Customers Bancorp, Inc. (NYSE:CUBI):
Second Quarter 2024 Highlights
- Q2 2024 net income available to common shareholders was $54.3
million, or $1.66 per diluted share; ROAA was 1.11% and ROCE was
13.85%.
- Q2 2024 core earnings*1 were $48.6 million, or $1.49 per
diluted share; Core ROAA* was 1.00% and Core ROCE* was 12.39%.
- CET 1 ratio of 12.8%2 at June 30, 2024, compared to 12.6% at
March 31, 2024, above the approximately 11.5% target.
- TCE / TA ratio* of 7.7% at June 30, 2024, compared to 7.3% at
March 31, 2024, above the approximately 7.5% target.
- Total loans and leases grew by $375.8 million in Q2 2024 from
Q1 2024 or 11% annualized.
- Q2 2024 net interest margin, tax equivalent (“NIM”) was 3.29%,
compared to Q1 2024 NIM of 3.10%, due to higher loan balances and
lower cost of deposits.
- Q2 2024 deposit inflows from commercial customers of $0.6
billion, along with excess cash, funded the paydown of $0.5 billion
of higher-cost consumer deposits and $0.3 billion of maturing
wholesale CDs. Total deposits decreased by $283.3 million in Q2
2024 from Q1 2024 with significant continued positive mix
shift.
- Total estimated insured deposits were 76%3 of total deposits at
June 30, 2024, with immediately available liquidity covering
estimated uninsured deposits3 by approximately 193%.
- Total borrowings declined by $176.6 million in Q2 2024 from Q1
2024 or 11.8%
- Non-performing assets were $47.4 million, or 0.23% of total
assets, at June 30, 2024 compared to 0.17% at March 31, 2024.
Allowance for credit losses on loans and leases equaled 280% of
non-performing loans at June 30, 2024, compared to 374% at March
31, 2024.
- Q2 2024 provision for credit losses on loans and leases was
$17.9 million compared to $16.0 million in Q1 2024 and the coverage
of credit loss reserves for loans and leases held for investment
was 1.08%. The coverage of credit loss reserves for loans and
leases held for investment decreased modestly from 1.12% in Q1
2024.
- Q2 2024 book value per share and tangible book value per share*
both grew by approximately $1.52, or 3.1% over Q1 2024, driven by
strong quarterly earnings and a decrease in AOCI losses of $0.9
million over the same time period. Tangible book value per share*
is $50.70 at June 30, 2024.
- Adopted a one-year common stock repurchase program to
repurchase up to 497,509 shares.
*
Non-GAAP measure. Customers’ reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
1
Excludes pre-tax unrealized gain on equity
method investments purchased at a discount in Q2 2024 of $11.0
million, severance expense of $2.6 million, loss on investment
securities of $0.7 million, FDIC special assessment expense of $0.2
million and derivative credit valuation adjustment of $0.1
million.
2
Regulatory capital ratios as of June 30,
2024 are estimates.
3
Uninsured deposits (estimate) of $5.8
billion to be reported on the Bank’s call report, less deposits of
$1.3 billion collateralized by standby letters of credit from the
FHLB and from our affiliates of $143.6 million.
CEO Commentary
“Customers Bancorp delivered another strong performance in the
second quarter of 2024, continuing to deliver on our strategic
priorities to grow our franchise value, our margins and our loans
and low-cost deposits,” said Customers Bancorp Chairman and CEO Jay
Sidhu. “We are pleased to share that actions we took over the last
six quarters have enabled us to exceed our 11.5% CET1 and 7.5% TCE
/ TA ratio* targets. We are now positioned for strategic,
relationship-based loan and deposit growth as we demonstrated this
quarter. We have strong momentum as we pursue phase two of our
deposit transformation – remixing existing higher-cost business
unit deposits*1 and brokered deposits into lower-cost and granular
deposits. We had a robust pipeline within our existing businesses
which has been materially enhanced by the 10 new banking teams that
joined Customers in April. In the quarter, we utilized deposit
growth from commercial customers of $0.6 billion and existing
excess cash to runoff $0.5 billion of higher-cost consumer deposits
and repay $0.3 billion in wholesale CDs. Business unit deposit*1
gross inflows were, once again, broad-based with more than 20
different channels increasing balances and roughly half
contributing $25 million or more. Our 10 new deposit focused
banking teams, with only two months of client activity, have opened
more than 1,000 new deposit accounts for more than 700 customers in
the quarter. Our deposit pipelines continue to grow with an
extraordinary conversion ratio. Our net interest margin expanded by
19 basis points in the second quarter to 3.29% outpacing current
industry trends. This expansion was a function of improvements in
both the asset and liability components of the balance sheet.
Capital levels continued to build as evidenced by a 40 basis point
increase in our TCE / TA ratio*. In June, our Board of Directors
authorized a share repurchase program providing an additional
capital deployment tool that can be utilized. Enhanced by the
addition of our new banking teams, we believe we are extremely
well-positioned to continue to strengthen our deposit franchise,
improve our profitability, and maintain our already strong capital
ratios,” stated Jay Sidhu.
“Our Q2 2024 GAAP earnings were $54.3 million, or $1.66 per
diluted share, and core earnings* were $48.6 million, or $1.49 per
diluted share. At June 30, 2024, our deposit base was well
diversified, with approximately 76%2 of total deposits insured. We
maintain a strong liquidity position, with $8.3 billion of
liquidity immediately available, which covers approximately 193% of
uninsured deposits2 and our loan to deposit ratio was 77%. We
continue to focus loan production where we have a holistic and
primary relationship. Total loans and leases grew by $357.7 million
driven by strong commercial loan growth of $396.1 million primarily
in our Corporate and Specialized verticals. Our loan pipeline
continued to build during the second quarter, and we remain
confident in the 10% – 15% loan growth outlook previously provided.
We continue to build liquidity and capital to support the needs of
our customers. At June 30, 2024, we had $3.0 billion of cash on
hand leading to prudent balance sheet and liquidity management.
Asset quality remains strong with our NPA ratio at just 0.23% of
total assets and reserve levels are robust at 280% of total
non-performing loans at the end of Q2 2024. Our exposure to the
higher risk commercial real estate office sector is minimal,
representing approximately 1% of the loan portfolio. Continued
execution on our strategic priorities has positioned us favorably
for success in 2024 from a capital, credit, liquidity, interest
rate risk and earnings perspective. We will remain disciplined, but
opportunistic, with our balance sheet capacity to manage risk and
maintain robust capital levels. Tangible Book Value per share* grew
to $50.70. We are excited and optimistic about the opportunities we
had in the first half of 2024, which have been enhanced by the
addition of the new banking teams,” Jay Sidhu continued.
*
Non-GAAP measure. Customers’ reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
1
Total deposits excluding wholesale CDs and
BMTX student-related deposits.
2
Uninsured deposits (estimate) of $5.8
billion to be reported on the Bank’s call report, less deposits of
$1.3 billion collateralized by standby letters of credit from the
FHLB and from our affiliates of $143.6 million.
Financial Highlights
(Dollars in thousands, except per share
data)
At or Three Months
Ended
Increase (Decrease)
June 30, 2024
March 31, 2024
Profitability Metrics:
Net income available for common
shareholders
$
54,300
$
45,926
$
8,374
18.2
%
Diluted earnings per share
$
1.66
$
1.40
$
0.26
18.6
%
Core earnings*
$
48,567
$
46,532
$
2,035
4.4
%
Adjusted core earnings*
$
48,567
$
55,137
$
(6,570
)
(11.9
)%
Core earnings per share*
$
1.49
$
1.42
$
0.07
4.9
%
Adjusted core earnings per share*
$
1.49
$
1.68
$
(0.19
)
(11.3
)%
Return on average assets (“ROAA”)
1.11
%
0.94
%
0.17
Core ROAA*
1.00
%
0.95
%
0.05
Adjusted core ROAA*
1.00
%
1.11
%
(0.11
)
Return on average common equity
(“ROCE”)
13.85
%
12.08
%
1.77
Core ROCE*
12.39
%
12.24
%
0.15
Adjusted core ROCE*
12.39
%
14.50
%
(2.11
)
Core pre-tax pre-provision net income*
$
89,220
$
83,674
$
5,546
6.6
%
Adjusted core pre-tax pre-provision net
income*
$
89,220
$
94,988
$
(5,768
)
(6.1
)%
Net interest margin, tax equivalent
3.29
%
3.10
%
0.19
Yield on loans (Loan yield)
7.17
%
7.05
%
0.12
Cost of deposits
3.40
%
3.45
%
(0.05
)
Efficiency ratio
51.87
%
54.58
%
(2.71
)
Core efficiency ratio*
53.47
%
54.24
%
(0.77
)
Adjusted core efficiency ratio*
53.47
%
48.02
%
5.45
Non-interest expense to average total
assets
1.98
%
1.87
%
0.11
Core non-interest expense to average total
assets*
1.93
%
1.86
%
0.07
Adjusted core non-interest expense to
average total assets*
1.93
%
1.65
%
0.28
Balance Sheet Trends:
Total assets
$
20,942,975
$
21,347,367
$
(404,392
)
(1.9
)%
Total cash and investment securities
$
6,523,036
$
7,338,025
$
(814,989
)
(11.1
)%
Total loans and leases
$
13,632,639
$
13,256,871
$
375,768
2.8
%
Non-interest bearing demand deposits
$
4,474,862
$
4,688,880
$
(214,018
)
(4.6
)%
Total deposits
$
17,678,093
$
17,961,383
$
(283,290
)
(1.6
)%
Capital Metrics:
Common Equity
$
1,609,071
$
1,553,823
$
55,248
3.6
%
Tangible Common Equity*
$
1,605,442
$
1,550,194
$
55,248
3.6
%
Common Equity to Total Assets
7.7
%
7.3
%
0.4
Tangible Common Equity to Tangible
Assets*
7.7
%
7.3
%
0.4
Book Value per common share
$
50.81
$
49.29
$
1.52
3.1
%
Tangible Book Value per common share*
$
50.70
$
49.18
$
1.52
3.1
%
Common equity Tier 1 capital ratio (1)
12.8
%
12.6
%
0.2
Total risk based capital ratio (1)
15.8
%
15.9
%
(0.1
)
(1) Regulatory capital ratios as of June
30, 2024 are estimates.
