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Customers Bancorp Reports Results for First Quarter

Customers Bancorp, Inc. (NYSE:CUBI):

First Quarter 2024 Highlights

  • Q1 2024 net income available to common shareholders was $45.9 million, or $1.40 per diluted share; ROAA was 0.94% and ROCE was 12.08%.
  • Q1 2024 core earnings* were $46.5 million, or $1.42 per diluted share; Core ROAA* was 0.95% and Core ROCE* was 12.24%.
  • Q1 2024 adjusted core earnings* excluding certain one-time items were $55.1 million, or $1.68 per diluted share; Adjusted Core ROAA* excluding certain one-time items was 1.11% and Adjusted Core ROCE* excluding certain one-time items was 14.50%.
  • CET 1 ratio of 12.5%1 at March 31, 2024, compared to 12.2% at December 31, 2023, above the approximately 11.5% target.
  • TCE / TA ratio* of 7.3% at March 31, 2024, compared to 7.0% at December 31, 2023, on track to achieve 7.5% target within one to two quarters.
  • Q1 2024 net interest margin, tax equivalent (“NIM”) was 3.10%, compared to Q4 2023 NIM of 3.31%, due to higher cash balances and lower average loans during the quarter.
  • Total deposits increased by $41.1 million in Q1 2024 from Q4 2023 with a significant positive mix shift. Q1 2024 business unit deposit*2 growth of $1.2 billion funded the repayment of maturing wholesale CDs of $1.2 billion.
  • Non-interest bearing deposits increased by $266.4 million in Q1 2024 from Q4 2023 and represented 26% of total deposits.
  • Total estimated insured deposits were 78%3 of total deposits at March 31, 2024, with immediately available liquidity covering estimated uninsured deposits3 by approximately 224%.
  • Non-performing assets were $35.8 million, or 0.17% of total assets, at March 31, 2024 compared to 0.13% at December 31, 2023. Allowance for credit losses on loans and leases equaled 374% of non-performing loans at March 31, 2024, compared to 499% at December 31, 2023.
  • Q1 2024 provision for credit losses on loans and leases was $16.0 million compared to $13.4 million in Q4 2023 and the coverage of credit loss reserves for loans and leases held for investment was 1.12%. The coverage of credit loss reserves for loans and leases held for investment decreased modestly from 1.13% in Q4 2023 largely driven by lower consumer installment loans held for investment.
  • Q1 2024 book value per share and tangible book value per share* both grew by approximately $1.56, or 3.3% over Q4 2023, driven by strong quarterly earnings and a decrease in AOCI losses of $4.3 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 March 31, 2024 are estimates.

2

Total deposits excluding wholesale CDs and BMTX student-related deposits.

3

Uninsured deposits (estimate) of $5.2 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 $124.5 million.

CEO Commentary

“Following an exceptional year in 2023, we are pleased to share continued progress on the execution of our strategic priorities which we believe will grow our franchise value, our margins and net interest income in 2024 and beyond,” said Customers Bancorp Chairman and CEO Jay Sidhu. “We are excited to announce that in April we welcomed 10 new, very experienced, banking teams to Customers Bank that are commercial focused deposit generators in the New York metropolitan area and in selected markets in California and Nevada. These commercial and business banking teams are highly experienced, have worked together for decades and have longstanding and deep client relationships. We expect the addition of these teams to accelerate the continued improvement of our deposit franchise with low cost, granular, primary relationship-based deposit accounts. We look forward to delivering exceptional service to their clients with our single point of contact, high-touch, technology-enabled banking capabilities. In the quarter, we once again demonstrated the momentum of our deposit franchise transformation by growing business unit deposits*2 by $1.2 billion which funded the repayment of maturing wholesale CDs in the amount of $1.2 billion. This was our fourth consecutive quarter of approximately $1 billion of business unit deposit*2 growth. The business unit deposit*2 growth was, once again, broad-based with more than 20 different channels increasing balances and roughly half contributing $25 million or more. Non-interest bearing deposits increased by $266.4 million during the quarter and represented 26 percent of total deposits. Our net interest margin moderated in the first quarter to 3.10% driven primarily by elevated cash balances resulting from strong business unit deposit*2 growth and the timing associated with replenishing higher yielding interest-earning assets that exited in the fourth quarter as we continue to remain focused on loan growth supporting holistic relationships. Capital levels continued to build as evidenced by a 24 basis point increase in our TCE / TA ratio* and an increase in our CET 1 ratio to 12.5%1. We are confident in our ability to achieve the 7.5% TCE / TA ratio* target that we disclosed last quarter. Enhanced by the addition of our new banking teams, we believe we are extremely well-positioned to continue to strengthen our deposit franchise, improve our profitability, and maintain our already strong capital ratios,” stated Jay Sidhu.

“Our Q1 2024 GAAP earnings were $45.9 million, or $1.40 per diluted share, and core earnings* were $46.5 million, or $1.42 per diluted share. Excluding certain one-time items incurred during the quarter, our adjusted core earnings* were $55.1 million, or $1.68 per diluted share. At March 31, 2024, our deposit base was well diversified, with approximately 78%3 of total deposits insured. We maintain a strong liquidity position, with $8.9 billion of liquidity immediately available, which covers approximately 224% of uninsured deposits3 and our loan to deposit ratio was 74%. We continue to focus loan production where we have a holistic and primary relationship. Commercial loans grew by $123.0 million though gross loan balances remained relatively flat given targeted reductions in consumer installment loans in the quarter. Our loan pipeline grew meaningfully through the first quarter, and we remain confident in the 10% – 15% loan growth outlook previously provided. We have ample liquidity and capital to support the needs of our customers. At March 31, 2024, we had $3.7 billion of cash on hand, to fund strategic loan growth as well as prudent balance sheet and liquidity management. Asset quality remains strong with our NPA ratio at just 0.17% of total assets and reserve levels are robust at over 370% of total non-performing loans at the end of Q1 2024. Our exposure to the higher risk commercial real estate office sector is minimal, representing approximately 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 manage risk and maintain robust capital levels. We are confident in our risk management capabilities and ability to provide excellent and differentiated service to our clients. We are excited and optimistic about the opportunities we had entering 2024, which will only be enhanced by the addition of the new banking teams,” 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 March 31, 2024 are estimates.

2

Total deposits excluding wholesale CDs and BMTX student-related deposits.

3

Uninsured deposits (estimate) of $5.2 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 $124.5 million.

Financial Highlights

(Dollars in thousands, except per share data)

 

At or Three Months Ended

 

Increase (Decrease)

 

March 31, 2024

 

December 31, 2023

 

Profitability Metrics:

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

45,926

 

 

$

58,223

 

 

$

(12,297

)

 

(21.1

)%

Diluted earnings per share

 

$

1.40

 

 

$

1.79

 

 

$

(0.39

)

 

(21.8

)%

Core earnings*

 

$

46,532

 

 

$

61,633

 

 

$

(15,101

)

 

(24.5

)%

Adjusted core earnings*

 

$

55,137

 

 

$

61,633

 

 

$

(6,496

)

 

(10.5

)%

Core earnings per share*

 

$

1.42

 

 

$

1.90

 

 

$

(0.48

)

 

(25.3

)%

Adjusted core earnings per share*

 

$

1.68

 

 

$

1.90

 

 

$

(0.22

)

 

(11.6

)%

Return on average assets (“ROAA”)

 

 

0.94

%

 

 

1.16

%

 

 

(0.22

)

 

 

Core ROAA*

 

 

0.95

%

 

 

1.22

%

 

 

(0.27

)

 

 

Adjusted core ROAA*

 

 

1.11

%

 

 

1.22

%

 

 

(0.11

)

 

 

Return on average common equity (“ROCE”)

 

 

12.08

%

 

 

15.93

%

 

 

(3.85

)

 

 

Core ROCE*

 

 

12.24

%

 

 

16.87

%

 

 

(4.63

)

 

 

Adjusted core ROCE*

 

 

14.50

%

 

 

16.87

%

 

 

(2.37

)

 

 

Core pre-tax pre-provision net income*

 

$

83,674

 

 

$

101,884

 

 

$

(18,210

)

 

(17.9

)%

Adjusted core pre-tax pre-provision net income*

 

$

94,988

 

 

$

101,884

 

 

$

(6,896

)

 

(6.8

)%

Net interest margin, tax equivalent

 

 

3.10

%

 

 

3.31

%

 

 

(0.21

)

 

 

Yield on loans (Loan yield)

 

 

7.05

%

 

 

7.30

%

 

 

(0.25

)

 

 

Cost of deposits

 

 

3.45

%

 

 

3.39

%

 

 

0.06

 

 

 

Efficiency ratio

 

 

54.58

%

 

 

49.08

%

 

 

5.50

 

 

 

Core efficiency ratio*

 

 

54.24

%

 

 

46.70

%

 

 

7.54

 

 

 

Adjusted core efficiency ratio*

 

 

48.02

%

 

 

46.70

%

 

 

