CUBI Customers Bancorp Inc

Customers Bancorp, Inc. (NYSE:CUBI):

Second Quarter 2024 Highlights

• Q2 2024 net income available to common shareholders was $54.3 million, or $1.66 per diluted share; ROAA was 1.11% and ROCE was 13.85%.
• Q2 2024 core earnings*1 were $48.6 million, or $1.49 per diluted share; Core ROAA* was 1.00% and Core ROCE* was 12.39%.
• CET 1 ratio of 12.8%2 at June 30, 2024, compared to 12.6% at March 31, 2024, above the approximately 11.5% target.
• TCE / TA ratio* of 7.7% at June 30, 2024, compared to 7.3% at March 31, 2024, above the approximately 7.5% target.
• Total loans and leases grew by $375.8 million in Q2 2024 from Q1 2024 or 11% annualized.
• Q2 2024 net interest margin, tax equivalent (“NIM”) was 3.29%, compared to Q1 2024 NIM of 3.10%, due to higher loan balances and lower cost of deposits.
• Q2 2024 deposit inflows from commercial customers of $0.6 billion, along with excess cash, funded the paydown of $0.5 billion of higher-cost consumer deposits and $0.3 billion of maturing wholesale CDs. Total deposits decreased by $283.3 million in Q2 2024 from Q1 2024 with significant continued positive mix shift.
• Total estimated insured deposits were 76%3 of total deposits at June 30, 2024, with immediately available liquidity covering estimated uninsured deposits3 by approximately 193%.
• Total borrowings declined by $176.6 million in Q2 2024 from Q1 2024 or 11.8%
• Non-performing assets were $47.4 million, or 0.23% of total assets, at June 30, 2024 compared to 0.17% at March 31, 2024. Allowance for credit losses on loans and leases equaled 280% of non-performing loans at June 30, 2024, compared to 374% at March 31, 2024.
• Q2 2024 provision for credit losses on loans and leases was $17.9 million compared to $16.0 million in Q1 2024 and the coverage of credit loss reserves for loans and leases held for investment was 1.08%. The coverage of credit loss reserves for loans and leases held for investment decreased modestly from 1.12% in Q1 2024.
• Q2 2024 book value per share and tangible book value per share* both grew by approximately $1.52, or 3.1% over Q1 2024, driven by strong quarterly earnings and a decrease in AOCI losses of $0.9 million over the same time period. Tangible book value per share* is $50.70 at June 30, 2024.
• Adopted a one-year common stock repurchase program to repurchase up to 497,509 shares.

 

 

 

 

 

 

*

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

Excludes pre-tax unrealized gain on equity method investments purchased at a discount in Q2 2024 of $11.0 million, severance expense of $2.6 million, loss on investment securities of $0.7 million, FDIC special assessment expense of $0.2 million and derivative credit valuation adjustment of $0.1 million.

2

Regulatory capital ratios as of June 30, 2024 are estimates.

3

Uninsured deposits (estimate) of $5.8 billion to be reported on the Bank’s call report, less deposits of $1.3 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $143.6 million.

CEO Commentary

“Customers Bancorp delivered another strong performance in the second quarter of 2024, continuing to deliver on our strategic priorities to grow our franchise value, our margins and our loans and low-cost deposits,” said Customers Bancorp Chairman and CEO Jay Sidhu. “We are pleased to share that actions we took over the last six quarters have enabled us to exceed our 11.5% CET1 and 7.5% TCE / TA ratio* targets. We are now positioned for strategic, relationship-based loan and deposit growth as we demonstrated this quarter. We have strong momentum as we pursue phase two of our deposit transformation – remixing existing higher-cost business unit deposits*1 and brokered deposits into lower-cost and granular deposits. We had a robust pipeline within our existing businesses which has been materially enhanced by the 10 new banking teams that joined Customers in April. In the quarter, we utilized deposit growth from commercial customers of $0.6 billion and existing excess cash to runoff $0.5 billion of higher-cost consumer deposits and repay $0.3 billion in wholesale CDs. Business unit deposit*1 gross inflows were, once again, broad-based with more than 20 different channels increasing balances and roughly half contributing $25 million or more. Our 10 new deposit focused banking teams, with only two months of client activity, have opened more than 1,000 new deposit accounts for more than 700 customers in the quarter. Our deposit pipelines continue to grow with an extraordinary conversion ratio. Our net interest margin expanded by 19 basis points in the second quarter to 3.29% outpacing current industry trends. This expansion was a function of improvements in both the asset and liability components of the balance sheet. Capital levels continued to build as evidenced by a 40 basis point increase in our TCE / TA ratio*. In June, our Board of Directors authorized a share repurchase program providing an additional capital deployment tool that can be utilized. 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 Q2 2024 GAAP earnings were $54.3 million, or $1.66 per diluted share, and core earnings* were $48.6 million, or $1.49 per diluted share. At June 30, 2024, our deposit base was well diversified, with approximately 76%2 of total deposits insured. We maintain a strong liquidity position, with $8.3 billion of liquidity immediately available, which covers approximately 193% of uninsured deposits2 and our loan to deposit ratio was 77%. We continue to focus loan production where we have a holistic and primary relationship. Total loans and leases grew by $357.7 million driven by strong commercial loan growth of $396.1 million primarily in our Corporate and Specialized verticals. Our loan pipeline continued to build during the second quarter, and we remain confident in the 10% – 15% loan growth outlook previously provided. We continue to build liquidity and capital to support the needs of our customers. At June 30, 2024, we had $3.0 billion of cash on hand leading to prudent balance sheet and liquidity management. Asset quality remains strong with our NPA ratio at just 0.23% of total assets and reserve levels are robust at 280% of total non-performing loans at the end of Q2 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. Tangible Book Value per share* grew to $50.70. We are excited and optimistic about the opportunities we had in the first half of 2024, which have been 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

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

2

Uninsured deposits (estimate) of $5.8 billion to be reported on the Bank’s call report, less deposits of $1.3 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $143.6 million.

Financial Highlights

(Dollars in thousands, except per share data)

 

At or Three Months Ended

 

Increase (Decrease)

 

June 30, 2024

 

March 31, 2024

 

Profitability Metrics:

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

54,300

 

 

$

45,926

 

 

$

8,374

 

 

18.2

%

Diluted earnings per share

 

$

1.66

 

 

$

1.40

 

 

$

0.26

 

 

18.6

%

Core earnings*

 

$

48,567

 

 

$

46,532

 

 

$

2,035

 

 

4.4

%

Adjusted core earnings*

 

$

48,567

 

 

$

55,137

 

 

$

(6,570

)

 

(11.9

)%

Core earnings per share*

 

$

1.49

 

 

$

1.42

 

 

$

0.07

 

 

4.9

%

Adjusted core earnings per share*

 

$

1.49

 

 

$

1.68

 

 

$

(0.19

)

 

(11.3

)%

Return on average assets (“ROAA”)

 

 

1.11

%

 

 

0.94

%

 

 

0.17

 

 

 

Core ROAA*

 

 

1.00

%

 

 

0.95

%

 

 

0.05

 

 

 

Adjusted core ROAA*

 

 

1.00

%

 

 

1.11

%

 

 

(0.11

)

 

 

Return on average common equity (“ROCE”)

 

 

13.85

%

 

 

12.08

%

 

 

1.77

 

 

 

Core ROCE*

 

 

12.39

%

 

 

12.24

%

 

 

0.15

 

 

 

Adjusted core ROCE*

 

 

12.39

%

 

 

14.50

%

 

 

(2.11

)

 

 

Core pre-tax pre-provision net income*

 

$

89,220

 

 

$

83,674

 

 

$

5,546

 

 

6.6

%

Adjusted core pre-tax pre-provision net income*

 

$

89,220

 

 

$

94,988

 

 

$

(5,768

)

 

(6.1

)%

Net interest margin, tax equivalent

 

 

3.29

%

 

 

3.10

%

 

 

0.19

 

 

 

Yield on loans (Loan yield)

 

 

7.17

%

 

 

7.05

%

 

 

0.12

 

 

 

Cost of deposits

 

 

3.40

%

 

 

3.45

%

 

 

(0.05

)

 

 

Efficiency ratio

 

 

51.87

%

 

 

54.58

%

 

 

(2.71

)

 

 

Core efficiency ratio*

 

 

53.47

%

 

 

54.24

%

 

 

(0.77

)

 

 

Adjusted core efficiency ratio*

 

 

53.47

%

 

 

48.02

%

 

 

5.45

 

 

 

Non-interest expense to average total assets

 

 

1.98

%

 

 

1.87

%

 

 

0.11

 

 

 

Core non-interest expense to average total assets*

 

 

1.93

%

 

 

1.86

%

 

 

0.07

 

 

 

Adjusted core non-interest expense to average total assets*

 

 

1.93

%

 

 

1.65

%

 

 

0.28

 

 

 

Balance Sheet Trends:

 

 

 

 

 

 

 

 

Total assets

 

$

20,942,975

 

 

$

21,347,367

 

 

$

(404,392

)

 

(1.9

)%

Total cash and investment securities

 

$

6,523,036

 

 

$

7,338,025

 

 

$

(814,989

)

 

(11.1

)%

Total loans and leases

 

$

13,632,639

 

 

$

13,256,871

 

 

$

375,768

 

 

2.8

%

Non-interest bearing demand deposits

 

$

4,474,862

 

 

$

4,688,880

 

 

$

(214,018

)

 

(4.6

)%

Total deposits

 

$

17,678,093

 

 

$

17,961,383

 

 

$

(283,290

)

 

(1.6

)%

Capital Metrics:

 

 

 

 

 

 

 

 

Common Equity

 

$

1,609,071

 

 

$

1,553,823

 

 

$

55,248

 

 

3.6

%

Tangible Common Equity*

 

$

1,605,442

 

 

$

1,550,194

 

 

$

55,248

 

 

3.6

%

Common Equity to Total Assets

 

 

7.7

%

 

 

7.3

%

 

 

0.4

 

 

 

Tangible Common Equity to Tangible Assets*

 

 

7.7

%

 

 

7.3

%

 

 

0.4

 

 

 

Book Value per common share

 

$

50.81

 

 

$

49.29

 

 

$

1.52

 

 

3.1

%

Tangible Book Value per common share*

 

$

50.70

 

 

$

49.18

 

 

$

1.52

 

 

3.1

%

Common equity Tier 1 capital ratio (1)

 

 

12.8

%

 

 

12.6

%

 

 

0.2

 

 

 

Total risk based capital ratio (1)

 

 

15.8

%

 

 

15.9

%

 

 

(0.1

)

 

 

 

 

 

 

 

 

 

 

 

(1) Regulatory capital ratios as of June 30, 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)

 

Six Months Ended

 

Increase (Decrease)

 

June 30, 2024

 

June 30, 2023

 

 

June 30, 2024

 

June 30, 2023

 

Profitability Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

54,300

 

 

$

44,007

 

 

$

10,293

 

 

23.4

%

 

$

100,226

 

 

$

94,272

 

 

$

5,954

 

 

6.3

%

Diluted earnings per share

 

$

1.66

 

 

$

1.39

 

 

$

0.27

 

 

19.4

%

 

$

3.06

 

 

$

2.95

 

 

$

0.11

 

 

3.7

%

Core earnings*

 

$

48,567

 

 

$

52,163

 

 

$

(3,596

)

 

(6.9

)%

 

$

95,099

 

 

$

103,306

 

 

$

(8,207

)

 

(7.9

)%

Adjusted core earnings*

 

$

48,567

 

 

$

52,163

 

 

$

(3,596

)

 

(6.9

)%

 

$

103,704

 

 

$

103,306

 

 

$

398

 

 

0.4

%

Core earnings per share*

 

$

1.49

 

 

$

1.65

 

 

$

(0.16

)

 

(9.7

)%

 

$

2.90

 

 

$

3.22

 

 

$

(0.32

)

 

(9.9

)%

Adjusted core earnings per share*

 

$

1.49

 

 

$

1.65

 

 

$

(0.16

)

 

(9.7

)%

 

$

3.16

 

 

$

3.22

 

 

$

(0.06

)

 

(1.9

)%

Return on average assets (“ROAA”)

 

 

1.11

%

 

 

0.88

%

 

 

0.23

 

 

 

 

 

1.02

%

 

 

0.96

%

 

 

0.06

 

 

 

Core ROAA*

 

 

1.00

%

 

 

1.03

%

 

 

(0.03

)

 

 

 

 

0.98

%

 

 

1.04

%

 

 

(0.06

)

 

 

Adjusted core ROAA*

 

 

1.00

%

 

 

1.03

%

 

 

(0.03

)

 

 

 

 

1.06

%

 

 

1.04

%

 

 

0.02

 

 

 

Return on average common equity (“ROCE”)

 

 

13.85

%

 

 

13.22

%

 

 

0.63

 

 

 

 

 

12.98

%

 

 

14.57

%

 

 

(1.59

)

 

 

Core ROCE*

 

 

12.39

%

 

 

15.67

%

 

 

(3.28

)

 

 

 

 

12.32

%

 

 

15.97

%

 

 

(3.65

)

 

 

Adjusted core ROCE*

 

 

12.39

%

 

 

15.67

%

 

 

(3.28

)

 

 

 

 

13.43

%

 

 

15.97

%

 

 

(2.54

)

 

 

Core pre-tax pre-provision net income*

 

$

89,220

 

 

$

96,833

 

 

$

(7,613

)

 

(7.9

)%

 

$

172,894

 

 

$

186,115

 

 

$

(13,221

)

 

(7.1

)%

Adjusted core pre-tax pre-provision net income*

 

$

89,220

 

 

$

96,833

 

