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Customers Bancorp Reports Second Quarter 2021 Results


Record Net Income of $58.0 million, or $1.72 Per Diluted Share,
ROAA of 1.27% and ROCE of 23.22%

Top 5 Bank PPP Lender in U.S. by Loan Count
~325,000 Loans Funded Totaling $9.5 billion
~$335 million of Deferred Origination Fees Earned
Tangible Book Value Increased 29% over Q2 2020 

  • Q2 2021 net income available to common shareholders was $58.0 million, or $1.72 per diluted share, up 182% over Q2 2020.
  • Q2 2021 core earnings (a non-GAAP measure) were $59.3 million, or $1.76 per diluted share, up 177% over Q2 2020.
  • Q2 2021 ROAA was 1.27% and Core ROAA (a non-GAAP measure) was 1.30%. Q2 2020 ROAA was 0.62% and Core ROAA (a non-GAAP measure) was 0.68%.
  • Q2 2021 ROCE was 23.22% and Core ROCE (a non-GAAP measure) was 23.72%. Q2 2020 ROCE was 9.97% and Core ROCE (a non-GAAP measure) was 11.16%.
  • Adjusted pre-tax pre-provision net income (a non-GAAP measure) for Q2 2021 was $86.5 million, an increase of 60% over Q2 2020. Q2 2021 adjusted pre-tax pre-provision return on average assets (a non-GAAP measure) was 1.80% compared to 1.48% for Q2 2020.
  • Q2 2021 results include a provision for credit losses on loans and leases of $3.3 million, compared to a benefit of $2.9 million in Q1 2021. At June 30, 2021, the coverage of credit loss reserves for loans and leases held for investment, excluding Paycheck Protection Program ("PPP") loans (a non-GAAP measure), was 1.61% compared to 1.71% at March 31, 2021.
  • Non-performing assets were 0.24% of total assets at June 30, 2021 compared to 0.26% at March 31, 2021. Allowance for credit losses equaled 270% of non-performing loans at June 30, 2021, up from 264% at March 31, 2021.
  • Net interest income for Q2 2021 grew $6.0 million, or 4.5%, over Q1 2021 and $46.8 million, or 50.9%, over Q2 2020.
  • Q2 2021 net interest margin (a non-GAAP measure) remained stable at 2.98%. Q2 2021 net interest margin, excluding the impact of PPP loans (a non-GAAP measure), increased by 31 basis points to 3.30% from Q1 2021.
  • Total loans and leases increased $1.7 billion, or 11.0% year-over-year. Total loans and leases, excluding PPP loans (a non-GAAP measure), increased $132.2 million, or 1.3% year-over-year, as growth in the core commercial and industrial (C&I), consumer and loans to mortgage companies portfolios was offset in part by runoff in the multi-family loan portfolio.
  • Total deposits increased $2.9 billion, or 26.5% year-over-year, which included a $2.4 billion or 51.9% increase in demand deposits. The total cost of deposits dropped 44 basis points from 0.91% in the year-ago quarter.
  • Total deferments declined to $98.2 million, or 0.9% of total loans and leases excluding PPP loans (a non-GAAP measure) at June 30, 2021, down from $189.1 million, or 1.7% of total loans and leases excluding PPP loans (a non-GAAP measure) at March 31, 2021.
  • Q2 2021 efficiency ratio was 46.59% compared to 50.73% for Q2 2020. Q2 2021 core efficiency ratio was 44.33% compared to 47.84% in Q2 2020 (non-GAAP measures).
  • Fully divested foreign equity holdings in Q2 2021 reducing overall taxable capital gains resulting from BankMobile divestiture in Q1 2021.
  • On track to soft launch a private real-time, blockchain-based B2B payments platform with integration of digital and legacy payment rails within the next 60 days. The platform will deliver enhanced payments functionality for our business clients and is expected to generate additional deposit growth in targeted niches, such as real estate, monetary and currency exchanges and institutional investments.
  • Preferred stock redemption planned prior to year-end.

WEST READING, Pa.--(BUSINESS WIRE)-- Customers Bancorp, Inc. (NYSE: CUBI), the parent company of Customers Bank (collectively "Customers" or "CUBI"), today reported second quarter 2021 ("Q2 2021") net income to common shareholders of $58.0 million, or $1.72 per diluted share, up from first quarter 2021 ("Q1 2021") net income to common shareholders of $33.2 million, or $1.01 per diluted share. Q1 2021 results included a net loss from discontinued operations of $38.0 million, which reduced GAAP earnings by $1.16 per diluted share, resulting from the divestiture of BankMobile Technologies, Inc. on January 4, 2021. Core earnings for Q2 2021 totaled $59.3 million, or $1.76 per diluted share compared to Q1 2021 core earnings of $70.3 million, or $2.14 per diluted share (non-GAAP measures). Adjusted pre-tax pre-provision net income was $86.5 million for Q2 2021 compared to $86.8 million for Q1 2021 (non-GAAP measures). Net interest margin, tax equivalent ("NIM") remained stable at 3% for Q2 2021 and Q1 2021. Excluding PPP loans, NIM expanded 31 basis points in Q2 2021 as compared to Q1 2021, largely benefiting from the balance sheet restructuring that occurred in Q1 2021, further reductions in deposit costs and disciplined pricing strategy (non-GAAP measures).