* Non-GAAP measure. Customers’ reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
Financial Highlights
(Dollars in thousands, except per share
data)
At or Three Months
Ended
Increase (Decrease)
Six Months Ended
Increase (Decrease)
June 30, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Profitability Metrics:
Net income available for common
shareholders
$
54,300
$
44,007
$
10,293
23.4
%
$
100,226
$
94,272
$
5,954
6.3
%
Diluted earnings per share
$
1.66
$
1.39
$
0.27
19.4
%
$
3.06
$
2.95
$
0.11
3.7
%
Core earnings*
$
48,567
$
52,163
$
(3,596
)
(6.9
)%
$
95,099
$
103,306
$
(8,207
)
(7.9
)%
Adjusted core earnings*
$
48,567
$
52,163
$
(3,596
)
(6.9
)%
$
103,704
$
103,306
$
398
0.4
%
Core earnings per share*
$
1.49
$
1.65
$
(0.16
)
(9.7
)%
$
2.90
$
3.22
$
(0.32
)
(9.9
)%
Adjusted core earnings per share*
$
1.49
$
1.65
$
(0.16
)
(9.7
)%
$
3.16
$
3.22
$
(0.06
)
(1.9
)%
Return on average assets (“ROAA”)
1.11
%
0.88
%
0.23
1.02
%
0.96
%
0.06
Core ROAA*
1.00
%
1.03
%
(0.03
)
0.98
%
1.04
%
(0.06
)
Adjusted core ROAA*
1.00
%
1.03
%
(0.03
)
1.06
%
1.04
%
0.02
Return on average common equity
(“ROCE”)
13.85
%
13.22
%
0.63
12.98
%
14.57
%
(1.59
)
Core ROCE*
12.39
%
15.67
%
(3.28
)
12.32
%
15.97
%
(3.65
)
Adjusted core ROCE*
12.39
%
15.67
%
(3.28
)
13.43
%
15.97
%
(2.54
)
Core pre-tax pre-provision net income*
$
89,220
$
96,833
$
(7,613
)
(7.9
)%
$
172,894
$
186,115
$
(13,221
)
(7.1
)%
Adjusted core pre-tax pre-provision net
income*
$
89,220
$
96,833
$
(7,613
)
(7.9
)%
$
184,208
$
186,115
$
(1,907
)
(1.0
)%
Net interest margin, tax equivalent
3.29
%
3.15
%
0.14
3.20
%
3.06
%
0.14
Yield on loans (Loan yield)
7.17
%
6.83
%
0.34
7.11
%
6.77
%
0.34
Cost of deposits
3.40
%
3.11
%
0.29
3.43
%
3.22
%
0.21
Efficiency ratio
51.87
%
49.25
%
2.62
53.16
%
48.51
%
4.65
Core efficiency ratio*
53.47
%
47.84
%
5.63
53.85
%
47.49
%
6.36
Adjusted core efficiency ratio*
53.47
%
47.84
%
5.63
50.79
%
47.49
%
3.30
Non-interest expense to average total
assets
1.98
%
1.65
%
0.33
1.93
%
1.60
%
0.33
Core non-interest expense to average total
assets*
1.93
%
1.65
%
0.28
1.89
%
1.59
%
0.30
Adjusted core non-interest expense to
average total assets*
1.93
%
1.65
%
0.28
1.79
%
1.59
%
0.20
Balance Sheet Trends:
Total assets
$
20,942,975
$
22,028,565
$
(1,085,590
)
(4.9
)%
Total cash and investment securities
$
6,523,036
$
7,238,422
$
(715,386
)
(9.9
)%
Total loans and leases
$
13,632,639
$
13,910,907
$
(278,268
)
(2.0
)%
Non-interest bearing demand deposits
$
4,474,862
$
4,490,198
$
(15,336
)
(0.3
)%
Total deposits
$
17,678,093
$
17,950,431
$
(272,338
)
(1.5
)%
Capital Metrics:
Common Equity
$
1,609,071
$
1,318,858
$
290,213
22.0
%
Tangible Common Equity*
$
1,605,442
$
1,315,229
$
290,213
22.1
%
Common Equity to Total Assets
7.7
%
6.0
%
1.7
Tangible Common Equity to Tangible
Assets*
7.7
%
6.0
%
1.7
Book Value per common share
$
50.81
$
42.16
$
8.65
20.5
%
Tangible Book Value per common share*
$
50.70
$
42.04
$
8.66
20.6
%
Common equity Tier 1 capital ratio (1)
12.8
%
10.3
%
2.5
Total risk based capital ratio (1)
15.8
%
13.2
%
2.6
(1) Regulatory capital ratios as of June
30, 2024 are estimates.
* Non-GAAP measure. Customers’ reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
Key Balance Sheet Trends
Loans and Leases
The following table presents the composition of total loans and
leases as of the dates indicated:
(Dollars in thousands)
June 30, 2024
% of Total
March 31, 2024
% of Total
June 30, 2023
% of Total
Loans and Leases
Held for Investment
Commercial:
Commercial & industrial:
Specialized lending
$
5,528,745
41.7
%
$
5,104,405
39.6
%
$
5,534,832
40.0
%
Other commercial & industrial (1)
1,092,146
8.2
1,113,517
8.6
1,240,908
9.0
Mortgage finance
1,122,812
8.5
1,071,146
8.3
1,108,598
8.0
Multifamily
2,067,332
15.6
2,123,675
16.5
2,151,734
15.6
Commercial real estate owner occupied
805,779
6.1
806,278
6.3
842,042
6.1
Commercial real estate non-owner
occupied
1,202,606
9.1
1,182,084
9.2
1,211,091
8.8
Construction
163,409
1.2
185,601
1.3
212,214
1.5
Total commercial loans and leases
11,982,829
90.4
11,586,706
89.8
12,301,419
89.0
Consumer:
Residential
481,503
3.6
482,537
3.8
487,199
3.5
Manufactured housing
35,901
0.3
37,382
0.3
41,664
0.3
Installment:
Personal
474,481
3.6
492,892
3.8
752,470
5.4
Other
282,201
2.1
299,714
2.3
250,047
1.8
Total installment loans
756,682
5.7
792,606
6.1
1,002,517
7.2
Total consumer loans
1,274,086
9.6
1,312,525
10.2
1,531,380
11.0
Total loans and leases held for
investment
$
13,256,915
100.0
%
$
12,899,231
100.0
%
$
13,832,799
100.0
%
Loans Held for
Sale
Residential
$
2,684
0.7
%
$
870
0.2
%
$
1,234
1.6
%
Installment:
Personal
125,598
33.4
137,755
38.5
76,874
98.4
Other
247,442
65.9
219,015
61.3
—
—
Total installment loans
373,040
99.3
356,770
99.8
76,874
98.4
Total loans held for sale
$
375,724
100.0
%
$
357,640
100.0
%
$
78,108
100.0
%
Total loans and leases
portfolio
$
13,632,639
$
13,256,871
$
13,910,907
(1) Includes PPP loans of $38.3 million, $52.0 million and
$188.8 million as of June 30, 2024, March 31, 2024 and June 30,
2023, respectively.
Loans and Leases Held for Investment
Loans and leases held for investment were $13.3 billion at June
30, 2024, up $357.7 million, or 2.8%, from March 31, 2024.
Specialized lending increased $424.3 million, or 8.3%
quarter-over-quarter, to $5.5 billion. Mortgage finance loans
increased $51.7 million, or 4.8% quarter-over-quarter due to higher
seasonal mortgage activity. Non-owner occupied commercial real
estate loans increased modestly by $20.5 million, or 1.7% to $1.2
billion. Multifamily loans decreased $56.3 million, or 2.7% to $2.1
billion. Construction loans decreased $22.2 million, or 12.0% to
$163.4 million. Other commercial and industrial loans decreased
$21.4 million, or 1.9% quarter-over-quarter, to $1.1 billion.
Consumer installment loans held for investment decreased $35.9
million, or 4.5% quarter-over-quarter, to $756.7 million due to the
continued build out of the held-for-sale strategy and de-risking of
the held-for-investment loan portfolio.
Loans and leases held for investment of $13.3 billion at June
30, 2024 were down $575.9 million, or 4.2%, year-over-year, largely
driven by reduced balances in consumer installment loans of $245.8
million, or 24.5% year-over-year, other commercial and industrial
loans of $148.8 million, which included a decrease in PPP loans
primarily from guarantee payments, multifamily loans of $84.4
million, construction loans of $48.8 million and owner-occupied
commercial real estate loans of $36.3 million.
Loans Held for Sale
Loans held for sale increased $18.1 million
quarter-over-quarter, and were $375.7 million at June 30, 2024 due
to the continued build out of the held-for-sale strategy in
2024.
Allowance for Credit Losses on Loans and Leases
The following table presents the allowance for credit losses on
loans and leases as of the dates and for the periods presented:
At or Three Months
Ended
Increase (Decrease)
At or Three Months
Ended
Increase (Decrease)
(Dollars in thousands)
June 30, 2024
March 31, 2024
June 30, 2024
June 30, 2023
Allowance for credit losses on loans and
leases
$
132,436
$
133,296
$
(860
)
$
132,436
$
139,656
$
(7,220
)
Provision (benefit) for credit losses on
loans and leases
$
17,851
$
15,953
$
1,898
$
17,851
$
22,363
$
(4,512
)
Net charge-offs from loans held for
investment
$
18,711
$
17,968
$
743
$
18,711
$
15,564
$
3,147
Annualized net charge-offs to average
loans and leases
0.56
%
0.55
%
0.56
%
0.42
%
Coverage of credit loss reserves for loans
and leases held for investment
1.08
%
1.12
%
1.08
%
1.09
%
Net charge-offs increased modestly with $18.7 million in Q2
2024, compared to $18.0 million in Q1 2024 and $15.6 million in Q2
2023.
Provision (benefit) for Credit Losses
Three Months Ended
Increase (Decrease)
Three Months Ended
Increase (Decrease)
(Dollars in thousands)
June 30, 2024
March 31, 2024
June 30, 2024
June 30, 2023
Provision (benefit) for credit losses on
loans and leases
$
17,851
$
15,953
$
1,898
$
17,851
$
22,363
$
(4,512
)
Provision (benefit) for credit losses on
available for sale debt securities
270
1,117
(847
)
270
1,266
(996
)
Provision for credit losses
18,121
17,070
1,051
18,121
23,629
(5,508
)
Provision (benefit) for credit losses on
unfunded commitments
1,594
430
1,164
1,594
(304
)
1,898
Total provision for credit losses
$
19,715
$
17,500
$
2,215
$
19,715
$
23,325
$
(3,610
)
The provision for credit losses on loans and leases in Q2 2024
was $17.9 million, compared to $16.0 million in Q1 2024. The higher
provision in Q2 2024 was primarily due to an increase in commercial
and industrial loan balances held for investment, partially offset
by slight improvements in macroeconomic forecasts and by lower
balances in consumer installment loans held for investment.
The provision for credit losses on available for sale investment
securities in Q2 2024 was $0.3 million, compared to provision of
$1.1 million in Q1 2024.
The provision for credit losses on loans and leases in Q2 2024
was $17.9 million, compared to $22.4 million in Q2 2023. The lower
provision in Q2 2024 compared to the year ago period was primarily
due to slight improvements in macroeconomic forecasts and by lower
balances in consumer installment loans held for investment.
The provision for credit losses on available for sale investment
securities in Q2 2024 was $0.3 million compared to provision of
$1.3 million in Q2 2023.
Asset Quality
The following table presents asset quality metrics as of the
dates indicated:
(Dollars in thousands)
June 30, 2024
March 31, 2024
Increase (Decrease)
June 30, 2024
June 30, 2023
Increase (Decrease)
Non-performing assets (“NPAs”):
Nonaccrual / non-performing loans
(“NPLs”)
$
47,380
$
35,654
$
11,726
$
47,380
$
28,244
$
19,136
Non-performing assets
$
47,444
$
35,753
$
11,691
$
47,444
$
28,380
$
19,064
NPLs to total loans and leases
0.35
%
0.27
%
0.35
%
0.20
%
Reserves to NPLs
279.52
%
373.86
%
279.52
%
494.46
%
NPAs to total assets
0.23
%
0.17
%
0.23
%
0.13
%
Loans and leases (1) risk
ratings:
Commercial loans and leases
Pass
$
10,500,922
$
10,095,611
$
405,311
$
10,500,922
$
10,667,619
$
(166,697
)
Special Mention
170,014
194,365
(24,351
)
170,014
166,468
3,546
Substandard
270,898
282,163
(11,265
)
270,898
272,301
(1,403
)
Total commercial loans and leases
10,941,834
10,572,139
369,695
10,941,834
11,106,388
(164,554
)
Consumer loans
Performing
1,256,816
1,293,457
(36,641
)
1,256,816
1,508,208
(251,392
)
Non-performing
17,270
19,068
(1,798
)
17,270
23,172
(5,902
)
Total consumer loans
1,274,086
1,312,525
(38,439
)
1,274,086
1,531,380
(257,294
)
Loans and leases receivable (1)
$
12,215,920
$
11,884,664
$
331,256
$
12,215,920
$
12,637,768
$
(421,848
)
(1) Risk ratings are assigned to loans and
leases held for investment, and excludes loans held for sale, loans
receivable, mortgage finance, at fair value and eligible PPP loans
that are fully guaranteed by the Small Business Administration.
