Customers Bancorp, Inc. (NYSE:CUBI)
First Quarter 2023 Highlights
- Q1 2023 net income available to common shareholders was $50.3
million, or $1.55 per diluted share; ROAA was 1.03% and ROCE was
16.00%.
- Q1 2023 core earnings* were $51.1 million, or $1.58 per diluted
share; Core ROAA* was 1.05% and Core ROCE* was 16.28%.
- Q1 2023 core earnings excluding Paycheck Protection Program*
("PPP") were $41.5 million, or $1.28 per diluted share.
- Q1 2023 adjusted pre-tax pre-provision net income* was $89.3
million; adjusted pre-tax pre-provision ROAA* was 1.72%; and
adjusted pre-tax pre-provision ROCE* was 27.33%.
- PPP loans decreased $751.9 million over Q4 2022, with less than
$250 million outstanding at March 31, 2023.
- Q1 2023 core loans* were flat over Q4 2022, with loan yields
(excluding PPP)* up 60 basis points in Q1 2023.
- Q1 2023 non-interest bearing deposits grew by $1.6 billion, or
85%, over Q4 2022, leading to a March 31, 2023 spot cost of
deposits decline of 14 basis points.
- Total insured deposits were 81%1 of total deposits at March 31,
2023, with immediately available liquidity covering uninsured
deposits by 272%.
- Q1 2023 net interest margin, tax equivalent was 2.96%. Q1 2023
net interest margin, tax equivalent, excluding the impact of PPP
loans* was 2.80%. High levels of cash negatively impacted net
interest margin by about 6 basis points2 in Q1 2023.
- Q1 2023 provision for credit losses on loans and leases of
$18.0 million was largely driven by the recognition of weaker
macroeconomic forecasts.
- Non-performing assets were $32.3 million, or 0.15% of total
assets, at March 31, 2023, relatively unchanged from December 31,
2022. Allowance for credit losses on loans and leases equaled 406%
of non-performing loans at March 31, 2023, compared to 426% at
December 31, 2022.
- Q1 2023 book value per share and tangible book value per share*
grew by $2.00 and $1.99, or 5.1%, respectively, with decreased AOCI
losses of $6.8 million over the same time period.
- Repurchased 1,379,883 common shares for $39.8 million in Q1
2023, approximately at 70% of tangible book value per share* at
March 31, 2023, leaving 497,509 common shares available for
repurchase under the existing authorization.
- All capital ratios remained stable in Q1 2023. Goal to bring
CET 1 ratio to 11.0% - 11.5% by year-end 2023.
* Non-GAAP measure. Customers' reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
1 Uninsured deposits of $3.9 billion less
state and municipal deposits of $393.9 million collateralized by
our line of credit from FHLB and from our affiliates of $54.9
million.
2 Assuming cash balance of $0.5
billion.
CEO Commentary
“The first quarter brought unexpected turmoil in the banking
industry and I would like to commend our leadership team and all
our team members for their remarkable performance navigating these
challenges,” said Customers Bancorp Chairman and CEO, Jay Sidhu.
“Our first quarter performance is a testament to the strength of
our risk management practices and our steadfast focus on strong
core banking fundamentals which we refer to as critical success
factors. Our Q1 2023 GAAP earnings were $50.3 million, or $1.55 per
diluted share. Core earnings* were $51.1 million, or $1.58 per
diluted share, and core earnings excluding PPP* were $41.5 million,
or $1.28 per diluted share, well above consensus estimates.
Importantly, our non-interest bearing deposits grew by $1.6
billion, an impressive 85% increase from year-end balances. This
growth came from opening new operating accounts during the quarter,
facilitated by our technology and service offerings, coupled with
our decision not to pay up for volatile deposits. We also acquired
several new relationships from failed banks. At March 31, 2023, our
deposit base was well diversified, with approximately 81% of total
deposits insured. We maintain a strong liquidity position, with
$9.4 billion of liquidity immediately available, which covers
approximately 272% of uninsured deposits and our loan to deposit
ratio stayed at about 80%," stated Jay Sidhu.
"In 2022, we took proactive measures to moderate loan growth,
focusing on floating rate, low-to-no credit risk verticals, to grow
and diversify our low-to-no-cost deposit franchise, to prudently
manage the duration and return in our securities portfolio, and to
maintain strong liquidity. We continued to purposely moderate loan
growth in the first quarter 2023 to further improve our capital
ratios. At March 31, 2023, we had slightly over $2.0 billion of
cash on hand, which negatively impacted net interest margin by
roughly 6 basis points, but we believe was prudent given persisting
levels of uncertainty. Asset quality remains exceptional and credit
reserves are extremely robust at 406% of total non-performing loans
at the end of Q1 2023. The prudent risk management strategic
actions that we have taken over the past several quarters have us
well positioned from a capital, credit, liquidity, interest rate
risk, and earnings perspective as we continue through a highly
uncertain 2023. With the looming recession, we believe it is
prudent to moderate growth, or even shrink the balance sheet
somewhat, and focus on further strengthening the balance sheet and
improving capital ratios. We are committed to improving our CET 1
ratio to 11.0% - 11.5% by year-end 2023 by retained earnings and
balance sheet optimization. We are confident in our ability to
manage our credit, interest rate, and liquidity risks, and superbly
service our clients in all operating environments. We remain very
optimistic about our future,” Jay Sidhu continued.
Financial Highlights
(Dollars in thousands, except per share
data)
At or Three Months
Ended
Increase (Decrease)
March 31, 2023
December 31, 2022
Profitability Metrics:
Net income available for common
shareholders
$
50,265
$
25,623
$
24,642
96.2
%
Diluted earnings per share
$
1.55
$
0.77
$
0.78
101.3
%
Core earnings*
$
51,143
$
39,368
$
11,775
29.9
%
Core earnings per share*
$
1.58
$
1.19
$
0.39
32.8
%
Core earnings, excluding PPP*
$
41,537
$
45,324
$
(3,787
)
(8.4
)%
Core earnings per share, excluding
PPP*
$
1.28
$
1.37
$
(0.09
)
(6.6
)%
Return on average assets ("ROAA")
1.03
%
0.55
%
0.48
Core ROAA*
1.05
%
0.81
%
0.24
Core ROAA, excluding PPP*
0.87
%
0.93
%
(0.06
)
Return on average common equity
("ROCE")
16.00
%
8.05
%
7.95
Core ROCE*
16.28
%
12.36
%
3.92
Adjusted pre-tax pre-provision net
income*
$
89,282
$
81,377
$
7,905
9.7
%
Adjusted pre-tax pre-provision net income
ROAA, excluding PPP*
1.53
%
1.67
%
(0.14
)
Net interest margin, tax equivalent
2.96
%
2.67
%
0.29
Net interest margin, tax equivalent,
excluding PPP*
2.80
%
2.87
%
(0.07
)
Loan yield
6.70
%
5.64
%
1.06
Loan yield, excluding PPP*
6.46
%
5.86
%
0.60
Cost of deposits
3.32
%
2.73
%
0.59
Efficiency ratio
47.71
%
49.20
%
(1.49
)
Core efficiency ratio*
47.09
%
49.12
%
(2.03
)
Balance Sheet Trends:
Total assets
$
21,751,614
$
20,896,112
$
855,502
4.1
%
Total loans and leases
$
15,063,034
$
15,794,671
$
(731,637
)
(4.6
)%
Total loans and leases, excluding PPP*
$
14,816,776
$
14,796,518
$
20,258
0.1
%
Non-interest bearing demand deposits
$
3,487,517
$
1,885,045
$
1,602,472
85.0
%
Total deposits
$
17,723,617
$
18,156,953
$
(433,336
)
(2.4
)%
Capital Metrics:
Common Equity
$
1,283,226
$
1,265,167
$
18,059
1.4
%
Tangible Common Equity*
$
1,279,597
$
1,261,538
$
18,059
1.4
%
Common Equity to Total Assets
5.9
%
6.1
%
(0.2
)
Tangible Common Equity to Tangible
Assets*
5.9
%
6.0
%
(0.1
)
Tangible Common Equity to Tangible Assets,
excluding PPP*
6.0
%
6.3
%
(0.3
)
Book Value per common share
$
41.08
$
39.08
$
2.00
5.1
%
Tangible Book Value per common share*
$
40.96
$
38.97
$
1.99
5.1
%
Common equity Tier 1 capital ratio (1)
9.6
%
9.6
%
—
Total risk based capital ratio (1)
12.3
%
12.2
%
0.1
(1) Regulatory capital ratios as of March
31, 2023 are estimates.
* Non-GAAP measure. Customers' reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
Financial Highlights
(Dollars in thousands, except per share
data)
At or Three Months
Ended
Increase (Decrease)
March 31, 2023
March 31, 2022
Profitability Metrics:
Net income available for common
shareholders
$
50,265
$
74,896
$
(24,631
)
(32.9
)%
Diluted earnings per share
$
1.55
$
2.18
$
(0.63
)
(28.9
)%
Core earnings*
$
51,143
$
75,410
$
(24,267
)
(32.2
)%
Core earnings per share*
$
1.58
$
2.20
$
(0.62
)
(28.2
)%
Core earnings, excluding PPP*
$
41,537
$
50,697
$
(9,160
)
(18.1
)%
Core earnings per share, excluding
PPP*
$
1.28
$
1.48
$
(0.20
)
(13.5
)%
Return on average assets ("ROAA")
1.03
%
1.63
%
(0.60
)
Core ROAA*
1.05
%
1.64
%
(0.59
)
Core ROAA, excluding PPP*
0.87
%
1.11
%
(0.24
)
Return on average common equity
("ROCE")
16.00
%
24.26
%
(8.26
)
Core ROCE*
16.28
%
24.43
%
(8.15
)
Adjusted pre-tax pre-provision net
income*
$
89,282
$
112,649
$
(23,367
)
(20.7
)%
Adjusted pre-tax pre-provision net income
ROAA, excluding PPP*
1.53
%
1.86
%
(0.33
)
Net interest margin, tax equivalent
2.96
%
3.60
%
(0.64
)
Net interest margin, tax equivalent,
excluding PPP*
2.80
%
3.32
%
(0.52
)
Loan yield
6.70
%
4.67
%
2.03
Loan yield, excluding PPP*
6.46
%
4.43
%
2.03
Cost of deposits
3.32
%
0.33
%
2.99
Efficiency ratio
47.71
%
39.42
%
8.29
Core efficiency ratio*
47.09
%
39.47
%
7.62
Balance Sheet Trends:
Total assets
$
21,751,614
$
19,163,708
$
2,587,906
13.5
%
Total loans and leases
$
15,063,034
$
14,073,518
$
989,516
7.0
%
Total loans and leases, excluding PPP*
$
14,816,776
$
11,877,616
$
2,939,160
24.7
%
Non-interest bearing demand deposits
$
3,487,517
$
4,594,428
$
(1,106,911
)
(24.1
)%
Total deposits
$
17,723,617
$
16,415,560
$
1,308,057
8.0
%
Capital Metrics:
Common Equity
$
1,283,226
$
1,239,612
$
43,614
3.5
%
Tangible Common Equity*
$
1,279,597
$
1,235,934
$
43,663
3.5
%
Common Equity to Total Assets
5.9
%
6.5
%
(0.6
)
Tangible Common Equity to Tangible
Assets*
5.9
%
6.5
%
(0.6
)
Tangible Common Equity to Tangible Assets,
excluding PPP*
6.0
%
7.3
%
(1.3
)
Book Value per common share
$
41.08
$
37.61
$
3.47
9.2
%
Tangible Book Value per common share*
$
40.96
$
37.50
$
3.46
9.2
%
Common equity Tier 1 capital ratio (1)
9.6
%
9.9
%
(0.3
)
Total risk based capital ratio (1)
12.3
%
12.9
%
(0.6
)
(1) Regulatory capital ratios as of March
31, 2023 are estimates.
