I don’t have a Harvard MBA, and neither does Jay Sidhu!
I’ve been poking around Customers Bancorp ($CUBI) for a long time. There is very little information on this bank. It’s big, but not huge. $21.3 billion in assets.
You should be familiar with what happened to Signature Bank, and Silvergate Bank. They were both crypto banks, and they both blew up spectacularly. Signature Bank is still haunting NY Community Bank. FTX blew up before Silvergate and Signature. As have many other crypto projects. Binance is now having issues, and at some point Tether, and the crypto bubble will collapse.
Customers Bancorp is basically the last US crypto bank standing, albeit very quietly. There is a small private bank named Cross River also in the crypto banking biz. CUBI used to highlight the performance of their Customers Bancorp Instant Token, but no longer mentions it at all in earnings reports. CBIT is basically a private “blockchain” conduit network, for crypto money to be moved in real dollars. You know, money people actually use. Like dollars, or euros. Signature Bank had SigNET, and Silvergate had SEN. All the same bullshit. Mostly, the thesis is that CUBI is going to suffer the same fate as Silvergate and Signature. There is a lot of great circumstantial evidence, as well as hard evidence, that CUBI will end up in FDIC receivership. Aka bankwupt. The brief history of shitty, 3rd tier-style banks that have dared to wade fully into crpyto is that things have ended very badly.
One of the more bizarre aspects of examining CUBI, was my discovery that Jay Sidhu had written an autobiographical book, entitled Never, Ever, Ever Give Up (NEEGU). My personal rating of this book is 0 out of 5 stars, although I did find several interesting tidbits, lies, tall tales, and possible/ likely inconsistencies that I will highlight here.
The biggest lie I found was Jay Sidhu claiming that he had the equivalent of a Harvard MBA, because he had taken over 10 classes (he says 14) at the Executive Ed program.
“If you attend at least ten leadership programs, you are considered the equivalent of a Harvard Business school MBA (with Harvard alumni status).” (page 62, NEEGU).
This is patently false. Not only is it obvious that the executive education programs have nothing to do with the MBA credential by just scrolling the website/ using common sense, just to be thorough, I emailed Harvard to confirm. Their response is below.
“Thank you for contacting Harvard Business School Executive Education. All HBS Executive Programs are, and have been, non-degree bearing. Participants in our programs receive a certificate of completion at the conclusion of their session. While not a degree, this certificate does indicate successful completion of an HBS Executive Education program.
The MBA program at HBS requires full-time attendance for two years. You can find more information about the MBA program on their website. “
So we know Jay is lying about his resume. Jay is the executive chairman of the bank. The son, Sam, is the Vice Chairman, President and Chief Executive Officer I don’t know about you, but, having your Executive Chairman making false claims about having “the equivalent,” of a Harvard MBA in his own autobiography, strikes me, as, at the very least, concerning. It’s downright bizarre. The claim is so obviously false and easily disproved, that one wonders why Jay would be crazy enough to make this claim? To my eyes, this sort of behavior, lying about a HBS MBA, fits right in with the crypto crowd. You know, shady characters, crooks, scam artists, etc. Nice work Jay.
Bluntly, most of Jay’s book is awful. At one point, he brags about driving a Porsche (page 22, NEEGU). This, my dear readers, is the level of devotion I have to this project. Half of it is filled with Jay recounting a hitchhiking trip from India to London with a friend when he was a teenager, in some supposed effort to spread world peace or something. Jay claims that he was on the BBC for his efforts, but “Lost the newspaper clipping.”
(page 31 NEEGU)
Page 32: “My mom saved the newspaper clipping. I wish I knew where it was now.”
Me too Jay, me too. Isn’t it convenient that the newspaper clipping was lost? I mean, who cares, he’s talking about his dumb teenage hitchhiking trip, but, once you know the guy is lying about getting a Harvard MBA, it becomes harder to believe things like going on the BBC and losing the newspaper clipping, ya know?
There’s lots of hard to believe stuff in NEEGU, including a personal teenage meeting with Indira Ghandi, where supposedly Jay asks Indira for money to fund his escapades, a cop apologizing to Jay for arresting him, smuggling a gun, and making bombs in Vietnam.
Jay characterizes the gun smuggling as heroic, because it was a present to his father. Jay devotes an entire chapter to his gun purchase in Kabul, which he then smuggled to India. Chapter 5 title “The Way Home: Buying a Gun in Kabul.” I don’t know about you, but, personally, gun smuggling is not something I consider heroic, let alone becoming of a bank executive! Either he lied about smuggling a gun, or he actually smuggled a firearm. Neither is great!