Over the last decade, the Bank has developed a suite of
commercial loan products with one particularly important common
denominator: relatively low credit risk assumption. The Bank’s
commercial and industrial (“C&I”), mortgage finance, corporate
and specialized lending lines of business, and multifamily loans
for example, are characterized by conservative underwriting
standards and historically low loss rates. Because of this
emphasis, the Bank’s credit quality to date has been incredibly
healthy despite an adverse economic environment. Maintaining strong
asset quality also requires a highly active portfolio monitoring
process. In addition to frequent client outreach and monitoring at
the individual loan level, management employs a bottom-up data
driven approach to analyze the commercial portfolio.
Total consumer installment loans held for investment at June 30,
2024 were less than 4% of total assets and approximately 6% of
total loans and leases held for investment, and were supported by
an allowance for credit losses of $49.8 million. At June 30, 2024,
the consumer installment portfolio had the following
characteristics: average original FICO score of 738, average
debt-to-income of 20% and average borrower income of $106
thousand.
Non-performing loans at June 30, 2024 increased to 0.35% of
total loans and leases, compared to 0.27% at March 31, 2024 and
0.20% at June 30, 2023. The $11.7 million increase in NPLs was
primarily due to one multifamily credit and one commercial loan
originated under the Federal Reserve’s Main Street Lending Program
moving to nonaccrual status.
Investment Securities
The investment securities portfolio, including debt securities
classified as available for sale (“AFS”) and held to maturity
(“HTM”) provides periodic cash flows through regular maturities and
amortization, can be used as collateral to secure additional
funding, and is an important component of the Bank’s liquidity
position.
The following table presents the composition of the investment
securities portfolio as of the dates indicated:
(Dollars in thousands)
June 30, 2024
March 31, 2024
June 30, 2023
Debt securities, available for sale
$
2,477,758
$
2,571,139
$
2,797,940
Equity securities
33,892
33,729
26,698
Investment securities, at fair value
2,511,650
2,604,868
2,824,638
Debt securities, held to maturity
962,799
1,032,037
1,258,560
Total investment securities portfolio
$
3,474,449
$
3,636,905
$
4,083,198
Customers’ securities portfolio is highly liquid, short in
duration, and high in yield. At June 30, 2024, the AFS debt
securities portfolio had a spot yield of 5.19%, an effective
duration of approximately 2.0 years, and approximately 33% are
variable rate. Additionally, 63% of the AFS securities portfolio
was AAA rated at June 30, 2024. During the quarter, approximately
$220 million of mostly floating rate CLOs were sold and a similar
amount of fixed rate agency securities were purchased, reducing
asset sensitivity and increasing high quality liquid assets.
At June 30, 2024, the HTM debt securities portfolio represented
only 4.6% of total assets at June 30, 2024, had a spot yield of
4.16% and an effective duration of approximately 3.1 years.
Additionally, at June 30, 2024, approximately 43% of the HTM
securities were AAA rated and 46% were credit enhanced asset backed
securities with no current expectation of credit losses.
Deposits
The following table presents the composition of our deposit
portfolio as of the dates indicated:
(Dollars in thousands)
June 30, 2024
% of Total
March 31, 2024
% of Total
June 30, 2023
% of Total
Demand, non-interest bearing
$
4,474,862
25.3
%
$
4,688,880
26.1
%
$
4,490,198
25.0
%
Demand, interest bearing
5,894,056
33.4
5,661,775
31.5
5,551,037
30.9
Total demand deposits
10,368,918
58.7
10,350,655
57.6
10,041,235
55.9
Savings
1,573,661
8.9
2,080,374
11.6
1,048,229
5.8
Money market
3,539,815
20.0
3,347,843
18.6
2,004,264
11.2
Time deposits
2,195,699
12.4
2,182,511
12.2
4,856,703
27.1
Total deposits
$
17,678,093
100.0
%
$
17,961,383
100.0
%
$
17,950,431
100.0
%
Total deposits decreased $283.3 million, or 1.6%, to $17.7
billion at June 30, 2024 as compared to the prior quarter. Savings
deposits decreased $506.7 million, or 24.4%, to $1.6 billion and
non-interest bearing demand deposits decreased $214.0 million, or
4.6%, to $4.5 billion. The decrease in savings deposits resulted
from an intentional reduction in higher cost consumer deposits.
These decreases were offset by increases in interest bearing demand
deposits of $232.3 million, or 4.1%, to $5.9 billion, money market
deposits of $192.0 million, or 5.7%, to $3.5 billion and time
deposits of $13.2 million, or 0.6%, to $2.2 billion. The total
average cost of deposits decreased by 5 basis points to 3.40% in Q2
2024 from 3.45% in the prior quarter driven by positive deposit mix
shift. Total estimated uninsured deposits were $4.3 billion1, or
24% of total deposits (inclusive of accrued interest) at June 30,
2024. Customers is also highly focused on total deposits with
contractual term to manage its liquidity profile and the funding of
loans and securities.
Total deposits decreased $272.3 million, or 1.5%, to $17.7
billion at June 30, 2024 as compared to a year ago. Time deposits
decreased $2.7 billion, or 54.8% to $2.2 billion and non-interest
bearing demand deposits decreased $15.3 million, or 0.3%, to $4.5
billion. These decreases were offset by increases in money market
deposits of $1.5 billion, or 76.6%, to $3.5 billion, savings
deposits of $525.4 million, or 50.1%, to $1.6 billion and interest
bearing demand deposits of $343.0 million, or 6.2%, to $5.9
billion. The total average cost of deposits increased by 29 basis
points to 3.40% in Q2 2024 from 3.11% in the prior year primarily
due to higher market interest rates, offsetting a positive shift in
deposit mix.
1
Uninsured deposits (estimate) of $5.8 billion to be reported on the
Bank’s call report, less deposits of $1.3 billion collateralized by
standby letters of credit from the FHLB and from our affiliates of
$143.6 million.
Borrowings
The following table presents the composition of our borrowings
as of the dates indicated:
(Dollars in thousands)
June 30, 2024
March 31, 2024
June 30, 2023
FHLB advances
$
1,018,349
$
1,195,088
$
2,046,142
Senior notes
123,970
123,905
123,710
Subordinated debt
182,370
182,300
182,091
Total borrowings
$
1,324,689
$
1,501,293
$
2,351,943
Total borrowings decreased $176.6 million, or 11.8%, to $1.3
billion at June 30, 2024 as compared to the prior quarter. This
decrease primarily resulted from net repayments of $175.0 million
in FHLB advances. As of June 30, 2024, Customers’ immediately
available borrowing capacity with the FRB and FHLB was
approximately $7.6 billion, of which $1.0 billion of available
capacity was utilized in borrowings and $1.4 billion was utilized
to collateralize deposits.
Total borrowings decreased $1.0 billion, or 43.7%, to $1.3
billion at June 30, 2024 as compared to a year ago. This decrease
primarily resulted from net repayments of $175.0 million, $340.0
million and $510.0 million in FHLB advances in Q2 2024, Q4 2023 and
Q3 2023, respectively.
Capital
The following table presents certain capital amounts and ratios
as of the dates indicated:
(Dollars in thousands except per share
data)
June 30, 2024
March 31, 2024
June 30, 2023
Customers Bancorp, Inc.
Common Equity
$
1,609,071
$
1,553,823
$
1,318,858
Tangible Common Equity*
$
1,605,442
$
1,550,194
$
1,315,229
Common Equity to Total Assets
7.7
%
7.3
%
6.0
%
Tangible Common Equity to Tangible
Assets*
7.7
%
7.3
%
6.0
%
Book Value per common share
$
50.81
$
49.29
$
42.16
Tangible Book Value per common share*
$
50.70
$
49.18
$
42.04
Common equity Tier 1 (“CET 1”) capital
ratio (1)
12.8
%
12.6
%
10.3
%
Total risk based capital ratio (1)
15.8
%
15.9
%
13.2
%
(1) Regulatory capital ratios as of June
30, 2024 are estimates.
* Non-GAAP measure. Customers’ reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
Customers Bancorp’s common equity increased $55.2 million to
$1.6 billion, and tangible common equity* increased $55.2 million
to $1.6 billion, at June 30, 2024 compared to the prior quarter,
respectively, primarily from earnings of $54.3 million and
decreased unrealized losses on investment securities of $0.9
million (net of taxes) deferred in accumulated other comprehensive
income (“AOCI”). Similarly, book value per common share increased
to $50.81 from $49.29, and tangible book value per common share*
increased to $50.70 from $49.18, at June 30, 2024 and March 31,
2024, respectively.
Customers Bancorp’s common equity increased $290.2 million to
$1.6 billion, and tangible common equity* increased $290.2 million
to $1.6 billion, at June 30, 2024 compared to a year ago,
respectively, primarily from earnings of $241.4 million and
decreased unrealized losses on investment securities in AOCI of
$36.8 million (net of taxes). Similarly, book value per common
share increased to $50.81 from $42.16, and tangible book value per
common share* increased to $50.70 from $42.04, at June 30, 2024 and
June 30, 2023, respectively.
At the Customers Bancorp level, the CET 1 ratio (estimate),
total risk based capital ratio (estimate), common equity to total
assets ratio and tangible common equity to tangible assets ratio*
(“TCE / TA ratio”) were 12.8%, 15.8%, 7.7%, and 7.7%, respectively,
at June 30, 2024.
At the Customers Bank level, capital levels remained strong and
well above regulatory minimums. At June 30, 2024, Tier 1 capital
(estimate) and total risk based capital (estimate) were 14.2% and
15.6%, respectively.
“Even though we remain well capitalized by all regulatory
measures, we are committed to maintaining our CET 1 ratio around
11.5% and our TCE / TA ratio* around 7.5% in 2024,” stated Jay
Sidhu.
Key Profitability Trends
Net Interest Income
Net interest income totaled $167.7 million in Q2 2024, an
increase of $7.3 million from Q1 2024. This increase was due to
higher interest income of $2.3 million primarily due to higher
yielding loan growth and lower interest expense of $5.0 million due
to the positive liability mix shift.
“We experienced an increase in net interest income in the second
quarter by executing on the loan pipelines that were generated
earlier in the year. These loan pipelines remain robust and we
expect they will continue to drive interest income higher
throughout 2024. Against industry trends, we reported lower
interest expense for the third quarter in a row. Positive drivers
remain that we expect to increase interest income and decrease
interest expense which will benefit net interest income and net
interest margin for the remainder of the year,” stated Customers
Bancorp President Sam Sidhu. “These positive drivers are bolstered
by the recent team additions. Having personally completed more than
175 in person client meetings since the onboarding of our 10 new
deposit-focused banking teams, it is clear we have the bankers,
products and balance sheet strength to deliver for these clients.
We expect the overwhelming majority of client prospects will become
Customers Bank clients in the near future,” stated Sam Sidhu.
Net interest income totaled $167.7 million in Q2 2024, an
increase of $2.4 million from Q2 2023. This increase was due to
higher interest income of $3.9 million primarily due to interest
earning deposits from higher average balances and market interest
rates, and lower interest expense from lower average balances of
borrowings, offset in part by higher interest expense on deposits
of $12.4 million primarily resulting from increased market interest
rates.