* Non-GAAP measure. Customers' reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
Paycheck Protection Program (PPP)
We funded, either directly or indirectly, about 358,000 loans
totaling $10.3 billion. Through the program, we earned close to
$350 million of deferred origination fees from the SBA, which was
significantly accretive to our earnings and capital levels as these
loans were forgiven or guaranteed by the government. In Q1 2023, we
recognized $22 million of these fees in earnings, leaving only $3
million to be recognized in future periods. "In Q1 2023, $752
million of PPP loans were repaid, leaving less than $250 million on
our balance sheet at March 31, 2023. As we near completion of this
program, we are extremely proud of our success in the PPP program
and the role we played in supporting small businesses across the
country. This program has been a tremendous benefit to our
franchise, going forward we will no longer report certain financial
metrics excluding PPP," commented Customers Bancorp CFO, Carla
Leibold.
Key Balance Sheet Trends
Loans and Leases
The following table presents the composition of total loans and
leases as of the dates indicated:
(Dollars in thousands)
March 31, 2023
% of Total
December 31, 2022
% of Total
March 31, 2022
% of Total
Loans and Leases
Held for Investment
Commercial:
Commercial & industrial:
Specialty lending
$
5,519,176
37.7
%
$
5,412,887
35.0
%
$
2,973,544
21.1
%
Other commercial & industrial
1,168,161
8.0
1,135,336
7.3
947,895
6.8
Multifamily
2,195,211
15.0
2,213,019
14.3
1,705,027
12.1
Loans to mortgage companies
1,374,894
9.4
1,447,919
9.4
1,830,121
13.0
Commercial real estate owner occupied
895,314
6.1
885,339
5.7
701,893
5.0
Loans receivable, PPP
246,258
1.7
998,153
6.5
2,195,902
15.6
Commercial real estate non-owner
occupied
1,245,248
8.5
1,290,730
8.4
1,140,311
8.1
Construction
188,123
1.3
162,009
1.0
161,024
1.1
Total commercial loans and leases
12,832,385
87.7
13,545,392
87.6
11,655,717
82.8
Consumer:
Residential
494,815
3.4
%
497,952
3.2
%
466,423
3.3
%
Manufactured housing
43,272
0.3
45,076
0.3
50,669
0.4
Installment:
Personal
849,420
5.8
964,641
6.2
1,584,011
11.3
Other
419,085
2.8
413,298
2.7
313,695
2.2
Total installment loans
1,268,505
8.6
1,377,939
8.9
1,897,706
13.5
Total consumer loans
1,806,592
12.3
1,920,967
12.4
2,414,798
17.2
Total loans and leases held for
investment
$
14,638,977
100.0
%
$
15,466,359
100.0
%
$
14,070,515
100.0
%
Loans Held for
Sale
Commercial:
Multifamily
$
4,051
1.0
%
$
4,079
1.2
%
$
—
—
%
Commercial real estate non-owner
occupied
16,000
3.7
—
—
—
—
Total commercial loans and leases
20,051
4.7
4,079
1.2
—
—
Consumer:
Residential
821
0.2
829
0.2
3,003
100.0
Installment:
Personal
307,336
72.5
133,801
40.8
—
—
Other
95,849
22.6
189,603
57.8
—
—
Total installment loans
403,185
95.1
323,404
98.6
—
—
Total consumer loans
404,006
95.3
324,233
98.8
3,003
100.0
Total loans held for sale
$
424,057
100.0
%
$
328,312
100.0
%
$
3,003
100.0
%
Total loans and leases
portfolio
$
15,063,034
$
15,794,671
$
14,073,518
Loans and Leases Held for Investment
Loans and leases held for investment were $14.6 billion at March
31, 2023, down $827.4 million, or 5.3%, from December 31, 2022.
Excluding PPP loans, core loans and leases held for investment*
decreased $75.5 million to $14.4 billion at March 31, 2023.
Consumer installment loans held for investment decreased $109.4
million, or 7.9% quarter-over-quarter, to $1.3 billion and
commercial real estate non-owner occupied loans decreased $45.5
million, or 3.5% quarter-over-quarter, to $1.2 billion as we
continue to reduce risk by remixing our held-for-investment loan
and lease portfolio. Loans to mortgage companies decreased $73.0
million, or 5.0% quarter-over-quarter. These decreases were offset
in part by increases in commercial and industrial ("C&I") loans
and leases of $139.1 million, or 2.1% quarter-over-quarter, to $6.7
billion, led by our variable rate low-to-no credit risk specialty
lending verticals.
Loans Held for Sale
Loans held for sale increased $95.7 million
quarter-over-quarter, and $421.1 million year-over-year, to $424.1
million at March 31, 2023 primarily due to increased consumer
installment loans as we continue to build out our
Banking-as-a-Service/Marketplace Lending (BaaS/MPL) strategy in
2023.
Allowance for Credit Losses on Loans and Leases
The following table presents the allowance for credit losses on
loans and leases as of the dates and for the periods presented:
At or Three Months
Ended
Increase (Decrease)
At or Three Months
Ended
Increase (Decrease)
(Dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2023
March 31, 2022
Allowance for credit losses on loans and
leases
$
130,281
$
130,924
$
(643
)
$
130,281
$
145,847
$
(15,566
)
Provision for credit losses on loans and
leases
$
18,008
$
27,891
$
(9,883
)
$
18,008
$
15,269
$
2,739
Net charge-offs from loans held for
investment
$
18,651
$
27,164
$
(8,513
)
$
18,651
$
7,226
$
11,425
Annualized net charge-offs to average
loans and leases
0.49
%
0.70
%
0.49
%
0.21
%
Coverage of credit loss reserves for loans
and leases held for investment
0.97
%
0.93
%
0.97
%
1.18
%
Coverage of credit loss reserves for loans
and leases held for investment, excluding PPP*
0.99
%
1.00
%
0.99
%
1.44
%
* 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.
The decrease in net charge-offs in Q1 2023 compared to Q4 2022
was primarily due to one-time charge-offs of $11.0 million for
certain loans originated under the PPP program that were
subsequently determined to be ineligible for SBA forgiveness and
guarantee and ultimately deemed uncollectible in Q4 2022.
The increase in net charge-offs in Q1 2023 compared to Q1 2022
was primarily due to an increase in consumer installment net
charge-offs in Q1 2023 compared to Q1 2022.
Provision for Credit Losses
Three Months Ended
Increase (Decrease)
Three Months Ended
Increase (Decrease)
(Dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2023
March 31, 2022
Provision for credit losses on loans and
leases
$
18,008
$
27,891
$
(9,883
)
$
18,008
$
15,269
$
2,739
Provision for credit losses on available
for sale debt securities
1,595
325
1,270
1,595
728
867
Provision for credit losses
19,603
28,216
(8,613
)
19,603
15,997
3,606
Provision (benefit) for credit losses on
unfunded commitments
280
153
127
280
(109
)
389
Total provision for credit losses
$
19,883
$
28,369
$
(8,486
)
$
19,883
$
15,888
$
3,995
The provision for credit losses on loans and leases in Q1 2023
was $18.0 million, compared to $27.9 million in Q4 2022. The
provision in Q1 2023 was primarily due to our recognition of weaker
macroeconomic forecasts, as compared to provision in Q4 2022, which
was primarily due to one-time charge-offs of $11.0 million for
certain loans originated under the PPP program that were
subsequently determined to be ineligible for SBA forgiveness and
guarantee and ultimately deemed uncollectible, as well as loan
growth and our recognition of weaker macroeconomic forecasts. The
provision for credit losses on available for sale investment
securities in Q1 2023 was $1.6 million compared to provision of
$0.3 million in Q4 2022.
The provision for credit losses on loans and leases in Q1 2023
was $18.0 million, compared to $15.3 million in Q1 2022. The
provision in Q1 2023 was primarily due to our recognition of weaker
macroeconomic forecasts, as compared to provision in Q1 2022, which
was primarily due to loan growth. The provision for credit losses
on available for sale investment securities in Q1 2023 was $1.6
million compared to $0.7 million in Q1 2022.
Asset Quality
The following table presents asset quality metrics as of the
dates indicated:
(Dollars in thousands)
March 31, 2023
December 31, 2022
Increase (Decrease)
March 31, 2023
March 31, 2022
Increase (Decrease)
Non-performing assets ("NPAs"):
Nonaccrual / non-performing loans
("NPLs")
$
32,124
$
30,737
$
1,387
$
32,124
$
43,778
$
(11,654
)
Non-performing assets
$
32,260
$
30,783
$
1,477
$
32,260
$
43,864
$
(11,604
)
NPLs to total loans and leases
0.21
%
0.19
%
0.21
%
0.31
%
Reserves to NPLs
405.56
%
425.95
%
405.56
%
333.15
%
NPAs to total assets
0.15
%
0.15
%
0.15
%
0.23
%
Loans and leases (1) risk
ratings:
Commercial loans and leases (2)
Pass
$
10,928,620
$
10,793,980
$
134,640
$
10,928,620
$
7,274,294
$
3,654,326
Special Mention
136,986
138,829
(1,843
)
136,986
128,622
8,364
Substandard
273,154
291,118
(17,964
)
273,154
301,141
(27,987
)
Total commercial loans and leases
11,338,760
11,223,927
114,833
11,338,760
7,704,057
3,634,703
Consumer loans
Performing
1,787,123
1,899,376
(112,253
)
1,787,123
2,399,860
(612,737
)
Non-performing
19,469
21,591
(2,122
)
19,469
14,938
4,531
Total consumer loans
1,806,592
1,920,967
(114,375
)
1,806,592
2,414,798
(608,206
)
Loans and leases receivable (1)
$
13,145,352
$
13,144,894
$
458
$
13,145,352
$
10,118,855
$
3,026,497
(1) Risk ratings are assigned to loans and
leases held for investment, and excludes loans held for sale and
loans receivable, mortgage warehouse, at fair value.