1.32

 

 

 

Non-interest expense to average total assets

 

 

1.87

%

 

 

1.75

%

 

 

0.12

 

 

 

Core non-interest expense to average total assets*

 

 

1.86

%

 

 

1.67

%

 

 

0.19

 

 

 

Adjusted core non-interest expense to average total assets*

 

 

1.65

%

 

 

1.67

%

 

 

(0.02

)

 

 

Balance Sheet Trends:

 

 

 

 

 

 

 

 

Total assets

 

$

21,347,367

 

 

$

21,316,265

 

 

$

31,102

 

 

0.1

%

Total cash and investment securities

 

$

7,338,025

 

 

$

7,355,156

 

 

$

(17,131

)

 

(0.2

)%

Total loans and leases

 

$

13,256,871

 

 

$

13,202,084

 

 

$

54,787

 

 

0.4

%

Non-interest bearing demand deposits

 

$

4,688,880

 

 

$

4,422,494

 

 

$

266,386

 

 

6.0

%

Total deposits

 

$

17,961,383

 

 

$

17,920,236

 

 

$

41,147

 

 

0.2

%

Capital Metrics:

 

 

 

 

 

 

 

 

Common Equity

 

$

1,553,823

 

 

$

1,500,600

 

 

$

53,223

 

 

3.5

%

Tangible Common Equity*

 

$

1,550,194

 

 

$

1,496,971

 

 

$

53,223

 

 

3.6

%

Common Equity to Total Assets

 

 

7.3

%

 

 

7.0

%

 

 

0.3

 

 

 

Tangible Common Equity to Tangible Assets*

 

 

7.3

%

 

 

7.0

%

 

 

0.3

 

 

 

Book Value per common share

 

$

49.29

 

 

$

47.73

 

 

$

1.56

 

 

3.3

%

Tangible Book Value per common share*

 

$

49.18

 

 

$

47.61

 

 

$

1.57

 

 

3.3

%

Common equity Tier 1 capital ratio (1)

 

 

12.5

%

 

 

12.2

%

 

 

0.3

 

 

 

Total risk based capital ratio (1)

 

 

15.6

%

 

 

15.3

%

 

 

0.3

 

 

 

 

 

 

 

 

 

 

 

 

(1) Regulatory capital ratios as of March 31, 2024 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)

 

March 31, 2024

 

March 31, 2023

 

Profitability Metrics:

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

45,926

 

 

$

50,265

 

 

$

(4,339

)

 

(8.6

)%

Diluted earnings per share

 

$

1.40

 

 

$

1.55

 

 

$

(0.15

)

 

(9.7

)%

Core earnings*

 

$

46,532

 

 

$

51,143

 

 

$

(4,611

)

 

(9.0

)%

Adjusted core earnings*

 

$

55,137

 

 

$

51,143

 

 

$

3,994

 

 

7.8

%

Core earnings per share*

 

$

1.42

 

 

$

1.58

 

 

$

(0.16

)

 

(10.1

)%

Adjusted core earnings per share*

 

$

1.68

 

 

$

1.58

 

 

$

0.10

 

 

6.3

%

Return on average assets (“ROAA”)

 

 

0.94

%

 

 

1.03

%

 

 

(0.09

)

 

 

Core ROAA*

 

 

0.95

%

 

 

1.05

%

 

 

(0.10

)

 

 

Adjusted core ROAA*

 

 

1.11

%

 

 

1.05

%

 

 

0.06

 

 

 

Return on average common equity (“ROCE”)

 

 

12.08

%

 

 

16.00

%

 

 

(3.92

)

 

 

Core ROCE*

 

 

12.24

%

 

 

16.28

%

 

 

(4.04

)

 

 

Adjusted core ROCE*

 

 

14.50

%

 

 

16.28

%

 

 

(1.78

)

 

 

Core pre-tax pre-provision net income*

 

$

83,674

 

 

$

89,282

 

 

$

(5,608

)

 

(6.3

)%

Adjusted core pre-tax pre-provision net income*

 

$

94,988

 

 

$

89,282

 

 

$

5,706

 

 

6.4

%

Net interest margin, tax equivalent

 

 

3.10

%

 

 

2.96

%

 

 

0.14

 

 

 

Yield on loans (Loan yield)

 

 

7.05

%

 

 

6.70

%

 

 

0.35

 

 

 

Cost of deposits

 

 

3.45

%

 

 

3.32

%

 

 

0.13

 

 

 

Efficiency ratio

 

 

54.58

%

 

 

47.71

%

 

 

6.87

 

 

 

Core efficiency ratio*

 

 

54.24

%

 

 

47.09

%

 

 

7.15

 

 

 

Adjusted core efficiency ratio*

 

 

48.02

%

 

 

47.09

%

 

 

0.93

 

 

 

Non-interest expense to average total assets

 

 

1.87

%

 

 

1.54

%

 

 

0.33

 

 

 

Core non-interest expense to average total assets*

 

 

1.86

%

 

 

1.53

%

 

 

0.33

 

 

 

Adjusted core non-interest expense to average total assets*

 

 

1.65

%

 

 

1.53

%

 

 

0.12

 

 

 

Balance Sheet Trends:

 

 

 

 

 

 

 

 

Total assets

 

$

21,347,367

 

 

$

21,751,614

 

 

$

(404,247

)

 

(1.9

)%

Total cash and investment securities

 

$

7,338,025

 

 

$

5,843,948

 

 

$

1,494,077

 

 

25.6

%

Total loans and leases

 

$

13,256,871

 

 

$

15,063,034

 

 

$

(1,806,163

)

 

(12.0

)%

Non-interest bearing demand deposits

 

$

4,688,880

 

 

$

3,487,517

 

 

$

1,201,363

 

 

34.4

%

Total deposits

 

$

17,961,383

 

 

$

17,723,617

 

 

$

237,766

 

 

1.3

%

Capital Metrics:

 

 

 

 

 

 

 

 

Common Equity

 

$

1,553,823

 

 

$

1,283,226

 

 

$

270,597

 

 

21.1

%

Tangible Common Equity*

 

$

1,550,194

 

 

$

1,279,597

 

 

$

270,597

 

 

21.1

%

Common Equity to Total Assets

 

 

7.3

%

 

 

5.9

%

 

 

1.4

 

 

 

Tangible Common Equity to Tangible Assets*

 

 

7.3

%

 

 

5.9

%

 

 

1.4

 

 

 

Book Value per common share

 

$

49.29

 

 

$

41.08

 

 

$

8.21

 

 

20.0

%

Tangible Book Value per common share*

 

$

49.18

 

 

$

40.96

 

 

$

8.22

 

 

20.1

%

Common equity Tier 1 capital ratio (1)

 

 

12.5

%

 

 

9.6

%

 

 

2.9

 

 

 

Total risk based capital ratio (1)

 

 

15.6

%

 

 

12.3

%

 

 

3.3

 

 

 

 

 

 

 

 

 

 

 

 

(1) Regulatory capital ratios as of March 31, 2024 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)

March 31, 2024

 

% of Total

 

December 31, 2023

 

% of Total

 

March 31, 2023

 

% of Total

Loans and Leases Held for Investment

 

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

 

 

Specialized lending

$

5,104,405

 

39.6

%

 

$

5,006,693

 

38.9

%

 

$

5,519,176

 

37.7

%

Other commercial & industrial (1)

 

1,113,517

 

8.6

 

 

 

1,162,317

 

9.0

 

 

 

1,414,419

 

9.7

 

Mortgage finance

 

1,071,146

 

8.3

 

 

 

1,014,742

 

7.9

 

 

 

1,374,894

 

9.4

 

Multifamily

 

2,123,675

 

16.5

 

 

 

2,138,622

 

16.6

 

 

 

2,195,211

 

15.0

 

Commercial real estate owner occupied

 

806,278

 

6.3

 

 

 

797,319

 

6.2

 

 

 

895,314

 

6.1

 

Commercial real estate non-owner occupied

 

1,182,084

 

9.2

 

 

 

1,177,650

 

9.2

 

 

 

1,245,248

 

8.5

 

Construction

 

185,601

 

1.3

 

 

 

166,393

 

1.3

 

 

 

188,123

 

1.3

 

Total commercial loans and leases

 

11,586,706

 

89.8

 

 

 

11,463,736

 

89.1

 

 

 

12,832,385

 

87.7

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Residential

 

482,537

 

3.8

 

 

 

484,435

 

3.8

 

 

 

494,815

 

3.4

 

Manufactured housing

 

37,382

 

0.3

 

 

 

38,670

 

0.3

 

 

 

43,272

 

0.3

 

Installment:

 

 

 

 

 

 

 

 

 

 

 

Personal

 

492,892

 

3.8

 

 

 

555,533

 

4.3

 

 

 

849,420

 

5.8

 

Other

 

299,714

 

2.3

 

 

 

319,393

 

2.5

 

 

 

419,085

 

2.8

 

Total installment loans

 

792,606

 

6.1

 

