Menu Search

Company Announcements

Customers Bancorp Inc

Customers Bancorp Reports Results for Third Quarter 2024

WEST READING, Pa.--(BUSINESS WIRE)--Oct. 31, 2024-- Customers Bancorp, Inc. (NYSE:CUBI):

Third Quarter 2024 Highlights

  • Q3 2024 net income available to common shareholders was $42.9 million, or $1.31 per diluted share; ROAA was 0.88% and ROCE was 10.44%.
  • Q3 2024 core earnings*1 were $43.8 million, or $1.34 per diluted share; Core ROAA* was 0.89% and Core ROCE* was 10.66%.
  • CET 1 ratio of 12.5%2 at September 30, 2024, compared to 12.8% at June 30, 2024, above the 11.5% target.
  • TCE / TA ratio* of 7.7% at September 30, 2024, compared to 7.7% at June 30, 2024, above the 7.5% target.
  • Total loans and leases held for investment grew by $520.8 million in Q3 2024 from Q2 2024 or 16% annualized.
  • Q3 2024 deposit inflows from commercial customers of $1.1 billion funded the paydown of $0.7 billion of higher-cost commercial and consumer deposits. Total deposits increased by $391.3 million in Q3 2024 from Q2 2024.
  • Total estimated insured deposits were 75%3 of total deposits at September 30, 2024, with immediately available liquidity covering estimated uninsured deposits3 by approximately 183%.
  • Q3 2024 net interest margin, tax equivalent (“NIM”) was 3.06%, compared to Q2 2024 NIM of 3.29% primarily due to lower discount accretion and prepayment income in Q3 2024 as well as lower average consumer installment loan balances and securities portfolio repositioning.
  • Non-performing assets were $47.3 million, or 0.22% of total assets, at September 30, 2024 compared to 0.23% at June 30, 2024.
  • Q3 2024 provision for credit losses on loans and leases was $17.8 million compared to $17.9 million in Q2 2024 and the allowance for credit losses on loans and leases equaled 281% of non-performing loans at September 30, 2024, compared to 280% at June 30, 2024.
  • Q3 2024 book value per share and tangible book value per share* both grew by approximately $2.26, or 4.5% over Q2 2024, or 17.7% annualized, with a tangible book value per share* of $52.96 at September 30, 2024. This was driven by current quarter earnings and a decrease in AOCI losses of $25.3 million.

 

 

 

 

 

*

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 severance expense of $0.7 million, unrealized losses on loans held for sale of $0.6 million, gain on investment securities of $0.4 million and derivative credit valuation adjustment of $0.2 million.

2

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

3

Uninsured deposits (estimate) of $6.1 billion to be reported on the Bank’s call report, less deposits of $1.4 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $136.5 million.

CEO Commentary

“Customers Bancorp continued to deliver on its strategic priorities to grow our franchise value through lower-cost and granular deposit inflows and diversified loan growth while we manage our operational risks,” said Customers Bancorp Chairman and CEO Jay Sidhu. “We have strong momentum as we pursue phase two of our deposit transformation strategy – remixing existing higher-cost business unit deposits*1 and brokered deposits into core lower-cost and granular deposits. We started the year with robust pipeline within our existing businesses which has been materially enhanced by the new commercial banking teams that joined Customers in April. In the quarter, we utilized deposit growth from commercial customers of $1.1 billion to paydown $0.7 billion of higher-cost commercial and consumer client deposits. In the third quarter, these inflows were, once again, broad-based with more than 25 different channels increasing balances and 70% of channels contributing $25 million or more. Our new deposit focused commercial banking teams have opened over 3,000 new deposit accounts since joining and gathered $536 million in deposits at an interest rate of approximately 2.9% with approximately 30% being non-interest bearing. Our deposit pipelines continue to grow with an extraordinary conversion ratio. We repurchased 373,974 shares of common stock under the previously authorized share repurchase program at an average price below Tangible Book Value per share*. Even with the share repurchase and balance sheet growth, our TCE / TA ratio* remained flat. 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 Q3 2024 GAAP earnings were $42.9 million, or $1.31 per diluted share, and core earnings* were $43.8 million, or $1.34 per diluted share. At September 30, 2024, our deposit base was well diversified, with approximately 75%2 of total deposits insured. We maintain a strong liquidity position, with $8.3 billion of liquidity immediately available, which covers approximately 183% of uninsured deposits2 and our loan to deposit ratio was 78%. We continue to focus loan production where we have a holistic and primary relationship. Total loans and leases held for investment grew by $520.8 million which represent a 16% annualized growth rate, driven by strong commercial loan growth of $539.5 million. Our loan pipeline continued to build during the third quarter, and we remain confident in achieving the 10% – 15% loan growth outlook previously provided. We continue to hold strong levels of liquidity and capital to support the needs of our customers. Asset quality remains strong, and a clear differentiator for us, with our NPA ratio at just 0.22% of total assets and reserve levels are robust at 281% of total non-performing loans at the end of Q3 2024. Total net charge-offs declined by $1.7 million and the combined level of special mention and substandard commercial loans declined by $44.0 million during the quarter. Our exposure to the higher risk commercial real estate office sector is minimal, representing approximately 1% of the loan portfolio. 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 $52.96. We are excited and optimistic about the opportunities ahead 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 $6.1 billion to be reported on the Bank’s call report, less deposits of $1.4 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $136.5 million.

Financial Highlights

(Dollars in thousands, except per share data)

 

At or Three Months Ended

 

Increase (Decrease)

 

September 30,

2024

 

June 30,

2024

 

Profitability Metrics:

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

42,937

 

 

$

54,300

 

 

$

(11,363

)

 

(20.9

)%

Diluted earnings per share

 

$

1.31

 

 

$

1.66

 

 

$

(0.35

)

 

(21.1

)%

Core earnings*

 

$

43,838

 

 

$

48,567

 

 

$

(4,729

)

 

(9.7

)%

Adjusted core earnings*

 

$

41,381

 

 

$

48,567

 

 

$

(7,186

)

 

(14.8

)%

Core earnings per share*

 

$

1.34

 

 

$

1.49

 

 

$

(0.15

)

 

(10.1

)%

Adjusted core earnings per share*

 

$

1.26

 

 

$

1.49

 

 

$

(0.23

)

 

(15.4

)%

Return on average assets (“ROAA”)

 

 

0.88

%

 

 

1.11

%

 

 

(0.23

)

 

 

Core ROAA*

 

 

0.89

%

 

 

1.00

%

 

 

(0.11

)

 

 

Adjusted core ROAA*

 

 

0.85

%

 

 

1.00

%

 

 

(0.15

)

 

 

Return on average common equity (“ROCE”)

 

 

10.44

%

 

 

13.85

%

 

 

(3.41

)

 

 

Core ROCE*

 

 

10.66

%

 

 

12.39

%

 

 

(1.73

)

 

 

Adjusted core ROCE*

 

 

10.06

%

 

 

12.39

%

 

 

(2.33

)

 

 

Core pre-tax pre-provision net income*

 

$

64,824

 

 

$

89,220

 

 

$

(24,396

)

 

(27.3

)%

Adjusted core pre-tax pre-provision net income*

 

$

61,827

 

 

$

89,220

 

 

$

(27,393

)

 

(30.7

)%

Net interest margin, tax equivalent

 

 

3.06

%

 

 

3.29

%

 

 

(0.23

)

 

 

Yield on loans (Loan yield)

 

 

6.99

%

 

 

7.17

%

 

 

(0.18

)

 

 

Cost of deposits

 

 

3.46

%

 

 

3.40

%

 

 

0.06

 

 

 

Efficiency ratio

 

 

62.40

%

 

 

51.87

%

 

 

10.53

 

 

 

Core efficiency ratio*

 

 

61.69

%

 

 

53.47

%

 

 

8.22

 

 

 

Adjusted core efficiency ratio*

 

 

63.48

%

 

 

53.47

%

 

 

10.01

 

 

 

Non-interest expense to average total assets

 

 

1.95

%

 

 

1.98

%

 

 

(0.03

)

 

 

Core non-interest expense to average total assets*

 

 

1.94

%

 

 

1.93

%

 

 

0.01

 

 

 

Adjusted core non-interest expense to average total assets*

 

 

1.99

%

 

 

1.93

%

 

 

0.06

 

 

 

Balance Sheet Trends:

 

 

 

 

 

 

 

 

Total assets

 

$

21,456,082

 

 

$

20,942,975

 

 

$

513,107

 

 

2.5

%

Total cash and investment securities

 

$

6,564,528

 

 

$

6,523,036

 

 

$

41,492

 

 

0.6

%

Total loans and leases

 

$

14,053,116

 

 

$

13,632,639

 

 

$

420,477

 

 

3.1

%

Non-interest bearing demand deposits

 

$

4,670,809

 

 

$

4,474,862

 

 

$

195,947

 

 

4.4

%

Total deposits

 

$

18,069,389

 

 

$

17,678,093

 

 

$

391,296

 

 

2.2

%

Capital Metrics:

 

 

 

 

 

 

 

 

Common Equity

 

$

1,663,386

 

 

$

1,609,071

 

 

$

54,315

 

 

3.4

%

Tangible Common Equity*

 

$

1,659,757

 

 

$

1,605,442

 

 

$

54,315

 

 

3.4

%

Common Equity to Total Assets

 

 

7.8

%

 

 

7.7

%

 

 

0.1

 

 

 

Tangible Common Equity to Tangible Assets*

 

 

7.7

%

 

 

7.7

%

 

 

—

 

 

 

Book Value per common share

 

$

53.07

 

 

$

50.81

 

 

$

2.26

 

 

4.4

%

Tangible Book Value per common share*

 

$

52.96

 

 

$

50.70

 

 

$

2.26

 

 

4.5

%

Common equity Tier 1 capital ratio (1)

 

 

12.5

%

 

 

12.8

%

 

 

(0.3

)

 

 

Total risk based capital ratio (1)

 

 

15.4

%

 

 

15.8

%

 

 

(0.4

)

 

 

 

 

 

 

 

 

 

 

 

(1) Regulatory capital ratios as of September 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)

 

Nine Months Ended

 

Increase (Decrease)

 

September 30,

2024

 

September 30,

2023

 

 

September 30,

2024

 

September 30,

2023

 

Profitability Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

42,937

 

 

$

82,953

 

 

$

(40,016

)

 

(48.2

)%

 

$

143,163

 

 

$

177,225

 

 

$

(34,062

)

 

(19.2

)%

Diluted earnings per share

 

$

1.31

 

 

$

2.58

 

 

$

(1.27

)

 

(49.2

)%

 

$

4.37

 

 

$

5.53

 

 

$

(1.16

)

 

(21.0

)%

Core earnings*

 

$

43,838

 

 

$

83,294

 

 

$

(39,456

)

 

(47.4

)%

 

$

138,937

 

 

$

186,600

 

 

$

(47,663

)

 

(25.5

)%

Adjusted core earnings*

 

$

41,381

 

 

$

83,294

 

 

$

(41,913

)

 

(50.3

)%

 

$

145,085

 

 

$

186,600

 

 

$

(41,515

)

 

(22.2

)%

Core earnings per share*

 

$

1.34

 

 

$

2.59

 

 

$

(1.25

)

 

(48.3

)%

 

$

4.24

 

 

$

5.82

 

 

$

(1.58

)

 

(27.1

)%

Adjusted core earnings per share*

 

$

1.26

 

 

$

2.59

 

 

$

(1.33

)

 

(51.4

)%

 

$

4.43

 

 

$

5.82

 

 

$

(1.39

)

 

(23.9

)%

Return on average assets (“ROAA”)

 

 

0.88

%

 

 

1.57

%

 

 

(0.69

)

 

 

 

 

0.97

%

 

 

1.17

%

 

 

(0.20

)

 

 

Core ROAA*

 

 

0.89

%

 

 

1.57

%

 

 

(0.68

)

 

 

 

 

0.95

%

 

 

1.22

%

 

 

(0.27

)

 

 

Adjusted core ROAA*

 

 

0.85

%

 

 

1.57

%

 

 

(0.72

)

 

 

 

 

0.99

%

 

 

1.22

%

 

 

(0.23

)

 

 

Return on average common equity (“ROCE”)

 

 

10.44

%

 

 

23.97

%

 

 

(13.53

)

 

 

 

 

12.10

%

 

 

17.84

%

 

 

(5.74

)

 

 

Core ROCE*

 

 

10.66

%

 

 

24.06

%

 

 

(13.40

)

 

 

 

 

11.74

%

 

 

18.79

%

 

 

(7.05

)

 

 

Adjusted core ROCE*

 

 

10.06

%

 

 

24.06

%

 

 

(14.00

)

 

 

 

 

12.26

%

 

 

18.79

%

 

 

(6.53

)

 

 

Core pre-tax pre-provision net income*

 

$

64,824

 

 

$

128,564

 

 

$

(63,740

)

 

(49.6

)%

 

$

237,718

 

 

$

314,679

 

 

$

(76,961

)

 

(24.5

)%

Adjusted core pre-tax pre-provision net income*

 

$

61,827

 

 

$

128,564

 

 

$

(66,737

)

 

(51.9

)%

 

$

246,035

 

 

$

314,679

 

 

$

(68,644

)

 

(21.8

)%

Net interest margin, tax equivalent

 

 

3.06

%

 

 

3.70

%

 

 

(0.64

)

 

 

 

 

3.16

%

 

 

3.28

%

 

 

(0.12

)

 

 

Yield on loans (Loan yield)

 

 

6.99

%

 

 

7.87

%

 

 

(0.88

)

 

 

 

 

7.07

%

 

 

7.12

%

 

 

(0.05

)

 

 

Cost of deposits

 

 

3.46

%

 

 

3.24

%

 

 

0.22

 

 

 