(2) Excludes loan receivable, PPP, as
eligible PPP loans are fully guaranteed by the Small Business
Administration.
Over the last decade, we have developed a suite of commercial
loan products with one particularly important common denominator:
relatively low credit risk assumption. The Bank’s C&I, loans to
mortgage companies, corporate and specialty lending lines of
business, and multifamily loans for example, are characterized by
conservative underwriting standards and low loss rates. Because of
this emphasis, the Bank’s credit quality to date has been
incredibly healthy despite an adverse economic environment.
Maintaining strong asset quality also requires a highly active
portfolio monitoring process. In addition to frequent client
outreach and monitoring at the individual loan level, we employ a
bottom-up data driven approach to analyze the commercial
portfolio.
Total consumer installment loans held for investment at March
31, 2023 were less than 6% of total assets, less than 9% of total
loans and leases held for investment, and were supported by an
allowance for credit losses of $62.1 million. At March 31, 2023,
our consumer installment portfolio had the following
characteristics: average original FICO score of 737, average
debt-to-income of 20% and average borrower income of $106
thousand.
Non-performing loans at March 31, 2023 were essentially flat at
0.21% of total loans and leases, compared to 0.19% at December 31,
2022, and decreased from 0.31% at March 31, 2022.
Investment Securities
Our investment securities portfolio, including debt securities
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 our liquidity position.
The following table presents the composition of our investment
securities portfolio as of the dates indicated:
(Dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Debt securities, available for sale
$
2,900,259
$
2,961,015
$
4,144,029
Equity securities
26,710
26,485
25,824
Investment securities, at fair value
2,926,969
2,987,500
4,169,853
Debt securities, held to maturity
870,294
840,259
—
Total investment securities portfolio
$
3,797,263
$
3,827,759
$
4,169,853
Critically important to performance during the recent banking
crisis are the characteristics of a bank’s securities portfolio.
While there may be virtually no credit risk in some of these
portfolios, holding longer term and lower yielding securities is
creating challenges for many banks. Our securities portfolio is
highly liquid, short in duration, and high in yield. Our AFS debt
securities portfolio has a spot yield of 4.91%, an effective
duration of approximately 1.5 years, and approximately 47% are
variable rate. Additionally, 62% of our AFS securities portfolio
was AAA rated at March 31, 2023.
Our HTM debt securities portfolio represents only 4.0% of our
total assets at March 31, 2023, and has a spot yield of 3.77% and
an effective duration of approximately 4.0 years. Additionally,
approximately 51% of our HTM securities are AAA rated and 37% are
credit enhanced asset backed securities with no current expectation
of credit losses.
Deposits
The following table presents the composition of our deposit
portfolio as of the dates indicated:
(Dollars in thousands)
March 31, 2023
% of Total
December 31, 2022
% of Total
March 31, 2022
% of Total
Demand, non-interest bearing
$
3,487,517
19.7
%
$
1,885,045
10.4
%
$
4,594,428
28.0
%
Demand, interest bearing
5,791,302
32.7
8,476,027
46.7
5,591,468
34.1
Total demand deposits
9,278,819
52.4
10,361,072
57.1
10,185,896
62.1
Savings
924,359
5.2
811,798
4.5
802,395
4.9
Money market
2,019,633
11.4
2,734,217
15.1
4,981,077
30.3
Time deposits
5,500,806
31.0
4,249,866
23.3
446,192
2.7
Total deposits
$
17,723,617
100.0
%
$
18,156,953
100.0
%
$
16,415,560
100.0
%
Total deposits decreased $433.3 million, or 2.4%, to $17.7
billion at March 31, 2023 as compared to the prior quarter.
Importantly, non-interest bearing demand deposits increased $1.6
billion, or 85.0%, to $3.5 billion. Time deposits increased $1.3
billion, or 29.4%, to $5.5 billion and savings deposits increased
$112.6 million, or 13.9%, to $924.4 million. These increases were
offset by decreases in interest bearing demand deposits of $2.7
billion, or 31.7%, to $5.8 billion and money market deposits of
$714.6 million, or 26.1%, to $2.0 billion. The total average cost
of deposits increased by 59 basis points to 3.32% in Q1 2023 from
2.73% in the prior quarter primarily due to higher market interest
rates and a shift in deposit mix. Total estimated uninsured
deposits was $3.5 billion1, or 19% of total deposits (inclusive of
accrued interest) at March 31, 2023. We are also highly focused on
total deposits with contractual term to manage our liquidity
profile and the funding of loans and securities.
Total deposits increased $1.3 billion, or 8.0%, to $17.7 billion
at March 31, 2023 as compared to a year ago. Time deposits
increased $5.1 billion to $5.5 billion. Interest bearing demand
deposits increased $199.8 million, or 3.6%, to $5.8 billion.
Savings deposits increased $122.0 million, or 15.2%, to $924.4
million. These increases were offset in part by decreases in money
market deposits of $3.0 billion, or 59.5%, to $2.0 billion and
non-interest bearing demand deposits of $1.1 billion, or 24.1%, to
$3.5 billion. The total average cost of deposits increased by 299
basis points to 3.32% in Q1 2023 from 0.33% in the prior year
primarily due to higher market interest rates and a shift in
deposit mix.
__________________________________ 1 Uninsured deposits of $3.9
billion less state and municipal deposits of $393.9 million
collateralized by our line of credit from FHLB and from our
affiliates of $54.9 million.
Borrowings
The following table presents the composition of our borrowings
as of the dates indicated:
(Dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Federal funds purchased
$
—
$
—
$
700,000
FHLB advances
2,052,143
800,000
—
Senior notes
123,645
123,580
223,230
Subordinated debt
182,021
181,952
181,742
Total borrowings
$
2,357,809
$
1,105,532
$
1,104,972
Total borrowings increased $1.3 billion, or 113.3%, to $2.4
billion at March 31, 2023 as compared to both the prior quarter and
the year-ago quarter. This increase primarily resulted from
increased FHLB borrowings to ensure ample cash on hand given the
heightened liquidity risk in the banking system, particularly among
regional banks in early March 2023. As of March 31, 2023,
Customers' borrowing capacity with the FRB and FHLB was
approximately $9.8 billion, of which $2.1 billion of available
capacity was utilized in borrowings and $397.2 million was utilized
to collateralize state and municipal deposits.
Capital
The following table presents certain capital amounts and ratios
as of the dates indicated:
(Dollars in thousands except per share
data)
March 31, 2023
December 31, 2022
March 31, 2022
Customers Bancorp, Inc.
Common Equity
$
1,283,226
$
1,265,167
$
1,239,612
Tangible Common Equity*
$
1,279,597
$
1,261,538
$
1,235,934
Common Equity to Total Assets
5.9
%
6.1
%
6.5
%
Tangible Common Equity to Tangible
Assets*
5.9
%
6.0
%
6.5
%
Tangible Common Equity to Tangible Assets,
excluding PPP*
6.0
%
6.3
%
7.3
%
Book Value per common share
$
41.08
$
39.08
$
37.61
Tangible Book Value per common share*
$
40.96
$
38.97
$
37.50
Common equity Tier 1 capital ratio (1)
9.6
%
9.6
%
9.9
%
Total risk based capital ratio (1)
12.3
%
12.2
%
12.9
%
(1) Regulatory capital ratios as of March
31, 2023 are estimates.
* Non-GAAP measure. Customers' reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
Customers Bancorp's common equity increased $18.1 million to
$1.3 billion, and tangible common equity* increased $18.1 million
to $1.3 billion, at March 31, 2023 compared to the prior quarter,
respectively, primarily due to earnings of $50.3 million, and
reduced unrealized losses on investment securities of $6.8 million
(net of taxes) deferred in accumulated other comprehensive income
("AOCI"). These increases were offset in part by $39.8 million of
common share repurchases during Q1 2023. Similarly, book value per
common share increased to $41.08 from $39.08, and tangible book
value per common share* increased to $40.96 from $38.97, at March
31, 2023 and December 31, 2022, respectively.
Customers Bancorp's common equity increased $43.6 million to
$1.3 billion, and tangible common equity* increased $43.7 million
to $1.3 billion, at March 31, 2023 compared to a year ago,
respectively, as earnings of $193.8 million more than offset a
negative impact to AOCI from increased unrealized losses on
investment securities of $93.7 million (net of taxes). Similarly,
book value per common share increased to $41.08 from $37.61, and
tangible book value per common share* increased to $40.96 from
$37.50, at March 31, 2023 and March 31, 2022, respectively.
At the Customers Bancorp level, the total risk based capital
ratio (estimate), common equity to total assets ratio and tangible
common equity to tangible assets ratio ("TCE ratio"), excluding PPP
loans*, were 12.3%, 5.9% and 6.0%, respectively, at March 31,
2023.
At the Customers Bank level, capital levels remained strong and
well above regulatory minimums. At March 31, 2023, estimated Tier 1
capital and total risk-based capital were 11.3% and 12.6%,
respectively.
Even though Customers remains well capitalized by all regulatory
measures, its goal is to increase its CET 1 ratio at year-end 2023
to be between 11.0% - 11.5%, up about 150 basis points over current
levels. "It is prudent to moderate or even shrink our balance sheet
in this uncertain environment and have strong capital ratios,"
stated Jay Sidhu.
Key Profitability Trends
Net Interest Income
Net interest income totaled $149.9 million in Q1 2023, an
increase of $14.8 million from Q4 2022, primarily due to higher PPP
net interest income of $16.9 million resulting from increased
recognition of deferred fees of $18.0 million mainly driven by
higher loan forgiveness and guarantee payments by the SBA in Q1
2023. Net interest income earned by the core bank* decreased $2.1
million over Q4 2022, reflecting a shift in funding mix and two
less days in Q1 2023. The increase in interest income on investment
securities and core loans* of $4.4 million and $20.9 million,
respectively, mostly due to higher interest rates on investment
securities and variable loans in our commercial loan verticals,
were offset by higher expenses paid on deposits and other
borrowings of $30.5 million from a shift in funding mix and higher
interest rates during Q1 2023. Excluding PPP loans, average
interest-earning assets increased $480.3 million. Interest-earning
asset growth was primarily driven by increases in interest earning
deposits, specialty lending and consumer installment loans held for
sale, partially offset by decreases in commercial loans to mortgage
companies due to lower mortgage activity from rising interest
rates. Compared to Q4 2022, total loan yields increased 106 basis
points to 6.70% primarily due to higher interest rates on variable
rate loans in commercial loans. Excluding PPP loans, the Q1 2023
total loan yield* was 60 basis points higher than Q4 2022
reflecting increased interest rates and the variable rate nature of
the loan portfolio.