 

$

(7,613

)

 

(7.9

)%

 

$

184,208

 

 

$

186,115

 

 

$

(1,907

)

 

(1.0

)%

Net interest margin, tax equivalent

 

 

3.29

%

 

 

3.15

%

 

 

0.14

 

 

 

 

 

3.20

%

 

 

3.06

%

 

 

0.14

 

 

 

Yield on loans (Loan yield)

 

 

7.17

%

 

 

6.83

%

 

 

0.34

 

 

 

 

 

7.11

%

 

 

6.77

%

 

 

0.34

 

 

 

Cost of deposits

 

 

3.40

%

 

 

3.11

%

 

 

0.29

 

 

 

 

 

3.43

%

 

 

3.22

%

 

 

0.21

 

 

 

Efficiency ratio

 

 

51.87

%

 

 

49.25

%

 

 

2.62

 

 

 

 

 

53.16

%

 

 

48.51

%

 

 

4.65

 

 

 

Core efficiency ratio*

 

 

53.47

%

 

 

47.84

%

 

 

5.63

 

 

 

 

 

53.85

%

 

 

47.49

%

 

 

6.36

 

 

 

Adjusted core efficiency ratio*

 

 

53.47

%

 

 

47.84

%

 

 

5.63

 

 

 

 

 

50.79

%

 

 

47.49

%

 

 

3.30

 

 

 

Non-interest expense to average total assets

 

 

1.98

%

 

 

1.65

%

 

 

0.33

 

 

 

 

 

1.93

%

 

 

1.60

%

 

 

0.33

 

 

 

Core non-interest expense to average total assets*

 

 

1.93

%

 

 

1.65

%

 

 

0.28

 

 

 

 

 

1.89

%

 

 

1.59

%

 

 

0.30

 

 

 

Adjusted core non-interest expense to average total assets*

 

 

1.93

%

 

 

1.65

%

 

 

0.28

 

 

 

 

 

1.79

%

 

 

1.59

%

 

 

0.20

 

 

 

Balance Sheet Trends:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

20,942,975

 

 

$

22,028,565

 

 

$

(1,085,590

)

 

(4.9

)%

 

 

 

 

 

 

 

 

Total cash and investment securities

 

$

6,523,036

 

 

$

7,238,422

 

 

$

(715,386

)

 

(9.9

)%

 

 

 

 

 

 

 

 

Total loans and leases

 

$

13,632,639

 

 

$

13,910,907

 

 

$

(278,268

)

 

(2.0

)%

 

 

 

 

 

 

 

 

Non-interest bearing demand deposits

 

$

4,474,862

 

 

$

4,490,198

 

 

$

(15,336

)

 

(0.3

)%

 

 

 

 

 

 

 

 

Total deposits

 

$

17,678,093

 

 

$

17,950,431

 

 

$

(272,338

)

 

(1.5

)%

 

 

 

 

 

 

 

 

Capital Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity

 

$

1,609,071

 

 

$

1,318,858

 

 

$

290,213

 

 

22.0

%

 

 

 

 

 

 

 

 

Tangible Common Equity*

 

$

1,605,442

 

 

$

1,315,229

 

 

$

290,213

 

 

22.1

%

 

 

 

 

 

 

 

 

Common Equity to Total Assets

 

 

7.7

%

 

 

6.0

%

 

 

1.7

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets*

 

 

7.7

%

 

 

6.0

%

 

 

1.7

 

 

 

 

 

 

 

 

 

 

 

Book Value per common share

 

$

50.81

 

 

$

42.16

 

 

$

8.65

 

 

20.5

%

 

 

 

 

 

 

 

 

Tangible Book Value per common share*

 

$

50.70

 

 

$

42.04

 

 

$

8.66

 

 

20.6

%

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio (1)

 

 

12.8

%

 

 

10.3

%

 

 

2.5

 

 

 

 

 

 

 

 

 

 

 

Total risk based capital ratio (1)

 

 

15.8

%

 

 

13.2

%

 

 

2.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Regulatory capital ratios as of June 30, 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)

June 30, 2024

 

% of Total

 

March 31, 2024

 

% of Total

 

June 30, 2023

 

% of Total

Loans and Leases Held for Investment

 

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

 

 

Specialized lending

$

5,528,745

 

41.7

%

 

$

5,104,405

 

39.6

%

 

$

5,534,832

 

40.0

%

Other commercial & industrial (1)

 

1,092,146

 

8.2

 

 

 

1,113,517

 

8.6

 

 

 

1,240,908

 

9.0

 

Mortgage finance

 

1,122,812

 

8.5

 

 

 

1,071,146

 

8.3

 

 

 

1,108,598

 

8.0

 

Multifamily

 

2,067,332

 

15.6

 

 

 

2,123,675

 

16.5

 

 

 

2,151,734

 

15.6

 

Commercial real estate owner occupied

 

805,779

 

6.1

 

 

 

806,278

 

6.3

 

 

 

842,042

 

6.1

 

Commercial real estate non-owner occupied

 

1,202,606

 

9.1

 

 

 

1,182,084

 

9.2

 

 

 

1,211,091

 

8.8

 

Construction

 

163,409

 

1.2

 

 

 

185,601

 

1.3

 

 

 

212,214

 

1.5

 

Total commercial loans and leases

 

11,982,829

 

90.4

 

 

 

11,586,706

 

89.8

 

 

 

12,301,419

 

89.0

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Residential

 

481,503

 

3.6

 

 

 

482,537

 

3.8

 

 

 

487,199

 

3.5

 

Manufactured housing

 

35,901

 

0.3

 

 

 

37,382

 

0.3

 

 

 

41,664

 

0.3

 

Installment:

 

 

 

 

 

 

 

 

 

 

 

Personal

 

474,481

 

3.6

 

 

 

492,892

 

3.8

 

 

 

752,470

 

5.4

 

Other

 

282,201

 

2.1

 

 

 

299,714

 

2.3

 

 

 

250,047

 

1.8

 

Total installment loans

 

756,682

 

5.7

 

 

 

792,606

 

6.1

 

 

 

1,002,517

 

7.2

 

Total consumer loans

 

1,274,086

 

9.6

 

 

 

1,312,525

 

10.2

 

 

 

1,531,380

 

11.0

 

Total loans and leases held for investment

$

13,256,915

 

100.0

%

 

$

12,899,231

 

100.0

%

 

$

13,832,799

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Loans Held for Sale

 

 

 

 

 

 

 

 

 

 

 

Residential

$

2,684

 

0.7

%

 

$

870

 

0.2

%

 

$

1,234

 

1.6

%

Installment:

 

 

 

 

 

 

 

 

 

 

 

Personal

 

125,598

 

33.4

 

 

 

137,755

 

38.5

 

 

 

76,874

 

98.4

 

Other

 

247,442

 

65.9

 

 

 

219,015

 

61.3

 

 

 

—

 

—

 

Total installment loans

 

373,040

 

99.3

 

 

 

356,770

 

99.8

 

 

 

76,874

 

98.4

 

Total loans held for sale

$

375,724

 

100.0

%

 

$

357,640

 

100.0

%

 

$

78,108

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases portfolio

$

13,632,639

 

 

 

$

13,256,871

 

 

 

$

13,910,907

 

 

(1) Includes PPP loans of $38.3 million, $52.0 million and $188.8 million as of June 30, 2024, March 31, 2024 and June 30, 2023, respectively.

Loans and Leases Held for Investment

Loans and leases held for investment were $13.3 billion at June 30, 2024, up $357.7 million, or 2.8%, from March 31, 2024. Specialized lending increased $424.3 million, or 8.3% quarter-over-quarter, to $5.5 billion. Mortgage finance loans increased $51.7 million, or 4.8% quarter-over-quarter due to higher seasonal mortgage activity. Non-owner occupied commercial real estate loans increased modestly by $20.5 million, or 1.7% to $1.2 billion. Multifamily loans decreased $56.3 million, or 2.7% to $2.1 billion. Construction loans decreased $22.2 million, or 12.0% to $163.4 million. Other commercial and industrial loans decreased $21.4 million, or 1.9% quarter-over-quarter, to $1.1 billion. Consumer installment loans held for investment decreased $35.9 million, or 4.5% quarter-over-quarter, to $756.7 million due to the continued build out of the held-for-sale strategy and de-risking of the held-for-investment loan portfolio.

Loans and leases held for investment of $13.3 billion at June 30, 2024 were down $575.9 million, or 4.2%, year-over-year, largely driven by reduced balances in consumer installment loans of $245.8 million, or 24.5% year-over-year, other commercial and industrial loans of $148.8 million, which included a decrease in PPP loans primarily from guarantee payments, multifamily loans of $84.4 million, construction loans of $48.8 million and owner-occupied commercial real estate loans of $36.3 million.

Loans Held for Sale

Loans held for sale increased $18.1 million quarter-over-quarter, and were $375.7 million at June 30, 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)

June 30, 2024

 

March 31, 2024

 

 

June 30, 2024

 

June 30, 2023

 

Allowance for credit losses on loans and leases

$

132,436

 

 

$

133,296

 

 

$

(860

)

 

$

132,436

 

 

$

139,656

 

 

$

(7,220

)

Provision (benefit) for credit losses on loans and leases

$

17,851

 

 

$

15,953

 

 

$

1,898

 

 

$

17,851

 

 

$

22,363

 

 

$

(4,512

)

Net charge-offs from loans held for investment

$

18,711

 

 

$

17,968

 

 

$

743

 

 

$

18,711

 

 

$

15,564

 

 

$

3,147

 

Annualized net charge-offs to average loans and leases

 

0.56

%

 

 

0.55

%

 

 

 

 

0.56

%

 

 

0.42

%

 

 

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

 

1.08

%

 

 

1.12

%

 

 

 

 

1.08

%

 

 

1.09

%

 

 

Net charge-offs increased modestly with $18.7 million in Q2 2024, compared to $18.0 million in Q1 2024 and $15.6 million in Q2 2023.

Provision (benefit) for Credit Losses

 

Three Months Ended

 

Increase (Decrease)

 

Three Months Ended

 

Increase (Decrease)

(Dollars in thousands)

June 30, 2024

 

March 31, 2024

 

 

June 30, 2024

 

June 30, 2023

 

Provision (benefit) for credit losses on loans and leases

$

17,851

 

$

15,953

 

$

1,898

 

 

$

17,851

 

$

22,363

 

 

$

(4,512

)

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

 

270

 

 

1,117

 

 

(847

)

 

 

270

 

 

1,266

 

 

 

(996

)

Provision for credit losses

 

18,121

 

 

17,070

 

 

1,051

 

 

 

18,121

 

 

23,629

 

 

 

(5,508

)

Provision (benefit) for credit losses on unfunded commitments

 

1,594

 

 

430

 

 

1,164

 

 

 

1,594

 

 

(304

)

 

 

1,898

 

Total provision for credit losses

$

19,715

 

$

17,500

 

$

2,215

 

 

$

19,715

 

$

23,325

 

 

$

(3,610

)

The provision for credit losses on loans and leases in Q2 2024 was $17.9 million, compared to $16.0 million in Q1 2024. The higher provision in Q2 2024 was primarily due to an increase in commercial and industrial loan balances held for investment, partially offset by slight improvements in macroeconomic forecasts and by lower balances in consumer installment loans held for investment.

The provision for credit losses on available for sale investment securities in Q2 2024 was $0.3 million, compared to provision of $1.1 million in Q1 2024.

The provision for credit losses on loans and leases in Q2 2024 was $17.9 million, compared to $22.4 million in Q2 2023. The lower provision in Q2 2024 compared to the year ago period was primarily due to slight improvements in macroeconomic forecasts and by lower balances in consumer installment loans held for investment.

The provision for credit losses on available for sale investment securities in Q2 2024 was $0.3 million compared to provision of $1.3 million in Q2 2023.

Asset Quality

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

(Dollars in thousands)

June 30, 2024

 

March 31, 2024

 

Increase (Decrease)

 

June 30, 2024

 

June 30, 2023

 

Increase (Decrease)

Non-performing assets (“NPAs”):

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual / non-performing loans (“NPLs”)

$

47,380

 

 

$

35,654

 

 

$

11,726

 

 

$

47,380

 

 

$

28,244

 

 

$

19,136

 

Non-performing assets

$

47,444

 

 

$

35,753

 

 

$

11,691

 

 

$

47,444

 

 

$

28,380

 

 

$

19,064

 

NPLs to total loans and leases

 

0.35

%

 

 

0.27

%

 

 

 

 

0.35

%

 

 

0.20

%

 

 

Reserves to NPLs

 

279.52

%

 

 

373.86

%

 

 

 

 

279.52

%

 

 

494.46

%

 

 

NPAs to total assets

 

0.23

%

 

 

0.17

%

 

 

 

 

0.23

%

 

 

0.13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases (1) risk ratings:

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

 

 

 

 

 

 

 

 

 

Pass

$

10,500,922

 

 

$

10,095,611

 

 

$

405,311

 

 

$

10,500,922

 

 

$

10,667,619

 

 

$

(166,697

)

Special Mention

 

170,014

 

 

 

194,365

 

 

 

(24,351

)

 

 

170,014

 

 

 

166,468

 

 

 

3,546

 

Substandard

 

270,898

 

 

 

282,163

 

 

 

(11,265

)

 

 

270,898

 

 

 

272,301

 

 

 

(1,403

)

Total commercial loans and leases

 

10,941,834

 

 

 

10,572,139

 

 

 

369,695

 

 

 

10,941,834

 

 

 

11,106,388

 

 

 

(164,554

)

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

Performing

 

1,256,816

 

 

 

1,293,457

 

 

 

(36,641

)

 

 

1,256,816

 

 

 

1,508,208

 

 

 

(251,392

)

Non-performing

 

17,270

 

 

 

19,068

 

 

 

(1,798

)

 

 

17,270

 

 

 

23,172

 

 

 

(5,902

)

Total consumer loans

 

1,274,086

 

 

 

1,312,525

 

 

 

(38,439

)

 

 

1,274,086

 

 

 

1,531,380

 

 

 

(257,294

)

Loans and leases receivable (1)

$

12,215,920

 

 

$

11,884,664

 

 

$

331,256

 

 

$

12,215,920

 

 

$

12,637,768

 

 

$

(421,848

)

 

(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 historically 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 June 30, 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 $49.8 million. At June 30, 2024, the consumer installment portfolio had the following characteristics: average original FICO score of 738, average debt-to-income of 20% and average borrower income of $106 thousand.