 

 

874,926

 

6.8

 

 

 

1,268,505

 

8.6

 

Total consumer loans

 

1,312,525

 

10.2

 

 

 

1,398,031

 

10.9

 

 

 

1,806,592

 

12.3

 

Total loans and leases held for investment

$

12,899,231

 

100.0

%

 

$

12,861,767

 

100.0

%

 

$

14,638,977

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Loans Held for Sale

 

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

Multifamily

$

 

%

 

$

 

%

 

$

4,051

 

1.0

%

Commercial real estate non-owner occupied

 

 

 

 

 

 

 

 

 

16,000

 

3.7

 

Total commercial loans and leases

 

 

 

 

 

 

 

 

 

20,051

 

4.7

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Residential

 

870

 

0.2

 

 

 

1,215

 

0.3

 

 

 

821

 

0.2

 

Installment:

 

 

 

 

 

 

 

 

 

 

 

Personal

 

137,755

 

38.5

 

 

 

151,040

 

44.4

 

 

 

307,336

 

72.5

 

Other

 

219,015

 

61.3

 

 

 

188,062

 

55.3

 

 

 

95,849

 

22.6

 

Total installment loans

 

356,770

 

99.8

 

 

 

339,102

 

99.7

 

 

 

403,185

 

95.1

 

Total consumer loans

 

357,640

 

100.0

 

 

 

340,317

 

100.0

 

 

 

404,006

 

95.3

 

Total loans held for sale

$

357,640

 

100.0

%

 

$

340,317

 

100.0

%

 

$

424,057

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases portfolio

$

13,256,871

 

 

 

$

13,202,084

 

 

 

$

15,063,034

 

 

 

(1) Includes PPP loans of $52.0 million, $74.7 million and $246.3 million as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

Loans and Leases Held for Investment

Loans and leases held for investment were $12.9 billion at March 31, 2024, up $37.5 million, or 0.3%, from December 31, 2023. Specialized lending increased $97.7 million, or 2.0% quarter-over-quarter, to $5.1 billion. Mortgage finance loans increased $56.4 million, or 5.6% quarter-over-quarter due to higher mortgage activity. Construction loans increased $19.2 million, or 11.5% quarter-over-quarter, to $185.6 million. Consumer installment loans held for investment decreased $82.3 million, or 9.4% quarter-over-quarter, to $792.6 million due to the continued build out of the held-for-sale strategy and de-risking of the held-for-investment loan portfolio. Other commercial and industrial loans decreased $48.8 million, or 4.2% quarter-over-quarter, to $1.1 billion, which included a decrease in PPP loans primarily from guarantee payments.

Loans and leases held for investment of $12.9 billion at March 31, 2024 was down $1.7 billion, or 11.9%, year-over-year, largely driven by reduced balances in consumer installment loans of $475.9 million, or 37.5% year-over-year, specialized lending of $414.8 million, mortgage finance loans of $303.7 million and other commercial and industrial loans of $300.9 million, which included a decrease in PPP loans primarily from guarantee payments.

Loans Held for Sale

Loans held for sale increased $17.3 million quarter-over-quarter, and were $357.6 million at March 31, 2024 due to the continued build out of the held-for-sale strategy in 2024.

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)

March 31, 2024

 

December 31, 2023

 

 

March 31, 2024

 

March 31, 2023

 

Allowance for credit losses on loans and leases

$

133,296

 

 

$

135,311

 

 

$

(2,015

)

 

$

133,296

 

 

$

130,281

 

 

$

3,015

 

Provision (benefit) for credit losses on loans and leases

$

15,953

 

 

$

13,420

 

 

$

2,533

 

 

$

15,953

 

 

$

18,008

 

 

$

(2,055

)

Net charge-offs from loans held for investment

$

17,968

 

 

$

17,322

 

 

$

646

 

 

$

17,968

 

 

$

18,651

 

 

$

(683

)

Annualized net charge-offs to average loans and leases

 

0.55

%

 

 

0.51

%

 

 

 

 

0.55

%

 

 

0.49

%

 

 

Coverage of credit loss reserves for loans and leases held for investment

 

1.12

%

 

 

1.13

%

 

 

 

 

1.12

%

 

 

0.97

%

 

 

Net charge-offs were relatively stable with $18.0 million in Q1 2024, compared to $17.3 million in Q4 2023 and $18.7 million in Q1 2023.

Provision (benefit) for Credit Losses

 

Three Months Ended

 

Increase (Decrease)

 

Three Months Ended

 

Increase (Decrease)

(Dollars in thousands)

March 31, 2024

 

December 31, 2023

 

 

March 31, 2024

 

March 31, 2023

 

Provision (benefit) for credit losses on loans and leases

$

15,953

 

$

13,420

 

 

$

2,533

 

$

15,953

 

$

18,008

 

$

(2,055

)

Provision (benefit) for credit losses on available for sale debt securities

 

1,117

 

 

103

 

 

 

1,014

 

 

1,117

 

 

1,595

 

 

(478

)

Provision for credit losses

 

17,070

 

 

13,523

 

 

 

3,547

 

 

17,070

 

 

19,603

 

 

(2,533

)

Provision (benefit) for credit losses on unfunded commitments

 

430

 

 

(136

)

 

 

566

 

 

430

 

 

280

 

 

150

 

Total provision for credit losses

$

17,500

 

$

13,387

 

 

$

4,113

 

$

17,500

 

$

19,883

 

$

(2,383

)

The provision for credit losses on loans and leases in Q1 2024 was $16.0 million, compared to $13.4 million in Q4 2023. The higher provision in Q1 2024 was primarily due to increased uncertainty and slightly weaker macroeconomic forecasts, partially offset by lower balances in consumer installment loans held for investment.

The provision for credit losses on available for sale investment securities in Q1 2024 was $1.1 million, compared to provision of $0.1 million in Q4 2023.

The provision for credit losses on loans and leases in Q1 2024 was $16.0 million, compared to $18.0 million in Q1 2023. The lower provision in Q1 2024 compared to the year ago period was primarily due to lower balances in loans held for investment.

The provision for credit losses on available for sale investment securities in Q1 2024 was $1.1 million compared to provision of $1.6 million in Q1 2023.

Asset Quality

The following table presents asset quality metrics as of the dates indicated:

(Dollars in thousands)

March 31, 2024

 

December 31, 2023

 

Increase (Decrease)

 

March 31, 2024

 

March 31, 2023

 

Increase (Decrease)

Non-performing assets (“NPAs”):

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual / non-performing loans (“NPLs”)

$

35,654

 

 

$

27,110

 

 

$

8,544

 

 

$

35,654

 

 

$

32,124

 

 

$

3,530

 

Non-performing assets

$

35,753

 

 

$

27,209

 

 

$

8,544

 

 

$

35,753

 

 

$

32,260

 

 

$

3,493

 

NPLs to total loans and leases

 

0.27

%

 

 

0.21

%

 

 

 

 

0.27

%

 

 

0.21

%

 

 

Reserves to NPLs

 

373.86

%

 

 

499.12

%

 

 

 

 

373.86

%

 

 

405.56

%

 

 

NPAs to total assets

 

0.17

%

 

 

0.13

%

 

 

 

 

0.17

%

 

 

0.15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases (1) risk ratings:

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

 

 

 

 

 

 

 

 

 

Pass

$

10,095,611

 

 

$

9,955,243

 

 

$

140,368

 

 

$

10,095,611

 

 

$

10,928,620

 

 

$

(833,009

)

Special Mention

 

194,365

 

 

 

196,182

 

 

 

(1,817

)

 

 

194,365

 

 

 

136,986

 

 

 

57,379

 

Substandard

 

282,163

 

 

 

339,664

 

 

 

(57,501

)

 

 

282,163

 

 

 

273,154

 

 

 

9,009

 

Total commercial loans and leases

 

10,572,139

 

 

 

10,491,089

 

 

 

81,050

 

 

 

10,572,139

 

 

 

11,338,760

 

 

 

(766,621

)

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

Performing

 

1,293,457

 

 

 

1,379,603

 

 

 

(86,146

)

 

 

1,293,457

 

 

 

1,787,123

 

 

 

(493,666

)

Non-performing

 

19,068

 

 

 

18,428

 

 

 

640

 

 

 

19,068

 

 

 

19,469

 

 

 

(401

)

Total consumer loans

 

1,312,525

 

 

 

1,398,031

 

 

 

(85,506

)

 

 

1,312,525

 

 

 

1,806,592

 

 

 

(494,067

)

Loans and leases receivable (1)

$

11,884,664

 

 

$

11,889,120

 

 

$

(4,456

)

 

$

11,884,664

 

 

$

13,145,352

 

 

$

(1,260,688

)

 

(1) Risk ratings are assigned to loans and leases held for investment, and excludes loans held for sale, loans receivable, mortgage finance, at fair value and eligible PPP loans that 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 commercial and industrial (“C&I”), mortgage finance, corporate and specialized 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 March 31, 2024 were less than 4% of total assets and approximately 6% of total loans and leases held for investment, and were supported by an allowance for credit losses of $50.7 million. At March 31, 2024, the consumer installment portfolio had the following characteristics: average original FICO score of 737, average debt-to-income of 20% and average borrower income of $107 thousand.