“As the Paycheck Protection Program ("PPP") comes to a close, we couldn't be happier with our overall execution and results in this program,” remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “Not only have we supported hundreds of thousands of small businesses, not-for-profits, and the communities we serve, we leveraged our technology expertise to build valuable fintech partnerships, established hundreds of thousands of new customer accounts ripe for in-house analytics and cross-selling and significantly improved our capital position and tangible book value at the same time. All of this was achieved while decreasing the risk profile of Customers Bank. At June 30, 2021, we have strong capital and reserves, exceptional asset quality and expect to report the highest full year earnings in our company's history. This leaves us very well positioned to support future growth and to redeem a portion of our preferred stock later this year, an EPS enhancing action which was approved by our Board earlier today. We remain optimistic about our future.” Mr. Sidhu concluded.

Key Balance Sheet Trends

Total loans and leases increased $1.7 billion, or 11.0%, to $17.0 billion at June 30, 2021 compared to the year-ago period. PPP loans were $6.3 billion at June 30, 2021, an increase of $1.5 billion compared to the year-ago period, driven by $4.1 billion and $0.2 billion in originations from the new round and earlier rounds of PPP loans, respectively. This increase in PPP loans was offset by $2.8 billion in forgiveness from the earlier rounds of PPP loans. Additionally, the loan mix improved year-over-year as commercial and industrial loans and leases increased $233.2 million to $2.3 billion, commercial real estate owner occupied loans increased $108.9 million to $653.6 million, commercial loans to mortgage companies increased $90.1 million to $2.9 billion, and consumer installment loans increased $319.8 million to $1.6 billion. These increases in loans and leases were partially offset by decreases in multi-family loans of $526.1 million to $1.5 billion, commercial real estate non-owner occupied loans of $55.7 million to $1.2 billion and residential mortgages of $79.4 million to $273.5 million. “Looking ahead, we see continued growth in core C&I and consumer loans offsetting some of the expected decreases in loans to mortgage companies in the second half of this year," stated Sidhu.

Total deposits increased $2.9 billion, or 26.5%, to $13.9 billion at June 30, 2021 compared to the year-ago period. Total demand deposits increased $2.4 billion, or 51.9%, to $6.9 billion, money market deposits increased $1.5 billion, or 44.2%, to $4.9 billion, and savings deposits increased $287.0 million, or 25.1%, to $1.4 billion. These increases were offset, in part, by a decrease in time deposits of $1.2 billion, or 66.5%, to $627.2 million. The total cost of deposits declined by 44 basis points to 0.47% in Q2 2021 from 0.91% in the year-ago quarter. At July 15, 2021, the spot cost of deposits was 0.44%. "We expect our deposit costs to be at or below 40 basis points by September 30, 2021," stated Sidhu.

Very Strong Growth in Tangible Common Equity and Tangible Book Value Per Share

Customers experienced significant improvements in regulatory capital ratios in Q2 2021 as compared to a year ago. Customers Bancorp's tangible common equity (a non-GAAP measure) increased by $253.6 million to $1.0 billion at June 30, 2021 from $775.8 million at June 30, 2020, and the tangible book value per common share (a non-GAAP measure) increased to $31.82 at June 30, 2021 from $24.62 at June 30, 2020, an increase of 29.2%. Customers remains well capitalized by all regulatory measures, leaving us well positioned to redeem a portion of the preferred stock prior to year end subject to routine and customary regulatory approval. 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 (a non-GAAP measure), were 13.2% and 7.7%, respectively, at June 30, 2021. At March 31, 2021, Customers Bancorp's total risk based capital ratio and TCE ratio, excluding PPP loans (a non-GAAP measure), were 12.4% and 7.1%, respectively." As a consequence of PPP related income and a potential cyclical decline in mortgage warehouse loans, we expect our capital levels to increase sharply in the second half of 2021 with the TCE ratio excluding PPP loans to be close to 9% by December 31, 2021," commented Customers Bancorp CFO, Carla Leibold.

Loan Portfolio Management During the COVID-19 Crisis

Over the last decade, Customers has developed a suite of commercial and retail loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s C&I, mortgage warehouse, 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, Customers employs a bottom-up data driven approach to analyze its commercial portfolio.