Non-performing loans at June 30, 2024 increased to 0.35% of total loans and leases, compared to 0.27% at March 31, 2024 and 0.20% at June 30, 2023. The $11.7 million increase in NPLs was primarily due to one multifamily credit and one commercial loan originated under the Federal Reserve’s Main Street Lending Program moving to nonaccrual status.

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)

June 30, 2024

 

March 31, 2024

 

June 30, 2023

Debt securities, available for sale

$

2,477,758

 

$

2,571,139

 

$

2,797,940

Equity securities

 

33,892

 

 

33,729

 

 

26,698

Investment securities, at fair value

 

2,511,650

 

 

2,604,868

 

 

2,824,638

Debt securities, held to maturity

 

962,799

 

 

1,032,037

 

 

1,258,560

Total investment securities portfolio

$

3,474,449

 

$

3,636,905

 

$

4,083,198

Customers’ securities portfolio is highly liquid, short in duration, and high in yield. At June 30, 2024, the AFS debt securities portfolio had a spot yield of 5.19%, an effective duration of approximately 2.0 years, and approximately 33% are variable rate. Additionally, 63% of the AFS securities portfolio was AAA rated at June 30, 2024. During the quarter, approximately $220 million of mostly floating rate CLOs were sold and a similar amount of fixed rate agency securities were purchased, reducing asset sensitivity and increasing high quality liquid assets.

At June 30, 2024, the HTM debt securities portfolio represented only 4.6% of total assets at June 30, 2024, had a spot yield of 4.16% and an effective duration of approximately 3.1 years. Additionally, at June 30, 2024, approximately 43% of the HTM securities were AAA rated and 46% 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)

June 30, 2024

 

% of Total

 

March 31, 2024

 

% of Total

 

June 30, 2023

 

% of Total

Demand, non-interest bearing

$

4,474,862

 

25.3

%

 

$

4,688,880

 

26.1

%

 

$

4,490,198

 

25.0

%

Demand, interest bearing

 

5,894,056

 

33.4

 

 

 

5,661,775

 

31.5

 

 

 

5,551,037

 

30.9

 

Total demand deposits

 

10,368,918

 

58.7

 

 

 

10,350,655

 

57.6

 

 

 

10,041,235

 

55.9

 

Savings

 

1,573,661

 

8.9

 

 

 

2,080,374

 

11.6

 

 

 

1,048,229

 

5.8

 

Money market

 

3,539,815

 

20.0

 

 

 

3,347,843

 

18.6

 

 

 

2,004,264

 

11.2

 

Time deposits

 

2,195,699

 

12.4

 

 

 

2,182,511

 

12.2

 

 

 

4,856,703

 

27.1

 

Total deposits

$

17,678,093

 

100.0

%

 

$

17,961,383

 

100.0

%

 

$

17,950,431

 

100.0

%

Total deposits decreased $283.3 million, or 1.6%, to $17.7 billion at June 30, 2024 as compared to the prior quarter. Savings deposits decreased $506.7 million, or 24.4%, to $1.6 billion and non-interest bearing demand deposits decreased $214.0 million, or 4.6%, to $4.5 billion. The decrease in savings deposits resulted from an intentional reduction in higher cost consumer deposits. These decreases were offset by increases in interest bearing demand deposits of $232.3 million, or 4.1%, to $5.9 billion, money market deposits of $192.0 million, or 5.7%, to $3.5 billion and time deposits of $13.2 million, or 0.6%, to $2.2 billion. The total average cost of deposits decreased by 5 basis points to 3.40% in Q2 2024 from 3.45% in the prior quarter driven by positive deposit mix shift. Total estimated uninsured deposits were $4.3 billion1, or 24% of total deposits (inclusive of accrued interest) at June 30, 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 decreased $272.3 million, or 1.5%, to $17.7 billion at June 30, 2024 as compared to a year ago. Time deposits decreased $2.7 billion, or 54.8% to $2.2 billion and non-interest bearing demand deposits decreased $15.3 million, or 0.3%, to $4.5 billion. These decreases were offset by increases in money market deposits of $1.5 billion, or 76.6%, to $3.5 billion, savings deposits of $525.4 million, or 50.1%, to $1.6 billion and interest bearing demand deposits of $343.0 million, or 6.2%, to $5.9 billion. The total average cost of deposits increased by 29 basis points to 3.40% in Q2 2024 from 3.11% in the prior year primarily due to higher market interest rates, offsetting a positive shift in deposit mix.

 

1

Uninsured deposits (estimate) of $5.8 billion to be reported on the Bank’s call report, less deposits of $1.3 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $143.6 million.

Borrowings

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

(Dollars in thousands)

June 30, 2024

 

March 31, 2024

 

June 30, 2023

FHLB advances

$

1,018,349

 

$

1,195,088

 

$

2,046,142

Senior notes

 

123,970

 

 

123,905

 

 

123,710

Subordinated debt

 

182,370

 

 

182,300

 

 

182,091

Total borrowings

$

1,324,689

 

$

1,501,293

 

$

2,351,943

Total borrowings decreased $176.6 million, or 11.8%, to $1.3 billion at June 30, 2024 as compared to the prior quarter. This decrease primarily resulted from net repayments of $175.0 million in FHLB advances. As of June 30, 2024, Customers’ immediately available borrowing capacity with the FRB and FHLB was approximately $7.6 billion, of which $1.0 billion of available capacity was utilized in borrowings and $1.4 billion was utilized to collateralize deposits.

Total borrowings decreased $1.0 billion, or 43.7%, to $1.3 billion at June 30, 2024 as compared to a year ago. This decrease primarily resulted from net repayments of $175.0 million, $340.0 million and $510.0 million in FHLB advances in Q2 2024, 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)

June 30, 2024

 

March 31, 2024

 

June 30, 2023

Customers Bancorp, Inc.

 

 

 

 

 

Common Equity

$

1,609,071

 

 

$

1,553,823

 

 

$

1,318,858

 

Tangible Common Equity*

$

1,605,442

 

 

$

1,550,194

 

 

$

1,315,229

 

Common Equity to Total Assets

 

7.7

%

 

 

7.3

%

 

 

6.0

%

Tangible Common Equity to Tangible Assets*

 

7.7

%

 

 

7.3

%

 

 

6.0

%

Book Value per common share

$

50.81

 

 

$

49.29

 

 

$

42.16

 

Tangible Book Value per common share*

$

50.70

 

 

$

49.18

 

 

$

42.04

 

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

 

12.8

%

 

 

12.6

%

 

 

10.3

%

Total risk based capital ratio (1)

 

15.8

%

 

 

15.9

%

 

 

13.2

%

 

(1) Regulatory capital ratios as of June 30, 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 $55.2 million to $1.6 billion, and tangible common equity* increased $55.2 million to $1.6 billion, at June 30, 2024 compared to the prior quarter, respectively, primarily from earnings of $54.3 million and decreased unrealized losses on investment securities of $0.9 million (net of taxes) deferred in accumulated other comprehensive income (“AOCI”). Similarly, book value per common share increased to $50.81 from $49.29, and tangible book value per common share* increased to $50.70 from $49.18, at June 30, 2024 and March 31, 2024, respectively.

Customers Bancorp’s common equity increased $290.2 million to $1.6 billion, and tangible common equity* increased $290.2 million to $1.6 billion, at June 30, 2024 compared to a year ago, respectively, primarily from earnings of $241.4 million and decreased unrealized losses on investment securities in AOCI of $36.8 million (net of taxes). Similarly, book value per common share increased to $50.81 from $42.16, and tangible book value per common share* increased to $50.70 from $42.04, at June 30, 2024 and June 30, 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 12.8%, 15.8%, 7.7%, and 7.7%, respectively, at June 30, 2024.

At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At June 30, 2024, Tier 1 capital (estimate) and total risk based capital (estimate) were 14.2% and 15.6%, respectively.

“Even though we remain well capitalized by all regulatory measures, we are committed to maintaining our CET 1 ratio around 11.5% and our TCE / TA ratio* around 7.5% in 2024,” stated Jay Sidhu.

Key Profitability Trends

Net Interest Income

Net interest income totaled $167.7 million in Q2 2024, an increase of $7.3 million from Q1 2024. This increase was due to higher interest income of $2.3 million primarily due to higher yielding loan growth and lower interest expense of $5.0 million due to the positive liability mix shift.

“We experienced an increase in net interest income in the second quarter by executing on the loan pipelines that were generated earlier in the year. These loan pipelines remain robust and we expect they will continue to drive interest income higher throughout 2024. Against industry trends, we reported lower interest expense for the third quarter in a row. Positive drivers remain that we expect to increase interest income and decrease interest expense which will benefit net interest income and net interest margin for the remainder of the year,” stated Customers Bancorp President Sam Sidhu. “These positive drivers are bolstered by the recent team additions. Having personally completed more than 175 in person client meetings since the onboarding of our 10 new deposit-focused banking teams, it is clear we have the bankers, products and balance sheet strength to deliver for these clients. We expect the overwhelming majority of client prospects will become Customers Bank clients in the near future,” stated Sam Sidhu.

Net interest income totaled $167.7 million in Q2 2024, an increase of $2.4 million from Q2 2023. This increase was due to higher interest income of $3.9 million primarily due to interest earning deposits from higher average balances and market interest rates, and lower interest expense from lower average balances of borrowings, offset in part by higher interest expense on deposits of $12.4 million primarily resulting from increased market interest rates.

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)

June 30, 2024

 

March 31, 2024

 

 

June 30, 2024

 

June 30, 2023

 

Commercial lease income

$

10,282

 

 

$

9,683

 

 

$

599

 

 

$

10,282

 

 

$

8,917

 

 

$

1,365

 

Loan fees

 

5,233

 

 

 

5,280

 

 

 

(47

)

 

 

5,233

 

 

 

4,271

 

 

 

962

 

Bank-owned life insurance

 

2,007

 

 

 

3,261

 

 

 

(1,254

)

 

 

2,007

 

 

 

4,997

 

 

 

(2,990

)

Mortgage finance transactional fees

 

1,058

 

 

 

946

 

 

 

112

 

 

 

1,058

 

 

 

1,376

 

 

 

(318

)

Net gain (loss) on sale of loans

 

(238

)

 

 

10

 

 

 

(248

)

 

 

(238

)

 

 

(761

)

 

 

523

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,037

)

 

 

5,037

 

Net gain (loss) on sale of investment securities

 

(719

)

 

 

(30

)

 

 

(689

)

 

 

(719

)

 

 

—

 

 

 

(719

)

Unrealized gain on equity method investments

 

11,041

 

 

 

—

 

 

 

11,041

 

 

 

11,041

 

 

 

—

 

 

 

11,041

 

Other

 

2,373

 

 

 

2,081

 

 

 

292

 

 

 

2,373

 

 

 

2,234

 

 

 

139

 

Total non-interest income

$

31,037

 

 

$

21,231

 

 

$

9,806

 

 

$

31,037

 

 

$

15,997

 

 

$

15,040

 

Non-interest income totaled $31.0 million for Q2 2024, an increase of $9.8 million compared to Q1 2024. The increase was primarily due to $11.0 million of unrealized gain on equity method investments purchased at a discount in Q2 2024, partially offset by a decrease in death benefits paid by insurance carriers under bank-owned life insurance policies.

Non-interest income totaled $31.0 million for Q2 2024, an increase of $15.0 million compared to Q2 2023. The increase was primarily due to $11.0 million of unrealized gain on equity method investments purchased at a discount in Q2 2024, a loss of $5.0 million realized from the sale of non-strategic short-term syndicated capital call lines of credit within our specialized lending vertical that the Bank exited completely in Q2 2023, and increases in commercial lease income of $1.4 million and loan fees of $1.0 million resulting from increased servicing-related revenue and unused line of credit fees. These increases were partially offset by a $3.0 million decrease in death benefits paid by insurance carriers under bank-owned life insurance policies.