Non-performing loans at March 31, 2024 increased to 0.27% of total loans and leases, compared to 0.21% at December 31, 2023 and 0.21% at March 31, 2023.

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)

March 31, 2024

 

December 31, 2023

 

March 31, 2023

Debt securities, available for sale

$

2,571,139

 

$

2,376,860

 

$

2,900,259

Equity securities

 

33,729

 

 

28,780

 

 

26,710

Investment securities, at fair value

 

2,604,868

 

 

2,405,640

 

 

2,926,969

Debt securities, held to maturity

 

1,032,037

 

 

1,103,170

 

 

870,294

Total investment securities portfolio

$

3,636,905

 

$

3,508,810

 

$

3,797,263

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 March 31, 2024, the AFS debt securities portfolio had a spot yield of 5.33%, an effective duration of approximately 1.7 years, and approximately 40% are variable rate. Additionally, 62% of the AFS securities portfolio was AAA rated at March 31, 2024.

At March 31, 2024, the HTM debt securities portfolio represented only 4.8% of total assets at March 31, 2024, had a spot yield of 4.26% and an effective duration of approximately 3.0 years. Additionally, at March 31, 2024, approximately 41% of the HTM securities were AAA rated and 49% 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)

March 31, 2024

 

% of Total

 

December 31, 2023

 

% of Total

 

March 31, 2023

 

% of Total

Demand, non-interest bearing

$

4,688,880

 

26.1

%

 

$

4,422,494

 

24.7

%

 

$

3,487,517

 

19.7

%

Demand, interest bearing

 

5,661,775

 

31.5

 

 

 

5,580,527

 

31.1

 

 

 

5,791,302

 

32.7

 

Total demand deposits

 

10,350,655

 

57.6

 

 

 

10,003,021

 

55.8

 

 

 

9,278,819

 

52.4

 

Savings

 

2,080,374

 

11.6

 

 

 

1,402,941

 

7.8

 

 

 

924,359

 

5.2

 

Money market

 

3,347,843

 

18.6

 

 

 

3,226,395

 

18.0

 

 

 

2,019,633

 

11.4

 

Time deposits

 

2,182,511

 

12.2

 

 

 

3,287,879

 

18.4

 

 

 

5,500,806

 

31.0

 

Total deposits

$

17,961,383

 

100.0

%

 

$

17,920,236

 

100.0

%

 

$

17,723,617

 

100.0

%

Total deposits increased $41.1 million, or 0.2%, to $18.0 billion at March 31, 2024 as compared to the prior quarter. Non-interest bearing demand deposits increased $266.4 million, or 6.0%, to $4.7 billion, savings deposits increased $677.4 million, or 48.3%, to $2.1 billion, money market deposits increased $121.4 million, or 3.8%, to $3.3 billion and interest bearing demand deposits of $81.2 million, or 1.5%, to $5.7 billion. These increases were offset by a decrease in time deposits of $1.1 billion, or 33.6%, to $2.2 billion. The total average cost of deposits increased modestly by 6 basis points to 3.45% in Q1 2024 from 3.39% in the prior quarter largely driven by continued competitive dynamics in the deposit market that the industry continues to experience. Total estimated uninsured deposits were $4.0 billion1, or 22% of total deposits (inclusive of accrued interest) at March 31, 2024. 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 increased $237.8 million, or 1.3%, to $18.0 billion at March 31, 2024 as compared to a year ago. Non-interest bearing demand deposits increased $1.2 billion, or 34.4%, to $4.7 billion, money market deposits increased $1.3 billion, or 65.8%, to $3.3 billion and savings deposits increased $1.2 billion, or 125.1%, to $2.1 billion. These increases were offset by decreases in time deposits of $3.3 billion, or 60.3% to $2.2 billion and interest bearing demand deposits of $129.5 million, or 2.2%, to $5.7 billion. The total average cost of deposits increased modestly by 13 basis points to 3.45% in Q1 2024 from 3.32% in the prior year primarily due to higher market interest rates, offsetting a positive shift in deposit mix.

______________________________________________

1

Uninsured deposits (estimate) of $5.2 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 $124.5 million.

Borrowings

The following table presents the composition of our borrowings as of the dates indicated:

(Dollars in thousands)

March 31, 2024

 

December 31, 2023

 

March 31, 2023

FHLB advances

$

1,195,088

 

$

1,203,207

 

$

2,052,143

Senior notes

 

123,905

 

 

123,840

 

 

123,645

Subordinated debt

 

182,300

 

 

182,230

 

 

182,021

Total borrowings

$

1,501,293

 

$

1,509,277

 

$

2,357,809

Total borrowings decreased $8.0 million, or 0.5%, to $1.5 billion at March 31, 2024 as compared to the prior quarter. As of March 31, 2024, Customers’ immediately available borrowing capacity with the FRB and FHLB was approximately $7.5 billion, of which $1.2 billion of available capacity was utilized in borrowings and $1.1 billion was utilized to collateralize deposits.

Total borrowings decreased $856.5 million, or 36.3%, to $1.5 billion at March 31, 2024 as compared to a year ago. This decrease primarily resulted from 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)

March 31, 2024

 

December 31, 2023

 

March 31, 2023

Customers Bancorp, Inc.

 

 

 

 

 

Common Equity

$

1,553,823

 

 

$

1,500,600

 

 

$

1,283,226

 

Tangible Common Equity*

$

1,550,194

 

 

$

1,496,971

 

 

$

1,279,597

 

Common Equity to Total Assets

 

7.3

%

 

 

7.0

%

 

 

5.9

%

Tangible Common Equity to Tangible Assets*

 

7.3

%

 

 

7.0

%

 

 

5.9

%

Book Value per common share

$

49.29

 

 

$

47.73

 

 

$

41.08

 

Tangible Book Value per common share*

$

49.18

 

 

$

47.61

 

 

$

40.96

 

Common equity Tier 1 (“CET 1”) capital ratio (1)

 

12.5

%

 

 

12.2

%

 

 

9.6

%

Total risk based capital ratio (1)

 

15.6

%

 

 

15.3

%

 

 

12.3

%

 

 

 

 

 

 

(1) Regulatory capital ratios as of March 31, 2024 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 $53.2 million to $1.6 billion, and tangible common equity* increased $53.2 million to $1.6 billion, at March 31, 2024 compared to the prior quarter, respectively, primarily from earnings of $45.9 million and decreased unrealized losses on investment securities of $4.3 million (net of taxes) deferred in accumulated other comprehensive income (“AOCI”). Similarly, book value per common share increased to $49.29 from $47.73, and tangible book value per common share* increased to $49.18 from $47.61, at March 31, 2024 and December 31, 2023, respectively.

Customers Bancorp’s common equity increased $270.6 million to $1.6 billion, and tangible common equity* increased $270.6 million to $1.6 billion, at March 31, 2024 compared to a year ago, respectively, primarily from earnings of $231.1 million and decreased unrealized losses on investment securities in AOCI of $24.0 million (net of taxes). Similarly, book value per common share increased to $49.29 from $41.08, and tangible book value per common share* increased to $49.18 from $40.96, at March 31, 2024 and March 31, 2023, respectively.

At the Customers Bancorp level, the CET 1 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 12.5%, 15.6%, 7.3%, and 7.3%, respectively, at March 31, 2024.

At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At March 31, 2024, Tier 1 capital (estimate) and total risk based capital (estimate) were 14.0% and 15.7%, 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 $160.4 million in Q1 2024, a decrease of $12.1 million from Q4 2023. This decrease was due to lower interest income of $14.1 million primarily due to the reduction of higher yielding loans and securities that exited the bank in the fourth quarter, and the measured pace of replenishing those interest-earning assets in the first quarter. Partially offsetting this decline was lower interest expense of $2.0 million due to the reduction of FHLB advances and positive remix of wholesale CDs with business unit deposits*2 that we executed in the fourth and first quarters.

“We experienced a modest decline in net interest income in the first quarter due to the selective reduction of higher yielding loans and securities in last quarter. This quarter we also reserved loan growth capacity in anticipation of the onboarding of the new teams. As we deploy excess liquidity, currently on the balance sheet in cash and securities, our net interest income is expected to grow and our net interest margin is expected to expand over the remainder of the year. Our loan pipeline grew meaningfully in the first quarter, which will benefit interest income and margin for the remainder of the year. For the second quarter in a row we reported lower interest expense compared to the prior quarter. The continued replacement of wholesale deposits and the remix of higher cost less strategic business unit deposits*2 is expected to continue to drive interest expense lower going forward. The combination of these efforts will benefit our net interest income throughout 2024 and beyond,” stated Customers Bancorp President Sam Sidhu.

