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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): January 25, 2024
(Exact name of registrant as specified in its charter)
| | | | | | | | |
Pennsylvania | 001-35542 | 27-2290659 |
(State or other jurisdiction of incorporation or organization) | (Commission File number) | (IRS Employer Identification No.) |
701 Reading Avenue
West Reading PA 19611
(Address of principal executive offices, including zip code)
(610) 933-2000
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instructions A.2. below): | | | | | |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
|
Securities registered pursuant to Section 12(g) of the Act: | | | | | | | | | | | | | | |
Title of Each Class | | Trading Symbols | | Name of Each Exchange on which Registered |
Voting Common Stock, par value $1.00 per share | | CUBI | | New York Stock Exchange |
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Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series E, par value $1.00 per share | | CUBI/PE | | New York Stock Exchange |
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, par value $1.00 per share | | CUBI/PF | | New York Stock Exchange |
5.375% Subordinated Notes due 2034 | | CUBB | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On January 25, 2024, Customers Bancorp, Inc. (the "Company") issued a press release announcing unaudited financial information for the quarter ended December 31, 2023, a copy of which is included as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
Item 7.01 Regulation FD Disclosure
The Company has posted to its website a slide presentation which is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K and incorporated into this Item 7.01 by reference.
The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto and incorporated by reference into Item 2.02 and Item 7.01, respectively, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, such information, including the exhibits attached hereto, shall not be deemed incorporated by reference into any of the Company's reports or filings with the SEC, whether made before or after the date hereof, except as expressly set forth by specific reference in such report or filing. The information in this Current Report on Form 8-K, including the exhibits attached hereto, shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits. | | | | | | | | |
Exhibit | | Description |
| | Press Release dated January 25, 2024 |
| | Slide presentation dated January 2024 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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| CUSTOMERS BANCORP, INC. |
| |
| By: /s/ Carla A. Leibold |
| Name: Carla A. Leibold |
| Title: Executive Vice President - Chief Financial Officer |
Date: January 25, 2024
EXHIBIT INDEX
| | | | | | | | |
Exhibit No. | | Description |
| | Press Release dated January 25, 2024 |
| | Slide presentation dated January 2024 |
Exhibit 99.1
Customers Bancorp, Inc. (NYSE:CUBI)
701 Reading Avenue
West Reading, PA 19611
Contact:
David W. Patti, Communications Director 610-451-9452
Customers Bancorp Reports Results for Fourth Quarter and Full Year 2023
Fourth Quarter 2023 Highlights
•Q4 2023 net income available to common shareholders was $58.2 million, or $1.79 per diluted share; ROAA was 1.16% and ROCE was 15.93%.
•Q4 2023 core earnings* were $61.6 million, or $1.90 per diluted share; Core ROAA* was 1.22% and Core ROCE* was 16.87%.
•CET 1 capital ratio of 12.2%1 at December 31, 2023, compared to 11.3% at September 30, 2023, surpassing 11.0% - 11.5% target.
•TCE / TA ratio* of 7.0% at December 31, 2023, compared to 6.5% at September 30, 2023, achieving stated target.
•Q4 2023 net interest margin, tax equivalent (“NIM”) was 3.31%, compared to Q3 2023 NIM of 3.70%. Q3 2023 NIM included the benefit of outsized discount accretion of roughly 50 basis points. Normalizing for this outsized accretion, Q4 2023 NIM expanded by 11 basis points.
•Total deposits decreased by $275.1 million in Q4 2023 from Q3 2023 with a significant positive mix shift. Q4 2023 core deposit growth of $1.1 billion funded in part the repayment of maturing wholesale CDs of $0.7 billion and the planned outflow of student-related deposit accounts serviced by BMTX of $0.6 billion.
•Total estimated insured deposits were 77%2 of total deposits at December 31, 2023, with immediately available liquidity covering uninsured deposits by approximately 202%.
•Non-performing assets were $27.2 million, or 0.13% of total assets, at December 31, 2023 compared to 0.14% at September 30, 2023. Allowance for credit losses on loans and leases equaled 499% of non-performing loans at December 31, 2023, compared to 466% at September 30, 2023.
•Q4 2023 provision for credit losses on loans and leases of $13.4 million was lower than Q3 2023 largely driven by lower balances in loans held for investment.
•Q4 2023 book value per share and tangible book value per share* both grew by approximately $2.26, or 5.0% over Q3 2023, driven by strong quarterly earnings combined with decreased AOCI losses of $13.2 million over the same time period.
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*Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
1 Regulatory capital ratios as of December 31, 2023 are estimates. |
2 Uninsured deposits (estimate) of $5.4 billion to be reported on the Bank's call report, less deposits of $1.1 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $118.0 million. |
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Full Year 2023 Highlights
•2023 net income available to common shareholders was $235.4 million, or $7.32 per diluted share; ROAA was 1.16% and ROCE was 17.33%.
•2023 core earnings* were $248.2 million, or $7.72 per diluted share; Core ROAA* was 1.22% and Core ROCE* was 18.27%.
•Record 2023 net interest income of $687.4 million.
•CET 1 capital ratio of 12.2%1 at December 31, 2023, compared to 9.6% at December 31, 2022, surpassing 11.0% - 11.5% target.
•TCE / TA ratio* of 7.0% at December 31, 2023, compared to 6.0% at December 31, 2022.
•2023 NIM was 3.29%, an increase of 10 basis points over 2022 NIM of 3.19%.
•Non-performing assets were $27.2 million, or 0.13% of total assets, at December 31, 2023 compared to $30.8 million, or 0.15% of total assets, at December 31, 2022. Allowance for credit losses on loans and leases equaled 499% of non-performing loans at December 31, 2023, compared to 426% at December 31, 2022.
•Book value per share and tangible book value per share* grew year over year by approximately $8.65 or 22.1%, driven by strong 2023 annual earnings combined with the decreased AOCI losses of $26.5 million over the same time period. Tangible book value per share* has grown at a 15% compound annual growth rate (CAGR) over the past 5 years, significantly higher than the regional bank peer median3 of 4%.
•Repurchased 1,379,883 common shares at a weighted-average price of $28.58 for $39.8 million in 2023.
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*Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document. |
1 Regulatory capital ratios as of December 31, 2023 are estimates. |
2 Uninsured deposits (estimate) of $5.4 billion to be reported on the Bank's call report, less deposits of $1.1 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $118.0 million. |
3 Regional bank peers based on selected 2023 proxy peers with a reporting date on or before January 24, 2024 before market close. |
CEO Commentary
West Reading, PA, January 25, 2024 - “We are pleased to share our fourth quarter and full year 2023 results as we continued to execute on our strategic priorities and delivered again for shareholders,” said Customers Bancorp Chairman and CEO Jay Sidhu. “While the banking industry has stabilized following the challenges in early 2023, higher interest rates and less liquidity in the banking system remain headwinds for all banks. We again demonstrated the sustainability of our differentiated deposit franchise by growing core deposits by $1.1 billion in the fourth quarter which funded in part the repayment of maturing wholesale CDs of $743 million and the planned outflow of student-related deposit accounts serviced by BMTX totaling approximately $637 million. Additional liquidity inflows primarily from sales of investment securities were used to payoff $340 million in callable FHLB advances. The core deposit growth was again broad-based with more than 20 different channels increasing balances and roughly half contributing $25 million or more. Non-interest bearing deposits as a percentage of total deposits remained relatively flat at 25%. Excluding the outsized accretion we experienced in the third quarter, our net interest margin continued to expand in the fourth quarter in contrast to the industry trends. Capital levels continued to increase substantially as evidenced by two consecutive quarters with a 50 basis point increase in our TCE / TA ratio* and a 90 basis point increase in our CET 1 ratio. In the last three quarters, we have increased our TCE / TA ratio* by 110 basis points to 7.0% and our CET 1 ratio by 260 basis points to 12.2%. We remain well-positioned to continue strengthening our deposit franchise, improve our profitability, and maintain our capital ratios,” stated Jay Sidhu.
“Our Q4 2023 GAAP earnings were $58.2 million, or $1.79 per diluted share, and core earnings were $61.6 million, or $1.90 per diluted share, considerably above consensus estimates. At December 31, 2023, our deposit base was well diversified, with approximately 77%2 of total deposits insured. We maintain a strong liquidity position, with $8.5 billion of liquidity immediately available, which covers approximately 202% of uninsured deposits2 and our loan to deposit ratio was 74%. We continue to focus loan production where we have a holistic and primary relationship. We are seeing attractive new origination opportunities. We have ample liquidity and capital, which we plan to deploy in 2024, to support the needs of our customers. At December 31, 2023, we had $3.8 billion of cash on hand, which we believe is prudent balance sheet and liquidity management in the current environment. Asset quality remains exceptional with our NPA ratio down slightly at just 0.13% of total assets and reserve levels are robust at over 499% of total non-performing loans at the end of Q4 2023. Our exposure to higher risk commercial real estate such as the office and retail sectors is minimal, each representing only 1% of the loan portfolio. Continued execution on our strategic priorities has positioned us favorably for success in 2024 from a capital, credit, liquidity, interest rate risk and earnings perspective. We will remain disciplined, but opportunistic, with our balance sheet capacity to minimize risk and maintain robust capital levels. We are extremely proud of the progress we made in 2023 and are confident in our risk management capabilities and ability to provide excellent service to our clients in all operating environments. We are excited and optimistic about the opportunities in 2024 and beyond,” Jay Sidhu continued.
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*Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
1 Regulatory capital ratios as of December 31, 2023 are estimates. |
2 Uninsured deposits (estimate) of $5.4 billion to be reported on the Bank's call report, less deposits of $1.1 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $118.0 million. |
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Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands, except per share data) | | At or Three Months Ended | | Increase (Decrease) | | | | |
| December 31, 2023 | | September 30, 2023 | | | | | | |
Profitability Metrics: | | | | | | | | | | | | | | | | |
Net income available for common shareholders | | $ | 58,223 | | | $ | 82,953 | | | $ | (24,730) | | | (29.8) | % | | | | | | | | |
Diluted earnings per share | | $ | 1.79 | | | $ | 2.58 | | | $ | (0.79) | | | (30.6) | % | | | | | | | | |
Core earnings* | | $ | 61,633 | | | $ | 83,294 | | | $ | (21,661) | | | (26.0) | % | | | | | | | | |
Core earnings per share* | | $ | 1.90 | | | $ | 2.59 | | | $ | (0.69) | | | (26.6) | % | | | | | | | | |
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| | | | | | | | | | | | | | | | |
Return on average assets (“ROAA”) | | 1.16 | % | | 1.57 | % | | (0.41) | | | | | | | | | | | |
Core ROAA* | | 1.22 | % | | 1.57 | % | | (0.35) | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Return on average common equity (“ROCE”) | | 15.93 | % | | 23.97 | % | | (8.04) | | | | | | | | | | | |
Core ROCE* | | 16.87 | % | | 24.06 | % | | (7.19) | | | | | | | | | | | |
Adjusted pre-tax pre-provision net income* | | $ | 101,884 | | | $ | 128,564 | | | $ | (26,680) | | | (20.8) | % | | | | | | | | |
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Net interest margin, tax equivalent | | 3.31 | % | | 3.70 | % | | (0.39) | | | | | | | | | | | |
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Yield on loans (Loan yield) | | 7.30 | % | | 7.87 | % | | (0.57) | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Cost of deposits | | 3.39 | % | | 3.24 | % | | 0.15 | | | | | | | | | | | |
Efficiency ratio | | 49.08 | % | | 41.01 | % | | 8.07 | | | | | | | | | | | |
Core efficiency ratio* | | 46.70 | % | | 41.04 | % | | 5.66 | | | | | | | | | | | |
Non-interest expense to average total assets | | 1.75 | % | | 1.62 | % | | 0.13 | | | | | | | | | | | |
Core non-interest expense to average total assets* | | 1.67 | % | | 1.62 | % | | 0.05 | | | | | | | | | | | |
Balance Sheet Trends: | | | | | | | | | | | | | | | | |
Total assets | | $ | 21,316,265 | | | $ | 21,857,152 | | | $ | (540,887) | | | (2.5) | % | | | | | | | | |
Total cash and investment securities | | $ | 7,355,156 | | | $ | 7,371,551 | | | $ | (16,395) | | | (0.2) | % | | | | | | | | |
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Total loans and leases | | $ | 13,202,084 | | | $ | 13,713,482 | | | $ | (511,398) | | | (3.7) | % | | | | | | | | |
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Non-interest bearing demand deposits | | $ | 4,422,494 | | | $ | 4,758,682 | | | $ | (336,188) | | | (7.1) | % | | | | | | | | |
Total deposits | | $ | 17,920,236 | | | $ | 18,195,364 | | | $ | (275,128) | | | (1.5) | % | | | | | | | | |
Capital Metrics: | | | | | | | | | | | | | | | | |
Common Equity | | $ | 1,500,600 | | | $ | 1,423,813 | | | $ | 76,787 | | | 5.4 | % | | | | | | | | |
Tangible Common Equity* | | $ | 1,496,971 | | | $ | 1,420,184 | | | $ | 76,787 | | | 5.4 | % | | | | | | | | |
Common Equity to Total Assets | | 7.0 | % | | 6.5 | % | | 0.5 | | | | | | | | | | | |
Tangible Common Equity to Tangible Assets* | | 7.0 | % | | 6.5 | % | | 0.5 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Book Value per common share | | $ | 47.73 | | | $ | 45.47 | | | $ | 2.26 | | | 5.0 | % | | | | | | | | |
Tangible Book Value per common share* | | $ | 47.61 | | | $ | 45.36 | | | $ | 2.25 | | | 5.0 | % | | | | | | | | |
Common equity Tier 1 capital ratio (1) | | 12.2 | % | | 11.3 | % | | 0.9 | | | | | | | | | | | |
Total risk based capital ratio (1) | | 15.3 | % | | 14.3 | % | | 1.0 | | | | | | | | | | | |
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(1) Regulatory capital ratios as of December 31, 2023 are estimates. |
*Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
Financial Highlights
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(Dollars in thousands, except per share data) | | | | | | At or Three Months Ended | | Increase (Decrease) | | Twelve Months Ended | | Increase (Decrease) |
| | | | | | December 31, 2023 | | December 31, 2022 | | | December 31, 2023 | | December 31, 2022 | |
Profitability Metrics: | | | | | | | | | | | | | | | | | | | | | | | | |
Net income available for common shareholders | | | | | | | | | | $ | 58,223 | | | $ | 25,623 | | | $ | 32,600 | | | 127.2 | % | | $ | 235,448 | | | $ | 218,402 | | | $ | 17,046 | | | 7.8 | % |
Diluted earnings per share | | | | | | | | | | $ | 1.79 | | | $ | 0.77 | | | $ | 1.02 | | | 132.5 | % | | $ | 7.32 | | | $ | 6.51 | | | $ | 0.81 | | | 12.4 | % |
Core earnings* | | | | | | | | | | $ | 61,633 | | | $ | 39,368 | | | $ | 22,265 | | | 56.6 | % | | $ | 248,233 | | | $ | 256,415 | | | $ | (8,182) | | | (3.2) | % |
Core earnings per share* | | | | | | | | | | $ | 1.90 | | | $ | 1.19 | | | $ | 0.71 | | | 59.7 | % | | $ | 7.72 | | | $ | 7.63 | | | $ | 0.09 | | | 1.2 | % |
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Return on average assets (“ROAA”) | | | | | | | | | | 1.16 | % | | 0.55 | % | | 0.61 | | | | | 1.16 | % | | 1.13 | % | | 0.03 | | | |
Core ROAA* | | | | | | | | | | 1.22 | % | | 0.81 | % | | 0.41 | | | | | 1.22 | % | | 1.32 | % | | (0.10) | | | |
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Return on average common equity (“ROCE”) | | | | | | | | | | 15.93 | % | | 8.05 | % | | 7.88 | | | | | 17.33 | % | | 17.40 | % | | (0.07) | | | |
Core ROCE* | | | | | | | | | | 16.87 | % | | 12.36 | % | | 4.51 | | | | | 18.27 | % | | 20.43 | % | | (2.16) | | | |
Adjusted pre-tax pre-provision net income* | | | | | | | | | | $ | 101,884 | | | $ | 81,377 | | | $ | 20,507 | | | 25.2 | % | | $ | 416,563 | | | $ | 400,712 | | | $ | 15,851 | | | 4.0 | % |
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Net interest margin, tax equivalent | | | | | | | | | | 3.31 | % | | 2.67 | % | | 0.64 | | | | | 3.29 | % | | 3.19 | % | | 0.10 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Yield on loans (Loan yield) | | | | | | | | | | 7.30 | % | | 5.64 | % | | 1.66 | | | | | 7.16 | % | | 5.00 | % | | 2.16 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Cost of deposits | | | | | | | | | | 3.39 | % | | 2.73 | % | | 0.66 | | | | | 3.27 | % | | 1.31 | % | | 1.96 | | | |
Efficiency ratio | | | | | | | | | | 49.08 | % | | 49.20 | % | | (0.12) | | | | | 46.49 | % | | 44.81 | % | | 1.68 | | | |
Core efficiency ratio* | | | | | | | | | | 46.70 | % | | 49.12 | % | | (2.42) | | | | | 45.45 | % | | 43.02 | % | | 2.43 | | | |
Non-interest expense to average total assets | | | | | | | | | | 1.75 | % | | 1.50 | % | | 0.25 | | | | | 1.64 | % | | 1.51 | % | | 0.13 | | | |
Core non-interest expense to average total assets* | | | | | | | | | | 1.67 | % | | 1.50 | % | | 0.17 | | | | | 1.62 | % | | 1.50 | % | | 0.12 | | | |
Balance Sheet Trends: | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | | | | | | | | | $ | 21,316,265 | | | $ | 20,896,112 | | | $ | 420,153 | | | 2.0 | % | | | | | | | | |
Total cash and investment securities | | | | | | | | | | $ | 7,355,156 | | | $ | 4,283,565 | | | $ | 3,071,591 | | | 71.7 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total loans and leases | | | | | | | | | | $ | 13,202,084 | | | $ | 15,794,671 | | | $ | (2,592,587) | | | (16.4) | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Non-interest bearing demand deposits | | | | | | | | | | $ | 4,422,494 | | | $ | 1,885,045 | | | $ | 2,537,449 | | | 134.6 | % | | | | | | | | |
Total deposits | | | | | | | | | | $ | 17,920,236 | | | $ | 18,156,953 | | | $ | (236,717) | | | (1.3) | % | | | | | | | | |
Capital Metrics: | | | | | | | | | | | | | | | | | | | | | | | | |
Common Equity | | | | | | | | | | $ | 1,500,600 | | | $ | 1,265,167 | | | $ | 235,433 | | | 18.6 | % | | | | | | | | |
Tangible Common Equity* | | | | | | | | | | $ | 1,496,971 | | | $ | 1,261,538 | | | $ | 235,433 | | | 18.7 | % | | | | | | | | |
Common Equity to Total Assets | | | | | | | | | | 7.0 | % | | 6.0 | % | | 1.0 | | | | | | | | | | | |
Tangible Common Equity to Tangible Assets* | | | | | | | | | | 7.0 | % | | 6.0 | % | | 1.0 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Book Value per common share | | | | | | | | | | $ | 47.73 | | | $ | 39.08 | | | $ | 8.65 | | | 22.1 | % | | | | | | | | |
Tangible Book Value per common share* | | | | | | | | | | $ | 47.61 | | | $ | 38.97 | | | $ | 8.64 | | | 22.2 | % | | | | | | | | |
Common equity Tier 1 capital ratio (1) | | | | | | | | | | 12.2 | % | | 9.6 | % | | 2.6 | | | | | | | | | | | |
Total risk based capital ratio (1) | | | | | | | | | | 15.3 | % | | 12.2 | % | | 3.1 | | | | | | | | | | | |
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(1) Regulatory capital ratios as of December 31, 2023 are estimates. |
*Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
Key Balance Sheet Trends
Loans and Leases
The following table presents the composition of total loans and leases as of the dates indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | December 31, 2023 | | % of Total | | September 30, 2023 | | % of Total | | December 31, 2022 | | % of Total |
Loans and Leases Held for Investment | | | | | | | | | | | |
Commercial: | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial & industrial: | | | | | | | | | | | |
Specialty lending | $ | 5,006,693 | | | 38.9 | % | | $ | 5,422,161 | | | 40.0 | % | | $ | 5,412,887 | | | 35.0 | % |
Other commercial & industrial | 1,087,582 | | | 8.5 | | | 1,115,364 | | | 8.2 | | | 1,135,336 | | | 7.4 | |
Loans to mortgage companies | 1,014,742 | | | 7.9 | | | 1,042,549 | | | 7.7 | | | 1,447,919 | | | 9.4 | |
Multifamily | 2,138,622 | | | 16.6 | | | 2,130,213 | | | 15.7 | | | 2,213,019 | | | 14.3 | |
Commercial real estate owner occupied | 797,319 | | | 6.2 | | | 794,815 | | | 5.9 | | | 885,339 | | | 5.7 | |
Loans receivable, PPP | 74,735 | | | 0.6 | | | 137,063 | | | 1.0 | | | 998,153 | | | 6.5 | |
Commercial real estate non-owner occupied | 1,177,650 | | | 9.2 | | | 1,178,203 | | | 8.7 | | | 1,290,730 | | | 8.3 | |
Construction | 166,393 | | | 1.2 | | | 252,588 | | | 1.8 | | | 162,009 | | | 1.0 | |
Total commercial loans and leases | 11,463,736 | | | 89.1 | | | 12,072,956 | | | 89.0 | | | 13,545,392 | | | 87.6 | |
Consumer: | | | | | | | | | | | |
Residential | 484,435 | | | 3.8 | | | 483,133 | | | 3.6 | | | 497,952 | | | 3.3 | |
Manufactured housing | 38,670 | | | 0.3 | | | 40,129 | | | 0.3 | | | 45,076 | | | 0.3 | |
| | | | | | | | | | | |
Installment: | | | | | | | | | | | |
Personal | 555,533 | | | 4.3 | | | 629,843 | | | 4.6 | | | 964,641 | | | 6.2 | |
Other | 319,393 | | | 2.5 | | | 337,053 | | | 2.5 | | | 413,298 | | | 2.7 | |
Total installment loans | 874,926 | | | 6.8 | | | 966,896 | | | 7.1 | | | 1,377,939 | | | 8.9 | |
| | | | | | | | | | | |
Total consumer loans | 1,398,031 | | | 10.9 | | | 1,490,158 | | | 11.0 | | | 1,920,967 | | | 12.4 | |
Total loans and leases held for investment | $ | 12,861,767 | | | 100.0 | % | | $ | 13,563,114 | | | 100.0 | % | | $ | 15,466,359 | | | 100.0 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
Loans Held for Sale | | | | | | | | | | | |
Commercial: | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Multifamily | $ | — | | | — | % | | $ | — | | | — | % | | $ | 4,079 | | | 1.2 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Commercial real estate non-owner occupied | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | |
Total commercial loans and leases | — | | | — | | | — | | | — | | | 4,079 | | | 1.2 | |
Consumer: | | | | | | | | | | | |
Residential | 1,215 | | | 0.3 | | | 1,005 | | | 0.7 | | | 829 | | | 0.3 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Installment: | | | | | | | | | | | |
Personal | 151,040 | | | 44.4 | | | 124,848 | | | 83.0 | | | 133,801 | | | 40.8 | |
Other | 188,062 | | | 55.3 | | | 24,515 | | | 16.3 | | | 189,603 | | | 57.8 | |
Total installment loans | 339,102 | | | 99.7 | | | 149,363 | | | 99.3 | | | 323,404 | | | 98.6 | |
| | | | | | | | | | | |
Total consumer loans | 340,317 | | | 100.0 | | | 150,368 | | | 100.0 | | | 324,233 | | | 98.8 | |
Total loans held for sale | $ | 340,317 | | | 100.0 | % | | $ | 150,368 | | | 100.0 | % | | $ | 328,312 | | | 100.0 | % |
| | | | | | | | | | | |
Total loans and leases portfolio | $ | 13,202,084 | | | | | $ | 13,713,482 | | | | | $ | 15,794,671 | | | |
Loans and Leases Held for Investment
Loans and leases held for investment were $12.9 billion at December 31, 2023, down $701.3 million, or 5.2%, from September 30, 2023. Specialty lending decreased $415.5 million, or 7.7% quarter-over-quarter, to $5.0 billion. Construction loans decreased $86.2 million, or 34.1% quarter-over-quarter, to $166.4 million. Loans to mortgage companies decreased $27.8 million, or 2.7% quarter-over-quarter due to lower mortgage activity. Consumer installment loans held for investment decreased $92.0 million, or 9.5% quarter-over-quarter, to $874.9 million due to the continued build out of the held-for-sale strategy and de-risking of the held-for-investment loan portfolio in 2023.
