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Customers Bancorp Reports Results for Second Quarter 2022


Customers Bancorp, Inc. (NYSE:CUBI)

Second Quarter 2022 Results

 

 

 

 

 

 

 

Earnings

 

Earnings Per Share

 

Return on Assets

 

Return on Common
Equity

 

 

 

 

 

 

 

$56.5 million

 

$1.68

 

1.2%

 

18.2%

Net Income

 

Diluted Earnings Per Share

 

ROAA

 

ROCE

 

 

 

 

 

 

 

$59.4 million

 

$1.77

 

1.2%

 

19.1%

Core Earnings*

 

Core Earnings Per Diluted Share*

 

Core ROAA*

 

Core ROCE*

 

 

 

 

 

 

 

$46.3 million

 

$1.38

 

2.1%

 

33.4%

Core Earnings, excluding PPP*

 

Core Earnings Per Diluted Share, excluding PPP*

 

Pre-tax and Pre-provision Adjusted ROAA*

 

Pre-tax and Pre-provision Adjusted ROCE*

 

Second Quarter 2022 Highlights

  • Q2 2022 net income available to common shareholders was $56.5 million, or $1.68 per diluted share, down 2.6% over Q2 2021.
  • Q2 2022 adjusted pre-tax pre-provision net income* was $105.7 million, up 22% over Q2 2021.
  • Q2 2022 core earnings* were $59.4 million, or $1.77 per diluted share, up 0.1% over Q2 2021.
  • Q2 2022 core earnings excluding Paycheck Protection Program* ("PPP") were $46.3 million, or $1.38 per diluted share, up 32.3% over Q2 2021.
  • Q2 2022 ROAA was 1.17% and Core ROAA* was 1.23%. Q2 2021 ROAA was 1.27% and Core ROAA* was 1.30%.
  • Q2 2022 ROCE was 18.2% and Core ROCE* was 19.1%. Q2 2021 ROCE was 23.2% and Core ROCE* was 23.7%.
  • Q2 2022 adjusted pre-tax pre-provision ROAA* was 2.11%. Q2 2021 adjusted pre-tax pre-provision ROAA* was 1.80%.
  • Year-over-year loan growth (excluding PPP loans and loans to mortgage companies*) was $4.4 billion or 56.6%, led by our low-risk variable rate specialty lending verticals.
  • Year-over-year commercial and industrial (C&I) loans and leases growth, including specialty lending, of $3.3 billion (up 145.8%), multifamily loan growth of $515.4 million (up 34.4%), and consumer loan increase of $500.8 million (up 26.2%).
  • Q2 2022 net interest margin, tax equivalent* increased 41 basis points from Q2 2021 to 3.39%. Q2 2022 net interest margin, tax equivalent, excluding the impact of PPP loans* increased 2 basis points from Q2 2021 to 3.32%.
  • Year-over-year deposit growth was $3.1 billion, up 22.1%. Total demand deposits increased $4.4 billion, or 64.0% year-over-year. This increase included CBIT-related deposits with a balance of $2.1 billion at June 30, 2022, up $0.3 billion from March 31, 2022.
  • Onboarded 90 new CBIT customers in Q2 2022, bringing total customers to 190.
  • Q2 2022 efficiency ratio was 42.14% compared to 46.59% for Q2 2021. Q2 2022 core efficiency ratio* was 41.74% compared to 44.33% in Q2 2021.
  • Q2 2022 provision for credit losses on loans and leases of $24.2 million was largely driven by strong loan growth as asset quality remains exceptional and compares to $15.3 million in Q1 2022 and $3.3 million in Q2 2021.
  • Non-performing assets were $28.2 million, or 0.14% of total assets, at June 30, 2022 compared to $43.9 million, or 0.23% of total assets, at March 31, 2022 and $46.9 million, or 0.24% of total assets, at June 30, 2021. Allowance for credit losses on loans and leases equaled 558% of non-performing loans at June 30, 2022, compared to 333% at March 31, 2022 and 270% at June 30, 2021.
  • Well positioned to support growth in 2022 and 2023 and expect to meet or beat projections of core earnings (excluding PPP)* between $4.75 - $5.00 in 2022 and over $6.00 in 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 is included at the end of this document.

CEO Commentary

West Reading, PA, July 27, 2022 - “We continued to perform well in the second quarter and are extremely pleased with our results for the first half of 2022,” remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “Despite the challenging macro and geopolitical environment, we remain laser focused on executing on our strategy which has not changed. Our core earnings per share, excluding PPP* were up over 32.3% year-over-year. Core ROAA* was 1.23% and core ROCE* was 19.1%. We continue to responsibly deliver remarkable organic loan growth without sacrificing credit quality. Our core loans* increased $2.2 billion in Q2 2022, up 18.7% from Q1 2022, and well above our $500 million average quarterly target. Nearly all of this growth was in low-risk specialty lending verticals and was predominately floating rate as we manage overall asset sensitivity. Asset quality remains exceptional and credit reserves are strong. Continuing the momentum from record 2021 performance and strong results for the first half of 2022, our loan and deposit pipelines remain robust, a testament to our customer centric business model supported by best-in-class service and technology. We remain very excited and optimistic about our future,” Mr. Jay Sidhu continued.

Financial Highlights

 

 

At or Three Months Ended

 

Increase (Decrease)

 

Six Months Ended

 

Increase (Decrease)

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

 

June 30,
2022

 

June 30,
2021

 

 

June 30,
2022

 

June 30,
2021

 

Profitability Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

56,519

 

$

58,042

 

$

(1,523)

 

(2.6) %

 

$

131,415

 

$

91,246

 

$

40,169

44.0 %

Diluted earnings per share

 

$

1.68

 

$

1.72

 

$

(0.04)

 

(2.3) %

 

$

3.87

 

$

2.74

 

$

1.13

41.2 %

Core earnings*

 

$

59,367

 

$

59,303

 

$

64

 

0.1 %

 

$

134,777

 

$

129,611

 

$

5,166

4.0 %

Core earnings per share*

 

$

1.77

 

$

1.76

 

$

0.01

 

0.6 %

 

$

3.97

 

$

3.89

 

$

0.08

2.1 %

Core earnings, excluding PPP*

 

$

46,301

 

$

34,991

 

$

11,310

 

32.3 %

 

$

96,998

 

$

80,220

 

$

16,778

20.9 %

Core earnings per share, excluding PPP*

 

$

1.38

 

$

1.04

 

$

0.34

 

32.7 %

 

$

2.86

 

$

2.41

 

$

0.45

18.7 %

Return on average assets ("ROAA")

 

 

1.17 %

 

 

1.27 %

 

 

(0.10)

 

 

 

 

1.39 %

 

 

1.04 %

 

 

0.35

 

Core ROAA*

 

 

1.23 %

 

 

1.30 %

 

 

(0.07)

 

 

 

 

1.43 %

 

 

1.45 %

 

 

(0.02)

 

Return on average common equity ("ROCE")

 

 

18.21 %

 

 

23.22 %

 

 

(5.01)

 

 

 

 

21.23 %

 

 

19.15 %

 

 

2.08

 

Core ROCE*

 

 

19.13 %

 

 

23.72 %

 

 

(4.59)

 

 

 

 

21.77 %

 

 

27.20 %

 

 

(5.43)

 

Adjusted pre-tax pre-provision net income*

 

$

105,692

 

$

86,467

 

$

19,225

 

22.2 %

 

$

218,341

 

$

173,236

 

$

45,105

26.0 %

Net interest margin, tax equivalent*

 

 

3.39 %

 

 

2.98 %

 

 

0.41

 

 

 

 

3.49 %

 

 

2.99 %

 

 

0.50

 

Net interest margin, tax equivalent, excluding PPP loans*

 

 

3.32 %

 

 

3.30 %

 

 

0.02

 

 

 

 

3.32 %

 

 

3.14 %

 

 

0.18

 

Loan yield, excluding PPP*

 

 

4.56 %

 

 

4.36 %

 

 

0.20

 

 

 

 

4.50 %

 

 

4.32 %

 

 

0.18

 

Cost of deposits

 

 

0.54 %

 

 

0.47 %

 

 

0.07

 

 

 

 

0.44 %

 

 

0.50 %

 

 

(0.06)

 

Efficiency ratio

 

 

42.14 %

 

 

46.59 %

 

 

(4.45)

 

 

 

 

40.76 %

 

 

47.64 %

 

 

(6.88)

 

Core efficiency ratio*

 

 

41.74 %

 

 

44.33 %

 

 

(2.59)

 

 

 

 

40.59 %

 

 

42.76 %

 

 

(2.17)

 

Balance Sheet Trends:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

20,251,996

 

$

19,635,108

 

$

616,888

 

3.1 %

 

 

 

 

 

 

 

Total assets, excluding PPP*

 

$

18,681,836

 

$

13,330,052

 

$

5,351,784

 

40.1 %

 

 

 

 