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)

June 30, 2024

 

March 31, 2024

 

 

June 30, 2024

 

June 30, 2023

 

Salaries and employee benefits

$

44,947

 

$

36,025

 

$

8,922

 

 

$

44,947

 

$

33,120

 

$

11,827

 

Technology, communication and bank operations

 

16,227

 

 

21,904

 

 

(5,677

)

 

 

16,227

 

 

16,407

 

 

(180

)

Commercial lease depreciation

 

7,829

 

 

7,970

 

 

(141

)

 

 

7,829

 

 

7,328

 

 

501

 

Professional services

 

6,104

 

 

6,353

 

 

(249

)

 

 

6,104

 

 

9,192

 

 

(3,088

)

Loan servicing

 

3,516

 

 

4,031

 

 

(515

)

 

 

3,516

 

 

4,777

 

 

(1,261

)

Occupancy

 

3,120

 

 

2,347

 

 

773

 

 

 

3,120

 

 

2,519

 

 

601

 

FDIC assessments, non-income taxes and regulatory fees

 

10,236

 

 

13,469

 

 

(3,233

)

 

 

10,236

 

 

9,780

 

 

456

 

Advertising and promotion

 

1,254

 

 

682

 

 

572

 

 

 

1,254

 

 

546

 

 

708

 

Other

 

10,219

 

 

6,388

 

 

3,831

 

 

 

10,219

 

 

5,628

 

 

4,591

 

Total non-interest expense

$

103,452

 

$

99,169

 

$

4,283

 

 

$

103,452

 

$

89,297

 

$

14,155

 

Non-interest expenses totaled $103.5 million in Q2 2024, an increase of $4.3 million compared to Q1 2024. The increase was primarily attributable to increases of $8.9 million in salaries and employee benefits primarily due to addition of 10 new banking teams, higher incentives and severance, $3.8 million in other expenses, higher FDIC assessments and software expenditures. These increases were partially offset by $11.3 million of certain one-time items related to periods prior to 2024 that were recorded in Q1 2024 resulting to the net decrease in technology, communications and bank operations and FDIC assessments, non-income taxes and regulatory fees. Excluding the impact of certain one-time items related to periods prior to 2024, severance and the FDIC special assessment, adjusted core non-interest expenses* were $100.7 million in Q2 2024, an increase of $13.4 million, compared to $87.4 million in Q1 2024.

Non-interest expenses totaled $103.5 million in Q2 2024, an increase of $14.2 million compared to Q2 2023. The increase was primarily attributable to increases of $11.8 million in salaries and employee benefits primarily due to higher headcount including the addition of 10 new banking teams, annual merit increases, incentives and severance and $4.6 million in other expenses. These increases were partially offset by a decrease of $3.1 million in professional fees.

Taxes

Income tax expense increased by $3.4 million to $19.0 million in Q2 2024 from $15.7 million in Q1 2024 primarily due to higher pre-tax income.

Income tax expense decreased by $1.7 million to $19.0 million in Q2 2024 from $20.8 million in Q2 2023 primarily due to tax expense on surrendered bank-owned life insurance policies of $4.1 million in Q2 2023, partially offset by higher pre-tax income.

The effective tax rate for Q2 2024 was 24.7%.

Outlook

“Looking forward, our strategy remains unchanged. We are focused on strengthening our deposit franchise, further improving our profitability and maintaining our strong capital ratios. Our deposit pipelines are expected to continue to improve the quality and mix 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. 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 over the medium-term. We are adjusting our guidance on effective tax rate to 23% - 25% based on our growth in higher-tax jurisdictions. We remain committed to maintaining a CET 1 ratio around 11.5% and TCE / TA ratio* around 7.5% in 2024. 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, July 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 and at the Customers Bancorp 2nd 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 $21 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. 1 on American Banker 2024 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.

Q2 2024 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended June 30, 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)

Q2

 

Q1

 

Q4

 

Q3

 

Q2

 

Six Months Ended June 30,

 

2024

 

 

 

2024

 

 

 

2023

 

 

 

2023

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Profitability Metrics:

Net income available to common shareholders

 

$

54,300

 

 

$

45,926

 

 

$

58,223

 

 

$

82,953

 

 

$

44,007

 

 

$

100,226

 

 

$

94,272

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

1.72

 

 

$

1.46

 

 

$

1.86

 

 

$

2.65

 

 

$

1.41

 

 

$

3.18

 

 

$

2.99

 

 

Earnings per share - diluted

$

1.66

 

 

$

1.40

 

 

$

1.79

 

 

$

2.58

 

 

$

1.39

 

 

$

3.06

 

 

$

2.95

 

 

Book value per common share (1)

$

50.81

 

 

$

49.29

 

 

$

47.73

 

 

$

45.47

 

 

$

42.16

 

 

$

50.81

 

 

$

42.16

 

 

CUBI stock price (1)

$

47.98

 

 

$

53.06

 

 

$

57.62

 

 

$

34.45

 

 

$

30.26

 

 

$

47.98

 

 

$

30.26

 

 

CUBI stock price as % of book value (1)

 

94

%

 

 

108

%

 

 

121

%

 

 

76

%

 

 

72

%

 

 

94

%

 

 

72

%

Average shares outstanding - basic

 

31,649,715

 

 

 

31,473,424

 

 

 

31,385,043

 

 

 

31,290,581

 

 

 

31,254,125

 

 

 

31,561,569

 

 

 

31,535,103

 

Average shares outstanding - diluted

 

32,699,149

 

 

 

32,854,534

 

 

 

32,521,787

 

 

 

32,175,084

 

 

 

31,591,142

 

 

 

32,776,842

 

 

 

31,965,997

 

Shares outstanding (1)

 

31,667,655

 

 

 

31,521,931

 

 

 

31,440,906

 

 

 

31,311,254

 

 

 

31,282,318

 

 

 

31,667,655

 

 

 

31,282,318

 

Return on average assets (“ROAA”)

 

1.11

%

 

 

0.94

%

 

 

1.16

%

 

 

1.57

%

 

 

0.88

%

 

 

1.02

%

 

 

0.96

%

Return on average common equity (“ROCE”)

 

13.85

%

 

 

12.08

%

 

 

15.93

%

 

 

23.97

%

 

 

13.22

%

 

 

12.98

%

 

 

14.57

%

Net interest margin, tax equivalent

 

3.29

%

 

 

3.10

%

 

 

3.31

%

 

 

3.70

%

 

 

3.15

%

 

 

3.20

%

 

 

3.06

%

Efficiency ratio

 

51.87

%

 

 

54.58

%

 

 

49.08

%

 

 

41.01

%

 

 

49.25

%

 

 

53.16

%

 

 

48.51

%

Non-GAAP Profitability Metrics (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

Core earnings

$

48,567

 

 

$

46,532

 

 

$

61,633

 

 

$

83,294

 

 

$

52,163

 

 

$

95,099

 

 

$

103,306

 

Core pre-tax pre-provision net income

$

89,220

 

 

$

83,674

 

 

$

101,884

 

 

$

128,564

 

 

$

96,833

 

 

$

172,894

 

 

$

186,115

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core earnings per share - diluted

$

1.49

 

 

$

1.42

 

 

$

1.90

 

 

$

2.59

 

 

$

1.65

 

 

$

2.90

 

 

$

3.22

 

 

Tangible book value per common share (1)

$

50.70

 

 

$

49.18

 

 

$

47.61

 

 

$

45.36

 

 

$

42.04

 

 

$

50.70

 

 

$

42.04

 

 

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

 

95

%

 

 

108

%

 

 

121

%

 

 

76

%

 

 

72

%

 

 

95

%

 

 

72

%

Core ROAA

 

1.00

%

 

 

0.95

%

 

 

1.22

%

 

 

1.57

%

 

 

1.03

%

 

 

0.98

%

 

 

1.04

%

Core ROCE

 

12.39

%

 

 

12.24

%

 

 

16.87

%

 

 

24.06

%

 

 

15.67

%

 

 

12.32

%

 

 

15.97

%

Core pre-tax pre-provision ROAA

 

1.71

%

 

 

1.58

%

 

 

1.90

%

 

 

2.32

%

 

 

1.79

%

 

 

1.64

%

 

 

1.76

%

Core pre-tax pre-provision ROCE

 

21.79

%

 

 

21.01

%

 

 

26.82

%

 

 

36.04

%

 

 

28.01

%

 

 

21.41

%

 

 

27.68

%

Core efficiency ratio

 

53.47

%

 

 

54.24

%

 

 

46.70

%

 

 

41.04

%

 

 

47.84

%

 

 

53.85

%

 

 

47.49

%

Asset Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs

$

18,711

 

 

$

17,968

 

 

$

17,322

 

 

$

17,498

 

 

$

15,564

 

 

$

36,679

 

 

$

34,215

 

Annualized net charge-offs to average total loans and leases

 

0.56

%

 

 

0.55

%

 

 

0.51

%

 

 

0.50

%

 

 

0.42

%

 

 

0.56

%

 

 

0.46

%

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

 

0.35

%

 

 

0.27

%

 

 

0.21

%

 

 

0.22

%

 

 

0.20

%

 

 

0.35

%

 

 

0.20

%

Reserves to NPLs (1)

 

279.52

%

 

 

373.86

%

 

 

499.12

%

 

 

466.11

%

 

 

494.46

%

 

 

279.52

%

 

 

494.46

%

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

 

0.23

%

 

 

0.17

%

 

 

0.13

%

 

 

0.14

%

 

 

0.13

%

 

 

0.23

%

 

 

0.13

%

Customers Bank Capital Ratios (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital to risk-weighted assets

 

14.2

%

 

 

14.16

%

 

 

13.77

%

 

 

12.97

%

 

 

11.96

%

 

 

14.2

%

 

 

11.96

%

Tier 1 capital to risk-weighted assets

 

14.2

%

 

 

14.16

%

 

 

13.77

%

 

 

12.97

%

 

 

11.96

%

 

 

14.2

%

 

 

11.96

%

Total capital to risk-weighted assets

 

15.6

%

 

 

15.82

%

 

 

15.28

%

 

 

14.45

%

 

 

13.38

%

 

 

15.6

%

 

 

13.38

%

Tier 1 capital to average assets (leverage ratio)

 

9.2

%

 

 

8.82

%

 

 

8.71

%

 

 

8.25

%

 

 

8.00

%

 

 

9.2

%

 

 

8.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 Q2 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 June 30, 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)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

 

June 30,

 

 

2024

 

 

 

2024

 

 

 

2023

 

 

 

2023

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

$

224,265

 

 

$

217,999

 

 

$

239,453

 

 

$

271,107

 

 

$

241,745

 

 

$

442,264

 

 

$

485,957

 

Investment securities

 

47,586

 

 

 

46,802

 

 

 

51,074

 

 

 

54,243

 

 

 

48,026

 

 

 

94,388

 

 

 

95,342

 

Interest earning deposits

 

45,506

 

 

 

52,817

 

 

 

44,104

 

 

 

43,800

 

 

 

27,624

 

 

 

98,323

 

 

 

38,019

 

Loans held for sale

 

13,671

 

 

 

12,048

 

 

 

8,707

 

 

 

4,664

 

 

 

11,149

 

 

 

25,719

 

 

 

22,850

 

Other

 

3,010

 

 

 

2,111

 

 

 

2,577

 

 

 

2,526

 

 

 

1,616

 

 

 

5,121

 

 

 

2,937

 

Total interest income

 

334,038

 

 

 

331,777

 

 

 

345,915

 

 

 

376,340

 

 

 

330,160

 

 

 

665,815

 

 

 

645,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

148,784

 

 

 

153,725

 

 

 

150,307

 

 

 

145,825

 

 

 

136,375

 

 

 

302,509

 

 

 

280,305

 

FHLB advances

 

13,437

 

 

 

13,485

 

 

 

18,868

 

 

 

26,485

 

 

 

24,285

 

 

 

26,922

 

 

 

34,655

 

FRB advances

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6,286

 

Subordinated debt

 

2,734

 

 

 

2,689

 

 

 

2,688

 

 

 

2,689

 

 

 

2,689

 

 

 

5,423

 

 

 

5,378

 

Other borrowings

 

1,430

 

 

 

1,493

 

 

 

1,546

 

 

 

1,568

 

 

 

1,540

 

 

 

2,923

 

 

 

3,311

 

Total interest expense

 

166,385

 

 

 

171,392

 

 

 

173,409

 

 

 

176,567

 

 

 

164,889

 

 

 

337,777

 

 

 

329,935

 

Net interest income

 

167,653

 

 

 

160,385

 

 

 

172,506

 

 

 

199,773

 

 

 

165,271

 

 

 

328,038

 

 

 

315,170

 

Provision for credit losses

 

18,121

 

 

 

17,070

 

 

 

13,523

 

 

 

17,856

 

 

 

23,629

 

 

 

35,191

 

 

 

43,232

 

Net interest income after provision for credit losses

 

149,532

 

 

 

143,315

 

 

 

158,983

 

 

 

181,917

 

 

 

141,642

 

 

 

292,847

 

 

 

271,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial lease income

 

10,282

 

 

 

9,683

 

 

 

9,035

 

 

 

8,901

 

 

 

8,917

 

 

 

19,965

 

 

 

18,243

 

Loan fees

 

5,233

 

 

 

5,280

 

 

 

5,926

 

 

 

6,029

 

 

 

4,271

 

 

 

10,513

 

 

 

8,261

 

Bank-owned life insurance

 

2,007

 

 

 

3,261

 

 

 

2,160

 

 

 

1,973

 

 

 

4,997

 

 

 

5,268

 

 

 

7,644

 

Mortgage finance transactional fees

 

1,058

 

 

 

946

 

 

 

927

 

 

 

1,018

 

 

 

1,376

 

 

 

2,004

 

 

 

2,450

 

Net gain (loss) on sale of loans

 

(238

)

 

 

10

 

 

 

(91

)

 

 

(348

)

 

 

(761

)

 

 

(228

)

 

 

(761

)

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,037

)

 

 

—

 

 

 

(5,037

)

Net gain (loss) on sale of investment securities

 

(719

)

 

 

(30

)

 

 

(145

)

 

 

(429

)

 

 

—

 

 

 

(749

)

 

 

—

 

Unrealized gain on equity method investments

 

11,041

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,041

 

 

 

—

 

Other

 

2,373

 

 

 

2,081

 

 

 

860

 

 

 

631

 

 

 

2,234

 

 

 

4,454

 

 

 

3,318

 

Total non-interest income

 

31,037

 

 

 

21,231

 