Strong commercial loan portfolio with very low concentration in COVID-19 impacted industries and CRE

  • Total commercial deferments declined to $89.8 million, or 0.8% of total loans and leases, excluding PPP loans (a non-GAAP measure), at June 30, 2021, down from $176.1 million, or 1.6% of total loans and leases, excluding PPP loans, at March 31, 2021. Customers' commercial deferments peaked at about $1.2 billion in July 2020.
  • Exposure to industry segments significantly impacted by COVID-19 is not substantial. At June 30, 2021, Customers had $82.8 million in energy and utilities exposure (with no deferments); $62.0 million in colleges and universities (with no deferments); $62.2 million in CRE retail sales exposure (mostly auto sales; with no deferments); $29.9 million in franchise restaurants and dining (with no deferments); and $26.1 million in entertainment only businesses (with no deferments).
  • At June 30, 2021, the hospitality portfolio was $399.3 million, or 3.8% of total loans and leases, excluding PPP loans, with $59.2 million in deferment. Approximately 79.5% ($317.4 million) represents “flagged” facilities, with the majority of the non-flagged being high-end destination hotels in Cape May (NJ), Avalon (NJ), and Long Island (NY). We believe the majority of the hotels have sufficient cash resources to get through the COVID-19 crisis.
  • At June 30, 2021, the healthcare portfolio was approximately $460 million, comprised predominantly of skilled nursing, which has been deemed an essential business and through a number of federal and state actions has been provided immunity from liability for COVID-19 related deaths. No deferments have been requested and there are no delinquencies.
  • The multi-family portfolio is highly seasoned, with a weighted average loan to value of 61.7% as of quarter-end. 55.77% of the portfolio was in New York City, of which 70.53% was in rent controlled/regulated properties. As of June 30, 2021, no deferments have been requested.
  • At June 30, 2021, investment CRE had a weighted average loan to value of 63.2%, with approximately 52% of the portfolio housed in New York, Philadelphia and surrounding markets. As of June 30, 2021, $4.4 million of the portfolio was on deferment, with minimal exposure to the office market.

Consumer installment, mortgage and home equity loan portfolios continue to perform well

  • Total consumer-related deferments declined to $8.4 million, or 0.1% of total loans and leases, excluding PPP loans (a non-GAAP measure), at June 30, 2021, down from $13.0 million at March 31, 2021.
  • The $1.6 billion consumer installment loan portfolio outperformed industry peers with deferments dropping to 0.31% and 30+ day delinquency at only 0.66%. Strong credit quality (avg. FICO at origination: 740), low concentration in at-risk job segments, and outstanding performance of CB Direct originations have resulted in solid results through the end of Q2 2021.
  • The consumer installment portfolio has been managed to moderate growth and strengthening credit quality, by replacing run-off with CB Direct originations with higher FICO scores.

Key Profitability Trends

Net Interest Income

Net interest income totaled $138.8 million in Q2 2021, an increase of $6.0 million from Q1 2021, primarily due to a $755.1 million net increase in average interest-earning assets and a decrease in the cost of interest-bearing liabilities. Interest-earning asset growth was driven by increases in consumer loans and the latest round of PPP loans, offset in part by PPP loan forgiveness from the first two rounds, which accelerated the recognition of net deferred loan origination fees, and decreases in commercial loans to mortgage companies and multi-family loans. Compared to Q1 2021, total loan yields decreased 28 basis points to 3.74%. The decrease is attributable to lower yields on commercial and industrial loans and leases, increased originations of PPP loans in the latest round and lower forgiveness of PPP loans from the first two rounds, offset in part by higher yields on consumer loans. Total borrowing costs decreased by 23 basis points to 0.77% primarily due to the balance sheet restructuring completed in Q1 2021 and lower utilization of the FRB PPP Liquidity Facility, costing 0.35%, due to the PPP loan forgiveness from the first two rounds and excess cash available to fund additional PPP round 3 originations. FHLB advances and federal funds purchased were also paid off during Q2 2021 due to sufficient liquidity. "It is difficult to predict net interest income in future periods because the timing of PPP forgiveness results in the accelerated recognition of net deferred fees and also affects the amount of net interest income expected to be earned while the PPP loans are held on our balance sheet," commented Mr. Sidhu.

Provision for Credit Losses

The provision for credit losses on loans and leases in Q2 2021 was $3.3 million, compared to a $2.9 million benefit (release) in Q1 2021. The provision in Q2 2021 primarily resulted from an increase in provision for consumer installment loans from continued growth, offset in part by the benefit (release) to the provision for commercial loans resulting from continuing improvement in forecasts of macroeconomic conditions since Q4 2020. The allowance for credit losses on loans and leases represented 1.6% of total loans and leases receivable, excluding PPP loans (a non-GAAP measure) at June 30, 2021, compared to 1.7% at March 31, 2021, and 2.2% at June 30, 2020. Customers' non-performing loans at June 30, 2021 were only 0.27% of total loans and leases, a significant improvement from 0.56% at June 30, 2020.