Non-Interest Income
The following table presents details of non-interest income for
the periods indicated:
Three Months Ended
Increase (Decrease)
Three Months Ended
Increase (Decrease)
(Dollars in thousands)
June 30, 2024
March 31, 2024
June 30, 2024
June 30, 2023
Commercial lease income
$
10,282
$
9,683
$
599
$
10,282
$
8,917
$
1,365
Loan fees
5,233
5,280
(47
)
5,233
4,271
962
Bank-owned life insurance
2,007
3,261
(1,254
)
2,007
4,997
(2,990
)
Mortgage finance transactional fees
1,058
946
112
1,058
1,376
(318
)
Net gain (loss) on sale of loans
(238
)
10
(248
)
(238
)
(761
)
523
Loss on sale of capital call lines of
credit
—
—
—
—
(5,037
)
5,037
Net gain (loss) on sale of investment
securities
(719
)
(30
)
(689
)
(719
)
—
(719
)
Unrealized gain on equity method
investments
11,041
—
11,041
11,041
—
11,041
Other
2,373
2,081
292
2,373
2,234
139
Total non-interest income
$
31,037
$
21,231
$
9,806
$
31,037
$
15,997
$
15,040
Non-interest income totaled $31.0 million for Q2 2024, an
increase of $9.8 million compared to Q1 2024. The increase was
primarily due to $11.0 million of unrealized gain on equity method
investments purchased at a discount in Q2 2024, partially offset by
a decrease in death benefits paid by insurance carriers under
bank-owned life insurance policies.
Non-interest income totaled $31.0 million for Q2 2024, an
increase of $15.0 million compared to Q2 2023. The increase was
primarily due to $11.0 million of unrealized gain on equity method
investments purchased at a discount in Q2 2024, a loss of $5.0
million realized from the sale of non-strategic short-term
syndicated capital call lines of credit within our specialized
lending vertical that the Bank exited completely in Q2 2023, and
increases in commercial lease income of $1.4 million and loan fees
of $1.0 million resulting from increased servicing-related revenue
and unused line of credit fees. These increases were partially
offset by a $3.0 million decrease in death benefits paid by
insurance carriers under bank-owned life insurance policies.
Non-Interest Expense
The following table presents details of non-interest expense for
the periods indicated:
Three Months Ended
Increase (Decrease)
Three Months Ended
Increase (Decrease)
(Dollars in thousands)
June 30, 2024
March 31, 2024
June 30, 2024
June 30, 2023
Salaries and employee benefits
$
44,947
$
36,025
$
8,922
$
44,947
$
33,120
$
11,827
Technology, communication and bank
operations
16,227
21,904
(5,677
)
16,227
16,407
(180
)
Commercial lease depreciation
7,829
7,970
(141
)
7,829
7,328
501
Professional services
6,104
6,353
(249
)
6,104
9,192
(3,088
)
Loan servicing
3,516
4,031
(515
)
3,516
4,777
(1,261
)
Occupancy
3,120
2,347
773
3,120
2,519
601
FDIC assessments, non-income taxes and
regulatory fees
10,236
13,469
(3,233
)
10,236
9,780
456
Advertising and promotion
1,254
682
572
1,254
546
708
Other
10,219
6,388
3,831
10,219
5,628
4,591
Total non-interest expense
$
103,452
$
99,169
$
4,283
$
103,452
$
89,297
$
14,155
Non-interest expenses totaled $103.5 million in Q2 2024, an
increase of $4.3 million compared to Q1 2024. The increase was
primarily attributable to increases of $8.9 million in salaries and
employee benefits primarily due to addition of 10 new banking
teams, higher incentives and severance, $3.8 million in other
expenses, higher FDIC assessments and software expenditures. These
increases were partially offset by $11.3 million of certain
one-time items related to periods prior to 2024 that were recorded
in Q1 2024 resulting to the net decrease in technology,
communications and bank operations and FDIC assessments, non-income
taxes and regulatory fees. Excluding the impact of certain one-time
items related to periods prior to 2024, severance and the FDIC
special assessment, adjusted core non-interest expenses* were
$100.7 million in Q2 2024, an increase of $13.4 million, compared
to $87.4 million in Q1 2024.
Non-interest expenses totaled $103.5 million in Q2 2024, an
increase of $14.2 million compared to Q2 2023. The increase was
primarily attributable to increases of $11.8 million in salaries
and employee benefits primarily due to higher headcount including
the addition of 10 new banking teams, annual merit increases,
incentives and severance and $4.6 million in other expenses. These
increases were partially offset by a decrease of $3.1 million in
professional fees.
Taxes
Income tax expense increased by $3.4 million to $19.0 million in
Q2 2024 from $15.7 million in Q1 2024 primarily due to higher
pre-tax income.
Income tax expense decreased by $1.7 million to $19.0 million in
Q2 2024 from $20.8 million in Q2 2023 primarily due to tax expense
on surrendered bank-owned life insurance policies of $4.1 million
in Q2 2023, partially offset by higher pre-tax income.
The effective tax rate for Q2 2024 was 24.7%.
Outlook
“Looking forward, our strategy remains unchanged. We are focused
on strengthening our deposit franchise, further improving our
profitability and maintaining our strong capital ratios. Our
deposit pipelines are expected to continue to improve the quality
and mix of deposits, reducing higher cost business unit deposits*1
with lower cost deposits where we have a holistic and primary
relationship. The addition of the new banking teams is expected to
accelerate and enhance these efforts which were already well
underway. We see attractive opportunities to deploy cash and
securities cash flows into franchise-enhancing loan growth and our
pipeline is strong. We remain confident in our ability to deliver
10% - 15% loan growth for the full year. The management of
non-interest expenses remains a priority for us. We expect the
investments made in recruiting the new banking teams will produce
significant benefits by increasing our net interest income and net
interest margin primarily through lowering our interest expense
costs as well as improving the overall quality of our deposit
franchise. Operating efficiency has and will continue to be a
differentiator of our business model, and we will continue to only
make investments that generate long-term positive operating
leverage and enable the organization to operate at a mid-40’s
efficiency ratio over the medium-term. We are adjusting our
guidance on effective tax rate to 23% - 25% based on our growth in
higher-tax jurisdictions. We remain committed to maintaining a CET
1 ratio around 11.5% and TCE / TA ratio* around 7.5% in 2024. We
are highly focused on preserving superior credit quality, managing
interest rate risk, maintaining robust liquidity, operating with
higher capital ratios and generating positive operating leverage,”
concluded Sam Sidhu.
*
Non-GAAP measure. Customers' reasons for
the use of the non-GAAP measure and a detailed reconciliation
between the non-GAAP measure and the comparable GAAP amount are
included at the end of this document.
1
Total deposits excluding wholesale CDs and
BMTX student-related deposits.
Webcast
Date:
Friday, July 26, 2024
Time:
9:00 AM EDT
The live audio webcast, presentation slides, and earnings press
release will be made available at https://www.customersbank.com and
at the Customers Bancorp 2nd Quarter Earnings Webcast.
You may submit questions in advance of the live webcast by
emailing our Communications Director, David Patti at
dpatti@customersbank.com.
The webcast will be archived for viewing on the Customers Bank
Investor Relations page and available beginning approximately two
hours after the conclusion of the live event.
Institutional Background
Customers Bancorp, Inc. (NYSE:CUBI) is one of the nation’s
top-performing banking companies with nearly $21 billion in assets
making it one of the 80 largest bank holding companies in the U.S.
Customers Bank’s commercial and consumer clients benefit from a
full suite of technology-enabled tailored product experiences
delivered by best-in-class customer service distinguished by a
Single Point of Contact approach. In addition to traditional lines
such as C&I lending, commercial real estate lending and
multifamily lending, Customers Bank also provides a number of
national corporate banking services to specialized lending clients.
Major accolades include:
- No. 1 on American Banker 2024 list of top-performing banks with
$10B to $50B in assets
- No. 29 out of the 100 largest publicly traded banks in 2024
Forbes Best Banks list
- No. 52 on Investor’s Business Daily 100 Best Stocks for
2023
A member of the Federal Reserve System with deposits insured by
the Federal Deposit Insurance Corporation, Customers Bank is an
equal opportunity lender. Learn more: www.customersbank.com.
“Safe Harbor” Statement
In addition to historical information, this press release may
contain “forward-looking statements” within the meaning of the
“safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements include
statements with respect to Customers Bancorp, Inc.’s strategies,
goals, beliefs, expectations, estimates, intentions, capital
raising efforts, financial condition and results of operations,
future performance and business. Statements preceded by, followed
by, or that include the words “may,” “could,” “should,” “pro
forma,” “looking forward,” “would,” “believe,” “expect,”
“anticipate,” “estimate,” “intend,” “plan,” “project,” or similar
expressions generally indicate a forward-looking statement. These
forward-looking statements involve risks and uncertainties that are
subject to change based on various important factors (some of
which, in whole or in part, are beyond Customers Bancorp, Inc.’s
control). Numerous competitive, economic, regulatory, legal and
technological events and factors, among others, could cause
Customers Bancorp, Inc.’s financial performance to differ
materially from the goals, plans, objectives, intentions and
expectations expressed in such forward-looking statements,
including: a continuation of the recent turmoil in the banking
industry, responsive measures taken by us and regulatory
authorities to mitigate and manage related risks, regulatory
actions taken that address related issues and the costs and
obligations associated therewith, such as the FDIC special
assessments, the impact of COVID-19 and its variants on the U.S.
economy and customer behavior, the impact that changes in the
economy have on the performance of our loan and lease portfolio,
the market value of our investment securities, the continued
success and acceptance of our blockchain payments system, the
demand for our products and services and the availability of
sources of funding, the effects of actions by the federal
government, including the Board of Governors of the Federal Reserve
System and other government agencies, that affect market interest
rates and the money supply, actions that we and our customers take
in response to these developments and the effects such actions have
on our operations, products, services and customer relationships,
higher inflation and its impacts, and the effects of any changes in
accounting standards or policies. Customers Bancorp, Inc. cautions
that the foregoing factors are not exclusive, and neither such
factors nor any such forward-looking statement takes into account
the impact of any future events. All forward-looking statements and
information set forth herein are based on management’s current
beliefs and assumptions as of the date hereof and speak only as of
the date they are made. For a more complete discussion of the
assumptions, risks and uncertainties related to our business, you
are encouraged to review Customers Bancorp, Inc.’s filings with the
Securities and Exchange Commission, including its most recent
annual report on Form 10-K for the year ended December 31, 2023,
subsequently filed quarterly reports on Form 10-Q and current
reports on Form 8-K, including any amendments thereto, that update
or provide information in addition to the information included in
the Form 10-K and Form 10-Q filings, if any. Customers Bancorp,
Inc. does not undertake to update any forward-looking statement
whether written or oral, that may be made from time to time by
Customers Bancorp, Inc. or by or on behalf of Customers Bank,
except as may be required under applicable law.