 

 

3.44

%

 

 

3.23

%

 

 

0.21

 

 

 

Efficiency ratio

 

 

62.40

%

 

 

41.01

%

 

 

21.39

 

 

 

 

 

55.97

%

 

 

45.62

%

 

 

10.35

 

 

 

Core efficiency ratio*

 

 

61.69

%

 

 

41.04

%

 

 

20.65

 

 

 

 

 

56.29

%

 

 

45.03

%

 

 

11.26

 

 

 

Adjusted core efficiency ratio*

 

 

63.48

%

 

 

41.04

%

 

 

22.44

 

 

 

 

 

54.75

%

 

 

45.03

%

 

 

9.72

 

 

 

Non-interest expense to average total assets

 

 

1.95

%

 

 

1.62

%

 

 

0.33

 

 

 

 

 

1.93

%

 

 

1.61

%

 

 

0.32

 

 

 

Core non-interest expense to average total assets*

 

 

1.94

%

 

 

1.62

%

 

 

0.32

 

 

 

 

 

1.91

%

 

 

1.60

%

 

 

0.31

 

 

 

Adjusted core non-interest expense to average total assets*

 

 

1.99

%

 

 

1.62

%

 

 

0.37

 

 

 

 

 

1.86

%

 

 

1.60

%

 

 

0.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Regulatory capital ratios as of September 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)

 

 

September 30,

2024

 

September 30,

2023

 

 

Balance Sheet Trends:

 

 

 

 

 

 

 

 

 

Total assets

 

$

21,456,082

 

 

$

21,857,152

 

 

$

(401,070

)

 

(1.8

)%

 

Total cash and investment securities

 

$

6,564,528

 

 

$

7,371,551

 

 

$

(807,023

)

 

(10.9

)%

 

Total loans and leases

 

$

14,053,116

 

 

$

13,713,482

 

 

$

339,634

 

 

2.5

%

 

Non-interest bearing demand deposits

 

$

4,670,809

 

 

$

4,758,682

 

 

$

(87,873

)

 

(1.8

)%

 

Total deposits

 

$

18,069,389

 

 

$

18,195,364

 

 

$

(125,975

)

 

(0.7

)%

 

Capital Metrics:

 

 

 

 

 

 

 

 

 

Common Equity

 

$

1,663,386

 

 

$

1,423,813

 

 

$

239,573

 

 

16.8

%

 

Tangible Common Equity*

 

$

1,659,757

 

 

$

1,420,184

 

 

$

239,573

 

 

16.9

%

 

Common Equity to Total Assets

 

 

7.8

%

 

 

6.5

%

 

 

1.3

 

 

 

 

Tangible Common Equity to Tangible Assets*

 

 

7.7

%

 

 

6.5

%

 

 

1.2

 

 

 

 

Book Value per common share

 

$

53.07

 

 

$

45.47

 

 

$

7.60

 

 

16.7

%

 

Tangible Book Value per common share*

 

$

52.96

 

 

$

45.36

 

 

$

7.60

 

 

16.8

%

 

Common equity Tier 1 capital ratio (1)

 

 

12.5

%

 

 

11.3

%

 

 

1.2

 

 

 

 

Total risk based capital ratio (1)

 

 

15.4

%

 

 

14.3

%

 

 

1.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Regulatory capital ratios as of September 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)

September 30,

2024

 

% of

Total

 

June 30,

2024

 

% of

Total

 

September 30,

2023

 

% of

Total

Loans and Leases Held for Investment

 

 

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

 

 

Specialized lending

$

5,468,507

 

39.7

%

 

$

5,528,745

 

41.7

%

 

$

5,422,161

 

40.0

%

Other commercial & industrial (1)

 

1,087,222

 

7.9

 

 

 

1,092,146

 

8.2

 

 

 

1,252,427

 

9.2

 

Mortgage finance

 

1,367,617

 

9.9

 

 

 

1,122,812

 

8.5

 

 

 

1,042,549

 

7.7

 

Multifamily

 

2,115,978

 

15.4

 

 

 

2,067,332

 

15.6

 

 

 

2,130,213

 

15.7

 

Commercial real estate owner occupied

 

981,904

 

7.1

 

 

 

805,779

 

6.1

 

 

 

794,815

 

5.9

 

Commercial real estate non-owner occupied

 

1,326,591

 

9.6

 

 

 

1,202,606

 

9.1

 

 

 

1,178,203

 

8.7

 

Construction

 

174,509

 

1.3

 

 

 

163,409

 

1.2

 

 

 

252,588

 

1.8

 

Total commercial loans and leases

 

12,522,328

 

90.9

 

 

 

11,982,829

 

90.4

 

 

 

12,072,956

 

89.0

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Residential

 

500,786

 

3.6

 

 

 

481,503

 

3.6

 

 

 

483,133

 

3.6

 

Manufactured housing

 

34,481

 

0.3

 

 

 

35,901

 

0.3

 

 

 

40,129

 

0.3

 

Installment:

 

 

 

 

 

 

 

 

 

 

 

Personal

 

453,739

 

3.3

 

 

 

474,481

 

3.6

 

 

 

629,843

 

4.6

 

Other

 

266,362

 

1.9

 

 

 

282,201

 

2.1

 

 

 

337,053

 

2.5

 

Total installment loans

 

720,101

 

5.2

 

 

 

756,682

 

5.7

 

 

 

966,896

 

7.1

 

Total consumer loans

 

1,255,368

 

9.1

 

 

 

1,274,086

 

9.6

 

 

 

1,490,158

 

11.0

 

Total loans and leases held for investment

$

13,777,696

 

100.0

%

 

$

13,256,915

 

100.0

%

 

$

13,563,114

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Loans Held for Sale

 

 

 

 

 

 

 

 

 

 

 

Residential

$

2,523

 

0.9

%

 

$

2,684

 

0.7

%

 

$

1,005

 

0.7

%

Installment:

 

 

 

 

 

 

 

 

 

 

 

Personal

 

55,799

 

20.3

 

 

 

125,598

 

33.4

 

 

 

124,848

 

83.0

 

Other

 

217,098

 

78.8

 

 

 

247,442

 

65.9

 

 

 

24,515

 

16.3

 

Total installment loans

 

272,897

 

99.1

 

 

 

373,040

 

99.3

 

 

 

149,363

 

99.3

 

Total loans held for sale

$

275,420

 

100.0

%

 

$

375,724

 

100.0

%

 

$

150,368

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases portfolio

$

14,053,116

 

 

 

$

13,632,639

 

 

 

$

13,713,482

 

 

(1) Includes PPP loans of $30.5 million, $38.3 million and $137.1 million as of September 30, 2024, June 30, 2024 and September 30, 2023, respectively.

Loans and Leases Held for Investment

Loans and leases held for investment were $13.8 billion at September 30, 2024, up $520.8 million, or 3.9%, from June 30, 2024. Mortgage finance loans increased by $244.8 million, or 21.8% quarter-over-quarter. Owner-occupied commercial real estate loans increased by $176.1 million, or 21.9% to $981.9 million. Non-owner occupied commercial real estate loans increased by $124.0 million, or 10.3% to $1.3 billion. Multifamily loans increased by $48.6 million, or 2.4% to $2.1 billion. Specialized lending decreased by $60.2 million, or 1.1% quarter-over-quarter, to $5.5 billion. Other commercial and industrial loans decreased by $4.9 million, or 0.5% quarter-over-quarter, to $1.1 billion. Consumer installment loans held for investment decreased by $36.6 million, or 4.8% quarter-over-quarter, to $720.1 million.

Loans and leases held for investment of $13.8 billion at September 30, 2024 were up $214.6 million, or 1.6%, year-over-year. Mortgage finance loans increased by $325.1 million, or 31.2% year-over-year due to higher mortgage activity from lower interest rates. Owner-occupied commercial real estate loans increased by $187.1 million. Non-owner occupied commercial real estate loans increased by $148.4 million. Specialized lending increased by $46.3 million. Consumer installment loans decreased by $246.8 million, or 25.5% year-over-year due to the continued build out of the held-for-sale strategy and de-risking of the held-for-investment loan portfolio. Other commercial and industrial loans decreased by $165.2 million, which included decreases in PPP loans primarily from guarantee payments. Construction loans decreased by $78.1 million.

Loans Held for Sale

Loans held for sale decreased $100.3 million quarter-over-quarter, and were $275.4 million at September 30, 2024 including the sale of consumer installment loans that were classified as held for sale with a carrying value of $200.8 million in Q3 2024. As part of these sales, Customers recognized a loss on sale of $0.3 million, which is presented within net gain (loss) on sale of loans and leases in the consolidated statement of income in Q3 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)

September 30,

2024

 

June 30,

2024

 

 

September 30,

2024

 

September 30,

2023

 

Allowance for credit losses on loans and leases

$

133,158

 

 

$

132,436

 

 

$

722

 

 

$

133,158

 

 

$

139,213

 

 

$

(6,055

)

Provision (benefit) for credit losses on loans and leases

$

17,766

 

 

$

17,851

 

 

$

(85

)

 

$

17,766

 

 

$

17,055

 

 

$

711

 

Net charge-offs from loans held for investment

$

17,044

 

 

$

18,711

 

 

$

(1,667

)

 

$

17,044

 

 

$

17,498

 

 

$

(454

)

Annualized net charge-offs to average loans and leases

 

0.50

%

 

 

0.56

%

 

 

 

 

0.50

%

 

 

0.50

%

 

 

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

 

1.06

%

 

 

1.08

%

 

 

 

 

1.06

%

 

 

1.10

%

 

 

Net charge-offs decreased modestly with $17.0 million in Q3 2024, compared to $18.7 million in Q2 2024 and $17.5 million in Q3 2023.

Provision (benefit) for Credit Losses

 

Three Months Ended

 

Increase

(Decrease)

 

Three Months Ended

 

Increase

(Decrease)

(Dollars in thousands)

September 30,

2024

 

June 30,

2024

 

 

September 30,

2024

 

September 30,

2023

 

Provision (benefit) for credit losses on loans and leases

$

17,766

 

 

$

17,851

 

$

(85

)

 

$

17,766

 

 

$

17,055

 

$

711

 

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

 

(700

)

 

 

270

 

 

(970

)

 

 

(700

)

 

 

801

 

 

(1,501

)

Provision for credit losses

 

17,066

 

 

 

18,121

 

 

(1,055

)

 

 

17,066

 

 

 

17,856

 

 

(790

)

Provision (benefit) for credit losses on unfunded commitments

 

642

 

 

 

1,594

 

 

(952

)

 

 

642

 

 

 

48

 

 

594

 

Total provision for credit losses

$

17,708

 

 

$

19,715

 

$

(2,007

)

 

$

17,708

 

 

$

17,904

 

$

(196

)

The provision for credit losses on loans and leases in Q3 2024 was $17.8 million, compared to $17.9 million in Q2 2024. The lower provision in Q3 2024 was primarily due to slight improvements in macroeconomic forecasts.

The provision for credit losses on available for sale investment securities in Q3 2024 was a benefit to provision of $0.7 million, compared to provision of $0.3 million in Q2 2024.

The provision for credit losses on loans and leases in Q3 2024 was $17.8 million, compared to $17.1 million in Q3 2023. The higher provision in Q3 2024 compared to the year ago period was primarily due to higher balances in commercial and industrial loan balances held for investment, partially offset by lower balances in consumer installment loans held for investment.

The provision for credit losses on available for sale investment securities in Q3 2024 was a benefit to provision of $0.7 million compared to provision of $0.8 million in Q3 2023.

Asset Quality

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

(Dollars in thousands)

September 30,

2024

 

June 30,

2024

 

Increase

(Decrease)

 

September 30,

2024

 

September 30,

2023

 

Increase

(Decrease)

Non-performing assets (“NPAs”):

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual / non-performing loans (“NPLs”)

$

47,326

 

 

$

47,380

 

 

$

(54

)

 

$

47,326

 

 

$

29,867

 

 

$

17,459

 

Non-performing assets

$

47,326

 

 

$

47,444

 

 

$

(118

)

 

$

47,326

 

 

$

29,970

 

 

$

17,356

 

NPLs to total loans and leases

 

0.34

%

 

 

0.35

%

 

 

 

 

0.34

%

 

 

0.22

%

 

 

Reserves to NPLs

 

281.36

%

 

 

279.52

%

 

 

 

 

281.36

%

 

 

466.11

%

 

 

NPAs to total assets

 

0.22

%

 

 

0.23

%

 

 

 

 

0.22

%

 

 

0.14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases (1) risk ratings:

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases

 

 

 

 

 

 

 

 

 

 

 

Pass

$

10,844,500

 

 

$

10,500,922

 

 

$

343,578

 

 

$

10,844,500

 

 

$

10,503,731

 

 

$

340,769

 

Special Mention

 

178,026

 

 

 

170,014

 

 

 

8,012

 

 

 

178,026

 

 

 

189,329

 

 

 

(11,303

)

Substandard

 

218,921

 

 

 

270,898

 

 

 

(51,977

)

 

 

218,921

 

 

 

280,267

 

 

 

(61,346

)

Total commercial loans and leases

 

11,241,447

 

 

 

10,941,834

 

 

 

299,613

 

 

 

11,241,447

 

 

 

10,973,327

 

 

 

268,120

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

Performing

 

1,240,581

 

 

 

1,256,816

 

 

 

(16,235

)

 

 

1,240,581

 

 

 

1,473,493

 

 

 

(232,912

)

Non-performing

 

14,787

 

 

 

17,270

 

 

 

(2,483

)

 

 

14,787

 

 

 

16,665

 

 

 

(1,878

)

Total consumer loans

 

1,255,368

 

 

 

1,274,086

 

 

 

(18,718

)

 

 

1,255,368

 

 

 

1,490,158

 

 

 

(234,790

)

Loans and leases receivable (1)

$

12,496,815

 

 

$

12,215,920

 

 

$

280,895

 

 

$

12,496,815

 

 

$

12,463,485

 

 

$

33,330

(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 September 30, 2024 were less than 4% of total assets and approximately 5% of total loans and leases held for investment, and were supported by an allowance for credit losses of $50.1 million. At September 30, 2024, the consumer installment portfolio had the following characteristics: average original FICO score of 746, average debt-to-income of 20% and average borrower income of $101 thousand.