Net interest income totaled $149.9 million in Q1 2023, a
decrease of $14.8 million from Q1 2022, primarily due to lower PPP
net interest income of $20.5 million resulting from reduced
recognition of deferred fees of $8.1 million driven by lower loan
forgiveness in Q1 2023 and increased funding costs of $7.2 million,
reflecting increases in funding rates. This decrease was offset in
part by increased net interest income earned by the core bank* of
$5.7 million, up 4.4% over Q1 2022, including increased interest
income on investment securities and core loans* of $27.0 million
and $112.1 million, respectively, mostly due to higher average
balances and interest rates on variable loans in specialty lending.
In addition, higher expenses paid on deposits and other borrowings
of $146.3 million resulted mainly from a shift in funding mix and
higher interest rates during Q1 2023. Excluding PPP loans, average
interest-earning assets increased $3.7 billion. Interest-earning
asset growth was primarily driven by increases in C&I loans and
leases, mostly in the variable rate low-to-no credit risk specialty
lending verticals and multifamily loans, offset in part by
decreases in commercial loans to mortgage companies due to lower
mortgage activity from rising interest rates. Total consumer
installment loans decreased in Q1 2023 as compared to Q1 2022, as
installment loans held for investment decreased primarily for risk
management purposes. Compared to Q1 2022, total loan yields
increased 203 basis points to 6.70% primarily due to higher
interest rates on variable rate loans in specialty lending,
partially offset by lower PPP yields driven by lower deferred fee
recognition. Excluding PPP loans, the Q1 2023 total loan yield* was
203 basis points higher than Q1 2022 reflecting increased interest
rates and the variable rate nature of the loan portfolio.
Non-Interest Income
The following table presents details of non-interest income for
the periods indicated:
Three Months Ended
Increase (Decrease)
Three Months Ended
Increase (Decrease)
(Dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2023
March 31, 2022
Commercial lease income
$
9,326
$
8,135
$
1,191
$
9,326
$
5,895
$
3,431
Loan fees
3,990
4,017
(27
)
3,990
2,545
1,445
Bank-owned life insurance
2,647
1,975
672
2,647
8,326
(5,679
)
Mortgage warehouse transactional fees
1,074
1,295
(221
)
1,074
2,015
(941
)
Gain (loss) on sale of SBA and other
loans
—
—
—
—
1,507
(1,507
)
Net gain (loss) on sale of investment
securities
—
(16,937
)
16,937
—
(1,063
)
1,063
Legal settlement gain
—
7,519
(7,519
)
—
—
—
Other
1,084
1,341
(257
)
1,084
1,973
(889
)
Total non-interest income
$
18,121
$
7,345
$
10,776
$
18,121
$
21,198
$
(3,077
)
Non-interest income totaled $18.1 million for Q1 2023, an
increase of $10.8 million compared to Q4 2022. The increase was
primarily due to losses realized from the sale of investment
securities of $16.9 million to rebalance the investment portfolio
with higher interest-earning securities in Q4 2022, higher
commercial lease income of $1.2 million from continued growth and
death benefits paid by insurance carriers under the bank-owned life
insurance policies of $0.7 million. These increases were partially
offset by a $7.5 million gain from a court-approved settlement with
a third party PPP service provider in Q4 2022.
Non-interest income totaled $18.1 million for Q1 2023, a
decrease of $3.1 million compared to Q1 2022. The decrease was
primarily due to lower death benefits paid by insurance carriers
under the bank-owned life insurance policies of $5.7 million,
reduced mortgage warehouse transactional fees from lower housing
activity due to rising interest rates of $0.9 million, and reduced
gains realized from sales of SBA loans of $1.5 million as there
were no such sales in Q1 2023. These decreases were offset
partially by increases in commercial lease income of $3.4 million
and loan fees of $1.4 million resulting from continued growth and
reduced losses on securities sales of $1.1 million as there were no
such sales in Q1 2023.
Non-Interest Expense
The following table presents details of non-interest expense for
the periods indicated:
Three Months Ended
Increase (Decrease)
Three Months Ended
Increase (Decrease)
(Dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2023
March 31, 2022
Salaries and employee benefits
$
32,345
$
29,194
$
3,151
$
32,345
$
26,607
$
5,738
Technology, communication and bank
operations
16,589
18,604
(2,015
)
16,589
24,068
(7,479
)
Commercial lease depreciation
7,875
6,518
1,357
7,875
4,942
2,933
Professional services
7,596
6,825
771
7,596
6,956
640
Loan servicing
4,661
4,460
201
4,661
2,371
2,290
Occupancy
2,760
3,672
(912
)
2,760
3,050
(290
)
FDIC assessments, non-income taxes and
regulatory fees
2,728
2,339
389
2,728
2,383
345
Advertising and promotion
1,049
1,111
(62
)
1,049
315
734
Other
4,530
5,696
(1,166
)
4,530
3,115
1,415
Total non-interest expense
$
80,133
$
78,419
$
1,714
$
80,133
$
73,807
$
6,326
The management of non-interest expenses remains a priority for
us. However, this will not deter us from making investments in new
technologies to support efficient and responsible growth in the
future.
Non-interest expenses totaled $80.1 million in Q1 2023, an
increase of $1.7 million compared to Q4 2022. The increase was
primarily attributable to increased salaries and employee benefits
of $3.2 million driven by higher payroll taxes, benefits and
severance accruals and higher commercial lease depreciation of $1.4
million resulting from continued growth in our equipment finance
business. These increases were offset in part by decreases of $2.0
million in deposit servicing-related expenses resulting from lower
servicing fees and the discontinuation of interchange maintenance
fees paid to BM Technologies offset in part by higher
software-related expenses and reduced other expenses of $1.2
million primarily due to lower loan workout expenses.
Non-interest expenses totaled $80.1 million in Q1 2023, an
increase of $6.3 million compared to Q1 2022. The increase was
primarily attributable to increases of $5.7 million in salaries and
employee benefits due to higher headcount, annual merit increases,
severance accruals and SERP expenses, $2.9 million in commercial
lease depreciation from continued growth, $2.3 million in loan
servicing for portfolios serviced by third parties, $0.7 million in
advertising and promotion mostly due to higher spending on media
and advertising agencies for our deposit products and $1.4 million
in other expenses mostly due to higher provision for credit losses
on unfunded lending commitments and operating losses. These
increases were offset in part by a decrease of $7.5 million in
deposit servicing-related expenses mostly due to lower servicing
fees and the discontinuation of interchange maintenance fees paid
to BM Technologies, offset by higher software licenses, fees paid
for software as a service and other technology-related
expenses.
Taxes
Income tax expense increased by $7.4 million to $14.6 million in
Q1 2023 from $7.1 million in Q4 2022 primarily due to higher
pre-tax income.
Income tax expense decreased by $4.8 million to $14.6 million in
Q1 2023 from $19.3 million in Q1 2022 primarily due to lower
pre-tax income and increased income tax credits.
The effective tax rate for Q1 2023 was 21%. Customers expects
the full-year 2023 effective tax rate to be approximately 22% to
24%.
Outlook
“Looking ahead, we will continue to moderate growth, or even
reduce the size of the balance sheet, as we optimize the balance
sheet and materially improve our capital ratios, maximize our
efficiency ratio with prudent expense management, and continue to
improve deposits and liquidity. We expect 2023 core loans to be
essentially flat to down. Deposits are expected to remain
relatively flat with a focus on improving our funding profile and
reducing high cost deposits. We believe our net interest margin has
troughed with expansion opportunities throughout the remainder of
2023. We expect net interest margin, excluding PPP* to increase
throughout 2023 by about 20 basis points to 3.00% or higher. 2023
Core EPS (excluding PPP)* is still expected to be about $6.00 with
a return on common equity of over 15%. Core non-interest expense*
is expected to increase between 5% - 7% in 2023 and we are
targeting a CET 1 ratio of approximately 11% - 11.5% by year-end
2023. We are focused on improving the quality of our balance sheet
and deposit franchise, improving capital and liquidity, maintaining
superior credit quality, expanding our net interest margin, and
achieving our tangible book value guidance in excess of $45 by
year-end 2023,” concluded Jay Sidhu.
* Non-GAAP measure. Customers' reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
Webcast
Date: Friday, April 28,
2023 Time: 9:00 AM EDT
The live audio webcast, presentation slides, and earnings press
release will be made available at
https://www.customersbank.com/investor-relations/ and at the
Customers Bancorp 1st Quarter Earnings Webcast.
You may submit questions in advance of the live webcast by
emailing our Communications Director, David Patti at
dpatti@customersbank.com; questions may also be asked during the
webcast through the webcast application.
The webcast will be archived for viewing on the Customers Bank
Investor Relations page and available beginning approximately two
hours after the conclusion of the live event.
Institutional Background
Customers Bancorp, Inc. (NYSE:CUBI) is one of the nation’s
top-performing banking companies with over $20 billion in assets,
making it one of the 100 largest bank holding companies in the US.
Through its primary subsidiary, Customers Bank, commercial and
consumer clients benefit from a full suite of technology-enabled
tailored product experience delivered by best-in-class customer
service. A pioneer in Banking-as-a-Service and digital banking
products, Customers Bank is one of the very few banks that provides
a blockchain-based 24/7/365 digital payment solution. In addition
to traditional lines such as C&I lending, commercial real
estate lending, and multifamily lending, Customers Bank also
provides a number of national corporate banking services to
Specialty Lending clients. Major accolades include:
- #34 out of the 100 largest publicly traded banks in 2023 per
Forbes;
- #64 on Fortune Magazine’s 2022 list of the 100 fastest growing
companies in America;
- #6 in top-performing banks with assets between $10 billion and
$50 billion in 2021 per American Banker; and
- #3 top-performing bank with over $10 billion in assets at
year-end 2021 per S&P Global S&P Global Market
Intelligence.
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: the impact of the ongoing pandemic on the U.S. economy
and customer behavior, the impact that changes in the economy have
on the performance of our loan and lease portfolio, the market
value of our investment securities, the continued success and
acceptance of our blockchain payments system, the demand for our
products and services and the availability of sources of funding,
the effects of actions by the federal government, including the
Board of Governors of the Federal Reserve System and other
government agencies, that affect market interest rates and the
money supply, actions that we and our customers take in response to
these developments and the effects such actions have on our
operations, products, services and customer relationships, higher
inflation and its impacts, and the effects of any changes in
accounting standards or policies. Customers Bancorp, Inc. cautions
that the foregoing factors are not exclusive, and neither such
factors nor any such forward-looking statement takes into account
the impact of any future events. All forward-looking statements and
information set forth herein are based on management’s current
beliefs and assumptions as of the date hereof and speak only as of
the date they are made. For a more complete discussion of the
assumptions, risks and uncertainties related to our business, you
are encouraged to review Customers Bancorp, Inc.’s filings with the
Securities and Exchange Commission, including its most recent
annual report on Form 10-K for the year ended December 31, 2022,
subsequently filed quarterly reports on Form 10-Q and current
reports on Form 8-K, including any amendments thereto, that update
or provide information in addition to the information included in
the Form 10-K and Form 10-Q filings, if any. Customers Bancorp,
Inc. does not undertake to update any forward-looking statement
whether written or oral, that may be made from time to time by
Customers Bancorp, Inc. or by or on behalf of Customers Bank,
except as may be required under applicable law.