 

 

 

Total loans and leases

 

$

15,664,353

 

$

16,967,022

 

$

(1,302,669)

 

(7.7) %

 

 

 

 

 

 

 

Total loans and leases, excluding PPP*

 

$

14,094,193

 

$

10,661,966

 

$

3,432,227

 

32.2 %

 

 

 

 

 

 

 

Non-interest bearing demand deposits

 

$

4,683,030

 

$

2,699,869

 

$

1,983,161

 

73.5 %

 

 

 

 

 

 

 

Total deposits

 

$

16,944,719

 

$

13,873,939

 

$

3,070,780

 

22.1 %

 

 

 

 

 

 

 

Capital Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity

 

$

1,215,596

 

$

1,033,258

 

$

182,338

 

17.6 %

 

 

 

 

 

 

 

Tangible Common Equity*

 

$

1,211,967

 

$

1,029,405

 

$

182,562

 

17.7 %

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets*

 

 

5.99 %

 

 

5.24 %

 

 

0.75

 

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets, excluding PPP*

 

 

6.49 %

 

 

7.72 %

 

 

(1.23)

 

 

 

 

 

 

 

 

 

Tangible Book Value per common share*

 

$

37.35

 

$

31.82

 

$

5.53

 

17.4 %

 

 

 

 

 

 

 

Total risk based capital ratio (1)

 

 

12.6 %

 

 

13.3 %

 

 

(0.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Total risk based capital ratio as of June 30, 2022 is an estimate.

* 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 is included at the end of this document.

Customers Bank Instant Token (CBITTM)

"Despite significant market volatility in the digital asset space during second quarter, we are very pleased with our progress to date. In Q2 2022, we onboarded 90 new CBIT-related customers to the Digital Bank, once again beating our internal target, and bringing total customers to 190. Our digital asset-related deposits stabilized in Q2 2022 and ended the quarter approximately $0.3 billion higher than Q1 2022. We continue to expect digital asset-related deposits to grow in 2022 as our pipelines remain strong, giving us an opportunity to further transform our deposits into a high quality, low-to-no cost, stable and growing deposit franchise. We believe our technology, compliance and customer service and support systems remain among the best in the country," commented Mr. Sam Sidhu, President and CEO of Customers Bank.

At June 30, 2022, $2.1 billion in core low-to-no cost demand deposits have been attracted to the Bank through this system.

Paycheck Protection Program (PPP)

We funded, either directly or indirectly, about 256,000 PPP loans totaling $5.2 billion in 2021, bringing total PPP loans funded to approximately 358,000 and $10.3 billion. We also earned close to $350 million of deferred origination fees from the SBA through the PPP loans, which is significantly accretive to our earnings and capital levels as these loans are forgiven by the government. In Q2 2022, we recognized $15 million of these fees in earnings, bringing total fees recognized to date to $307 million, resulting in approximately $43 million remaining to be recognized throughout 2022 and 2023. "As we've stated previously, it is difficult to predict the timing of PPP forgiveness. We continue to expect most of the fees to be recognized in 2022, with approximately two-thirds of the remaining fees to be recognized in the second half of this year," 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)

June 30, 2022

% of Total

 

March 31, 2022

% of Total

 

June 30, 2021

% of Total

Commercial:

 

 

 

 

 

 

 

 

Commercial & industrial, including specialty lending

$

5,637,083

36.0

%

 

$

3,921,439

27.9

%

 

$

2,293,723

13.5

%

Multi-family

 

2,012,920

12.9

 

 

 

1,705,027

12.1

 

 

 

1,497,485

8.8

 

Loans to mortgage companies

 

1,975,189

12.6

 

 

 

1,830,121

13.0

 

 

 

2,922,217

17.2

 

Commercial real estate owner occupied

 

710,577

4.5

 

 

 

701,893

5.0

 

 

 

653,649

3.9

 

Loans receivable, PPP

 

1,570,160

10.0

 

 

 

2,195,902

15.6

 

 

 

6,305,056

37.2

 

Commercial real estate non-owner occupied

 

1,152,869

7.4

 

 

 

1,140,311

8.1

 

 

 

1,206,646

7.1

 

Construction

 

195,687

1.2

 

 

 

161,024

1.1

 

 

 

179,198

1.1

 

Total commercial loans and leases

 

13,254,485

84.6

 

 

 

11,655,717

82.8

 

 

 

15,057,974

88.8

 

Consumer:

 

 

 

 

 

 

 

 

Residential

 

460,228

2.9

 

 

 

469,426

3.3

 

 

 

273,493

1.6

 

Manufactured housing

 

48,570

0.3

 

 

 

50,669

0.4

 

 

 

57,904

0.3

 

Installment

 

1,901,070

12.1

 

 

 

1,897,706

13.5

 

 

 

1,577,651

9.3

 

Total consumer loans

 

2,409,868

15.4

 

 

 

2,417,801

17.2

 

 

 

1,909,048

11.2

 

Total loans and leases

$

15,664,353

100.0

%

 

$

14,073,518

100.0

%

 

$

16,967,022

100.0

%

 

 

 

 

 

 

 

 

 

C&I loans and leases, including specialty lending, increased $3.3 billion, or 145.8% year-over-year, to $5.6 billion. Practically all of the increases were in low-risk variable rate secured categories of Fund Finance and Lender Finance. Multi-family loans increased $515.4 million, or 34.4%, to $2.0 billion, consumer installment loans increased $323.4 million, or 20.5%, to $1.9 billion, residential loans increased $186.7 million, or 68.3%, to $460.2 million, commercial real estate owner occupied loans increased $56.9 million, or 8.7%, to $710.6 million and construction loans increased $16.5 million, or 9.2%, to $195.7 million. These increases in loans and leases were partially offset by a decrease in commercial real estate non-owner occupied loans of $53.8 million, or 4.5% year-over-year to $1.2 billion.

Allowance for Credit Losses on Loans and Leases

The following table presents allowance for credit losses on loans and leases information as of the dates and periods indicated:

 

At or Three Months Ended

 

Increase
(Decrease)

 

At or Three Months Ended

 

Increase
(Decrease)

(Dollars in thousands)

June 30, 2022

 

March 31, 2022

 

 

June 30, 2022

 

June 30, 2021

 

Allowance for credit losses on loans and leases

$

156,530

 

 

$

145,847

 

 

$

10,683

 

$

156,530

 

 

$

125,436

 

 

$

31,094

Provision for credit losses on loans and leases

 

24,164

 

 

 

15,269

 

 

 

8,895

 

 

24,164

 

 

 

3,291

 

 

 

20,873

Net charge-offs (recoveries)

 

13,481

 

 

 

7,226

 

 

 

6,255

 

 

13,481

 

 

 

6,591

 

 

 

6,890

Annualized net charge-offs (recoveries) to average loans and leases

 

0.36

%

 

 

0.21

%

 

 

 

 

0.36

%

 

 

0.16

%

 

 

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

 

1.14

%

 

 

1.18

%

 

 

 

 

1.14

%

 

 

0.89

%

 

 

Coverage of credit loss reserves for loans and leases held for investment, excluding PPP*

 

1.28

%

 

 

1.44

%

 

 

 

 

1.28

%

 

 

1.61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* 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 is included at the end of this document.

Provision for Credit Losses

 

 

Three Months Ended

 

Increase
(Decrease)

(Dollars in thousands)

 

June 30, 2022

 

March 31, 2022

 

Provision for credit losses on loans and leases

 

$

24,164

 

 

$

15,269

 

 

$

8,895

 

Provision (benefit) for credit losses on unfunded commitments

 

 

608

 

 

 

(109

)

 

 

717

 

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

 

(317

)

 

 

728

 

 

 

(1,045

)

Total provision for credit losses

$

24,455

 

 

$

15,888

 

 

$

8,567

 

 

 

 

 

 

 

 

The provision for credit losses on loans and leases in Q2 2022 was $24.2 million, compared to $15.3 million in Q1 2022. The provision in Q2 2022 was primarily to support loan growth. The provision (benefit) for credit losses for available for sale investment securities in Q2 2022 was a benefit to provision of $0.3 million compared to provision expense of $0.7 million in Q1 2022.