Q2 2024 Overview
The following table presents a summary of key earnings and
performance metrics for the quarter ended June 30, 2024 and the
preceding four quarters:
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED
(Dollars in thousands, except per share
data and stock price data)
Q2
Q1
Q4
Q3
Q2
Six Months Ended June
30,
2024
2024
2023
2023
2023
2024
2023
GAAP Profitability Metrics:
Net income available to common
shareholders
$
54,300
$
45,926
$
58,223
$
82,953
$
44,007
$
100,226
$
94,272
Per share amounts:
Earnings per share - basic
$
1.72
$
1.46
$
1.86
$
2.65
$
1.41
$
3.18
$
2.99
Earnings per share - diluted
$
1.66
$
1.40
$
1.79
$
2.58
$
1.39
$
3.06
$
2.95
Book value per common share (1)
$
50.81
$
49.29
$
47.73
$
45.47
$
42.16
$
50.81
$
42.16
CUBI stock price (1)
$
47.98
$
53.06
$
57.62
$
34.45
$
30.26
$
47.98
$
30.26
CUBI stock price as % of book value
(1)
94
%
108
%
121
%
76
%
72
%
94
%
72
%
Average shares outstanding - basic
31,649,715
31,473,424
31,385,043
31,290,581
31,254,125
31,561,569
31,535,103
Average shares outstanding - diluted
32,699,149
32,854,534
32,521,787
32,175,084
31,591,142
32,776,842
31,965,997
Shares outstanding (1)
31,667,655
31,521,931
31,440,906
31,311,254
31,282,318
31,667,655
31,282,318
Return on average assets (“ROAA”)
1.11
%
0.94
%
1.16
%
1.57
%
0.88
%
1.02
%
0.96
%
Return on average common equity
(“ROCE”)
13.85
%
12.08
%
15.93
%
23.97
%
13.22
%
12.98
%
14.57
%
Net interest margin, tax equivalent
3.29
%
3.10
%
3.31
%
3.70
%
3.15
%
3.20
%
3.06
%
Efficiency ratio
51.87
%
54.58
%
49.08
%
41.01
%
49.25
%
53.16
%
48.51
%
Non-GAAP Profitability Metrics
(2):
Core earnings
$
48,567
$
46,532
$
61,633
$
83,294
$
52,163
$
95,099
$
103,306
Core pre-tax pre-provision net income
$
89,220
$
83,674
$
101,884
$
128,564
$
96,833
$
172,894
$
186,115
Per share amounts:
Core earnings per share - diluted
$
1.49
$
1.42
$
1.90
$
2.59
$
1.65
$
2.90
$
3.22
Tangible book value per common share
(1)
$
50.70
$
49.18
$
47.61
$
45.36
$
42.04
$
50.70
$
42.04
CUBI stock price as % of tangible book
value (1)
95
%
108
%
121
%
76
%
72
%
95
%
72
%
Core ROAA
1.00
%
0.95
%
1.22
%
1.57
%
1.03
%
0.98
%
1.04
%
Core ROCE
12.39
%
12.24
%
16.87
%
24.06
%
15.67
%
12.32
%
15.97
%
Core pre-tax pre-provision ROAA
1.71
%
1.58
%
1.90
%
2.32
%
1.79
%
1.64
%
1.76
%
Core pre-tax pre-provision ROCE
21.79
%
21.01
%
26.82
%
36.04
%
28.01
%
21.41
%
27.68
%
Core efficiency ratio
53.47
%
54.24
%
46.70
%
41.04
%
47.84
%
53.85
%
47.49
%
Asset Quality:
Net charge-offs
$
18,711
$
17,968
$
17,322
$
17,498
$
15,564
$
36,679
$
34,215
Annualized net charge-offs to average
total loans and leases
0.56
%
0.55
%
0.51
%
0.50
%
0.42
%
0.56
%
0.46
%
Non-performing loans (“NPLs”) to total
loans and leases (1)
0.35
%
0.27
%
0.21
%
0.22
%
0.20
%
0.35
%
0.20
%
Reserves to NPLs (1)
279.52
%
373.86
%
499.12
%
466.11
%
494.46
%
279.52
%
494.46
%
Non-performing assets (“NPAs”) to total
assets
0.23
%
0.17
%
0.13
%
0.14
%
0.13
%
0.23
%
0.13
%
Customers Bank Capital Ratios
(3):
Common equity Tier 1 capital to
risk-weighted assets
14.2
%
14.16
%
13.77
%
12.97
%
11.96
%
14.2
%
11.96
%
Tier 1 capital to risk-weighted assets
14.2
%
14.16
%
13.77
%
12.97
%
11.96
%
14.2
%
11.96
%
Total capital to risk-weighted assets
15.6
%
15.82
%
15.28
%
14.45
%
13.38
%
15.6
%
13.38
%
Tier 1 capital to average assets (leverage
ratio)
9.2
%
8.82
%
8.71
%
8.25
%
8.00
%
9.2
%
8.00
%
(1) Metric is a spot balance for the last
day of each quarter presented.
(2) Customers’ reasons for the use of
these non-GAAP measures and a detailed reconciliation between the
non-GAAP measures and the comparable GAAP amounts are included at
the end of this document.
(3) Regulatory capital ratios are
estimated for Q2 2024 and actual for the remaining periods. In
accordance with regulatory capital rules, Customers elected to
apply the CECL capital transition provisions which delayed the
effects of CECL on regulatory capital for two years until January
1, 2022, followed by a three-year transition period. The cumulative
CECL capital transition impact as of December 31, 2021 which
amounted to $61.6 million will be phased in at 25% per year
beginning on January 1, 2022 through December 31, 2024. As of June
30, 2024, our regulatory capital ratios reflected 25%, or $15.4
million, benefit associated with the CECL transition
provisions.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS -
UNAUDITED
(Dollars in thousands, except per share
data)
Six Months Ended
Q2
Q1
Q4
Q3
Q2
June 30,
2024
2024
2023
2023
2023
2024
2023
Interest income:
Loans and leases
$
224,265
$
217,999
$
239,453
$
271,107
$
241,745
$
442,264
$
485,957
Investment securities
47,586
46,802
51,074
54,243
48,026
94,388
95,342
Interest earning deposits
45,506
52,817
44,104
43,800
27,624
98,323
38,019
Loans held for sale
13,671
12,048
8,707
4,664
11,149
25,719
22,850
Other
3,010
2,111
2,577
2,526
1,616
5,121
2,937
Total interest income
334,038
331,777
345,915
376,340
330,160
665,815
645,105
Interest expense:
Deposits
148,784
153,725
150,307
145,825
136,375
302,509
280,305
FHLB advances
13,437
13,485
18,868
26,485
24,285
26,922
34,655
FRB advances
—
—
—
—
—
—
6,286
Subordinated debt
2,734
2,689
2,688
2,689
2,689
5,423
5,378
Other borrowings
1,430
1,493
1,546
1,568
1,540
2,923
3,311
Total interest expense
166,385
171,392
173,409
176,567
164,889
337,777
329,935
Net interest income
167,653
160,385
172,506
199,773
165,271
328,038
315,170
Provision for credit losses
18,121
17,070
13,523
17,856
23,629
35,191
43,232
Net interest income after provision for
credit losses
149,532
143,315
158,983
181,917
141,642
292,847
271,938
Non-interest income:
Commercial lease income
10,282
9,683
9,035
8,901
8,917
19,965
18,243
Loan fees
5,233
5,280
5,926
6,029
4,271
10,513
8,261
Bank-owned life insurance
2,007
3,261
2,160
1,973
4,997
5,268
7,644
Mortgage finance transactional fees
1,058
946
927
1,018
1,376
2,004
2,450
Net gain (loss) on sale of loans
(238
)
10
(91
)
(348
)
(761
)
(228
)
(761
)
Loss on sale of capital call lines of
credit
—
—
—
—
(5,037
)
—
(5,037
)
Net gain (loss) on sale of investment
securities
(719
)
(30
)
(145
)
(429
)
—
(749
)
—
Unrealized gain on equity method
investments
11,041
—
—
—
—
11,041
—
Other
2,373
2,081
860
631
2,234
4,454
3,318
Total non-interest income
31,037
21,231
18,672
17,775
15,997
52,268
34,118
Non-interest expense:
Salaries and employee benefits
44,947
36,025
33,965
33,845
33,120
80,972
65,465
Technology, communication and bank
operations
16,227
21,904
16,887
15,667
16,407
38,131
32,996
Commercial lease depreciation
7,829
7,970
7,357
7,338
7,328
15,799
15,203
Professional services
6,104
6,353
9,820
8,569
9,192
12,457
16,788
Loan servicing
3,516
4,031
3,779
3,858
4,777
7,547
9,438
Occupancy
3,120
2,347
2,320
2,471
2,519
5,467
5,279
FDIC assessments, non-income taxes and
regulatory fees
10,236
13,469
13,977
8,551
9,780
23,705
12,508
Advertising and promotion
1,254
682
850
650
546
1,936
1,595
Legal settlement expense
—
—
—
4,096
—
—
—
Other
10,219
6,388
4,812
4,421
5,628
16,607
10,158
Total non-interest expense
103,452
99,169
93,767
89,466
89,297
202,621
169,430
Income before income tax expense
77,117
65,377
83,888
110,226
68,342
142,494
136,626
Income tax expense
19,032
15,651
21,796
23,470
20,768
34,683
35,331
Net income
58,085
49,726
62,092
86,756
47,574
107,811
101,295
Preferred stock dividends
3,785
3,800
3,869
3,803
3,567
7,585
7,023
Net income available to common
shareholders
$
54,300
$
45,926
$
58,223
$
82,953
$
44,007
$
100,226
$
94,272
Basic earnings per common share
$
1.72
$
1.46
$
1.86
$
2.65
$
1.41
$
3.18
$
2.99
Diluted earnings per common share
1.66
1.40
1.79
2.58
1.39
3.06
2.95
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEET -
UNAUDITED
(Dollars in thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2024
2024
2023
2023
2023
ASSETS
Cash and due from banks
$
45,045
$
51,974
$
45,210
$
68,288
$
54,127
Interest earning deposits
3,003,542
3,649,146
3,801,136
3,351,686
3,101,097
Cash and cash equivalents
3,048,587
3,701,120
3,846,346
3,419,974
3,155,224
Investment securities, at fair value
2,511,650
2,604,868
2,405,640
2,773,207
2,824,638
Investment securities held to maturity
962,799
1,032,037
1,103,170
1,178,370
1,258,560
Loans held for sale
375,724
357,640
340,317
150,368
78,108
Loans and leases receivable
12,254,204
11,936,621
11,963,855
12,600,548
12,826,531
Loans receivable, mortgage finance, at
fair value
1,002,711
962,610
897,912
962,566
1,006,268
Allowance for credit losses on loans and
leases
(132,436
)
(133,296
)
(135,311
)
(139,213
)
(139,656
)
Total loans and leases receivable, net of
allowance for credit losses on loans and leases
13,124,479
12,765,935
12,726,456
13,423,901
13,693,143
FHLB, Federal Reserve Bank, and other
restricted stock