Net interest income totaled $160.4 million in Q1 2024, an increase of $10.5 million from Q1 2023. This increase was due to higher interest income of $16.8 million primarily due to variable rate lower credit risk specialized lending verticals and interest earning deposits from higher market interest rates, and lower interest expense from lower average balances of borrowings, offset in part by higher interest expense on deposits of $9.8 million primarily resulting from increased market interest rates. The decrease in interest-earning assets was primarily driven by decreases in specialized lending verticals, consumer installment loans, mortgage finance loans and PPP loans included in other C&I loans. Total consumer installment loans decreased in Q1 2024 as compared to Q1 2023, as installment loans held for investment decreased primarily for risk management purposes and the implementation of a held-for-sale strategy.

______________________________________________

2

Total deposits excluding wholesale CDs and BMTX student-related deposits.

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)

March 31, 2024

 

December 31, 2023

 

 

March 31, 2024

 

March 31, 2023

 

Commercial lease income

$

9,683

 

 

$

9,035

 

 

$

648

 

 

$

9,683

 

 

$

9,326

 

$

357

 

Loan fees

 

5,280

 

 

 

5,926

 

 

 

(646

)

 

 

5,280

 

 

 

3,990

 

 

1,290

 

Bank-owned life insurance

 

3,261

 

 

 

2,160

 

 

 

1,101

 

 

 

3,261

 

 

 

2,647

 

 

614

 

Mortgage finance transactional fees

 

946

 

 

 

927

 

 

 

19

 

 

 

946

 

 

 

1,074

 

 

(128

)

Gain (loss) on sale of loans

 

10

 

 

 

(91

)

 

 

101

 

 

 

10

 

 

 

 

 

10

 

Net gain (loss) on sale of investment securities

 

(30

)

 

 

(145

)

 

 

115

 

 

 

(30

)

 

 

 

 

(30

)

Other

 

2,081

 

 

 

860

 

 

 

1,221

 

 

 

2,081

 

 

 

1,084

 

 

997

 

Total non-interest income

$

21,231

 

 

$

18,672

 

 

$

2,559

 

 

$

21,231

 

 

$

18,121

 

$

3,110

 

Non-interest income totaled $21.2 million for Q1 2024, an increase of $2.6 million compared to Q4 2023. The increase was primarily due to increases in death benefits paid by insurance carriers under bank-owned life insurance policies, commercial lease income and other income.

Non-interest income totaled $21.2 million for Q1 2024, an increase of $3.1 million compared to Q1 2023. The increase was primarily due to increases in loan fees of $1.3 million resulting from increased servicing-related revenue and unused line of credit fees, death benefits paid by insurance carriers under bank-owned life insurance policies, commercial lease income and other income.

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)

March 31, 2024

 

December 31, 2023

 

 

March 31, 2024

 

March 31, 2023

 

Salaries and employee benefits

$

36,025

 

$

33,965

 

$

2,060

 

 

$

36,025

 

$

32,345

 

$

3,680

 

Technology, communication and bank operations

 

21,904

 

 

16,887

 

 

5,017

 

 

 

21,904

 

 

16,589

 

 

5,315

 

Commercial lease depreciation

 

7,970

 

 

7,357

 

 

613

 

 

 

7,970

 

 

7,875

 

 

95

 

Professional services

 

6,353

 

 

9,820

 

 

(3,467

)

 

 

6,353

 

 

7,596

 

 

(1,243

)

Loan servicing

 

4,031

 

 

3,779

 

 

252

 

 

 

4,031

 

 

4,661

 

 

(630

)

Occupancy

 

2,347

 

 

2,320

 

 

27

 

 

 

2,347

 

 

2,760

 

 

(413

)

FDIC assessments, non-income taxes and regulatory fees

 

13,469

 

 

13,977

 

 

(508

)

 

 

13,469

 

 

2,728

 

 

10,741

 

Advertising and promotion

 

682

 

 

850

 

 

(168

)

 

 

682

 

 

1,049

 

 

(367

)

Other

 

6,388

 

 

4,812

 

 

1,576

 

 

 

6,388

 

 

4,530

 

 

1,858

 

Total non-interest expense

$

99,169

 

$

93,767

 

$

5,402

 

 

$

99,169

 

$

80,133

 

$

19,036

 

Non-interest expenses totaled $99.2 million in Q1 2024, an increase of $5.4 million compared to Q4 2023. The increase was primarily attributable to certain one-time items which included deposit servicing-related fees of $7.1 million in technology, communications and bank operations and FDIC premiums of $4.2 million, both of which relate to periods prior to 2024. There was also an increase in the estimated industry-wide FDIC special assessment of $0.5 million in Q1 2024 from the $3.7 million FDIC special assessment fee recorded in Q4 2023. Excluding the impact of these amounts, total non-interest expenses were $87.4 million, which decreased $2.7 million in Q1 2024 compared to $90.0 million in Q4 2023. Other changes during the quarter include an increase of $2.1 million in salaries and employee benefits primarily due to higher incentives and stock awards and a decrease of $3.5 million in professional fees. Q1 2024 adjusted core non-interest expenses* were $87.4 million, a decrease of $2.1 million over Q4 2023.

Non-interest expenses totaled $99.2 million in Q1 2024, an increase of $19.0 million compared to Q1 2023. The increase was primarily attributable to increases of $10.7 million in FDIC assessments, non-income taxes and regulatory fees resulting primarily from higher FDIC assessments, one-time FDIC premiums of $4.2 million relating to periods prior to 2024 and an increase in the estimated industry-wide FDIC special assessment of $0.5 million, $5.3 million in technology, communications and bank operations which included the one-time deposit servicing-related fees and $3.7 million in salaries and employee benefits primarily due to higher headcount, annual merit increases and incentives. These increases were partially offset by a decrease of $1.2 million in professional fees.

Taxes

Income tax expense decreased by $6.1 million to $15.7 million in Q1 2024 from $21.8 million in Q4 2023 primarily due to lower pre-tax income.

Income tax expense increased by $1.1 million to $15.7 million in Q1 2024 from $14.6 million in Q1 2023 primarily due to a decrease in estimated income tax credits for 2024.

The effective tax rate for Q1 2024 was 24%. Customers expects the full-year 2024 effective tax rate to be approximately 22% to 24%.

Outlook

“Looking forward, our strategy and risk management principles remain unchanged. We are focused on managing risk, strengthening our deposit franchise, further improving our profitability and maintaining our strong capital ratios. Our deposits are expected to grow modestly with continued improvement in the quality of deposits, reducing higher cost business unit deposits*1 with lower cost deposits where we have a holistic and primary relationship. The addition of the new banking teams is expected to accelerate and enhance these efforts which were already well underway. We see attractive opportunities to deploy cash and securities cash flows into franchise-enhancing loan growth and our pipeline is strong. We remain confident in our ability to deliver 10% - 15% loan growth for the full year. The management of non-interest expenses remains a priority for us. Our adjusted core non-interest expense*, which excludes certain one-time items, declined from the core non-interest expense in the prior quarter. We expect the investments made in recruiting the new banking teams will produce significant benefits by increasing our net interest income and net interest margin primarily through lowering our interest expense costs as well as improving the overall quality of our deposit franchise. 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. The onboarding of our new banking teams will elevate our efficiency ratio temporarily, but we are confident in our ability to operate with a mid-40’s efficiency ratio over the medium term. 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 highly focused on 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.

1

Total deposits excluding wholesale CDs and BMTX student-related deposits.

Webcast

Date:

Friday, April 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 1st Quarter Earnings Webcast.

You may submit questions in advance of the live webcast by emailing our Communications Director, David Patti at dpatti@customersbank.com.

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 nearly $22 billion in assets making it one of the 80 largest bank holding companies in the U.S. Customers Bank’s commercial and consumer clients benefit from a full suite of technology-enabled tailored product experiences delivered by best-in-class customer service distinguished by a Single Point of Contact approach. 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 specialized lending clients. Major accolades include:

  • No. 5 on American Banker 2023 list of top-performing banks with $10B to $50B in assets
  • No. 29 out of the 100 largest publicly traded banks in 2024 Forbes Best Banks list
  • No. 52 on Investor’s Business Daily 100 Best Stocks for 2023

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, 2023, 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.