Loans and leases held for investment of $12.9 billion at December 31, 2023 was down $2.6 billion, or 16.8%, year-over-year, largely driven by reduced balances in PPP loans of $923.4 million, consumer installment loans of $503.0 million, or 36.5% year-over-year, loans to mortgage companies of $433.2 million and specialty lending of $406.2 million.
Loans Held for Sale
Loans held for sale increased $189.9 million quarter-over-quarter, and were $340.3 million at December 31, 2023 due to the continued build out of the held-for-sale strategy in 2023.
Allowance for Credit Losses on Loans and Leases
The following table presents the allowance for credit losses on loans and leases as of the dates and for the periods presented: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| At or Three Months Ended | | Increase (Decrease) | | At or Three Months Ended | | Increase (Decrease) | | | | |
(Dollars in thousands) | December 31, 2023 | | September 30, 2023 | | | December 31, 2023 | | December 31, 2022 | | | | | | |
Allowance for credit losses on loans and leases | $ | 135,311 | | | $ | 139,213 | | | $ | (3,902) | | | $ | 135,311 | | | $ | 130,924 | | | $ | 4,387 | | | | | | | |
Provision (benefit) for credit losses on loans and leases | $ | 13,420 | | | $ | 17,055 | | | $ | (3,635) | | | $ | 13,420 | | | $ | 27,891 | | | $ | (14,471) | | | | | | | |
Net charge-offs from loans held for investment | $ | 17,322 | | | $ | 17,498 | | | $ | (176) | | | $ | 17,322 | | | $ | 27,164 | | | $ | (9,842) | | | | | | | |
| | | | | | | | | | | | | | | | | |
Annualized net charge-offs to average loans and leases | 0.51 | % | | 0.50 | % | | | | 0.51 | % | | 0.70 | % | | | | | | | | |
Coverage of credit loss reserves for loans and leases held for investment | 1.13 | % | | 1.10 | % | | | | 1.13 | % | | 0.93 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
|
|
Net charge-offs were relatively stable with $17.3 million in Q4 2023, compared to $17.5 million in Q3 2023 and decreased compared to $27.2 million in Q4 2022.
Provision (benefit) for Credit Losses
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Increase (Decrease) | | Three Months Ended | | Increase (Decrease) | | | | |
(Dollars in thousands) | December 31, 2023 | | September 30, 2023 | | | December 31, 2023 | | December 31, 2022 | | | | | | |
Provision for credit losses on loans and leases | $ | 13,420 | | | $ | 17,055 | | | $ | (3,635) | | | $ | 13,420 | | | $ | 27,891 | | | $ | (14,471) | | | | | | | |
Provision (benefit) for credit losses on available for sale debt securities | 103 | | | 801 | | | (698) | | | 103 | | | 325 | | | (222) | | | | | | | |
| | | | | | | | | | | | | | | | | |
Provision for credit losses | 13,523 | | | 17,856 | | | (4,333) | | | 13,523 | | | 28,216 | | | (14,693) | | | | | | | |
Provision (benefit) for credit losses on unfunded commitments | (136) | | | 48 | | | (184) | | | (136) | | | 153 | | | (289) | | | | | | | |
Total provision for credit losses | $ | 13,387 | | | $ | 17,904 | | | $ | (4,517) | | | $ | 13,387 | | | $ | 28,369 | | | $ | (14,982) | | | | | | | |
The provision for credit losses on loans and leases in Q4 2023 was $13.4 million, compared to $17.1 million in Q3 2023 and $27.9 million in Q4 2022. The lower provision in Q4 2023 was primarily due to lower balances in loans held for investment.
The provision for credit losses on available for sale investment securities in Q4 2023 was $0.1 million, compared to provision of $0.8 million in Q3 2023 and $0.3 million in Q4 2022.
Asset Quality
The following table presents asset quality metrics as of the dates indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | December 31, 2023 | | September 30, 2023 | | Increase (Decrease) | | December 31, 2023 | | December 31, 2022 | | Increase (Decrease) |
Non-performing assets (“NPAs”): | | | | | | | | | | | |
Nonaccrual / non-performing loans (“NPLs”) | $ | 27,110 | | | $ | 29,867 | | | $ | (2,757) | | | $ | 27,110 | | | $ | 30,737 | | | $ | (3,627) | |
Non-performing assets | $ | 27,209 | | | $ | 29,970 | | | $ | (2,761) | | | $ | 27,209 | | | $ | 30,783 | | | $ | (3,574) | |
NPLs to total loans and leases | 0.21 | % | | 0.22 | % | | | | 0.21 | % | | 0.19 | % | | |
Reserves to NPLs | 499.12 | % | | 466.11 | % | | | | 499.12 | % | | 425.95 | % | | |
NPAs to total assets | 0.13 | % | | 0.14 | % | | | | 0.13 | % | | 0.15 | % | | |
| | | | | | | | | | | |
Loans and leases (1) risk ratings: | | | | | | | | | | | |
Commercial loans and leases (2) | | | | | | | | | | | |
Pass | $ | 9,955,243 | | | $ | 10,503,731 | | | $ | (548,488) | | | $ | 9,955,243 | | | $ | 10,793,980 | | | $ | (838,737) | |
Special Mention | 196,182 | | | 189,329 | | | 6,853 | | | 196,182 | | | 138,829 | | | 57,353 | |
Substandard | 339,664 | | | 280,267 | | | 59,397 | | | 339,664 | | | 291,118 | | | 48,546 | |
| | | | | | | | | | | |
Total commercial loans and leases | 10,491,089 | | | 10,973,327 | | | (482,238) | | | 10,491,089 | | | 11,223,927 | | | (732,838) | |
Consumer loans | | | | | | | | | | | |
Performing | 1,379,603 | | | 1,473,493 | | | (93,890) | | | 1,379,603 | | | 1,899,376 | | | (519,773) | |
Non-performing | 18,428 | | | 16,665 | | | 1,763 | | | 18,428 | | | 21,591 | | | (3,163) | |
Total consumer loans | 1,398,031 | | | 1,490,158 | | | (92,127) | | | 1,398,031 | | | 1,920,967 | | | (522,936) | |
Loans and leases receivable (1) | $ | 11,889,120 | | | $ | 12,463,485 | | | $ | (574,365) | | | $ | 11,889,120 | | | $ | 13,144,894 | | | $ | (1,255,774) | |
| | | | | | | | | | | |
(1) Risk ratings are assigned to loans and leases held for investment, and excludes loans held for sale and loans receivable, mortgage warehouse, at fair value.
(2) Excludes loan receivable, PPP, as eligible PPP loans are fully guaranteed by the Small Business Administration.
Over the last decade, the Bank has developed a suite of commercial loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s C&I, loans to mortgage companies, corporate and specialty lending lines of business, and multifamily loans for example, are characterized by conservative underwriting standards and low loss rates. Because of this emphasis, the Bank’s credit quality to date has been incredibly healthy despite an adverse economic environment. Maintaining strong asset quality also requires a highly active portfolio monitoring process. In addition to frequent client outreach and monitoring at the individual loan level, management employs a bottom-up data driven approach to analyze the commercial portfolio.
Total consumer installment loans held for investment at December 31, 2023 were less than 5% of total assets and approximately 7% of total loans and leases held for investment, and were supported by an allowance for credit losses of $56.4 million. At December 31, 2023, the consumer installment portfolio had the following characteristics: average original FICO score of 734, average debt-to-income of 19% and average borrower income of $107 thousand.
Non-performing loans at December 31, 2023 remained relatively stable at 0.21% of total loans and leases, compared to 0.22% at September 30, 2023 and 0.19% at December 31, 2022.
Investment Securities
The investment securities portfolio, including debt securities classified as available for sale (“AFS”) and held to maturity (“HTM”) provides periodic cash flows through regular maturities and amortization, can be used as collateral to secure additional funding, and is an important component of the Bank’s liquidity position.
The following table presents the composition of the investment securities portfolio as of the dates indicated: | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | December 31, 2023 | | September 30, 2023 | | December 31, 2022 |
Debt securities, available for sale | $ | 2,376,860 | | | $ | 2,746,729 | | | $ | 2,961,015 | |
Equity securities | 28,780 | | | 26,478 | | | 26,485 | |
Investment securities, at fair value | 2,405,640 | | | 2,773,207 | | | 2,987,500 | |
Debt securities, held to maturity | 1,103,170 | | | 1,178,370 | | | 840,259 | |
Total investment securities portfolio | $ | 3,508,810 | | | $ | 3,951,577 | | | $ | 3,827,759 | |
Critically important to performance during the recent banking crisis are the characteristics of a bank’s securities portfolio. While there may be virtually no credit risk in some of these portfolios, holding longer term and lower yielding securities is creating challenges for many banks. Customers’ securities portfolio is highly liquid, short in duration, and high in yield. At December 31, 2023, the AFS debt securities portfolio had a spot yield of 5.12%, an effective duration of approximately 1.5 years, and approximately 41% are variable rate. Additionally, 59% of the AFS securities portfolio was AAA rated at December 31, 2023.
At December 31, 2023, the HTM debt securities portfolio represented only 5.2% of total assets at December 31, 2023, had a spot yield of 4.31% and an effective duration of approximately 3.0 years. Additionally, at December 31, 2023, approximately 39% of the HTM securities were AAA rated and 52% were credit enhanced asset backed securities with no current expectation of credit losses.
Deposits
The following table presents the composition of our deposit portfolio as of the dates indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | December 31, 2023 | | % of Total | | September 30, 2023 | | % of Total | | December 31, 2022 | | % of Total |
Demand, non-interest bearing | $ | 4,422,494 | | | 24.7 | % | | $ | 4,758,682 | | | 26.2 | % | | $ | 1,885,045 | | | 10.4 | % |
Demand, interest bearing | 5,580,527 | | | 31.1 | | | 5,824,410 | | | 32.0 | | | 8,476,027 | | | 46.7 | |
Total demand deposits | 10,003,021 | | | 55.8 | | | 10,583,092 | | | 58.2 | | | 10,361,072 | | | 57.1 | |
Savings | 1,402,941 | | | 7.8 | | | 1,118,353 | | | 6.1 | | | 811,798 | | | 4.5 | |
Money market | 3,226,395 | | | 18.0 | | | 2,499,593 | | | 13.7 | | | 2,734,217 | | | 15.1 | |
Time deposits | 3,287,879 | | | 18.4 | | | 3,994,326 | | | 22.0 | | | 4,249,866 | | | 23.3 | |
Total deposits | $ | 17,920,236 | | | 100.0 | % | | $ | 18,195,364 | | | 100.0 | % | | $ | 18,156,953 | | | 100.0 | % |
Total deposits decreased $275.1 million, or 1.5%, to $17.9 billion at December 31, 2023 as compared to the prior quarter. Money market deposits increased $726.8 million, or 29.1%, to $3.2 billion and savings deposits increased $284.6 million, or 25.4%, to $1.4 billion. These increases were offset by decreases in time deposits of $706.4 million, or 17.7%, to $3.3 billion, non-interest bearing demand deposits of $336.2 million, or 7.1%, to $4.4 billion and interest bearing demand deposits of $243.9 million, or 4.2%, to $5.6 billion. There was also an outflow of student-related deposit accounts serviced by BMTX of $0.6 billion, including the planned transfer of approximately $430.0 million to a new partner bank on December 1st and expected seasonal outflows of $0.2 billion. The total average cost of deposits increased by 15 basis points to 3.39% in Q4 2023 from 3.24% in the prior quarter largely driven by the increase in market interest rates and a shift in deposit mix during the fourth quarter including the outflow of student-related deposits serviced by BMTX. Total estimated uninsured deposits was $4.2 billion1, or 23% of total deposits (inclusive of accrued interest) at December 31, 2023. Customers is also highly focused on total deposits with contractual term to manage its liquidity profile and the funding of loans and securities.
Total deposits decreased $236.7 million, or 1.3%, to $17.9 billion at December 31, 2023 as compared to a year ago. Non-interest bearing demand deposits increased $2.5 billion, or 134.6%, to $4.4 billion, savings deposits increased $591.1 million, or 72.8%, to $1.4 billion and money market deposits increased $492.2 million, or 18.0%, to $3.2 billion. These increases were offset by decreases in interest bearing demand deposits of $2.9 billion, or 34.2%, to $5.6 billion and time deposits of $962.0 million, or 22.6% to $3.3 billion. The total average cost of deposits increased by 66 basis points to 3.39% in Q4 2023 from 2.73% in the prior year primarily due to higher market interest rates and a shift in deposit mix.
1 Uninsured deposits (estimate) of $5.4 billion to be reported on the Bank's call report, less deposits of $1.1 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $118.0 million.
Borrowings
The following table presents the composition of our borrowings as of the dates indicated: | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | December 31, 2023 | | September 30, 2023 | | December 31, 2022 |
| | | | | |
| | | | | |
FHLB advances | $ | 1,203,207 | | | $ | 1,529,839 | | | $ | 800,000 | |
Senior notes | 123,840 | | | 123,775 | | | 123,580 | |
Subordinated debt | 182,230 | | | 182,161 | | | 181,952 | |
Total borrowings | $ | 1,509,277 | | | $ | 1,835,775 | | | $ | 1,105,532 | |
Total borrowings decreased $326.5 million, or 17.8%, to $1.5 billion at December 31, 2023 as compared to the prior quarter. This decrease primarily resulted from the repayment of $340.0 million in callable FHLB advances. As of December 31, 2023, Customers’ immediately available borrowing capacity with the FRB and FHLB was approximately $6.9 billion, of which $1.2 billion of available capacity was utilized in borrowings and $1.1 billion was utilized to collateralize deposits.
Total borrowings increased $403.7 million, or 36.5%, to $1.5 billion at December 31, 2023 as compared to a year ago. This increase primarily resulted from an increase in FHLB advances to ensure ample cash on hand given the heightened liquidity risk in the banking system, particularly among regional banks since early March 2023, net of repayments of $340.0 million and $510.0 million in callable FHLB advances in Q4 2023 and Q3 2023, respectively.
Capital
The following table presents certain capital amounts and ratios as of the dates indicated: | | | | | | | | | | | | | | | | | |
(Dollars in thousands except per share data) | December 31, 2023 | | September 30, 2023 | | December 31, 2022 |
Customers Bancorp, Inc. | | | | | |
Common Equity | $ | 1,500,600 | | | $ | 1,423,813 | | | $ | 1,265,167 | |
Tangible Common Equity* | $ | 1,496,971 | | | $ | 1,420,184 | | | $ | 1,261,538 | |
Common Equity to Total Assets | 7.0 | % | | 6.5 | % | | 6.0 | % |
Tangible Common Equity to Tangible Assets* | 7.0 | % | | 6.5 | % | | 6.0 | % |
| | | | | |
Book Value per common share | $ | 47.73 | | | $ | 45.47 | | | $ | 39.08 | |
Tangible Book Value per common share* | $ | 47.61 | | | $ | 45.36 | | | $ | 38.97 | |
Common equity Tier 1 (“CET 1”) capital ratio (1) | 12.2 | % | | 11.3 | % | | 9.6 | % |
Total risk based capital ratio (1) | 15.3 | % | | 14.3 | % | | 12.2 | % |
| | | | | |
(1) Regulatory capital ratios as of December 31, 2023 are estimates. |
*Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
Customers Bancorp’s common equity increased $76.8 million to $1.5 billion, and tangible common equity* increased $76.8 million to $1.5 billion, at December 31, 2023 compared to the prior quarter, respectively, primarily from earnings of $58.2 million and decreased unrealized losses on investment securities of $13.2 million (net of taxes) deferred in accumulated other comprehensive income (“AOCI”). Similarly, book value per common share increased to $47.73 from $45.47, and tangible book value per common share* increased to $47.61 from $45.36, at December 31, 2023 and September 30, 2023, respectively.
Customers Bancorp’s common equity increased $235.4 million to $1.5 billion, and tangible common equity* increased $235.4 million to $1.5 billion, at December 31, 2023 compared to a year ago, respectively, primarily from earnings of $235.4 million and decreased unrealized losses on investment securities in AOCI of $26.5 million (net of taxes), partially offset by $39.8 million of common share repurchases. Similarly, book value per common share increased to $47.73 from $39.08, and tangible book value per common share* increased to $47.61 from $38.97, at December 31, 2023 and December 31, 2022, respectively.
At the Customers Bancorp level, the CET 1 capital ratio (estimate), total risk based capital ratio (estimate), common equity to total assets ratio and tangible common equity to tangible assets ratio* (“TCE / TA ratio”) were 12.2%, 15.3%, 7.0%, and 7.0%, respectively, at December 31, 2023.
At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At December 31, 2023, Tier 1 capital (estimate) and total risk based capital (estimate) were 13.7% and 15.3%, respectively.
“Even though we remain well capitalized by all regulatory measures, we are committed to maintaining our CET 1 ratio around 11.5% and growing our TCE / TA ratio* to 7.5% in 2024,” stated Jay Sidhu.
Key Profitability Trends
Net Interest Income
Net interest income totaled $172.5 million in Q4 2023, a decrease of $27.3 million from Q3 2023, primarily due to lower interest income from the acquired Venture Banking portfolio that had outsized discount accretion in Q3 2023.
“We experienced continued momentum in net interest income in the fourth quarter, despite elective reductions in loan balances. Loan balance reductions were in part due to exiting certain credits with less attractive pricing and clients without holistic banking relationships. Excluding the outsized accretion recognized in the third quarter on the acquired loan portfolio from the FDIC, our fourth quarter net interest income was in-line relative to the third quarter,” stated Customers Bancorp President Sam Sidhu.
Net interest income totaled $172.5 million in Q4 2023, an increase of $37.4 million from Q4 2022. This increase was due to higher interest income of $76.3 million on variable rate lower credit risk specialty lending verticals, which included the acquired Venture Banking portfolio, investment securities and interest earning deposits, offset in part by higher interest expenses on deposits and other borrowings of $38.9 million primarily resulting from increased market interest rates and higher average balances of other borrowings. Interest-earning asset growth was primarily driven by an increase in interest earning deposits, offset in part by decreases in PPP loans, as the PPP program was substantially completed in Q1 2023, consumer installment loans and commercial loans to mortgage companies. Total consumer installment loans decreased in Q4 2023 as compared to Q4 2022, as installment loans held for investment decreased primarily for risk management purposes and the implementation of a held-for-sale strategy.