Asset Quality

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

(Dollars in thousands)

June 30, 2022

 

March 31, 2022

 

Increase
(Decrease)

 

June 30, 2022

 

June 30, 2021

 

Increase
(Decrease)

Non-performing assets ("NPAs"):

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual / non-performing loans ("NPLs")

$

28,064

 

 

$

43,778

 

 

$

(15,714

)

 

$

28,064

 

 

$

46,465

 

 

$

(18,401

)

Non-performing assets

 

28,150

 

 

 

43,864

 

 

 

(15,714

)

 

 

28,150

 

 

 

46,932

 

 

 

(18,782

)

NPLs to total loans and leases (1)

 

0.18

%

 

 

0.31

%

 

 

 

 

0.18

%

 

 

0.27

%

 

 

Reserves to NPLs (1)

 

557.76

%

 

 

333.15

%

 

 

 

 

557.76

%

 

 

269.96

%

 

 

NPAs to total assets

 

0.14

%

 

 

0.23

%

 

 

 

 

0.14

%

 

 

0.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases risk ratings:

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases (1)

 

 

 

 

 

 

 

 

 

 

 

Pass

$

9,355,846

 

 

$

7,274,294

 

 

$

2,081,552

 

 

$

9,355,846

 

 

$

5,381,909

 

 

$

3,973,937

 

Special Mention

 

106,566

 

 

 

128,622

 

 

 

(22,056

)

 

 

106,566

 

 

 

268,130

 

 

 

(161,564

)

Substandard

 

343,175

 

 

 

301,141

 

 

 

42,034

 

 

 

343,175

 

 

 

247,595

 

 

 

95,580

 

Total commercial loans and leases

 

9,805,587

 

 

 

7,704,057

 

 

 

2,101,530

 

 

 

9,805,587

 

 

 

5,897,634

 

 

 

3,907,953

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

Performing

 

2,392,852

 

 

 

2,399,860

 

 

 

(7,008

)

 

 

2,392,852

 

 

 

1,858,204

 

 

 

534,648

 

Non-performing

 

14,556

 

 

 

14,938

 

 

 

(382

)

 

 

14,556

 

 

 

16,304

 

 

 

(1,748

)

Total consumer loans

 

2,407,408

 

 

 

2,414,798

 

 

 

(7,390

)

 

 

2,407,408

 

 

 

1,874,508

 

 

 

532,900

 

Loans and leases receivable

$

12,212,995

 

 

$

10,118,855

 

 

$

2,094,140

 

 

$

12,212,995

 

 

$

7,772,142

 

 

$

4,440,853

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes loan receivable, PPP, as 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, specialty finance lines of business, and multi-family 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 healthy despite a highly 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. Exposure to industry segments and CRE significantly impacted by COVID-19 initially is not substantial.

Total consumer installment loans were approximately 9% of total assets at June 30, 2022 and were supported by an allowance for credit losses of $111.2 million. At June 30, 2022, our consumer installment portfolio had the following characteristics: average FICO score of 729, average debt-to-income of 17.4% and average borrower income of $102 thousand.

Non-performing loans at June 30, 2022 were 0.18% of total loans and leases, compared to 0.31% at March 31, 2022 and 0.27% at June 30, 2021.

Deposits and Borrowings

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

(Dollars in thousands)

June 30, 2022

% of Total

 

March 31, 2022

% of Total

 

June 30, 2021

% of Total

Demand, non-interest bearing

$

4,683,030

27.6

%

 

$

4,594,428

28.0

%

 

$

2,699,869

19.5

%

Demand, interest bearing

 

6,644,398

39.2

 

 

 

5,591,468

34.1

 

 

 

4,206,355

30.3

 

Total demand deposits

 

11,327,428

66.8

 

 

 

10,185,896

62.1

 

 

 

6,906,224

49.8

 

Savings

 

640,062

3.8

 

 

 

802,395

4.9

 

 

 

1,431,756

10.3

 

Money market

 

4,254,205

25.1

 

 

 

4,981,077

30.3

 

 

 

4,908,809

35.4

 

Time deposits

 

723,024

4.3

 

 

 

446,192

2.7

 

 

 

627,150

4.5

 

Total deposits

$

16,944,719

100.0

%

 

$

16,415,560

100.0

%

$

13,873,939

100.0

%

Total deposits increased $3.1 billion, or 22.1%, to $16.9 billion at June 30, 2022 as compared to a year ago. Total demand deposits increased $4.4 billion, or 64.0%, to $11.3 billion. Time deposits increased $95.9 million, or 15.3%, to $723.0 million. These increases were offset, in part, by decreases in savings deposits of $791.7 million, or 55.3%, to $640.1 million and money market deposits of $654.6 million, or 13.3%, to $4.3 billion. The total cost of deposits increased by 7 basis points to 0.54% in Q2 2022 from 0.47% in the prior year.

Other borrowings remained relatively unchanged at $123.5 million at June 30, 2022 compared to the prior year due to the issuance of the Customers Bancorp 2.875% senior notes in August 2021, offset by the pay off at maturity of the Customers Bancorp 3.95% senior notes in June 2022.

Capital

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

(Dollars in thousands except per share data)

June 30, 2022

 

March 31, 2022

 

June 30, 2021

Customers Bancorp, Inc.

 

 

 

 

 

Common Equity

$

1,215,596

 

 

$

1,239,612

 

 

$

1,033,258

 

Tangible Common Equity*

 

1,211,967

 

 

 

1,235,934

 

 

 

1,029,405

 

Tangible Common Equity to Tangible Assets*

 

5.99

%

 

 

6.45

%

 

 

5.24

%

Tangible Common Equity to Tangible Assets, excluding PPP*

 

6.49

%

 

 

7.29

%

 

 

7.72

%

Tangible Book Value per common share*

$

37.35

 

 

$

37.50

 

 

$

31.82

 

Total risk based capital ratio (1)

 

12.6

%

 

 

12.9

%

 

 

13.3

%

(1) Total risk-based capital ratio as of June 30, 2022 is an estimate.

* 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 is included at the end of this document.

Customers Bancorp's tangible common equity* increased $182.3 million to $1.2 billion at June 30, 2022 compared to a year ago, as earnings of $340.3 million more than offset a negative impact to accumulated other comprehensive income ("AOCI") from increased unrealized losses on investment securities of $130.9 million (net of taxes) and share buyback of $55.5 million. Similarly, tangible book value per common share* increased to $37.35 at June 30, 2022 from $31.82 at June 30, 2021. Customers remains well capitalized by all regulatory measures.

At the Customers Bancorp level, the total risk based capital ratio (estimate) and tangible common equity to tangible assets ratio ("TCE ratio"), excluding PPP loans*, were 12.6% and 6.49%, respectively, at June 30, 2022. "We expect our TCE ratio to be at or above 7.5% within the next three to four quarters," stated Mr. Sam Sidhu.

At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At June 30, 2022, estimated Tier 1 capital and total risk-based capital were 11.5% and 12.9% respectively.

Key Profitability Trends

Net Interest Income

Net interest income totaled $164.9 million in Q2 2022, an increase of $0.2 million from Q1 2022, primarily due to increased net interest income earned by the core bank, including increased interest income on investment securities and core loans* of $5.1 million and $28.1 million, respectively, mostly due to higher average balances. This increase was offset in part by lower PPP interest income of $16.3 million resulting from reduced recognition of deferred fees of $14.7 million driven by lower loan forgiveness in Q2 2022 and by dividend income of $5.2 million primarily from an equity investment distribution in Q1 2022. In addition, higher expenses paid on deposits, FHLB advances and other borrowings of $12.7 million resulted mainly from higher interest rates during Q2 2022. Excluding PPP loans, average interest-earning assets increased $1.7 billion. Interest-earning asset growth was primarily driven by increases in C&I loans and leases and multi-family loans, offset in part by a decrease in interest earning deposits. Compared to Q1 2022, total loan yields decreased 13 basis points to 4.54% primarily due to higher PPP yields driven by deferred fee recognition and average balances in Q1 2022. Excluding PPP loans, the Q2 2022 total loan yield was 13 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)

(Dollars in thousands)

June 30, 2022

 

March 31, 2022

 

Interchange and card revenue

$

24

 

 

$

76

 

 

$

(52

)

Deposit fees

 

964

 

 

 

940

 

 

 

24

 

Commercial lease income

 

6,592

 

 

 

5,895

 

 

 

697

 

Bank-owned life insurance

 

1,947

 

 

 

8,326

 

 

 

(6,379

)

Mortgage warehouse transactional fees

 

1,883

 

 

 

2,015

 

 

 

(132

)

Gain (loss) on sale of SBA and other loans

 

1,542

 

 

 

1,507

 

 

 

35

 

Loan fees

 

2,618

 

 

 

2,545

 

 

 

73

 

Mortgage banking income (loss)

 

173

 

 

 

481

 

 

 

(308

)

Gain (loss) on sale of investment securities

 

(3,029

)

 

 

(1,063

)

 

 

(1,966

)

Unrealized gain (loss) on investment securities

 

(203

)

 

 

(276

)

 

 

73

 

Unrealized gain (loss) on derivatives

 

821

 

 

 

964

 

 

 

(143

)

Other

 

(586

)

 

 

(212

)

 

 

(374

)

Total non-interest income

$

12,746

 

 

$

21,198

 

 

$

(8,452

)

 

 

 

 

 

 

Non-interest income totaled $12.7 million for Q2 2022, a decrease of $8.5 million compared to Q1 2022. The decrease was primarily due to $6.4 million of death benefits from bank-owned life insurance policies in Q1 2022 and higher realized losses from the sale of investment securities of $2.0 million in Q2 2022 compared to Q1 2022.

