open offices in Philadelphia.
Not in Center City, which Sidhu's former $50 billion bank, Sovereign Bancorp, used to call home (though it was actually run, as is Customers, from Wyomissing, Pa.), before he was forced out in an ill-fated 2006 coup by activist investors that resulted in the company's sale to Spain's Banco Santander at a fraction of its former price .
Instead, "we will be catering to the African American and Hispanic commmunity," through a planned office in Northeast Philadlephia, a smaller business center in West Philadelphia, and a branch at a Germantown-area community center, Sidhu told me.
Catering, how? Sidhu says he's not interested in offering the masses through high-interest subprime mortgage loans, high-fee "secured" credit cards, or the other financial weapons by which American banks have lately separated people of modest means or damaged credit from extra cash.
Instead, he says he's lending to homebuyers with good credit, neighborhood apartment landlords, bodega owners, cleaning service crews, and other small and medium-sized businesses whose owners would rather bank by smartphone than crowd into branch offices. And he's making wholesale loans to apartment investors nationwide through a warehouse lending unit headed by former GE Capitla executive Glen Hedde." We're not putting our costs into brick and mortar, but into people," Sidhu says. "Codistefanonvenience has been redefined. We have all-appointment banking. We'll have offices, but very few. We can operate the company more and more efficiently."
Sidhu says he's sworn off "having lots of branches." He's not going to copy his old rival TD Bank (formerly Commerce) in building "on the most expensive street corner," or opening early and shutting late. That's expensive, and customers shouldn't have to pay for it, he adds: "We don't believe we need a Taj Mahal branch in downtown Philadelphia serving high-income, high-net-worth people," he told me. Too many banks are already fighting over Rittenhouse Square as it is.
The kernel of Customers was the former New Century (corrected) Bank, which Sidhu and his investors, including several of his former Sovereign directors, bought from Steve Forbes' brother-in-law five years ago. He's re-hired Dick Ehst, Jim Hogan and many other former Sovereign cronies (Customers' staff topped 250 last year, up from 200 the year before.) Customers has grown by acquisition, but only modestly; mostly Sidhu's team is collecting deposits and financing loans.
Sidhu doesn't expect to fund downtown developers like Carl Dranoff anytime soon. He's more focused on $20 million apartment-complex loans.
He plans to grow the company to as much as $10 billion over the next five years, with profits approaching $100 million a year, with a market value of orver $1 billion. On Thursday he'll ring the bell to start Nasdaq trading.