 

 

18,672

 

 

 

17,775

 

 

 

15,997

 

 

 

52,268

 

 

 

34,118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

44,947

 

 

 

36,025

 

 

 

33,965

 

 

 

33,845

 

 

 

33,120

 

 

 

80,972

 

 

 

65,465

 

Technology, communication and bank operations

 

16,227

 

 

 

21,904

 

 

 

16,887

 

 

 

15,667

 

 

 

16,407

 

 

 

38,131

 

 

 

32,996

 

Commercial lease depreciation

 

7,829

 

 

 

7,970

 

 

 

7,357

 

 

 

7,338

 

 

 

7,328

 

 

 

15,799

 

 

 

15,203

 

Professional services

 

6,104

 

 

 

6,353

 

 

 

9,820

 

 

 

8,569

 

 

 

9,192

 

 

 

12,457

 

 

 

16,788

 

Loan servicing

 

3,516

 

 

 

4,031

 

 

 

3,779

 

 

 

3,858

 

 

 

4,777

 

 

 

7,547

 

 

 

9,438

 

Occupancy

 

3,120

 

 

 

2,347

 

 

 

2,320

 

 

 

2,471

 

 

 

2,519

 

 

 

5,467

 

 

 

5,279

 

FDIC assessments, non-income taxes and regulatory fees

 

10,236

 

 

 

13,469

 

 

 

13,977

 

 

 

8,551

 

 

 

9,780

 

 

 

23,705

 

 

 

12,508

 

Advertising and promotion

 

1,254

 

 

 

682

 

 

 

850

 

 

 

650

 

 

 

546

 

 

 

1,936

 

 

 

1,595

 

Legal settlement expense

 

—

 

 

 

—

 

 

 

—

 

 

 

4,096

 

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

10,219

 

 

 

6,388

 

 

 

4,812

 

 

 

4,421

 

 

 

5,628

 

 

 

16,607

 

 

 

10,158

 

Total non-interest expense

 

103,452

 

 

 

99,169

 

 

 

93,767

 

 

 

89,466

 

 

 

89,297

 

 

 

202,621

 

 

 

169,430

 

Income before income tax expense

 

77,117

 

 

 

65,377

 

 

 

83,888

 

 

 

110,226

 

 

 

68,342

 

 

 

142,494

 

 

 

136,626

 

Income tax expense

 

19,032

 

 

 

15,651

 

 

 

21,796

 

 

 

23,470

 

 

 

20,768

 

 

 

34,683

 

 

 

35,331

 

Net income

 

58,085

 

 

 

49,726

 

 

 

62,092

 

 

 

86,756

 

 

 

47,574

 

 

 

107,811

 

 

 

101,295

 

Preferred stock dividends

 

3,785

 

 

 

3,800

 

 

 

3,869

 

 

 

3,803

 

 

 

3,567

 

 

 

7,585

 

 

 

7,023

 

Net income available to common shareholders

$

54,300

 

 

$

45,926

 

 

$

58,223

 

 

$

82,953

 

 

$

44,007

 

 

$

100,226

 

 

$

94,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

1.72

 

 

$

1.46

 

 

$

1.86

 

 

$

2.65

 

 

$

1.41

 

 

$

3.18

 

 

$

2.99

 

Diluted earnings per common share

 

1.66

 

 

 

1.40

 

 

 

1.79

 

 

 

2.58

 

 

 

1.39

 

 

 

3.06

 

 

 

2.95

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET - UNAUDITED

(Dollars in thousands)

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

2024

 

 

 

2024

 

 

 

2023

 

 

 

2023

 

 

 

2023

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

45,045

 

 

$

51,974

 

 

$

45,210

 

 

$

68,288

 

 

$

54,127

 

Interest earning deposits

 

3,003,542

 

 

 

3,649,146

 

 

 

3,801,136

 

 

 

3,351,686

 

 

 

3,101,097

 

Cash and cash equivalents

 

3,048,587

 

 

 

3,701,120

 

 

 

3,846,346

 

 

 

3,419,974

 

 

 

3,155,224

 

Investment securities, at fair value

 

2,511,650

 

 

 

2,604,868

 

 

 

2,405,640

 

 

 

2,773,207

 

 

 

2,824,638

 

Investment securities held to maturity

 

962,799

 

 

 

1,032,037

 

 

 

1,103,170

 

 

 

1,178,370

 

 

 

1,258,560

 

Loans held for sale

 

375,724

 

 

 

357,640

 

 

 

340,317

 

 

 

150,368

 

 

 

78,108

 

Loans and leases receivable

 

12,254,204

 

 

 

11,936,621

 

 

 

11,963,855

 

 

 

12,600,548

 

 

 

12,826,531

 

Loans receivable, mortgage finance, at fair value

 

1,002,711

 

 

 

962,610

 

 

 

897,912

 

 

 

962,566

 

 

 

1,006,268

 

Allowance for credit losses on loans and leases

 

(132,436

)

 

 

(133,296

)

 

 

(135,311

)

 

 

(139,213

)

 

 

(139,656

)

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

 

13,124,479

 

 

 

12,765,935

 

 

 

12,726,456

 

 

 

13,423,901

 

 

 

13,693,143

 

FHLB, Federal Reserve Bank, and other restricted stock

 

92,276

 

 

 

100,067

 

 

 

109,548

 

 

 

126,098

 

 

 

126,240

 

Accrued interest receivable

 

112,788

 

 

 

120,123

 

 

 

114,766

 

 

 

123,984

 

 

 

119,501

 

Bank premises and equipment, net

 

7,019

 

 

 

7,253

 

 

 

7,371

 

 

 

7,789

 

 

 

8,031

 

Bank-owned life insurance

 

293,108

 

 

 

293,400

 

 

 

292,193

 

 

 

291,670

 

 

 

290,322

 

Goodwill and other intangibles

 

3,629

 

 

 

3,629

 

 

 

3,629

 

 

 

3,629

 

 

 

3,629

 

Other assets

 

410,916

 

 

 

361,295

 

 

 

366,829

 

 

 

358,162

 

 

 

471,169

 

Total assets

$

20,942,975

 

 

$

21,347,367

 

 

$

21,316,265

 

 

$

21,857,152

 

 

$

22,028,565

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing deposits

$

4,474,862

 

 

$

4,688,880

 

 

$

4,422,494

 

 

$

4,758,682

 

 

$

4,490,198

 

Interest bearing deposits

 

13,203,231

 

 

 

13,272,503

 

 

 

13,497,742

 

 

 

13,436,682

 

 

 

13,460,233

 

Total deposits

 

17,678,093

 

 

 

17,961,383

 

 

 

17,920,236

 

 

 

18,195,364

 

 

 

17,950,431

 

FHLB advances

 

1,018,349

 

 

 

1,195,088

 

 

 

1,203,207

 

 

 

1,529,839

 

 

 

2,046,142

 

Other borrowings

 

123,970

 

 

 

123,905

 

 

 

123,840

 

 

 

123,775

 

 

 

123,710

 

Subordinated debt

 

182,370

 

 

 

182,300

 

 

 

182,230

 

 

 

182,161

 

 

 

182,091

 

Accrued interest payable and other liabilities

 

193,328

 

 

 

193,074

 

 

 

248,358

 

 

 

264,406

 

 

 

269,539

 

Total liabilities

 

19,196,110

 

 

 

19,655,750

 

 

 

19,677,871

 

 

 

20,295,545

 

 

 

20,571,913

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

137,794

 

 

 

137,794

 

 

 

137,794

 

 

 

137,794

 

 

 

137,794

 

Common stock

 

35,686

 

 

 

35,540

 

 

 

35,459

 

 

 

35,330

 

 

 

35,301

 

Additional paid in capital

 

567,345

 

 

 

567,490

 

 

 

564,538

 

 

 

559,346

 

 

 

555,737

 

Retained earnings

 

1,259,808

 

 

 

1,205,508

 

 

 

1,159,582

 

 

 

1,101,359

 

 

 

1,018,406

 

Accumulated other comprehensive income (loss), net

 

(131,358

)

 

 

(132,305

)

 

 

(136,569

)

 

 

(149,812

)

 

 

(168,176

)

Treasury stock, at cost

 

(122,410

)

 

 

(122,410

)

 

 

(122,410

)

 

 

(122,410

)

 

 

(122,410

)

Total shareholders’ equity

 

1,746,865

 

 

 

1,691,617

 

 

 

1,638,394

 

 

 

1,561,607

 

 

 

1,456,652

 

Total liabilities and shareholders’ equity

$

20,942,975

 

 

$

21,347,367

 

 

$

21,316,265

 

 

$

21,857,152

 

 

$

22,028,565

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

Three Months Ended

 

June 30, 2024

 

March 31, 2024

 

June 30, 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

$

3,325,771

 

$

45,506

 

5.50

%

 

$

3,865,028

 

$

52,817

 

5.50

%

 

$

2,150,154

 

$

27,624

 

5.15

%

Investment securities (1)

 

3,732,565

 

 

47,586

 

5.13

%

 

 

3,771,097

 

 

46,802

 

4.99

%

 

 

3,949,732

 

 

48,026

 

4.86

%

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialized lending loans and leases (2)

 

5,446,882

 

 

120,977

 

8.93

%

 

 

5,268,345

 

 

115,590

 

8.82

%

 

 

5,832,485

 

 

121,779

 

8.37

%

Other commercial & industrial loans (2)(3)

 

1,540,191

 

 

25,119

 

6.56

%

 

 

1,654,665

 

 

26,714

 

6.49

%

 

 

1,879,794

 

 

27,661

 

5.90

%

Mortgage finance loans

 

1,151,407

 

 

15,087

 

5.27

%

 

 

1,033,177

 

 

12,830

 

4.99

%

 

 

1,300,496

 

 

19,606

 

6.05

%

Multifamily loans

 

2,108,835

 

 

21,461

 

4.09

%

 

 

2,121,650

 

 

21,255

 

4.03

%

 

 

2,181,617

 

 

21,095

 

3.88

%

Non-owner occupied commercial real estate loans

 

1,396,771

 

 

20,470

 

5.89

%

 

 

1,348,468

 

 

20,179

 

6.02

%

 

 

1,428,086

 

 

19,877

 

5.58

%

Residential mortgages

 

520,791

 

 

5,955

 

4.60

%

 

 

522,528

 

 

5,708

 

4.39

%

 

 

535,739

 

 

5,735

 

4.28

%

Installment loans

 

1,186,486

 

 

28,867

 

9.79

%

 

 

1,179,721

 

 

27,771

 

9.47

%

 

 

1,684,215

 

 

37,141

 

8.84

%

Total loans and leases (4)

 

13,351,363

 

 

237,936

 

7.17

%

 

 

13,128,554

 

 

230,047

 

7.05

%

 

 

14,842,432

 

 

252,894

 

6.83

%

Other interest-earning assets

 

110,585

 

 

3,010

 

10.95

%

 

 

107,525

 

 

2,111

 

7.90

%

 

 

131,362

 

 

1,616

 

4.93

%

Total interest-earning assets

 

20,520,284

 

 

334,038

 

6.54

%

 

 

20,872,204

 

 

331,777

 

6.39

%

 

 

21,073,680

 

 

330,160

 

6.28

%

Non-interest-earning assets

 

464,919

 

 

 

 

 

 

463,025

 

 

 

 

 

 

581,055

 

 

 

 

Total assets

$

20,985,203

 

 

 

 

 

$

21,335,229

 

 

 

 

 

$

21,654,735

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking accounts

$

5,719,698

 

$

64,047

 

4.50

%

 

$

5,538,846

 

$

61,531

 

4.47

%

 

$

5,309,775

 

$

49,862

 

3.77

%

Money market deposit accounts

 

3,346,718

 

 

38,167

 

4.59

%

 

 

3,233,103

 

 

36,811

 

4.58

%

 

 

1,978,546

 

 

19,678

 

3.99

%

Other savings accounts

 

1,810,375

 

 

21,183

 

4.71

%

 

 

1,753,118

 

 

21,399

 

4.91

%

 

 

997,205

 

 

9,839

 

3.96

%

Certificates of deposit

 

2,034,605

 

 

25,387

 

5.02

%

 

 

2,750,788

 

 

33,984

 

4.97

%

 

 

5,020,205

 

 

56,996

 

4.55

%

Total interest-bearing deposits (5)

 

12,911,396

 

 

148,784

 

4.63

%

 

 

13,275,855

 

 

153,725

 

4.66

%

 

 

13,305,731

 

 

136,375

 

4.11

%

Borrowings

 

1,454,010

 

 

17,601

 

4.87

%

 

 

1,506,707

 

 

17,667

 

4.72

%

 

 

2,357,981

 

 

28,514

 

4.85

%

Total interest-bearing liabilities

 

14,365,406

 

 

166,385

 

4.66

%

 

 

14,782,562

 

 

171,392

 

4.66

%

 

 

15,663,712

 

 

164,889

 

4.22

%

Non-interest-bearing deposits (5)

 

4,701,695

 

 

 

 

 

 

4,620,986

 

 

 

 

 

 

4,258,711

 

 

 

 

Total deposits and borrowings

 

19,067,101

 

 

 

3.51

%

 

 

19,403,548

 

 

 

3.55

%

 

 

19,922,423

 

 

 

3.32

%

Other non-interest-bearing liabilities

 

203,714

 

 

 

 

 

 

264,677

 

 

 

 

 

 

259,111

 

 

 

 

Total liabilities

 

19,270,815

 

 

 

 

 

 

19,668,225

 

 

 

 

 

 

20,181,534

 

 

 

 

Shareholders’ equity

 

1,714,388

 

 

 

 

 

 

1,667,004

 

 

 

 

 

 

1,473,201

 

 

 

 

Total liabilities and shareholders’ equity

$

20,985,203

 

 

 

 

 

$

21,335,229

 

 

 

 

 

$

21,654,735

 

 

 

 

Net interest income

 

 

 

167,653

 

 

 

 

 

 

160,385

 

 

 

 

 

 

165,271

 

 

Tax-equivalent adjustment

 

 

 

393

 

 

 

 

 

 

394

 

 

 

 

 

 

390

 

 

Net interest earnings

 

 

$

168,046

 

 

 

 

 

$

160,779

 

 

 

 

 

$

165,661

 

 

Interest spread

 

 

 

 

3.03

%

 

 

 

 

 

2.84

%

 

 

 

 

 

2.96

%

Net interest margin

 

 

 

 

3.28

%

 

 

 

 

 

3.09

%

 

 

 

 

 

3.14

%

Net interest margin tax equivalent (6)

 

 

 

 

3.29

%

 

 

 

 

 

3.10

%

 

 

 

 

 

3.15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 3.40%, 3.45% and 3.11% for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively.