Q1 2024 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended March 31, 2024 and the preceding four quarters:

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

EARNINGS SUMMARY - UNAUDITED

 

(Dollars in thousands, except per share data and stock price data)

Q1

 

Q4

 

Q3

 

Q2

 

Q1

2024

 

2023

 

2023

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

 

GAAP Profitability Metrics:

Net income available to common shareholders

 

$

45,926

 

 

$

58,223

 

 

$

82,953

 

 

$

44,007

 

 

$

50,265

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

1.46

 

 

$

1.86

 

 

$

2.65

 

 

$

1.41

 

 

$

1.58

 

 

Earnings per share - diluted

$

1.40

 

 

$

1.79

 

 

$

2.58

 

 

$

1.39

 

 

$

1.55

 

 

Book value per common share (1)

$

49.29

 

 

$

47.73

 

 

$

45.47

 

 

$

42.16

 

 

$

41.08

 

 

CUBI stock price (1)

$

53.06

 

 

$

57.62

 

 

$

34.45

 

 

$

30.26

 

 

$

18.52

 

 

CUBI stock price as % of book value (1)

 

108

%

 

 

121

%

 

 

76

%

 

 

72

%

 

 

45

%

Average shares outstanding - basic

 

31,473,424

 

 

 

31,385,043

 

 

 

31,290,581

 

 

 

31,254,125

 

 

 

31,819,203

 

Average shares outstanding - diluted

 

32,854,534

 

 

 

32,521,787

 

 

 

32,175,084

 

 

 

31,591,142

 

 

 

32,345,017

 

Shares outstanding (1)

 

31,521,931

 

 

 

31,440,906

 

 

 

31,311,254

 

 

 

31,282,318

 

 

 

31,239,750

 

Return on average assets (“ROAA”)

 

0.94

%

 

 

1.16

%

 

 

1.57

%

 

 

0.88

%

 

 

1.03

%

Return on average common equity (“ROCE”)

 

12.08

%

 

 

15.93

%

 

 

23.97

%

 

 

13.22

%

 

 

16.00

%

Net interest margin, tax equivalent

 

3.10

%

 

 

3.31

%

 

 

3.70

%

 

 

3.15

%

 

 

2.96

%

Efficiency ratio

 

54.58

%

 

 

49.08

%

 

 

41.01

%

 

 

49.25

%

 

 

47.71

%

Non-GAAP Profitability Metrics (2):

 

 

 

 

 

 

 

 

 

Core earnings

$

46,532

 

 

$

61,633

 

 

$

83,294

 

 

$

52,163

 

 

$

51,143

 

Core pre-tax pre-provision net income

$

83,674

 

 

$

101,884

 

 

$

128,564

 

 

$

96,833

 

 

$

89,282

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

Core earnings per share - diluted

$

1.42

 

 

$

1.90

 

 

$

2.59

 

 

$

1.65

 

 

$

1.58

 

 

Tangible book value per common share (1)

$

49.18

 

 

$

47.61

 

 

$

45.36

 

 

$

42.04

 

 

$

40.96

 

 

CUBI stock price as % of tangible book value (1)

 

108

%

 

 

121

%

 

 

76

%

 

 

72

%

 

 

45

%

Core ROAA

 

0.95

%

 

 

1.22

%

 

 

1.57

%

 

 

1.03

%

 

 

1.05

%

Core ROCE

 

12.24

%

 

 

16.87

%

 

 

24.06

%

 

 

15.67

%

 

 

16.28

%

Core pre-tax pre-provision ROAA

 

1.58

%

 

 

1.90

%

 

 

2.32

%

 

 

1.79

%

 

 

1.72

%

Core pre-tax pre-provision ROCE

 

21.01

%

 

 

26.82

%

 

 

36.04

%

 

 

28.01

%

 

 

27.33

%

Core efficiency ratio

 

54.24

%

 

 

46.70

%

 

 

41.04

%

 

 

47.84

%

 

 

47.09

%

Asset Quality:

 

 

 

 

 

 

 

 

 

Net charge-offs

$

17,968

 

 

$

17,322

 

 

$

17,498

 

 

$

15,564

 

 

$

18,651

 

Annualized net charge-offs to average total loans and leases

 

0.55

%

 

 

0.51

%

 

 

0.50

%

 

 

0.42

%

 

 

0.49

%

Non-performing loans (“NPLs”) to total loans and leases (1)

 

0.27

%

 

 

0.21

%

 

 

0.22

%

 

 

0.20

%

 

 

0.21

%

Reserves to NPLs (1)

 

373.86

%

 

 

499.12

%

 

 

466.11

%

 

 

494.46

%

 

 

405.56

%

Non-performing assets (“NPAs”) to total assets

 

0.17

%

 

 

0.13

%

 

 

0.14

%

 

 

0.13

%

 

 

0.15

%

Customers Bank Capital Ratios (3):

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital to risk-weighted assets

 

14.0

%

 

 

13.77

%

 

 

12.97

%

 

 

11.96

%

 

 

11.31

%

Tier 1 capital to risk-weighted assets

 

14.0

%

 

 

13.77

%

 

 

12.97

%

 

 

11.96

%

 

 

11.31

%

Total capital to risk-weighted assets

 

15.7

%

 

 

15.28

%

 

 

14.45

%

 

 

13.38

%

 

 

12.64

%

Tier 1 capital to average assets (leverage ratio)

 

8.8

%

 

 

8.71

%

 

 

8.25

%

 

 

8.00

%

 

 

8.09

%

 

 

 

 

 

 

 

 

 

 

 

(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 Q1 2024 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 March 31, 2024, our regulatory capital ratios reflected 25%, or $15.4 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)

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

 

2024

 

2023

 

2023

 

2023

 

2023

Interest income:

 

 

 

 

 

 

 

 

 

Loans and leases

$

217,999

 

 

$

239,453

 

 

$

271,107

 

 

$

241,745

 

 

$

244,212

Investment securities

 

46,802

 

 

 

51,074

 

 

 

54,243

 

 

 

48,026

 

 

 

47,316

Interest earning deposits

 

52,817

 

 

 

44,104

 

 

 

43,800

 

 

 

27,624

 

 

 

10,395

Loans held for sale

 

12,048

 

 

 

8,707

 

 

 

4,664

 

 

 

11,149

 

 

 

11,701

Other

 

2,111

 

 

 

2,577

 

 

 

2,526

 

 

 

1,616

 

 

 

1,321

Total interest income

 

331,777

 

 

 

345,915

 

 

 

376,340

 

 

 

330,160

 

 

 

314,945

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

153,725

 

 

 

150,307

 

 

 

145,825

 

 

 

136,375

 

 

 

143,930

FHLB advances

 

13,485

 

 

 

18,868

 

 

 

26,485

 

 

 

24,285

 

 

 

10,370

FRB advances

 

 

 

 

 

 

 

 

 

 

 

 

 

6,286

Subordinated debt

 

2,689

 

 

 

2,688

 

 

 

2,689

 

 

 

2,689

 

 

 

2,689

Other borrowings

 

1,493

 

 

 

1,546

 

 

 

1,568

 

 

 

1,540

 

 

 

1,771

Total interest expense

 

171,392

 

 

 

173,409

 

 

 

176,567

 

 

 

164,889

 

 

 

165,046

Net interest income

 

160,385

 

 

 

172,506

 

 

 

199,773

 

 

 

165,271

 

 

 

149,899

Provision for credit losses

 

17,070

 

 

 

13,523

 

 

 

17,856

 

 

 

23,629

 

 

 

19,603

Net interest income after provision for credit losses

 

143,315

 

 

 

158,983

 

 

 

181,917

 

 

 

141,642

 

 

 

130,296

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Commercial lease income

 

9,683

 

 

 

9,035

 

 

 

8,901

 

 

 

8,917

 

 

 

9,326

Loan fees

 

5,280

 

 

 

5,926

 

 

 

6,029

 

 

 

4,271

 

 

 

3,990

Bank-owned life insurance

 

3,261

 

 

 

2,160

 

 

 

1,973

 

 

 

4,997

 

 

 

2,647

Mortgage finance transactional fees

 

946

 

 

 

927

 

 

 

1,018

 

 

 

1,376

 

 

 

1,074

Gain (loss) on sale of loans

 

10

 

 

 

(91

)

 

 

(348

)

 

 

(761

)

 

 

Loss on sale of capital call lines of credit

 

 

 

 

 

 

 

 

 

 

(5,037

)

 

 

Net gain (loss) on sale of investment securities

 

(30

)

 

 

(145

)

 

 

(429

)

 

 

 

 

 

Other

 

2,081

 

 

 

860

 

 

 

631

 

 

 

2,234

 

 

 

1,084

Total non-interest income

 

21,231

 

 

 

18,672

 

 

 

17,775

 

 

 

15,997

 

 

 

18,121

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

36,025

 

 

 

33,965

 

 

 

33,845

 

 

 

33,120

 

 

 

32,345

Technology, communication and bank operations

 

21,904

 

 

 

16,887

 

 

 

15,667

 

 

 

16,407

 

 

 

16,589

Commercial lease depreciation

 

7,970

 

 

 

7,357

 

 

 

7,338

 

 

 

7,328

 

 

 

7,875

Professional services

 

6,353

 

 

 

9,820

 

 

 

8,569

 

 

 

9,192

 

 

 

7,596

Loan servicing

 

4,031

 

 

 

3,779

 

 

 

3,858

 

 

 

4,777

 

 

 

4,661

Occupancy

 

2,347

 

 

 

2,320

 

 

 

2,471

 

 

 

2,519

 

 

 

2,760

FDIC assessments, non-income taxes and regulatory fees

 

13,469

 

 

 

13,977

 

