Cross River Bank is eyeing an initial public offering in 2025, President, Chairman and CEO Gilles Gade said this week on the sidelines of Money 20/20 in Las Vegas.
The Fort Lee, New Jersey-based financial services and banking firm views an IPO as the best way to create liquidity for its investors. “That’s the plan,” Gade said of a Nasdaq or NYSE listing in 2025. “We have to, or our investors won’t be very happy with me.”
Cross River’s backers include Eldridge and Andreessen Horowitz, which led its USD 620m funding round in March 2022. T. Rowe Price, Whale Rock and Hanaco Ventures participated in the round along with other previous investors and partners.
Since it was founded in 2008, Cross River has raised more than USD 700m in total and become a critical partner to many financial technology and cryptocurrency companies.
The firm powers lending and payments for more than 80 technology partners including Affirm, Coinbase, Divvy, Freedom Financial, Pay.com, Plaid, Rocket Loans and Stripe.
Cross River also has a commercial real estate division focused on the New York, New Jersey and Connecticut metro areas with loans ranging from USD 250,000 to USD 40m.
Given its position in financial services, Cross River has many banking relationships, but it is too early to speculate which firms it would hire to advise a possible IPO, Gade said.
The company was valued at more than USD 3bn in the 2022 financing round. It saw revenues spike prior to the raise as it became a major originator of COVID-19 relief loans. When those revenues rolled off its books, its net income took a substantial hit. T. Rowe Price slashed the valuation of its shares in Cross River by 26% in December 2022.
On the heels of Silicon Valley Bank, Signature Bank and First Republic Bank’s failures last spring, the Federal Deposit Insurance Corporation accused Cross River of “unsound banking practices” and ordered its board to increase supervision of the bank’s internal controls, credit underwriting and internal audit processes. Cross River’s board agreed to a remediation plan without admitting or denying fault.
Despite regulatory challenges and difficult market conditions, an industry executive said he believes Cross River can have success in the public market because it sits at the center of embedded finance and is a key player in the growing fintech and crypto industries.
Last week, Cross River announced its first broadly syndicated securitization, backed by USD 250m of personal loans originated by the bank through Upstart [NASDAQ:UPST].
Cross River has plans to expand internationally and may make acquisitions to accelerate that strategy, according to executive vice president and head of fintech banking Adam Goller. But its focus in the near term is on organic growth, he said.
The bank also invests in early stage fintech startups through Cross River Digital Ventures.
Although it does not disclose annual revenue or EBITDA margins, Cross River said in April it closed 1Q “strong and on target despite a turbulent macro environment.” In July, it said it closed 1H23 with loans totaling USD 66m and 100% growth in the number of originations compared to 1H22. Cross River has not commented on 3Q results.
FT Partners advised Cross River in its 2022 funding round. In last week’s securitization, Cross River was named the servicer for the transaction, with Upstart acting as sub-servicer while Goldman Sachs served as initial purchaser and structuring agent with Barclays and CRB Securities serving as initial purchasers and joint book-runners.
by Troy Hooper in Las Vegas
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