Non-performing loans at September 30, 2024 decreased to 0.34% of total loans and leases, compared to 0.35% at June 30, 2024 and increased, compared to 0.22% at September 30, 2023.

Investment Securities

The investment securities portfolio, including debt securities classified as available for sale (“AFS”) and held to maturity (“HTM”) provides periodic cash flows through regular maturities and amortization, can be used as collateral to secure additional funding, and is an important component of the Bank’s liquidity position.

The following table presents the composition of the investment securities portfolio as of the dates indicated:

(Dollars in thousands)

September 30,

2024

 

June 30,

2024

 

September 30,

2023

Debt securities, available for sale

$

2,377,733

 

$

2,477,758

 

$

2,746,729

Equity securities

 

34,336

 

 

33,892

 

 

26,478

Investment securities, at fair value

 

2,412,069

 

 

2,511,650

 

 

2,773,207

Debt securities, held to maturity

 

1,064,437

 

 

962,799

 

 

1,178,370

Total investment securities portfolio

$

3,476,506

 

$

3,474,449

 

$

3,951,577

Customers’ securities portfolio is highly liquid, short in duration, and high in yield. At September 30, 2024, the AFS debt securities portfolio had a spot yield of 5.23%, an effective duration of approximately 2.0 years, and approximately 30% are variable rate. Additionally, 63% of the AFS securities portfolio was AAA rated at September 30, 2024.

At September 30, 2024, the HTM debt securities portfolio represented only 5.0% of total assets at September 30, 2024, had a spot yield of 4.31% and an effective duration of approximately 3.5 years. Additionally, at September 30, 2024, approximately 43% of the HTM securities were AAA rated and 51% were credit enhanced asset backed securities with no current expectation of credit losses.

As a part of the sales of consumer installment loans that were classified as held for sale, Customers provided financing to the purchaser for a portion of the sale price in the form of $160.0 million of asset-backed securities, collateralized by the sold loans, which mostly accounted for the increase in HTM debt securities at September 30, 2024 as compared to the prior quarter.

Deposits

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

(Dollars in thousands)

September 30,

2024

 

% of

Total

 

June 30,

2024

 

% of

Total

 

September 30,

2023

 

% of

Total

Demand, non-interest bearing

$

4,670,809

 

25.9

%

 

$

4,474,862

 

25.3

%

 

$

4,758,682

 

26.2

%

Demand, interest bearing

 

5,606,500

 

31.0

 

 

 

5,894,056

 

33.4

 

 

 

5,824,410

 

32.0

 

Total demand deposits

 

10,277,309

 

56.9

 

 

 

10,368,918

 

58.7

 

 

 

10,583,092

 

58.2

 

Savings

 

1,399,968

 

7.7

 

 

 

1,573,661

 

8.9

 

 

 

1,118,353

 

6.1

 

Money market

 

3,961,028

 

21.9

 

 

 

3,539,815

 

20.0

 

 

 

2,499,593

 

13.7

 

Time deposits

 

2,431,084

 

13.5

 

 

 

2,195,699

 

12.4

 

 

 

3,994,326

 

22.0

 

Total deposits

$

18,069,389

 

100.0

%

 

$

17,678,093

 

100.0

%

 

$

18,195,364

 

100.0

%

Total deposits increased $391.3 million, or 2.2%, to $18.1 billion at September 30, 2024 as compared to the prior quarter. Non-interest bearing demand deposits increased $195.9 million, or 4.4%, to $4.7 billion. Money market deposits increased $421.2 million, or 11.9%, to $4.0 billion and time deposits increased $235.4 million, or 10.7%, to $2.4 billion. These increases were offset by decreases in interest bearing demand deposits of $287.6 million, or 4.9%, to $5.6 billion and savings deposits of $173.7 million, or 11.0%, to $1.4 billion. The total average cost of deposits increased by 6 basis points to 3.46% in Q3 2024 from 3.40% in the prior quarter. Total estimated uninsured deposits were $4.5 billion1, or 25% of total deposits (inclusive of accrued interest) at September 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.

“Our deposit costs increased in the quarter attributable to strong deposit growth in the interest bearing category. We’re extremely excited about the success we’re having in bringing new clients to the bank and the long-term franchise value it will drive outweighing any short-term impacts. With the remix efforts underway and in a declining rate environment we expect to have flexibility lowering interest bearing deposit costs going forward including as these newer relationships season,” stated Jay Sidhu.

Total deposits decreased $126.0 million, or 0.7%, to $18.1 billion at September 30, 2024 as compared to a year ago. Time deposits decreased $1.6 billion, or 39.1% to $2.4 billion, interest bearing demand deposits decreased $217.9 million, or 3.7%, to $5.6 billion and non-interest bearing demand deposits decreased $87.9 million, or 1.8%, to $4.7 billion. These decreases were offset by increases in money market deposits of $1.5 billion, or 58.5%, to $4.0 billion and savings deposits of $281.6 million, or 25.2%, to $1.4 billion. The total average cost of deposits increased by 22 basis points to 3.46% in Q3 2024 from 3.24% in the prior year primarily due to higher market interest rates.

Borrowings

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

(Dollars in thousands)

September 30,

2024

 

June 30,

2024

 

September 30,

2023

FHLB advances

$

1,117,229

 

$

1,018,349

 

$

1,529,839

Senior notes

 

99,033

 

 

123,970

 

 

123,775

Subordinated debt

 

182,439

 

 

182,370

 

 

182,161

Total borrowings

$

1,398,701

 

$

1,324,689

 

$

1,835,775

Total borrowings increased $74.0 million, or 5.6%, to $1.4 billion at September 30, 2024 as compared to the prior quarter. This increase primarily resulted from an increase of $80.0 million in FHLB advances, partially offset by repayment of $25.0 million in senior notes upon maturity. As of September 30, 2024, Customers’ immediately available borrowing capacity with the FRB and FHLB was approximately $7.7 billion, of which $1.1 billion of available capacity was utilized in borrowings and $1.5 billion was utilized to collateralize deposits.

Total borrowings decreased $437.1 million, or 23.8%, to $1.4 billion at September 30, 2024 as compared to a year ago. This decrease primarily resulted from net repayments of $435.0 million in FHLB advances and $25.0 million in senior notes upon maturity.

 

 

 

 

 

1

Uninsured deposits (estimate) of $6.1 billion to be reported on the Bank’s call report, less deposits of $1.4 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $136.5 million.

Capital

The following table presents certain capital amounts and ratios as of the dates indicated:

(Dollars in thousands except per share data)

September 30,

2024

 

June 30,

2024

 

September 30,

2023

Customers Bancorp, Inc.

 

 

 

 

 

Common Equity

$

1,663,386

 

 

$

1,609,071

 

 

$

1,423,813

 

Tangible Common Equity*

$

1,659,757

 

 

$

1,605,442

 

 

$

1,420,184

 

Common Equity to Total Assets

 

7.8

%

 

 

7.7

%

 

 

6.5

%

Tangible Common Equity to Tangible Assets*

 

7.7

%

 

 

7.7

%

 

 

6.5

%

Book Value per common share

$

53.07

 

 

$

50.81

 

 

$

45.47

 

Tangible Book Value per common share*

$

52.96

 

 

$

50.70

 

 

$

45.36

 

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

 

12.5

%

 

 

12.8

%

 

 

11.3

%

Total risk based capital ratio (1)

 

15.4

%

 

 

15.8

%

 

 

14.3

%

 

 

 

 

 

 

(1) Regulatory capital ratios as of September 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 $54.3 million to $1.7 billion, and tangible common equity* increased $54.3 million to $1.7 billion, at September 30, 2024 compared to the prior quarter, respectively, primarily from earnings of $42.9 million and decreased unrealized losses on investment securities of $25.3 million (net of taxes) deferred in accumulated other comprehensive income (“AOCI”). These increases were offset in part by $18.2 million of common share repurchases in Q3 2024. Similarly, book value per common share increased to $53.07 from $50.81, and tangible book value per common share* increased to $52.96 from $50.70, at September 30, 2024 and June 30, 2024, respectively.

Customers Bancorp’s common equity increased $239.6 million to $1.7 billion, and tangible common equity* increased $239.6 million to $1.7 billion, at September 30, 2024 compared to a year ago, respectively, primarily from earnings of $201.4 million and decreased unrealized losses on investment securities in AOCI of $43.7 million (net of taxes), offset in part by $18.2 million of common share repurchases. Similarly, book value per common share increased to $53.07 from $45.47, and tangible book value per common share* increased to $52.96 from $45.36, at September 30, 2024 and September 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 12.5%, 15.4%, 7.8%, and 7.7%, respectively, at September 30, 2024.

At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At September 30, 2024, Tier 1 capital (estimate) and total risk based capital (estimate) were 13.6% and 15.1%, respectively.

Key Profitability Trends

Net Interest Income

Net interest income totaled $158.5 million in Q3 2024, a decrease of $9.1 million from Q2 2024. This decrease was due to lower interest income of $1.9 million primarily due to lower interest income from loans in specialized lending, lower consumer installment loans and higher interest expense of $7.2 million due to higher costs of deposits and other borrowings.

“Net interest income and net interest margin declined in the quarter impacted by higher discount accretion and prepayment income that were benefits in Q2 2024 and did not repeat at the same levels in Q3 2024, as well as initiatives that were proactive risk management strategies including the $200.8 million consumer installment loan sale in Q3 2024 resulting in lower average balances and the well-timed securities portfolio repositioning completed in Q2 2024. These factors accounted for over 80% of the decline in reported net interest margin. Robust loan growth and accretive deposit remix remain as positive drivers that we expect to help increase net interest income and net interest margin in 2025,” stated Customers Bancorp President Sam Sidhu. “These positive drivers are bolstered by the recent team additions. Our new commercial deposit-focused banking teams have substantial momentum and it is clear we have the bankers, products and balance sheet strength to deliver for our new and existing clients. We continue to believe the overwhelming majority of client prospects will become Customers Bank clients in the near future,” stated Sam Sidhu.

Net interest income totaled $158.5 million in Q3 2024, a decrease of $41.2 million from Q3 2023. This decrease was due to lower interest income in specialized lending primarily due to approximately $27.0 million of interest income attributable to outsized discount accretion recognized on the acquired loan portfolio in Q3 2023.

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)

September 30,

2024

 

June 30,

2024

 

 

September 30,

2024

 

September 30,

2023

 

Commercial lease income

$

10,093

 

 

$

10,282

 

 

$

(189

)

 

$

10,093

 

 

$

8,901

 

 

$

1,192

 

Loan fees

 

8,011

 

 

 

5,233

 

 

 

2,778

 

 

 

8,011

 

 

 

6,029

 

 

 

1,982

 

Bank-owned life insurance

 

2,049

 

 

 

2,007

 

 

 

42

 

 

 

2,049

 

 

 

1,973

 

 

 

76

 

Mortgage finance transactional fees

 

1,087

 

 

 

1,058

 

 

 

29

 

 

 

1,087

 

 

 

1,018

 

 

 

69

 

Net gain (loss) on sale of loans and leases

 

(14,548

)

 

 

(238

)

 

 

(14,310

)

 

 

(14,548

)

 

 

(348

)

 

 

(14,200

)

Net gain (loss) on sale of investment securities

 

—

 

 

 

(719

)

 

 

719

 

 

 

—

 

 

 

(429

)

 

 

429

 

Unrealized gain on equity method investments

 

—

 

 

 

11,041

 

 

 

(11,041

)

 

 

—

 

 

 

—

 

 

 

—

 

Other

 

1,865

 

 

 

2,373

 

 

 

(508

)

 

 

1,865

 

 

 

631

 

 

 

1,234

 

Total non-interest income

$

8,557

 

 

$

31,037

 

 

$

(22,480

)

 

$

8,557

 

 

$

17,775

 

 

$

(9,218

)

Reported non-interest income totaled $8.6 million for Q3 2024, a decrease of $22.5 million compared to Q2 2024. The decrease was primarily due to $11.0 million of unrealized gain on equity method investments purchased at a discount in Q2 2024 and $14.3 million of loss on leases of commercial clean vehicles that were accounted for as sales-type leases and included within net gain (loss) on sale of loans and leases. These commercial clean vehicle leases generated the same amount of investment tax credits that were included as a benefit to income tax expense in Q3 2024. These decreases were partially offset by an increase of $2.8 million in loan fees primarily resulting from increased unused line of credit fees.

Non-interest income totaled $8.6 million for Q3 2024, a decrease of $9.2 million compared to Q3 2023. As stated above, the decrease was primarily due to $14.3 million of loss on leases of commercial clean vehicles that were accounted for as sales-type leases and included within net gain (loss) on sale of loans and leases. These commercial clean vehicle leases generated the same amount of investment tax credits that were included as a corresponding benefit to income tax expense in Q3 2024. This decrease was partially offset by increases in commercial lease income of $1.2 million and loan fees of $2.0 million primarily resulting from increased unused line of credit fees.