 

 

8,551

 

 

 

9,780

 

 

 

2,728

Advertising and promotion

 

682

 

 

 

850

 

 

 

650

 

 

 

546

 

 

 

1,049

Legal settlement expense

 

 

 

 

 

 

 

4,096

 

 

 

 

 

 

Other

 

6,388

 

 

 

4,812

 

 

 

4,421

 

 

 

5,628

 

 

 

4,530

Total non-interest expense

 

99,169

 

 

 

93,767

 

 

 

89,466

 

 

 

89,297

 

 

 

80,133

Income before income tax expense

 

65,377

 

 

 

83,888

 

 

 

110,226

 

 

 

68,342

 

 

 

68,284

Income tax expense

 

15,651

 

 

 

21,796

 

 

 

23,470

 

 

 

20,768

 

 

 

14,563

Net income

 

49,726

 

 

 

62,092

 

 

 

86,756

 

 

 

47,574

 

 

 

53,721

Preferred stock dividends

 

3,800

 

 

 

3,869

 

 

 

3,803

 

 

 

3,567

 

 

 

3,456

Net income available to common shareholders

$

45,926

 

 

$

58,223

 

 

$

82,953

 

 

$

44,007

 

 

$

50,265

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

1.46

 

 

$

1.86

 

 

$

2.65

 

 

$

1.41

 

 

$

1.58

Diluted earnings per common share

 

1.40

 

 

 

1.79

 

 

 

2.58

 

 

 

1.39

 

 

 

1.55

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET - UNAUDITED

(Dollars in thousands)

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

2024

 

2023

 

2023

 

2023

 

2023

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

51,974

 

 

$

45,210

 

 

$

68,288

 

 

$

54,127

 

 

$

77,251

 

Interest earning deposits

 

3,649,146

 

 

 

3,801,136

 

 

 

3,351,686

 

 

 

3,101,097

 

 

 

1,969,434

 

Cash and cash equivalents

 

3,701,120

 

 

 

3,846,346

 

 

 

3,419,974

 

 

 

3,155,224

 

 

 

2,046,685

 

Investment securities, at fair value

 

2,604,868

 

 

 

2,405,640

 

 

 

2,773,207

 

 

 

2,824,638

 

 

 

2,926,969

 

Investment securities held to maturity

 

1,032,037

 

 

 

1,103,170

 

 

 

1,178,370

 

 

 

1,258,560

 

 

 

870,294

 

Loans held for sale

 

357,640

 

 

 

340,317

 

 

 

150,368

 

 

 

78,108

 

 

 

424,057

 

Loans and leases receivable

 

11,936,621

 

 

 

11,963,855

 

 

 

12,600,548

 

 

 

12,826,531

 

 

 

13,391,610

 

Loans receivable, mortgage finance, at fair value

 

962,610

 

 

 

897,912

 

 

 

962,566

 

 

 

1,006,268

 

 

 

1,247,367

 

Allowance for credit losses on loans and leases

 

(133,296

)

 

 

(135,311

)

 

 

(139,213

)

 

 

(139,656

)

 

 

(130,281

)

Total loans and leases receivable, net of allowance for credit losses on loans and leases

 

12,765,935

 

 

 

12,726,456

 

 

 

13,423,901

 

 

 

13,693,143

 

 

 

14,508,696

 

FHLB, Federal Reserve Bank, and other restricted stock

 

100,067

 

 

 

109,548

 

 

 

126,098

 

 

 

126,240

 

 

 

124,733

 

Accrued interest receivable

 

120,123

 

 

 

114,766

 

 

 

123,984

 

 

 

119,501

 

 

 

123,754

 

Bank premises and equipment, net

 

7,253

 

 

 

7,371

 

 

 

7,789

 

 

 

8,031

 

 

 

8,581

 

Bank-owned life insurance

 

293,400

 

 

 

292,193

 

 

 

291,670

 

 

 

290,322

 

 

 

339,607

 

Goodwill and other intangibles

 

3,629

 

 

 

3,629

 

 

 

3,629

 

 

 

3,629

 

 

 

3,629

 

Other assets

 

361,295

 

 

 

366,829

 

 

 

358,162

 

 

 

471,169

 

 

 

374,609

 

Total assets

$

21,347,367

 

 

$

21,316,265

 

 

$

21,857,152

 

 

$

22,028,565

 

 

$

21,751,614

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing deposits

$

4,688,880

 

 

$

4,422,494

 

 

$

4,758,682

 

 

$

4,490,198

 

 

$

3,487,517

 

Interest bearing deposits

 

13,272,503

 

 

 

13,497,742

 

 

 

13,436,682

 

 

 

13,460,233

 

 

 

14,236,100

 

Total deposits

 

17,961,383

 

 

 

17,920,236

 

 

 

18,195,364

 

 

 

17,950,431

 

 

 

17,723,617

 

FHLB advances

 

1,195,088

 

 

 

1,203,207

 

 

 

1,529,839

 

 

 

2,046,142

 

 

 

2,052,143

 

Other borrowings

 

123,905

 

 

 

123,840

 

 

 

123,775

 

 

 

123,710

 

 

 

123,645

 

Subordinated debt

 

182,300

 

 

 

182,230

 

 

 

182,161

 

 

 

182,091

 

 

 

182,021

 

Accrued interest payable and other liabilities

 

193,074

 

 

 

248,358

 

 

 

264,406

 

 

 

269,539

 

 

 

249,168

 

Total liabilities

 

19,655,750

 

 

 

19,677,871

 

 

 

20,295,545

 

 

 

20,571,913

 

 

 

20,330,594

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

137,794

 

 

 

137,794

 

 

 

137,794

 

 

 

137,794

 

 

 

137,794

 

Common stock

 

35,540

 

 

 

35,459

 

 

 

35,330

 

 

 

35,301

 

 

 

35,258

 

Additional paid in capital

 

567,490

 

 

 

564,538

 

 

 

559,346

 

 

 

555,737

 

 

 

552,255

 

Retained earnings

 

1,205,508

 

 

 

1,159,582

 

 

 

1,101,359

 

 

 

1,018,406

 

 

 

974,399

 

Accumulated other comprehensive income (loss), net

 

(132,305

)

 

 

(136,569

)

 

 

(149,812

)

 

 

(168,176

)

 

 

(156,276

)

Treasury stock, at cost

 

(122,410

)

 

 

(122,410

)

 

 

(122,410

)

 

 

(122,410

)

 

 

(122,410

)

Total shareholders’ equity

 

1,691,617

 

 

 

1,638,394

 

 

 

1,561,607

 

 

 

1,456,652

 

 

 

1,421,020

 

Total liabilities and shareholders’ equity

$

21,347,367

 

 

$

21,316,265

 

 

$

21,857,152

 

 

$

22,028,565

 

 

$

21,751,614

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

Three Months Ended

 

March 31, 2024

 

December 31, 2023

 

March 31, 2023

 

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

$

3,865,028

 

$

52,817

 

5.50

%

 

$

3,191,677

 

$

44,104

 

5.48

%

 

$

914,149

 

$

10,395

 

4.61

%

Investment securities (1)

 

3,771,097

 

 

46,802

 

4.99

%

 

 

4,007,418

 

 

51,074

 

5.10

%

 

 

4,031,247

 

 

47,316

 

4.69

%

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialized lending loans and leases (2)

 

5,268,345

 

 

115,590

 

8.82

%

 

 

5,574,149

 

 

130,838

 

9.31

%

 

 

5,694,168

 

 

103,688

 

7.38

%

Other commercial & industrial loans (2)(3)

 

1,654,665

 

 

26,714

 

6.49

%

 

 

1,666,052

 

 

28,053

 

6.68

%

 

 

2,594,440

 

 

49,121

 

7.68

%

Mortgage finance loans

 

1,033,177

 

 

12,830

 

4.99

%

 

 

997,353

 

 

13,726

 

5.46

%

 

 

1,262,139

 

 

17,412

 

5.59

%

Multifamily loans

 

2,121,650

 

 

21,255

 

4.03

%

 

 

2,131,750

 

 

22,347

 

4.16

%

 

 

2,206,600

 

 

20,470

 

3.76

%

Non-owner occupied commercial real estate loans

 

1,348,468

 

 

20,179

 

6.02

%

 

 

1,392,684

 

 

20,686

 

5.89

%

 

 

1,449,722

 

 

20,199

 

5.65

%

Residential mortgages

 

522,528

 

 

5,708

 

4.39

%

 

 

526,422

 

 

5,942

 

4.48

%

 

 

542,909

 

 

5,598

 

4.18

%

Installment loans

 

1,179,721

 

 

27,771

 

9.47

%

 

 

1,198,043

 

 

26,568

 

8.80

%

 

 

1,727,995

 

 

39,425

 

9.25

%

Total loans and leases (4)

 

13,128,554

 

 

230,047

 

7.05

%

 

 

13,486,453

 

 

248,160

 

7.30

%

 

 

15,477,973

 

