Customers Bank Agrees to Acquire Student Checking Customers and Refund Management Disbursement Business From Higher One, Inc. - $42M In Cash

Customers Bancorp, Inc. ("Customers") CUBI, through its subsidiary Customers Bank, announced today that it will acquire the One Account Student Checking and Refund Management Disbursement Services business ("Disbursements") of Higher One, Inc. ("Higher One") -- the leading provider of refund disbursements to about 800 higher education campuses across the United States. The Disbursements business primarily provides educational institutions with a comprehensive turnkey technology-based solution for the disbursement of student financial aid to the students, through deposit accounts opened by students with Higher One's partner banks or to student accounts with other banks. Customers Bank has been a Higher One partner bank since August 2013. Approximately 2.0 million students currently have deposit accounts with Higher One's partner banks, and over 500,000 new student accounts are opened with partner banks annually. The Higher One business unit has processed over $70 billion in student refund payments over its 14 years of operations. Customers expects the acquired business unit to add about $65-75 million annually in mostly interchange income. In addition, Customers anticipates onboarding approximately $250 million of additional core demand deposits from students currently utilizing Higher One disbursement related bank accounts at another partner bank. Customers Bank intends to combine this new business with its BankMobile division offering state-of-the-art digital banking services to students across the country. "We are very enthusiastic about combining the Disbursements business with our BankMobile Technologies platform," stated Jay S. Sidhu, Chairman & CEO of Customers and BankMobile. "By providing a superior product that is easier to use and is more affordable, we hope to create an 'Uber like banking experience' at BankMobile." Customers and Higher One have entered into an Asset Purchase Agreement (the "Agreement") which includes non-compete, consulting services and transitions services provisions. Pursuant to the Agreement, Customers acquires all assets of the Disbursements business, including all property and equipment, existing contractual relationships with vendors and educational institutions, and all intellectual property, assumes certain normal business related liabilities, and commits to hire approximately 225 current Higher One employees primarily located in New Haven, Connecticut that manage the business and serve the customers. Customers intends to retain these team members in New Haven. Customers will pay Higher One an aggregate of $42 million in cash in connection with the acquisition of the Disbursements business. Under the Agreement, Customers will pay Higher One $17 million in cash at closing and make cash payments of $10 million each on the first and second anniversaries of the closing. Customers also will pay Higher One $5 million in cash for Higher One's services under a transition services agreement. Customers will not assume any regulatory compliance related liabilities for any possible violations of laws or regulations by Higher One identified prior to the closing date as a result of the Agreement. "We plan to leverage our strong Risk Management and Compliance functions and make that a strength for this business," stated Sidhu. The transaction must be approved by the Higher One stockholders, a vote of which is expected to occur in the first quarter of 2016. Customers believes the transaction will close by July 1, 2016, giving it enough time to ensure that the compliance and risk management functions and processes are strong and systems are fully compliant with new Department of Education rules. Customers launched its BankMobile business in January 2015 creating the first no-fee digital bank in the United States. "We believe it is important to provide middle class Americans and the underbanked and unbanked consumers a very attractive digital banking option. BankMobile currently offers no fee banking, lines of credit to qualified customers, and access to 55,000 ATMs across America for free, charges no overdraft fees and pays a higher than average interest rate for savings. We hope to bring all or most of these banking services to students across America in a favorable and supportive manner with absolute compliance with banking regulations and Department of Education rules regarding banking services for students," Sidhu continued. "The combined businesses will be reported prospectively in Customers' communications with investors as a separate business segment. The strategic combination of Customers' BankMobile business with the Disbursements business will provide about 2.0 million student depositors with the financial stability of a well-capitalized bank, state-of-the-industry deposit services and access to their money delivered nearly wherever and whenever the student needs them at no or low cost to the student, and provides Customers with the opportunity to become the bank of choice for life for the current student customers as well as many more future students," Sidhu continued. "Customers Bank's acquisition of the Disbursements business is a wonderful strategic transaction for Customers and will greatly accelerate the development and profitability of our BankMobile product offering," stated Sidhu. Sidhu continued, "This transaction, combined with our plans to combine BankMobile with the Disbursements business and charge students no or low fees to use the student deposit product, is uniquely structured to address consumer and banking compliance issues that have challenged this business for the past half-decade. With this combination we believe we will provide an extremely compliant 'best-in-class' deposit account for college students that includes a strong financial literacy and money management component. We look forward to welcoming our new team members and to building a really special business together. This acquisition is not expected to have a material impact to Customers core operating earnings or capital in 2016." Customers will host a call to discuss the Disbursements transaction on Wednesday, December 16, 2015 at 10:00 am ET. The call in information is presented below. In addition, a brief written presentation describing the transaction and the plan to combine BankMobile and the Disbursements business will be available at Customers Bancorp, Inc.'s website www.CustomersBank.com. Conference Call Date: Wednesday, December 16, 2015 Time: 10:00 am ET US Dial-in: 1-800-238-9007 Conference ID: 419408 For those unable to attend the live conference a replay of the call will be available at 1:00 pm December 16, 2015 through Wednesday, December 30, 2015 at 1 (888) 203-1112; remote replay passcode: 4770485. Customers Bancorp is being advised by the investment banking firms of Keefe, Bruyette & Woods, Inc., a Stifel Company, and UBS Investment Bank. Customers is using Stradley Ronon Stevens and Young, LLP as its corporate counsel and BuckleySandler LLP as its regulatory counsel.