Non-Interest Expense

The following table presents details of non-interest expense for the periods indicated:

 

Three Months Ended

 

Increase
(Decrease)

(Dollars in thousands)

June 30, 2022

 

March 31, 2022

 

Salaries and employee benefits

$

25,334

 

$

26,607

 

 

$

(1,273

)

Technology, communication and bank operations

 

22,738

 

 

24,068

 

 

 

(1,330

)

Professional services

 

7,415

 

 

6,956

 

 

 

459

 

Occupancy

 

4,279

 

 

3,050

 

 

 

1,229

 

Commercial lease depreciation

 

5,552

 

 

4,942

 

 

 

610

 

FDIC assessments, non-income taxes and regulatory fees

 

1,619

 

 

2,383

 

 

 

(764

)

Loan servicing

 

4,341

 

 

2,371

 

 

 

1,970

 

Loan workout

 

179

 

 

(38

)

 

 

217

 

Advertising and promotion

 

353

 

 

315

 

 

 

38

 

Other

 

4,395

 

 

3,153

 

 

 

1,242

 

Total non-interest expense

$

76,205

 

$

73,807

 

 

$

2,398

 

 

 

 

 

 

 

The management of non-interest expenses remains a priority for us. However, this will not be at the expense of not making adequate investments with new technologies to support efficient and responsible growth.

Non-interest expenses totaled $76.2 million in Q2 2022, an increase of $2.4 million compared to Q1 2022. The increase was primarily attributable to $2.0 million in higher loan servicing costs for consumer loans, $0.9 million in one-time impairment charges included in occupancy primarily due to consolidation of five branches into other existing locations in Southeastern Pennsylvania, $0.7 million in higher provision for credit losses on unfunded commitments, $0.6 million in commercial lease depreciation due to growth in our leasing business and $0.5 million in professional fees primarily associated with the PPP loan forgiveness. These increases were offset in part by a $1.3 million decrease in technology, processing and deposit servicing-related expenses mostly due to lower deposit servicing and interchange maintenance fees and lower salaries and employee benefits of $1.3 million due to expense management initiatives.

Taxes

Income tax expense from continuing operations decreased by $0.4 million to $18.9 million in Q2 2022 from $19.3 million in Q1 2022 primarily due to a reduction in pre-tax income, partially offset by a decrease in excess tax benefits from restricted stock units that vested in Q1 2022. The effective tax rate from continuing operations for Q2 2022 was 24%, resulting in an effective tax rate of 22% for the six months ended June 30, 2022. Customers expects the full-year 2022 effective tax rate from continuing operations to be approximately 21% to 23%.

Outlook

“Looking ahead, we continue to project sustainable and responsible organic core growth and are very optimistic about the prospects of our company. We are focused on improving the quality of our balance sheet and deposit franchise and are not focused on growth just for the sake of growth. We continue to expect, on average, $500 million of quarterly loan growth and continued digital asset-related deposit growth by year-end 2022. Through a combination of revenue growth and prudent expense management we expect our efficiency ratio to be around 45% by early 2023. Customers Bancorp stock at the close of business on July 22, 2022 was trading at $38.02, only 1 times tangible book value* at June 30, 2022. We continue to expect to meet or beat projections of our core earnings (excluding PPP)* between $4.75 - $5.00 in 2022 and over $6.00 in 2023, two to three years ahead of our previous guidance of $6.00 by 2025/2026,” concluded Mr. 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 is included at the end of this document.

Webcast

Date: Thursday, July 28, 2022
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 2nd Quarter Earnings Webcast.

You may submit questions in advance of the live webcast by emailing our Communications Director, David Patti at [email protected]; 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 a bank holding company located in West Reading, Pennsylvania engaged in banking and related businesses through its bank subsidiary, Customers Bank, a full-service bank with $20.3 billion in assets at June 30, 2022. A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender that provides a range of banking and lending services to small and medium-sized businesses, professionals, individuals and families. Services and products are available wherever permitted by law through mobile-first apps, online portals, and a network of offices and branches. Customers Bank provides blockchain-based digital payments via the Customers Bank Instant Token (CBITTM) which allows clients to make instant payments in U.S. dollars, 24 hours a day, 7 days a week, 365 days a year.

“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, 2021, 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 2022 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended June 30, 2022 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,

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

GAAP Profitability Metrics:

 

Net income available to common shareholders

(from continuing and discontinued operations)

$

56,519

 

$

74,896

 

$

98,647

 

$

110,241

 

$

58,042

 

$

131,415

 

$

91,246

 

 

Per share amounts:

 

 

 

 

 

 

 

 

Earnings per share - basic

$

1.73

 

$

2.27

 

$

3.02

 

$

3.40

 

$

1.80

 

$

4.00

 

$

2.84

 

 

Earnings per share - diluted

$

1.68

 

$

2.18

 

$

2.87

 

$

3.25

 

$

1.72

 

$

3.87

 

$

2.74

 

 

Book value per common share (1)

$

37.46

 

$

37.61

 

$

37.32

 

$

35.24

 

$

31.94

 

$

37.46

 

$

31.94

 

 

CUBI stock price (1)

$

33.90

 

$

52.14

 

$

65.37

 

$

43.02

 

$

38.99

 

$

33.90

 

$

38.99

 

 

CUBI stock price as % of book value (1)

 

90

%

 

139

%

 

175

%

 

122

%

 

122

%

 

90

%

 

122

%

 

Average shares outstanding - basic

 

32,712,616

 

 

32,957,033

 

 

32,625,960

 

 

32,449,853

 

 

32,279,625

 

 

32,834,150

 

 

32,082,878

 

 

Average shares outstanding - diluted

 

33,579,013

 

 

34,327,065

 

 

34,320,327

 

 

33,868,553

 

 

33,741,468

 

 

33,950,973

 

 

33,294,075

 

 

Shares outstanding (1)

 

32,449,486

 

 

32,957,847

 

 

32,913,267

 

 

32,537,976

 

 

32,353,256

 

 

32,449,486

 

 

32,353,256

 

 

Return on average assets ("ROAA")

 

1.17

%

 

1.63

%

 

2.08

%

 

2.33

%

 

1.27

%

 

1.39

%

 

1.04

%

 

Return on average common equity ("ROCE")

 

18.21

%

 

24.26

%

 

33.18

%

 

40.82

%

 

23.22

%

 

21.23

%

 

19.15

%

 

Efficiency ratio

 

42.14

%

 

39.42

%

 

38.70

%

 

33.42

%

 

46.59

%

 

40.76

%

 

47.64

%

 

Non-GAAP Profitability Metrics (2):

 

 

 

 

 

 

 

 

Core earnings

$

59,367

 

$

75,410

 

$

101,213

 

$

113,876

 

$

59,303

 

$

134,777

 

$

129,611

 

 

Adjusted pre-tax pre-provision net income

$

105,692

 

$

112,649

 

$

130,595

 

$

167,215

 

$

86,467

 

$

218,341

 

$

173,236

 

 

Per share amounts:

 

 

 

 

 

 

 

 

Core earnings per share - diluted

$

1.77

 

$

2.20

 

$

2.95

 

$

3.36

 

$

1.76

 

$

3.97

 

$

3.89

 

 

Tangible book value per common share (1)

$

37.35

 

$

37.50

 

$

37.21

 

$

35.12

 

$

31.82

 

$

37.35

 

$

31.82

 

 

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

 

91

%

 

139

%

 

176

%

 

122

%

 

123

%

 

91

%

 

123

%

 

Core ROAA

 

1.23

%

 

1.64

%

 

2.13

%

 

2.35

%

 

1.30

%

 

1.43

%

 

1.45

%

 

Core ROCE

 

19.13

%

 

24.43

%

 

34.04

%

 

42.16

%

 

23.72

%

 

21.77

%

 

27.20

%

 

Adjusted ROAA - pre-tax and pre-provision

 

2.11

%

 

2.39

%

 

2.70

%

 

3.36

%

 

1.80

%

 

2.25

%

 

1.85

%

 

Adjusted ROCE - pre-tax and pre-provision

 

33.37

%

 

35.89

%

 

43.25

%

 

60.81

%

 

33.27

%

 

34.62

%

 

34.95

%

 

Net interest margin, tax equivalent

 

3.39

%

 

3.60

%

 

4.14

%

 

4.59

%

 

2.98

%

 

3.49

%

 

2.99

%

 

Net interest margin, tax equivalent, excluding PPP loans

 

3.32

%

 

3.32

%

 

3.12

%

 

3.24

%

 

3.30

%

 

3.32

%

 

3.14

%

 

Core efficiency ratio

 

41.74

%

 

39.47

%

 

38.14

%

 

30.36

%

 

44.33

%

 

40.59

%

 

42.76

%

 

Asset Quality:

 

 

 

 

 

 

 

 

Net charge-offs

$

13,481

 