(6) Tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, presented to approximate interest income as a taxable asset.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED)

(Dollars in thousands)

 

Six Months Ended

 

June 30, 2024

 

June 30, 2023

 

Average Balance

 

Interest Income or Expense

 

Average Yield or Cost (%)

 

Average Balance

 

Interest Income or Expense

 

Average Yield or Cost (%)

Assets

 

 

 

 

 

 

 

 

 

 

 

Interest earning deposits

$

3,595,400

 

$

98,323

 

5.50

%

 

$

1,535,566

 

$

38,019

 

4.99

%

Investment securities (1)

 

3,751,831

 

 

94,388

 

5.06

%

 

 

3,990,265

 

 

95,342

 

4.78

%

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

 

 

Specialized lending loans and leases (2)

 

5,357,613

 

 

236,567

 

8.88

%

 

 

5,763,708

 

 

225,467

 

7.89

%

Other commercial & industrial loans (2)(3)

 

1,597,428

 

 

51,833

 

6.53

%

 

 

2,235,144

 

 

76,782

 

6.93

%

Mortgage finance loans

 

1,092,292

 

 

27,917

 

5.14

%

 

 

1,281,424

 

 

37,018

 

5.83

%

Multifamily loans

 

2,115,243

 

 

42,716

 

4.06

%

 

 

2,194,039

 

 

41,565

 

3.82

%

Non-owner occupied commercial real estate loans

 

1,372,619

 

 

40,649

 

5.96

%

 

 

1,438,844

 

 

40,076

 

5.62

%

Residential mortgages

 

521,659

 

 

11,663

 

4.50

%

 

 

539,304

 

 

11,333

 

4.24

%

Installment loans

 

1,183,104

 

 

56,638

 

9.63

%

 

 

1,705,984

 

 

76,566

 

9.05

%

Total loans and leases (4)

 

13,239,958

 

 

467,983

 

7.11

%

 

 

15,158,447

 

 

508,807

 

6.77

%

Other interest-earning assets

 

109,055

 

 

5,121

 

9.44

%

 

 

111,446

 

 

2,937

 

5.32

%

Total interest-earning assets

 

20,696,244

 

 

665,815

 

6.46

%

 

 

20,795,724

 

 

645,105

 

6.25

%

Non-interest-earning assets

 

463,972

 

 

 

 

 

 

559,766

 

 

 

 

Total assets

$

21,160,216

 

 

 

 

 

$

21,355,490

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest checking accounts

$

5,629,272

 

$

125,578

 

4.49

%

 

$

6,396,042

 

$

120,347

 

3.79

%

Money market deposit accounts

 

3,289,911

 

 

74,978

 

4.58

%

 

 

2,222,917

 

 

40,461

 

3.67

%

Other savings accounts

 

1,781,746

 

 

42,582

 

4.81

%

 

 

910,241

 

 

16,125

 

3.57

%

Certificates of deposit

 

2,392,696

 

 

59,371

 

4.99

%

 

 

4,763,694

 

 

103,372

 

4.38

%

Total interest-bearing deposits (5)

 

13,093,625

 

 

302,509

 

4.65

%

 

 

14,292,894

 

 

280,305

 

3.95

%

Federal funds purchased

 

—

 

 

—

 

—

%

 

 

7,624

 

 

188

 

4.97

%

Borrowings

 

1,480,359

 

 

35,268

 

4.79

%

 

 

2,074,623

 

 

49,442

 

4.81

%

Total interest-bearing liabilities

 

14,573,984

 

 

337,777

 

4.66

%

 

 

16,375,141

 

 

329,935

 

4.06

%

Non-interest-bearing deposits (5)

 

4,661,341

 

 

 

 

 

 

3,284,416

 

 

 

 

Total deposits and borrowings

 

19,235,325

 

 

 

3.53

%

 

 

19,659,557

 

 

 

3.38

%

Other non-interest-bearing liabilities

 

234,195

 

 

 

 

 

 

253,376

 

 

 

 

Total liabilities

 

19,469,520

 

 

 

 

 

 

19,912,933

 

 

 

 

Shareholders’ equity

 

1,690,696

 

 

 

 

 

 

1,442,557

 

 

 

 

Total liabilities and shareholders’ equity

$

21,160,216

 

 

 

 

 

$

21,355,490

 

 

 

 

Net interest income

 

 

 

328,038

 

 

 

 

 

 

315,170

 

 

Tax-equivalent adjustment

 

 

 

787

 

 

 

 

 

 

765

 

 

Net interest earnings

 

 

$

328,825

 

 

 

 

 

$

315,935

 

 

Interest spread

 

 

 

 

2.93

%

 

 

 

 

 

2.86

%

Net interest margin

 

 

 

 

3.19

%

 

 

 

 

 

3.05

%

Net interest margin tax equivalent (6)

 

 

 

 

3.20

%

 

 

 

 

 

3.06

%

 

 

 

 

 

 

 

 

 

 

 

 

(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 3.43% and 3.22% for the six months ended June 30, 2024 and 2023, respectively.

(6) Tax-equivalent basis, using an estimated marginal tax rate of 26% for the six months ended June 30, 2024 and 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)

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

2024

 

2024

 

2023

 

2023

 

2023

Loans and leases held for investment

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

Specialized lending

$

5,528,745

 

$

5,104,405

 

$

5,006,693

 

$

5,422,161

 

$

5,534,832

Other commercial & industrial (1)

 

1,092,146

 

 

1,113,517

 

 

1,162,317

 

 

1,252,427

 

 

1,240,908

Mortgage finance

 

1,122,812

 

 

1,071,146

 

 

1,014,742

 

 

1,042,549

 

 

1,108,598

Multifamily

 

2,067,332

 

 

2,123,675

 

 

2,138,622

 

 

2,130,213

 

 

2,151,734

Commercial real estate owner occupied

 

805,779

 

 

806,278

 

 

797,319

 

 

794,815

 

 

842,042

Commercial real estate non-owner occupied

 

1,202,606

 

 

1,182,084

 

 

1,177,650

 

 

1,178,203

 

 

1,211,091

Construction

 

163,409

 

 

185,601

 

 

166,393

 

 

252,588

 

 

212,214

Total commercial loans and leases

 

11,982,829

 

 

11,586,706

 

 

11,463,736

 

 

12,072,956

 

 

12,301,419

Consumer:

 

 

 

 

 

 

 

 

 

Residential

 

481,503

 

 

482,537

 

 

484,435

 

 

483,133

 

 

487,199

Manufactured housing

 

35,901

 

 

37,382

 

 

38,670

 

 

40,129

 

 

41,664

Installment:

 

 

 

 

 

 

 

 

 

Personal

 

474,481

 

 

492,892

 

 

555,533

 

 

629,843

 

 

752,470

Other

 

282,201

 

 

299,714

 

 

319,393

 

 

337,053

 

 

250,047

Total installment loans

 

756,682

 

 

792,606

 

 

874,926

 

 

966,896

 

 

1,002,517

Total consumer loans

 

1,274,086

 

 

1,312,525

 

 

1,398,031

 

 

1,490,158

 

 

1,531,380

Total loans and leases held for investment

$

13,256,915

 

$

12,899,231

 

$

12,861,767

 

$

13,563,114

 

$

13,832,799

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

 

 

 

 

 

 

 

Residential

$

2,684

 

$

870

 

$

1,215

 

$

1,005

 

$

1,234

Installment:

 

 

 

 

 

 

 

 

 

Personal

 

125,598

 

 

137,755

 

 

151,040

 

 

124,848

 

 

76,874

Other

 

247,442

 

 

219,015

 

 

188,062

 

 

24,515

 

 

—

Total installment loans

 

373,040

 

 

356,770

 

 

339,102

 

 

149,363

 

 

76,874

Total loans held for sale

$

375,724

 

$

357,640

 

$

340,317

 

$

150,368

 

$

78,108

 

 

 

 

 

 

 

 

 

 

Total loans and leases portfolio

$

13,632,639

 

$

13,256,871

 

$

13,202,084

 

$

13,713,482

 

$

13,910,907

 

(1) Includes PPP loans.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END DEPOSIT COMPOSITION - UNAUDITED

(Dollars in thousands)

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

2024

 

2024

 

2023

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing

$

4,474,862

 

$

4,688,880

 

$

4,422,494

 

$

4,758,682

 

$

4,490,198

Demand, interest bearing

 

5,894,056

 

 

5,661,775

 

 

5,580,527

 

 

5,824,410

 

 

5,551,037

Total demand deposits

 

10,368,918

 

 

10,350,655

 

 

10,003,021

 

 

10,583,092

 

 

10,041,235

Savings

 

1,573,661

 

 

2,080,374

 

 

1,402,941

 

 

1,118,353

 

 

1,048,229

Money market

 

3,539,815

 

 

3,347,843

 

 

3,226,395

 

 

2,499,593

 

 

2,004,264

Time deposits

 

2,195,699

 

 

2,182,511

 

 

3,287,879

 

 

3,994,326

 

 

4,856,703

Total deposits

$

17,678,093

 

$

17,961,383

 

$

17,920,236

 

$

18,195,364

 

$

17,950,431

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

 

ASSET QUALITY - UNAUDITED

 

(Dollars in thousands)

As of June 30, 2024

 

As of March 31, 2024

 

As of June 30, 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial, including specialized lending (1)

$

6,740,992

 

$

5,488

 

$

23,721

 

0.08

%

 

432.23

%

 

$

6,326,458

 

$

3,608

 

$

23,003

 

0.06

%

 

637.56

%

 

$

6,878,070

 

$

4,441

 

$

29,092

 

0.06

%

 

655.08

%

 

Multifamily

 

2,067,332

 

 

14,002

 

 

20,652

 

0.68

%

 

147.49

%

 

 

2,123,675

 

 

5,161

 

 

18,307

 

0.24

%

 

354.72

%

 

 

2,151,734

 

 

4,022

 

 

15,400

 

0.19

%

 

382.89

%

 

Commercial real estate owner occupied

 

805,779

 

 

9,612

 

 

8,431

 

1.19

%

 

87.71

%

 

 

806,278

 

 

8,920

 

 

10,201

 

1.11

%

 

114.36

%

 

 

842,042

 

 

3,304

 

 

10,215

 

0.39

%

 

309.17

%

 

Commercial real estate non-owner occupied

 

1,202,606

 

 

62

 

 

17,966

 

0.01

%

 

28977.42

%

 

 

1,182,084

 

 

62

 

 

18,320

 

0.01

%

 

29548.39

%

 

 

1,211,091

 

 

—

 

 

13,495

 

—

%

 

—

%

 

Construction

 

163,409

 

 

—

 

 

1,856

 

—

%

 

—

%

 

 

185,601

 

 

—

 

 

1,866

 

—

%

 

—

%

 

 

212,214

 

 

—

 

 

2,639

 

—

%

 

—

%

 

Total commercial loans and leases receivable

 

10,980,118

 

 

29,164

 

 

72,626

 

0.27

%

 

249.03

%

 

 

10,624,096

 

 

17,751

 

 

71,697

 

0.17

%

 

403.90

%

 

 

11,295,151

 

 

11,767

 

 

70,841

 

0.10

%

 

602.03

%

 

Residential

 

481,503

 

 

8,179

 

 

5,884

 

1.70

%

 

71.94

%

 

 

482,537

 

 

8,089

 

 

6,707

 

1.68

%

 

82.92

%

 

 

487,199

 

 

7,306

 

 

6,846

 

1.50

%

 

93.70

%

 

Manufactured housing

 

35,901

 

 

2,047

 

 

4,094

 

5.70

%

 

200.00

%

 

 

37,382

 

 

2,268

 

 

4,160

 

6.07

%

 

183.42

%

 

 

41,664

 

 

2,634

 

 

4,338

 

6.32

%

 

164.69

%

 

Installment

 

756,682

 

 

5,614

 

 

49,832

 

0.74

%

 

887.64

%

 

 

792,606

 

 

6,958

 

 

50,732

 

0.88

%

 

729.12

%

 

 

1,002,517

 

 

6,537

 

 

57,631

 

0.65

%

 

881.61

%

 

Total consumer loans receivable

 

1,274,086

 

 

15,840

 

 

59,810

 

1.24

%

 

377.59

%

 

 

1,312,525

 

 

17,315

 

 

61,599

 

1.32

%

 

355.76

%

 

 

1,531,380

 

 

16,477

 

 

68,815

 

1.08

%

 

417.64

%

 

Loans and leases receivable

 

12,254,204

 

 

45,004

 

 

132,436

 

0.37

%

 

294.28

%

 

 

11,936,621

 

 

35,066

 

 

133,296

 

0.29

%

 

380.13

%

 

 

12,826,531

 

 

28,244

 

 

139,656

 

0.22

%

 

494.46

%

 

Loans receivable, mortgage finance, at fair value

 

1,002,711

 

 

—

 

 

—

 

—

%

 

—

%

 

 

962,610

 

 

—

 

 

—

 

—

%

 

—

%

 

 

1,006,268

 

 

—

 

 

—

 

—

%

 

—

%

 

Loans held for sale

 

375,724

 

 

2,376

 

 

—

 

0.63

%

 

—

%

 

 

357,640

 

 

588

 

 

—

 

0.16

%

 

—

%

 

 

78,108

 

 

—

 

 

—

 

—

%

 

—

%

 

Total portfolio

$

13,632,639

 

$

47,380

 

$

132,436

 

0.35

%

 

279.52

%

 

$

13,256,871

 

$

35,654

 

$

133,296

 

0.27

%

 

373.86

%

 

$

13,910,907

 

$

28,244

 

$

139,656

 

0.20

%

 

494.46

%

 

 

(1) Includes PPP loans.