Jay also made bombs for Vietnam (page 50 NEEGU), but doesn’t wanna talk about that as much as he wants to talk about his gun smuggling.
There’s so much hot air in Jay’s book, that I don’t want to overwhelm the reader. I could go on and on. I think the fake Harvard MBA, gun smuggling, and bomb making is enough for now.
The last thing I will tie back to the book, is Jay’s bragging about how himself and his children were all CEOs, a “historic” achievement. As noted already, Jay’s son Sam is now also with Customer’s Bancorp, after a stint at Megalith Capital. Jay’s daughter, Luvleen, runs Bank Mobile Technologies (ticker BMTX).
When one googles Megalith Capital, the first result is this document. Sure, technically Sam, Luvleen, and Jay, all hold or held CEO titles. But, it’s all under the umbrella of Customer’s Bancorp! Jay is in charge of the umbrella organization, while Sam runs the bank. I also found this press release about Customer’s acquisition of Bank Mobile, which is more digestible.
“The business combination transaction reflects an enterprise value for the Company of approximately $140 million. Customers Bank is to receive approximately $97 million in consideration comprised of cash, stock in the Company, and approximately $10 million in value attributed to a new technology license with BMT…
The balance of the consideration will consist of shares of common stock in the combined Company, each to be valued at $10.38 per share. Customers Bank is expected to remain the largest investor in the Company by rolling over significant equity into the combined Company. Customers Bank will be subject to a standard lock-up period, but plans to reduce its ownership stake in BM Technologies gradually after the closing of the transaction.
In light of the relationship between MFAC’s sponsor and certain officers and directors of BankMobile’s ultimate parent entity Customers Bankcorp Inc. (“CUBI”), both MFAC and CUBI appointed special committees consisting of independent directors with full access to counsel and financial advisors. The special committees of each party reviewed this transaction and made unanimous recommendations to their respective boards of directors for approval.”
MFAC, was Sam’s blank check company. Customer’s made sure to appoint some (super, super) independent special committees to make sure the deal was legit, along with financial advisors. The results of this deal speak for themselves. The advisors did a terrible job. $BMTX currently trades for around $2, a huge drop from the $10.34 deal closing price. It’s hard to say how many millions $CUBI may have lost on this deal, but I suspect it was at least in the tens of millions. With a huge helping of nepotism to boot. Nice work $CUBI!
Getting back to CBIT, it’s essentially the invisible, last crypto-US dollar pipeline that has not yet been blown up either by the inherent nature of crypto, or regulators.
25%, $4.4 billion, of CUBI assets are non-interest bearing (p. 11). According to $CUBI, the most recent info I could find was $2.2 billion, or 12.5% of deposits, are crypto. So just about half of their non-interest bearing deposits, aka their most profitable deposits, are crypto. Non-interest bearing deposits are great for banks, especially these days, because just buying treasuries gives you a solid yield, and with even just a conservative, traditional banking home loan, you can make 6-7% no problem. All of that money could evaporate at any time once this whole crypto charade ends. In my opinion, it’s going to happen in the next couple of years if not much sooner. Imminently. Sometime between tomorrow and the next few years.
Another interesting tidbit, is that, CUBI is loaded up with FHLB loans. FHLB loans, without getting too into it, are at the tippy top of the “capital stack.” Basically, the government entity FHLB is getting paid before basically anyone else. And, CUBI has $1,449,728 in equity capital (p. 33), and $1.2 billion in FHLB loans (p. 12).
One can see how those numbers are very close together. CUBI does not have a whole lot of wiggle room, if, say, some of their $4.4 billion in non-interest bearing deposits leaves.
With that, I’ve pretty much made my case. I don’t have any special skills. I don’t have access to anybody at the bank, nor do I have any interest in talking to anybody at the bank, really. I just read Jay’s book and am using common sense. CUBI is a POS bank (not an official S&P rating) that very few people have heard of, and if/when it goes away, won’t be super news worthy beyond the fact that it was a crypto bank.
One of Jay’s last banks, Sovereign Banc, let’s just say it did not end that well in the 08 financial crisis. Customer’s Bancorp also “fueled rampant PPP fraud,” according to a congressional report.
With the stock having gone up a ton in 2023, I think we have all of the ingredients here for a stock crash if/when things go bad at CUBI. People can do whatever they want, but at least they will have been sufficiently warned about the possibility of a disaster unfolding with CUBI. The leadership a CUBI seems to be extremely questionable.
The FDIC also might want to have their checkbooks and bank shutdown team reader to travel to Pennsylvania at some point soon. I suspect their services will be required.
Needless to say, regional banks are under pressure regardless.