Non-Interest Income

Non-interest income totaled $16.8 million for Q2 2021, a decrease of $1.6 million compared to Q1 2021. The decrease in non-interest income primarily resulted from decreases of $21.8 million in gain on sale of investment securities and $3.0 million in unrealized gain on derivatives, offset in part by a $24.5 million decrease in loss on cash flow hedge derivative terminations recorded in Q1 2021. In Q2 2021, the change in the fair value of foreign equity securities and the sale of the foreign subsidiaries that held those securities resulted in a net loss of $1.1 million.

Non-Interest Expense

Non-interest expense totaled $70.8 million for Q2 2021, an increase of $8.9 million compared to Q1 2021. The increase was primarily due to approximately $2.5 million of compensation expense associated with an executive's retirement and other one-time benefits, $2.4 million of increased PPP-related costs primarily due to outside professional services used to support the PPP forgiveness process and our participation in the latest round of PPP, increased consumer installment servicing expense of $1.0 million, increased stock-based compensation of $0.9 million related to new awards, and a benefit (release) to credit losses for unfunded commitments of $1.3 million recorded in Q1 2021. "Looking ahead, we expect non-interest expenses to be lower in Q3 2021," stated Ms. Leibold.

Taxes

Income tax expense from continuing operations increased by $2.5 million to $20.1 million in Q2 2021 from $17.6 million in Q1 2021 primarily due to an increase in compensation expense associated with an executive's retirement that exceeded the limit for tax deduction purposes, along with an increase in projected pre-tax income from continuing operations. Customers expects the full-year 2021 effective tax rate from continuing operations to be approximately 23% to 25%, which is comparable to previous years.

Net Loss From Discontinued Operations

The divestiture of BankMobile Technologies, Inc. was completed on January 4, 2021, and its historical financial results are presented as discontinued operations.

Outlook

“Looking ahead, we are very optimistic about the prospects of our company. The best in class tech agility of Customers Bancorp has allowed us to be a major participant in the third round of PPP and to incubate new lines of businesses that leverage our fintech relationships. We expect to launch a private real-time, blockchain-based B2B payments platform with integration of digital and legacy payment rails. The platform will deliver enhanced payments functionality for our business clients and is expected to generate additional deposit growth in targeted niches, such as real estate, monetary and currency exchanges and institutional investments. We also expect our tangible common equity and regulatory capital levels to achieve targeted levels within the next 12 months and our credit quality to remain in line with or better than peers. The financial benefits of PPP aside, we project our recurring earnings power to expand to at least the $4.00 level during 2021 and 2022 and expect to achieve $6.00 in core EPS in 2025 rather than 2026,” concluded Mr. Sidhu.

Our updated financial guidance is as follows:

  • Loan growth, excluding PPP and mortgage warehouse balances, is expected to average in the mid-to-high single digits over the next several quarters.
  • The balance of commercial loans to mortgage companies is expected to decline to $1.6 billion - $2.4 billion at December 31, 2021.
  • The Total Capital Ratio is expected to be about 14.0% by year-end 2021. The TCE ratio excluding PPP loans is expected to be close to 9.0% by year-end 2021.
  • We project the NIM, excluding PPP loans, to remain within the 3.25% - 3.50% range for the second half of 2021.
  • We project an effective tax rate from continuing operations for 2021 of 23.0% - 25.0%.
  • We now expect to earn at least $6.00 in core EPS in 2021 and 2022. Our core EPS guidance includes the net interest income expected to be earned on the PPP loans.
  • Excluding PPP loans, we expect to earn at least $4 in core EPS in 2021 and 2022 and expect to achieve $6 in core EPS by 2025 rather than 2026.

2021 NIM expansion is expected to be achieved by:

  • Remixing the loan portfolio away from commercial loans to mortgage companies toward other C&I categories and consumer installment loans.
  • Restructuring of the asset and liability side of the balance sheet that was completed in Q1 2021.
  • Bringing our total cost of deposits down to around 35 basis points by year-end 2021.

Webcast

Date:

Thursday, July 29, 2021

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 Customers' Communications & Marketing 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 Bancorp 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 $19.6 billion in assets at June 30, 2021. 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.

“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,” 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 adverse impact on the U.S. economy, including the markets in which we operate, of the coronavirus outbreak, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan and lease portfolio, the market value of our investment securities, the demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply; actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships; 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, 2020, 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 2021 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended June 30, 2021 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,

 

2021

2021

2020

2020

2020

2021

2020

 

 

 

 

 

 

 

 

 

 

GAAP Profitability Metrics:

 

 

 

 

 

 

 

 

Net income available to common shareholders

(from continuing and discontinued operations)

$

58,042

 

$

33,204

 

$

52,831

 

$

47,085

 

$

19,137

 

$

91,246

 

$

18,621

 

 

Per share amounts:

 

 

 

 

 

 

 

 

Earnings per share - basic

$

1.80

 

$

1.04

 

$

1.67

 

$

1.49

 

$

0.61

 

$

2.84

 