Q1 2023 Overview
The following table presents a summary of key earnings and
performance metrics for the quarter ended March 31, 2023 and the
preceding four quarters:
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED
(Dollars in thousands, except per share
data and stock price data)
Q1
Q4
Q3
Q2
Q1
2023
2022
2022
2022
2022
GAAP Profitability Metrics:
Net income available to common
shareholders
$
50,265
$
25,623
$
61,364
$
56,519
$
74,896
Per share amounts:
Earnings per share - basic
$
1.58
$
0.79
$
1.89
$
1.73
$
2.27
Earnings per share - diluted
$
1.55
$
0.77
$
1.85
$
1.68
$
2.18
Book value per common share (1)
$
41.08
$
39.08
$
38.46
$
37.46
$
37.61
CUBI stock price (1)
$
18.52
$
28.34
$
29.48
$
33.90
$
52.14
CUBI stock price as % of book value
(1)
45
%
73
%
77
%
90
%
139
%
Average shares outstanding - basic
31,819,203
32,413,459
32,455,814
32,712,616
32,957,033
Average shares outstanding - diluted
32,345,017
33,075,422
33,226,607
33,579,013
34,327,065
Shares outstanding (1)
31,239,750
32,373,697
32,475,502
32,449,486
32,957,847
Return on average assets ("ROAA")
1.03
%
0.55
%
1.24
%
1.17
%
1.63
%
Return on average common equity
("ROCE")
16.00
%
8.05
%
19.33
%
18.21
%
24.26
%
Net interest margin, tax equivalent
2.96
%
2.67
%
3.16
%
3.39
%
3.60
%
Efficiency ratio
47.71
%
49.20
%
50.00
%
42.14
%
39.42
%
Non-GAAP Profitability Metrics
(2):
Core earnings
$
51,143
$
39,368
$
82,270
$
59,367
$
75,410
Adjusted pre-tax pre-provision net
income
$
89,282
$
81,377
$
100,994
$
105,692
$
112,649
Per share amounts:
Core earnings per share - diluted
$
1.58
$
1.19
$
2.48
$
1.77
$
2.20
Tangible book value per common share
(1)
$
40.96
$
38.97
$
38.35
$
37.35
$
37.50
CUBI stock price as % of tangible book
value (1)
45
%
73
%
77
%
91
%
139
%
Core ROAA
1.05
%
0.81
%
1.64
%
1.23
%
1.64
%
Core ROCE
16.28
%
12.36
%
25.91
%
19.13
%
24.43
%
Adjusted ROAA - pre-tax and
pre-provision
1.72
%
1.56
%
1.95
%
2.11
%
2.39
%
Adjusted ROCE - pre-tax and
pre-provision
27.33
%
24.59
%
31.01
%
33.37
%
35.89
%
Net interest margin, tax equivalent,
excluding PPP loans
2.80
%
2.87
%
3.18
%
3.32
%
3.32
%
Core efficiency ratio
47.09
%
49.12
%
42.57
%
41.74
%
39.47
%
Asset Quality:
Net charge-offs
$
18,651
$
27,164
$
18,497
$
13,481
$
7,226
Annualized net charge-offs to average
total loans and leases
0.49
%
0.70
%
0.47
%
0.36
%
0.21
%
Non-performing loans ("NPLs") to total
loans and leases (1)
0.21
%
0.19
%
0.18
%
0.18
%
0.31
%
Reserves to NPLs (1)
405.56
%
425.95
%
466.34
%
557.76
%
333.15
%
Non-performing assets ("NPAs") to total
assets
0.15
%
0.15
%
0.14
%
0.14
%
0.23
%
Customers Bank Capital Ratios
(3):
Common equity Tier 1 capital to
risk-weighted assets
11.3
%
11.21
%
11.42
%
11.46
%
11.60
%
Tier 1 capital to risk-weighted assets
11.3
%
11.21
%
11.42
%
11.46
%
11.60
%
Total capital to risk-weighted assets
12.6
%
12.40
%
12.65
%
12.91
%
13.03
%
Tier 1 capital to average assets (leverage
ratio)
8.1
%
8.15
%
8.10
%
8.09
%
8.21
%
(1) Metric is a spot balance for the last
day of each quarter presented.
(2) Customers' reasons for the use of
these non-GAAP measures and a detailed reconciliation between the
non-GAAP measures and the comparable GAAP amounts are included at
the end of this document.
(3) Regulatory capital ratios are
estimated for Q1 2023 and actual for the remaining periods. In
accordance with regulatory capital rules, Customers elected to
apply the CECL capital transition provisions which delayed the
effects of CECL on regulatory capital for two years until January
1, 2022, followed by a three-year transition period. The cumulative
CECL capital transition impact as of December 31, 2021 which
amounted to $61.6 million will be phased in at 25% per year
beginning on January 1, 2022 through December 31, 2024. As of March
31, 2023, our regulatory capital ratios reflected 50%, or $30.8
million, benefit associated with the CECL transition
provisions.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS -
UNAUDITED
(Dollars in thousands, except per share
data)
Q1
Q4
Q3
Q2
Q1
2023
2022
2022
2022
2022
Interest income:
Loans and leases
$
244,212
$
217,471
$
200,438
$
168,920
$
157,120
Investment securities
47,316
42,953
30,546
25,442
20,295
Loans held for sale
11,701
1,269
19
21
55
Interest earning deposits
10,395
6,754
2,949
919
330
Other
1,321
1,200
1,964
1,032
5,676
Total interest income
314,945
269,647
235,916
196,334
183,476
Interest expense:
Deposits
143,930
124,366
65,380
22,781
13,712
FHLB advances
10,370
4,464
4,684
2,316
—
FRB advances
6,286
—
—
—
—
Subordinated debt
2,689
2,688
2,689
2,689
2,689
Other borrowings
1,771
2,992
4,131
3,696
2,376
Total interest expense
165,046
134,510
76,884
31,482
18,777
Net interest income
149,899
135,137
159,032
164,852
164,699
Provision (benefit) for credit losses
19,603
28,216
(7,994
)
23,847
15,997
Net interest income after provision
(benefit) for credit losses
130,296
106,921
167,026
141,005
148,702
Non-interest income:
Commercial lease income
9,326
8,135
7,097
6,592
5,895
Loan fees
3,990
4,017
3,008
2,618
2,545
Bank-owned life insurance
2,647
1,975
3,449
1,947
8,326
Mortgage warehouse transactional fees
1,074
1,295
1,545
1,883
2,015
Gain (loss) on sale of SBA and other
loans
—
—
106
1,542
1,507
Gain (loss) on sale of consumer
installment loans
—
—
(23,465
)
—
—
Net gain (loss) on sale of investment
securities
—
(16,937
)
(2,135
)
(3,029
)
(1,063
)
Legal settlement gain
—
7,519
—
—
—
Other
1,084
1,341
1,378
1,193
1,973
Total non-interest income
18,121
7,345
(9,017
)
12,746
21,198
Non-interest expense:
Salaries and employee benefits
32,345
29,194
31,230
25,334
26,607
Technology, communication and bank
operations
16,589
18,604
19,588
22,738
24,068
Commercial lease depreciation
7,875
6,518
5,966
5,552
4,942
Professional services
7,596
6,825
6,269
7,415
6,956
Loan servicing
4,661
4,460
3,851
4,341
2,371
Occupancy
2,760
3,672
2,605
4,279
3,050
FDIC assessments, non-income taxes and
regulatory fees
2,728
2,339
2,528
1,619
2,383
Advertising and promotion
1,049
1,111
762
353
315
Other
4,530
5,696
3,399
4,574
3,115
Total non-interest expense
80,133
78,419
76,198
76,205
73,807
Income before income tax expense
68,284
35,847
81,811
77,546
96,093
Income tax expense
14,563
7,136
17,899
18,896
19,332
Net income
53,721
28,711
63,912
58,650
76,761
Preferred stock dividends
3,456
3,088
2,548
2,131
1,865
Net income available to common
shareholders
$
50,265
$
25,623
$
61,364
$
56,519
$
74,896
Basic earnings per common share
$
1.58
$
0.79
$
1.89
$
1.73
$
2.27
Diluted earnings per common share
1.55
0.77
1.85
1.68
2.18
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEET -
UNAUDITED
(Dollars in thousands)
March 31,
December 31,
September 30,
June 30,
March 31,
2023
2022
2022
2022
2022
ASSETS
Cash and due from banks
$
77,251
$
58,025
$
41,520
$
66,703
$
55,515
Interest earning deposits
1,969,434
397,781
362,945
178,475
219,085
Cash and cash equivalents
2,046,685
455,806
404,465
245,178
274,600
Investment securities, at fair value
2,926,969
2,987,500
2,943,694
3,144,882
4,169,853
Investment securities held to maturity
870,294
840,259
886,294
495,039
—
Loans held for sale
424,057
328,312
5,224
6,595
3,003
Loans receivable, mortgage warehouse, at
fair value
1,247,367
1,323,312
1,569,090
1,874,603
1,755,758
Loans receivable, PPP
246,258
998,153
1,154,632
1,570,160
2,195,902
Loans and leases receivable
13,145,352
13,144,894
12,607,742
12,212,995
10,118,855
Allowance for credit losses on loans and
leases
(130,281
)
(130,924
)
(130,197
)
(156,530
)
(145,847
)
Total loans and leases receivable, net of
allowance for credit losses on loans and leases
14,508,696
15,335,435
15,201,267
15,501,228
13,924,668
FHLB, Federal Reserve Bank, and other
restricted stock
124,733
74,196
64,112
74,626
54,553
Accrued interest receivable
123,754
123,374
107,621
98,727
94,669
Bank premises and equipment, net
8,581
9,025
6,610
6,755
8,233
Bank-owned life insurance
339,607
338,441
336,130
335,153
332,239
Goodwill and other intangibles
3,629
3,629
3,629
3,629
3,678
Other assets
374,609
400,135
408,575
340,184
298,212
Total assets
$
21,751,614
$
20,896,112
$
20,367,621
$
20,251,996
$
19,163,708
LIABILITIES AND SHAREHOLDERS'
EQUITY
Demand, non-interest bearing deposits
$
3,487,517
$
1,885,045
$
2,993,793
$
4,683,030
$
4,594,428
Interest bearing deposits
14,236,100
16,271,908
14,528,645
12,261,689
11,821,132
Total deposits
17,723,617
18,156,953
17,522,438
16,944,719
16,415,560
Federal funds purchased
—
—
365,000
770,000
700,000
FHLB advances
2,052,143
800,000
500,000
635,000
—
Other borrowings
123,645
123,580
123,515
123,450
223,230
Subordinated debt
182,021
181,952
181,882
181,812
181,742
Accrued interest payable and other
liabilities
249,168
230,666
287,855
243,625
265,770
Total liabilities
20,330,594
19,493,151
18,980,690