Non-Interest Income
The following table presents details of non-interest income for the periods indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Increase (Decrease) | | Three Months Ended | | Increase (Decrease) | | | | |
(Dollars in thousands) | December 31, 2023 | | September 30, 2023 | | | December 31, 2023 | | December 31, 2022 | | | | | | |
Commercial lease income | $ | 9,035 | | | $ | 8,901 | | | $ | 134 | | | $ | 9,035 | | | $ | 8,135 | | | $ | 900 | | | | | | | |
Loan fees | 5,926 | | | 6,029 | | | (103) | | | 5,926 | | | 4,017 | | | 1,909 | | | | | | | |
Bank-owned life insurance | 2,160 | | | 1,973 | | | 187 | | | 2,160 | | | 1,975 | | | 185 | | | | | | | |
Mortgage warehouse transactional fees | 927 | | | 1,018 | | | (91) | | | 927 | | | 1,295 | | | (368) | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Gain (loss) on sale of SBA and other loans | (91) | | | (348) | | | 257 | | | (91) | | | — | | | (91) | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Net gain (loss) on sale of investment securities | (145) | | | (429) | | | 284 | | | (145) | | | (16,937) | | | 16,792 | | | | | | | |
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Legal settlement gain | — | | | — | | | — | | | — | | | 7,519 | | | (7,519) | | | | | | | |
Other | 860 | | | 631 | | | 229 | | | 860 | | | 1,341 | | | (481) | | | | | | | |
Total non-interest income | $ | 18,672 | | | $ | 17,775 | | | $ | 897 | | | $ | 18,672 | | | $ | 7,345 | | | $ | 11,327 | | | | | | | |
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Non-interest income totaled $18.7 million for Q4 2023, an increase of $0.9 million compared to Q3 2023. The increase was primarily due to decreases in losses on sales of loans and investment securities, and increases in death benefits paid by insurance carriers under bank-owned life insurance policies and commercial lease income.
Non-interest income totaled $18.7 million for Q4 2023, an increase of $11.3 million compared to Q4 2022. The increase was primarily due to a decrease of $16.8 million in net loss realized from the sales of investment securities, and an increase in loan fees of $1.9 million resulting from increased servicing-related revenue and unused line of credit fees, partially offset by a $7.5 million gain from a court-approved settlement with a third party PPP service provider in Q4 2022.
Non-Interest Expense
The following table presents details of non-interest expense for the periods indicated: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Increase (Decrease) | | Three Months Ended | | Increase (Decrease) | | | | |
(Dollars in thousands) | December 31, 2023 | | September 30, 2023 | | | December 31, 2023 | | December 31, 2022 | | | | | | |
Salaries and employee benefits | $ | 33,965 | | | $ | 33,845 | | | $ | 120 | | | $ | 33,965 | | | $ | 29,194 | | | $ | 4,771 | | | | | | | |
Technology, communication and bank operations | 16,887 | | | 15,667 | | | 1,220 | | | 16,887 | | | 18,604 | | | (1,717) | | | | | | | |
Commercial lease depreciation | 7,357 | | | 7,338 | | | 19 | | | 7,357 | | | 6,518 | | | 839 | | | | | | | |
Professional services | 9,820 | | | 8,569 | | | 1,251 | | | 9,820 | | | 6,825 | | | 2,995 | | | | | | | |
Loan servicing | 3,779 | | | 3,858 | | | (79) | | | 3,779 | | | 4,460 | | | (681) | | | | | | | |
Occupancy | 2,320 | | | 2,471 | | | (151) | | | 2,320 | | | 3,672 | | | (1,352) | | | | | | | |
FDIC assessments, non-income taxes and regulatory fees | 13,977 | | | 8,551 | | | 5,426 | | | 13,977 | | | 2,339 | | | 11,638 | | | | | | | |
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Advertising and promotion | 850 | | | 650 | | | 200 | | | 850 | | | 1,111 | | | (261) | | | | | | | |
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Legal settlement expense | — | | | 4,096 | | | (4,096) | | | — | | | — | | | — | | | | | | | |
Other | 4,812 | | | 4,421 | | | 391 | | | 4,812 | | | 5,696 | | | (884) | | | | | | | |
Total non-interest expense | $ | 93,767 | | | $ | 89,466 | | | $ | 4,301 | | | $ | 93,767 | | | $ | 78,419 | | | $ | 15,348 | | | | | | | |
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Non-interest expenses totaled $93.8 million in Q4 2023, an increase of $4.3 million compared to Q3 2023. The increase was primarily attributable to increases of $5.4 million in FDIC assessments, non-income taxes and regulatory fees resulting from higher FDIC assessments including the special assessment of $3.7 million, $1.3 million in professional fees and $1.2 million in technology, communication and bank operations mostly due to higher processing and software fees offset by lower servicing fees paid to BMTX. These increases were partially offset by $4.1 million of expenses from a settlement with a third party PPP service provider in Q3 2023. Q4 2023 core non-interest expenses* were $89.4 million, flat over Q3 2023.
Non-interest expenses totaled $93.8 million in Q4 2023, an increase of $15.3 million compared to Q4 2022. The increase was primarily attributable to increases of $11.6 million in FDIC assessments, non-income taxes and regulatory fees resulting primarily from higher FDIC assessments including the special assessment of $3.7 million, $4.8 million in salaries and employee benefits primarily due to higher headcount, annual merit increases and severance, and $3.0 million in professional fees. These increases were partially offset by decreases of $1.7 million in deposit servicing-related expenses mostly due to lower servicing fees and the discontinuation of interchange maintenance fees paid to BMTX offset by higher fees for processing and software as a service, and $1.4 million in occupancy mostly due to lower lease and maintenance expenses.
Taxes
Income tax expense decreased by $1.7 million to $21.8 million in Q4 2023 from $23.5 million in Q3 2023 primarily due to lower pre-tax income, partially offset by lower income tax credits.
Income tax expense increased by $14.7 million to $21.8 million in Q4 2023 from $7.1 million in Q4 2022 primarily due to higher pre-tax income and lower income tax credits.
The effective tax rate for Q4 2023 was 26%, and 24% for the full year 2023. Customers expects the full-year 2024 effective tax rate to be approximately 22% to 24%.
Outlook
“Looking forward, our strategy and risk management principles will remain unchanged. We’re focused on managing risk, strengthening our deposit franchise, further improving our profitability and maintaining our higher capital ratios. Our deposits are expected to grow modestly with continued improvement in the quality of deposits, reducing higher cost wholesale deposits with lower cost core deposits. We see attractive opportunities to deploy securities cash flows and cash into franchise-enhancing loan growth in 2024. Core EPS (excluding PPP)* significantly exceeded our target of $6.00 per diluted share and core return on common equity* was well in excess of our target of 15%. We also achieved the tangible book value per share* target of $45.00, inclusive of the impact of AOCI, a full quarter early, ending at $47.61. The management of non-interest expenses remains a priority for us. However, this will not deter us from making investments in deposit teams and new technologies to support efficient and responsible growth in the future. Operating efficiency has and will continue to be a differentiator of our business model, and we will continue to only make investments that generate long-term positive operating leverage and enable the organization to operate at a mid-40’s efficiency ratio. We remain committed to maintaining a CET 1 ratio around 11.5% in 2024, and growing our TCE / TA ratio* to 7.5%. We are committed to preserving superior credit quality, managing interest rate risk, maintaining robust liquidity, operating with higher capital ratios and generating positive operating leverage,” concluded Sam Sidhu.
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*Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
Webcast
Date: Friday, January 26, 2024
Time: 9:00 AM EDT
The live audio webcast, presentation slides, and earnings press release will be made available at https://www.customersbank.com/investor-relations/ and at the Customers Bancorp 4th Quarter Earnings Webcast.
You may submit questions in advance of the live webcast by emailing our Communications Director, David Patti at dpatti@customersbank.com; questions may also be asked during the webcast through the webcast application.
The webcast will be archived for viewing on the Customers Bank Investor Relations page and available beginning approximately two hours after the conclusion of the live event.
Institutional Background
Customers Bancorp, Inc. (NYSE:CUBI) is one of the nation’s top-performing banking companies with about $21 billion in assets, making it one of the 80 largest bank holding companies in the US. Through its primary subsidiary, Customers Bank, commercial and consumer clients benefit from a full suite of technology-enabled tailored product experiences delivered by best-in-class customer service. In addition to traditional lines such as C&I lending, commercial real estate lending, and multifamily lending, Customers Bank also provides a number of national corporate banking services to Specialty Lending clients. Major accolades include:
•#5 in top-performing banks with assets between $10 billion and $50 billion in 2022 per American Banker list;
•#34 out of the 100 largest publicly traded banks in 2023 per Forbes; and
•#64 on Fortune Magazine’s 2022 list of the 100 fastest growing companies in America.
A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender. Learn more: www.customersbank.com.
“Safe Harbor” Statement
In addition to historical information, this press release may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “project,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: a continuation of the recent turmoil in the banking industry, responsive measures taken by us and regulatory authorities to mitigate and manage related risks, regulatory actions taken that address related issues and the costs and obligations associated therewith, such as the FDIC special assessments, the impact of COVID-19 and its variants on the U.S. economy and customer behavior, the impact that changes in the economy have on the performance of our loan and lease portfolio, the market value of our investment securities, the continued success and acceptance of our blockchain payments system, the demand for our products and services and the availability of sources of funding, the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply, actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships, higher inflation and its impacts, and the effects of any changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement
takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2022, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.
Q4 2023 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended December 31, 2023 and the preceding four quarters, and full year 2023 and 2022:
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |
EARNINGS SUMMARY - UNAUDITED | |
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(Dollars in thousands, except per share data and stock price data) | Q4 | | Q3 | | Q2 | | Q1 | | Q4 | | Twelve Months Ended December 31, | |
2023 | | 2023 | | 2023 | | 2023 | | 2022 | | 2023 | | 2022 | |
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GAAP Profitability Metrics: | |
Net income available to common shareholders
| $ | 58,223 | | | $ | 82,953 | | | $ | 44,007 | | | $ | 50,265 | | | $ | 25,623 | | | $ | 235,448 | | | $ | 218,402 | | |
Per share amounts: | | | | | | | | | | | | | | |
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| Earnings per share - basic | $ | 1.86 | | | $ | 2.65 | | | $ | 1.41 | | | $ | 1.58 | | | $ | 0.79 | | | $ | 7.49 | | | $ | 6.69 | | |
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| Earnings per share - diluted | $ | 1.79 | | | $ | 2.58 | | | $ | 1.39 | | | $ | 1.55 | | | $ | 0.77 | | | $ | 7.32 | | | $ | 6.51 | | |
| Book value per common share (1) | $ | 47.73 | | | $ | 45.47 | | | $ | 42.16 | | | $ | 41.08 | | | $ | 39.08 | | | $ | 47.73 | | | $ | 39.08 | | |
| CUBI stock price (1) | $ | 57.62 | | | $ | 34.45 | | | $ | 30.26 | | | $ | 18.52 | | | $ | 28.34 | | | $ | 57.62 | | | $ | 28.34 | | |
| CUBI stock price as % of book value (1) | 121 | % | | 76 | % | | 72 | % | | 45 | % | | 73 | % | | 121 | % | | 73 | % | |
Average shares outstanding - basic | 31,385,043 | | | 31,290,581 | | | 31,254,125 | | | 31,819,203 | | | 32,413,459 | | | 31,435,647 | | | 32,632,751 | | |
Average shares outstanding - diluted | 32,521,787 | | | 32,175,084 | | | 31,591,142 | | | 32,345,017 | | | 33,075,422 | | | 32,158,788 | | | 33,547,706 | | |
Shares outstanding (1) | 31,440,906 | | | 31,311,254 | | | 31,282,318 | | | 31,239,750 | | | 32,373,697 | | | 31,440,906 | | | 32,373,697 | | |
Return on average assets (“ROAA”) | 1.16 | % | | 1.57 | % | | 0.88 | % | | 1.03 | % | | 0.55 | % | | 1.16 | % | | 1.13 | % | |
Return on average common equity (“ROCE”) | 15.93 | % | | 23.97 | % | | 13.22 | % | | 16.00 | % | | 8.05 | % | | 17.33 | % | | 17.40 | % | |
Net interest margin, tax equivalent | 3.31 | % | | 3.70 | % | | 3.15 | % | | 2.96 | % | | 2.67 | % | | 3.29 | % | | 3.19 | % | |
Efficiency ratio | 49.08 | % | | 41.01 | % | | 49.25 | % | | 47.71 | % | | 49.20 | % | | 46.49 | % | | 44.81 | % | |
Non-GAAP Profitability Metrics (2): | | | | | | | | | | | | | | |
Core earnings | $ | 61,633 | | | $ | 83,294 | | | $ | 52,163 | | | $ | 51,143 | | | $ | 39,368 | | | $ | 248,233 | | | $ | 256,415 | | |
Adjusted pre-tax pre-provision net income | $ | 101,884 | | | $ | 128,564 | | | $ | 96,833 | | | $ | 89,282 | | | $ | 81,377 | | | $ | 416,563 | | | $ | 400,712 | | |
Per share amounts: | | | | | | | | | | | | | | |
| Core earnings per share - diluted | $ | 1.90 | | | $ | 2.59 | | | $ | 1.65 | | | $ | 1.58 | | | $ | 1.19 | | | $ | 7.72 | | | $ | 7.63 | | |
| Tangible book value per common share (1) | $ | 47.61 | | | $ | 45.36 | | | $ | 42.04 | | | $ | 40.96 | | | $ | 38.97 | | | $ | 47.61 | | | $ | 38.97 | | |
| CUBI stock price as % of tangible book value (1) | 121 | % | | 76 | % | | 72 | % | | 45 | % | | 73 | % | | 121 | % | | 73 | % | |
Core ROAA | 1.22 | % | | 1.57 | % | | 1.03 | % | | 1.05 | % | | 0.81 | % | | 1.22 | % | | 1.32 | % | |
Core ROCE | 16.87 | % | | 24.06 | % | | 15.67 | % | | 16.28 | % | | 12.36 | % | | 18.27 | % | | 20.43 | % | |
Adjusted ROAA - pre-tax and pre-provision | 1.90 | % | | 2.32 | % | | 1.79 | % | | 1.72 | % | | 1.56 | % | | 1.94 | % | | 1.99 | % | |
Adjusted ROCE - pre-tax and pre-provision | 26.82 | % | | 36.04 | % | | 28.01 | % | | 27.33 | % | | 24.59 | % | | 29.58 | % | | 31.16 | % | |
Net interest margin, tax equivalent, excluding PPP loans | 3.33 | % | | 3.75 | % | | 3.20 | % | | 2.80 | % | | 2.87 | % | | 3.28 | % | | 3.16 | % | |
Core efficiency ratio | 46.70 | % | | 41.04 | % | | 47.84 | % | | 47.09 | % | | 49.12 | % | | 45.45 | % | | 43.02 | % | |
Asset Quality: | | | | | | | | | | | | | | |
Net charge-offs | $ | 17,322 | | | $ | 17,498 | | | $ | 15,564 | | | $ | 18,651 | | | $ | 27,164 | | | $ | 69,035 | | | $ | 66,368 | | |
Annualized net charge-offs to average total loans and leases | 0.51 | % | | 0.50 | % | | 0.42 | % | | 0.49 | % | | 0.70 | % | | 0.48 | % | | 0.45 | % | |
Non-performing loans (“NPLs”) to total loans and leases (1) | 0.21 | % | | 0.22 | % | | 0.20 | % | | 0.21 | % | | 0.19 | % | | 0.21 | % | | 0.19 | % | |
Reserves to NPLs (1) | 499.12 | % | | 466.11 | % | | 494.46 | % | | 405.56 | % | | 425.95 | % | | 499.12 | % | | 425.95 | % | |
Non-performing assets (“NPAs”) to total assets | 0.13 | % | | 0.14 | % | | 0.13 | % | | 0.15 | % | | 0.15 | % | | 0.13 | % | | 0.15 | % | |
Customers Bank Capital Ratios (3): | | | | | | | | | | | | | | |
Common equity Tier 1 capital to risk-weighted assets | 13.7 | % | | 12.97 | % | | 11.96 | % | | 11.31 | % | | 11.21 | % | | 13.7 | % | | 11.21 | % | |
Tier 1 capital to risk-weighted assets | 13.7 | % | | 12.97 | % | | 11.96 | % | | 11.31 | % | | 11.21 | % | | 13.7 | % | | 11.21 | % | |
Total capital to risk-weighted assets | 15.3 | % | | 14.45 | % | | 13.38 | % | | 12.64 | % | | 12.40 | % | | 15.3 | % | | 12.40 | % | |
Tier 1 capital to average assets (leverage ratio) | 8.7 | % | | 8.25 | % | | 8.00 | % | | 8.09 | % | | 8.15 | % | | 8.7 | % | | 8.15 | % | |
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(1) Metric is a spot balance for the last day of each quarter presented. | |
(2) Customers' reasons for the use of these non-GAAP measures and a detailed reconciliation between the non-GAAP measures and the comparable GAAP amounts are included at the end of this document. | |
(3) Regulatory capital ratios are estimated for Q4 2023 and actual for the remaining periods. In accordance with regulatory capital rules, Customers elected to apply the CECL capital transition provisions which delayed the effects of CECL on regulatory capital for two years until January 1, 2022, followed by a three-year transition period. The cumulative CECL capital transition impact as of December 31, 2021 which amounted to $61.6 million will be phased in at 25% per year beginning on January 1, 2022 through December 31, 2024. As of December 31, 2023, our regulatory capital ratios reflected 50%, or $30.8 million, benefit associated with the CECL transition provisions. | |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED |
(Dollars in thousands, except per share data) | | | | | | | | | | | Twelve Months Ended |
| Q4 | | Q3 | | Q2 | | Q1 | | Q4 | | December 31, |
| 2023 | | 2023 | | 2023 | | 2023 | | 2022 | | 2023 | | 2022 |
Interest income: | | | | | | | | | | | | | |
Loans and leases | $ | 239,453 | | | $ | 271,107 | | | $ | 241,745 | | | $ | 244,212 | | | $ | 217,471 | | | $ | 996,517 | | | $ | 743,949 | |
Investment securities | 51,074 | | | 54,243 | | | 48,026 | | | 47,316 | | | 42,953 | | | 200,659 | | | 119,236 | |
Interest earning deposits | 44,104 | | | 43,800 | | | 27,624 | | | 10,395 | | | 6,754 | | | 125,923 | | | 10,952 | |
Loans held for sale | 8,707 | | | 4,664 | | | 11,149 | | | 11,701 | | | 1,269 | | | 36,221 | | | 1,364 | |
Other | 2,577 | | | 2,526 | | | 1,616 | | | 1,321 | | | 1,200 | | | 8,040 | | | 9,872 | |
Total interest income | 345,915 | | | 376,340 | | | 330,160 | | | 314,945 | | | 269,647 | | | 1,367,360 | | | 885,373 | |
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Interest expense: | | | | | | | | | | | | | |
Deposits | 150,307 | | | 145,825 | | | 136,375 | | | 143,930 | | | 124,366 | | | 576,437 | | | 226,239 | |