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED

(Dollars in thousands)

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

 

Six Months Ended June 30,

 

 

2024

 

 

2024

 

 

2023

 

 

2023

 

2023 (1)

 

 

2024

 

 

 

2023

 

Loan type

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial, including specialized lending

$

5,665

 

 

$

3,672

 

$

5,282

 

 

$

2,974

 

$

258

 

 

$

9,337

 

 

$

187

 

Multifamily

 

1,433

 

 

 

473

 

 

127

 

 

 

1,999

 

 

1,448

 

 

 

1,906

 

 

 

1,448

 

Commercial real estate owner occupied

 

—

 

 

 

22

 

 

—

 

 

 

39

 

 

(34

)

 

 

22

 

 

 

(34

)

Commercial real estate non-owner occupied

 

—

 

 

 

—

 

 

(288

)

 

 

—

 

 

266

 

 

 

—

 

 

 

4,500

 

Construction

 

(7

)

 

 

—

 

 

—

 

 

 

—

 

 

—

 

 

 

(7

)

 

 

(116

)

Residential

 

(20

)

 

 

18

 

 

(1

)

 

 

13

 

 

24

 

 

 

(2

)

 

 

22

 

Installment

 

11,640

 

 

 

13,783

 

 

12,202

 

 

 

12,473

 

 

13,602

 

 

 

25,423

 

 

 

28,208

 

Total net charge-offs (recoveries) from loans held for investment

$

18,711

 

 

$

17,968

 

$

17,322

 

 

$

17,498

 

$

15,564

 

 

$

36,679

 

 

$

34,215

 

 

(1) Excludes $6.2 million of charge-offs for certain PCD loans acquired from the FDIC that were immediately applied against $8.7 million of allowance for credit losses on PCD loans recognized upon the acquisition of the loan portfolio on June 15, 2023. Subsequent recoveries and charge-offs of these PCD loans will be included in the period in which they occur.

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED

We believe that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. The non-GAAP measures presented are not necessarily comparable to non-GAAP measures that may be presented by other financial institutions. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP.

The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document.

 

Core Earnings and Adjusted Core Earnings - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

2024

 

2023

(Dollars in thousands, except per share data)

USD

Per share

 

USD

Per share

 

USD

Per share

 

USD

Per share

 

USD

Per share

 

USD

Per share

 

USD

Per share

GAAP net income to common shareholders

$

54,300

 

$

1.66

 

 

$

45,926

$

1.40

 

$

58,223

 

$

1.79

 

$

82,953

 

$

2.58

 

$

44,007

 

$

1.39

 

$

100,226

 

$

3.06

 

 

$

94,272

$

2.95

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance expense

 

1,928

 

 

0.06

 

 

 

—

 

—

 

 

473

 

 

0.01

 

 

—

 

 

—

 

 

141

 

 

0.00

 

 

1,928

 

 

0.06

 

 

 

778

 

0.02

Impairments on fixed assets and leases

 

—

 

 

—

 

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

12

 

 

0.00

 

 

—

 

 

—

 

 

 

98

 

0.00

Loss on sale of capital call lines of credit

 

—

 

 

—

 

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

3,914

 

 

0.12

 

 

—

 

 

—

 

 

 

3,914

 

0.12

(Gains) losses on investment securities

 

561

 

 

0.02

 

 

 

57

 

0.00

 

 

(85

)

 

0.00

 

 

492

 

 

0.02

 

 

49

 

 

0.00

 

 

618

 

 

0.02

 

 

 

0

 

0.00

Derivative credit valuation adjustment

 

(44

)

 

0.00

 

 

 

169

 

0.01

 

 

267

 

 

0.01

 

 

(151

)

 

0.00

 

 

(101

)

 

0.00

 

 

125

 

 

0.00

 

 

 

103

 

0.00

Tax on surrender of bank-owned life insurance policies

 

—

 

 

—

 

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

4,141

 

 

0.13

 

 

—

 

 

—

 

 

 

4,141

 

0.13

FDIC special assessment

 

138

 

 

0.00

 

 

 

380

 

0.01

 

 

2,755

 

 

0.08

 

 

—

 

 

—

 

 

—

 

 

—

 

 

518

 

 

0.02

 

 

 

—

 

—

Unrealized (gain) on equity method investments

 

(8,316

)

 

(0.25

)

 

 

—

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

(8,316

)

 

(0.25

)

 

 

—

 

—

Core earnings

$

48,567

 

$

1.49

 

 

$

46,532

$

1.42

 

$

61,633

 

$

1.90

 

$

83,294

 

$

2.59

 

$

52,163

 

$

1.65

 

$

95,099

 

$

2.90

 

 

$

103,306

$

3.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-time non-interest expense items recorded in 2024 (after-tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit servicing fees prior to 2024

 

—

 

 

—

 

 

 

5,405

 

0.16

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

5,405

 

 

0.16

 

 

 

—

 

—

FDIC premiums prior to 2024

 

—

 

 

—

 

 

 

3,200

 

0.10

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

3,200

 

 

0.10

 

 

 

—

 

—

Total one-time non-interest expense items

 

—

 

 

—

 

 

 

8,605

 

0.26

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

8,605

 

 

0.26

 

 

 

—

 

—

Adjusted core earnings (adjusted for one-time non-interest expense items)

$

48,567

 

$

1.49

 

 

$

55,137

$

1.68

 

$

61,633

 

$

1.90

 

$

83,294

 

$

2.59

 

$

52,163

 

$

1.65

 

$

103,704

 

$

3.16

 

 

$

103,306

$

3.22

 

Core Return on Average Assets and Adjusted Core Return on Average Assets - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

(Dollars in thousands, except per share data)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

 

2024

 

 

 

2023

 

GAAP net income

$

58,085

 

 

$

49,726

 

 

$

62,092

 

 

$

86,756

 

 

$

47,574

 

 

$

107,811

 

 

$

101,295

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance expense

 

1,928

 

 

 

—

 

 

 

473

 

 

 

—

 

 

 

141

 

 

 

1,928

 

 

 

778

 

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12

 

 

 

—

 

 

 

98

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,914

 

 

 

—

 

 

 

3,914

 

(Gains) losses on investment securities

 

561

 

 

 

57

 

 

 

(85

)

 

 

492

 

 

 

49

 

 

 

618

 

 

 

0

 

Derivative credit valuation adjustment

 

(44

)

 

 

169

 

 

 

267

 

 

 

(151

)

 

 

(101

)

 

 

125

 

 

 

103

 

Tax on surrender of bank-owned life insurance policies

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,141

 

 

 

—

 

 

 

4,141

 

FDIC special assessment

 

138

 

 

 

380

 

 

 

2,755

 

 

 

—

 

 

 

—

 

 

 

518

 

 

 

—

 

Unrealized (gain) on equity method investments

 

(8,316

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(8,316

)

 

 

—

 

Core net income

$

52,352

 

 

$

50,332

 

 

$

65,502

 

 

$

87,097

 

 

$

55,730

 

 

$

102,684

 

 

$

110,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-time non-interest expense items recorded in 2024 (after-tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit servicing fees prior to 2024

 

—

 

 

 

5,405

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,405

 

 

 

—

 

FDIC premiums prior to 2024

 

—

 

 

 

3,200

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,200

 

 

 

—

 

Total one-time non-interest expense items

 

—

 

 

 

8,605

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,605

 

 

 

—

 

Adjusted core net income (adjusted for one-time non-interest expense items)

$

52,352

 

 

$

58,937

 

 

$

65,502

 

 

$

87,097

 

 

$

55,730

 

 

$

111,289

 

 

$

110,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

20,985,203

 

 

$

21,335,229

 

 

$

21,252,273

 

 

$

21,978,010

 

 

$

21,654,735

 

 

$

21,160,216

 

 

$

21,355,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core return on average assets

 

1.00

%

 

 

0.95

%

 

 

1.22

%

 

 

1.57

%

 

 

1.03

%

 

 

0.98

%

 

 

1.04

%

Adjusted core return on average assets (adjusted for one-time non-interest expense items)

 

1.00

%

 

 

1.11

%

 

 

1.22

%

 

 

1.57

%

 

 

1.03

%

 

 

1.06

%

 

 

1.04

%

 

Core Pre-Tax Pre-Provision Net Income and ROAA and Adjusted Core Pre-Tax Pre-Provision Net Income and ROAA - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

(Dollars in thousands, except per share data)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

 

2024

 

 

 

2023

 

GAAP net income

$

58,085

 

 

$

49,726

 

 

$

62,092

 

 

$

86,756

 

 

$

47,574

 

 

$

107,811

 

 

$

101,295

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

19,032

 

 

 

15,651

 

 

 

21,796

 

 

 

23,470

 

 

 

20,768

 

 

 

34,683

 

 

 

35,331

 

Provision (benefit) for credit losses

 

18,121

 

 

 

17,070

 

 

 

13,523

 

 

 

17,856

 

 

 

23,629

 

 

 

35,191

 

 

 

43,232

 

Provision (benefit) for credit losses on unfunded commitments

 

1,594

 

 

 

430

 

 

 

(136

)

 

 

48

 

 

 

(304

)

 

 

2,024

 

 

 

(24

)

Severance expense

 

2,560

 

 

 

—

 

 

 

639

 

 

 

—

 

 

 

182

 

 

 

2,560

 

 

 

991

 

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

15

 

 

 

—

 

 

 

124

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,037

 

 

 

—

 

 

 

5,037

 

(Gains) losses on investment securities

 

744

 

 

 

75

 

 

 

(114

)

 

 

626

 

 

 

62

 

 

 

819

 

 

 

0

 

Derivative credit valuation adjustment

 

(58

)

 

 

222

 

 

 

361

 

 

 

(192

)

 

 

(130

)

 

 

164

 

 

 

129

 

FDIC special assessment

 

183

 

 

 

500

 

 

 

3,723

 

 

 

—

 

 

 

—

 

 

 

683

 

 

 

—

 

Unrealized (gain) on equity method investments

 

(11,041

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,041

)

 

 

—

 

Core pre-tax pre-provision net income

$

89,220

 

 

$

83,674

 

 

$

101,884

 

 

$

128,564

 

 

$

96,833

 

 

$

172,894

 

 

$

186,115

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-time non-interest expense items recorded in 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit servicing fees prior to 2024

 

—

 

 

 

7,106

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7,106

 

 

 

—

 

FDIC premiums prior to 2024

 

—

 

 

 

4,208

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,208

 

 

 

—

 

Total one-time non-interest expense items

 

—

 

 

 

11,314

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,314

 

 

 

—

 

Adjusted core pre-tax pre-provision net income (adjusted for one-time non-interest expense items)

$

89,220

 

 

$

94,988

 

 

$

101,884

 

 

$

128,564

 

 

$

96,833

 

 

$

184,208

 

 

$

186,115

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

20,985,203

 

 

$

21,335,229

 

 

$

21,252,273

 

 

$

21,978,010

 

 

$

21,654,735

 

 

$

21,160,216

 

 

$

21,355,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core pre-tax pre-provision ROAA

 

1.71

%

 

 

1.58

%

 

 

1.90

%

 

 

2.32

%

 

 

1.79

%

 

 

1.64

%

 

 

1.76

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted core pre-tax pre-provision ROAA (adjusted for one-time non-interest expense items)

 

1.71

%

 

 

1.79

%

 

 

1.90

%

 

 

2.32

%

 

 

1.79

%

 

 

1.75

%

 

 

 

1.76

%

 

Core Return on Average Common Equity and Adjusted Core Return on Average Common Equity - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

(Dollars in thousands, except per share data)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

 

2024

 

 

 

2023

 

GAAP net income to common shareholders

$

54,300

 

 

$

45,926

 

 

$

58,223

 

 

$

82,953

 

 

$

44,007

 

 

$

100,226

 

 

$

94,272

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance expense

 

1,928

 

 

 

—

 

 

 

473

 

 

 

—

 

 

 

141

 

 

 

1,928

 

 

 

778

 

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

12

 

 

 

—

 

 

 

98

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,914

 

 

 

—

 

 

 

3,914

 

(Gains) losses on investment securities

 

561

 

 

 

57

 

 

 

(85

)

 

 

492

 

 

 

49

 

 

 

618

 

 

 

0

 

Derivative credit valuation adjustment

 

(44

)

 

 

169

 

 

 

267

 

 

 

(151

)

 

 

(101

)

 

 

125

 

 

 

103

 

Tax on surrender of bank-owned life insurance policies

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,141

 

 

 

—

 