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)

September 30,

2024

 

June 30,

2024

 

 

September 30,

2024

 

September 30,

2023

 

Salaries and employee benefits

$

47,717

 

$

44,947

 

$

2,770

 

 

$

47,717

 

$

33,845

 

$

13,872

 

Technology, communication and bank operations

 

13,588

 

 

16,227

 

 

(2,639

)

 

 

13,588

 

 

15,667

 

 

(2,079

)

Commercial lease depreciation

 

7,811

 

 

7,829

 

 

(18

)

 

 

7,811

 

 

7,338

 

 

473

 

Professional services

 

9,048

 

 

6,104

 

 

2,944

 

 

 

9,048

 

 

8,569

 

 

479

 

Loan servicing

 

3,778

 

 

3,516

 

 

262

 

 

 

3,778

 

 

3,858

 

 

(80

)

Occupancy

 

2,987

 

 

3,120

 

 

(133

)

 

 

2,987

 

 

2,471

 

 

516

 

FDIC assessments, non-income taxes and regulatory fees

 

7,902

 

 

10,236

 

 

(2,334

)

 

 

7,902

 

 

8,551

 

 

(649

)

Advertising and promotion

 

908

 

 

1,254

 

 

(346

)

 

 

908

 

 

650

 

 

258

 

Legal settlement expense

 

—

 

 

—

 

 

—

 

 

 

—

 

 

4,096

 

 

(4,096

)

Other

 

10,279

 

 

10,219

 

 

60

 

 

 

10,279

 

 

4,421

 

 

5,858

 

Total non-interest expense

$

104,018

 

$

103,452

 

$

566

 

 

$

104,018

 

$

89,466

 

$

14,552

 

Non-interest expenses totaled $104.0 million in Q3 2024, an increase of $0.6 million compared to Q2 2024. The increase was primarily attributable to increases of $2.8 million in salaries and employee benefits driven by higher headcount including the full quarter impact of Q2 2024 hires, annual merit increases, incentives partially offset by lower severance and $2.9 million in professional fees, partially offset by lower non-income taxes, software expenditures and processing fees.

“In the quarter we incurred professional services expense of approximately $3.0 million as we made investments to enhance our risk management infrastructure. We expect to spend an additional $3.0-$5.0 million in each of the next two quarters as we seek to build a best-in-class risk management function which we believe can be a competitive advantage for the bank in the future,” stated Sam Sidhu.

Non-interest expenses totaled $104.0 million in Q3 2024, an increase of $14.6 million compared to Q3 2023. The increase was primarily attributable to increases of $13.9 million in salaries and employee benefits primarily due to higher headcount including the addition of new banking teams in Q2 2024, annual merit increases, incentives and severance, fees paid to a fintech company related to consumer installment loans originated and held for sale as a part of the Bank’s held for sale strategy, and provision for operating losses. These increases were partially offset by $4.1 million of expenses from a settlement with a third party PPP service provider in Q3 2023 and a decrease in deposit servicing fees.

Taxes

Income tax expense decreased by $19.8 million to a benefit of $0.7 million in Q3 2024 from a provision of $19.0 million in Q2 2024 primarily due to lower pre-tax income and higher estimated income tax credits for 2024, including $14.3 million of investment tax credits generated from commercial clean vehicles in Q3 2024. These investment tax credits from commercial clean vehicle leases were the same amount as the loss on leases of commercial clean vehicles included within net gain (loss) on sale of loans and leases.

Income tax expense decreased by $24.2 million to a benefit of $0.7 million in Q3 2024 from a provision of $23.5 million in Q3 2023 primarily due to lower pre-tax income and an increase in estimated income tax credits for 2024, including $14.3 million of investment tax credits generated from commercial clean vehicles in Q3 2024. These investment tax credits from commercial clean vehicle leases were the same amount as the loss on leases of commercial clean vehicles included within net gain (loss) on sale of loans and leases. The effective tax rate for Q3 2024 was (1.6)%.

Outlook

“Looking forward, our strategy remains unchanged. We are focused on strengthening our deposit franchise, 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 accelerating and enhancing these efforts which were already well underway. We see attractive opportunities to execute franchise-enhancing loan growth and our pipeline continues to be strong. We remain confident in our ability to deliver 10% - 15% loan growth for the full year. While the interest earning asset repositioning and the hedging we executed impacts our short term margin and will be a headwind in 2024, they will positively impact profitability and earnings in 2025. We expect net interest margin in Q4 2024 to be roughly flattish with Q3 2024. The management of non-interest expenses remains a priority for us. We expect the investments made in recruiting the new commercial banking teams will produce significant benefits by increasing our net interest income and net interest margin as well as improving the overall quality of our deposit franchise. We believe the investments we are making to enhance our risk management infrastructure will pay dividends over the long-term. We previously noted an $8.0-$10.0 million quarterly investment in the new commercial banking teams in 2024 and now about $3.0-$5.0 million of quarterly professional service expense in enhancing our risk management infrastructure for a few quarters. Looking forward we expect the new teams to breakeven in Q1 2025 and payoff throughout 2025 as well as a sunsetting of the additional professional services costs. We would also note that we had an $11.0 million unrealized gain on equity method investments purchased at a discount in Q2 2024 which helped offset some of these investment related expenses. While our efficiency ratio will be elevated in the near term as we make these investments in our future, we remain fundamentally focused on positive operating leverage and working to 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 18% - 20% primarily as a result of higher estimated investment tax credits in 2024. We remain committed to maintaining CET 1 ratio and TCE / TA ratio* targets of 11.5% and 7.5%, respectively 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, November 1, 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 3rd Quarter Earnings Webcast.

You may submit questions in advance of the live webcast by emailing our Head of Corporate Communications, Jordan Baucum at jbaucum@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 over $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 potential for negative consequences resulting from regulatory violations, investigations and examinations, including potential supervisory actions, the assessment of fines and penalties, the imposition of sanctions, the need to undertake remedial actions and possible damage to our reputation; effects of competition on deposit rates and growth, loan rates and growth and net interest margin; failure to identify and adequately and promptly address cybersecurity risks, including data breaches and cyberattacks; public health crises and pandemics and their effects on the economic and business environments in which we operate; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and military conflicts, including the war between Russia and Ukraine and escalating conflict in the Middle East, which could impact economic conditions in the United States; 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 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.

Q3 2024 Overview

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

Q3

 

Q2

 

Q1

 

Q4

 

Q3

 

Nine Months Ended

September 30,

2024

 

2024

 

2024

 

2023

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Profitability Metrics:

Net income available to common shareholders

$

42,937

 

 

$

54,300

 

 

$

45,926

 

 

$

58,223

 

 

$

82,953

 

 

$

143,163

 

 

$

177,225

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

1.36

 

 

$

1.72

 

 

$

1.46

 

 

$

1.86

 

 

$

2.65

 

 

$

4.54

 

 

$

5.63

 

Earnings per share - diluted

$

1.31

 

 

$

1.66

 

 

$

1.40

 

 

$

1.79

 

 

$

2.58

 

 

$

4.37

 

 

$

5.53

 

Book value per common share (1)

$

53.07

 

 

$

50.81

 

 

$

49.29

 

 

$

47.73

 

 

$

45.47

 

 

$

53.07

 

 

$

45.47

 

CUBI stock price (1)

$

46.45

 

 

$

47.98

 

 

$

53.06

 

 

$

57.62

 

 

$

34.45

 

 

$

46.45

 

 

$

34.45

 

CUBI stock price as % of book value (1)

 

88

%

 

 

94

%

 

 

108

%

 

 

121

%

 

 

76

%

 

 

88

%

 

 

76

%

Average shares outstanding - basic

 

31,567,797

 

 

 

31,649,715

 

 

 

31,473,424

 

 

 

31,385,043

 

 

 

31,290,581

 

 

 

31,563,660

 

 

 

31,452,700

 

Average shares outstanding - diluted

 

32,766,488

 

 

 

32,699,149

 

 

 

32,854,534

 

 

 

32,521,787

 

 

 

32,175,084

 

 

 

32,773,365

 

 

 

32,036,459

 

Shares outstanding (1)

 

31,342,107

 

 

 

31,667,655

 

 

 

31,521,931

 

 

 

31,440,906

 

 

 

31,311,254

 

 

 

31,342,107

 

 

 

31,311,254

 

Return on average assets (“ROAA”)

 

0.88

%

 

 

1.11

%

 

 

0.94

%

 

 

1.16

%

 

 

1.57

%

 

 

0.97

%

 

 

1.17

%

Return on average common equity (“ROCE”)

 

10.44

%

 

 

13.85

%

 

 

12.08

%

 

 

15.93

%

 

 

23.97

%

 

 

12.10

%

 

 

17.84

%

Net interest margin, tax equivalent

 

3.06

%

 

 

3.29

%

 

 

3.10

%

 

 

3.31

%

 

 

3.70

%

 

 

3.16

%

 

 

3.28

%

Efficiency ratio

 

62.40

%

 

 

51.87

%

 

 

54.58

%

 

 

49.08

%

 

 

41.01

%

 

 

55.97

%

 

 

45.62

%

Non-GAAP Profitability Metrics (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

Core earnings

$

43,838

 

 

$

48,567

 

 

$

46,532

 

 

$

61,633

 

 

$

83,294

 

 

$

138,937

 

 

$

186,600

 

Core pre-tax pre-provision net income

$

64,824

 

 

$

89,220

 

 

$

83,674

 

 

$

101,884

 

 

$

128,564

 

 

$

237,718

 

 

$

314,679

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

Core earnings per share - diluted

$

1.34

 

 

$

1.49

 

 

$

1.42

 

 

$

1.90

 

 

$

2.59

 

 

$

4.24

 

 

$

5.82

 

Tangible book value per common share (1)

$

52.96

 

 

$

50.70

 

 

$

49.18

 

 

$

47.61

 

 

$

45.36

 

 

$

52.96

 

 

$

45.36

 

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

 

88

%

 

 

95

%

 

 

108

%

 

 

121

%

 

 

76

%

 

 

88

%

 

 

76

%

Core ROAA

 

0.89

%

 

 

1.00

%

 

 

0.95

%

 

 

1.22

%

 

 

1.57

%

 

 

0.95

%

 

 

1.22

%

Core ROCE

 

10.66

%

 

 

12.39

%

 

 

12.24

%

 

 

16.87

%

 

 

24.06

%

 

 

11.74

%

 

 

18.79

%

Core pre-tax pre-provision ROAA

 

1.21

%

 

 

1.71

%

 

 

1.58

%

 

 

1.90

%

 

 

2.32

%

 

 

1.50

%

 

 

1.95

%

Core pre-tax pre-provision ROCE

 

14.84

%

 

 

21.79

%

 

 

21.01

%

 

 

26.82

%

 

 

36.04

%

 

 

19.12

%

 

 

30.59

%

Core efficiency ratio

 

61.69

%

 

 

53.47

%

 

 

54.24

%

 

 

46.70

%

 

 

41.04

%

 

 

56.29

%

 

 

45.03

%

Asset Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs

$

17,044

 

 

$

18,711

 

 

$

17,968

 

 

$

17,322

 

 

$

17,498

 

 

$

53,723

 

 

$

51,713

 

Annualized net charge-offs to average total loans and leases

 

0.50

%

 

 

0.56

%

 

 

0.55

%

 

 

0.51

%

 

 

0.50

%

 

 

0.54

%

 

 

0.47

%

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

 

0.34

%

 

 

0.35

%

 

 

0.27

%

 

 

0.21

%

 

 

0.22

%

 

 

0.34

%

 

 

0.22

%

Reserves to NPLs (1)

 

281.36

%

 

 

279.52

%

 

 

373.86

%

 

 

499.12

%

 

 

466.11

%

 

 

281.36

%

 

 

466.11

%

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

 

0.22

%

 

 

0.23

%

 

 

0.17

%

 

 

0.13

%

 

 

0.14

%

 

 

0.22

%

 

 

0.14

%

Customers Bank Capital Ratios (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital to risk-weighted assets

 

13.6

%

 

 

14.17

%

 

 

14.16

%

 

 

13.77

%

 

 

12.97

%

 

 

13.6

%

 

 

12.97

%

Tier 1 capital to risk-weighted assets

 

13.6

%

 

 

14.17

%

 

 

14.16

%

 

 

13.77

%

 

 

12.97

%

 

 

13.6

%

 

 

12.97

%

Total capital to risk-weighted assets

 

15.1

%

 

 

15.64

%

 

 

15.82

%

 

 

15.28

%

 

 

14.45

%

 

 

15.1

%

 

 

14.45

%

Tier 1 capital to average assets (leverage ratio)

 

9.1

%

 

 

9.16

%

 

 

8.82

%

 

 

8.71

%

 

 

8.25

%

 

 

9.1

%

 

 

8.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 Q3 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 September 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)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

Q3

 

Q2

 

Q1

 

Q4

 

Q3

 

September 30,

 

2024

 

2024

 

2024

 

2023

 

2023

 

2024

 

2023

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

$

228,659

 

 

$

224,265

 

 

$

217,999

 

 

$

239,453

 

 

$

271,107

 

 

$

670,923

 

 

$

757,064

 

Investment securities

 

46,265

 

 

 

47,586

 

 

 

46,802

 

 

 

51,074

 

 

 

54,243

 

 

 

140,653

 

 

 

149,585

 

Interest earning deposits

 

44,372

 

 

 

45,506

 

 

 

52,817

 

 

 

44,104

 

 

 

43,800

 

 

 

142,695

 

 

 

81,819

 

Loans held for sale

 

10,907

 

 

 

13,671

 

 

 

12,048

 

 

 

8,707

 

 

 

4,664

 

 

 

36,626

 

 

 

27,514

 

Other

 

1,910

 

 

 

3,010

 

 

 

2,111

 

 

 

2,577

 

 

 

2,526

 

 

 

7,031

 

 

 

5,463

 

Total interest income

 

332,113

 

 

 

334,038

 

 

 

331,777

 

 

 

345,915

 

 

 

376,340

 

 

 

997,928

 

 

 