FHLB advances | 18,868 | | | 26,485 | | | 24,285 | | | 10,370 | | | 4,464 | | | 80,008 | | | 11,464 | |
FRB advances | — | | | — | | | — | | | 6,286 | | | — | | | 6,286 | | | — | |
Subordinated debt | 2,688 | | | 2,689 | | | 2,689 | | | 2,689 | | | 2,688 | | | 10,755 | | | 10,755 | |
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Other borrowings | 1,546 | | | 1,568 | | | 1,540 | | | 1,771 | | | 2,992 | | | 6,425 | | | 13,195 | |
Total interest expense | 173,409 | | | 176,567 | | | 164,889 | | | 165,046 | | | 134,510 | | | 679,911 | | | 261,653 | |
Net interest income | 172,506 | | | 199,773 | | | 165,271 | | | 149,899 | | | 135,137 | | | 687,449 | | | 623,720 | |
Provision for credit losses | 13,523 | | | 17,856 | | | 23,629 | | | 19,603 | | | 28,216 | | | 74,611 | | | 60,066 | |
Net interest income after provision for credit losses | 158,983 | | | 181,917 | | | 141,642 | | | 130,296 | | | 106,921 | | | 612,838 | | | 563,654 | |
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Non-interest income: | | | | | | | | | | | | | |
Commercial lease income | 9,035 | | | 8,901 | | | 8,917 | | | 9,326 | | | 8,135 | | | 36,179 | | | 27,719 | |
Loan fees | 5,926 | | | 6,029 | | | 4,271 | | | 3,990 | | | 4,017 | | | 20,216 | | | 12,188 | |
Bank-owned life insurance | 2,160 | | | 1,973 | | | 4,997 | | | 2,647 | | | 1,975 | | | 11,777 | | | 15,697 | |
Mortgage warehouse transactional fees | 927 | | | 1,018 | | | 1,376 | | | 1,074 | | | 1,295 | | | 4,395 | | | 6,738 | |
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Gain (loss) on sale of SBA and other loans | (91) | | | (348) | | | (761) | | | — | | | — | | | (1,200) | | | 3,155 | |
Loss on sale of capital call lines of credit | — | | | — | | | (5,037) | | | — | | | — | | | (5,037) | | | — | |
Loss on sale of consumer installment loans | — | | | — | | | — | | | — | | | — | | | — | | | (23,465) | |
Net gain (loss) on sale of investment securities | (145) | | | (429) | | | — | | | — | | | (16,937) | | | (574) | | | (23,164) | |
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Legal settlement gain | — | | | — | | | — | | | — | | | 7,519 | | | — | | | 7,519 | |
Other | 860 | | | 631 | | | 2,234 | | | 1,084 | | | 1,341 | | | 4,809 | | | 5,885 | |
Total non-interest income | 18,672 | | | 17,775 | | | 15,997 | | | 18,121 | | | 7,345 | | | 70,565 | | | 32,272 | |
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Non-interest expense: | | | | | | | | | | | | | |
Salaries and employee benefits | 33,965 | | | 33,845 | | | 33,120 | | | 32,345 | | | 29,194 | | | 133,275 | | | 112,365 | |
Technology, communication and bank operations | 16,887 | | | 15,667 | | | 16,407 | | | 16,589 | | | 18,604 | | | 65,550 | | | 84,998 | |
Commercial lease depreciation | 7,357 | | | 7,338 | | | 7,328 | | | 7,875 | | | 6,518 | | | 29,898 | | | 22,978 | |
Professional services | 9,820 | | | 8,569 | | | 9,192 | | | 7,596 | | | 6,825 | | | 35,177 | | | 27,465 | |
Loan servicing | 3,779 | | | 3,858 | | | 4,777 | | | 4,661 | | | 4,460 | | | 17,075 | | | 15,023 | |
Occupancy | 2,320 | | | 2,471 | | | 2,519 | | | 2,760 | | | 3,672 | | | 10,070 | | | 13,606 | |
FDIC assessments, non-income taxes and regulatory fees | 13,977 | | | 8,551 | | | 9,780 | | | 2,728 | | | 2,339 | | | 35,036 | | | 8,869 | |
Advertising and promotion | 850 | | | 650 | | | 546 | | | 1,049 | | | 1,111 | | | 3,095 | | | 2,541 | |
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Legal settlement expense | — | | | 4,096 | | | — | | | — | | | — | | | 4,096 | | | — | |
Other | 4,812 | | | 4,421 | | | 5,628 | | | 4,530 | | | 5,696 | | | 19,391 | | | 16,784 | |
Total non-interest expense | 93,767 | | | 89,466 | | | 89,297 | | | 80,133 | | | 78,419 | | | 352,663 | | | 304,629 | |
Income before income tax expense | 83,888 | | | 110,226 | | | 68,342 | | | 68,284 | | | 35,847 | | | 330,740 | | | 291,297 | |
Income tax expense | 21,796 | | | 23,470 | | | 20,768 | | | 14,563 | | | 7,136 | | | 80,597 | | | 63,263 | |
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Net income | 62,092 | | | 86,756 | | | 47,574 | | | 53,721 | | | 28,711 | | | 250,143 | | | 228,034 | |
Preferred stock dividends | 3,869 | | | 3,803 | | | 3,567 | | | 3,456 | | | 3,088 | | | 14,695 | | | 9,632 | |
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Net income available to common shareholders | $ | 58,223 | | | $ | 82,953 | | | $ | 44,007 | | | $ | 50,265 | | | $ | 25,623 | | | $ | 235,448 | | | $ | 218,402 | |
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Basic earnings per common share | $ | 1.86 | | | $ | 2.65 | | | $ | 1.41 | | | $ | 1.58 | | | $ | 0.79 | | | $ | 7.49 | | | $ | 6.69 | |
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Diluted earnings per common share | 1.79 | | | 2.58 | | | 1.39 | | | 1.55 | | | 0.77 | | | 7.32 | | | 6.51 | |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEET - UNAUDITED |
(Dollars in thousands) |
| December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
| 2023 | | 2023 | | 2023 | | 2023 | | 2022 |
ASSETS | | | | | | | | | |
Cash and due from banks | $ | 45,210 | | | $ | 68,288 | | | $ | 54,127 | | | $ | 77,251 | | | $ | 58,025 | |
Interest earning deposits | 3,801,136 | | | 3,351,686 | | | 3,101,097 | | | 1,969,434 | | | 397,781 | |
Cash and cash equivalents | 3,846,346 | | | 3,419,974 | | | 3,155,224 | | | 2,046,685 | | | 455,806 | |
Investment securities, at fair value | 2,405,640 | | | 2,773,207 | | | 2,824,638 | | | 2,926,969 | | | 2,987,500 | |
Investment securities held to maturity | 1,103,170 | | | 1,178,370 | | | 1,258,560 | | | 870,294 | | | 840,259 | |
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Loans held for sale | 340,317 | | | 150,368 | | | 78,108 | | | 424,057 | | | 328,312 | |
Loans receivable, mortgage warehouse, at fair value | 897,912 | | | 962,566 | | | 1,006,268 | | | 1,247,367 | | | 1,323,312 | |
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Loans receivable, PPP | 74,735 | | | 137,063 | | | 188,763 | | | 246,258 | | | 998,153 | |
Loans and leases receivable | 11,889,120 | | | 12,463,485 | | | 12,637,768 | | | 13,145,352 | | | 13,144,894 | |
Allowance for credit losses on loans and leases | (135,311) | | | (139,213) | | | (139,656) | | | (130,281) | | | (130,924) | |
Total loans and leases receivable, net of allowance for credit losses on loans and leases | 12,726,456 | | | 13,423,901 | | | 13,693,143 | | | 14,508,696 | | | 15,335,435 | |
FHLB, Federal Reserve Bank, and other restricted stock | 109,548 | | | 126,098 | | | 126,240 | | | 124,733 | | | 74,196 | |
Accrued interest receivable | 114,766 | | | 123,984 | | | 119,501 | | | 123,754 | | | 123,374 | |
Bank premises and equipment, net | 7,371 | | | 7,789 | | | 8,031 | | | 8,581 | | | 9,025 | |
Bank-owned life insurance | 292,193 | | | 291,670 | | | 290,322 | | | 339,607 | | | 338,441 | |
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Goodwill and other intangibles | 3,629 | | | 3,629 | | | 3,629 | | | 3,629 | | | 3,629 | |
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Other assets | 366,829 | | | 358,162 | | | 471,169 | | | 374,609 | | | 400,135 | |
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Total assets | $ | 21,316,265 | | | $ | 21,857,152 | | | $ | 22,028,565 | | | $ | 21,751,614 | | | $ | 20,896,112 | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | |
Demand, non-interest bearing deposits | $ | 4,422,494 | | | $ | 4,758,682 | | | $ | 4,490,198 | | | $ | 3,487,517 | | | $ | 1,885,045 | |
Interest bearing deposits | 13,497,742 | | | 13,436,682 | | | 13,460,233 | | | 14,236,100 | | | 16,271,908 | |
Total deposits | 17,920,236 | | | 18,195,364 | | | 17,950,431 | | | 17,723,617 | | | 18,156,953 | |
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FHLB advances | 1,203,207 | | | 1,529,839 | | | 2,046,142 | | | 2,052,143 | | | 800,000 | |
Other borrowings | 123,840 | | | 123,775 | | | 123,710 | | | 123,645 | | | 123,580 | |
Subordinated debt | 182,230 | | | 182,161 | | | 182,091 | | | 182,021 | | | 181,952 | |
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Accrued interest payable and other liabilities | 248,358 | | | 264,406 | | | 269,539 | | | 249,168 | | | 230,666 | |
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Total liabilities | 19,677,871 | | | 20,295,545 | | | 20,571,913 | | | 20,330,594 | | | 19,493,151 | |
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Preferred stock | 137,794 | | | 137,794 | | | 137,794 | | | 137,794 | | | 137,794 | |
Common stock | 35,459 | | | 35,330 | | | 35,301 | | | 35,258 | | | 35,012 | |
Additional paid in capital | 564,538 | | | 559,346 | | | 555,737 | | | 552,255 | | | 551,721 | |
Retained earnings | 1,159,582 | | | 1,101,359 | | | 1,018,406 | | | 974,399 | | | 924,134 | |
Accumulated other comprehensive income (loss), net | (136,569) | | | (149,812) | | | (168,176) | | | (156,276) | | | (163,096) | |
Treasury stock, at cost | (122,410) | | | (122,410) | | | (122,410) | | | (122,410) | | | (82,604) | |
Total shareholders’ equity | 1,638,394 | | | 1,561,607 | | | 1,456,652 | | | 1,421,020 | | | 1,402,961 | |
Total liabilities and shareholders’ equity | $ | 21,316,265 | | | $ | 21,857,152 | | | $ | 22,028,565 | | | $ | 21,751,614 | | | $ | 20,896,112 | |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED | |
(Dollars in thousands) | | | | | | | | | | | | | | | | | | |
| Three Months Ended | |
| December 31, 2023 | | September 30, 2023 | | December 31, 2022 | |
| Average Balance | | Interest Income or Expense | | Average Yield or Cost (%) | | Average Balance | | Interest Income or Expense | | Average Yield or Cost (%) | | Average Balance | | Interest Income or Expense | | Average Yield or Cost (%) | |
Assets | | | | | | | | | | | | | | | | | | |
Interest earning deposits | $ | 3,191,677 | | | $ | 44,104 | | | 5.48% | | $ | 3,211,753 | | | $ | 43,800 | | | 5.41% | | $ | 693,563 | | | $ | 6,754 | | | 3.86% | |
Investment securities (1) | 4,007,418 | | | 51,074 | | | 5.10% | | 4,240,116 | | | 54,243 | | | 5.12% | | 4,061,555 | | | 42,953 | | | 4.23% | |
Loans and leases: | | | | | | | | | | | | | | | | | | |
Commercial & industrial: | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Specialty lending loans and leases (2) | 5,574,149 | | | 130,838 | | | 9.31% | | 5,717,252 | | | 157,671 | | | 10.94% | | 5,529,567 | | | 90,885 | | | 6.52% | |
Other commercial & industrial loans (2) | 1,550,201 | | | 27,214 | | | 6.96% | | 1,613,614 | | | 28,012 | | | 6.89% | | 1,670,000 | | | 22,796 | | | 5.42% | |
Commercial loans to mortgage companies | 997,353 | | | 13,726 | | | 5.46% | | 1,159,698 | | | 16,916 | | | 5.79% | | 1,376,760 | | | 17,701 | | | 5.10% | |
Multifamily loans | 2,131,750 | | | 22,347 | | | 4.16% | | 2,141,384 | | | 21,292 | | | 3.94% | | 2,235,885 | | | 22,481 | | | 3.99% | |
Loans receivable, PPP | 115,851 | | | 839 | | | 2.87% | | 166,164 | | | 604 | | | 1.44% | | 1,065,919 | | | 7,249 | | | 2.70% | |
Non-owner occupied commercial real estate loans | 1,392,684 | | | 20,686 | | | 5.89% | | 1,425,831 | | | 21,208 | | | 5.90% | | 1,430,420 | | | 18,536 | | | 5.14% | |
Residential mortgages | 526,422 | | | 5,942 | | | 4.48% | | 528,022 | | | 5,965 | | | 4.48% | | 524,344 | | | 5,462 | | | 4.13% | |
Installment loans | 1,198,043 | | | 26,568 | | | 8.80% | | 1,147,069 | | | 24,103 | | | 8.34% | | 1,555,108 | | | 33,630 | | | 8.58% | |
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Total loans and leases (3) | 13,486,453 | | | 248,160 | | | 7.30% | | 13,899,034 | | | 275,771 | | | 7.87% | | 15,388,003 | | | 218,740 | | | 5.64% | |
Other interest-earning assets | 116,756 | | | 2,577 | | | 8.75% | | 134,416 | | | 2,526 | | | 7.45% | | 67,907 | | | 1,200 | | | 7.01% | |
Total interest-earning assets | 20,802,304 | | | 345,915 | | | 6.61% | | 21,485,319 | | | 376,340 | | | 6.96% | | 20,211,028 | | | 269,647 | | | 5.30% | |
Non-interest-earning assets | 449,969 | | | | | | | 492,691 | | | | | | | 506,334 | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total assets | $ | 21,252,273 | | | | | | | $ | 21,978,010 | | | | | | | $ | 20,717,362 | | | | | | |
Liabilities | | | | | | | | | | | | | | | | | | |
Interest checking accounts | $ | 5,656,212 | | | $ | 62,041 | | | 4.35% | | $ | 5,758,215 | | | $ | 58,637 | | | 4.04% | | $ | 8,536,962 | | | $ | 70,041 | | | 3.26% | |
Money market deposit accounts | 2,802,309 | | | 29,990 | | | 4.25% | | 2,181,184 | | | 22,983 | | | 4.18% | | 3,094,206 | | | 21,220 | | | 2.72% | |
Other savings accounts | 1,218,118 | | | 13,849 | | | 4.51% | | 1,077,298 | | | 11,582 | | | 4.27% | | 669,466 | | | 3,368 | | | 2.00% | |
Certificates of deposit | 3,625,311 | | | 44,427 | | | 4.86% | | 4,466,522 | | | 52,623 | | | 4.67% | | 3,259,801 | | | 29,737 | | | 3.62% | |
Total interest-bearing deposits (4) | 13,301,950 | | | 150,307 | | | 4.48% | | 13,483,219 | | | 145,825 | | | 4.29% | | 15,560,435 | | | 124,366 | | | 3.17% | |
Federal funds purchased | — | | | — | | | —% | | — | | | — | | | —% | | 151,467 | | | 1,437 | | | 3.76% | |
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Borrowings | 1,816,047 | | | 23,102 | | | 5.05% | | 2,328,955 | | | 30,742 | | | 5.24% | | 819,032 | | | 8,707 | | | 4.22% | |
Total interest-bearing liabilities | 15,117,997 | | | 173,409 | | | 4.55% | | 15,812,174 | | | 176,567 | | | 4.43% | | 16,530,934 | | | 134,510 | | | 3.23% | |
Non-interest-bearing deposits (4) | 4,270,557 | | | | | | | 4,347,977 | | | | | | | 2,514,316 | | | | | | |
Total deposits and borrowings | 19,388,554 | | | | | 3.55% | | 20,160,151 | | | | | 3.48% | | 19,045,250 | | | | | 2.80% | |
Other non-interest-bearing liabilities | 276,198 | | | | | | | 306,822 | | | | | | | 271,129 | | | | | | |
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Total liabilities | 19,664,752 | | | | | | | 20,466,973 | | | | | | | 19,316,379 | | | | | | |
Shareholders’ equity | 1,587,521 | | | | | | | 1,511,037 | | | | | | | 1,400,983 | | | | | | |
Total liabilities and shareholders’ equity | $ | 21,252,273 | | | | | | | $ | 21,978,010 | | | | | | | $ | 20,717,362 | | | | | | |
Net interest income | | | 172,506 | | | | | | | 199,773 | | | | | | | 135,137 | | | | |
Tax-equivalent adjustment | | | 398 | | | | | | | 405 | | | | | | | 342 | | | | |
Net interest earnings | | | $ | 172,904 | | | | | | | $ | 200,178 | | | | | | | $ | 135,479 | | | | |
Interest spread | | | | | 3.06% | | | | | | 3.48% | | | | | | 2.50% | |
Net interest margin | | | | | 3.30% | | | | | | 3.70% | | | | | | 2.66% | |
Net interest margin tax equivalent | | | | | 3.31% | | | | | | 3.70% | | | | | | 2.67% | |
Net interest margin tax equivalent excl. PPP (5) | | | | | 3.33% | | | | | | 3.75% | | | | | | 2.87% | |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED) | |
(Dollars in thousands) | | | | | | | | | | | | | | | | | | |
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(1) For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. | |
(2) Includes owner occupied commercial real estate loans. | |
(3) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees. | |
(4) Total costs of deposits (including interest bearing and non-interest bearing) were 3.39%, 3.24% and 2.73% for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively. | |
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(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, presented to approximate interest income as a taxable asset and excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. | |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED) |
(Dollars in thousands) | | | | | | | | | | | |
| Twelve Months Ended |
| December 31, 2023 | | December 31, 2022 |
| Average Balance | | Interest Income or Expense | | Average Yield or Cost (%) | | Average Balance | | Interest Income or Expense | | Average Yield or Cost (%) |
Assets | | | | | | | | | | | |
Interest earning deposits | $ | 2,375,488 | | | $ | 125,923 | | | 5.30% | | $ | 620,071 | | | $ | 10,952 | | | 1.77% |
Investment securities (1) | 4,057,564 | | | 200,659 | | | 4.95% | | 3,992,934 | | | 119,236 | | | 2.99% |
Loans and leases: | | | | | | | | | | | |
Commercial & industrial: | | | | | | | | | | | |
| | | | | | | | | | | |
Specialty lending loans and leases (2) | 5,704,220 | | | 513,976 | | | 9.01% | | 4,357,995 | | | 218,189 | | | 5.01% |
Other commercial & industrial loans (2) | 1,634,937 | | | 106,824 | | | 6.53% | | 1,540,435 | | | 69,564 | | | 4.52% |
Commercial loans to mortgage companies | 1,179,141 | | | 67,660 | | | 5.74% | | 1,682,471 | | | 64,413 | | | 3.83% |
Multifamily loans | 2,165,067 | | | 85,204 | | | 3.94% | | 1,957,672 | | | 73,987 | | | 3.78% |
Loans receivable, PPP | 341,987 | | | 26,627 | | | 7.79% | | 1,724,659 | | | 79,381 | | | 4.60% |
Non-owner occupied commercial real estate loans | 1,423,929 | | | 81,970 | | | 5.76% | | 1,356,086 | | | 59,087 | | | 4.36% |
Residential mortgages | 533,213 | | | 23,240 | | | 4.36% | | 492,870 | | | 19,048 | | | 3.86% |
Installment loans | 1,437,078 | | | 127,237 | | | 8.85% | | 1,798,977 | | | 161,644 | | | 8.99% |
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Total loans and leases (3) | 14,419,572 | | | 1,032,738 | | | 7.16% | | 14,911,165 | | | 745,313 | | | 5.00% |
Other interest-earning assets | 118,574 | | | 8,040 | | | 6.78% | | 64,204 | | | 9,872 | | | NM (6) |
Total interest-earning assets | 20,971,198 | | | 1,367,360 | | | 6.52% | | 19,588,374 | | | 885,373 | | | 4.52% |
Non-interest-earning assets | 515,185 | | | | | | | 521,370 | | | | | |
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Total assets | $ | 21,486,383 | | | | | | | $ | 20,109,744 | | | | | |
Liabilities | | | | | | | | | | | |
Interest checking accounts | $ | 6,048,797 | | | $ | 241,025 | | | 3.98% | | $ | 6,853,533 | | | $ | 125,100 | | | 1.83% |
Money market deposit accounts | 2,358,437 | | | 93,434 | | | 3.96% | | 4,615,574 | | | 57,765 | | | 1.25% |
Other savings accounts | 1,029,951 | | | 41,556 | | | 4.03% | | 716,838 | | | 6,727 | | | 0.94% |
Certificates of deposit | 4,401,855 | | | 200,422 | | | 4.55% | | 1,352,787 | | | 36,647 | | | 2.71% |
Total interest-bearing deposits (4) | 13,839,040 | | | 576,437 | | | 4.17% | | 13,538,732 | | | 226,239 | | | 1.67% |
Federal funds purchased | 3,781 | | | 188 | | | 4.97% | | 349,581 | | | 5,811 | | | 1.66% |
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Borrowings | 2,073,553 | | | 103,286 | | | 4.98% | | 792,563 | | | 29,603 | | | 3.74% |
Total interest-bearing liabilities | 15,916,374 | | | 679,911 | | | 4.27% | | 14,680,876 | | | 261,653 | | | 1.78% |
Non-interest-bearing deposits (4) | 3,801,053 | | | | | | | 3,780,185 | | | | | |
Total deposits and borrowings | 19,717,427 | | | | | 3.45% | | 18,461,061 | | | | | 1.42% |