18,898,606
17,786,302
Preferred stock
137,794
137,794
137,794
137,794
137,794
Common stock
35,258
35,012
34,948
34,922
34,882
Additional paid in capital
552,255
551,721
549,066
545,670
542,402
Retained earnings
974,399
924,134
898,511
837,147
780,628
Accumulated other comprehensive income
(loss), net
(156,276
)
(163,096
)
(156,126
)
(124,881
)
(62,548
)
Treasury stock, at cost
(122,410
)
(82,604
)
(77,262
)
(77,262
)
(55,752
)
Total shareholders' equity
1,421,020
1,402,961
1,386,931
1,353,390
1,377,406
Total liabilities and shareholders'
equity
$
21,751,614
$
20,896,112
$
20,367,621
$
20,251,996
$
19,163,708
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST
MARGIN - UNAUDITED
(Dollars in thousands)
Three Months Ended
March 31, 2023
December 31, 2022
March 31, 2022
Average Balance
Interest Income or
Expense
Average Yield or Cost
(%)
Average Balance
Interest Income or
Expense
Average Yield or Cost
(%)
Average Balance
Interest Income or
Expense
Average Yield or Cost
(%)
Assets
Interest earning deposits
$
914,149
$
10,395
4.61
%
$
693,563
$
6,754
3.86
%
$
826,240
$
329
0.16
%
Investment securities (1)
4,031,247
47,316
4.69
%
4,061,555
42,953
4.23
%
4,036,966
20,295
2.01
%
Loans and leases:
Commercial & industrial:
Specialty lending loans and leases (2)
5,694,168
103,688
7.38
%
5,529,567
90,885
6.52
%
2,730,990
23,391
3.47
%
Other commercial & industrial loans
(2)
1,705,205
25,570
6.08
%
1,670,000
22,796
5.42
%
1,393,418
13,268
3.86
%
Commercial loans to mortgage companies
1,262,139
17,412
5.59
%
1,376,760
17,701
5.10
%
1,836,647
14,006
3.09
%
Multifamily loans
2,206,600
20,470
3.76
%
2,235,885
22,481
3.99
%
1,531,846
13,766
3.64
%
Loans receivable, PPP
889,235
23,551
10.74
%
1,065,919
7,249
2.70
%
2,641,318
36,894
5.66
%
Non-owner occupied commercial real estate
loans
1,449,722
20,199
5.65
%
1,430,420
18,536
5.14
%
1,312,210
12,207
3.77
%
Residential mortgages
542,909
5,598
4.18
%
524,344
5,462
4.13
%
416,417
3,680
3.58
%
Installment loans
1,727,995
39,425
9.25
%
1,555,108
33,630
8.58
%
1,794,145
39,963
9.03
%
Total loans and leases (3)
15,477,973
255,913
6.70
%
15,388,003
218,740
5.64
%
13,656,991
157,175
4.67
%
Other interest-earning assets
91,308
1,321
5.87
%
67,907
1,200
7.01
%
52,111
5,677
NM(6)
Total interest-earning assets
20,514,677
314,945
6.21
%
20,211,028
269,647
5.30
%
18,572,308
183,476
4.00
%
Non-interest-earning assets
538,243
506,334
557,022
Total assets
$
21,052,920
$
20,717,362
$
19,129,330
Liabilities
Interest checking accounts
$
7,494,379
$
70,485
3.81
%
$
8,536,962
$
70,041
3.26
%
$
5,769,372
$
7,730
0.54
%
Money market deposit accounts
2,470,004
20,783
3.41
%
3,094,206
21,220
2.72
%
4,880,051
4,674
0.39
%
Other savings accounts
822,312
6,286
3.10
%
669,466
3,368
2.00
%
880,113
784
0.36
%
Certificates of deposit
4,504,333
46,376
4.18
%
3,259,801
29,737
3.62
%
450,644
524
0.47
%
Total interest-bearing deposits (4)
15,291,028
143,930
3.82
%
15,560,435
124,366
3.17
%
11,980,180
13,712
0.46
%
Federal funds purchased
15,333
188
4.97
%
151,467
1,437
3.76
%
88,611
73
0.33
%
Borrowings
1,788,116
20,928
4.75
%
819,032
8,707
4.22
%
532,610
4,992
3.80
%
Total interest-bearing
liabilities
17,094,477
165,046
3.91
%
16,530,934
134,510
3.23
%
12,601,401
18,777
0.60
%
Non-interest-bearing deposits (4)
2,299,295
2,514,316
4,900,983
Total deposits and borrowings
19,393,772
3.45
%
19,045,250
2.80
%
17,502,384
0.43
%
Other non-interest-bearing liabilities
247,575
271,129
237,131
Total liabilities
19,641,347
19,316,379
17,739,515
Shareholders' equity
1,411,573
1,400,983
1,389,815
Total liabilities and shareholders'
equity
$
21,052,920
$
20,717,362
$
19,129,330
Net interest income
149,899
135,137
164,699
Tax-equivalent adjustment
375
342
239
Net interest earnings
$
150,274
$
135,479
$
164,938
Interest spread
2.76
%
2.50
%
3.57
%
Net interest margin
2.95
%
2.66
%
3.59
%
Net interest margin tax
equivalent
2.96
%
2.67
%
3.60
%
Net interest margin tax equivalent
excl. PPP (5)
2.80
%
2.87
%
3.32
%
(1) For presentation in this table,
average balances and the corresponding average yields for
investment securities are based upon historical cost, adjusted for
amortization of premiums and accretion of discounts.
(2) Includes owner occupied commercial
real estate loans.
(3) Includes non-accrual loans, the effect
of which is to reduce the yield earned on loans and leases, and
deferred loan fees.
(4) Total costs of deposits (including
interest bearing and non-interest bearing) were 3.32%, 2.73% and
0.33% for the three months ended March 31, 2023, December 31, 2022
and March 31, 2022, respectively.
(5) Non-GAAP tax-equivalent basis, using
an estimated marginal tax rate of 26% for the three months ended
March 31, 2023, December 31, 2022 and March 31, 2022, presented to
approximate interest income as a taxable asset and excluding net
interest income from PPP loans and related borrowings, along with
the related PPP loan balances and PPP fees receivable from
interest-earning assets. Management uses non-GAAP measures to
present historical periods comparable to the current period
presentation. In addition, management believes the use of these
non-GAAP measures provides additional clarity when assessing
Customers’ financial results. These disclosures should not be
viewed as substitutes for results determined to be in accordance
with U.S. GAAP, nor are they necessarily comparable to non-GAAP
performance measures that may be presented by other entities.
(6) Not meaningful.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
PERIOD END LOAN AND LEASE COMPOSITION -
UNAUDITED
(Dollars in thousands)
March 31,
December 31,
September 30,
June 30,
March 31,
2023
2022
2022
2022
2022
Loans and leases
held for investment
Commercial:
Commercial & industrial:
Specialty lending
$
5,519,176
$
5,412,887
$
5,103,974
$
4,599,640
$
2,973,544
Other commercial & industrial
1,168,161
1,135,336
1,064,332
1,037,444
947,895
Multifamily
2,195,211
2,213,019
2,263,268
2,008,784
1,705,027
Loans to mortgage companies
1,374,894
1,447,919
1,708,587
1,975,189
1,830,121
Commercial real estate owner occupied
895,314
885,339
726,670
710,577
701,893
Loans receivable, PPP
246,258
998,153
1,154,632
1,570,160
2,195,902
Commercial real estate non-owner
occupied
1,245,248
1,290,730
1,263,211
1,152,869
1,140,311
Construction
188,123
162,009
136,133
195,687
161,024
Total commercial loans and leases
12,832,385
13,545,392
13,420,807
13,250,350
11,655,717
Consumer:
Residential
494,815
497,952
465,772
457,768
466,423
Manufactured housing
43,272
45,076
46,990
48,570
50,669
Installment:
Personal
849,420
964,641
1,056,432
1,613,628
1,584,011
Other
419,085
413,298
341,463
287,442
313,695
Total installment loans
1,268,505
1,377,939
1,397,895
1,901,070
1,897,706
Total consumer loans
1,806,592
1,920,967
1,910,657
2,407,408
2,414,798
Total loans and leases held for
investment
$
14,638,977
$
15,466,359
$
15,331,464
$
15,657,758
$
14,070,515
Loans held for
sale
Commercial:
Multifamily
$
4,051
$
4,079
$
4,108
$
4,136
$
—
Commercial real estate non-owner
occupied
16,000
—
—
—
—
Total commercial loans and leases
20,051
4,079
4,108
4,136
—
Consumer:
Residential
821
829
1,116
2,459
3,003
Installment:
Personal
307,336
133,801
—
—
—
Other
95,849
189,603
—
—
—
Total installment loans
403,185
323,404
—
—
—
Total consumer loans
404,006
324,233
1,116
2,459
3,003
Total loans held for sale
$
424,057
$
328,312
$
5,224
$
6,595
$
3,003
Total loans and leases
portfolio
$
15,063,034
$
15,794,671
$
15,336,688
$
15,664,353
$
14,073,518
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION -
UNAUDITED
(Dollars in thousands)
March 31,
December 31,
September 30,
June 30,
March 31,
2023
2022
2022
2022
2022
Demand, non-interest bearing
$
3,487,517
$
1,885,045
$
2,993,793
$
4,683,030
$
4,594,428
Demand, interest bearing
5,791,302
8,476,027
7,124,663
6,644,398
5,591,468
Total demand deposits
9,278,819
10,361,072
10,118,456
11,327,428
10,185,896
Savings
924,359
811,798
592,002
640,062
802,395
Money market
2,019,633
2,734,217
4,913,967
4,254,205
4,981,077
Time deposits
5,500,806
4,249,866
1,898,013
723,024
446,192
Total deposits
$
17,723,617
$
18,156,953
$
17,522,438
$
16,944,719
$
16,415,560
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
ASSET QUALITY - UNAUDITED
(Dollars in thousands)
As of March 31, 2023
As of December 31,
2022
As of March 31, 2022
Total loans
Non accrual /NPLs
Allowance for credit
losses
Total NPLs to total
loans
Total reserves to total
NPLs
Total loans
Non accrual /NPLs
Allowance for credit
losses
Total NPLs to total
loans
Total reserves to total
NPLs
Total loans
Non accrual /NPLs
Allowance for credit
losses
Total NPLs to total
loans
Total reserves to total
NPLs
Loan type
Commercial & industrial, including
specialty lending (1)
$
6,814,864
$
3,886