1,021,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

155,829

 

 

 

148,784

 

 

 

153,725

 

 

 

150,307

 

 

 

145,825

 

 

 

458,338

 

 

 

426,130

 

FHLB advances

 

12,590

 

 

 

13,437

 

 

 

13,485

 

 

 

18,868

 

 

 

26,485

 

 

 

39,512

 

 

 

61,140

 

FRB advances

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6,286

 

Subordinated debt

 

3,537

 

 

 

2,734

 

 

 

2,689

 

 

 

2,688

 

 

 

2,689

 

 

 

8,960

 

 

 

8,067

 

Other borrowings

 

1,612

 

 

 

1,430

 

 

 

1,493

 

 

 

1,546

 

 

 

1,568

 

 

 

4,535

 

 

 

4,879

 

Total interest expense

 

173,568

 

 

 

166,385

 

 

 

171,392

 

 

 

173,409

 

 

 

176,567

 

 

 

511,345

 

 

 

506,502

 

Net interest income

 

158,545

 

 

 

167,653

 

 

 

160,385

 

 

 

172,506

 

 

 

199,773

 

 

 

486,583

 

 

 

514,943

 

Provision for credit losses

 

17,066

 

 

 

18,121

 

 

 

17,070

 

 

 

13,523

 

 

 

17,856

 

 

 

52,257

 

 

 

61,088

 

Net interest income after provision for credit losses

 

141,479

 

 

 

149,532

 

 

 

143,315

 

 

 

158,983

 

 

 

181,917

 

 

 

434,326

 

 

 

453,855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial lease income

 

10,093

 

 

 

10,282

 

 

 

9,683

 

 

 

9,035

 

 

 

8,901

 

 

 

30,058

 

 

 

27,144

 

Loan fees

 

8,011

 

 

 

5,233

 

 

 

5,280

 

 

 

5,926

 

 

 

6,029

 

 

 

18,524

 

 

 

14,290

 

Bank-owned life insurance

 

2,049

 

 

 

2,007

 

 

 

3,261

 

 

 

2,160

 

 

 

1,973

 

 

 

7,317

 

 

 

9,617

 

Mortgage finance transactional fees

 

1,087

 

 

 

1,058

 

 

 

946

 

 

 

927

 

 

 

1,018

 

 

 

3,091

 

 

 

3,468

 

Net gain (loss) on sale of loans and leases

 

(14,548

)

 

 

(238

)

 

 

10

 

 

 

(91

)

 

 

(348

)

 

 

(14,776

)

 

 

(1,109

)

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(5,037

)

Net gain (loss) on sale of investment securities

 

—

 

 

 

(719

)

 

 

(30

)

 

 

(145

)

 

 

(429

)

 

 

(749

)

 

 

(429

)

Unrealized gain on equity method investments

 

—

 

 

 

11,041

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,041

 

 

 

—

 

Other

 

1,865

 

 

 

2,373

 

 

 

2,081

 

 

 

860

 

 

 

631

 

 

 

6,319

 

 

 

3,949

 

Total non-interest income

 

8,557

 

 

 

31,037

 

 

 

21,231

 

 

 

18,672

 

 

 

17,775

 

 

 

60,825

 

 

 

51,893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

47,717

 

 

 

44,947

 

 

 

36,025

 

 

 

33,965

 

 

 

33,845

 

 

 

128,689

 

 

 

99,310

 

Technology, communication and bank operations

 

13,588

 

 

 

16,227

 

 

 

21,904

 

 

 

16,887

 

 

 

15,667

 

 

 

51,719

 

 

 

48,663

 

Commercial lease depreciation

 

7,811

 

 

 

7,829

 

 

 

7,970

 

 

 

7,357

 

 

 

7,338

 

 

 

23,610

 

 

 

22,541

 

Professional services

 

9,048

 

 

 

6,104

 

 

 

6,353

 

 

 

9,820

 

 

 

8,569

 

 

 

21,505

 

 

 

25,357

 

Loan servicing

 

3,778

 

 

 

3,516

 

 

 

4,031

 

 

 

3,779

 

 

 

3,858

 

 

 

11,325

 

 

 

13,296

 

Occupancy

 

2,987

 

 

 

3,120

 

 

 

2,347

 

 

 

2,320

 

 

 

2,471

 

 

 

8,454

 

 

 

7,750

 

FDIC assessments, non-income taxes and regulatory fees

 

7,902

 

 

 

10,236

 

 

 

13,469

 

 

 

13,977

 

 

 

8,551

 

 

 

31,607

 

 

 

21,059

 

Advertising and promotion

 

908

 

 

 

1,254

 

 

 

682

 

 

 

850

 

 

 

650

 

 

 

2,844

 

 

 

2,245

 

Legal settlement expense

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,096

 

 

 

—

 

 

 

4,096

 

Other

 

10,279

 

 

 

10,219

 

 

 

6,388

 

 

 

4,812

 

 

 

4,421

 

 

 

26,886

 

 

 

14,579

 

Total non-interest expense

 

104,018

 

 

 

103,452

 

 

 

99,169

 

 

 

93,767

 

 

 

89,466

 

 

 

306,639

 

 

 

258,896

 

Income before income tax expense (benefit)

 

46,018

 

 

 

77,117

 

 

 

65,377

 

 

 

83,888

 

 

 

110,226

 

 

 

188,512

 

 

 

246,852

 

Income tax expense (benefit)

 

(725

)

 

 

19,032

 

 

 

15,651

 

 

 

21,796

 

 

 

23,470

 

 

 

33,958

 

 

 

58,801

 

Net income

 

46,743

 

 

 

58,085

 

 

 

49,726

 

 

 

62,092

 

 

 

86,756

 

 

 

154,554

 

 

 

188,051

 

Preferred stock dividends

 

3,806

 

 

 

3,785

 

 

 

3,800

 

 

 

3,869

 

 

 

3,803

 

 

 

11,391

 

 

 

10,826

 

Net income available to common shareholders

$

42,937

 

 

$

54,300

 

 

$

45,926

 

 

$

58,223

 

 

$

82,953

 

 

$

143,163

 

 

$

177,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

1.36

 

 

$

1.72

 

 

$

1.46

 

 

$

1.86

 

 

$

2.65

 

 

$

4.54

 

 

$

5.63

 

Diluted earnings per common share

 

1.31

 

 

 

1.66

 

 

 

1.40

 

 

 

1.79

 

 

 

2.58

 

 

 

4.37

 

 

 

5.53

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET - UNAUDITED

(Dollars in thousands)

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

2024

 

2024

 

2024

 

2023

 

2023

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

39,429

 

 

$

45,045

 

 

$

51,974

 

 

$

45,210

 

 

$

68,288

 

Interest earning deposits

 

3,048,593

 

 

 

3,003,542

 

 

 

3,649,146

 

 

 

3,801,136

 

 

 

3,351,686

 

Cash and cash equivalents

 

3,088,022

 

 

 

3,048,587

 

 

 

3,701,120

 

 

 

3,846,346

 

 

 

3,419,974

 

Investment securities, at fair value

 

2,412,069

 

 

 

2,511,650

 

 

 

2,604,868

 

 

 

2,405,640

 

 

 

2,773,207

 

Investment securities held to maturity

 

1,064,437

 

 

 

962,799

 

 

 

1,032,037

 

 

 

1,103,170

 

 

 

1,178,370

 

Loans held for sale

 

275,420

 

 

 

375,724

 

 

 

357,640

 

 

 

340,317

 

 

 

150,368

 

Loans and leases receivable

 

12,527,283

 

 

 

12,254,204

 

 

 

11,936,621

 

 

 

11,963,855

 

 

 

12,600,548

 

Loans receivable, mortgage finance, at fair value

 

1,250,413

 

 

 

1,002,711

 

 

 

962,610

 

 

 

897,912

 

 

 

962,566

 

Allowance for credit losses on loans and leases

 

(133,158

)

 

 

(132,436

)

 

 

(133,296

)

 

 

(135,311

)

 

 

(139,213

)

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

 

13,644,538

 

 

 

13,124,479

 

 

 

12,765,935

 

 

 

12,726,456

 

 

 

13,423,901

 

FHLB, Federal Reserve Bank, and other restricted stock

 

95,035

 

 

 

92,276

 

 

 

100,067

 

 

 

109,548

 

 

 

126,098

 

Accrued interest receivable

 

115,588

 

 

 

112,788

 

 

 

120,123

 

 

 

114,766

 

 

 

123,984

 

Bank premises and equipment, net

 

6,730

 

 

 

7,019

 

 

 

7,253

 

 

 

7,371

 

 

 

7,789

 

Bank-owned life insurance

 

295,531

 

 

 

293,108

 

 

 

293,400

 

 

 

292,193

 

 

 

291,670

 

Goodwill and other intangibles

 

3,629

 

 

 

3,629

 

 

 

3,629

 

 

 

3,629

 

 

 

3,629

 

Other assets

 

455,083

 

 

 

410,916

 

 

 

361,295

 

 

 

366,829

 

 

 

358,162

 

Total assets

$

21,456,082

 

 

$

20,942,975

 

 

$

21,347,367

 

 

$

21,316,265

 

 

$

21,857,152

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing deposits

$

4,670,809

 

 

$

4,474,862

 

 

$

4,688,880

 

 

$

4,422,494

 

 

$

4,758,682

 

Interest bearing deposits

 

13,398,580

 

 

 

13,203,231

 

 

 

13,272,503

 

 

 

13,497,742

 

 

 

13,436,682

 

Total deposits

 

18,069,389

 

 

 

17,678,093

 

 

 

17,961,383

 

 

 

17,920,236

 

 

 

18,195,364

 

FHLB advances

 

1,117,229

 

 

 

1,018,349

 

 

 

1,195,088

 

 

 

1,203,207

 

 

 

1,529,839

 

Other borrowings

 

99,033

 

 

 

123,970

 

 

 

123,905

 

 

 

123,840

 

 

 

123,775

 

Subordinated debt

 

182,439

 

 

 

182,370

 

 

 

182,300

 

 

 

182,230

 

 

 

182,161

 

Accrued interest payable and other liabilities

 

186,812

 

 

 

193,328

 

 

 

193,074

 

 

 

248,358

 

 

 

264,406

 

Total liabilities

 

19,654,902

 

 

 

19,196,110

 

 

 

19,655,750

 

 

 

19,677,871

 

 

 

20,295,545

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

137,794

 

 

 

137,794

 

 

 

137,794

 

 

 

137,794

 

 

 

137,794

 

Common stock

 

35,734

 

 

 

35,686

 

 

 

35,540

 

 

 

35,459

 

 

 

35,330

 

Additional paid in capital

 

571,609

 

 

 

567,345

 

 

 

567,490

 

 

 

564,538

 

 

 

559,346

 

Retained earnings

 

1,302,745

 

 

 

1,259,808

 

 

 

1,205,508

 

 

 

1,159,582

 

 

 

1,101,359

 

Accumulated other comprehensive income (loss), net

 

(106,082

)

 

 

(131,358

)

 

 

(132,305

)

 

 

(136,569

)

 

 

(149,812

)

Treasury stock, at cost

 

(140,620

)

 

 

(122,410

)

 

 

(122,410

)

 

 

(122,410

)

 

 

(122,410

)

Total shareholders’ equity

 

1,801,180

 

 

 

1,746,865

 

 

 

1,691,617

 

 

 

1,638,394

 

 

 

1,561,607

 

Total liabilities and shareholders’ equity

$

21,456,082

 

 

$

20,942,975

 

 

$

21,347,367

 

 

$

21,316,265

 

 

$

21,857,152

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

September 30, 2024

 

June 30, 2024

 

September 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

$

3,224,940

 

$

44,372

 

5.47%

 

$

3,325,771

 

$

45,506

 

5.50%

 

$

3,211,753

 

$

43,800

 

5.41%

Investment securities (1)

 

3,706,974

 

 

46,265

 

4.97%

 

 

3,732,565

 

 

47,586

 

5.13%

 

 

4,240,116

 

 

54,243

 

5.12%

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialized lending loans and leases (2)

 

5,805,389

 

 

124,667

 

8.54%

 

 

5,446,882

 

 

120,977

 

8.93%

 

 

5,717,252

 

 

157,671

 

10.94%

Other commercial & industrial loans (2)(3)

 

1,533,057

 

 

24,654

 

6.40%

 

 

1,540,191

 

 

25,119

 

6.56%

 

 

1,779,778

 

 

28,616

 

6.38%

Mortgage finance loans

 

1,267,656

 

 

17,723

 

5.56%

 

 

1,151,407

 

 

15,087

 

5.27%

 

 

1,159,698

 

 

16,916

 

5.79%

Multifamily loans

 

2,071,340

 

 

21,147

 

4.06%

 

 

2,108,835

 

 

21,461

 

4.09%

 

 

2,141,384

 

 

21,292

 

3.94%

Non-owner occupied commercial real estate loans

 

1,411,533

 

 

21,065

 

5.94%

 

 

1,396,771

 

 

20,470

 

5.89%

 

 

1,425,831

 

 

21,208

 

5.90%

Residential mortgages

 

525,285

 

 

6,082

 

4.61%

 

 

520,791

 

 

5,955

 

4.60%

 

 

528,022

 

 

5,965

 

4.48%

Installment loans

 

1,029,812

 

 

24,228

 

9.36%

 

 

1,186,486

 

 

28,867

 

9.79%

 

 

1,147,069

 

 

24,103

 

8.34%

Total loans and leases (4)

 

13,644,072

 

 

239,566

 

6.99%

 

 

13,351,363

 

 

237,936

 

7.17%

 

 

13,899,034

 

 

275,771

 

7.87%

Other interest-earning assets

 

118,914

 

 

1,910

 

6.39%

 

 

110,585

 

 