Other non-interest-bearing liabilities | 272,599 | | | | | | | 255,911 | | | | | |
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Total liabilities | 19,990,026 | | | | | | | 18,716,972 | | | | | |
Shareholders’ equity | 1,496,357 | | | | | | | 1,392,772 | | | | | |
Total liabilities and shareholders’ equity | $ | 21,486,383 | | | | | | | $ | 20,109,744 | | | | | |
Net interest income | | | 687,449 | | | | | | | 623,720 | | | |
Tax-equivalent adjustment | | | 1,568 | | | | | | | 1,185 | | | |
Net interest earnings | | | $ | 689,017 | | | | | | | $ | 624,905 | | | |
Interest spread | | | | | 3.07% | | | | | | 3.10% |
Net interest margin | | | | | 3.28% | | | | | | 3.18% |
Net interest margin tax equivalent | | | | | 3.29% | | | | | | 3.19% |
Net interest margin tax equivalent excl. PPP (5) | | | | | 3.28% | | | | | | 3.16% |
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(1) For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. |
(2) Includes owner occupied commercial real estate loans. |
(3) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees. |
(4) Total costs of deposits (including interest bearing and non-interest bearing) were 3.27% and 1.31% for the twelve months ended December 31, 2023 and 2022, respectively. |
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(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the twelve months ended December 31, 2023 and 2022, presented to approximate interest income as a taxable asset and excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. |
(6) Not meaningful. |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED |
(Dollars in thousands) | | | | | | | | | |
| December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
| 2023 | | 2023 | | 2023 | | 2023 | | 2022 |
Loans and leases held for investment | | | | | | | | | |
Commercial: | | | | | | | | | |
| | | | | | | | | |
Commercial & industrial: | | | | | | | | | |
Specialty lending | $ | 5,006,693 | | | $ | 5,422,161 | | | $ | 5,534,832 | | | $ | 5,519,176 | | | $ | 5,412,887 | |
Other commercial & industrial | 1,087,582 | | | 1,115,364 | | | 1,052,145 | | | 1,168,161 | | | 1,135,336 | |
Loans to mortgage companies | 1,014,742 | | | 1,042,549 | | | 1,108,598 | | | 1,374,894 | | | 1,447,919 | |
Multifamily | 2,138,622 | | | 2,130,213 | | | 2,151,734 | | | 2,195,211 | | | 2,213,019 | |
Commercial real estate owner occupied | 797,319 | | | 794,815 | | | 842,042 | | | 895,314 | | | 885,339 | |
Loans receivable, PPP | 74,735 | | | 137,063 | | | 188,763 | | | 246,258 | | | 998,153 | |
Commercial real estate non-owner occupied | 1,177,650 | | | 1,178,203 | | | 1,211,091 | | | 1,245,248 | | | 1,290,730 | |
Construction | 166,393 | | | 252,588 | | | 212,214 | | | 188,123 | | | 162,009 | |
Total commercial loans and leases | 11,463,736 | | | 12,072,956 | | | 12,301,419 | | | 12,832,385 | | | 13,545,392 | |
Consumer: | | | | | | | | | |
Residential | 484,435 | | | 483,133 | | | 487,199 | | | 494,815 | | | 497,952 | |
Manufactured housing | 38,670 | | | 40,129 | | | 41,664 | | | 43,272 | | | 45,076 | |
| | | | | | | | | |
Installment: | | | | | | | | | |
Personal | 555,533 | | | 629,843 | | | 752,470 | | | 849,420 | | | 964,641 | |
Other | 319,393 | | | 337,053 | | | 250,047 | | | 419,085 | | | 413,298 | |
Total installment loans | 874,926 | | | 966,896 | | | 1,002,517 | | | 1,268,505 | | | 1,377,939 | |
| | | | | | | | | |
Total consumer loans | 1,398,031 | | | 1,490,158 | | | 1,531,380 | | | 1,806,592 | | | 1,920,967 | |
Total loans and leases held for investment | $ | 12,861,767 | | | $ | 13,563,114 | | | $ | 13,832,799 | | | $ | 14,638,977 | | | $ | 15,466,359 | |
| | | | | | | | | |
Loans held for sale | | | | | | | | | |
Commercial: | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Multifamily | $ | — | | | $ | — | | | $ | — | | | $ | 4,051 | | | $ | 4,079 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Commercial real estate non-owner occupied | — | | | — | | | — | | | 16,000 | | | — | |
| | | | | | | | | |
Total commercial loans and leases | — | | | — | | | — | | | 20,051 | | | 4,079 | |
Consumer: | | | | | | | | | |
Residential | 1,215 | | | 1,005 | | | 1,234 | | | 821 | | | 829 | |
| | | | | | | | | |
Installment: | | | | | | | | | |
Personal | 151,040 | | | 124,848 | | | 76,874 | | | 307,336 | | | 133,801 | |
Other | 188,062 | | | 24,515 | | | — | | | 95,849 | | | 189,603 | |
Total installment loans | 339,102 | | | 149,363 | | | 76,874 | | | 403,185 | | | 323,404 | |
| | | | | | | | | |
Total consumer loans | 340,317 | | | 150,368 | | | 78,108 | | | 404,006 | | | 324,233 | |
Total loans held for sale | $ | 340,317 | | | $ | 150,368 | | | $ | 78,108 | | | $ | 424,057 | | | $ | 328,312 | |
| | | | | | | | | |
Total loans and leases portfolio | $ | 13,202,084 | | | $ | 13,713,482 | | | $ | 13,910,907 | | | $ | 15,063,034 | | | $ | 15,794,671 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
PERIOD END DEPOSIT COMPOSITION - UNAUDITED |
(Dollars in thousands) | | | | | | | | | |
| December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
| 2023 | | 2023 | | 2023 | | 2023 | | 2022 |
| | | | | | | | | |
Demand, non-interest bearing | $ | 4,422,494 | | | $ | 4,758,682 | | | $ | 4,490,198 | | | $ | 3,487,517 | | | $ | 1,885,045 | |
Demand, interest bearing | 5,580,527 | | | 5,824,410 | | | 5,551,037 | | | 5,791,302 | | | 8,476,027 | |
Total demand deposits | 10,003,021 | | | 10,583,092 | | | 10,041,235 | | | 9,278,819 | | | 10,361,072 | |
Savings | 1,402,941 | | | 1,118,353 | | | 1,048,229 | | | 924,359 | | | 811,798 | |
Money market | 3,226,395 | | | 2,499,593 | | | 2,004,264 | | | 2,019,633 | | | 2,734,217 | |
Time deposits | 3,287,879 | | | 3,994,326 | | | 4,856,703 | | | 5,500,806 | | | 4,249,866 | |
Total deposits | $ | 17,920,236 | | | $ | 18,195,364 | | | $ | 17,950,431 | | | $ | 17,723,617 | | | $ | 18,156,953 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |
ASSET QUALITY - UNAUDITED | |
(Dollars in thousands) | As of December 31, 2023 | | As of September 30, 2023 | | As of December 31, 2022 | |
| Total loans | | Non accrual /NPLs | | Allowance for credit losses | | Total NPLs to total loans | | Total reserves to total NPLs | | Total loans | | Non accrual /NPLs | | Allowance for credit losses | | Total NPLs to total loans | | Total reserves to total NPLs | | Total loans | | Non accrual /NPLs | | Allowance for credit losses | | Total NPLs to total loans | | Total reserves to total NPLs | |
| | | | | | | | | | | | | | | |
Loan type | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial & industrial, including specialty lending (1) | $ | 6,211,105 | | | $ | 4,436 | | | $ | 23,503 | | | 0.07 | % | | 529.82 | % | | $ | 6,617,508 | | | $ | 5,767 | | | $ | 24,986 | | | 0.09 | % | | 433.26 | % | | $ | 6,672,830 | | | $ | 1,761 | | | $ | 17,582 | | | 0.03 | % | | 998.41 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multifamily | 2,138,622 | | | — | | | 16,343 | | | — | % | | — | % | | 2,130,213 | | | — | | | 15,870 | | | — | % | | — | % | | 2,213,019 | | | 1,143 | | | 14,541 | | | 0.05 | % | | 1272.18 | % | |
Commercial real estate owner occupied | 797,319 | | | 5,869 | | | 9,882 | | | 0.74 | % | | 168.38 | % | | 794,815 | | | 7,442 | | | 10,363 | | | 0.94 | % | | 139.25 | % | | 885,339 | | | 2,768 | | | 6,454 | | | 0.31 | % | | 233.16 | % | |
Commercial real estate non-owner occupied | 1,177,650 | | | — | | | 16,859 | | | — | % | | — | % | | 1,178,203 | | | — | | | 15,819 | | | — | % | | — | % | | 1,290,730 | | | — | | | 11,219 | | | — | % | | — | % | |
Construction | 166,393 | | | — | | | 1,482 | | | — | % | | — | % | | 252,588 | | | — | | | 3,130 | | | — | % | | — | % | | 162,009 | | | — | | | 1,913 | | | — | % | | — | % | |
Total commercial loans and leases receivable | 10,491,089 | | | 10,305 | | | 68,069 | | | 0.10 | % | | 660.54 | % | | 10,973,327 | | | 13,209 | | | 70,168 | | | 0.12 | % | | 531.21 | % | | 11,223,927 | | | 5,672 | | | 51,709 | | | 0.05 | % | | 911.65 | % | |
Residential | 484,435 | | | 6,802 | | | 6,586 | | | 1.40 | % | | 96.82 | % | | 483,133 | | | 6,559 | | | 6,802 | | | 1.36 | % | | 103.70 | % | | 497,952 | | | 6,922 | | | 6,094 | | | 1.39 | % | | 88.04 | % | |
Manufactured housing | 38,670 | | | 2,331 | | | 4,239 | | | 6.03 | % | | 181.85 | % | | 40,129 | | | 2,582 | | | 4,080 | | | 6.43 | % | | 158.02 | % | | 45,076 | | | 2,410 | | | 4,430 | | | 5.35 | % | | 183.82 | % | |
Installment | 874,926 | | | 7,211 | | | 56,417 | | | 0.82 | % | | 782.37 | % | | 966,896 | | | 7,299 | | | 58,163 | | | 0.75 | % | | 796.86 | % | | 1,377,939 | | | 9,527 | | | 68,691 | | | 0.69 | % | | 721.01 | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans receivable | 1,398,031 | | | 16,344 | | | 67,242 | | | 1.17 | % | | 411.42 | % | | 1,490,158 | | | 16,440 | | | 69,045 | | | 1.10 | % | | 419.98 | % | | 1,920,967 | | | 18,859 | | | 79,215 | | | 0.98 | % | | 420.04 | % | |
Loans and leases receivable (1) | 11,889,120 | | | 26,649 | | | 135,311 | | | 0.22 | % | | 507.75 | % | | 12,463,485 | | | 29,649 | | | 139,213 | | | 0.24 | % | | 469.54 | % | | 13,144,894 | | | 24,531 | | | 130,924 | | | 0.19 | % | | 533.71 | % | |
Loans receivable, PPP | 74,735 | | | — | | | — | | | — | % | | — | % | | 137,063 | | | — | | | — | | | — | % | | — | % | | 998,153 | | | — | | | — | | | — | % | | — | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable, mortgage warehouse, at fair value | 897,912 | | | — | | | — | | | — | % | | — | % | | 962,566 | | | — | | | — | | | — | % | | — | % | | 1,323,312 | | | — | | | — | | | — | % | | — | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans held for sale | 340,317 | | | 461 | | | — | | | 0.14 | % | | — | % | | 150,368 | | | 218 | | | — | | | 0.14 | % | | — | % | | 328,312 | | | 6,206 | | | — | | | 1.89 | % | | — | % | |
Total portfolio | $ | 13,202,084 | | | $ | 27,110 | | | $ | 135,311 | | | 0.21 | % | | 499.12 | % | | $ | 13,713,482 | | | $ | 29,867 | | | $ | 139,213 | | | 0.22 | % | | 466.11 | % | | $ | 15,794,671 | | | $ | 30,737 | | | $ | 130,924 | | | 0.19 | % | | 425.95 | % | |
(1) Excluding loans receivable, PPP from total loans and leases receivable is a non-GAAP measure. Management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. Please refer to the reconciliation schedules that follow this table.
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED |
(Dollars in thousands) | | | | | | | | | | | | | |
| Q4 | | Q3 | | Q2 | | Q1 | | Q4 | | Twelve Months Ended December 31, |
| 2023 | | 2023 | | 2023 (1) | | 2023 | | 2022 | | 2023 | | 2022 |
Loan type | | | | | | | | | | | | | |
Commercial & industrial, including specialty lending | $ | 5,282 | | | $ | 2,974 | | | $ | 258 | | | $ | (71) | | | $ | 12,960 | | | $ | 8,443 | | | $ | 15,066 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Multifamily | 127 | | | 1,999 | | | 1,448 | | | — | | | — | | | 3,574 | | | 1,653 | |
Commercial real estate owner occupied | — | | | 39 | | | (34) | | | — | | | (2) | | | 5 | | | (51) | |
Commercial real estate non-owner occupied | (288) | | | — | | | 266 | | | 4,234 | | | 972 | | | 4,212 | | | 5,954 | |
Construction | — | | | — | | | — | | | (116) | | | (10) | | | (116) | | | (236) | |
Residential | (1) | | | 13 | | | 24 | | | (2) | | | 7 | | | 34 | | | (47) | |
Installment | 12,202 | | | 12,473 | | | 13,602 | | | 14,606 | | | 13,237 | | | 52,883 | | | 44,029 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Total net charge-offs (recoveries) from loans held for investment | $ | 17,322 | | | $ | 17,498 | | | $ | 15,564 | | | $ | 18,651 | | | $ | 27,164 | | | $ | 69,035 | | | $ | 66,368 | |
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| | | | | | | | | | | | | |
(1) Excludes $6.2 million of charge-offs for certain PCD loans acquired from the FDIC that were immediately applied against $8.7 million of allowance for credit losses on PCD loans recognized upon the acquisition of the loan portfolio on June 15, 2023. Subsequent recoveries and charge-offs of these PCD loans will be included in the period in which they occur.
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED |
We believe that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. The non-GAAP measures presented are not necessarily comparable to non-GAAP measures that may be presented by other financial institutions. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP.
The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document.
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Core Earnings - Customers Bancorp | | | | | | | | | | | | | | | | Twelve Months Ended December 31, |
Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
(Dollars in thousands, except per share data) | USD | Per share | | USD | Per share | | USD | Per share | | USD | Per share | | USD | Per share | | USD | Per share | | USD | Per share |
GAAP net income to common shareholders | $ | 58,223 | | $ | 1.79 | | | $ | 82,953 | | $ | 2.58 | | | $ | 44,007 | | $ | 1.39 | | | $ | 50,265 | | $ | 1.55 | | | $ | 25,623 | | $ | 0.77 | | | $ | 235,448 | | $ | 7.32 | | | $ | 218,402 | | $ | 6.51 | |
Reconciling items (after tax): | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Severance expense | 473 | | 0.01 | | | — | | — | | | 141 | | 0.00 | | | 637 | | 0.02 | | | — | | — | | | 1,251 | | 0.04 | | | 1,058 | | 0.03 | |
Impairments on fixed assets and leases | — | | — | | | — | | — | | | 12 | | 0.00 | | | 86 | | 0.00 | | | — | | — | | | 98 | | 0.00 | | | 1,051 | | 0.03 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Loss on sale of consumer installment loans | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 18,221 | | 0.54 | |
Loss on sale of capital call lines of credit | — | | — | | | — | | — | | | 3,914 | | 0.12 | | | — | | — | | | — | | — | | | 3,914 | | 0.12 | | | — | | — | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
(Gains) losses on investment securities | (85) | | 0.00 | | | 492 | | 0.02 | | | 49 | | 0.00 | | | (49) | | 0.00 | | | 13,543 | | 0.41 | | 407 | | 0.01 | | | 18,926 | | 0.56 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Derivative credit valuation adjustment | 267 | | 0.01 | | | (151) | | 0.00 | | | (101) | | 0.00 | | | 204 | | 0.01 | | | 202 | | 0.01 | | | 219 | | 0.01 | | | (1,243) | | (0.04) | |
Tax on surrender of bank-owned life insurance policies | — | | — | | | — | | — | | | 4,141 | | 0.13 | | | — | | — | | | — | | — | | | 4,141 | | 0.13 | | | — | | — | |
FDIC special assessment | 2,755 | | 0.08 | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 2,755 | | 0.09 | | | — | | — | |
| | | | | | | | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Core earnings | $ | 61,633 | | $ | 1.90 | | | $ | 83,294 | | $ | 2.59 | | | $ | 52,163 | | $ | 1.65 | | | $ | 51,143 | | $ | 1.58 | | | $ | 39,368 | | $ | 1.19 | | | $ | 248,233 | | $ | 7.72 | | | $ | 256,415 | | $ | 7.63 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |
| | | | | | | | | |
(Dollars in thousands, except per share data) |
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Core Earnings, excluding PPP - Customers Bancorp | | | | | | | | | | | | | | | | Twelve Months Ended December 31, |
Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
(Dollars in thousands, except per share data) | USD | Per share | | USD | Per share | | USD | Per share | | USD | Per share | | USD | Per share | | USD | Per share | | USD | Per share |
GAAP net income to common shareholders | $ | 58,223 | | $ | 1.79 | | | $ | 82,953 | | $ | 2.58 | | | $ | 44,007 | | $ | 1.39 | | | $ | 50,265 | | $ | 1.55 | | | $ | 25,623 | | $ | 0.77 | | | $ | 235,448 | | $ | 7.32 | | | $ | 218,402 | | $ | 6.51 | |
Less: PPP net income (loss) (after tax) | (5,264) | | (0.16) | | | (11,168) | | (0.35) | | | (2,068) | | (0.07) | | | 9,606 | | 0.30 | | | (5,956) | | (0.18) | | | (8,894) | | (0.28) | | | 37,669 | | 1.12 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Net income to common shareholders, excluding PPP | 63,487 | | 1.95 | | | 94,121 | | 2.93 | | | 46,075 | | 1.46 | | | 40,659 | | 1.26 | | | 31,579 | | 0.95 | | | 244,342 | | 7.60 | | | 180,733 | | 5.39 | |
Reconciling items (after tax): | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Severance expense | 473 | | 0.01 | | | — | | — | | | 141 | | 0.00 | | | 637 | | 0.02 | | | — | | — | | | 1,251 | | 0.04 | | | 1,058 | | 0.03 | |
Impairments on fixed assets and leases | — | | — | | | — | | — | | | 12 | | 0.00 | | | 86 | | 0.00 | | | — | | — | | | 98 | | 0.00 | | | 1,051 | | 0.03 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Loss on sale of consumer installment loans | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 18,221 | | 0.54 | |
Loss on sale of capital call lines of credit | — | | — | | | — | | — | | | 3,914 | | 0.12 | | | — | | — | | | — | | — | | | 3,914 | | 0.12 | | | — | | — | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
(Gains) losses on investment securities | (85) | | 0.00 | | | 492 | | 0.02 | | | 49 | | 0.00 | | | (49) | | 0.00 | | | 13,543 | | 0.41 | | | 407 | | 0.01 | | | 18,926 | | 0.56 | |
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| | | | | | | | | | | | | | | | | | | | |
Derivative credit valuation adjustment | 267 | | 0.01 | | | (151) | | 0.00 | | | (101) | | 0.00 | | | 204 | | 0.01 | | | 202 | | 0.01 | | | 219 | | 0.01 | | | (1,243) | | (0.04) | |
Tax on surrender of bank-owned life insurance policies | — | | — | | | — | | — | | | 4,141 | | 0.13 | | | — | | — | | | — | | — | | | 4,141 | | 0.13 | | | — | | — | |
FDIC special assessment | 2,755 | | 0.08 | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 2,755 | | 0.09 | | | — | | — | |
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Core earnings, excluding PPP | $ | 66,897 | | $ | 2.06 | | | $ | 94,462 | | $ | 2.94 | | | $ | 54,231 | | $ | 1.72 | | | $ | 41,537 | | $ | 1.28 | | | $ | 45,324 | | $ | 1.37 | | | $ | 257,127 | | $ | 7.99 | | | $ | 218,746 | | $ | 6.51 | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Core Return on Average Assets - Customers Bancorp | | | | | | | | | | | Twelve Months Ended December 31, |
(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
GAAP net income | $ | 62,092 | | | $ | 86,756 | | | $ | 47,574 | | | $ | 53,721 | | | $ | 28,711 | | | $ | 250,143 | | | $ | 228,034 | |
Reconciling items (after tax): | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Severance expense | 473 | | | — | | | 141 | | | 637 | | | — | | | 1,251 | | | 1,058 | |
Impairments on fixed assets and leases | — | | | — | | | 12 | | | 86 | | | — | | | 98 | | | 1,051 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Loss on sale of consumer installment loans | — | | | — | | | — | | | — | | | — | | | — | | | 18,221 | |