92,276
100,067
109,548
126,098
126,240
Accrued interest receivable
112,788
120,123
114,766
123,984
119,501
Bank premises and equipment, net
7,019
7,253
7,371
7,789
8,031
Bank-owned life insurance
293,108
293,400
292,193
291,670
290,322
Goodwill and other intangibles
3,629
3,629
3,629
3,629
3,629
Other assets
410,916
361,295
366,829
358,162
471,169
Total assets
$
20,942,975
$
21,347,367
$
21,316,265
$
21,857,152
$
22,028,565
LIABILITIES AND SHAREHOLDERS’
EQUITY
Demand, non-interest bearing deposits
$
4,474,862
$
4,688,880
$
4,422,494
$
4,758,682
$
4,490,198
Interest bearing deposits
13,203,231
13,272,503
13,497,742
13,436,682
13,460,233
Total deposits
17,678,093
17,961,383
17,920,236
18,195,364
17,950,431
FHLB advances
1,018,349
1,195,088
1,203,207
1,529,839
2,046,142
Other borrowings
123,970
123,905
123,840
123,775
123,710
Subordinated debt
182,370
182,300
182,230
182,161
182,091
Accrued interest payable and other
liabilities
193,328
193,074
248,358
264,406
269,539
Total liabilities
19,196,110
19,655,750
19,677,871
20,295,545
20,571,913
Preferred stock
137,794
137,794
137,794
137,794
137,794
Common stock
35,686
35,540
35,459
35,330
35,301
Additional paid in capital
567,345
567,490
564,538
559,346
555,737
Retained earnings
1,259,808
1,205,508
1,159,582
1,101,359
1,018,406
Accumulated other comprehensive income
(loss), net
(131,358
)
(132,305
)
(136,569
)
(149,812
)
(168,176
)
Treasury stock, at cost
(122,410
)
(122,410
)
(122,410
)
(122,410
)
(122,410
)
Total shareholders’ equity
1,746,865
1,691,617
1,638,394
1,561,607
1,456,652
Total liabilities and shareholders’
equity
$
20,942,975
$
21,347,367
$
21,316,265
$
21,857,152
$
22,028,565
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST
MARGIN - UNAUDITED
(Dollars in thousands)
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
Average Balance
Interest Income or
Expense
Average Yield or Cost
(%)
Average Balance
Interest Income or
Expense
Average Yield or Cost
(%)
Average Balance
Interest Income or
Expense
Average Yield or Cost
(%)
Assets
Interest earning deposits
$
3,325,771
$
45,506
5.50
%
$
3,865,028
$
52,817
5.50
%
$
2,150,154
$
27,624
5.15
%
Investment securities (1)
3,732,565
47,586
5.13
%
3,771,097
46,802
4.99
%
3,949,732
48,026
4.86
%
Loans and leases:
Commercial & industrial:
Specialized lending loans and leases
(2)
5,446,882
120,977
8.93
%
5,268,345
115,590
8.82
%
5,832,485
121,779
8.37
%
Other commercial & industrial loans
(2)(3)
1,540,191
25,119
6.56
%
1,654,665
26,714
6.49
%
1,879,794
27,661
5.90
%
Mortgage finance loans
1,151,407
15,087
5.27
%
1,033,177
12,830
4.99
%
1,300,496
19,606
6.05
%
Multifamily loans
2,108,835
21,461
4.09
%
2,121,650
21,255
4.03
%
2,181,617
21,095
3.88
%
Non-owner occupied commercial real estate
loans
1,396,771
20,470
5.89
%
1,348,468
20,179
6.02
%
1,428,086
19,877
5.58
%
Residential mortgages
520,791
5,955
4.60
%
522,528
5,708
4.39
%
535,739
5,735
4.28
%
Installment loans
1,186,486
28,867
9.79
%
1,179,721
27,771
9.47
%
1,684,215
37,141
8.84
%
Total loans and leases (4)
13,351,363
237,936
7.17
%
13,128,554
230,047
7.05
%
14,842,432
252,894
6.83
%
Other interest-earning assets
110,585
3,010
10.95
%
107,525
2,111
7.90
%
131,362
1,616
4.93
%
Total interest-earning assets
20,520,284
334,038
6.54
%
20,872,204
331,777
6.39
%
21,073,680
330,160
6.28
%
Non-interest-earning assets
464,919
463,025
581,055
Total assets
$
20,985,203
$
21,335,229
$
21,654,735
Liabilities
Interest checking accounts
$
5,719,698
$
64,047
4.50
%
$
5,538,846
$
61,531
4.47
%
$
5,309,775
$
49,862
3.77
%
Money market deposit accounts
3,346,718
38,167
4.59
%
3,233,103
36,811
4.58
%
1,978,546
19,678
3.99
%
Other savings accounts
1,810,375
21,183
4.71
%
1,753,118
21,399
4.91
%
997,205
9,839
3.96
%
Certificates of deposit
2,034,605
25,387
5.02
%
2,750,788
33,984
4.97
%
5,020,205
56,996
4.55
%
Total interest-bearing deposits (5)
12,911,396
148,784
4.63
%
13,275,855
153,725
4.66
%
13,305,731
136,375
4.11
%
Borrowings
1,454,010
17,601
4.87
%
1,506,707
17,667
4.72
%
2,357,981
28,514
4.85
%
Total interest-bearing
liabilities
14,365,406
166,385
4.66
%
14,782,562
171,392
4.66
%
15,663,712
164,889
4.22
%
Non-interest-bearing deposits (5)
4,701,695
4,620,986
4,258,711
Total deposits and borrowings
19,067,101
3.51
%
19,403,548
3.55
%
19,922,423
3.32
%
Other non-interest-bearing liabilities
203,714
264,677
259,111
Total liabilities
19,270,815
19,668,225
20,181,534
Shareholders’ equity
1,714,388
1,667,004
1,473,201
Total liabilities and shareholders’
equity
$
20,985,203
$
21,335,229
$
21,654,735
Net interest income
167,653
160,385
165,271
Tax-equivalent adjustment
393
394
390
Net interest earnings
$
168,046
$
160,779
$
165,661
Interest spread
3.03
%
2.84
%
2.96
%
Net interest margin
3.28
%
3.09
%
3.14
%
Net interest margin tax equivalent
(6)
3.29
%
3.10
%
3.15
%
(1) For presentation in this table,
average balances and the corresponding average yields for
investment securities are based upon historical cost, adjusted for
amortization of premiums and accretion of discounts.
(2) Includes owner occupied commercial
real estate loans.
(3) Includes PPP loans.
(4) Includes non-accrual loans, the effect
of which is to reduce the yield earned on loans and leases, and
deferred loan fees.
(5) Total costs of deposits (including
interest bearing and non-interest bearing) were 3.40%, 3.45% and
3.11% for the three months ended June 30, 2024, March 31, 2024 and
June 30, 2023, respectively.
(6) Tax-equivalent basis, using an
estimated marginal tax rate of 26% for the three months ended June
30, 2024, March 31, 2024 and June 30, 2023, presented to
approximate interest income as a taxable asset.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST
MARGIN - UNAUDITED (CONTINUED)
(Dollars in thousands)
Six Months Ended
June 30, 2024
June 30, 2023
Average Balance
Interest Income or
Expense
Average Yield or Cost
(%)
Average Balance
Interest Income or
Expense
Average Yield or Cost
(%)
Assets
Interest earning deposits
$
3,595,400
$
98,323
5.50
%
$
1,535,566
$
38,019
4.99
%
Investment securities (1)
3,751,831
94,388
5.06
%
3,990,265
95,342
4.78
%
Loans and leases:
Commercial & industrial:
Specialized lending loans and leases
(2)
5,357,613
236,567
8.88
%
5,763,708
225,467
7.89
%
Other commercial & industrial loans
(2)(3)
1,597,428
51,833
6.53
%
2,235,144
76,782
6.93
%
Mortgage finance loans
1,092,292
27,917
5.14
%
1,281,424
37,018
5.83
%
Multifamily loans
2,115,243
42,716
4.06
%
2,194,039
41,565
3.82
%
Non-owner occupied commercial real estate
loans
1,372,619
40,649
5.96
%
1,438,844
40,076
5.62
%
Residential mortgages
521,659
11,663
4.50
%
539,304
11,333
4.24
%
Installment loans
1,183,104
56,638
9.63
%
1,705,984
76,566
9.05
%
Total loans and leases (4)
13,239,958
467,983
7.11
%
15,158,447
508,807
6.77
%
Other interest-earning assets
109,055
5,121
9.44
%
111,446
2,937
5.32
%
Total interest-earning assets
20,696,244
665,815
6.46
%
20,795,724
645,105
6.25
%
Non-interest-earning assets
463,972
559,766
Total assets
$
21,160,216
$
21,355,490
Liabilities
Interest checking accounts
$
5,629,272
$
125,578
4.49
%
$
6,396,042
$
120,347
3.79
%
Money market deposit accounts
3,289,911
74,978
4.58
%
2,222,917
40,461
3.67
%
Other savings accounts
1,781,746
42,582
4.81
%
910,241
16,125
3.57
%
Certificates of deposit
2,392,696
59,371
4.99
%
4,763,694
103,372
4.38
%
Total interest-bearing deposits (5)
13,093,625
302,509
4.65
%
14,292,894
280,305
3.95
%
Federal funds purchased
—
—
—
%
7,624
188
4.97
%
Borrowings
1,480,359
35,268
4.79
%
2,074,623
49,442
4.81
%
Total interest-bearing
liabilities
14,573,984
337,777
4.66
%
16,375,141
329,935
4.06
%
Non-interest-bearing deposits (5)
4,661,341
3,284,416
Total deposits and borrowings
19,235,325
3.53
%
19,659,557
3.38
%
Other non-interest-bearing liabilities
234,195
253,376
Total liabilities
19,469,520
19,912,933
Shareholders’ equity
1,690,696
1,442,557
Total liabilities and shareholders’
equity
$
21,160,216
$
21,355,490
Net interest income
328,038
315,170
Tax-equivalent adjustment
787
765
Net interest earnings
$
328,825
$
315,935
Interest spread
2.93
%
2.86
%
Net interest margin
3.19
%
3.05
%
Net interest margin tax equivalent
(6)
3.20
%
3.06
%
(1) For presentation in this table,
average balances and the corresponding average yields for
investment securities are based upon historical cost, adjusted for
amortization of premiums and accretion of discounts.
(2) Includes owner occupied commercial
real estate loans.
(3) Includes PPP loans.
(4) Includes non-accrual loans, the effect
of which is to reduce the yield earned on loans and leases, and
deferred loan fees.
(5) Total costs of deposits (including
interest bearing and non-interest bearing) were 3.43% and 3.22% for
the six months ended June 30, 2024 and 2023, respectively.