3,010

 

10.95%

 

 

134,416

 

 

2,526

 

7.45%

Total interest-earning assets

 

20,694,900

 

 

332,113

 

6.39%

 

 

20,520,284

 

 

334,038

 

6.54%

 

 

21,485,319

 

 

376,340

 

6.96%

Non-interest-earning assets

 

535,504

 

 

 

 

 

 

464,919

 

 

 

 

 

 

492,691

 

 

 

 

Total assets

$

21,230,404

 

 

 

 

 

$

20,985,203

 

 

 

 

 

$

21,978,010

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking accounts

$

5,787,026

 

$

65,554

 

4.51%

 

$

5,719,698

 

$

64,047

 

4.50%

 

$

5,758,215

 

$

58,637

 

4.04%

Money market deposit accounts

 

3,676,994

 

 

42,128

 

4.56%

 

 

3,346,718

 

 

38,167

 

4.59%

 

 

2,181,184

 

 

22,983

 

4.18%

Other savings accounts

 

1,563,970

 

 

18,426

 

4.69%

 

 

1,810,375

 

 

21,183

 

4.71%

 

 

1,077,298

 

 

11,582

 

4.27%

Certificates of deposit

 

2,339,937

 

 

29,721

 

5.05%

 

 

2,034,605

 

 

25,387

 

5.02%

 

 

4,466,522

 

 

52,623

 

4.67%

Total interest-bearing deposits (5)

 

13,367,927

 

 

155,829

 

4.64%

 

 

12,911,396

 

 

148,784

 

4.63%

 

 

13,483,219

 

 

145,825

 

4.29%

Borrowings

 

1,334,905

 

 

17,739

 

5.29%

 

 

1,454,010

 

 

17,601

 

4.87%

 

 

2,328,955

 

 

30,742

 

5.24%

Total interest-bearing liabilities

 

14,702,832

 

 

173,568

 

4.70%

 

 

14,365,406

 

 

166,385

 

4.66%

 

 

15,812,174

 

 

176,567

 

4.43%

Non-interest-bearing deposits (5)

 

4,557,815

 

 

 

 

 

 

4,701,695

 

 

 

 

 

 

4,347,977

 

 

 

 

Total deposits and borrowings

 

19,260,647

 

 

 

3.59%

 

 

19,067,101

 

 

 

3.51%

 

 

20,160,151

 

 

 

3.48%

Other non-interest-bearing liabilities

 

195,722

 

 

 

 

 

 

203,714

 

 

 

 

 

 

306,822

 

 

 

 

Total liabilities

 

19,456,369

 

 

 

 

 

 

19,270,815

 

 

 

 

 

 

20,466,973

 

 

 

 

Shareholders’ equity

 

1,774,035

 

 

 

 

 

 

1,714,388

 

 

 

 

 

 

1,511,037

 

 

 

 

Total liabilities and shareholders’ equity

$

21,230,404

 

 

 

 

 

$

20,985,203

 

 

 

 

 

$

21,978,010

 

 

 

 

Net interest income

 

 

 

158,545

 

 

 

 

 

 

167,653

 

 

 

 

 

 

199,773

 

 

Tax-equivalent adjustment

 

 

 

392

 

 

 

 

 

 

393

 

 

 

 

 

 

405

 

 

Net interest earnings

 

 

$

158,937

 

 

 

 

 

$

168,046

 

 

 

 

 

$

200,178

 

 

Interest spread

 

 

 

 

2.80%

 

 

 

 

 

3.03%

 

 

 

 

 

3.48%

Net interest margin

 

 

 

 

3.05%

 

 

 

 

 

3.28%

 

 

 

 

 

3.70%

Net interest margin tax equivalent (6)

 

 

 

 

3.06%

 

 

 

 

 

3.29%

 

 

 

 

 

3.70%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 3.46%, 3.40% and 3.24% for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.

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

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

September 30, 2024

 

September 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

$

3,471,011

 

$

142,695

 

5.49%

 

$

2,100,435

 

$

81,819

 

5.21%

Investment securities (1)

 

3,736,770

 

 

140,653

 

5.03%

 

 

4,074,464

 

 

149,585

 

4.90%

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

 

 

Specialized lending loans and leases (2)

 

5,507,963

 

 

361,234

 

8.76%

 

 

5,748,053

 

 

383,138

 

8.91%

Other commercial & industrial loans (2)(3)

 

1,575,815

 

 

76,487

 

6.48%

 

 

2,081,688

 

 

105,398

 

6.77%

Mortgage finance loans

 

1,151,173

 

 

45,640

 

5.30%

 

 

1,240,403

 

 

53,934

 

5.81%

Multifamily loans

 

2,100,501

 

 

63,863

 

4.06%

 

 

2,176,294

 

 

62,857

 

3.86%

Non-owner occupied commercial real estate loans

 

1,385,685

 

 

61,714

 

5.95%

 

 

1,434,459

 

 

61,284

 

5.71%

Residential mortgages

 

522,876

 

 

17,745

 

4.53%

 

 

535,502

 

 

17,298

 

4.32%

Installment loans

 

1,131,633

 

 

80,866

 

9.55%

 

 

1,517,632

 

 

100,669

 

8.87%

Total loans and leases (4)

 

13,375,646

 

 

707,549

 

7.07%

 

 

14,734,031

 

 

784,578

 

7.12%

Other interest-earning assets

 

112,365

 

 

7,031

 

8.36%

 

 

119,187

 

 

5,463

 

6.13%

Total interest-earning assets

 

20,695,792

 

 

997,928

 

6.44%

 

 

21,028,117

 

 

1,021,445

 

6.49%

Non-interest-earning assets

 

487,991

 

 

 

 

 

 

537,160

 

 

 

 

Total assets

$

21,183,783

 

 

 

 

 

$

21,565,277

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest checking accounts

$

5,682,240

 

$

191,132

 

4.49%

 

$

6,181,097

 

$

178,984

 

3.87%

Money market deposit accounts

 

3,419,880

 

 

117,106

 

4.57%

 

 

2,208,853

 

 

63,444

 

3.84%

Other savings accounts

 

1,708,625

 

 

61,008

 

4.77%

 

 

966,539

 

 

27,707

 

3.83%

Certificates of deposit

 

2,374,982

 

 

89,092

 

5.01%

 

 

4,663,548

 

 

155,995

 

4.47%

Total interest-bearing deposits (5)

 

13,185,727

 

 

458,338

 

4.64%

 

 

14,020,037

 

 

426,130

 

4.06%

Federal funds purchased

 

—

 

 

—

 

—%

 

 

5,055

 

 

188

 

4.97%

Borrowings

 

1,431,520

 

 

53,007

 

4.95%

 

 

2,160,332

 

 

80,184

 

4.96%

Total interest-bearing liabilities

 

14,617,247

 

 

511,345

 

4.67%

 

 

16,185,424

 

 

506,502

 

4.18%

Non-interest-bearing deposits (5)

 

4,626,580

 

 

 

 

 

 

3,642,832

 

 

 

 

Total deposits and borrowings

 

19,243,827

 

 

 

3.55%

 

 

19,828,256

 

 

 

3.42%

Other non-interest-bearing liabilities

 

221,278

 

 

 

 

 

 

271,387

 

 

 

 

Total liabilities

 

19,465,105

 

 

 

 

 

 

20,099,643

 

 

 

 

Shareholders’ equity

 

1,718,678

 

 

 

 

 

 

1,465,634

 

 

 

 

Total liabilities and shareholders’ equity

$

21,183,783

 

 

 

 

 

$

21,565,277

 

 

 

 

Net interest income

 

 

 

486,583

 

 

 

 

 

 

514,943

 

 

Tax-equivalent adjustment

 

 

 

1,179

 

 

 

 

 

 

1,170

 

 

Net interest earnings

 

 

$

487,762

 

 

 

 

 

$

516,113

 

 

Interest spread

 

 

 

 

2.89%

 

 

 

 

 

3.08%

Net interest margin

 

 

 

 

3.15%

 

 

 

 

 

3.27%

Net interest margin tax equivalent (6)

 

 

 

 

3.16%

 

 

 

 

 

3.28%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 3.44% and 3.23% for the nine months ended September 30, 2024 and 2023, respectively.

(6) Tax-equivalent basis, using an estimated marginal tax rate of 26% for the nine months ended September 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)

 

 

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

2024

 

2024

 

2024

 

2023

 

2023

Loans and leases held for investment

 

 

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

Specialized lending

$

5,468,507

 

$

5,528,745

 

$

5,104,405

 

$

5,006,693

 

$

5,422,161

Other commercial & industrial (1)

 

1,087,222

 

 

1,092,146

 

 

1,113,517

 

 

1,162,317

 

 

1,252,427

Mortgage finance

 

1,367,617

 

 

1,122,812

 

 

1,071,146

 

 

1,014,742

 

 

1,042,549

Multifamily

 

2,115,978

 

 

2,067,332

 

 

2,123,675

 

 

2,138,622

 

 

2,130,213

Commercial real estate owner occupied

 

981,904

 

 

805,779

 

 

806,278

 

 

797,319

 

 

794,815

Commercial real estate non-owner occupied

 

1,326,591

 

 

1,202,606

 

 

1,182,084

 

 

1,177,650

 

 

1,178,203

Construction

 

174,509

 

 

163,409

 

 

185,601

 

 

166,393

 

 

252,588

Total commercial loans and leases

 

12,522,328

 

 

11,982,829

 

 

11,586,706

 

 

11,463,736

 

 

12,072,956

Consumer:

 

 

 

 

 

 

 

 

 

Residential

 

500,786

 

 

481,503

 

 

482,537

 

 

484,435

 

 

483,133

Manufactured housing

 

34,481

 

 

35,901

 

 

37,382

 

 

38,670

 

 

40,129

Installment:

 

 

 

 

 

 

 

 

 

Personal

 

453,739

 

 

474,481

 

 

492,892

 

 

555,533

 

 

629,843

Other

 

266,362

 

 

282,201

 

 

299,714

 

 

319,393

 

 

337,053

Total installment loans

 

720,101

 

 

756,682

 

 

792,606

 

 

874,926

 

 

966,896

Total consumer loans

 

1,255,368

 

 

1,274,086

 

 

1,312,525

 

 

1,398,031

 

 

1,490,158

Total loans and leases held for investment

$

13,777,696

 

$

13,256,915

 

$

12,899,231

 

$

12,861,767

 

$

13,563,114

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

 

 

 

 

 

 

 

Residential

$

2,523

 

$

2,684

 

$

870

 

$

1,215

 

$

1,005

Installment:

 

 

 

 

 

 

 

 

 

Personal

 

55,799

 

 

125,598

 

 

137,755

 

 

151,040

 

 

124,848

Other

 

217,098

 

 

247,442

 

 

219,015

 

 

188,062

 

 

24,515

Total installment loans

 

272,897

 

 

373,040

 

 

356,770

 

 

339,102

 

 

149,363

Total loans held for sale

$

275,420

 

$

375,724

 

$

357,640

 

$

340,317

 

$

150,368

 

 

 

 

 

 

 

 

 

 

Total loans and leases portfolio

$

14,053,116

 

$

13,632,639

 

$

13,256,871

 

$

13,202,084

 

$

13,713,482

(1) Includes PPP loans.

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END DEPOSIT COMPOSITION - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

2024

 

2024

 

2024

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing

$

4,670,809

 

$

4,474,862

 

$

4,688,880

 

$

4,422,494

 

$

4,758,682

Demand, interest bearing

 

5,606,500

 

 

5,894,056

 

 

5,661,775

 

 

5,580,527

 

 

5,824,410

Total demand deposits

 

10,277,309

 

 

10,368,918

 

 

10,350,655

 

 

10,003,021

 

 

10,583,092

Savings

 

1,399,968

 

 

1,573,661

 

 

2,080,374

 

 

1,402,941

 

 

1,118,353

Money market

 

3,961,028

 

 

3,539,815

 

 

3,347,843

 

 

3,226,395

 

 

2,499,593

Time deposits

 

2,431,084

 

 

2,195,699

 

 

2,182,511

 

 

3,287,879

 

 

3,994,326

Total deposits

$

18,069,389

 

$

17,678,093

 

$

17,961,383

 

$

17,920,236

 

$

18,195,364

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2024

 

As of June 30, 2024

 

As of September 30, 2023

Loan type

Total loans

 

Allowance

for credit

losses

 

Total

reserves to

total loans

 

Total loans

 

Allowance

for credit

losses

 

Total

reserves to

total loans

 

Total loans

 

Allowance

for credit

losses

 

Total

reserves to

total loans

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial, including specialized lending (1)

$

6,672,933

 

$

25,191

 

0.38

%

 

$

6,740,992

 

$

23,721

 

0.35

%

 

$

6,754,571

 

$

24,986

 

0.37

%

Multifamily

 

2,115,978

 

 

18,090

 

0.85

%

 

 

2,067,332

 

 

20,652

 

1.00

%

 

 

2,130,213

 

 

15,870

 

0.74

%

Commercial real estate owner occupied

 

981,904

 

 

10,913

 

1.11

%

 

 

805,779

 

 

8,431

 

1.05

%

 

 

794,815

 

 

10,363

 

1.30

%

Commercial real estate non-owner occupied

 

1,326,591

 

 

17,303

 

1.30

%

 

 

1,202,606

 

 

17,966

 

1.49

%

 

 

1,178,203

 

 

15,819

 

1.34

%

Construction

 

174,509

 

 

1,606

 

0.92

%

 

 

163,409

 

 

1,856

 

1.14

%

 

 

252,588

 

 

3,130

 

1.24

%

Total commercial loans and leases receivable

 

11,271,915

 

 

73,103

 

0.65

%

 

 

10,980,118

 

 

72,626

 

0.66

%

 

 

11,110,390

 

 

70,168

 

0.63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

500,786

 

 

5,838

 

1.17

%

 

 

481,503

 

 

5,884

 

1.22

%

 

 

483,133

 

 

6,802

 

1.41

%

Manufactured housing

 

34,481

 

 

4,080

 

11.83

%

 

 

35,901

 

 

4,094

 

11.40

%

 

 

40,129

 

 

4,080

 

10.17

%

Installment

 

720,101

 

 

50,137

 

6.96

%

 

 

756,682

 

 

49,832

 

6.59

%

 

 

966,896

 

 

58,163

 

6.02

%

Total consumer loans receivable

 

1,255,368

 

 

60,055

 

4.78

%

 

 

1,274,086

 

 

59,810

 

4.69

%

 

 

1,490,158

 

 

69,045

 

4.63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases receivable held for investment

 

12,527,283

 

 

133,158

 

1.06

%

 

 

12,254,204

 

 

132,436

 

1.08

%

 

 

12,600,548

 

 

139,213

 

1.10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, mortgage finance, at fair value

 

1,250,413

 

 

—

 

—

%

 

 

1,002,711

 

 

—

 

—

%

 

 

962,566

 

 

—

 

—

%

Loans held for sale

 

275,420

 

 

—

 

—

%

 

 

375,724

 

 

—

 

—

%

 

 

150,368

 

 

—

 

—

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases portfolio

$

14,053,116

$

133,158

0.95

%

$

13,632,639

$

132,436

0.97

%

$

13,713,482

$

139,213

1.02

%

(1) Includes PPP loans.