Loss on sale of capital call lines of credit | — | | | — | | | 3,914 | | | — | | | — | | | 3,914 | | | — | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(Gains) losses on investment securities | (85) | | | 492 | | | 49 | | | (49) | | | 13,543 | | | 407 | | | 18,926 | |
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| | | | | | | | | | | | | |
Derivative credit valuation adjustment | 267 | | | (151) | | | (101) | | | 204 | | | 202 | | | 219 | | | (1,243) | |
Tax on surrender of bank-owned life insurance policies | — | | | — | | | 4,141 | | | — | | | — | | | 4,141 | | | — | |
FDIC special assessment | 2,755 | | | — | | | — | | | — | | | — | | | 2,755 | | | — | |
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Core net income | $ | 65,502 | | | $ | 87,097 | | | $ | 55,730 | | | $ | 54,599 | | | $ | 42,456 | | | $ | 262,928 | | | $ | 266,047 | |
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Average total assets | $ | 21,252,273 | | | $ | 21,978,010 | | | $ | 21,654,735 | | | $ | 21,052,920 | | | $ | 20,717,362 | | | $ | 21,486,383 | | | $ | 20,109,744 | |
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Core return on average assets | 1.22 | % | | 1.57 | % | | 1.03 | % | | 1.05 | % | | 0.81 | % | | 1.22 | % | | 1.32 | % |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |
| | | | | | | | | |
(Dollars in thousands, except per share data) |
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Core Return on Average Assets, excluding PPP - Customers Bancorp | | | | | | | | | | | Twelve Months Ended December 31, |
(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
GAAP net income | $ | 62,092 | | | $ | 86,756 | | | $ | 47,574 | | | $ | 53,721 | | | $ | 28,711 | | | $ | 250,143 | | | $ | 228,034 | |
Less: PPP net income (loss) (after tax) | (5,264) | | | (11,168) | | | (2,068) | | | 9,606 | | | (5,956) | | | (8,894) | | | 37,669 | |
Net income, excluding PPP | 67,356 | | | 97,924 | | | 49,642 | | | 44,115 | | | 34,667 | | | 259,037 | | | 190,365 | |
Reconciling items (after tax): | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Severance expense | 473 | | | — | | | 141 | | | 637 | | | — | | | 1,251 | | | 1,058 | |
Impairments on fixed assets and leases | — | | | — | | | 12 | | | 86 | | | — | | | 98 | | | 1,051 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Loss on sale of consumer installment loans | — | | | — | | | — | | | — | | | — | | | — | | | 18,221 | |
Loss on sale of capital call lines of credit | — | | | — | | | 3,914 | | | — | | | — | | | 3,914 | | | — | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(Gains) losses on investment securities | (85) | | | 492 | | | 49 | | | (49) | | | 13,543 | | | 407 | | | 18,926 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Derivative credit valuation adjustment | 267 | | | (151) | | | (101) | | | 204 | | | 202 | | | 219 | | | (1,243) | |
Tax on surrender of bank-owned life insurance policies | — | | | — | | | 4,141 | | | — | | | — | | | 4,141 | | | — | |
FDIC special assessment | 2,755 | | | — | | | — | | | — | | | — | | | 2,755 | | | — | |
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Core net income, excluding PPP | $ | 70,766 | | | $ | 98,265 | | | $ | 57,798 | | | $ | 44,993 | | | $ | 48,412 | | | $ | 271,822 | | | $ | 228,378 | |
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Average total assets | $ | 21,252,273 | | | $ | 21,978,010 | | | $ | 21,654,735 | | | $ | 21,052,920 | | | $ | 20,717,362 | | | $ | 21,486,383 | | | $ | 20,109,744 | |
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Core return on average assets, excluding PPP | 1.32 | % | | 1.77 | % | | 1.07 | % | | 0.87 | % | | 0.93 | % | | 1.27 | % | | 1.14 | % |
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Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp | | | | | | | | | | | Twelve Months Ended December 31, |
(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
GAAP net income | $ | 62,092 | | | $ | 86,756 | | | $ | 47,574 | | | $ | 53,721 | | | $ | 28,711 | | | $ | 250,143 | | | $ | 228,034 | |
Reconciling items: | | | | | | | | | | | | | |
Income tax expense | 21,796 | | | 23,470 | | | 20,768 | | | 14,563 | | | 7,136 | | | 80,597 | | | 63,263 | |
Provision (benefit) for credit losses | 13,523 | | | 17,856 | | | 23,629 | | | 19,603 | | | 28,216 | | | 74,611 | | | 60,066 | |
Provision (benefit) for credit losses on unfunded commitments | (136) | | | 48 | | | (304) | | | 280 | | | 153 | | | (112) | | | 906 | |
Severance expense | 639 | | | — | | | 182 | | | 809 | | | — | | | 1,630 | | | 1,363 | |
| | | | | | | | | | | | | |
Impairments on fixed assets and leases | — | | | — | | | 15 | | | 109 | | | — | | | 124 | | | 1,362 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Loss on sale of consumer installment loans | — | | | — | | | — | | | — | | | — | | | — | | | 23,465 | |
Loss on sale of capital call lines of credit | — | | | — | | | 5,037 | | | — | | | — | | | 5,037 | | | — | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(Gains) losses on investment securities | (114) | | | 626 | | | 62 | | | (62) | | | 16,909 | | | 512 | | | 23,874 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Derivative credit valuation adjustment | 361 | | | (192) | | | (130) | | | 259 | | | 252 | | | 298 | | | (1,621) | |
FDIC special assessment | 3,723 | | | — | | | — | | | — | | | — | | | 3,723 | | | — | |
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Adjusted net income - pre-tax pre-provision | $ | 101,884 | | | $ | 128,564 | | | $ | 96,833 | | | $ | 89,282 | | | $ | 81,377 | | | $ | 416,563 | | | $ | 400,712 | |
| | | | | | | | | | | | | |
Average total assets | $ | 21,252,273 | | | $ | 21,978,010 | | | $ | 21,654,735 | | | $ | 21,052,920 | | | $ | 20,717,362 | | | $ | 21,486,383 | | | $ | 20,109,744 | |
| | | | | | | | | | | | | |
Adjusted ROAA - pre-tax pre-provision | 1.90 | % | | 2.32 | % | | 1.79 | % | | 1.72 | % | | 1.56 | % | | 1.94 | % | | 1.99 | % |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |
| | | | | | | | | |
(Dollars in thousands, except per share data) |
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Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision, excluding PPP - Customers Bancorp | | | | | | | | | | | Twelve Months Ended December 31, |
(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
GAAP net income | $ | 62,092 | | | $ | 86,756 | | | $ | 47,574 | | | $ | 53,721 | | | $ | 28,711 | | | $ | 250,143 | | | $ | 228,034 | |
Less: PPP net income (loss) (after tax) | (5,264) | | | (11,168) | | | (2,068) | | | 9,606 | | | (5,956) | | | (8,894) | | | 37,669 | |
Net income, excluding PPP | 67,356 | | | 97,924 | | | 49,642 | | | 44,115 | | | 34,667 | | | 259,037 | | | 190,365 | |
Reconciling items: | | | | | | | | | | | | | |
Income tax expense | 21,796 | | | 23,470 | | | 20,768 | | | 14,563 | | | 7,136 | | | 80,597 | | | 63,263 | |
Provision (benefit) for credit losses | 13,523 | | | 17,856 | | | 23,629 | | | 19,603 | | | 28,216 | | | 74,611 | | | 60,066 | |
Provision (benefit) for credit losses on unfunded commitments | (136) | | | 48 | | | (304) | | | 280 | | | 153 | | | (112) | | | 906 | |
Severance expense | 639 | | | — | | | 182 | | | 809 | | | — | | | 1,630 | | | 1,363 | |
| | | | | | | | | | | | | |
Impairments on fixed assets and leases | — | | | — | | | 15 | | | 109 | | | — | | | 124 | | | 1,362 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Loss on sale of consumer installment loans | — | | | — | | | — | | | — | | | — | | | — | | | 23,465 | |
Loss on sale of capital call lines of credit | — | | | — | | | 5,037 | | | — | | | — | | | 5,037 | | | — | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(Gains) losses on investment securities | (114) | | | 626 | | | 62 | | | (62) | | | 16,909 | | | 512 | | | 23,874 | |
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| | | | | | | | | | | | | |
Derivative credit valuation adjustment | 361 | | | (192) | | | (130) | | | 259 | | | 252 | | | 298 | | | (1,621) | |
FDIC special assessment | 3,723 | | | — | | | — | | | — | | | — | | | 3,723 | | | — | |
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Adjusted net income - pre-tax pre-provision, excluding PPP | $ | 107,148 | | | $ | 139,732 | | | $ | 98,901 | | | $ | 79,676 | | | $ | 87,333 | | | $ | 425,457 | | | $ | 363,043 | |
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Average total assets | $ | 21,252,273 | | | $ | 21,978,010 | | | $ | 21,654,735 | | | $ | 21,052,920 | | | $ | 20,717,362 | | | $ | 21,486,383 | | | $ | 20,109,744 | |
| | | | | | | | | | | | | |
Adjusted ROAA - pre-tax pre-provision, excluding PPP | 2.00 | % | | 2.52 | % | | 1.83 | % | | 1.53 | % | | 1.67 | % | | 1.98 | % | | 1.81 | % |
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Core Return on Average Common Equity - Customers Bancorp | | | | | | | | | | | Twelve Months Ended December 31, |
(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
GAAP net income to common shareholders | $ | 58,223 | | | $ | 82,953 | | | $ | 44,007 | | | $ | 50,265 | | | $ | 25,623 | | | $ | 235,448 | | | $ | 218,402 | |
Reconciling items (after tax): | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Severance expense | 473 | | | — | | | 141 | | | 637 | | | — | | | 1,251 | | | 1,058 | |
Impairments on fixed assets and leases | — | | | — | | | 12 | | | 86 | | | — | | | 98 | | | 1,051 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Loss on sale of consumer installment loans | — | | | — | | | — | | | — | | | — | | | — | | | 18,221 | |
Loss on sale of capital call lines of credit | — | | | — | | | 3,914 | | | — | | | — | | | 3,914 | | | — | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(Gains) losses on investment securities | (85) | | | 492 | | | 49 | | | (49) | | | 13,543 | | | 407 | | | 18,926 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Derivative credit valuation adjustment | 267 | | | (151) | | | (101) | | | 204 | | | 202 | | | 219 | | | (1,243) | |
Tax on surrender of bank-owned life insurance policies | — | | | — | | | 4,141 | | | — | | | — | | | 4,141 | | | — | |
FDIC special assessment | 2,755 | | | — | | | — | | | — | | | — | | | 2,755 | | | — | |
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Core earnings | $ | 61,633 | | | $ | 83,294 | | | $ | 52,163 | | | $ | 51,143 | | | $ | 39,368 | | | $ | 248,233 | | | $ | 256,415 | |
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Average total common shareholders’ equity | $ | 1,449,728 | | | $ | 1,373,244 | | | $ | 1,335,408 | | | $ | 1,273,780 | | | $ | 1,263,190 | | | $ | 1,358,564 | | | $ | 1,254,979 | |
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Core return on average common equity | 16.87 | % | | 24.06 | % | | 15.67 | % | | 16.28 | % | | 12.36 | % | | 18.27 | % | | 20.43 | % |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |
| | | | | | | | | |
(Dollars in thousands, except per share data) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted ROCE - Pre-Tax Pre-Provision - Customers Bancorp | | | | | | | | | | | Twelve Months Ended December 31, |
(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
GAAP net income to common shareholders | $ | 58,223 | | | $ | 82,953 | | | $ | 44,007 | | | $ | 50,265 | | | $ | 25,623 | | | $ | 235,448 | | | $ | 218,402 | |
Reconciling items: | | | | | | | | | | | | | |
Income tax expense | 21,796 | | | 23,470 | | | 20,768 | | | 14,563 | | | 7,136 | | | 80,597 | | | 63,263 | |
Provision (benefit) for credit losses | 13,523 | | | 17,856 | | | 23,629 | | | 19,603 | | | 28,216 | | | 74,611 | | | 60,066 | |
Provision (benefit) for credit losses on unfunded commitments | (136) | | | 48 | | | (304) | | | 280 | | | 153 | | | (112) | | | 906 | |
| | | | | | | | | | | | | |
Severance expense | 639 | | | — | | | 182 | | | 809 | | | — | | | 1,630 | | | 1,363 | |
Impairments on fixed assets and leases | — | | | — | | | 15 | | | 109 | | | — | | | 124 | | | 1,362 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Loss on sale of consumer installment loans | — | | | — | | | — | | | — | | | — | | | — | | | 23,465 | |
Loss on sale of capital call lines of credit | — | | | — | | | 5,037 | | | — | | | — | | | 5,037 | | | — | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
(Gains) losses on investment securities | (114) | | | 626 | | | 62 | | | (62) | | | 16,909 | | | 512 | | | 23,874 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Derivative credit valuation adjustment | 361 | | | (192) | | | (130) | | | 259 | | | 252 | | | 298 | | | (1,621) | |
FDIC special assessment | 3,723 | | | — | | | — | | | — | | | — | | | 3,723 | | | — | |
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Pre-tax pre-provision adjusted net income available to common shareholders | $ | 98,015 | | | $ | 124,761 | | | $ | 93,266 | | | $ | 85,826 | | | $ | 78,289 | | | $ | 401,868 | | | $ | 391,080 | |
| | | | | | | | | | | | | |
Average total common shareholders’ equity | $ | 1,449,728 | | | $ | 1,373,244 | | | $ | 1,335,408 | | | $ | 1,273,780 | | | $ | 1,263,190 | | | $ | 1,358,564 | | | $ | 1,254,979 | |
| | | | | | | | | | | | | |
Adjusted ROCE - pre-tax pre-provision | 26.82 | % | | 36.04 | % | | 28.01 | % | | 27.33 | % | | 24.59 | % | | 29.58 | % | | 31.16 | % |
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Net Interest Margin, Tax Equivalent, excluding PPP - Customers Bancorp | | | | | | | | | | | Twelve Months Ended December 31, |
(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
GAAP net interest income | $ | 172,506 | | | $ | 199,773 | | | $ | 165,271 | | | $ | 149,899 | | | $ | 135,137 | | | $ | 687,449 | | | $ | 623,720 | |
PPP net interest (income) expense | 596 | | | 1,381 | | | 765 | | | (14,106) | | | 2,791 | | | (11,364) | | | (60,402) | |
Tax-equivalent adjustment | 398 | | | 405 | | | 390 | | | 375 | | | 342 | | | 1,568 | | | 1,185 | |
Net interest income, tax equivalent, excluding PPP | $ | 173,500 | | | $ | 201,559 | | | $ | 166,426 | | | $ | 136,168 | | | $ | 138,270 | | | $ | 677,653 | | | $ | 564,503 | |
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GAAP average total interest earning assets | $ | 20,802,304 | | | $ | 21,485,319 | | | $ | 21,073,680 | | | $ | 20,514,677 | | | $ | 20,211,028 | | | $ | 20,971,198 | | | $ | 19,588,374 | |
Average PPP loans | (115,851) | | | (166,164) | | | (207,127) | | | (889,235) | | | (1,065,919) | | | (341,987) | | | (1,724,659) | |
Adjusted average total interest earning assets, excluding PPP | $ | 20,686,453 | | | $ | 21,319,155 | | | $ | 20,866,553 | | | $ | 19,625,442 | | | $ | 19,145,109 | | | $ | 20,629,211 | | | $ | 17,863,715 | |
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Net interest margin, tax equivalent, excluding PPP | 3.33 | % | | 3.75 | % | | 3.20 | % | | 2.80 | % | | 2.87 | % | | 3.28 | % | | 3.16 | % |
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Loan Yield, excluding PPP | | | | | | | | | | | Twelve Months Ended December 31, |
(Dollars in thousands except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
Interest income on loans and leases | $ | 248,160 | | | $ | 275,771 | | | $ | 252,894 | | | $ | 255,913 | | | $ | 218,740 | | | $ | 1,032,738 | | | $ | 745,313 | |
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PPP interest income | (839) | | | (604) | | | (1,633) | | | (23,551) | | | (7,249) | | | (26,627) | | | (79,381) | |
Interest income on core loans (Loans and leases, excluding PPP) | $ | 247,321 | | | $ | 275,167 | | | $ | 251,261 | | | $ | 232,362 | | | $ | 211,491 | | | $ | 1,006,111 | | | $ | 665,932 | |
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Average total loans and leases | $ | 13,486,453 | | | $ | 13,899,034 | | | $ | 14,842,432 | | | $ | 15,477,973 | | | $ | 15,388,003 | | | $ | 14,419,572 | | | $ | 14,911,165 | |
Average PPP loans | (115,851) | | | (166,164) | | | (207,127) | | | (889,235) | | | (1,065,919) | | | (341,987) | | | (1,724,659) | |
Adjusted average total loans and leases | $ | 13,370,602 | | | $ | 13,732,870 | | | $ | 14,635,305 | | | $ | 14,588,738 | | | $ | 14,322,084 | | | $ | 14,077,585 | | | $ | 13,186,506 | |
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Loan yield, excluding PPP | 7.34 | % | | 7.95 | % | | 6.89 | % | | 6.46 | % | | 5.86 | % | | 7.15 | % | | 5.05 | % |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |
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(Dollars in thousands, except per share data) |
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Core Efficiency Ratio - Customers Bancorp | | | | | | | | | | | Twelve Months Ended December 31, |
(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
GAAP net interest income | $ | 172,506 | | | $ | 199,773 | | | $ | 165,271 | | | $ | 149,899 | | | $ | 135,137 | | | $ | 687,449 | | | $ | 623,720 | |
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GAAP non-interest income | $ | 18,672 | | | $ | 17,775 | | | $ | 15,997 | | | $ | 18,121 | | | $ | 7,345 | | | $ | 70,565 | | | $ | 32,272 | |
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Loss on sale of consumer installment loans | — | | | — | | | — | | | — | | | — | | | — | | | 23,465 | |
Loss on sale of capital call lines of credit | — | | | — | | | 5,037 | | | — | | | — | | | 5,037 | | | — | |
(Gains) losses on investment securities | (114) | | | 626 | | | 62 | | | (62) | | | 16,909 | | | 512 | | | 23,874 | |
Derivative credit valuation adjustment | 361 | | | (192) | | | (130) | | | 259 | | | 252 | | | 298 | | | (1,621) | |
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Core non-interest income | 18,919 | | | 18,209 | | | 20,966 | | | 18,318 | | | 24,506 | | | 76,412 | | | 77,990 | |
Core revenue | $ | 191,425 | | | $ | 217,982 | | | $ | 186,237 | | | $ | 168,217 | | | $ | 159,643 | | | $ | 763,861 | | | $ | 701,710 | |
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GAAP non-interest expense | $ | 93,767 | | | $ | 89,466 | | | $ | 89,297 | | | $ | 80,133 | | | $ | 78,419 | | | $ | 352,663 | | | $ | 304,629 | |
Severance expense | (639) | | | — | | | (182) | | | (809) | | | — | | | (1,630) | | | (1,363) | |
Impairments on fixed assets and leases | — | | | — | | | (15) | | | (109) | | | — | | | (124) | | | (1,362) | |
FDIC special assessment | (3,723) | | | — | | | — | | | — | | | — | | | (3,723) | | | — | |
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Core non-interest expense | $ | 89,405 | | | $ | 89,466 | | | $ | 89,100 | | | $ | 79,215 | | | $ | 78,419 | | | $ | 347,186 | | | $ | 301,904 | |
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Core efficiency ratio (1) | 46.70 | % | | 41.04 | % | | 47.84 | % | | 47.09 | % | | 49.12 | % | | 45.45 | % | | 43.02 | % |
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(1) Core efficiency ratio calculated as core non-interest expense divided by core revenue.