(6) Tax-equivalent basis, using an
estimated marginal tax rate of 26% for the six months ended June
30, 2024 and 2023, presented to approximate interest income as a
taxable asset.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
PERIOD END LOAN AND LEASE COMPOSITION -
UNAUDITED
(Dollars in thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2024
2024
2023
2023
2023
Loans and leases
held for investment
Commercial:
Commercial & industrial:
Specialized lending
$
5,528,745
$
5,104,405
$
5,006,693
$
5,422,161
$
5,534,832
Other commercial & industrial (1)
1,092,146
1,113,517
1,162,317
1,252,427
1,240,908
Mortgage finance
1,122,812
1,071,146
1,014,742
1,042,549
1,108,598
Multifamily
2,067,332
2,123,675
2,138,622
2,130,213
2,151,734
Commercial real estate owner occupied
805,779
806,278
797,319
794,815
842,042
Commercial real estate non-owner
occupied
1,202,606
1,182,084
1,177,650
1,178,203
1,211,091
Construction
163,409
185,601
166,393
252,588
212,214
Total commercial loans and leases
11,982,829
11,586,706
11,463,736
12,072,956
12,301,419
Consumer:
Residential
481,503
482,537
484,435
483,133
487,199
Manufactured housing
35,901
37,382
38,670
40,129
41,664
Installment:
Personal
474,481
492,892
555,533
629,843
752,470
Other
282,201
299,714
319,393
337,053
250,047
Total installment loans
756,682
792,606
874,926
966,896
1,002,517
Total consumer loans
1,274,086
1,312,525
1,398,031
1,490,158
1,531,380
Total loans and leases held for
investment
$
13,256,915
$
12,899,231
$
12,861,767
$
13,563,114
$
13,832,799
Loans held for
sale
Residential
$
2,684
$
870
$
1,215
$
1,005
$
1,234
Installment:
Personal
125,598
137,755
151,040
124,848
76,874
Other
247,442
219,015
188,062
24,515
—
Total installment loans
373,040
356,770
339,102
149,363
76,874
Total loans held for sale
$
375,724
$
357,640
$
340,317
$
150,368
$
78,108
Total loans and leases
portfolio
$
13,632,639
$
13,256,871
$
13,202,084
$
13,713,482
$
13,910,907
(1) Includes PPP loans.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION -
UNAUDITED
(Dollars in thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2024
2024
2023
2023
2023
Demand, non-interest bearing
$
4,474,862
$
4,688,880
$
4,422,494
$
4,758,682
$
4,490,198
Demand, interest bearing
5,894,056
5,661,775
5,580,527
5,824,410
5,551,037
Total demand deposits
10,368,918
10,350,655
10,003,021
10,583,092
10,041,235
Savings
1,573,661
2,080,374
1,402,941
1,118,353
1,048,229
Money market
3,539,815
3,347,843
3,226,395
2,499,593
2,004,264
Time deposits
2,195,699
2,182,511
3,287,879
3,994,326
4,856,703
Total deposits
$
17,678,093
$
17,961,383
$
17,920,236
$
18,195,364
$
17,950,431
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
ASSET QUALITY - UNAUDITED
(Dollars in thousands)
As of June 30, 2024
As of March 31, 2024
As of June 30, 2023
Total loans
Non accrual /NPLs
Allowance for credit
losses
Total NPLs to total
loans
Total reserves to total
NPLs
Total loans
Non accrual /NPLs
Allowance for credit
losses
Total NPLs to total
loans
Total reserves to total
NPLs
Total loans
Non accrual /NPLs
Allowance for credit
losses
Total NPLs to total
loans
Total reserves to total
NPLs
Loan type
Commercial & industrial, including
specialized lending (1)
$
6,740,992
$
5,488
$
23,721
0.08
%
432.23
%
$
6,326,458
$
3,608
$
23,003
0.06
%
637.56
%
$
6,878,070
$
4,441
$
29,092
0.06
%
655.08
%
Multifamily
2,067,332
14,002
20,652
0.68
%
147.49
%
2,123,675
5,161
18,307
0.24
%
354.72
%
2,151,734
4,022
15,400
0.19
%
382.89
%
Commercial real estate owner occupied
805,779
9,612
8,431
1.19
%
87.71
%
806,278
8,920
10,201
1.11
%
114.36
%
842,042
3,304
10,215
0.39
%
309.17
%
Commercial real estate non-owner
occupied
1,202,606
62
17,966
0.01
%
28977.42
%
1,182,084
62
18,320
0.01
%
29548.39
%
1,211,091
—
13,495
—
%
—
%
Construction
163,409
—
1,856
—
%
—
%
185,601
—
1,866
—
%
—
%
212,214
—
2,639
—
%
—
%
Total commercial loans and leases
receivable
10,980,118
29,164
72,626
0.27
%
249.03
%
10,624,096
17,751
71,697
0.17
%
403.90
%
11,295,151
11,767
70,841
0.10
%
602.03
%
Residential
481,503
8,179
5,884
1.70
%
71.94
%
482,537
8,089
6,707
1.68
%
82.92
%
487,199
7,306
6,846
1.50
%
93.70
%
Manufactured housing
35,901
2,047
4,094
5.70
%
200.00
%
37,382
2,268
4,160
6.07
%
183.42
%
41,664
2,634
4,338
6.32
%
164.69
%
Installment
756,682
5,614
49,832
0.74
%
887.64
%
792,606
6,958
50,732
0.88
%
729.12
%
1,002,517
6,537
57,631
0.65
%
881.61
%
Total consumer loans receivable
1,274,086
15,840
59,810
1.24
%
377.59
%
1,312,525
17,315
61,599
1.32
%
355.76
%
1,531,380
16,477
68,815
1.08
%
417.64
%
Loans and leases receivable
12,254,204
45,004
132,436
0.37
%
294.28
%
11,936,621
35,066
133,296
0.29
%
380.13
%
12,826,531
28,244
139,656
0.22
%
494.46
%
Loans receivable, mortgage finance, at
fair value
1,002,711
—
—
—
%
—
%
962,610
—
—
—
%
—
%
1,006,268
—
—
—
%
—
%
Loans held for sale
375,724
2,376
—
0.63
%
—
%
357,640
588
—
0.16
%
—
%
78,108
—
—
—
%
—
%
Total portfolio
$
13,632,639
$
47,380
$
132,436
0.35
%
279.52
%
$
13,256,871
$
35,654
$
133,296
0.27
%
373.86
%
$
13,910,907
$
28,244
$
139,656
0.20
%
494.46
%
(1) Includes PPP loans.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
NET CHARGE-OFFS/(RECOVERIES) -
UNAUDITED
(Dollars in thousands)
Q2
Q1
Q4
Q3
Q2
Six Months Ended June
30,
2024
2024
2023
2023
2023 (1)
2024
2023
Loan type
Commercial & industrial, including
specialized lending
$
5,665
$
3,672
$
5,282
$
2,974
$
258
$
9,337
$
187
Multifamily
1,433
473
127
1,999
1,448
1,906
1,448
Commercial real estate owner occupied
—
22
—
39
(34
)
22
(34
)
Commercial real estate non-owner
occupied
—
—
(288
)
—
266
—
4,500
Construction
(7
)
—
—
—
—
(7
)
(116
)
Residential
(20
)
18
(1
)
13
24
(2
)
22
Installment
11,640
13,783
12,202
12,473
13,602
25,423
28,208
Total net charge-offs (recoveries) from
loans held for investment
$
18,711
$
17,968
$
17,322
$
17,498
$
15,564
$
36,679
$
34,215
(1) Excludes $6.2 million of charge-offs
for certain PCD loans acquired from the FDIC that were immediately
applied against $8.7 million of allowance for credit losses on PCD
loans recognized upon the acquisition of the loan portfolio on June
15, 2023. Subsequent recoveries and charge-offs of these PCD loans
will be included in the period in which they occur.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES - UNAUDITED
We believe that the non-GAAP measurements disclosed within this
document are useful for investors, regulators, management and
others to evaluate our core results of operations and financial
condition relative to other financial institutions. These non-GAAP
financial measures are frequently used by securities analysts,
investors, and other interested parties in the evaluation of
companies in our industry. These non-GAAP financial measures
exclude from corresponding GAAP measures the impact of certain
elements that we do not believe are representative of our ongoing
financial results, which we believe enhance an overall
understanding of our performance and increases comparability of our
period to period results. Investors should consider our performance
and financial condition as reported under GAAP and all other
relevant information when assessing our performance or financial
condition. The non-GAAP measures presented are not necessarily
comparable to non-GAAP measures that may be presented by other
financial institutions. Although non-GAAP financial measures are
frequently used in the evaluation of a company, they have
limitations as analytical tools and should not be considered in
isolation or as a substitute for analysis of our results of
operations or financial condition as reported under GAAP.
The following tables present reconciliations of GAAP to non-GAAP
measures disclosed within this document.
Core Earnings and Adjusted Core
Earnings - Customers Bancorp
Six Months Ended
June 30,
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
2024
2023
(Dollars in thousands, except per share
data)
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
GAAP net income to common shareholders
$
54,300
$
1.66
$
45,926
$
1.40
$
58,223
$
1.79
$
82,953
$
2.58
$
44,007
$
1.39
$
100,226
$
3.06
$
94,272
$
2.95
Reconciling items (after tax):
Severance expense
1,928
0.06
—
—
473
0.01
—
—
141
0.00
1,928
0.06
778
0.02
Impairments on fixed assets and leases
—
—
—
—
—
—
—
—
12
0.00
—
—
98
0.00
Loss on sale of capital call lines of
credit
—
—
—
—
—
—
—
—
3,914
0.12
—
—
3,914
0.12
(Gains) losses on investment
securities
561
0.02
57
0.00
(85
)
0.00
492
0.02
49
0.00
618
0.02
0
0.00
Derivative credit valuation adjustment
(44
)
0.00
169
0.01
267
0.01
(151
)
0.00
(101
)
0.00
125
0.00
103
0.00
Tax on surrender of bank-owned life
insurance policies
—
—
—
—
—
—
—
—
4,141
0.13
—
—
4,141
0.13
FDIC special assessment
138
0.00
380
0.01
2,755
0.08
—
—
—
—
518
0.02
—
—
Unrealized (gain) on equity method
investments
(8,316
)
(0.25
)
—
—
—
—
—
—
—
—
(8,316
)
(0.25
)
—
—
Core earnings
$
48,567
$
1.49
$
46,532
$
1.42
$
61,633
$
1.90
$
83,294
$
2.59
$
52,163
$
1.65
$
95,099
$
2.90
$
103,306
$
3.22
One-time non-interest expense items
recorded in 2024 (after-tax):
Deposit servicing fees prior to 2024
—
—
5,405
0.16
—
—
—
—
—
—
5,405
0.16
—
—
FDIC premiums prior to 2024
—
—
3,200
0.10
—
—
—
—
—
—
3,200
0.10
—
—
Total one-time non-interest expense
items
—
—
8,605
0.26
—
—
—
—
—
—
8,605
0.26
—
—
Adjusted core earnings (adjusted for
one-time non-interest expense items)
$
48,567
$
1.49
$
55,137
$
1.68
$
61,633
$
1.90
$
83,294
$
2.59
$
52,163
$
1.65
$
103,704
$
3.16
$
103,306
$
3.22
Core Return on Average Assets and
Adjusted Core Return on Average Assets - Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands, except per share
data)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
2024
2023
GAAP net income
$
58,085
$
49,726
$
62,092
$
86,756
$
47,574
$
107,811
$
101,295
Reconciling items (after tax):
Severance expense
1,928
—
473
—
141
1,928
778
Impairments on fixed assets and leases
—
—
—
—
12
—
98
Loss on sale of capital call lines of
credit
—
—
—
—
3,914
—
3,914
(Gains) losses on investment
securities
561
57
(85
)
492
49
618
0
Derivative credit valuation adjustment
(44
)
169
267
(151
)
(101
)
125
103
Tax on surrender of bank-owned life
insurance policies
—
—
—
—
4,141
—
4,141
FDIC special assessment
138
380
2,755
—
—
518
—
Unrealized (gain) on equity method
investments
(8,316
)
—
—
—
—
(8,316
)
—
Core net income
$
52,352
$
50,332
$
65,502
$
87,097
$
55,730
$
102,684
$
110,329
One-time non-interest expense items
recorded in 2024 (after-tax):
Deposit servicing fees prior to 2024
—
5,405
—
—
—
5,405
—
FDIC premiums prior to 2024
—
3,200
—
—
—
3,200
—
Total one-time non-interest expense
items
—
8,605
—
—
—
8,605
—
Adjusted core net income (adjusted for
one-time non-interest expense items)
$
52,352
$
58,937
$
65,502
$
87,097
$
55,730
$
111,289
$
110,329
Average total assets
$
20,985,203
$
21,335,229
$
21,252,273
$
21,978,010
$
21,654,735
$
21,160,216
$
21,355,490
Core return on average assets
1.00
%
0.95
%
1.22
%
1.57
%
1.03
%
0.98
%
1.04
%
Adjusted core return on average assets
(adjusted for one-time non-interest expense items)
1.00
%
1.11
%
1.22
%
1.57
%
1.03
%
1.06
%
1.04
%
Core Pre-Tax Pre-Provision Net Income