$

0.59

 

 

Earnings per share - diluted

$

1.72

 

$

1.01

 

$

1.65

 

$

1.48

 

$

0.61

 

$

2.74

 

$

0.59

 

 

Book value per common share (1)

$

31.94

 

$

30.13

 

$

28.37

 

$

26.43

 

$

25.08

 

$

31.94

 

$

25.08

 

 

CUBI stock price (1)

$

38.99

 

$

31.82

 

$

18.18

 

$

11.20

 

$

12.02

 

$

38.99

 

$

12.02

 

 

CUBI stock price as % of book value (1)

122

%

106

%

64

%

42

%

48

%

122

%

48

%

 

Average shares outstanding - basic

32,279,625

 

31,883,946

 

31,638,447

 

31,517,504

 

31,477,591

 

32,082,878

 

31,434,371

 

 

Average shares outstanding - diluted

33,741,468

 

32,841,711

 

31,959,100

 

31,736,311

 

31,625,771

 

33,294,075

 

31,625,669

 

 

Shares outstanding (1)

32,353,256

 

32,238,762

 

31,705,088

 

31,555,124

 

31,510,287

 

32,353,256

 

31,510,287

 

 

Return on average assets ("ROAA")

1.27

%

0.80

%

1.23

%

1.12

%

0.62

%

1.04

%

0.40

%

 

Return on average common equity ("ROCE")

23.22

%

14.66

%

24.26

%

23.05

%

9.97

%

19.15

%

4.74

%

 

Efficiency ratio

46.59

%

48.89

%

43.56

%

46.76

%

50.73

%

47.64

%

52.52

%

 

Non-GAAP Profitability Metrics (2):

 

 

 

 

 

 

 

 

Core earnings

$

59,303

 

$

70,308

 

$

54,588

 

$

38,439

 

$

21,413

 

$

129,611

 

$

26,499

 

 

Adjusted pre-tax pre-provision net income

$

86,467

 

$

86,769

 

$

77,896

 

$

64,146

 

$

53,931

 

$

173,236

 

$

98,154

 

 

Per share amounts:

 

 

 

 

 

 

 

 

Core earnings per share - diluted

$

1.76

 

$

2.14

 

$

1.71

 

$

1.21

 

$

0.68

 

$

3.89

 

$

0.84

 

 

Tangible book value per common share (1)

$

31.82

 

$

30.01

 

$

27.92

 

$

25.97

 

$

24.62

 

$

31.82

 

$

24.62

 

 

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

123

%

106

%

65

%

43

%

49

%

123

%

49

%

 

Core ROAA

1.30

%

1.61

%

1.26

%

0.93

%

0.68

%

1.45

%

0.52

%

 

Core ROCE

23.72

%

31.03

%

25.06

%

18.82

%

11.16

%

27.20

%

6.75

%

 

Adjusted ROAA - pre-tax and pre-provision

1.80

%

1.90

%

1.70

%

1.43

%

1.48

%

1.85

%

1.50

%

 

Adjusted ROCE - pre-tax and pre-provision

33.27

%

36.80

%

34.20

%

29.73

%

26.24

%

34.95

%

23.16

%

 

Net interest margin, tax equivalent

2.98

%

3.00

%

2.78

%

2.50

%

2.65

%

2.99

%

2.80

%

 

Net interest margin, tax equivalent, excluding PPP loans

3.30

%

2.99

%

3.04

%

2.86

%

2.97

%

3.14

%

2.98

%

 

Core efficiency ratio

44.33

%

41.13

%

42.89

%

46.10

%

47.84

%

42.76

%

50.25

%

 

Asset Quality:

 

 

 

 

 

 

 

 

Net charge-offs

$

6,591

 

$

12,521

 

$

8,472

 

$

17,299

 

$

10,325

 

$

19,112

 

$

29,035

 

 

Annualized net charge-offs to average total loans and leases

0.16

%

0.33

%

0.21

%

0.45

%

0.32

%

0.24

%

0.52

%

 

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

0.27

%

0.30

%

0.45

%

0.38

%

0.56

%

0.27

%

0.56

%

 

Reserves to NPLs (1)

269.96

%

264.21

%

204.48

%

244.70

%

185.36

%

269.96

%

185.36

%

 

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

0.24

%

0.26

%

0.39

%

0.34

%

0.48

%

0.24

%

0.48

%

 

Customers Bank Capital Ratios (3):

 

 

 

 

 

 

 

 

Common equity Tier 1 capital to risk-weighted assets

12.35

%

11.75

%

10.62

%

10.12

%

10.64

%

12.35

%

10.64

%

 

Tier 1 capital to risk-weighted assets

12.35

%

11.75

%

10.62

%

10.12

%

10.64

%

12.35

%

10.64

%

 

Total capital to risk-weighted assets

13.72

%

13.11

%

12.06

%

11.62

%

12.30

%

13.72

%

12.30

%

 

Tier 1 capital to average assets (leverage ratio)

9.07

%

9.35

%

9.21

%

9.29

%

9.59

%

9.07

%

9.59

%

 

(1)

Metric is a spot balance for the last day of each quarter presented.