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Core non-interest expense to average total assets - Customers Bancorp | | | | | | | | | | | Twelve Months Ended December 31, |
(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | 2023 | | 2022 |
GAAP non-interest expense | $ | 93,767 | | | $ | 89,466 | | | $ | 89,297 | | | $ | 80,133 | | | $ | 78,419 | | | $ | 352,663 | | | $ | 304,629 | |
Severance expense | (639) | | | — | | | (182) | | | (809) | | | — | | | (1,630) | | | (1,363) | |
Impairments on fixed assets and leases | — | | | — | | | (15) | | | (109) | | | — | | | (124) | | | (1,362) | |
FDIC special assessment | (3,723) | | | — | | | — | | | — | | | — | | | (3,723) | | | — | |
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Core non-interest expense | $ | 89,405 | | | $ | 89,466 | | | $ | 89,100 | | | $ | 79,215 | | | $ | 78,419 | | | $ | 347,186 | | | $ | 301,904 | |
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Average total assets | $ | 21,252,273 | | | $ | 21,978,010 | | | $ | 21,654,735 | | | $ | 21,052,920 | | | $ | 20,717,362 | | | $ | 21,486,383 | | | $ | 20,109,744 | |
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Core non-interest expense to average total assets | 1.67 | % | | 1.62 | % | | 1.65 | % | | 1.53 | % | | 1.50 | % | | 1.62 | % | | 1.50 | % |
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Tangible Common Equity to Tangible Assets - Customers Bancorp | | | | | | | | | |
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(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 |
GAAP total shareholders’ equity | $ | 1,638,394 | | | $ | 1,561,607 | | | $ | 1,456,652 | | | $ | 1,421,020 | | | $ | 1,402,961 | |
Reconciling items: | | | | | | | | | |
Preferred stock | (137,794) | | | (137,794) | | | (137,794) | | | (137,794) | | | (137,794) | |
Goodwill and other intangibles | (3,629) | | | (3,629) | | | (3,629) | | | (3,629) | | | (3,629) | |
Tangible common equity | $ | 1,496,971 | | | $ | 1,420,184 | | | $ | 1,315,229 | | | $ | 1,279,597 | | | $ | 1,261,538 | |
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GAAP total assets | $ | 21,316,265 | | | $ | 21,857,152 | | | $ | 22,028,565 | | | $ | 21,751,614 | | | $ | 20,896,112 | |
Reconciling items: | | | | | | | | | |
Goodwill and other intangibles | (3,629) | | | (3,629) | | | (3,629) | | | (3,629) | | | (3,629) | |
Tangible assets | $ | 21,312,636 | | | $ | 21,853,523 | | | $ | 22,024,936 | | | $ | 21,747,985 | | | $ | 20,892,483 | |
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Tangible common equity to tangible assets | 7.0 | % | | 6.5 | % | | 6.0 | % | | 5.9 | % | | 6.0 | % |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |
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(Dollars in thousands, except per share data) |
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Tangible Common Equity to Tangible Assets, excluding PPP - Customers Bancorp | | | | | | | | | |
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(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 |
GAAP total shareholders’ equity | $ | 1,638,394 | | | $ | 1,561,607 | | | $ | 1,456,652 | | | $ | 1,421,020 | | | $ | 1,402,961 | |
Reconciling items: | | | | | | | | | |
Preferred stock | (137,794) | | | (137,794) | | | (137,794) | | | (137,794) | | | (137,794) | |
Goodwill and other intangibles | (3,629) | | | (3,629) | | | (3,629) | | | (3,629) | | | (3,629) | |
Tangible common equity | $ | 1,496,971 | | | $ | 1,420,184 | | | $ | 1,315,229 | | | $ | 1,279,597 | | | $ | 1,261,538 | |
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GAAP total assets | $ | 21,316,265 | | | $ | 21,857,152 | | | $ | 22,028,565 | | | $ | 21,751,614 | | | $ | 20,896,112 | |
Loans receivable, PPP | (74,735) | | | (137,063) | | | (188,763) | | | (246,258) | | | (998,153) | |
Total assets, excluding PPP | $ | 21,241,530 | | | $ | 21,720,089 | | | $ | 21,839,802 | | | $ | 21,505,356 | | | $ | 19,897,959 | |
Reconciling items: | | | | | | | | | |
Goodwill and other intangibles | (3,629) | | | (3,629) | | | (3,629) | | | (3,629) | | | (3,629) | |
Tangible assets, excluding PPP | $ | 21,237,901 | | | $ | 21,716,460 | | | $ | 21,836,173 | | | $ | 21,501,727 | | | $ | 19,894,330 | |
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Tangible common equity to tangible assets, excluding PPP | 7.0 | % | | 6.5 | % | | 6.0 | % | | 6.0 | % | | 6.3 | % |
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Tangible Book Value per Common Share - Customers Bancorp | | | | | | | | | | | |
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(Dollars in thousands, except share and per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 | | | | |
GAAP total shareholders’ equity | $ | 1,638,394 | | | $ | 1,561,607 | | | $ | 1,456,652 | | | $ | 1,421,020 | | | $ | 1,402,961 | | | | | |
Reconciling Items: | | | | | | | | | | | | | |
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Preferred stock | (137,794) | | | (137,794) | | | (137,794) | | | (137,794) | | | (137,794) | | | | | |
Goodwill and other intangibles | (3,629) | | | (3,629) | | | (3,629) | | | (3,629) | | | (3,629) | | | | | |
Tangible common equity | $ | 1,496,971 | | | $ | 1,420,184 | | | $ | 1,315,229 | | | $ | 1,279,597 | | | $ | 1,261,538 | | | | | |
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Common shares outstanding | 31,440,906 | | | 31,311,254 | | | 31,282,318 | | | 31,239,750 | | | 32,373,697 | | | | | |
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Tangible book value per common share | $ | 47.61 | | | $ | 45.36 | | | $ | 42.04 | | | $ | 40.96 | | | $ | 38.97 | | | | | |
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Tangible Book Value per Common Share - Customers Bancorp | | | | | | | | | | | |
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(Dollars in thousands, except share and per share data) | Q4 2023 | | Q4 2022 | | Q4 2021 | | Q4 2020 | | Q4 2019 | | Q4 2018 |
GAAP total shareholders’ equity | $ | 1,638,394 | | | $ | 1,402,961 | | | $ | 1,366,217 | | | $ | 1,117,086 | | | $ | 1,052,795 | | | $ | 956,816 | |
Reconciling Items: | | | | | | | | | | | |
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Preferred stock | (137,794) | | | (137,794) | | | (137,794) | | | (217,471) | | | (217,471) | | | (217,471) | |
Goodwill and other intangibles | (3,629) | | | (3,629) | | | (3,736) | | | (14,298) | | | (15,195) | | | (16,499) | |
Tangible common equity | $ | 1,496,971 | | | $ | 1,261,538 | | | $ | 1,224,687 | | | $ | 885,317 | | | $ | 820,129 | | | $ | 722,846 | |
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Common shares outstanding | 31,440,906 | | | 32,373,697 | | | 32,913,267 | | | 31,705,088 | | | 31,336,791 | | | 31,003,028 | |
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Tangible book value per common share | $ | 47.61 | | | $ | 38.97 | | | $ | 37.21 | | | $ | 27.92 | | | $ | 26.17 | | | $ | 23.32 | |
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Core Loans (Total Loans and Leases, excluding PPP) | | | | | | | | | |
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(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 |
Total loans and leases | $ | 13,202,084 | | | $ | 13,713,482 | | | $ | 13,910,907 | | | $ | 15,063,034 | | | $ | 15,794,671 | |
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Loans receivable, PPP | (74,735) | | | (137,063) | | | (188,763) | | | (246,258) | | | (998,153) | |
Core Loans (Total loans and leases, excluding PPP) | $ | 13,127,349 | | | $ | 13,576,419 | | | $ | 13,722,144 | | | $ | 14,816,776 | | | $ | 14,796,518 | |
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |
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(Dollars in thousands, except per share data) |
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Core Loans Held for Investment (Total Loans and Leases Held for Investment, excluding PPP) | | | | | | | | | |
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(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 |
Total loans and leases, held for investment | $ | 12,861,767 | | | $ | 13,563,114 | | | $ | 13,832,799 | | | $ | 14,638,977 | | | $ | 15,466,359 | |
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Loans receivable, PPP | (74,735) | | | (137,063) | | | (188,763) | | | (246,258) | | | (998,153) | |
Core Loans Held for Investment (Total loans and leases held for investment, excluding PPP) | $ | 12,787,032 | | | $ | 13,426,051 | | | $ | 13,644,036 | | | $ | 14,392,719 | | | $ | 14,468,206 | |
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Total Assets, excluding PPP | | | | | | | | | |
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(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 |
Total assets | $ | 21,316,265 | | | $ | 21,857,152 | | | $ | 22,028,565 | | | $ | 21,751,614 | | | $ | 20,896,112 | |
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Loans receivable, PPP | (74,735) | | | (137,063) | | | (188,763) | | | (246,258) | | | (998,153) | |
Total assets, excluding PPP | $ | 21,241,530 | | | $ | 21,720,089 | | | $ | 21,839,802 | | | $ | 21,505,356 | | | $ | 19,897,959 | |
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Coverage of credit loss reserves for loans and leases held for investment, excluding PPP | | | | | | | | | |
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(Dollars in thousands, except per share data) | Q4 2023 | | Q3 2023 | | Q2 2023 | | Q1 2023 | | Q4 2022 |
Loans and leases receivable | $ | 11,963,855 | | | $ | 12,600,548 | | | $ | 12,826,531 | | | $ | 13,391,610 | | | $ | 14,143,047 | |
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Loans receivable, PPP | (74,735) | | | (137,063) | | | (188,763) | | | (246,258) | | | (998,153) | |
Loans and leases held for investment, excluding PPP | $ | 11,889,120 | | | $ | 12,463,485 | | | $ | 12,637,768 | | | $ | 13,145,352 | | | $ | 13,144,894 | |
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Allowance for credit losses on loans and leases | $ | 135,311 | | | $ | 139,213 | | | $ | 139,656 | | | $ | 130,281 | | | $ | 130,924 | |
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Coverage of credit loss reserves for loans and leases held for investment, excluding PPP | 1.14 | % | | 1.12 | % | | 1.11 | % | | 0.99 | % | | 1.00 | % |
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“A Forward-Thinking Bank with Strong Risk Management“ Let’s take on tomorrow. Investor Presentation: Q4 2023 January 2024
2 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED In addition to historical information, this presentation may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “project”, or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: a continuation of the recent turmoil in the banking industry, responsive measures taken by us and regulatory authorities to mitigate and manage related risks, regulatory actions taken that address related issues and the costs and obligations associated therewith, such as the FDIC special assessments, the impact of COVID-19 and its variants on the U.S. economy and customer behavior, the impact that changes in the economy have on the performance of our loan and lease portfolio, the market value of our investment securities, the continued success and acceptance of our blockchain payments system, the demand for our products and services and the availability of sources of funding, the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply, actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships, higher inflation and its impacts, and the effects of any changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2022, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law. This does not constitute an offer to sell, or a solicitation of an offer to buy, any security in any state or jurisdiction in which such offer, solicitation or sale would be unlawful. Forward-Looking Statements
3 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Core EPS1 of $1.90 exceeded consensus estimates through continued deposit transformation, higher margin, and well-controlled expenses Strength of the Franchise Maintaining Superior Credit Quality Strong Capital and Liquidity TCE/TA1 increased to 7.0% achieving our previously announced goal CET13 increased to 12.2% exceeding our previously announced goal Immediately available liquidity greater than 200% of uninsured deposits4 NPA ratio low at just 0.13% and credit outlook remains stable Minimal exposure to higher-risk CRE asset classes (office and retail CRE each represent only ~1% of HFI loan portfolio) $1.1 billion of core deposit2 growth offset $0.6 billion of planned BMTX student- related deposit outflows and the repayment of $0.7 billion of wholesale CDs Deposit growth was granular and broad-based across the franchise Non-interest bearing deposits account for 25% of total deposits; wholesale CDs now represent only 17% of total deposits Management Outlook Significantly exceeded full year core EPS guidance Continued optimism for balance sheet improvement, strong capital levels, and superior profitability Q4’23 Earnings Review Let’s take on tomorrow. A Forward-Thinking Bank with Strong Risk Management 1. Non-GAAP measure, refer to appendix for reconciliation 2. Total deposits excluding wholesale CDs and BMTX student-related deposits 3. Capital ratios are estimated pending final regulatory report 4. Uninsured deposits of $5.4 billion (estimate) to be reported on Customers Bank’s call report less $1.1 billion of collateralized deposits and $0.1 billion of affiliate deposits
4 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. z Delivering On Our Promises Core EPS within 3 years (2023) of $4.00 and $6.00 by 2025EPS (Jan. 2020) 1. Non-GAAP measure 2. Q4’18-Q4’23 $7.72 FY 2023 Core EPS1 z TCE/TA1: 7.0%+Higher Capital Ratios 9% CAGR between 2009 and 2018 What We Promised in 2018 Grow TBVPS1 NIM Expansion Improve ROAA NIM: 2.75% ROAA: 1.25% ROCE: double-digitImprove ROCE Board is actively engaged with risk focused culture and detailed oversight Risk Management What We Accomplished (Q4’23) 7.0%1 Among strongest in industry in liquidity, interest rate risk management and capital build while maintaining superior credit quality 15% CAGR1,2 3.31% NIM 1.22% Core ROAA1 18.3% Core ROCE1
5 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Let’s take on tomorrow. Our Priorities Remain Unchanged Moderate growth by focusing on holistic and strategic relationships and building a strong franchise Focus on further strengthening our balance sheet, improving liquidity, capital ratios and margins Not deviate from strong risk management principles: − Superior credit quality − Sound interest rate risk management − Maintain robust liquidity − Strong capital ratios − Positive operating leverage
6 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Continue deposit transformation and grow loan portfolio Further improve efficiency through focus on operational excellence and expanding fee income opportunities Let’s take on tomorrow. 2024 Areas of Focus 1 2 3 Maintain strong capital base and liquidity while growing loans 10-15% Preserve strong credit quality with focus on holistic and primary relationships 4 Client-centric culture resulting in high client satisfaction rates6 Maintain strong margin through deployment of securities cash flow, excess cash and deposit growth into higher yielding loans 5
7 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Q4’23 (vs. Q3’23) Profitability Balance Sheet Credit 3.31% vs. 3.70% NIM $21.3B -2% Total Assets 0.13% -1 bps NPA Ratio $13.2B -4% Total Loans and Leases $27.1M -9% NPLs Financial Highlights - GAAP Highlights Q4’23 FY’23 $7.32 $235.4M 17.3% $1.79 Diluted EPS $58.2M Net Income ROCE 15.9% ROAA 1.16% vs. 1.57% Total Deposits $17.9B -2% Reserves to NPLs 499% vs. 466% 1.0 Q4’23 EARNINGS REVIEW
8 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Q4’23 (vs. Q3’23) Profitability Balance Sheet Credit 3.31% vs. 3.70% NIM $21.3B -2% Total Assets 0.13% -1 bps NPA Ratio $13.2B -4% Total Loans and Leases $27.1M -9% NPLs Financial Highlights - Core 1. Excludes pre-tax items: special one-time FDIC assessment fee of $3.7 million, severance expense of $0.6 million, derivative credit valuation adjustment of $0.4 million offset by gain on investment securities of $0.1 million 2. Non-GAAP measure, refer to appendix for reconciliation Highlights Q4’23 FY’23 1.0 Q4’23 EARNINGS REVIEW $7.72 $248.2M 18.3% $1.90 Core EPS1,2 $61.6M Core Net Income1,2 Core ROCE1,2 16.9% Core ROAA1,2 1.22% vs. 1.57% Core PTPP ROAA1,2 1.90% vs. 2.32% Total Deposits $17.9B -2% Reserves to NPLs 499% vs. 466%
9 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Customers Bank has Demonstrated Sustainable Organic Growth While Significantly Improving Our Liquidity Position… 2.0 STRENGH OF THE FRANCHISE 2018 2023 $9.8 $21.317% Total Assets $ billions Cash and Investment Securities $ billions Gross Loans - HFI $ billions Total Deposits $ billions 120% 72% 2018 2023 $0.7 $7.4 $0.1 $3.8 $0.7 $3.5 59% 2018 2023 $8.5 $12.99% 2018 2023 $7.1 $17.920% Loans - HFI to DepositsCash & Cash EquivalentsInvestment Securities
10 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. …and Increasing Our EPS by 4x and ROCE by 2x Over the Last Five Years 2.0 STRENGH OF THE FRANCHISE 2018 2023 $258 $687 22% NII $ millions NIM percent Diluted EPS per share ROCE percent 2018 2023 2.58% 3.29% +71 bps $1.78 $7.32 2018 2023 33% 2018 2023 7.9% 17.3% +940 bps
11 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Total Deposits $ billions Successfully Executing on Deposit Franchise Transformation • Total deposits declined by $275 million QoQ while paying down $743 million in wholesale CDs • $1.1 billion of core deposit1 growth in Q4’23 and $3.1 billion over the last three quarters • Third consecutive quarter of approximately $1.0 billion core deposit1 growth • CUBI’s estimated insured deposits2 as a percentage of total deposits were 77% among the best of regional bank peers3 Average cost of deposits 1. Total deposits excluding wholesale CDs and BMTX student-related deposits 2. Uninsured deposits of $5.4 billion (estimate) to be reported on Customers Bank’s call report less $1.1 billion of collateralized deposits and $0.1 billion of affiliate deposits; similar adjustment made to peers when publicly disclosed otherwise unadjusted reported figures used 3. Selected 2023 proxy peers as disclosed in appendix 3.39% 2.0 STRENGH OF THE FRANCHISE 3.24% $1.9 $8.5 $7.8 Q4’22 $3.5 $5.8 $8.4 Q1’23 $4.5 $5.6 $7.9 Q2’23 $4.8 $5.8 $7.6 Q3’23 $4.4 (25%) $5.6 $7.9 Q4’23 $18.2 $17.7 $18.0 $18.2 $17.9 Non-Interest Bearing DDA Interest Bearing DDA Non-DDA
12 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Robust Deposit Pipeline will Continue to Transform Funding Base FHLB Advances $ billions Wholesale CDs $ billions Meaningful progress on reducing wholesale funding2 $0.3 $0.9 $1.0 Q1’23 $0.3 $1.0 Q4’23 $2.1 $1.2 -$0.9 -41% FHLB callable fixed FHLB callable floating FHLB non-callable fixed • Total deposit pipeline remains at $1.5 billion despite significant core deposit growth in 2023 • $2.2 billion in wholesale CD maturities in 2024 2.0 STRENGH OF THE FRANCHISE Q1’23 Q4’23 $5.3 $3.0 -$2.3 -44% Core Deposits1 $ billions Q1’23 Q4’23 $11.9 $14.9 +$3.1 +26% 1. Total deposits excluding wholesale CDs and BMTX student-related deposits 2. Wholesale CDs and FHLB advances
13 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Net Interest Margin Continues to Demonstrate Positive Trends NIM percent • Margin exceeded management guidance of 3.20-3.25% target for Q4’23 3.70% 2.67% 2.96% 3.15% 3.31% 2.00% 2.50% 3.00% 3.50% 4.00% Q4’22 Q1’23 Q2’23 3.20%1 Q3’23 Q4’23 +64 bps Q4’22 Q1’23 Q2’23 $1731 Q3’23 Q4’23 $135 $150 $165 $200 $173 +28% Net Interest Income $ millions • Net interest income continues in an upward trajectory1 despite modest interest-earning asset balance declines 2.0 STRENGH OF THE FRANCHISE 1. Adjusted for $27 million of outsized accretion related to FDIC transaction in Q3’23
14 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Strategic Portfolio Remix Complete and Continuing to Maintain Strong Liquidity Position Loans – HFI $ billions Loans – HFI / Deposits percent $1.4 $5.9 $7.2 Q4’22 $1.3 $5.9 $7.2 Q1’23 $1.0 $5.7 $7.0 Q2’23 $1.0 $5.7 $6.8 Q3’23 $0.9 $5.6 $6.3 Q4’23 $14.52 $14.42 $13.62 $13.42 $12.82 Consumer Installment HFI Community Banking Corporate & Specialized Banking • Loan to deposit ratio is 72%, 17 percentage points lower than regional bank peer median 1. Total deposits excluding wholesale CDs and BMTX student-related deposits 2. HFI loans excluding PPP; non-GAAP measure, refer to appendix for reconciliation 3. Selected 2023 proxy peers as disclosed in appendix 68% 103% C UB I 72% CUBI (Q4’23) Regional Bank Peers3 (MRQ) 5.64% 6.70% 6.83% 7.87% 7.30% Yield on Loans • Anticipate deploying securities cash flow, excess cash, and core deposit1 growth into higher yielding loans at ~300 basis points additional spread in 2024 2.0 STRENGH OF THE FRANCHISE $1.0 $0.2 $0.2 $0.1PPP Loans $0.1 Top Quartile (77%) Median (89%)
15 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Customers Operates with Industry-Leading Efficiency $78 $79 $89 $89 $89 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Core Non-Interest Expense1 $ millions • Disciplined expense management resulting in flat core non-interest expense1 for the last three quarters • Meaningful opportunity to generate positive operating leverage at current expense levels Core Non-Interest Expense1 / Average Assets percent • CUBI’s core non-interest expense1 as percent of average assets is the lowest among regional bank peers2 3.06% C UB I 1.67% CUBI (Q4’23) Regional Bank Peers2 (MRQ) 1. Non-GAAP measure, refer to appendix for reconciliation 2. Selected 2023 proxy peers as disclosed in appendix 2.0 STRENGH OF THE FRANCHISE Top Quartile (1.94%) Median (2.16%)
16 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Robust Liquidity Position with Greater than 200% Coverage of Uninsured Deposits Immediately Available Liquidity $ billions $0.5 $2.3 $2.5 Q4’22 $3.8 $1.2 $3.4 Q4’23 $5.2 $8.5 +$3.2 Cash FHLB Available Committed Capacity FRB Available Committed Capacity 1. Uninsured deposits of $5.4 billion (estimate) to be reported on Customers Bank’s call report less $1.1 billion of collateralized deposits and $0.1 billion of affiliate deposits 3.0 STRONG CAPITAL AND LIQUIDITY • Sold $295 million of AFS securities in Q4’23 at roughly book value • Redeemed $340 million of callable FHLB advances in Q4’23 • CUBI’s ratio of immediately available liquidity to uninsured deposits1 estimated to be approximately 202% • Total overall liquidity of $11.4 billion as of Q4’23