and ROAA and Adjusted Core Pre-Tax Pre-Provision Net Income and
ROAA - Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands, except per share
data)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
2024
2023
GAAP net income
$
58,085
$
49,726
$
62,092
$
86,756
$
47,574
$
107,811
$
101,295
Reconciling items:
Income tax expense
19,032
15,651
21,796
23,470
20,768
34,683
35,331
Provision (benefit) for credit losses
18,121
17,070
13,523
17,856
23,629
35,191
43,232
Provision (benefit) for credit losses on
unfunded commitments
1,594
430
(136
)
48
(304
)
2,024
(24
)
Severance expense
2,560
—
639
—
182
2,560
991
Impairments on fixed assets and leases
—
—
—
—
15
—
124
Loss on sale of capital call lines of
credit
—
—
—
—
5,037
—
5,037
(Gains) losses on investment
securities
744
75
(114
)
626
62
819
0
Derivative credit valuation adjustment
(58
)
222
361
(192
)
(130
)
164
129
FDIC special assessment
183
500
3,723
—
—
683
—
Unrealized (gain) on equity method
investments
(11,041
)
—
—
—
—
(11,041
)
—
Core pre-tax pre-provision net income
$
89,220
$
83,674
$
101,884
$
128,564
$
96,833
$
172,894
$
186,115
One-time non-interest expense items
recorded in 2024:
Deposit servicing fees prior to 2024
—
7,106
—
—
—
7,106
—
FDIC premiums prior to 2024
—
4,208
—
—
—
4,208
—
Total one-time non-interest expense
items
—
11,314
—
—
—
11,314
—
Adjusted core pre-tax pre-provision net
income (adjusted for one-time non-interest expense items)
$
89,220
$
94,988
$
101,884
$
128,564
$
96,833
$
184,208
$
186,115
Average total assets
$
20,985,203
$
21,335,229
$
21,252,273
$
21,978,010
$
21,654,735
$
21,160,216
$
21,355,490
Core pre-tax pre-provision ROAA
1.71
%
1.58
%
1.90
%
2.32
%
1.79
%
1.64
%
1.76
%
Adjusted core pre-tax pre-provision ROAA
(adjusted for one-time non-interest expense items)
1.71
%
1.79
%
1.90
%
2.32
%
1.79
%
1.75
%
1.76
%
Core Return on Average Common Equity
and Adjusted Core Return on Average Common Equity - Customers
Bancorp
Six Months Ended
June 30,
(Dollars in thousands, except per share
data)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
2024
2023
GAAP net income to common shareholders
$
54,300
$
45,926
$
58,223
$
82,953
$
44,007
$
100,226
$
94,272
Reconciling items (after tax):
Severance expense
1,928
—
473
—
141
1,928
778
Impairments on fixed assets and leases
—
—
—
—
12
—
98
Loss on sale of capital call lines of
credit
—
—
—
—
3,914
—
3,914
(Gains) losses on investment
securities
561
57
(85
)
492
49
618
0
Derivative credit valuation adjustment
(44
)
169
267
(151
)
(101
)
125
103
Tax on surrender of bank-owned life
insurance policies
—
—
—
—
4,141
—
4,141
FDIC special assessment
138
380
2,755
—
—
518
—
Unrealized (gain) on equity method
investments
(8,316
)
—
—
—
—
(8,316
)
—
Core earnings
$
48,567
$
46,532
$
61,633
$
83,294
$
52,163
$
95,099
$
103,306
One-time non-interest expense items
recorded in 2024 (after-tax):
Deposit servicing fees prior to 2024
—
5,405
—
—
—
5,405
—
FDIC premiums prior to 2024
—
3,200
—
—
—
3,200
—
Total one-time non-interest expense
items
—
8,605
—
—
—
8,605
—
Adjusted core earnings (adjusted for
one-time non-interest expense items)
$
48,567
$
55,137
$
61,633
$
83,294
$
52,163
$
103,704
$
103,306
Average total common shareholders’
equity
$
1,576,595
$
1,529,211
$
1,449,728
$
1,373,244
$
1,335,408
$
1,552,903
$
1,304,764
Core return on average common equity
12.39
%
12.24
%
16.87
%
24.06
%
15.67
%
12.32
%
15.97
%
Adjusted core return on average common
equity (adjusted for one-time non-interest expense items)
12.39
%
14.50
%
16.87
%
24.06
%
15.67
%
13.43
%
15.97
%
Core Pre-Tax Pre-Provision ROCE and
Adjusted Core Pre-Tax Pre-Provision ROCE - Customers
Bancorp
Six Months Ended
June 30,
(Dollars in thousands, except per share
data)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
2024
2023
GAAP net income to common shareholders
$
54,300
$
45,926
$
58,223
$
82,953
$
44,007
$
100,226
$
94,272
Reconciling items:
Income tax expense
19,032
15,651
21,796
23,470
20,768
34,683
35,331
Provision (benefit) for credit losses
18,121
17,070
13,523
17,856
23,629
35,191
43,232
Provision (benefit) for credit losses on
unfunded commitments
1,594
430
(136
)
48
(304
)
2,024
(24
)
Severance expense
2,560
—
639
—
182
2,560
991
Impairments on fixed assets and leases
—
—
—
—
15
—
124
Loss on sale of capital call lines of
credit
—
—
—
—
5,037
—
5,037
(Gains) losses on investment
securities
744
75
(114
)
626
62
819
0
Derivative credit valuation adjustment
(58
)
222
361
(192
)
(130
)
164
129
FDIC special assessment
183
500
3,723
—
—
683
—
Unrealized (gain) on equity method
investments
(11,041
)
—
—
—
—
(11,041
)
—
Core pre-tax pre-provision net income
available to common shareholders
$
85,435
$
79,874
$
98,015
$
124,761
$
93,266
$
165,309
$
179,092
One-time non-interest expense items
recorded in 2024:
Deposit servicing fees prior to 2024
—
7,106
—
—
—
7,106
—
FDIC premiums prior to 2024
—
4,208
—
—
—
4,208
—
Total one-time non-interest expense
items
—
11,314
—
—
—
11,314
—
Adjusted core pre-tax pre-provision net
income available to common shareholders
$
85,435
$
91,188
$
98,015
$
124,761
$
93,266
$
176,623
$
179,092
Average total common shareholders’
equity
$
1,576,595
$
1,529,211
$
1,449,728
$
1,373,244
$
1,335,408
$
1,552,903
$
1,304,764
Core pre-tax pre-provision ROCE
21.79
%
21.01
%
26.82
%
36.04
%
28.01
%
21.41
%
27.68
%
Adjusted core pre-tax pre-provision ROCE
(adjusted for one-time non-interest expense items)
21.79
%
23.98
%
26.82
%
36.04
%
28.01
%
22.87
%
27.68
%
Core Efficiency Ratio and Adjusted Core
Efficiency Ratio - Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands, except per share
data)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
2024
2023
GAAP net interest income
$
167,653
$
160,385
$
172,506
$
199,773
$
165,271
$
328,038
$
315,170
GAAP non-interest income
$
31,037
$
21,231
$
18,672
$
17,775
$
15,997
$
52,268
$
34,118
Loss on sale of capital call lines of
credit
—
—
—
—
5,037
—
5,037
(Gains) losses on investment
securities
744
75
(114
)
626
62
819
0
Derivative credit valuation adjustment
(58
)
222
361
(192
)
(130
)
164
129
Unrealized (gain) on equity method
investments
(11,041
)
—
—
—
—
(11,041
)
—
Core non-interest income
20,682
21,528
18,919
18,209
20,966
42,210
39,284
Core revenue
$
188,335
$
181,913
$
191,425
$
217,982
$
186,237
$
370,248
$
354,454
GAAP non-interest expense
$
103,452
$
99,169
$
93,767
$
89,466
$
89,297
$
202,621
$
169,430
Severance expense
(2,560
)
—
(639
)
—
(182
)
(2,560
)
(991
)
Impairments on fixed assets and leases
—
—
—
—
(15
)
—
(124
)
FDIC special assessment
(183
)
(500
)
(3,723
)
—
—
(683
)
—
Core non-interest expense
$
100,709
$
98,669
$
89,405
$
89,466
$
89,100
$
199,378
$
168,315
One-time non-interest expense items
recorded in 2024:
Deposit servicing fees prior to 2024
—
(7,106
)
—
—
—
(7,106
)
—
FDIC premiums prior to 2024
—
(4,208
)
—
—
—
(4,208
)
—
Total one-time non-interest expense
items
—
(11,314
)
—
—
—
(11,314
)
—
Adjusted core non-interest expense
$
100,709
$
87,355
$
89,405
$
89,466
$
89,100
$
188,064
$
168,315
Core efficiency ratio (1)
53.47
%
54.24
%
46.70
%
41.04
%
47.84
%
53.85
%
47.49
%
Adjusted core efficiency ratio (adjusted
for one-time non-interest expense items) (2)
53.47
%
48.02
%
46.70
%
41.04
%
47.84
%
50.79
%
47.49
%
(1) Core efficiency ratio calculated as
core non-interest expense divided by core revenue.
(2) Adjusted core efficiency ratio
calculated as adjusted core non-interest expense divided by core
revenue.
Core Non-Interest Expense to Average
Total Assets and Adjusted Core Non-Interest Expense to Average
Total Assets- Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands, except per share
data)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
2024
2023
GAAP non-interest expense
$
103,452
$
99,169
$
93,767
$
89,466
$
89,297
$
202,621
$
169,430
Severance expense
(2,560
)
—
(639
)
—
(182
)
(2,560
)
(991
)
Impairments on fixed assets and leases
—
—
—
—
(15
)
—
(124
)
FDIC special assessment
(183
)
(500
)
(3,723
)
—
—
(683
)
—
Core non-interest expense
$
100,709
$
98,669
$
89,405
$
89,466
$
89,100
$
199,378
$
168,315
One-time non-interest expense items
recorded in 2024:
Deposit servicing fees prior to 2024
—
(7,106
)
—
—
—
(7,106
)
—
FDIC premiums prior to 2024
—
(4,208
)
—
—
—
(4,208
)
—
Total one-time non-interest expense
items
—
(11,314
)
—
—
—
(11,314
)
—
Adjusted core non-interest expense
$
100,709
$
87,355
$
89,405
$
89,466
$
89,100
$
188,064
$
168,315
Average total assets
$
20,985,203
$
21,335,229
$
21,252,273
$
21,978,010
$
21,654,735
$
21,160,216
$
21,355,490
Core non-interest expense to average total
assets
1.93
%
1.86
%
1.67
%
1.62
%
1.65
%
1.89
%
1.59
%
Adjusted core non-interest expense to
average total assets (adjusted for one-time non-interest expense
items)
1.93
%
1.65
%
1.67
%
1.62
%
1.65
%
1.79
%
1.59
%
Business Unit Deposits (formerly, Core
Deposits, Total Deposits, excluding Wholesale CDs and BMTX student
deposits) - Customers Bancorp
(Dollars in thousands, except per share
data)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Total deposits
$
17,678,093
$
17,961,383
$
17,920,236
$
18,195,364
$
17,950,431
Reconciling items:
Wholesale CDs
1,545,885
1,809,573
2,970,615
3,713,933
4,651,054
BMTX student deposits
—
850
1,157
636,951
407,118
Business Unit Deposits (formerly, Core
Deposits, Total deposits, excluding wholesale CDs and BMTX student
deposits)
$
16,132,208
$
16,150,960
$
14,948,464
$
13,844,480
$
12,892,259
Tangible Common Equity to Tangible
Assets - Customers Bancorp
(Dollars in thousands, except per share
data)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
GAAP total shareholders’ equity
$
1,746,865
$
1,691,617
$
1,638,394
$
1,561,607
$
1,456,652
Reconciling items:
Preferred stock
(137,794
)
(137,794
)
(137,794
)
(137,794
)
(137,794
)
Goodwill and other intangibles
(3,629
)
(3,629
)
(3,629
)
(3,629
)
(3,629
)
Tangible common equity
$
1,605,442
$
1,550,194
$
1,496,971
$
1,420,184
$
1,315,229
GAAP total assets
$
20,942,975
$
21,347,367
$
21,316,265
$
21,857,152
$
22,028,565
Reconciling items:
Goodwill and other intangibles
(3,629
)
(3,629
)
(3,629
)
(3,629
)
(3,629
)
Tangible assets
$
20,939,346
$
21,343,738
$
21,312,636
$
21,853,523
$
22,024,936
Tangible common equity to tangible
assets
7.7
%
7.3
%
7.0
%
6.5
%
6.0
%
Tangible Book Value per Common Share -
Customers Bancorp
(Dollars in thousands, except share and
per share data)
Q2 2024
Q1 2024
Q4 2023
Q3 2023
Q2 2023
GAAP total shareholders’ equity
$
1,746,865
$
1,691,617
$
1,638,394
$
1,561,607
$
1,456,652
Reconciling Items:
Preferred stock
(137,794
)
(137,794
)
(137,794
)
(137,794
)
(137,794
)
Goodwill and other intangibles
(3,629
)
(3,629
)
(3,629
)
(3,629
)
(3,629
)
Tangible common equity
$
1,605,442
$
1,550,194
$
1,496,971
$
1,420,184
$
1,315,229
Common shares outstanding
31,667,655
31,521,931
31,440,906
31,311,254
31,282,318
Tangible book value per common share
$
50.70
$
49.18
$
47.61
$
45.36
$
42.04
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240724679699/en/
David W. Patti, Communications Director 610-451-9452
Customers Bancorp (NYSE:CUBI)
Gráfica de Acción Histórica
De Jun 2024 a Jul 2024
Customers Bancorp (NYSE:CUBI)
Gráfica de Acción Histórica
De Jul 2023 a Jul 2024