$

7,226

 

$

7,582

 

$

7,104

 

$

6,591

 

$

20,707

 

$

19,112

 

 

Annualized net charge-offs to average total loans and leases

 

0.36

%

 

0.21

%

 

0.21

%

 

0.17

%

 

0.16

%

 

0.29

%

 

0.24

%

 

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

 

0.18

%

 

0.31

%

 

0.34

%

 

0.34

%

 

0.27

%

 

0.18

%

 

0.27

%

 

Reserves to NPLs (1)

 

557.76

%

 

333.15

%

 

277.72

%

 

252.68

%

 

269.96

%

 

557.76

%

 

269.96

%

 

Non-performing assets ("NPAs") to total assets

 

0.14

%

 

0.23

%

 

0.25

%

 

0.27

%

 

0.24

%

 

0.14

%

 

0.24

%

 

Customers Bank Capital Ratios (3):

 

 

 

 

 

 

 

 

Common equity Tier 1 capital to risk-weighted assets

 

11.47

%

 

11.60

%

 

11.83

%

 

12.77

%

 

12.40

%

 

11.47

%

 

12.40

%

 

Tier 1 capital to risk-weighted assets

 

11.47

%

 

11.60

%

 

11.83

%

 

12.77

%

 

12.40

%

 

11.47

%

 

12.40

%

 

Total capital to risk-weighted assets

 

12.92

%

 

13.03

%

 

13.11

%

 

14.16

%

 

13.77

%

 

12.92

%

 

13.77

%

 

Tier 1 capital to average assets (leverage ratio)

 

8.09

%

 

8.21

%

 

7.93

%

 

8.66

%

 

9.07

%

 

8.09

%

 

9.07

%

 

 

 

 

 

 

 

 

 

 

(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 2022 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, 2022, our regulatory capital ratios reflected 75%, or $46.2 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,

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

$

168,941

 

 

$

157,175

 

 

$

198,000

 

 

$

233,097

 

 

$

153,608

 

 

$

326,116

 

 

$

305,725

 

Investment securities

 

25,442

 

 

 

20,295

 

 

 

15,202

 

 

 

8,905

 

 

 

8,327

 

 

 

45,737

 

 

 

16,306

 

Other

 

1,951

 

 

 

6,006

 

 

 

835

 

 

 

849

 

 

 

946

 

 

 

7,957

 

 

 

1,965

 

Total interest income

 

196,334

 

 

 

183,476

 

 

 

214,037

 

 

 

242,851

 

 

 

162,881

 

 

 

379,810

 

 

 

323,996

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

22,781

 

 

 

13,712

 

 

 

15,415

 

 

 

15,915

 

 

 

15,653

 

 

 

36,493

 

 

 

31,311

 

FHLB advances

 

2,316

 

 

 

 

 

 

51

 

 

 

5

 

 

 

963

 

 

 

2,316

 

 

 

6,155

 

Subordinated debt

 

2,689

 

 

 

2,689

 

 

 

2,688

 

 

 

2,689

 

 

 

2,689

 

 

 

5,378

 

 

 

5,378

 

FRB PPP liquidity facility, federal funds purchased and other borrowings

 

3,696

 

 

 

2,376

 

 

 

2,189

 

 

 

4,350

 

 

 

4,819

 

 

 

6,072

 

 

 

9,664

 

Total interest expense

 

31,482

 

 

 

18,777

 

 

 

20,343

 

 

 

22,959

 

 

 

24,124

 

 

 

50,259

 

 

 

52,508

 

Net interest income

 

164,852

 

 

 

164,699

 

 

 

193,694

 

 

 

219,892

 

 

 

138,757

 

 

 

329,551

 

 

 

271,488

 

Provision for credit losses

 

23,847

 

 

 

15,997

 

 

 

13,890

 

 

 

13,164

 

 

 

3,291

 

 

 

39,844

 

 

 

372

 

Net interest income after provision for credit losses

 

141,005

 

 

 

148,702

 

 

 

179,804

 

 

 

206,728

 

 

 

135,466

 

 

 

289,707

 

 

 

271,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interchange and card revenue

 

24

 

 

 

76

 

 

 

84

 

 

 

83

 

 

 

84

 

 

 

100

 

 

 

169

 

Deposit fees

 

964

 

 

 

940

 

 

 

1,026

 

 

 

994

 

 

 

891

 

 

 

1,904

 

 

 

1,754

 

Commercial lease income

 

6,592

 

 

 

5,895

 

 

 

5,378

 

 

 

5,213

 

 

 

5,311

 

 

 

12,487

 

 

 

10,516

 

Bank-owned life insurance

 

1,947

 

 

 

8,326

 

 

 

1,984

 

 

 

1,988

 

 

 

2,765

 

 

 

10,273

 

 

 

4,444

 

Mortgage warehouse transactional fees

 

1,883

 

 

 

2,015

 

 

 

2,262

 

 

 

3,100

 

 

 

3,265

 

 

 

3,898

 

 

 

7,512

 

Gain (loss) on sale of SBA and other loans

 

1,542

 

 

 

1,507

 

 

 

2,493

 

 

 

5,359

 

 

 

1,900

 

 

 

3,049

 

 

 

3,475

 

Loan fees

 

2,618

 

 

 

2,545

 

 

 

2,513

 

 

 

1,909

 

 

 

1,670

 

 

 

5,163

 

 

 

3,106

 

Mortgage banking income (loss)

 

173

 

 

 

481

 

 

 

262

 

 

 

425

 

 

 

386

 

 

 

654

 

 

 

849

 

Gain (loss) on sale of investment securities

 

(3,029

)

 

 

(1,063

)

 

 

(49

)

 

 

6,063

 

 

 

1,812

 

 

 

(4,092

)

 

 

25,378

 

Unrealized gain (loss) on investment securities

 

(203

)

 

 

(276

)

 

 

 

 

 

 

 

 

1,746

 

 

 

(479

)

 

 

2,720

 

Loss on sale of foreign subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,840

)

 

 

 

 

 

(2,840

)

Unrealized gain (loss) on derivatives

 

821

 

 

 

964

 

 

 

586

 

 

 

524

 

 

 

(439

)

 

 

1,785

 

 

 

2,098

 

Loss on cash flow hedge derivative terminations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,467

)

Other

 

(586

)

 

 

(212

)

 

 

452

 

 

 

(72

)

 

 

271

 

 

 

(798

)

 

 

576

 

Total non-interest income

 

12,746

 

 

 

21,198

 

 

 

16,991

 

 

 

25,586

 

 

 

16,822

 

 

 

33,944

 

 

 

35,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

25,334

 

 

 

26,607

 

 

 

29,940

 

 

 

26,268

 

 

 

28,023

 

 

 

51,941

 

 

 

51,994

 

Technology, communication and bank operations

 

22,738

 

 

 

24,068

 

 

 

22,657

 

 

 

21,281

 

 

 

19,618

 

 

 

46,806

 

 

 

39,606

 

Professional services

 

7,415

 

 

 

6,956

 

 

 

7,058

 

 

 

6,871

 

 

 

6,882

 

 

 

14,371

 

 

 

12,759

 

Occupancy

 

4,279

 

 

 

3,050

 

 

 

4,336

 

 

 

2,704

 

 

 

2,482

 

 

 

7,329

 

 

 

5,103

 

Commercial lease depreciation

 

5,552

 

 

 

4,942

 

 

 

4,625

 

 

 

4,493

 

 

 

4,415

 

 

 

10,494

 

 

 

8,706

 

FDIC assessments, non-income taxes and regulatory fees

 

1,619

 

 

 

2,383

 

 

 

2,427

 

 

 

2,313

 

 

 

2,602

 

 

 

4,002

 

 

 

5,321

 

Loan servicing

 

4,341

 

 

 

2,371

 

 

 

4,361

 

 

 

4,265

 

 

 

1,700

 

 

 

6,712

 

 

 

2,137

 

Merger and acquisition related expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

418

 

Loan workout

 

179

 

 

 

(38

)

 

 

226

 

 

 

198

 

 

 

102

 

 

 

141

 

 

 

(159

)

Advertising and promotion

 

353

 

 

 

315

 

 

 

344

 

 

 

302

 

 

 

313

 

 

 

668

 

 

 

874

 

Deposit relationship adjustment fees

 

 

 

 

 

 

 

 

 

 

6,216

 

 

 

 

 

 

 

 

 

 

Other

 

4,395

 

 

 

3,153

 

 

 

5,574

 

 

 

5,098

 

 

 

4,686

 

 

 

7,548

 

 

 

5,991

 

Total non-interest expense

 

76,205

 

 

 

73,807

 

 

 

81,548

 

 

 

80,009

 

 

 

70,823

 

 

 

150,012

 

 

 

132,750

 

Income before income tax expense

 

77,546

 

 

 

96,093

 

 

 

115,247

 

 

 

152,305

 

 

 

81,465

 