 

255,913

 

6.70

%

Other interest-earning assets

 

107,525

 

 

2,111

 

7.90

%

 

 

116,756

 

 

2,577

 

8.75

%

 

 

91,308

 

 

1,321

 

5.87

%

Total interest-earning assets

 

20,872,204

 

 

331,777

 

6.39

%

 

 

20,802,304

 

 

345,915

 

6.61

%

 

 

20,514,677

 

 

314,945

 

6.21

%

Non-interest-earning assets

 

463,025

 

 

 

 

 

 

449,969

 

 

 

 

 

 

538,243

 

 

 

 

Total assets

$

21,335,229

 

 

��

 

 

$

21,252,273

 

 

 

 

 

$

21,052,920

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking accounts

$

5,538,846

 

$

61,531

 

4.47

%

 

$

5,656,212

 

$

62,041

 

4.35

%

 

$

7,494,379

 

$

70,485

 

3.81

%

Money market deposit accounts

 

3,233,103

 

 

36,811

 

4.58

%

 

 

2,802,309

 

 

29,990

 

4.25

%

 

 

2,470,004

 

 

20,783

 

3.41

%

Other savings accounts

 

1,753,118

 

 

21,399

 

4.91

%

 

 

1,218,118

 

 

13,849

 

4.51

%

 

 

822,312

 

 

6,286

 

3.10

%

Certificates of deposit

 

2,750,788

 

 

33,984

 

4.97

%

 

 

3,625,311

 

 

44,427

 

4.86

%

 

 

4,504,333

 

 

46,376

 

4.18

%

Total interest-bearing deposits (5)

 

13,275,855

 

 

153,725

 

4.66

%

 

 

13,301,950

 

 

150,307

 

4.48

%

 

 

15,291,028

 

 

143,930

 

3.82

%

Federal funds purchased

 

 

 

 

%

 

 

 

 

 

%

 

 

15,333

 

 

188

 

4.97

%

Borrowings

 

1,506,707

 

 

17,667

 

4.72

%

 

 

1,816,047

 

 

23,102

 

5.05

%

 

 

1,788,116

 

 

20,928

 

4.75

%

Total interest-bearing liabilities

 

14,782,562

 

 

171,392

 

4.66

%

 

 

15,117,997

 

 

173,409

 

4.55

%

 

 

17,094,477

 

 

165,046

 

3.91

%

Non-interest-bearing deposits (5)

 

4,620,986

 

 

 

 

 

 

4,270,557

 

 

 

 

 

 

2,299,295

 

 

 

 

Total deposits and borrowings

 

19,403,548

 

 

 

3.55

%

 

 

19,388,554

 

 

 

3.55

%

 

 

19,393,772

 

 

 

3.45

%

Other non-interest-bearing liabilities

 

264,677

 

 

 

 

 

 

276,198

 

 

 

 

 

 

247,575

 

 

 

 

Total liabilities

 

19,668,225

 

 

 

 

 

 

19,664,752

 

 

 

 

 

 

19,641,347

 

 

 

 

Shareholders’ equity

 

1,667,004

 

 

 

 

 

 

1,587,521

 

 

 

 

 

 

1,411,573

 

 

 

 

Total liabilities and shareholders’ equity

$

21,335,229

 

 

 

 

 

$

21,252,273

 

 

 

 

 

$

21,052,920

 

 

 

 

Net interest income

 

 

 

160,385

 

 

 

 

 

 

172,506

 

 

 

 

 

 

149,899

 

 

Tax-equivalent adjustment

 

 

 

394

 

 

 

 

 

 

398

 

 

 

 

 

 

375

 

 

Net interest earnings

 

 

$

160,779

 

 

 

 

 

$

172,904

 

 

 

 

 

$

150,274

 

 

Interest spread

 

 

 

 

2.84

%

 

 

 

 

 

3.06

%

 

 

 

 

 

2.76

%

Net interest margin

 

 

 

 

3.09

%

 

 

 

 

 

3.30

%

 

 

 

 

 

2.95

%

Net interest margin tax equivalent (6)

 

 

 

 

3.10

%

 

 

 

 

 

3.31

%

 

 

 

 

 

2.96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 PPP loans.

(4) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees.

(5) Total costs of deposits (including interest bearing and non-interest bearing) were 3.45%, 3.39% and 3.32% for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

(6) Tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, presented to approximate interest income as a taxable asset.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED

(Dollars in thousands)

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

2024

 

2023

 

2023

 

2023

 

2023

Loans and leases held for investment

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

Specialized lending

$

5,104,405

 

$

5,006,693

 

$

5,422,161

 

$

5,534,832

 

$

5,519,176

Other commercial & industrial (1)

 

1,113,517

 

 

1,162,317

 

 

1,252,427

 

 

1,240,908

 

 

1,414,419

Mortgage finance

 

1,071,146

 

 

1,014,742

 

 

1,042,549

 

 

1,108,598

 

 

1,374,894

Multifamily

 

2,123,675

 

 

2,138,622

 

 

2,130,213

 

 

2,151,734

 

 

2,195,211

Commercial real estate owner occupied

 

806,278

 

 

797,319

 

 

794,815

 

 

842,042

 

 

895,314

Commercial real estate non-owner occupied

 

1,182,084

 

 

1,177,650

 

 

1,178,203

 

 

1,211,091

 

 

1,245,248

Construction

 

185,601

 

 

166,393

 

 

252,588

 

 

212,214

 

 

188,123

Total commercial loans and leases

 

11,586,706

 

 

11,463,736

 

 

12,072,956

 

 

12,301,419

 

 

12,832,385

Consumer:

 

 

 

 

 

 

 

 

 

Residential

 

482,537

 

 

484,435

 

 

483,133

 

 

487,199

 

 

494,815

Manufactured housing

 

37,382

 

 

38,670

 

 

40,129

 

 

41,664

 

 

43,272

Installment:

 

 

 

 

 

 

 

 

 

Personal

 

492,892

 

 

555,533

 

 

629,843

 

 

752,470

 

 

849,420

Other

 

299,714

 

 

319,393

 

 

337,053

 

 

250,047

 

 

419,085

Total installment loans

 

792,606

 

 

874,926

 

 

966,896

 

 

1,002,517

 

 

1,268,505

Total consumer loans

 

1,312,525

 

 

1,398,031

 

 

1,490,158

 

 

1,531,380

 

 

1,806,592

Total loans and leases held for investment

$

12,899,231

 

$

12,861,767

 

$

13,563,114

 

$

13,832,799

 

$

14,638,977

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

Multifamily

$

 

$

 

$

 

$

 

$

4,051

Commercial real estate non-owner occupied

 

 

 

 

 

 

 

 

 

16,000

Total commercial loans and leases

 

 

 

 

 

 

 

 

 

20,051

Consumer:

 

 

 

 

 

 

 

 

 

Residential

 

870

 

 

1,215

 

 

1,005

 

 

1,234

 

 

821

Installment:

 

 

 

 

 

 

 

 

 

Personal

 

137,755

 

 

151,040

 

 

124,848

 

 

76,874

 

 

307,336

Other

 

219,015

 

 

188,062

 

 

24,515

 

 

 

 

95,849

Total installment loans

 

356,770

 

 

339,102

 

 

149,363

 

 

76,874

 

 

403,185

Total consumer loans

 

357,640

 

 

340,317

 

 

150,368

 

 

78,108

 

 

404,006

Total loans held for sale

$

357,640

 

$

340,317

 

$

150,368

 

$

78,108

 

$

424,057

 

 

 

 

 

 

 

 

 

 

Total loans and leases portfolio

$

13,256,871

 

$

13,202,084

 

$

13,713,482

 

$

13,910,907

 

$

15,063,034

 

(1) Includes PPP loans.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END DEPOSIT COMPOSITION - UNAUDITED

(Dollars in thousands)

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

2024

 

2023

 

2023

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing

$

4,688,880

 

$

4,422,494

 

$

4,758,682

 

$

4,490,198

 

$

3,487,517

Demand, interest bearing

 

5,661,775

 

 

5,580,527

 

 

5,824,410

 

 

5,551,037

 

 

5,791,302

Total demand deposits

 

10,350,655

 

 

10,003,021

 

 

10,583,092

 

 

10,041,235

 

 

9,278,819

Savings

 

2,080,374

 

 

1,402,941

 

 

1,118,353

 

 

1,048,229

 

 

924,359

Money market

 

3,347,843

 

 

3,226,395

 

 

2,499,593

 

 

2,004,264

 

 

2,019,633

Time deposits

 

2,182,511

 

 

3,287,879

 

 

3,994,326

 

 

4,856,703

 

 

5,500,806

Total deposits

$

17,961,383

 

$

17,920,236

 

$

18,195,364

 

$

17,950,431

 

$

17,723,617

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

 

ASSET QUALITY - UNAUDITED

 

(Dollars in thousands)

As of March 31, 2024

 

As of December 31, 2023

 

As of March 31, 2023

 

 

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