 

 

4,141

 

FDIC special assessment

 

138

 

 

 

380

 

 

 

2,755

 

 

 

—

 

 

 

—

 

 

 

518

 

 

 

—

 

Unrealized (gain) on equity method investments

 

(8,316

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(8,316

)

 

 

—

 

Core earnings

$

48,567

 

 

$

46,532

 

 

$

61,633

 

 

$

83,294

 

 

$

52,163

 

 

$

95,099

 

 

$

103,306

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-time non-interest expense items recorded in 2024 (after-tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit servicing fees prior to 2024

 

—

 

 

 

5,405

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,405

 

 

 

—

 

FDIC premiums prior to 2024

 

—

 

 

 

3,200

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,200

 

 

 

—

 

Total one-time non-interest expense items

 

—

 

 

 

8,605

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,605

 

 

 

—

 

Adjusted core earnings (adjusted for one-time non-interest expense items)

$

48,567

 

 

$

55,137

 

 

$

61,633

 

 

$

83,294

 

 

$

52,163

 

 

$

103,704

 

 

$

103,306

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total common shareholders’ equity

$

1,576,595

 

 

$

1,529,211

 

 

$

1,449,728

 

 

$

1,373,244

 

 

$

1,335,408

 

 

$

1,552,903

 

 

$

1,304,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core return on average common equity

 

12.39

%

 

 

12.24

%

 

 

16.87

%

 

 

24.06

%

 

 

15.67

%

 

 

12.32

%

 

 

15.97

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted core return on average common equity (adjusted for one-time non-interest expense items)

 

12.39

%

 

 

14.50

%

 

 

16.87

%

 

 

24.06

%

 

 

15.67

%

 

 

13.43

%

 

 

15.97

%

 

Core Pre-Tax Pre-Provision ROCE and Adjusted Core Pre-Tax Pre-Provision ROCE - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

(Dollars in thousands, except per share data)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

 

2024

 

 

 

2023

 

GAAP net income to common shareholders

$

54,300

 

 

$

45,926

 

 

$

58,223

 

 

$

82,953

 

 

$

44,007

 

 

$

100,226

 

 

$

94,272

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

19,032

 

 

 

15,651

 

 

 

21,796

 

 

 

23,470

 

 

 

20,768

 

 

 

34,683

 

 

 

35,331

 

Provision (benefit) for credit losses

 

18,121

 

 

 

17,070

 

 

 

13,523

 

 

 

17,856

 

 

 

23,629

 

 

 

35,191

 

 

 

43,232

 

Provision (benefit) for credit losses on unfunded commitments

 

1,594

 

 

 

430

 

 

 

(136

)

 

 

48

 

 

 

(304

)

 

 

2,024

 

 

 

(24

)

Severance expense

 

2,560

 

 

 

—

 

 

 

639

 

 

 

—

 

 

 

182

 

 

 

2,560

 

 

 

991

 

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

15

 

 

 

—

 

 

 

124

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,037

 

 

 

—

 

 

 

5,037

 

(Gains) losses on investment securities

 

744

 

 

 

75

 

 

 

(114

)

 

 

626

 

 

 

62

 

 

 

819

 

 

 

0

 

Derivative credit valuation adjustment

 

(58

)

 

 

222

 

 

 

361

 

 

 

(192

)

 

 

(130

)

 

 

164

 

 

 

129

 

FDIC special assessment

 

183

 

 

 

500

 

 

 

3,723

 

 

 

—

 

 

 

—

 

 

 

683

 

 

 

—

 

Unrealized (gain) on equity method investments

 

(11,041

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,041

)

 

 

—

 

Core pre-tax pre-provision net income available to common shareholders

$

85,435

 

 

$

79,874

 

 

$

98,015

 

 

$

124,761

 

 

$

93,266

 

 

$

165,309

 

 

$

179,092

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-time non-interest expense items recorded in 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit servicing fees prior to 2024

 

—

 

 

 

7,106

 

 

 

—

 

 

 

—

 

 

 

—

 

 

7,106

 

 

 

—

 

FDIC premiums prior to 2024

 

—

 

 

 

4,208

 

 

 

—

 

 

 

—

 

 

 

—

 

 

4,208

 

 

 

—

 

Total one-time non-interest expense items

 

—

 

 

 

11,314

 

 

 

—

 

 

 

—

 

 

 

—

 

 

11,314

 

 

 

—

 

Adjusted core pre-tax pre-provision net income available to common shareholders

$

85,435

 

 

$

91,188

 

 

$

98,015

 

 

$

124,761

 

 

$

93,266

 

 

$

176,623

 

 

$

179,092

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total common shareholders’ equity

$

1,576,595

 

 

$

1,529,211

 

 

$

1,449,728

 

 

$

1,373,244

 

 

$

1,335,408

 

 

$

1,552,903

 

 

$

1,304,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core pre-tax pre-provision ROCE

 

21.79

%

 

 

21.01

%

 

 

26.82

%

 

 

36.04

%

 

 

28.01

%

 

 

21.41

%

 

 

27.68

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted core pre-tax pre-provision ROCE (adjusted for one-time non-interest expense items)

 

21.79

%

 

 

23.98

%

 

 

26.82

%

 

 

36.04

%

 

 

28.01

%

 

 

22.87

%

 

 

27.68

%

 

Core Efficiency Ratio and Adjusted Core Efficiency Ratio - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

(Dollars in thousands, except per share data)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

 

2024

 

 

 

2023

 

GAAP net interest income

$

167,653

 

 

$

160,385

 

 

$

172,506

 

 

$

199,773

 

 

$

165,271

 

 

$

328,038

 

 

$

315,170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP non-interest income

$

31,037

 

 

$

21,231

 

 

$

18,672

 

 

$

17,775

 

 

$

15,997

 

 

$

52,268

 

 

$

34,118

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,037

 

 

 

—

 

 

 

5,037

 

(Gains) losses on investment securities

 

744

 

 

 

75

 

 

 

(114

)

 

 

626

 

 

 

62

 

 

 

819

 

 

 

0

 

Derivative credit valuation adjustment

 

(58

)

 

 

222

 

 

 

361

 

 

 

(192

)

 

 

(130

)

 

 

164

 

 

 

129

 

Unrealized (gain) on equity method investments

 

(11,041

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,041

)

 

 

—

 

Core non-interest income

 

20,682

 

 

 

21,528

 

 

 

18,919

 

 

 

18,209

 

 

 

20,966

 

 

 

42,210

 

 

 

39,284

 

Core revenue

$

188,335

 

 

$

181,913

 

 

$

191,425

 

 

$

217,982

 

 

$

186,237

 

 

$

370,248

 

 

$

354,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP non-interest expense

$

103,452

 

 

$

99,169

 

 

$

93,767

 

 

$

89,466

 

 

$

89,297

 

 

$

202,621

 

 

$

169,430

 

Severance expense

 

(2,560

)

 

 

—

 

 

 

(639

)

 

 

—

 

 

 

(182

)

 

 

(2,560

)

 

 

(991

)

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(15

)

 

 

—

 

 

 

(124

)

FDIC special assessment

 

(183

)

 

 

(500

)

 

 

(3,723

)

 

 

—

 

 

 

—

 

 

 

(683

)

 

 

—

 

Core non-interest expense

$

100,709

 

 

$

98,669

 

 

$

89,405

 

 

$

89,466

 

 

$

89,100

 

 

$

199,378

 

 

$

168,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One-time non-interest expense items recorded in 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit servicing fees prior to 2024

 

—

 

 

 

(7,106

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7,106

)

 

 

—

 

FDIC premiums prior to 2024

 

—

 

 

 

(4,208

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,208

)

 

 

—

 

Total one-time non-interest expense items

 

—

 

 

 

(11,314

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,314

)

 

 

—

 

Adjusted core non-interest expense

$

100,709

 

 

$

87,355

 

 

$

89,405

 

 

$

89,466

 

 

$

89,100

 

 

$

188,064

 

 

$

168,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core efficiency ratio (1)

 

53.47

%

 

 

54.24

%

 

 

46.70

%

 

 

41.04

%

 

 

47.84

%

 

 

53.85

%

 

 

47.49

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted core efficiency ratio (adjusted for one-time non-interest expense items) (2)

 

53.47

%

 

 

48.02

%

 

 

46.70

%

 

 

41.04

%

 

 

47.84

%

 

 

50.79

%

 

 

47.49

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Core efficiency ratio calculated as core non-interest expense divided by core revenue.

(2) Adjusted core efficiency ratio calculated as adjusted core non-interest expense divided by core revenue.

 

Core Non-Interest Expense to Average Total Assets and Adjusted Core Non-Interest Expense to Average Total Assets- Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

(Dollars in thousands, except per share data)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

 

2024

 

 

 

2023

 

GAAP non-interest expense

$

103,452

 

 

$

99,169

 

 

$

93,767

 

 

$

89,466

 

 

$

89,297

 

 

$

202,621

 

 

$

169,430

 

Severance expense

 

(2,560

)

 

 

—

 

 

 

(639

)

 

 

—

 

 

 

(182

)

 

 

(2,560

)

 

 

(991

)

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(15

)

 

 

—

 

 

 

(124

)

FDIC special assessment

 

(183

)

 

 

(500

)

 

 

(3,723

)

 

 

—

 

 

 

—

 

 

 

(683

)

 

 

—

 

Core non-interest expense

$

100,709

 

 

$

98,669

 

 

$

89,405

 

 

$

89,466

 

 

$

89,100

 

 

$

199,378

 

 

$

168,315

 

One-time non-interest expense items recorded in 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit servicing fees prior to 2024

 

—

 

 

 

(7,106

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7,106

)

 

 

—

 

FDIC premiums prior to 2024

 

—

 

 

 

(4,208

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,208

)

 

 

—

 

Total one-time non-interest expense items

 

—

 

 

 

(11,314

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,314

)

 

 

—

 

Adjusted core non-interest expense

$

100,709

 

 

$

87,355

 

 

$

89,405

 

 

$

89,466

 

 

$

89,100

 

 

$

188,064

 

 

$

168,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

20,985,203

 

 

$

21,335,229

 

 

$

21,252,273

 

 

$

21,978,010

 

 

$

21,654,735

 

 

$

21,160,216

 

 

$

21,355,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core non-interest expense to average total assets

 

1.93

%

 

 

1.86

%

 

 

1.67

%

 

 

1.62

%

 

 

1.65

%

 

 

1.89

%

 

 

1.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted core non-interest expense to average total assets (adjusted for one-time non-interest expense items)

 

1.93

%

 

 

1.65

%

 

 

1.67

%

 

 

1.62

%

 

 

1.65

%

 

 

1.79

%

 

 

1.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Unit Deposits (formerly, Core Deposits, Total Deposits, excluding Wholesale CDs and BMTX student deposits) - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

Total deposits

$

17,678,093

 

$

17,961,383

 

$

17,920,236

 

$

18,195,364

 

$

17,950,431

Reconciling items:

 

 

 

 

 

 

 

 

 

Wholesale CDs

 

1,545,885

 

 

1,809,573

 

 

2,970,615

 

 

3,713,933

 

 

4,651,054

BMTX student deposits

 

—

 

 

850

 

 

1,157

 

 

636,951

 

 

407,118

Business Unit Deposits (formerly, Core Deposits, Total deposits, excluding wholesale CDs and BMTX student deposits)

$

16,132,208

 

$

16,150,960

 

$

14,948,464

 

$

13,844,480

 

$

12,892,259

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

GAAP total shareholders’ equity

$

1,746,865

 

 

$

1,691,617

 

 

$

1,638,394

 

 

$

1,561,607

 

 

$

1,456,652

 

Reconciling items:

 

 

 

 

 

 

 

 

 

Preferred stock

 

(137,794

)

 

 

(137,794

)

 

 

(137,794

)

 

 

(137,794

)

 

 

(137,794

)

Goodwill and other intangibles

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

Tangible common equity

$

1,605,442

 

 

$

1,550,194

 

 

$

1,496,971

 

 

$

1,420,184

 

 

$

1,315,229

 

 

 

 

 

 

 

 

 

 

 

GAAP total assets

$

20,942,975

 

 

$

21,347,367

 

 

$

21,316,265

 

 

$

21,857,152

 

 

$

22,028,565

 

Reconciling items:

 

 

 

 

 

 

 

 

 

Goodwill and other intangibles

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

Tangible assets

$

20,939,346

 

 

$

21,343,738

 

 

$

21,312,636

 

 

$

21,853,523

 

 

$

22,024,936

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets

 

7.7

%

 

 

7.3

%

 

 

7.0

%

 

 

6.5

%

 

 

6.0

%

Tangible Book Value per Common Share - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

GAAP total shareholders’ equity

$

1,746,865

 

 

$

1,691,617

 

 

$

1,638,394

 

 

$

1,561,607

 

 

$

1,456,652

 

Reconciling Items:

 

 

 

 

 

 

 

 

 

Preferred stock

 

(137,794

)

 

 

(137,794

)

 

 

(137,794

)

 

 

(137,794

)

 

 

(137,794

)

Goodwill and other intangibles

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

Tangible common equity

$

1,605,442

 

 

$

1,550,194

 

 

$

1,496,971

 

 

$

1,420,184

 

 

$

1,315,229

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

31,667,655

 

 

 

31,521,931

 

 

 

31,440,906

 

 

 

31,311,254

 

 

 

31,282,318

 

 

 

 

 

 

 

 

 

 

 

Tangible book value per common share

$

50.70

 

 

$

49.18

 

 

$

47.61

 

 

$

45.36

 

 

$

42.04

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240724679699/en/

David W. Patti, Communications Director 610-451-9452