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2024

 

As of June 30, 2024

 

As of September 30, 2023

Loan type

Non accrual

/NPLs

 

Total NPLs

to total

loans

 

Total

reserves to

total NPLs

 

Non accrual

/NPLs

 

Total NPLs

to total

loans

 

Total

reserves to

total NPLs

 

Non accrual

/NPLs

 

Total NPLs

to total

loans

 

Total

reserves to

total NPLs

Commercial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial, including specialized lending (1)

$

4,615

 

0.07

%

 

545.85

%

 

$

5,488

 

0.08

%

 

432.23

%

 

$

5,767

 

0.09

%

 

433.26

%

Multifamily

 

11,834

 

0.56

%

 

152.86

%

 

 

14,002

 

0.68

%

 

147.49

%

 

 

—

 

—

%

 

—

%

Commercial real estate owner occupied

 

8,613

 

0.88

%

 

126.70

%

 

 

9,612

 

1.19

%

 

87.71

%

 

 

7,442

 

0.94

%

 

139.25

%

Commercial real estate non-owner occupied

 

763

 

0.06

%

 

2267.76

%

 

 

62

 

0.01

%

 

28977.42

%

 

 

—

 

—

%

 

—

%

Construction

 

—

 

—

%

 

—

%

 

 

—

 

—

%

 

—

%

 

 

—

 

—

%

 

—

%

Total commercial loans and leases receivable

 

25,825

 

0.23

%

 

283.07

%

 

 

29,164

 

0.27

%

 

249.03

%

 

 

13,209

 

0.12

%

 

531.21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

7,997

 

1.60

%

 

73.00

%

 

 

8,179

 

1.70

%

 

71.94

%

 

 

6,559

 

1.36

%

 

103.70

%

Manufactured housing

 

1,869

 

5.42

%

 

218.30

%

 

 

2,047

 

5.70

%

 

200.00

%

 

 

2,582

 

6.43

%

 

158.02

%

Installment

 

6,328

 

0.88

%

 

792.30

%

 

 

5,614

 

0.74

%

 

887.64

%

 

 

7,299

 

0.75

%

 

796.86

%

Total consumer loans receivable

 

16,194

 

1.29

%

 

370.85

%

 

 

15,840

 

1.24

%

 

377.59

%

 

 

16,440

 

1.10

%

 

419.98

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases receivable

 

42,019

 

0.34

%

 

316.90

%

 

 

45,004

 

0.37

%

 

294.28

%

 

 

29,649

 

0.24

%

 

469.54

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, mortgage finance, at fair value

 

—

 

—

%

 

—

%

 

 

—

 

—

%

 

—

%

 

 

—

 

—

%

 

—

%

Loans held for sale

 

5,307

 

1.93

%

 

—

%

 

 

2,376

 

0.63

%

 

—

%

 

 

218

 

0.14

%

 

—

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans and leases portfolio

$

47,326

 

0.34

%

 

281.36

%

 

$

47,380

 

0.35

%

 

279.52

%

 

$

29,867

 

0.22

%

 

466.11

%

(1) Includes PPP loans.

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3

 

Q2

 

Q1

 

Q4

 

Q3

 

Nine Months Ended

September 30,

 

2024

 

2024

 

2024

 

2023

 

2023

 

2024

 

2023

Loan type

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial, including specialized lending

$

5,056

 

 

$

5,665

 

 

$

3,672

 

$

5,282

 

 

$

2,974

 

$

14,393

 

 

$

3,161

 

Multifamily

 

2,167

 

 

 

1,433

 

 

 

473

 

 

127

 

 

 

1,999

 

 

4,073

 

 

 

3,447

 

Commercial real estate owner occupied

 

4

 

 

 

—

 

 

 

22

 

 

—

 

 

 

39

 

 

26

 

 

 

5

 

Commercial real estate non-owner occupied

 

—

 

 

 

—

 

 

 

—

 

 

(288

)

 

 

—

 

 

—

 

 

 

4,500

 

Construction

 

(3

)

 

 

(7

)

 

 

—

 

 

—

 

 

 

—

 

 

(10

)

 

 

(116

)

Residential

 

(21

)

 

 

(20

)

 

 

18

 

 

(1

)

 

 

13

 

 

(23

)

 

 

35

 

Installment

 

9,841

 

 

 

11,640

 

 

 

13,783

 

 

12,202

 

 

 

12,473

 

 

35,264

 

 

 

40,681

 

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

$

17,044

 

 

$

18,711

 

 

$

17,968

 

$

17,322

 

 

$

17,498

 

$

53,723

 

 

$

51,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

Q3 2024

Q2 2024

Q1 2024

Q4 2023

Q3 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

$

42,937

 

$

1.31

 

$

54,300

 

$

1.66

 

$

45,926

$

1.40

$

58,223

 

$

1.79

$

82,953

 

$

2.58

$

143,163

 

$

4.37

 

$

177,225

 

$

5.53

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance expense

 

540

 

 

0.02

 

 

1,928

 

 

0.06

 

 

—

 

—

 

473

 

 

0.01

 

—

 

 

—

 

2,468

 

 

0.08

 

 

778

 

 

0.02

Impairments on fixed assets and leases

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

—

 

—

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

98

 

 

0.00

Loss on sale of capital call lines of credit

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

—

 

—

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

3,914

 

 

0.12

(Gains) losses on investment securities

 

(322

)

 

(0.01

)

 

561

 

 

0.02

 

 

57

 

0.00

 

(85

)

 

0.00

 

492

 

 

0.02

 

296

 

 

0.01

 

 

492

 

 

0.02

Derivative credit valuation adjustment

 

185

 

 

0.01

 

 

(44

)

 

0.00

 

 

169

 

0.01

 

267

 

 

0.01

 

(151

)

 

0.00

 

310

 

 

0.01

 

 

(48

)

 

0.00

Tax on surrender of bank-owned life insurance policies

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

—

 

—

 

 

—

 

—

 

 

—

 

—

 

 

—

 

 

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

)

 

—

 

 

—

Unrealized losses on loans held for sale

 

498

 

 

0.02

 

 

—

 

 

—

 

 

—

 

—

 

—

 

 

—

 

—

 

 

—

 

498

 

 

0.02

 

 

—

 

 

—

Core earnings

$

43,838

 

$

1.34

 

$

48,567

 

$

1.49

 

$

46,532

$

1.42

$

61,633

 

$

1.90

$

83,294

 

$

2.59

$

138,937

 

$

4.24

 

$

186,600

 

$

5.82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

—

 

 

—

Non-income taxes prior to 2024

 

(2,457

)

 

(0.07

)

 

—

 

 

—

 

 

—

 

—

 

—

 

 

—

 

—

 

 

—

 

(2,457

)

 

(0.07

)

 

—

 

 

—

Total one-time non-interest expense items

 

(2,457

)

 

(0.07

)

 

—

 

 

—

 

 

8,605

 

0.26

 

—

 

 

—

 

—

 

 

—

 

6,148

 

 

0.19

 

 

—

 

 

—

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

$

41,381

 

$

1.26

 

$

48,567

 

$

1.49

 

$

55,137

$

1.68

$

61,633

 

$

1.90

$

83,294

 

$

2.59

$

145,085

 

$

4.43

 

$

186,600

 

$

5.82

 

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

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

S eptember 30,

(Dollars in thousands, except per share data)

Q3 2024

 

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

2024

 

2023

GAAP net income

$

46,743

 

 

$

58,085

 

 

$

49,726

 

 

$

62,092

 

 

$

86,756

 

 

$

154,554

 

 

$

188,051

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance expense

 

540

 

 

 

1,928

 

 

 

—

 

 

 

473

 

 

 

—

 

 

 

2,468

 

 

 

778

 

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

98

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,914

 

(Gains) losses on investment securities

 

(322

)

 

 

561

 

 

 

57

 

 

 

(85

)

 

 

492

 

 

 

296

 

 

 

492

 

Derivative credit valuation adjustment

 

185

 

 

 

(44

)

 

 

169

 

 

 

267

 

 

 

(151

)

 

 

310

 

 

 

(48

)

Tax on surrender of bank-owned life insurance policies

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,141

 

FDIC special assessment

 

—

 

 

 

138

 

 

 

380

 

 

 

2,755

 

 

 

—

 

 

 

518

 

 

 

—

 

Unrealized (gain) on equity method investments

 

—

 

 

 

(8,316

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(8,316

)

 

 

—

 

Unrealized losses on loans held for sale

 

498

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

498

 

 

 

—

 

Core net income

$

47,644

 

 

$

52,352

 

 

$

50,332

 

 

$

65,502

 

 

$

87,097

 

 

$

150,328

 

 

$

197,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

—

 

Non-income taxes prior to 2024

 

(2,457

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,457

)

 

 

—

 

Total one-time non-interest expense items

 

(2,457

)

 

 

—

 

 

 

8,605

 

 

 

—

 

 

 

—

 

 

 

6,148

 

 

 

—

 

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

$

45,187

 

 

$

52,352

 

 

$

58,937

 

 

$

65,502

 

 

$

87,097

 

 

$

156,476

 

 

$

197,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

21,230,404

 

 

$

20,985,203

 

 

$

21,335,229

 

 

$

21,252,273

 

 

$

21,978,010

 

 

$

21,183,783

 

 

$

21,565,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core return on average assets

 

0.89

%

 

 

1.00

%

 

 

0.95

%

 

 

1.22

%

 

 

1.57

%

 

 

0.95

%

 

 

1.22

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

0.85

%

 

 

1.00

%

 

 

1.11

%

 

 

1.22

%

 

 

1.57

%

 

 

0.99

%

 

 

1.22

%

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

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

S eptember 30,

(Dollars in thousands, except per share data)

Q3 2024

 

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

2024

 

2023

GAAP net income

$

46,743

 

 

$

58,085

 

 

$

49,726

 

 

$

62,092

 

 

$

86,756

 

 

$

154,554

 

 

$

188,051

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

(725

)

 

 

19,032

 

 

 

15,651

 

 

 

21,796

 

 

 

23,470

 

 

 

33,958

 

 

 

58,801

 

Provision (benefit) for credit losses

 

17,066

 

 

 

18,121

 

 

 

17,070

 

 

 

13,523

 

 

 

17,856

 

 

 

52,257

 

 

 

61,088

 

Provision (benefit) for credit losses on unfunded commitments

 

642

 

 

 

1,594

 

 

 

430

 

 

 

(136

)

 

 

48

 

 

 

2,666

 

 

 

24

 

Severance expense

 

659

 

 

 

2,560

 

 

 

—

 

 

 

639

 

 

 

—

 

 

 

3,219

 

 

 

991

 

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

124

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,037

 

(Gains) losses on investment securities

 

(394

)

 

 

744

 

 

 

75

 

 

 

(114

)

 

 

626

 

 

 

425

 

 

 

626

 

Derivative credit valuation adjustment

 

226

 

 

 

(58

)

 

 

222

 

 

 

361

 

 

 

(192

)

 

 

390

 

 

 

(63

)

FDIC special assessment

 

—

 

 

 

183

 

 

 

500

 

 

 

3,723

 

 

 

—

 

 

 

683

 

 

 

—

 

Unrealized (gain) on equity method investments

 

—

 

 

 

(11,041

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,041

)

 

 

—

 

Unrealized losses on loans held for sale

 

607

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

607

 

 

 

—

 

Core pre-tax pre-provision net income

$

64,824

 

 

$

89,220

 

 

$

83,674

 

 

$

101,884

 

 

$

128,564

 

 

$

237,718

 

 

$

314,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit servicing fees prior to 2024

 

—

 

 

 

—

 

 

 

7,106

 

 

 

—

 

 

 

—

 

 

 

7,106

 

 

 

—

 

FDIC premiums prior to 2024

 

—

 

 

 

—

 

 

 

4,208

 

 

 

—

 

 

 

—

 

 

 

4,208

 

 

 

—

 

Non-income taxes prior to 2024

 

(2,997

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,997

)

 

 

—

 

Total one-time non-interest expense items

 

(2,997

)

 

 

—

 

 

 

11,314

 

 

 

—

 

 

 

—

 

 

 

8,317

 

 

 

—

 

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

$

61,827

 

 

$

89,220

 

 

$

94,988

 