17 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Tangible Book Value1 per share 22% Growth in Tangible Book Value in 2023; TBV has More Than Doubled Over the Last 5 Years 1. Non-GAAP measure, refer to appendix for reconciliation 2. CAGR from Q4’18 to Q4’23 inclusive of impact of AOCI mark-to-market 3. Selected 2023 proxy peers as disclosed in appendix AOCI $23.32 $26.17 $27.92 $37.21 $38.97 $47.61 Q4’18 Q4’19 Q4’20 Q4’21 Q4’22 Q4’23 3.0 STRONG CAPITAL AND LIQUIDITY $4.34 $51.96 15%2 22% • 22% growth in TBV1 in 2023 • 5-year CAGR in TBV1 has been 15%2 despite AOCI headwinds compared to 4% for regional bank peers3 • TBV1 has more than doubled in the last 5 years • AOCI recovery of $13.2 million and $0.42 TBV1 per share in Q4’23 • Estimated AOCI recovery of ~$1.50 TBV1 per share in 2024
18 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. ` Q4’22 Q1’23 Q2’23 Q3’23 Q4’231 12.2% 12.3% 13.2% 14.3% 15.3% Total Risk-Based Capital percent 6.0% 5.9% 6.0% Q4’22 Q1’23 Q2’23 Q3’23 0.6% 7.0% Q4’23 6.5% 7.6% +50 bps +110 bps TCE/TA2,3 percent 1. Capital ratios are estimated pending final regulatory report 2. TCE/TA negatively impacted by 64 bps in Q4’23 due to AOCI 3. Non-GAAP measure, refer to appendix for reconciliation Achieved 12.2% CET1 and TCE/TA of 7.0% AOCI 9.6% 9.6% Q4’22 Q1’23 Q2’23 Q3’23 Q4’231 10.3% 11.3% 12.2% +90 bps +260 bps CET1 Risk-Based Capital percent 3.0 STRONG CAPITAL AND LIQUIDITY • Increase of approximately 90 bps in CET1 during Q4’23 and 260 bps since Q1’23 • CET1 adjusted for AOCI is 11.2% - top quartile for banks with $10- $100 billion in assets • Increase of approximately 50 bps in TCE/TA3 during Q4’23 and 110 bps since Q1’23 through organic capital generation on flat balance sheet
19 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. $31 $32 $28 $30 $27 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 NPLs $ millions Commercial NCOs percent 0.15% 0.15% 0.13% 0.14% 0.13% Q3’22 Q4’22 Q1’23 Q3’23 Q4’23 NPAs as Percent of Total Assets percent Credit Quality Remains Strong 0.41% 0.12% 0.16% 0.17% Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 0.06%1 2.53% 2.61% 2.46% 2.96% 2.81% Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 0.70% 0.49% 0.50% 0.51% Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 0.42%1 Consumer NCOs percent Total NCOs percent 4.0 MAINTAINING SUPERIOR CREDIT QUALITY • NPLs and NPA ratio stable over the last five quarters • Office and retail CRE each represent only ~1% of HFI loan portfolio • Consumer installment HFI represents only ~7% of HFI loan portfolio CUBI2 Regional Bank Peer Median3,4 15% 38% CRE (excluding Multifamily)2 Loan mix, Q4’23 Note: Prior period amounts have been recast to conform with the current reporting 1. Excludes $6.2 million charge-offs against $8.7 million ACL on PCD loans upon FDIC loan pool acquisition 2. Excludes construction loans 3. As of Q4’23 for CUBI and MRQ for regional bank peers 4. Selected 2023 proxy peers as disclosed in appendix
20 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. 2024 Management Outlook Metrics 1.15% – 1.25%ROAA Outlook for FY 2024 Financial Targets Growth Outlook Operating Assumptions Efficiency Ratio Net Interest Margin Mid – 40’s 3.20% – 3.40% 10% – 15% core deposit1 growth; low single-digit total deposit growth Deposit Growth Loan Growth PPNR Growth2 10% – 15% driven by redeploying excess liquidity (cash and securities) into loans 10% – 15% ~11.5%CET1 ~7.5%TCE / TA3 Tax Rate 22% – 24% 5.0 MANAGEMENT OUTLOOK 1. Total deposits excluding wholesale CDs and BMTX student-related deposits 2. 2023 baseline adjusted PPNR of $367.0 million (adjusted for $11.4 million of PPP net interest income in FY’23 and $27.0 million of outsized discount accretion related to acquired loan portfolio from the FDIC transaction in Q3’23) 3. Non-GAAP measure
21 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. $3.1 billion of core deposit1 growth with corresponding reduction in wholesale funding over the last three quarters Robust core deposit pipeline remains at approximately $1.5 billion NIM Expansion Strategic Outlook Strengthening Capital Base Strong capital levels with 7.0% TCE/TA2 and 12.2% CET13 Improved TCE/TA2 by 50 bps and CET13 by 90 bps in a single quarter Extremely well-positioned to take market share Client-centric culture continues to drive franchise value Deposit remix has significant runway with meaningful financial benefits Poised to deploy securities and cash into higher yielding loans Operating platform designed to generate positive operating leverage and drive superior efficiency and profitability Net interest margin of 3.31% exceeded our Q4’23 guidance and is at sustainable levels Improving Deposit Franchise Let’s take on tomorrow. Concluding Perspectives Maintaining Strong Risk Management Robust liquidity position with coverage of over 200% of uninsured deposits4 Diversified loan and deposit franchises built to perform across all macroeconomic environments; credit continues to perform well 1. Total deposits excluding wholesale CDs and BMTX student-related deposits 2. Non-GAAP measure, refer to appendix for reconciliation 3. Capital ratios are estimated pending final regulatory report 4. Uninsured deposits of $5.4 billion (estimate) to be reported on Customers Bank’s call report less $1.1 billion of collateralized deposits and $0.1 billion of affiliate deposits
ANALYST COVERAGE D.A. Davidson Companies Peter Winter Hovde Group David Bishop Jefferies Group LLC Casey Haire Keefe, Bruyette & Woods Inc. Michael Perito Maxim Group Inc. Michael Diana Piper Sandler Companies Frank Schiraldi Stephens Inc. Matt Breese Wedbush Securities Inc. David Chiaverini Raymond James Steve Moss 2023 New Analyst Coverage B.Riley Securities, Inc. Hal Goetsch `
APPENDIX
24 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Customers Bancorp, Inc. NYSE: CUBI Headquarters West Reading, PA Offices1 54 FTE Employees 714 Market Capitalization As of January 24, 2024 $1.7B Total Assets $21.3B Tangible Book Value2 $47.61 Share price As of January 24, 2024 $53.07 Data as of December 31, 2023, unless otherwise noted (1) Offices includes branches, executive offices, Private Banking Offices and Loan Production Offices (2) Non-GAAP measure, refer to appendix for reconciliation A Forward-Thinking Bank with Strong Risk Management Customers Bancorp Overview Community Banking Corporate & Specialized Banking Corporate & Specialized Banking Community Banking Digital Banking Deep relationship-based community banking predominantly in the Northeast with selected presence in the Carolinas, Florida and Texas Serving small and medium-sized businesses, and individuals, with a comprehensive suite of loan and deposit products National corporate businesses where Customers has differentiated capabilities, often enhanced through technology, to create value for clients Serving sophisticated corporate businesses above the complexity level of most community banks but with a higher level of service and attention than large regionals provide Consumer Suite of loan and deposit products delivered digitally to clients; increasingly generating fee and “fee- like” revenue with limited credit risk through our HFS strategy Commercial Transaction banking (treasury and payment services) with associated deposits D es cr ip tio n Regional C&I, owner-occupied CRE, SBA, multifamily, non-owner-occupied CRE, mortgage Operating deposit accounts (commercial and consumer) Lender finance, capital call lines, venture banking, mortgage warehouse, equipment finance, healthcare, real estate specialty finance Operating deposit accounts Consumer installment lending Payments Online savings Pr od uc ts Providence Dallas Raleigh/Durham Chicago Washington, D.C. Southern California Bay Area Denver NYC Boston Orlando PA Portsmouth Austin
25 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Investment Securities – AFS percent, Q4’23 Securities Portfolio Generating Attractive Returns with Minimal Credit and Duration Risk • Spot yield: 5.12% • Effective duration: ~1.5 years • Floating rate securities: ~41% • Credit rating: 59% AAA with only 2% at BB and below 50% 24% 24% 1% MBS & CMO ABS Corporate Other Total: $2.4 billion Investment Securities – HTM percent, Q4’23 • Spot yield: 4.31% • Effective duration: ~3.0 years • Floating rate securities: ~25% • Credit rating: 39% AAA with no rated securities non- investment grade • ABS: ~$0.6 billion of credit enhanced asset backed securities from sale of consumer installment loan portfolio in Q3’22 and Q2’23 52%48% Credit Enhanced ABS MBS & CMO Total: $1.1 billion
26 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. 18% 49% 32% 1% FICO Score1 660-679 680-699 700-749 750+ 22% 34% 24% 13% 6% 1% 0-9.99% 10 – 19.99% 20 – 29.99% 30 – 39.99% 40 – 49.99% > 50% Unknown Geog raphy Profession Deb t to Income Ratio1 Borrower Income 15% 40% 45% <$50K $50K -$100K >$100K 20% 11% 20% 27% 22% West Southwest Midwest Southeast Northeast Consumer Installment Loans – Portfolio Credit Metrics Purp ose 68% 10% 6% 16% Personal Loan Specialty Home Improvement Student Loan 94% 4% 2% Non COVID-19 Impacted Segments Non-Professional Retail & Restaurants Average FICO Score1 ~734 Average DTI1 ~19% Average Borrower Income ~$107k Weighted average life of ~2.1 years Note: Data as of December 31, 2023; includes consumer installment HFS loans 1. DTI and FICO scores as of time of origination
27 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Selected 2023 Proxy Peers • Atlantic Union • Commerce • Community Bank System • FB Financial • First Busey • F.N.B. • Fulton • Independent • Northwest • Old National • Pinnacle • Sandy Spring • United Community • WesBanco Note: Excludes the following banks due to lack of available disclosure – Ameris, Associated, Axos, BankUnited, Eastern, First Financial (OH), First Merchants, Provident, Silvergate (removed following its March 8, 2023 announcement that it would wind down operations and liquidate the bank), Towne, United Bancshares, WSFS Financial
28 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Robust Sources of Liquidity 1. Includes CLOs 2. Began pledging mortgage warehouse collateral to FRB in Q1’23 Liquidity Sources ($000's) 4Q 23 4Q 22 YOY Change Cash and Cash Equivalents $3,846,346 $455,807 $3,390,539 FHLB Available Borrowing Capacity $1,180,972 $2,265,499 ($1,084,527) FRB Available Borrowing Capacity $3,436,000 $2,510,189 $925,810 Investments (MV AFS + HTM) US Gov't & Agency Debt $0 $0 $0 Agency & Non-Agency MBS & CMO $1,739,284 $1,811,633 ($72,349) Corporates $583,034 $595,253 ($12,219) ABS1 $1,157,711 $1,394,388 ($236,677) Other AFS $28,781 $26,485 $2,295 Less: Pledged Securities HTM & AFS ($1,554,837) ($16,749) ($1,538,088) Net Unpledged Securities $1,953,973 $3,811,010 ($1,857,037) Unpledged Mortgage Warehouse Loans2 $1,014,742 $0 $1,014,742 $11,432,033 $9,042,505 $2,389,528
29 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. 1. Utilized Moody’s December 2023 baseline and adverse forecast scenario with qualitative adjustments for Q4’23 provision 2. Excludes loans to mortgage companies reported at fair value, loans held for sale and PPP loans 3. Non-GAAP measure, refer to appendix for reconciliation Allowance for Credit Losses for Loans and Leases ($ in thousands) December 31, 2023 Amortized Cost2 Allowance for Credit Losses Lifetime Loss Rate1 Loans and Leases Receivable: Commercial: Commercial and Industrial, including Specialty Lending $ 6,211,105 $ 23,503 0.38 % Multifamily 2,138,622 16,343 0.76 % Commercial Real Estate Owner Occupied 797,319 9,882 1.24 % Commercial Real Estate Non-Owner Occupied 1,177,650 16,859 1.43 % Construction 166,393 1,482 0.89 % Total Commercial Loans and Leases Receivable $ 10,491,089 $ 68,069 0.65 % Consumer: Residential Real Estate $ 484,435 $ 6,586 1.36 % Manufacturing Housing 38,670 4,239 10.96 % Installment 874,926 56,417 6.45 % Total Consumer Loans Receivable $ 1,398,031 $ 67,242 4.81 % Total Loans and Leases Receivable $ 11,889,120 $ 135,311 1.14 %3
30 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in Customers' industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. The non-GAAP measures presented are not necessarily comparable to non-GAAP measures that may be presented by other financial institutions. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP. The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document. Reconciliation of Non-GAAP Measures - Unaudited
31 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core earnings - Customers Bancorp ($ in thousands except per share data) Twelve Months Ended December 31, Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 2023 2022 USD Per share USD Per share USD Per share USD Per share USD Per share USD Per share USD Per share GAAP net income to common shareholders $ 58,223 $ 1.79 $ 82,953 $ 2.58 $ 44,007 $ 1.39 $ 50,265 $ 1.55 $ 25,623 $ 0.77 $ 235,448 $ 7.32 $ 218,402 $ 6.51 Reconciling items (after tax): Severance expense 473 0.01 — — 141 0.00 637 0.02 — — 1,251 0.04 1,058 0.03 Impairments on fixed assets and leases — — — — 12 0.00 86 0.00 — — 98 0.00 1,051 0.03 Loss on sale of consumer installment loans — — — — — — — — — — — — 18,221 0.54 Loss on sale of capital call lines of credit — — — — 3,914 0.12 — — — — 3,914 0.12 — — (Gains) losses on investment securities (85) — 492 0.02 49 0.00 (49) (0.00) 13,543 0.41 407 0.01 18,926 0.56 Derivative credit valuation adjustment 267 0.01 (151) (0.00) (101) (0.00) 204 0.01 202 0.01 219 0.01 (1,243) (0.04) Tax on surrender of bank-owned life insurance policies — — — — 4,141 0.13 — — — — 4,141 0.13 — — FDIC special assessment 2,755 0.08 — — — — — — — — 2,755 0.08 — — Core earnings $ 61,633 $ 1.90 $ 83,294 $ 2.59 $ 52,163 $ 1.65 $ 51,143 $ 1.58 $ 39,368 $ 1.19 $ 248,233 $ 7.72 $ 256,415 $ 7.63
32 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core return on average assets - Customers Bancorp ($ in thousands except per share data) Twelve Months Ended December 31, Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 2023 2022 GAAP net income $ 62,092 $ 86,756 $ 47,574 $ 53,721 $ 28,711 $ 250,143 $ 228,034 Reconciling items (after tax): Severance expense 473 — 141 637 — 1,251 1,058 Impairments on fixed assets and leases — — 12 86 — 98 1,051 Loss on sale of consumer installment loans — — — — — — 18,221 Loss on sale of capital call lines of credit — — 3,914 — — 3,914 — (Gains) losses on investment securities (85) 492 49 (49) 13,543 407 18,926 Derivative credit valuation adjustment 267 (151) (101) 204 202 219 (1,243) Tax on surrender of bank-owned life insurance policies — — 4,141 — — 4,141 — FDIC special assessment 2,755 — — — — 2,755 — Core net income $ 65,502 $ 87,097 $ 55,730 $ 54,599 $ 42,456 $ 262,928 $ 266,047 Average total assets $ 21,252,273 $ 21,978,010 $ 21,654,735 $ 21,052,920 $ 20,717,362 $ 21,486,383 $ 20,109,744 Core return on average assets 1.22 % 1.57 % 1.03 % 1.05 % 0.81 % 1.22 % 1.32 %
33 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core return on average common equity – Customers Bancorp ($ in thousands) Twelve Months Ended December 31, Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 2023 2022 GAAP net income to common shareholders $ 58,223 $ 82,953 $ 44,007 $ 50,265 $ 25,623 $ 235,448 $ 218,402 Reconciling items (after tax): Severance expense 473 — 141 637 — 1,251 1,058 Impairments on fixed assets and leases — — 12 86 — 98 1,051 Loss on sale of consumer installment loans — — — — — — 18,221 Loss on sale of capital call lines of credit — — 3,914 — — 3,914 — (Gains) losses on investment securities (85) 492 49 (49) 13,543 407 18,926 Derivative credit valuation adjustment 267 (151) (101) 204 202 219 (1,243) Tax on surrender of bank-owned life insurance policies — — 4,141 — — 4,141 — FDIC special assessment 2,755 — — — — 2,755 — Core earnings $ 61,633 $ 83,294 $ 52,163 $ 51,143 $ 39,368 $ 248,233 $ 256,415 Average total common shareholders' equity $ 1,449,728 $ 1,373,244 $ 1,335,408 $ 1,273,780 $ 1,263,190 $ 1,358,564 $ 1,254,979 Core return on average common equity 16.87 % 24.06 % 15.67 % 16.28 % 12.36 % 18.27 % 20.43 %
34 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Adjusted net income and adjusted ROAA - pre-tax pre- provision - Customers Bancorp ($ in thousands, except per share data) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 GAAP net income $ 62,092 $ 86,756 $ 47,574 $ 53,721 $ 28,711 Reconciling items: Income tax expense 21,796 23,470 20,768 14,563 7,136 Provision (benefit) for credit losses 13,523 17,856 23,629 19,603 28,216 Provision (benefit) for credit losses on unfunded commitments (136) 48 (304) 280 153 Severance expense 639 — 182 809 — Impairments on fixed assets and leases — — 15 109 — Loss on sale of consumer installment loans — — — — — Loss on sale of capital call lines of credit — — 5,037 — — (Gains) losses on investment securities (114) 626 62 (62) 16,909 Derivative credit valuation adjustment 361 (192) (130) 259 252 FDIC special assessment 3,723 — — — — Adjusted net income - pre-tax pre-provision $ 101,884 $ 128,564 $ 96,833 $ 89,282 $ 81,377 Average total assets $ 21,252,273 $ 21,978,010 $ 21,654,735 $ 21,052,920 $ 20,717,362 Adjusted ROAA - pre-tax pre-provision 1.90 % 2.32 % 1.79 % 1.72 % 1.56 %
35 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core efficiency ratio - Customers Bancorp ($ in thousands, except per share data) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 GAAP net interest income $ 172,506 $ 199,773 $ 165,271 $ 149,899 $ 135,137 GAAP non-interest income $ 18,672 $ 17,775 $ 15,997 $ 18,121 $ 7,345 Loss on sale of capital call lines of credit — — 5,037 — — (Gains) losses on investment securities (114) 626 62 (62) 16,909 Derivative credit valuation adjustment 361 (192) (130) 259 252 Core non-interest income $ 18,919 $ 18,209 $ 20,966 $ 18,318 $ 24,506 Core revenue $ 191,425 $ 217,982 $ 186,237 $ 168,217 $ 159,643 GAAP non-interest expense $ 93,767 $ 89,466 $ 89,297 $ 80,133 $ 78,419 Severance expense (639) — (182) (809) — Impairments on fixed assets and leases — — (15) (109) — FDIC special assessment (3,723) — — — — Core non-interest expense $ 89,405 $ 89,466 $ 89,100 $ 79,215 $ 78,419 Core efficiency ratio (1) 46.70 % 41.04 % 47.84 % 47.09 % 49.12 % 1. Core efficiency ratio calculated as core non-interest expense divided by core revenue
36 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core non-interest expense to average assets - Customers Bancorp ($ in thousands except per share data) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 GAAP non-interest expense $ 93,767 $ 89,466 $ 89,297 $ 80,133 $ 78,419 Severance expense (639) — (182) (809) — Impairments on fixed assets and leases — — (15) (109) — FDIC special assessment (3,723) — — — — Core non-interest expense $ 89,405 $ 89,466 $ 89,100 $ 79,215 $ 78,419 Average total assets $ 21,252,273 $ 21,978,010 $ 21,654,735 $ 21,052,920 $ 20,717,362 Core non-interest expense to average assets 1.67 % 1.62 % 1.65 % 1.53 % 1.50 %
37 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible common equity to tangible assets - Customers Bancorp ($ in thousands except per share data) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 GAAP total shareholders' equity $ 1,638,394 $ 1,561,607 $ 1,456,652 $ 1,421,020 $ 1,402,961 Reconciling items: Preferred stock (137,794) (137,794) (137,794) (137,794) (137,794) Goodwill and other intangibles (3,629) (3,629) (3,629) (3,629) (3,629) Tangible common equity $ 1,496,971 $ 1,420,184 $ 1,315,229 $ 1,279,597 $ 1,261,538 GAAP Total assets $ 21,316,265 $ 21,857,152 $ 22,028,565 $ 21,751,614 $ 20,896,112 Reconciling items: Goodwill and other intangibles (3,629) (3,629) (3,629) (3,629) (3,629) Tangible assets $ 21,312,636 $ 21,853,523 $ 22,024,936 $ 21,747,985 $ 20,892,483 Tangible common equity to tangible assets 7.0 % 6.5 % 6.0 % 5.9 % 6.0 %
38 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible book value per common share - Customers Bancorp ($ in thousands except per share data) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 GAAP total shareholders' equity $ 1,638,394 $ 1,561,607 $ 1,456,652 $ 1,421,020 $ 1,402,961 Reconciling Items: Preferred stock (137,794) (137,794) (137,794) (137,794) (137,794) Goodwill and other intangibles (3,629) (3,629) (3,629) (3,629) (3,629) Tangible common equity $ 1,496,971 $ 1,420,184 $ 1,315,229 $ 1,279,597 $ 1,261,538 Common shares outstanding 31,440,906 31,311,254 31,282,318 31,239,750 32,373,697 Tangible book value per common share $ 47.61 $ 45.36 $ 42.04 $ 40.96 $ 38.97 Tangible book value per common share - Customers Bancorp ($ in thousands except per share data) Q4 2023 Q4 2022 Q4 2021 Q4 2020 Q4 2019 Q4 2018 GAAP total shareholders' equity $ 1,638,394 $ 1,402,961 $ 1,366,217 $ 1,117,086 $ 1,052,795 $ 956,816 Reconciling Items: Preferred stock (137,794) (137,794) (137,794) (217,471) (217,471) (217,471) Goodwill and other intangibles (3,629) (3,629) (3,736) (14,298) (15,195) (16,499) Tangible common equity $ 1,496,971 $ 1,261,538 $ 1,224,687 $ 885,317 $ 820,129 $ 722,846 Common shares outstanding 31,440,906 32,373,697 32,913,267 31,705,088 31,336,791 31,003,028 Tangible book value per common share $ 47.61 $ 38.97 $ 37.21 $ 27.92 $ 26.17 $ 23.32
39 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Total loans and leases, excluding PPP and consumer HFS - Customers Bancorp ($ in thousands except per share data) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Total loans and leases $ 13,202,084 $ 13,713,482 $ 13,910,907 $ 15,063,034 $ 15,794,671 PPP loans (74,735) (137,063) (188,763) (246,258) (998,153) Consumer HFS (340,317) (150,368) (78,108) (404,006) (324,233) Total loans and leases, excluding PPP and consumer HFS $ 12,787,032 $ 13,426,051 $ 13,644,036 $ 14,412,770 $ 14,472,285
40 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core loans held for investment (Total loans and leases HFI, excluding PPP) to total deposits - Customers Bancorp ($ in thousands except per share data) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Total loans and leases HFI $ 12,861,767 $ 13,563,114 $ 13,832,799 $ 14,638,977 $ 15,466,359 PPP loans (74,735) (137,063) (188,763) (246,258) (998,153) Core loans held for investment (Total loans and leases HFI, excluding PPP) $ 12,787,032 $ 13,426,051 $ 13,644,036 $ 14,392,719 $ 14,468,206
41 © 2024 C U STO M ERS BA N C O RP, IN C . / A LL RIG H TS RESERV ED Let’s take on tomorrow. Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Coverage of credit loss reserves for loans and leases HFI, excluding PPP - Customers Bancorp ($ in thousands except per share data) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Loans and leases receivable $ 11,963,855 $ 12,600,548 $ 12,826,531 $ 13,391,610 $ 14,143,047 Loans receivable, PPP (74,735) (137,063) (188,763) (246,258) (998,153) Loans and leases held for investment, excluding PPP $ 11,889,120 $ 12,463,485 $ 12,637,768 $ 13,145,352 $ 13,144,894 Allowance for credit losses on loans and leases $ 135,311 $ 139,213 $ 139,656 $ 130,281 $ 130,924 Coverage of credit loss reserves for loans and leases held for investment, excluding PPP 1.14 % 1.12 % 1.11 % 0.99 % 1.00 %
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Customers Bancorp (NYSE:CUBI-F)
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