 

 

173,639

 

 

 

173,656

 

Income tax expense

 

18,896

 

 

 

19,332

 

 

 

12,993

 

 

 

36,263

 

 

 

20,124

 

 

 

38,228

 

 

 

37,684

 

Net income from continuing operations

$

58,650

 

 

$

76,761

 

 

$

102,254

 

 

$

116,042

 

 

$

61,341

 

 

$

135,411

 

 

$

135,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED (CONTINUED)

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

 

June 30,

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Loss from discontinued operations before income taxes

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

(20,354

)

Income tax expense (benefit) from discontinued operations

 

 

 

 

 

 

 

1,585

 

 

 

 

 

 

 

 

 

 

 

 

17,682

 

Net loss from discontinued operations

 

 

 

 

 

 

 

(1,585

)

 

 

 

 

 

 

 

 

 

 

 

(38,036

)

Net income

 

58,650

 

 

 

76,761

 

 

 

100,669

 

 

 

116,042

 

 

 

61,341

 

 

 

135,411

 

 

 

97,936

 

Preferred stock dividends

 

2,131

 

 

 

1,865

 

 

 

2,022

 

 

 

2,981

 

 

 

3,299

 

 

 

3,996

 

 

 

6,690

 

Loss on redemption of preferred stock

 

 

 

 

 

 

 

 

 

 

2,820

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders

$

56,519

 

 

$

74,896

 

 

$

98,647

 

 

$

110,241

 

 

$

58,042

 

 

$

131,415

 

 

$

91,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share from continuing operations

$

1.73

 

 

$

2.27

 

 

$

3.07

 

 

$

3.40

 

 

$

1.80

 

 

$

4.00

 

 

$

4.03

 

Basic earnings per common share

 

1.73

 

 

 

2.27

 

 

 

3.02

 

 

 

3.40

 

 

 

1.80

 

 

 

4.00

 

 

 

2.84

 

Diluted earnings per common share from continuing operations

 

1.68

 

 

 

2.18

 

 

 

2.92

 

 

 

3.25

 

 

 

1.72

 

 

 

3.87

 

 

 

3.88

 

Diluted earnings per common share

 

1.68

 

 

 

2.18

 

 

 

2.87

 

 

 

3.25

 

 

 

1.72

 

 

 

3.87

 

 

 

2.74

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET - UNAUDITED

(Dollars in thousands)

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2021

 

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

66,703

 

 

$

55,515

 

 

$

35,238

 

 

$

51,169

 

 

$

36,837

 

Interest earning deposits

 

178,475

 

 

 

219,085

 

 

 

482,794

 

 

 

1,000,885

 

 

 

393,663

 

Cash and cash equivalents

 

245,178

 

 

 

274,600

 

 

 

518,032

 

 

 

1,052,054

 

 

 

430,500

 

Investment securities, at fair value

 

3,144,882

 

 

 

4,169,853

 

 

 

3,817,150

 

 

 

1,866,697

 

 

 

1,526,792

 

Investment securities held to maturity

 

495,039

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

6,595

 

 

 

3,003

 

 

 

16,254

 

 

 

29,957

 

 

 

34,540

 

Loans receivable, mortgage warehouse, at fair value

 

1,874,603

 

 

 

1,755,758

 

 

 

2,284,325

 

 

 

2,557,624

 

 

 

2,855,284

 

Loans receivable, PPP

 

1,570,160

 

 

 

2,195,902

 

 

 

3,250,008

 

 

 

4,957,357

 

 

 

6,305,056

 

Loans and leases receivable

 

12,212,995

 

 

 

10,118,855

 

 

 

9,018,298

 

 

 

7,970,599

 

 

 

7,772,142

 

Allowance for credit losses on loans and leases

 

(156,530

)

 

 

(145,847

)

 

 

(137,804

)

 

 

(131,496

)

 

 

(125,436

)

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

 

15,501,228

 

 

 

13,924,668

 

 

 

14,414,827

 

 

 

15,354,084

 

 

 

16,807,046

 

FHLB, Federal Reserve Bank, and other restricted stock

 

74,626

 

 

 

54,553

 

 

 

64,584

 

 

 

57,184

 

 

 

39,895

 

Accrued interest receivable

 

98,727

 

 

 

94,669

 

 

 

92,239

 

 

 

93,514

 

 

 

90,009

 

Bank premises and equipment, net

 

6,755

 

 

 

8,233

 

 

 

8,890

 

 

 

9,944

 

 

 

10,391

 

Bank-owned life insurance

 

335,153

 

 

 

332,239

 

 

 

333,705

 

 

 

331,423

 

 

 

329,421

 

Goodwill and other intangibles

 

3,629

 

 

 

3,678

 

 

 

3,736

 

 

 

3,794

 

 

 

3,853

 

Other assets

 

340,184

 

 

 

298,212

 

 

 

305,611

 

 

 

310,271

 

 

 

362,661

 

Total assets

$

20,251,996

 

 

$

19,163,708

 

 

$

19,575,028

 

 

$

19,108,922

 

 

$

19,635,108

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing deposits

$

4,683,030

 

 

$

4,594,428

 

 

$

4,459,790

 

 

$

4,954,331

 

 

$

2,699,869

 

Interest bearing deposits

 

12,261,689

 

 

 

11,821,132

 

 

 

12,318,134

 

 

 

12,016,694

 

 

 

11,174,070

 

Total deposits

 

16,944,719

 

 

 

16,415,560

 

 

 

16,777,924

 

 

 

16,971,025

 

 

 

13,873,939

 

Federal funds purchased

 

770,000

 

 

 

700,000

 

 

 

75,000

 

 

 

 

 

 

 

FHLB advances

 

635,000

 

 

 

 

 

 

700,000

 

 

 

 

 

 

 

Other borrowings

 

123,450

 

 

 

223,230

 

 

 

223,086

 

 

 

223,151

 

 

 

124,240

 

Subordinated debt

 

181,812

 

 

 

181,742

 

 

 

181,673

 

 

 

181,603

 

 

 

181,534

 

FRB PPP liquidity facility

 

 

 

 

 

 

 

 

 

 

 

 

 

3,865,865

 

Accrued interest payable and other liabilities

 

243,625

 

 

 

265,770

 

 

 

251,128

 

 

 

448,844

 

 

 

338,801

 

Total liabilities

 

18,898,606

 

 

 

17,786,302

 

 

 

18,208,811

 

 

 

17,824,623

 

 

 

18,384,379

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

137,794

 

 

 

137,794

 

 

 

137,794

 

 

 

137,794

 

 

 

217,471

 

Common stock

 

34,922

 

 

 

34,882

 

 

 

34,722

 

 

 

33,818

 

 

 

33,634

 

Additional paid in capital

 

545,670

 

 

 

542,402

 

 

 

542,391

 

 

 

525,894

 

 

 

519,294

 

Retained earnings

 

837,147

 

 

 

780,628

 

 

 

705,732

 

 

 

607,085

 

 

 

496,844

 

Accumulated other comprehensive income (loss), net

 

(124,881

)

 

 

(62,548

)

 

 

(4,980

)

 

 

1,488

 

 

 

5,266

 

Treasury stock, at cost

 

(77,262

)

 

 

(55,752

)

 

 

(49,442

)

 

 

(21,780

)

 

 

(21,780

)

Total shareholders' equity

 

1,353,390

 

 

 

1,377,406

 

 

 

1,366,217

 

 

 

1,284,299

 

 

 

1,250,729

 

Total liabilities and shareholders' equity

$

20,251,996

 

 

$

19,163,708

 

 

$

19,575,028

 

 

$

19,108,922

 

 

$

19,635,108

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

Average
Balance

Average
Yield or
Cost (%)

 

Average
Balance

Average
Yield or
Cost (%)

 

Average
Balance

Average
Yield or
Cost (%)

Assets

 

 

 

 

 

 

 

 

Interest earning deposits

$

434,950

0.85%

 

$

826,240

0.16%

 

$

646,342

0.12%

Investment securities (1)

 

4,104,463

2.48%

 

 

4,036,966

2.01%

 

 

1,512,644

2.20%

Loans and leases:

 

 

 

 

 

 

 

 

Commercial loans to mortgage companies

 

1,898,554

3.30%

 

 

1,836,647

3.09%

 

 

2,737,629

3.09%

Multi-family loans

 

1,845,527

3.76%

 

 

1,531,846

3.64%

 

 

1,551,370

3.88%

Commercial & industrial loans and leases (2)

 

5,577,830

3.87%

 

 

4,124,408

3.60%

 

 

2,878,045

3.59%

Loans receivable, PPP

 

1,863,429

4.43%

 

 

2,641,318

5.66%

 

 

6,133,184

2.69%

Non-owner occupied commercial real estate loans

 

1,307,995

3.91%

 

 

1,312,210

3.77%

 

 

1,368,695

3.86%

Residential mortgages

 