(2)

 

Non-GAAP measures exclude net loss from discontinued operations, loss on sale of foreign subsidiaries, unrealized gains (losses) on loans held for sale, investment securities gains and losses, loss on cash flow hedge derivative terminations, severance expense, merger and acquisition-related expenses, losses realized from the sale of non-QM residential mortgage loans, loss upon acquisition of interest-only GNMA securities, legal reserves, credit valuation adjustments on derivatives, risk participation agreement mark-to-market adjustments, goodwill and intangible assets, and PPP loans. These notable items are not included in Customers' disclosures of core earnings and other core profitability metrics. Please note that not each of the aforementioned adjustments affected the reported amount in each of the periods presented. 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 2021 and actual for the remaining periods. In accordance with regulatory capital rules, Customers elected an option to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending January 1, 2025. As a result, capital ratios and amounts as of Q2 2021 exclude the impact of the increased allowance for credit losses on loans and leases and unfunded loan commitments attributed to the adoption of CECL and 25% of the quarterly provision for credit losses for subsequent quarters through Q4 2021.

 
 

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,

 

2021

 

2021

 

2020

 

2020

 

2020

 

2021

 

2020

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

$

153,608

 

 

$

152,117

 

 

$

145,414

 

 

$

132,107

 

 

$

118,447

 

 

$

305,725

 

 

$

234,527

 

Investment securities

8,327

 

 

7,979

 

 

6,777

 

 

6,297

 

 

6,155

 

 

16,306

 

 

11,132

 

Other

946

 

 

1,019

 

 

902

 

 

1,246

 

 

616

 

 

1,965

 

 

4,902

 

Total interest income

162,881

 

 

161,115

 

 

153,093

 

 

139,650

 

 

125,218

 

 

323,996

 

 

250,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

15,653

 

 

15,658

 

 

16,107

 

 

18,347

 

 

23,238

 

 

31,311

 

 

57,591

 

FHLB advances

963

 

 

5,192

 

 

5,749

 

 

5,762

 

 

4,736

 

 

6,155

 

 

10,127

 

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

4,819

 

 

4,845

 

 

5,603

 

 

5,413

 

 

2,573

 

 

9,664

 

 

4,163

 

Total interest expense

24,124

 

 

28,384

 

 

30,147

 

 

32,211

 

 

33,236

 

 

52,508

 

 

77,259

 

Net interest income

138,757

 

 

132,731

 

 

122,946

 

 

107,439

 

 

91,982

 

 

271,488

 

 

173,302

 

Provision (benefit) for credit losses on loans and leases

3,291

 

 

(2,919)

 

 

(2,913)

 

 

12,955

 

 

20,946

 

 

372

 

 

52,732

 

Net interest income after provision (benefit) for credit losses on loans and leases

135,466

 

 

135,650

 

 

125,859

 

 

94,484

 

 

71,036

 

 

271,116

 

 

120,570

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interchange and card revenue

84

 

 

85

 

 

91

 

 

92

 

 

193

 

 

169

 

 

463

 

Deposit fees

891

 

 

863

 

 

823

 

 

650

 

 

502

 

 

1,754

 

 

1,054

 

Commercial lease income

5,311

 

 

5,205

 

 

4,853

 

 

4,510

 

 

4,508

 

 

10,516

 

 

8,776

 

Bank-owned life insurance

2,765

 

 

1,679

 

 

1,744

 

 

1,746

 

 

1,757

 

 

4,444

 

 

3,519

 

Mortgage warehouse transactional fees

3,265

 

 

4,247

 

 

3,681

 

 

3,320

 

 

2,582

 

 

7,512

 

 

4,533

 

Gain (loss) on sale of SBA and other loans

1,900

 

 

1,575

 

 

1,689

 

 

286

 

 

23

 

 

3,475

 

 

34

 

Mortgage banking income (loss)

386

 

 

463

 

 

346

 

 

1,013

 

 

38

 

 

849

 

 

334

 

Gain (loss) on sale of investment securities

1,812

 

 

23,566

 

 

44

 

 

11,707

 

 

4,353

 

 

25,378

 

 

8,328

 

Unrealized gain (loss) on investment securities

1,746

 

 

974

 

 

1,387

 

 

238

 

 

1,200

 

 

2,720

 

 

(178)

 

Loss on sale of foreign subsidiaries

(2,840)

 

 

 

 

 

 

 

 

 

 

(2,840)

 

 

 

Unrealized gain (loss) on derivatives

(439)

 

 

2,537

 

 

804

 

 

549

 

 

(4,158)

 

 

2,098

 

 

(5,304)

 

Loss on cash flow hedge derivative terminations

 