 

$

101,884

 

 

$

128,564

 

 

$

246,035

 

 

$

314,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

21,230,404

$

20,985,203

 

$

21,335,229

 

 

$

21,252,273

 

 

$

21,978,010

 

 

$

21,183,783

 

 

$

21,565,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core pre-tax pre-provision ROAA

 

1.21

%

 

 

1.71

%

 

 

1.58

%

 

 

1.90

%

 

 

2.32

%

 

 

1.50

%

 

 

1.95

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1.16

%

 

 

1.71

%

 

 

1.79

%

 

 

1.90

%

 

 

2.32

%

 

 

1.55

%

 

 

 

1.95

 

%

 

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

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

S eptember 30,

(Dollars in thousands, except per share data)

Q3 2024

 

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

2024

 

2023

GAAP net income to common shareholders

$

42,937

 

 

$

54,300

 

 

$

45,926

 

 

$

58,223

 

 

$

82,953

 

 

$

143,163

 

 

$

177,225

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance expense

 

540

 

 

 

1,928

 

 

 

—

 

 

 

473

 

 

 

—

 

 

 

2,468

 

 

 

778

 

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

98

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,914

 

(Gains) losses on investment securities

 

(322

)

 

 

561

 

 

 

57

 

 

 

(85

)

 

 

492

 

 

 

296

 

 

 

492

 

Derivative credit valuation adjustment

 

185

 

 

 

(44

)

 

 

169

 

 

 

267

 

 

 

(151

)

 

 

310

 

 

 

(48

)

Tax on surrender of bank-owned life insurance policies

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,141

 

FDIC special assessment

 

—

 

 

 

138

 

 

 

380

 

 

 

2,755

 

 

 

—

 

 

 

518

 

 

 

—

 

Unrealized (gain) on equity method investments

 

—

 

 

 

(8,316

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(8,316

)

 

 

—

 

Unrealized losses on loans held for sale

 

498

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

498

 

 

 

—

 

Core earnings

$

43,838

 

 

$

48,567

 

 

$

46,532

 

 

$

61,633

 

 

$

83,294

 

 

$

138,937

 

 

$

186,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

—

 

Non-income taxes prior to 2024

 

(2,457

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,457

)

 

 

—

 

Total one-time non-interest expense items

 

(2,457

)

 

 

—

 

 

 

8,605

 

 

 

—

 

 

 

—

 

 

 

6,148

 

 

 

—

 

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

$

41,381

 

 

$

48,567

 

 

$

55,137

 

 

$

61,633

 

 

$

83,294

 

 

$

145,085

 

 

$

186,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total common shareholders’ equity

$

1,636,242

 

 

$

1,576,595

 

 

$

1,529,211

 

 

$

1,449,728

 

 

$

1,373,244

 

 

$

1,580,885

 

 

$

1,327,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core return on average common equity

 

10.66

%

 

 

12.39

%

 

 

12.24

%

 

 

16.87

%

 

 

24.06

%

 

 

11.74

%

 

 

18.79

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

10.06

%

 

 

12.39

%

 

 

14.50

%

 

 

16.87

%

 

 

24.06

%

 

 

12.26

%

 

 

18.79

%

 

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

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

S eptember 30,

(Dollars in thousands, except per share data)

Q3 2024

 

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

2024

 

2023

GAAP net income to common shareholders

$

42,937

 

 

$

54,300

 

 

$

45,926

 

 

$

58,223

 

 

$

82,953

 

 

$

143,163

 

 

$

177,225

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

(725

)

 

 

19,032

 

 

 

15,651

 

 

 

21,796

 

 

 

23,470

 

 

 

33,958

 

 

 

58,801

 

Provision (benefit) for credit losses

 

17,066

 

 

 

18,121

 

 

 

17,070

 

 

 

13,523

 

 

 

17,856

 

 

 

52,257

 

 

 

61,088

 

Provision (benefit) for credit losses on unfunded commitments

 

642

 

 

 

1,594

 

 

 

430

 

 

 

(136

)

 

 

48

 

 

 

2,666

 

 

 

24

 

Severance expense

 

659

 

 

 

2,560

 

 

 

—

 

 

 

639

 

 

 

—

 

 

 

3,219

 

 

 

991

 

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

124

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,037

 

(Gains) losses on investment securities

 

(394

)

 

 

744

 

 

 

75

 

 

 

(114

)

 

 

626

 

 

 

425

 

 

 

626

 

Derivative credit valuation adjustment

 

226

 

 

 

(58

)

 

 

222

 

 

 

361

 

 

 

(192

)

 

 

390

 

 

 

(63

)

FDIC special assessment

 

—

 

 

 

183

 

 

 

500

 

 

 

3,723

 

 

 

—

 

 

 

683

 

 

 

—

 

Unrealized (gain) on equity method investments

 

—

 

 

 

(11,041

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,041

)

 

 

—

 

Unrealized losses on loans held for sale

 

607

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

607

 

 

 

—

 

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

$

61,018

 

 

$

85,435

 

 

$

79,874

 

 

$

98,015

 

 

$

124,761

 

 

$

226,327

 

 

$

303,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit servicing fees prior to 2024

 

—

 

 

 

—

 

 

 

7,106

 

 

 

—

 

 

 

—

 

 

 

7,106

 

 

 

—

 

FDIC premiums prior to 2024

 

—

 

 

 

—

 

 

 

4,208

 

 

 

—

 

 

 

—

 

 

 

4,208

 

 

 

—

 

Non-income taxes prior to 2024

 

(2,997

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,997

)

 

 

—

 

Total one-time non-interest expense items

 

(2,997

)

 

 

—

 

 

 

11,314

 

 

 

—

 

 

 

—

 

 

 

8,317

 

 

 

—

 

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

$

58,021

 

 

$

85,435

 

 

$

91,188

 

 

$

98,015

 

 

$

124,761

 

 

$

234,644

 

 

$

303,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total common shareholders’ equity

$

1,636,242

 

 

$

1,576,595

 

 

$

1,529,211

 

 

$

1,449,728

 

 

$

1,373,244

 

 

$

1,580,885

 

 

$

1,327,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core pre-tax pre-provision ROCE

 

14.84

%

 

 

21.79

%

 

 

21.01

%

 

 

26.82

%

 

 

36.04

%

 

 

19.12

%

 

 

30.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

14.11

%

 

21.79

%

 

23.98

%

 

26.82

%

 

36.04

%

 

19.83

%

 

30.59

%

 
Core Efficiency Ratio and Adjusted Core Efficiency Ratio - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

S eptember 30,

(Dollars in thousands, except per share data)

Q3 2024

 

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

2024

 

2023

GAAP net interest income

$

158,545

 

 

$

167,653

 

 

$

160,385

 

 

$

172,506

 

 

$

199,773

 

 

$

486,583

 

 

$

514,943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP non-interest income

$

8,557

 

 

$

31,037

 

 

$

21,231

 

 

$

18,672

 

 

$

17,775

 

 

$

60,825

 

 

$

51,893

 

Loss on sale of capital call lines of credit

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,037

 

(Gains) losses on investment securities

 

(394

)

 

 

744

 

 

 

75

 

 

 

(114

)

 

 

626

 

 

 

425

 

 

 

626

 

Derivative credit valuation adjustment

 

226

 

 

 

(58

)

 

 

222

 

 

 

361

 

 

 

(192

)

 

 

390

 

 

 

(63

)

Unrealized (gain) on equity method investments

 

—

 

 

 

(11,041

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(11,041

)

 

 

—

 

Unrealized losses on loans held for sale

 

607

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

607

 

 

 

—

 

Core non-interest income

 

8,996

 

 

 

20,682

 

 

 

21,528

 

 

 

18,919

 

 

 

18,209

 

 

 

51,206

 

 

 

57,493

 

Core revenue

$

167,541

 

 

$

188,335

 

 

$

181,913

 

 

$

191,425

 

 

$

217,982

 

 

$

537,789

 

 

$

572,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP non-interest expense

$

104,018

 

 

$

103,452

 

 

$

99,169

 

 

$

93,767

 

 

$

89,466

 

 

$

306,639

 

 

$

258,896

 

Severance expense

 

(659

)

 

 

(2,560

)

 

 

—

 

 

 

(639

)

 

 

—

 

 

 

(3,219

)

 

 

(991

)

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(124

)

FDIC special assessment

 

—

 

 

 

(183

)

 

 

(500

)

 

 

(3,723

)

 

 

—

 

 

 

(683

)

 

 

—

 

Core non-interest expense

$

103,359

 

 

$

100,709

 

 

$

98,669

 

 

$

89,405

 

 

$

89,466

 

 

$

302,737

 

 

$

257,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

)

 

 

—

 

Non-income taxes prior to 2024

 

2,997

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,997

 

 

 

—

 

Total one-time non-interest expense items

 

2,997

 

 

 

—

 

 

 

(11,314

)

 

 

—

 

 

 

—

 

 

 

(8,317

)

 

 

—

 

Adjusted core non-interest expense

$

106,356

 

 

$

100,709

 

 

$

87,355

 

 

$

89,405

 

 

$

89,466

 

 

$

294,420

 

 

$

257,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core efficiency ratio (1)

 

61.69

%

 

 

53.47

%

 

 

54.24

%

 

 

46.70

%

 

 

41.04

%

 

 

56.29

%

 

 

45.03

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

63.48

%

 

 

53.47

%

 

 

48.02

%

 

 

46.70

%

 

 

41.04

%

 

 

54.75

%

 

 

45.03

%

(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

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

S eptember 30,

(Dollars in thousands, except per share data)

Q3 2024

 

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

2024

 

2023

GAAP non-interest expense

$

104,018

 

 

$

103,452

 

 

$

99,169

 

 

$

93,767

 

 

$

89,466

 

 

$

306,639

 

 

$

258,896

 

Severance expense

 

(659

)

 

 

(2,560

)

 

 

—

 

 

 

(639

)

 

 

—

 

 

 

(3,219

)

 

 

(991

)

Impairments on fixed assets and leases

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(124

)

FDIC special assessment

 

—

 

 

 

(183

)

 

 

(500

)

 

 

(3,723

)

 

 

—

 

 

 

(683

)

 

 

—

 

Core non-interest expense

$

103,359

 

 

$

100,709

 

 

$

98,669

 

 

$

89,405

 

 

$

89,466

 

 

$

302,737

 

 

$

257,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

)

 

 

—

 

Non-income taxes prior to 2024

 

2,997

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,997

 

 

 

—

 

Total one-time non-interest expense items

 

2,997

 

 

 

—

 

 

 

(11,314

)

 

 

—

 

 

 

—

 

 

 

(8,317

)

 

 

—

 

Adjusted core non-interest expense

$

106,356

 

 

$

100,709

 

 

$

87,355

 

 

$

89,405

 

 

$

89,466

 

 

$

294,420

 

 

$

257,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

21,230,404

 

 

$

20,985,203

 

 

$

21,335,229

 

 

$

21,252,273

 

 

$

21,978,010

 

 

$

21,183,783

 

 

$

21,565,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core non-interest expense to average total assets

 

1.94

%

 

 

1.93

%

 

 

1.86

%

 

 

1.67

%

 

 

1.62

%

 

 

1.91

%

 

 

1.60

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1.99

%

 

 

1.93

%

 

 

1.65

%

 

 

1.67

%

 

 

1.62

%

 

 

1.86

%

 

 

1.60

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

Q3 2024

 

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

Total deposits

$

18,069,389

 

$

17,678,093

 

$

17,961,383

 

$

17,920,236

 

$

18,195,364

Reconciling items:

 

 

 

 

 

 

 

 

 

Wholesale CDs

 

1,585,081

 

 

1,545,885

 

 

1,809,573

 

 

2,970,615

 

 

3,713,933

BMTX student deposits

 

—

 

 

—

 

 

850

 

 

1,157

 

 

636,951

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

$

16,484,308

 

$

16,132,208

 

$

16,150,960

 

$

14,948,464

 

$

13,844,480

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

Q3 2024

 

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

GAAP total shareholders’ equity

$

1,801,180

 

 

$

1,746,865

 

 

$

1,691,617

 

 

$

1,638,394

 

 

$

1,561,607

 

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

$

1,659,757

 

 

$

1,605,442

 

 

$

1,550,194

 

 

$

1,496,971

 

 

$

1,420,184

 

 

 

 

 

 

 

 

 

 

 

GAAP total assets

$

21,456,082

 

 

$

20,942,975

 

 

$

21,347,367

 

 

$

21,316,265

 

 

$

21,857,152

 

Reconciling items:

 

 

 

 

 

 

 

 

 

Goodwill and other intangibles

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

 

 

(3,629

)

Tangible assets

$

21,452,453

 

 

$

20,939,346

 

 

$

21,343,738

 

 

$

21,312,636

 

 

$

21,853,523

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets

 

7.7

%

 

 

7.7

%

 

 

7.3

%

 

 

7.0

%

 

 

6.5

%

 
Tangible Book Value per Common Share - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Q3 2024

 

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

GAAP total shareholders’ equity

$

1,801,180

 

 

$

1,746,865

 

 

$

1,691,617

 

 

$

1,638,394

 

 

$

1,561,607

 

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

$

1,659,757

 

 

$

1,605,442

 

 

$

1,550,194

 

 

$

1,496,971

 

 

$

1,420,184

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

31,342,107

 

 

 

31,667,655

 

 

 

31,521,931

 

 

 

31,440,906

 

 

 

31,311,254

 

 

 

 

 

 

 

 

 

 

 

Tangible book value per common share

$

52.96

 

 

$

50.70

 

 

$

49.18

 

 

$

47.61

 

 

$

45.36

 

 

Jordan Baucum, Head of Corporate Communications 951-608-8314

Source: Customers Bancorp, Inc.