515,612

3.81%

 

 

416,417

3.58%

 

 

346,284

3.62%

Installment loans

 

1,909,551

9.23%

 

 

1,794,145

9.03%

 

 

1,467,595

9.37%

Total loans and leases (3)

 

14,918,498

4.54%

 

 

13,656,991

4.67%

 

 

16,482,802

3.74%

Other interest-earning assets

 

68,025

6.09%

 

 

52,111

NM(7)

 

 

57,208

5.32%

Total interest-earning assets

 

19,525,936

4.03%

 

 

18,572,308

4.00%

 

 

18,698,996

3.49%

Non-interest-earning assets

 

530,084

 

 

 

557,022

 

 

 

607,952

 

Total assets

$

20,056,020

 

 

$

19,129,330

 

 

$

19,306,948

 

Liabilities

 

 

 

 

 

 

 

 

Interest checking accounts

 

6,409,617

0.85%

 

 

5,769,372

0.54%

 

 

3,503,242

0.76%

Money market deposit accounts

 

4,704,767

0.64%

 

 

4,880,051

0.39%

 

 

4,859,614

0.47%

Other savings accounts

 

695,176

0.44%

 

 

880,113

0.36%

 

 

1,456,777

0.57%

Certificates of deposit

 

530,180

0.65%

 

 

450,644

0.47%

 

 

658,698

0.78%

Total interest-bearing deposits (4)

 

12,339,740

0.74%

 

 

11,980,180

0.46%

 

 

10,478,331

0.60%

Federal funds purchased

 

642,747

0.89%

 

 

88,611

0.33%

 

 

71,703

0.07%

FRB PPP liquidity facility

 

—%

 

 

—%

 

 

3,858,733

0.35%

Borrowings

 

940,068

3.10%

 

 

532,610

3.80%

 

 

460,054

4.44%

Total interest-bearing liabilities

 

13,922,555

0.91%

 

 

12,601,401

0.60%

 

 

14,868,821

0.65%

Non-interest-bearing deposits (4)

 

4,491,574

 

 

 

4,900,983

 

 

 

2,889,781

 

Total deposits and borrowings

 

18,414,129

0.69%

 

 

17,502,384

0.43%

 

 

17,758,602

0.54%

Other non-interest-bearing liabilities

 

259,279

 

 

 

237,131

 

 

 

328,251

 

Total liabilities

 

18,673,408

 

 

 

17,739,515

 

 

 

18,086,853

 

Shareholders' equity

 

1,382,612

 

 

 

1,389,815

 

 

 

1,220,095

 

Total liabilities and shareholders' equity

$

20,056,020

 

 

$

19,129,330

 

 

$

19,306,948

 

Interest spread

 

3.35%

 

 

3.57%

 

 

2.95%

Net interest margin

 

3.38%

 

 

3.59%

 

 

2.98%

Net interest margin tax equivalent (5)

 

3.39%

 

 

3.60%

 

 

2.98%

Net interest margin tax equivalent excl. PPP (6)

 

3.32%

 

 

3.32%

 

 

3.30%

(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 0.54%, 0.33% and 0.47% for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, presented to approximate interest income as a taxable asset. 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) Non-GAAP tax-equivalent basis, as described in note (5) for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, 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.

(7) Not meaningful.

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

Six Months Ended

 

June 30, 2022

 

June 30, 2021

 

Average
Balance

Average
Yield
or
Cost (%)

 

Average
Balance

Average
Yield
or
Cost (%)

Assets

 

 

 

 

 

Interest earning deposits

$

629,514

0.40%

 

$

910,362

0.11%

Investment securities (1)

 

4,070,901

2.25%

 

 

1,435,529

2.27%

Loans and leases:

 

 

 

 

 

Commercial loans to mortgage companies

 

1,867,772

3.20%

 

 

2,928,802

3.09%

Multi-family loans

 

1,689,553

3.71%

 

 

1,619,891

3.84%

Commercial & industrial loans and leases (2)

 

4,855,134

3.76%

 

 

2,863,268

3.78%

Loans receivable, PPP

 

2,250,224

5.15%

 

 

5,382,370

3.00%

Non-owner occupied commercial real estate loans

 

1,310,091

3.84%

 

 

1,358,871

3.86%

Residential mortgages

 

466,288

3.71%

 

 

359,815

3.71%

Installment loans

 

1,852,167

9.13%

 

 

1,396,126

9.22%

Total loans and leases (3)

 

14,291,229

4.60%

 

 

15,909,143

3.88%

Other interest-earning assets

 

60,113

NM (7)

 

 

68,521

4.34%

Total interest-earning assets

 

19,051,757

4.02%

 

 

18,323,555

3.56%

Non-interest-earning assets

 

543,479

 

 

 

594,936

 

Total assets

$

19,595,236

 

 

$

18,918,491

 

Liabilities

 

 

 

 

 

Interest checking accounts

$

6,091,263

0.71%

 

$

3,099,725

0.80%

Money market deposit accounts

 

4,791,925

0.51%

 

 

4,648,942

0.51%

Other savings accounts

 

787,134

0.39%

 

 

1,435,681

0.63%

Certificates of deposit

 

490,632

0.57%

 

 

662,447

0.87%

Total interest-bearing deposits (4)

 

12,160,954

0.61%

 

 

9,846,795

0.64%

Federal funds purchased

 

367,210

0.82%

 

 

44,171

0.07%

FRB PPP liquidity facility

 

—%

 

 

3,899,996

0.35%

Borrowings

 

737,464

3.35%

 

 

805,853

3.61%

Total interest-bearing liabilities

 

13,265,628

0.76%

 

 

14,596,815

0.72%

Non-interest-bearing deposits (4)

 

4,695,148

 

 

 

2,855,019

 

Total deposits and borrowings

 

17,960,776

0.56%

 

 

17,451,834

0.61%

Other non-interest-bearing liabilities

 

248,266

 

 

 

288,246

 

Total liabilities

 

18,209,042

 

 

 

17,740,080

 

Shareholders' equity

 

1,386,194

 

 

 

1,178,411

 

Total liabilities and shareholders' equity

$

19,595,236

 

 

$

18,918,491

 

Interest spread

 

3.45%

 

 

2.96%

Net interest margin

 

3.48%

 

 

2.99%

Net interest margin tax equivalent (5)

 

3.49%

 

 

2.99%

Net interest margin tax equivalent excl. PPP (6)

 

3.32%

 

 

3.14%

(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 0.44% and 0.50% for the six months ended June 30, 2022 and 2021, respectively.

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the six months ended June 30, 2022 and 2021, presented to approximate interest income as a taxable asset. 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) Non-GAAP tax-equivalent basis as described in note (5), for the six months ended June 30, 2022 and 2021, 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.

(7) Not meaningful.

 

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,

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2021

Commercial:

 

 

 

 

 

 

 

 

 

Commercial & industrial, including specialty lending

$

5,637,083

 

$

3,921,439

 

$

3,346,670

 

$

2,604,367

 

$

2,293,723

Multi-family

 

2,012,920

 

 

1,705,027

 

 

1,486,308

 

 

1,387,166

 

 

1,497,485

Loans to mortgage companies

 

1,975,189

 

 

1,830,121

 

 

2,362,438

 

 

2,626,483

 

 

2,922,217

Commercial real estate owner occupied

 

710,577

 

 

701,893

 

 

654,922

 

 

656,044

 

 

653,649

Loans receivable, PPP

 

1,570,160

 

 

2,195,902

 

 

3,250,008

 

 

4,957,357

 

 

6,305,056

Commercial real estate non-owner occupied

 

1,152,869

 

 

1,140,311

 

 

1,121,238

 

 

1,144,643

 

 

1,206,646

Construction

 

195,687

 

 

161,024

 

 

198,981

 

 

198,607

 

 

179,198

Total commercial loans and leases

 

13,254,485

 

 

11,655,717

 

 

12,420,565

 

 

13,574,667

 

 

15,057,974

Consumer:

 

 

 

 

 

 

 

 

 

Residential

 

460,228

 

 

469,426

 

 

350,984

 

 

260,820

 

 

273,493

Manufactured housing

 

48,570

 

 

50,669

 

 

52,861

 

 

55,635

 

 

57,904

Installment

 

1,901,070

 

 

1,897,706

 

 

1,744,475

 

 

1,624,415

 

 

1,577,651

Total consumer loans

 

2,409,868

 

 

2,417,801

 

 

2,148,320

 

 

1,940,870

 

 

1,909,048

Total loans and leases

$

15,664,353

 

$

14,073,518

 

$

14,568,885

 

$

15,515,537

 

$

16,967,022

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END DEPOSIT COMPOSITION - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2021

 

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing

$

4,683,030

 

$

4,594,428

 

$

4,459,790

 

$

4,954,331

 

$

2,699,869

Demand, interest bearing

 

6,644,398

 

 

5,591,468

 

 

6,488,406

 

 