 

(24,467)

 

 

 

 

 

 

 

 

(24,467)

 

 

 

Other

1,941

 

 

1,741

 

 

621

 

 

753

 

 

713

 

 

3,682

 

 

1,312

 

Total non-interest income

16,822

 

 

18,468

 

 

16,083

 

 

24,864

 

 

11,711

 

 

35,290

 

 

22,871

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

28,023

 

 

23,971

 

 

25,600

 

 

24,752

 

 

23,192

 

 

51,994

 

 

43,716

 

Technology, communication and bank operations

19,618

 

 

19,988

 

 

16,021

 

 

13,005

 

 

11,103

 

 

39,606

 

 

21,642

 

Professional services

8,234

 

 

6,289

 

 

5,449

 

 

4,421

 

 

2,974

 

 

14,523

 

 

6,519

 

Occupancy

2,482

 

 

2,621

 

 

2,742

 

 

3,368

 

 

2,639

 

 

5,103

 

 

5,252

 

Commercial lease depreciation

4,415

 

 

4,291

 

 

3,982

 

 

3,663

 

 

3,643

 

 

8,706

 

 

7,070

 

FDIC assessments, non-income taxes and regulatory fees

2,602

 

 

2,719

 

 

2,642

 

 

3,784

 

 

2,368

 

 

5,321

 

 

5,235

 

Merger and acquisition related expenses

 

 

418

 

 

709

 

 

658

 

 

 

 

418

 

 

 

Loan workout

102

 

 

(261)

 

 

123

 

 

846

 

 

1,808

 

 

(159)

 

 

2,175

 

Advertising and promotion

313

 

 

561

 

 

 

 

 

 

372

 

 

874

 

 

1,795

 

Other

5,034

 

 

1,330

 

 

2,665

 

 

1,788

 

 

1,692

 

 

6,364

 

 

5,354

 

Total non-interest expense

70,823

 

 

61,927

 

 

59,933

 

 

56,285

 

 

49,791

 

 

132,750

 

 

98,758

 

Income before income tax expense

81,465

 

 

92,191

 

 

82,009

 

 

63,063

 

 

32,956

 

 

173,656

 

 

44,683

 

Income tax expense

20,124

 

 

17,560

 

 

23,447

 

 

12,016

 

 

7,980

 

 

37,684

 

 

11,254

 

Net income from continuing operations

61,341

 

 

74,631

 

 

58,562

 

 

51,047

 

 

24,976

 

 

135,972

 

 

33,429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations before income taxes

 

 

(20,354)

 

 

(3,539)

 

 

(347)

 

 

(3,190)

 

 

(20,354)

 

 

(9,911)

 

Income tax expense (benefit) from discontinued operations

 

 

17,682

 

 

(1,222)

 

 

185

 

 

(932)

 

 

17,682

 

 

(2,299)

 

Net loss from discontinued operations

 

 

(38,036)

 

 

(2,317)

 

 

(532)

 

 

(2,258)

 

 

(38,036)

 

 

(7,612)

 

Net income

61,341

 

 

36,595

 

 

56,245

 

 

50,515

 

 

22,718

 

 

97,936

 

 

25,817

 

Preferred stock dividends

3,299

 

 

3,391

 

 

3,414

 

 

3,430

 

 

3,581

 

 

6,690

 

 

7,196

 

Net income available to common shareholders

$

58,042

 

 

$

33,204

 

 

$

52,831

 

 

$

47,085

 

 

$

19,137

 

 

$

91,246

 

 

$

18,621

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share from continuing operations

$

1.80

 

 

$

2.23

 

 

$

1.74

 

 

$

1.51

 

 

$

0.68

 

 

$

4.03

 

 

$

0.83

 

Basic earnings per common share

$

1.80

 

 

$

1.04

 

 

$

1.67

 

 

$

1.49

 

 

$

0.61

 

 

$

2.84

 

 

$

0.59

 

Diluted earnings per common share from continuing operations

$

1.72

 

 

$

2.17

 

 

$

1.73

 

 

$

1.50

 

 

$

0.68

 

 

$

3.88

 

 

$

0.83

 

Diluted earnings per common share

$

1.72

 

 

$

1.01

 

 

$

1.65

 

 

$

1.48

 

 

$

0.61

 

 

$

2.74

 

 

$

0.59

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET - UNAUDITED

(Dollars in thousands)

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

2021

 

2021

 

2020

 

2020

 

2020

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

36,837

 

 

$

3,123

 

 

$

78,090

 

 

$

5,822

 

 

$

44,577

 

Interest earning deposits

393,663

 

 

512,241

 

 

615,264

 

 

325,594

 

 

1,022,753

 

Cash and cash equivalents

430,500

 

 

515,364

 

 

693,354

 

 

331,416

 

 

1,067,330

 

Investment securities, at fair value

1,526,792

 

 

1,441,904

 

 

1,210,285

 

