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Customers Bancorp Reports Results for Fourth Quarter and Full Year 2023

Customers Bancorp, Inc. (NYSE:CUBI):

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.
______________________________________________

*

 

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.

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.
______________________________________________

*

 

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

“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.

______________________________________________

*

 

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.

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

)%

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

)%

Net interest margin, tax equivalent

 

 

3.31

%

 

 

3.70

%

 

 

(0.39

)

 

 

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

)%

Total loans and leases

 

$

13,202,084

 

 

$

13,713,482

 

 

$

(511,398

)

 

(3.7

)%

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

 

 

 

 

 

 

 

 

 

 

 

 

(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

(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

%

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

)

 

 

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

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

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

 

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

 

Advertising and promotion

 

850

 

 

650

 

 

200

 

 

 

850

 

 

1,111

 

 

(261

)

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

 

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.

__________________________________________________

*

 

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 EST

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:

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

 

EARNINGS SUMMARY - UNAUDITED

 

 

 

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

1.86

 

 

$

2.65

 

 

$

1.41

 

 

$

1.58

 

 

$

0.79

 

 

$

7.49

 

 

$

6.69

 

 

 

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

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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.

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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

 

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

 

Net income available to common shareholders

$

58,223

 

 

$

82,953

 

 

$

44,007

 

 

$

50,265

 

$

25,623

 

 

$

235,448

 

 

$

218,402

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

1.86

 

 

$

2.65

 

 

$

1.41

 

 

$

1.58

 

$

0.79

 

 

$

7.49

 

 

$

6.69

 

Diluted earnings per common share

 

1.79

 

 

 

2.58

 

 

 

1.39

 

 

 

1.55

 

 

0.77

 

 

 

7.32

 

 

 

6.51

 

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

 

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

 

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

 

Goodwill and other intangibles

 

3,629

 

 

 

3,629

 

 

 

3,629

 

 

 

3,629

 

 

 

3,629

 

Other assets

 

366,829

 

 

 

358,162

 

 

 

471,169

 

 

 

374,609

 

 

 

400,135

 

Total assets

$

21,316,265

 

 

$

21,857,152

 

 

$

22,028,565

 

 

$

21,751,614

 

 

$

20,896,112

 

 

 

 

 

 

 

 

 

 

 

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

 

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

 

Accrued interest payable and other liabilities

 

248,358

 

 

 

264,406

 

 

 

269,539

 

 

 

249,168

 

 

 

230,666

 

Total liabilities

 

19,677,871

 

 

 

20,295,545

 

 

 

20,571,913

 

 

 

20,330,594

 

 

 

19,493,151

 

 

 

 

 

 

 

 

 

 

 

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

 

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

%

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