5,023,081

 

 

4,206,355

Total demand deposits

 

11,327,428

 

 

10,185,896

 

 

10,948,196

 

 

9,977,412

 

 

6,906,224

Savings

 

640,062

 

 

802,395

 

 

973,317

 

 

1,310,343

 

 

1,431,756

Money market

 

4,254,205

 

 

4,981,077

 

 

4,349,073

 

 

5,090,121

 

 

4,908,809

Time deposits

 

723,024

 

 

446,192

 

 

507,338

 

 

593,149

 

 

627,150

Total deposits

$

16,944,719

 

$

16,415,560

 

$

16,777,924

 

$

16,971,025

 

$

13,873,939

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY - UNAUDITED

(Dollars in thousands)

As of June 30, 2022

As of March 31, 2022

As of June 30, 2021

 

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)

$

5,737,670

$

4,061

$

11,081

0.07 %

272.86 %

$

3,995,802

$

5,490

$

10,765

0.14 %

196.08 %

$

2,360,656

$

6,717

$

8,127

0.28 %

120.99 %

Multi-family

 

2,008,784

 

1,153

 

9,765

0.06 %

846.92 %

 

1,705,027

 

17,869

 

7,437

1.05 %

41.62 %

 

1,497,485

 

21,595

 

5,028

1.44 %

23.28 %

Commercial real estate owner occupied

 

710,577

 

2,913

 

4,745

0.41 %

162.89 %

 

701,893

 

2,191

 

3,841

0.31 %

175.31 %

 

653,649

 

2,688

 

4,464

0.41 %

166.07 %

Commercial real estate non-owner occupied

 

1,152,869

 

 

8,880

— %

— %

 

1,140,311

 

1,302

 

5,955

0.11 %

457.37 %

 

1,206,646

 

 

7,374

— %

— %

Construction

 

195,687

 

 

1,179

— %

— %

 

161,024

 

 

939

— %

— %

 

179,198

 

 

2,643

— %

— %

Total commercial loans and leases receivable

 

9,805,587

 

8,127

 

35,650

0.08 %

438.66 %

 

7,704,057

 

26,852

 

28,937

0.35 %

107.76 %

 

5,897,634

 

31,000

 

27,636

0.53 %

89.15 %

Residential

 

457,768

 

6,258

 

5,578

1.37 %

89.13 %

 

466,423

 

8,124

 

4,685

1.74 %

57.67 %

 

266,911

 

8,991

 

2,299

3.37 %

25.57 %

Manufactured housing

 

48,570

 

3,071

 

4,080

6.32 %

132.86 %

 

50,669

 

3,430

 

4,342

6.77 %

126.59 %

 

57,904

 

3,239

 

4,372

5.59 %

134.98 %

Installment

 

1,901,070

 

5,965

 

111,222

0.31 %

1864.58 %

 

1,897,706

 

4,865

 

107,883

0.26 %

2217.53 %

 

1,549,693

 

2,728

 

91,129

0.18 %

3340.51 %

Total consumer loans receivable

 

2,407,408

 

15,294

 

120,880

0.64 %

790.38 %

 

2,414,798

 

16,419

 

116,910

0.68 %

712.04 %

 

1,874,508

 

14,958

 

97,800

0.80 %

653.83 %

Loans and leases receivable (1)

 

12,212,995

 

23,421

 

156,530

0.19 %

668.33 %

 

10,118,855

 

43,271

 

145,847

0.43 %

337.05 %

 

7,772,142

 

45,958

 

125,436

0.59 %

272.94 %

Loans receivable, PPP

 

1,570,160

 

 

— %

— %

 

2,195,902

 

 

— %

— %

 

6,305,056

 

 

— %

— %

Loans receivable, mortgage warehouse, at fair value

 

1,874,603

 

 

— %

— %

 

1,755,758

 

 

— %

— %

 

2,855,284

 

 

— %

— %

Total loans held for sale

 

6,595

 

4,643

 

70.40 %

— %

 

3,003

 

507

 

16.88 %

— %

 

34,540

 

507

 

1.47 %

— %

Total portfolio

$

15,664,353

$

28,064

$

156,530

0.18 %

557.76 %

$

14,073,518

$

43,778

$

145,847

0.31 %

333.15 %

$

16,967,022

$

46,465

$

125,436

0.27 %

269.96 %

(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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2

 

Q1

 

Q4

 

Q3

 

Q2

 

Six Months Ended
June 30,

 

2022

 

2022

 

2021

 

2021

 

2021

 

2022

 

2021

Loan type

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

$

1,990

 

$

(337)

 

$

 

$

 

$

 

$

1,653

 

$

1,132

Commercial & industrial

 

(416)

 

 

(59)

 

 

240

 

 

116

 

 

(283)

 

 

(475)

 

 

92

Commercial real estate owner occupied

 

(42)

 

 

(7)

 

 

66

 

 

50

 

 

(1)

 

 

(49)

 

 

133

Commercial real estate non-owner occupied

 

159

 

 

(8)

 

 

(14)

 

 

943

 

 

(59)

 

 

151

 

 

(69)

Construction

 

(103)

 

 

(113)

 

 

(3)

 

 

(3)

 

 

(114)

 

 

(216)

 

 

(119)

Residential

 

(39)

 

 

(2)

 

 

(6)

 

 

54

 

 

(12)

 

 

(41)

 

 

28

Installment

 

11,932

 

 

7,752

 

 

7,299

 

 

5,944

 

 

7,060

 

 

19,684

 

 

17,915

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

$

13,481

 

$

7,226

 

$

7,582

 

$

7,104

 

$

6,591

 

$

20,707

 

$

19,112

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30,

Q2 2022

 

Q1 2022

 

Q4 2021

 

Q3 2021

 

Q2 2021

 

2022

 

2021

(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

$

56,519

$

1.68

 

$

74,896

$

2.18

 

$

98,647

$

2.87

 

$

110,241

$

3.25

 

$

58,042

$

1.72

 

$

131,415

$

3.87

 

$

91,246

$

2.74

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

 

 

 

 

 

 

1,585

 

0.05

 

 

 

 

 

 

 

 

 

 

 

38,036

 

1.14

Severance expense

 

 

 

 

 

 

 

 

 

 

 

 

 

1,517

 

0.04

 

 

 

 

 

1,517

 

0.05

Impairments on fixed assets and leases

 

705

 

0.02

 

 

220

 

0.01

 

 

1,118

 

0.03

 

 

 

 

 

 

 

 

925

 

0.03

 

 

 

Merger and acquisition related expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

320

 

0.01

Legal reserves

 

 

 

 

 

 

 

 

 

 

897

 

0.03

 

 

 

 

 

 

 

 

 

(Gains) losses on investment securities

 

2,494

 

0.07

 

 

1,030

 

0.03

 

 

43

 

0.00

 

 

(4,591)

 

(0.14)

 

 

(2,694)

 

(0.08)

 

 

3,524

 

0.10

 

 

(21,467)

 

(0.64)

Loss on sale of foreign subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

2,150

 

0.06

 

 

 

 

 

2,150

 

0.06

Loss on cash flow hedge derivative terminations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,716

 

0.56

Derivative credit valuation adjustment

 

(351)

 

(0.01)

 

 

(736)

 

(0.02)

 

 

(180)

 

(0.01)

 

 

(198)

 

(0.01)

 

 

288

 

0.01

 

 

(1,087)

 

(0.03)

 

 

(907)

 

(0.03)

Deposit relationship adjustment fees

 

 

 

 

 

 

 

 

 

 

4,707

 

0.14

 

 

 

 

 

 

 

 

 

Loss on redemption of preferred stock

 

 

 

 

 

 

 

 

 

 

2,820

 

0.08

 

 

 

 

 

 

 

 

 

Core earnings

$

59,367

$

1.77

 

$

75,410

$

2.20

 

$

101,213

$

2.95

 

$

113,876

$

3.36

 

$

59,303

$

1.76

 

$

134,777

$

3.97

 

$

129,611

$

3.89

 

Core Earnings, excluding PPP - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

June 30,

Q2 2022

 

Q1 2022

 

Q4 2021

 

Q3 2021

 

Q2 2021

 

2022

 

2021

(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

$

56,519

$

1.68

 

$

74,896

$

2.18

 

$

98,647

$

2.87

 

$

110,241

$

3.25

 

$

58,042

$

1.72

 

$

131,415

$

3.87

 

$

91,246

$

2.74

Less: PPP net income (after tax)

 

13,066

 

0.39

 

 

24,713

 

0.72

 

 

64,323

 

1.87

 

 

81,337

 

2.40

 

 

24,312

 

0.72

 

 

37,779

 

1.11

 

 

49,391

 

1.48

GAAP net income to common shareholders, excluding PPP

 

43,453

 

1.29

 

 

50,183

 

1.46

 

 

34,324

 

1.00

 

 

28,904

 

0.85

 

 

33,730

 

1.00