$
20,050
0.06
%
515.95
%
$
6,672,830
$
1,761
$
17,582
0.03
%
998.41
%
$
3,995,802
$
5,490
$
10,765
0.14
%
196.08
%
Multifamily
2,195,211
881
15,084
0.04
%
1712.15
%
2,213,019
1,143
14,541
0.05
%
1272.18
%
1,705,027
17,869
7,437
1.05
%
41.62
%
Commercial real estate owner occupied
895,314
3,621
8,472
0.40
%
233.97
%
885,339
2,768
6,454
0.31
%
233.16
%
701,893
2,191
3,841
0.31
%
175.31
%
Commercial real estate non-owner
occupied
1,245,248
—
11,032
—
%
—
%
1,290,730
—
11,219
—
%
—
%
1,140,311
1,302
5,955
0.11
%
457.37
%
Construction
188,123
—
2,336
—
%
—
%
162,009
—
1,913
—
%
—
%
161,024
—
939
—
%
—
%
Total commercial loans and leases
receivable
11,338,760
8,388
56,974
0.07
%
679.23
%
11,223,927
5,672
51,709
0.05
%
911.65
%
7,704,057
26,852
28,937
0.35
%
107.76
%
Residential
494,815
6,473
6,853
1.31
%
105.87
%
497,952
6,922
6,094
1.39
%
88.04
%
466,423
8,124
4,685
1.74
%
57.67
%
Manufactured housing
43,272
2,568
4,339
5.93
%
168.96
%
45,076
2,410
4,430
5.35
%
183.82
%
50,669
3,430
4,342
6.77
%
126.59
%
Installment
1,268,505
8,720
62,115
0.69
%
712.33
%
1,377,939
9,527
68,691
0.69
%
721.01
%
1,897,706
4,865
107,883
0.26
%
2217.53
%
Total consumer loans receivable
1,806,592
17,761
73,307
0.98
%
412.74
%
1,920,967
18,859
79,215
0.98
%
420.04
%
2,414,798
16,419
116,910
0.68
%
712.04
%
Loans and leases receivable (1)
13,145,352
26,149
130,281
0.20
%
498.23
%
13,144,894
24,531
130,924
0.19
%
533.71
%
10,118,855
43,271
145,847
0.43
%
337.05
%
Loans receivable, PPP
246,258
—
—
—
%
—
%
998,153
—
—
—
%
—
%
2,195,902
—
—
—
%
—
%
Loans receivable, mortgage warehouse,
at fair value
1,247,367
—
—
—
%
—
%
1,323,312
—
—
—
%
—
%
1,755,758
—
—
—
%
—
%
Total loans held for sale
424,057
5,975
—
1.41
%
—
%
328,312
6,206
—
1.89
%
—
%
3,003
507
—
16.88
%
—
%
Total portfolio
$
15,063,034
$
32,124
$
130,281
0.21
%
405.56
%
$
15,794,671
$
30,737
$
130,924
0.19
%
425.95
%
$
14,073,518
$
43,778
$
145,847
0.31
%
333.15
%
(1) Excluding loans receivable, PPP from total loans and leases
receivable is a non-GAAP measure. Management believes the use of
these non-GAAP measures provides additional clarity when assessing
Customers' financial results. These disclosures should not be
viewed as substitutes for results determined to be in accordance
with U.S. GAAP, nor are they necessarily comparable to non-GAAP
performance measures that may be presented by other entities.
Please refer to the reconciliation schedules that follow this
table.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
NET CHARGE-OFFS/(RECOVERIES) -
UNAUDITED
(Dollars in thousands)
Q1
Q4
Q3
Q2
Q1
2023
2022
2022
2022
2022
Loan type
Commercial & industrial, including
specialty lending (1)
$
(71
)
$
12,960
$
2,581
$
(416
)
$
(59
)
Multifamily
—
—
—
1,990
(337
)
Commercial real estate owner occupied
—
(2
)
—
(42
)
(7
)
Commercial real estate non-owner
occupied
4,234
972
4,831
159
(8
)
Construction
(116
)
(10
)
(10
)
(103
)
(113
)
Residential
(2
)
7
(13
)
(39
)
(2
)
Installment
14,606
13,237
11,108
11,932
7,752
Total net charge-offs (recoveries) from
loans held for investment
$
18,651
$
27,164
$
18,497
$
13,481
$
7,226
(1) Includes $11.0 million of one-time charge-offs from certain
loans originated under the PPP program that were subsequently
determined to be ineligible for SBA forgiveness and guarantee and
were deemed uncollectible during the three months ended December
31, 2022.
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 - Customers
Bancorp
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
(Dollars in thousands except per share
data)
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
GAAP net income to common shareholders
$
50,265
$
1.55
$
25,623
$
0.77
$
61,364
$
1.85
$
56,519
$
1.68
$
74,896
$
2.18
Reconciling items (after tax):
Severance expense
637
0.02
—
—
1,058
0.03
—
—
—
—
Impairments on fixed assets and leases
86
0.00
—
—
126
0.00
705
0.02
220
0.01
Loss on sale of consumer installment
loans
—
—
—
—
18,221
0.55
—
—
—
—
(Gains) losses on investment
securities
(49
)
0.00
13,543
0.41
1,859
0.06
2,494
0.07
1,030
0.03
Derivative credit valuation adjustment
204
0.01
202
0.01
(358
)
(0.01
)
(351
)
(0.01
)
(736
)
(0.02
)
Core earnings
$
51,143
$
1.58
$
39,368
$
1.19
$
82,270
$
2.48
$
59,367
$
1.77
$
75,410
$
2.20
Core Earnings, excluding PPP -
Customers Bancorp
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
(Dollars in thousands except per share
data)
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
GAAP net income to common shareholders
$
50,265
$
1.55
$
25,623
$
0.77
$
61,364
$
1.85
$
56,519
$
1.68
$
74,896
$
2.18
Less: PPP net income (loss) (after
tax)
9,606
0.30
(5,956
)
(0.18
)
5,846
0.18
13,066
0.39
24,713
0.72
Net income to common shareholders,
excluding PPP
40,659
1.26
31,579
0.95
55,518
1.67
43,453
1.29
50,183
1.46
Reconciling items (after tax):
Severance expense
637
0.02
—
—
1,058
0.03
—
—
—
—
Impairments on fixed assets and leases
86
0.00
—
—
126
0.00
705
0.02
220
0.01
Loss on sale of consumer installment
loans
—
—
—
—
18,221
0.55
—
—
—
—
(Gains) losses on investment
securities
(49
)
0.00
13,543
0.41
1,859
0.06
2,494
0.07
1,030
0.03
Derivative credit valuation adjustment
204
0.01
202
0.01
(358
)
(0.01
)
(351
)
(0.01
)
(736
)
(0.02
)
Core earnings, excluding PPP
$
41,537
$
1.28
$
45,324
$
1.37
$
76,424
$
2.30
$
46,301
$
1.38
$
50,697
$
1.48
Core Return on Average Assets -
Customers Bancorp
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP net income
$
53,721
$
28,711
$
63,912
$
58,650
$
76,761
Reconciling items (after tax):
Severance expense
637
—
1,058
—
—
Impairments on fixed assets and leases
86
—
126
705
220
Loss on sale of consumer installment
loans
—
—
18,221
—
—
(Gains) losses on investment
securities
(49
)
13,543
1,859
2,494
1,030
Derivative credit valuation adjustment
204
202
(358
)
(351
)
(736
)
Core net income
$
54,599
$
42,456
$
84,818
$
61,498
$
77,275
Average total assets
$
21,052,920
$
20,717,362
$
20,514,366
$
20,056,020
$
19,129,330
Core return on average assets
1.05
%
0.81
%
1.64
%
1.23
%
1.64
%
Core Return on Average Assets,
excluding PPP - Customers Bancorp
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP net income
$
53,721
$
28,711
$
63,912
$
58,650
$
76,761
Less: PPP net income (loss) (after
tax)
9,606
(5,956
)
5,846
13,066
24,713
Net income, excluding PPP
44,115
34,667
58,066
45,584
52,048
Reconciling items (after tax):
Severance expense
637
—
1,058
—
—
Impairments on fixed assets and leases
86
—
126
705
220
Loss on sale of consumer installment
loans
—
—
18,221
—
—
(Gains) losses on investment
securities
(49
)
13,543
1,859
2,494
1,030
Derivative credit valuation adjustment
204
202
(358
)
(351
)
(736
)
Core net income, excluding PPP
$
44,993
$
48,412
$
78,972
$
48,432
$
52,562
Average total assets
$
21,052,920
$
20,717,362
$
20,514,366
$
20,056,020
$
19,129,330
Core return on average assets, excluding
PPP
0.87
%
0.93
%
1.53
%
0.97
%
1.11
%
Adjusted Net Income and Adjusted ROAA -
Pre-Tax Pre-Provision - Customers Bancorp
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP net income
$
53,721
$
28,711
$
63,912
$
58,650
$
76,761
Reconciling items:
Income tax expense
14,563
7,136
17,899
18,896
19,332
Provision (benefit) for credit losses
19,603
28,216
(7,994
)
23,847
15,997
Provision (benefit) for credit losses on
unfunded commitments
280
153
254
608
(109
)
Severance expense
809
—
1,363
—
—
Impairments on fixed assets and leases
109
—
162
914
286
Loss on sale of consumer installment
loans
—
—
23,465
—
—
(Gains) losses on investment
securities
(62
)
16,909
2,394
3,232
1,339
Derivative credit valuation adjustment
259
252
(461
)
(455
)
(957
)
Adjusted net income - pre-tax
pre-provision
$
89,282
$
81,377
$
100,994
$
105,692
$
112,649
Average total assets
$
21,052,920
$
20,717,362
$
20,514,366
$
20,056,020
$
19,129,330
Adjusted ROAA - pre-tax pre-provision
1.72
%
1.56
%
1.95
%
2.11
%
2.39
%
Adjusted Net Income and Adjusted ROAA -
Pre-Tax Pre-Provision, excluding PPP - Customers Bancorp
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP net income
$
53,721
$
28,711
$
63,912
$
58,650
$
76,761
Less: PPP net income (loss) (after
tax)
9,606
(5,956
)
5,846
13,066
24,713
Net income, excluding PPP
44,115
34,667
58,066
45,584
52,048
Reconciling items:
Income tax expense
14,563
7,136
17,899
18,896
19,332
Provision (benefit) for credit losses
19,603
28,216
(7,994
)
23,847
15,997
Provision (benefit) for credit losses on
unfunded commitments
280
153
254
608
(109
)
Severance expense
809
—
1,363
—
—
Impairments on fixed assets and leases
109
—
162
914
286
Loss on sale of consumer installment
loans
—
—
23,465
—
—
(Gains) losses on investment
securities
(62
)
16,909
2,394
3,232
1,339
Derivative credit valuation adjustment
259
252
(461
)
(455
)
(957
)
Adjusted net income - pre-tax
pre-provision, excluding PPP
$
79,676
$
87,333
$
95,148
$
92,626
$
87,936
Average total assets
$
21,052,920
$
20,717,362
$
20,514,366
$
20,056,020
$
19,129,330
Adjusted ROAA - pre-tax pre-provision,
excluding PPP
1.53
%
1.67
%
1.84
%
1.85
%
1.86
%
Core Return on Average Common Equity -
Customers Bancorp
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP net income to common shareholders
$
50,265
$
25,623
$
61,364
$
56,519
$
74,896
Reconciling items (after tax):
Severance expense
637
—
1,058
—
—
Impairments on fixed assets and leases
86
—
126
705
220
Loss on sale of consumer installment
loans
—
—
18,221
—
—
(Gains) losses on investment
securities
(49
)
13,543
1,859
2,494
1,030
Derivative credit valuation adjustment
204
202
(358
)
(351
)
(736
)
Core earnings
$
51,143
$
39,368
$
82,270
$
59,367
$
75,410
Average total common shareholders'
equity
$
1,273,780
$
1,263,190
$
1,259,711
$
1,244,819
$
1,252,022
Core return on average common equity
16.28
%
12.36
%
25.91
%
19.13
%
24.43
%
Adjusted ROCE - Pre-Tax Pre-Provision -
Customers Bancorp
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP net income to common shareholders
$
50,265
$
25,623
$
61,364
$
56,519
$
74,896
Reconciling items:
Income tax expense
14,563
7,136
17,899
18,896
19,332
Provision (benefit) for credit losses
19,603
28,216
(7,994
)
23,847
15,997
Provision (benefit) for credit losses on
unfunded commitments
280
153
254
608
(109
)
Severance expense
809
—
1,363
—
—
Impairments on fixed assets and leases
109
—
162
914
286
Loss on sale of consumer installment
loans
—
—
23,465
—
—
(Gains) losses on investment
securities
(62
)
16,909
2,394
3,232
1,339
Derivative credit valuation adjustment
259
252
(461
)
(455
)
(957
)
Pre-tax pre-provision adjusted net income
available to common shareholders
$
85,826
$
78,289
$
98,446
$
103,561
$
110,784
Average total common shareholders'
equity
$
1,273,780
$
1,263,190
$
1,259,711
$
1,244,819
$
1,252,022
Adjusted ROCE - pre-tax pre-provision
27.33
%
24.59
%
31.01
%
33.37
%
35.89
%
Net Interest Margin, Tax Equivalent, excluding PPP -
Customers Bancorp
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP net interest income
$
149,899
$
135,137
$
159,032
$
164,852
$
164,699
PPP net interest (income) expense
(14,106
)
2,791
(9,632
)
(18,946
)
(34,615
)
Tax-equivalent adjustment
375
342
334
270
239
Net interest income, tax equivalent,
excluding PPP
$
136,168
$
138,270
$
149,734
$
146,176
$
130,323
GAAP average total interest earning
assets
$
20,514,677
$
20,211,028
$
20,021,455
$
19,525,936
$
18,572,308
Average PPP loans
(889,235
)
(1,065,919
)
(1,349,403
)
(1,863,429
)
(2,641,318
)
Adjusted average total interest earning
assets, excluding PPP
$
19,625,442
$
19,145,109
$
18,672,052
$
17,662,507
$
15,930,990
Net interest margin, tax equivalent,
excluding PPP
2.80
%
2.87
%
3.18
%
3.32
%
3.32
%
Loan Yield, excluding PPP
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Interest income on loans and leases
$
255,913
$
218,740
$
200,457
$
168,941
$
157,175
PPP interest income
(23,551
)
(7,249
)
(14,666
)
(20,572
)
(36,894
)
Interest income on core loans (Loans and
leases, excluding PPP)
$
232,362
$
211,491
$
185,791
$
148,369
$
120,281
Average total loans and leases
$
15,477,973
$
15,388,003
$
15,653,983
$
14,918,498
$
13,656,991
Average PPP loans
(889,235
)
(1,065,919
)
(1,349,403
)
(1,863,429
)
(2,641,318
)
Adjusted average total loans and
leases
$
14,588,738
$
14,322,084
$
14,304,580
$
13,055,069
$
11,015,673
Loan yield, excluding PPP
6.46
%
5.86
%
5.15
%
4.56
%
4.43
%
Core Efficiency Ratio - Customers
Bancorp
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP net interest income
$
149,899
$
135,137
$
159,032
$
164,852
$
164,699
GAAP non-interest income
$
18,121
$
7,345
$
(9,017
)
$
12,746
$
21,198
Loss on sale of consumer installment
loans
—
—
23,465
—
—
(Gains) losses on investment
securities
(62
)
16,909
2,394
3,232
1,339
Derivative credit valuation adjustment
259
252
(461
)
(455
)
(957
)
Core non-interest income
18,318
24,506
16,381
15,523
21,580
Core revenue
$
168,217
$
159,643
$
175,413
$
180,375
$
186,279
GAAP non-interest expense
$
80,133
$
78,419
$
76,198
$
76,205
$
73,807
Severance expense
(809
)
—
(1,363
)
—
—
Impairments on fixed assets and leases
(109
)
—
(162
)
(914
)
(286
)
Core non-interest expense
$
79,215
$
78,419
$
74,673
$
75,291
$
73,521
Core efficiency ratio (1)
47.09
%
49.12
%
42.57
%
41.74
%
39.47
%
(1) Core efficiency ratio calculated as core non-interest
expense divided by core revenue.
Tangible Common Equity to Tangible
Assets - Customers Bancorp
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP total shareholders' equity
$
1,421,020
$
1,402,961
$
1,386,931
$
1,353,390
$
1,377,406
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
)
(3,678
)
Tangible common equity
$
1,279,597
$
1,261,538
$
1,245,508
$
1,211,967
$
1,235,934
GAAP total assets
$
21,751,614
$
20,896,112
$
20,367,621
$
20,251,996
$
19,163,708
Reconciling items:
Goodwill and other intangibles
(3,629
)
(3,629
)
(3,629
)
(3,629
)
(3,678
)
Tangible assets
$
21,747,985
$
20,892,483
$
20,363,992
$
20,248,367
$
19,160,030
Tangible common equity to tangible
assets
5.9
%
6.0
%
6.1
%
6.0
%
6.5
%
Tangible Common Equity to Tangible
Assets, excluding PPP - Customers Bancorp
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP total shareholders' equity
$
1,421,020
$
1,402,961
$
1,386,931
$
1,353,390
$
1,377,406
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
)
(3,678
)
Tangible common equity
$
1,279,597
$
1,261,538
$
1,245,508
$
1,211,967
$
1,235,934
GAAP total assets
$
21,751,614
$
20,896,112
$
20,367,621
$
20,251,996
$
19,163,708
Loans receivable, PPP
(246,258
)
(998,153
)
(1,154,632
)
(1,570,160
)
(2,195,902
)
Total assets, excluding PPP
$
21,505,356
$
19,897,959
$
19,212,989
$
18,681,836
$
16,967,806
Reconciling items:
Goodwill and other intangibles
(3,629
)
(3,629
)
(3,629
)
(3,629
)
(3,678
)
Tangible assets, excluding PPP
$
21,501,727
$
19,894,330
$
19,209,360
$
18,678,207
$
16,964,128
Tangible common equity to tangible assets,
excluding PPP
6.0
%
6.3
%
6.5
%
6.5
%
7.3
%
Tangible Book Value per Common Share -
Customers Bancorp
(Dollars in thousands except share and per
share data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
GAAP total shareholders' equity
$
1,421,020
$
1,402,961
$
1,386,931
$
1,353,390
$
1,377,406
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
)
(3,678
)
Tangible common equity
$
1,279,597
$
1,261,538
$
1,245,508
$
1,211,967
$
1,235,934
Common shares outstanding
31,239,750
32,373,697
32,475,502
32,449,486
32,957,847
Tangible book value per common share
$
40.96
$
38.97
$
38.35
$
37.35
$
37.50
Core Loans (Total Loans and Leases,
excluding PPP)
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Total loans and leases
$
15,063,034
$
15,794,671
$
15,336,688
$
15,664,353
$
14,073,518
Loans receivable, PPP
(246,258
)
(998,153
)
(1,154,632
)
(1,570,160
)
(2,195,902
)
Core Loans (Total loans and leases,
excluding PPP)
$
14,816,776
$
14,796,518
$
14,182,056
$
14,094,193
$
11,877,616
Core Loans Held for Investment
(Total Loans and Leases Held for
Investment, excluding PPP)
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Total loans and leases, held for
investment
$
14,638,977
$
15,466,359
$
15,331,464
$
15,657,758
$
14,070,515
Loans receivable, PPP
(246,258
)
(998,153
)
(1,154,632
)
(1,570,160
)
(2,195,902
)
Core Loans Held for Investment
(Total loans and leases held for
investment, excluding PPP)
$
14,392,719
$
14,468,206
$
14,176,832
$
14,087,598
$
11,874,613
Total Assets, excluding PPP
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Total assets
$
21,751,614
$
20,896,112
$
20,367,621
$
20,251,996
$
19,163,708
Loans receivable, PPP
(246,258
)
(998,153
)
(1,154,632
)
(1,570,160
)
(2,195,902
)
Total assets, excluding PPP
$
21,505,356
$
19,897,959
$
19,212,989
$
18,681,836
$
16,967,806
Coverage of credit loss reserves for
loans and leases held for investment, excluding PPP
(Dollars in thousands except per share
data)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Loans and leases receivable
$
13,391,610
$
14,143,047
$
13,762,374
$
13,783,155
$
12,314,757
Loans receivable, PPP
(246,258
)
(998,153
)
(1,154,632
)
(1,570,160
)
(2,195,902
)
Loans and leases held for investment,
excluding PPP
$
13,145,352
$
13,144,894
$
12,607,742
$
12,212,995
$
10,118,855
Allowance for credit losses on loans and
leases
$
130,281
$
130,924
$
130,197
$
156,530
$
145,847
Coverage of credit loss reserves for loans
and leases held for investment, excluding PPP
0.99
%
1.00
%
1.03
%
1.28
%
1.44
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230426006065/en/
David W. Patti, Communications Director 610-451-9452
Customers Bancorp (NYSE:CUBI)
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