 

1,133,831

 

 

681,382

 

Loans held for sale

34,540

 

 

46,106

 

 

79,086

 

 

26,689

 

 

464,164

 

Loans receivable, mortgage warehouse, at fair value

2,855,284

 

 

3,407,622

 

 

3,616,432

 

 

3,913,593

 

 

2,793,164

 

Loans receivable, PPP

6,305,056

 

 

5,178,089

 

 

4,561,365

 

 

4,964,105

 

 

4,760,427

 

Loans and leases receivable

7,772,142

 

 

7,536,489

 

 

7,575,368

 

 

7,700,892

 

 

7,272,447

 

Allowance for credit losses on loans and leases

(125,436)

 

 

(128,736)

 

 

(144,176)

 

 

(155,561)

 

 

(159,905)

 

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

16,807,046

 

 

15,993,464

 

 

15,608,989

 

 

16,423,029

 

 

14,666,133

 

FHLB, Federal Reserve Bank, and other restricted stock

39,895

 

 

69,420

 

 

71,368

 

 

70,387

 

 

91,023

 

Accrued interest receivable

90,009

 

 

83,186

 

 

80,412

 

 

65,668

 

 

49,911

 

Bank premises and equipment, net

10,391

 

 

10,943

 

 

11,225

 

 

11,308

 

 

7,879

 

Bank-owned life insurance

329,421

 

 

281,923

 

 

280,067

 

 

277,826

 

 

275,842

 

Goodwill and other intangibles

3,853

 

 

3,911

 

 

3,969

 

 

4,028

 

 

4,086

 

Other assets

362,661

 

 

371,439

 

 

338,438

 

 

354,010

 

 

512,209

 

Assets of discontinued operations

 

 

 

 

62,055

 

 

80,535

 

 

83,159

 

Total assets

$

19,635,108

 

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

 

$

17,903,118

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing deposits

$

2,699,869

 

 

$

2,687,628

 

 

$

2,356,998

 

 

$

2,327,017

 

 

$

1,879,789

 

Interest bearing deposits

11,174,070

 

 

9,784,812

 

 

8,952,931

 

 

8,512,060

 

 

9,086,086

 

Total deposits

13,873,939

 

 

12,472,440

 

 

11,309,929

 

 

10,839,077

 

 

10,965,875

 

Federal funds purchased

 

 

365,000

 

 

250,000

 

 

680,000

 

 

 

FHLB advances

 

 

850,000

 

 

850,000

 

 

850,000

 

 

850,000

 

Other borrowings

124,240

 

 

124,138

 

 

124,037

 

 

123,935

 

 

123,833

 

Subordinated debt

181,534

 

 

181,464

 

 

181,394

 

 

181,324

 

 

181,255

 

FRB PPP liquidity facility

3,865,865

 

 

3,284,156

 

 

4,415,016

 

 

4,811,009

 

 

4,419,967

 

Accrued interest payable and other liabilities

338,801

 

 

351,741

 

 

152,082

 

 

185,927

 

 

296,192

 

Liabilities of discontinued operations

 

 

 

 

39,704

 

 

55,964

 

 

58,149

 

Total liabilities

18,384,379

 

 

17,628,939

 

 

17,322,162

 

 

17,727,236

 

 

16,895,271

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

217,471

 

 

217,471

 

 

217,471

 

 

217,471

 

 

217,471

 

Common stock

33,634

 

 

33,519

 

 

32,986

 

 

32,836

 

 

32,791

 

Additional paid in capital

519,294

 

 

515,318

 

 

455,592

 

 

452,965

 

 

450,665

 

Retained earnings

496,844

 

 

438,802

 

 

438,581

 

 

385,750

 

 

338,665

 

Accumulated other comprehensive income (loss)

5,266

 

 

5,391

 

 

(5,764)

 

 

(15,751)

 

 

(9,965)

 

Treasury stock, at cost

(21,780)

 

 

(21,780)

 

 

(21,780)

 

 

(21,780)

 

 

(21,780)

 

Total shareholders' equity

1,250,729

 

 

1,188,721

 

 

1,117,086

 

 

1,051,491

 

 

1,007,847

 

Total liabilities & shareholders' equity

$

19,635,108

 

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

 

$

17,903,118

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

June 30, 2021

 

March 31, 2021

 

June 30, 2020

 

Average
Balance

Average
Yield or
Cost (%)

 

Average
Balance

Average
Yield or
Cost (%)

 

Average
Balance

Average
Yield or
Cost (%)

Assets

 

 

 

 

 

 

 

 

Interest earning deposits

$

646,342

 

0.12%

 

$

1,177,315

 

0.10%

 

$

384,622

 

0.12%

Investment securities (1)

1,512,644

 

2.20%

 

1,357,558

 

2.35%

 

705,389

 

3.49%

Loans and leases:

 

 

 

 

 

 

 

 

Commercial loans to mortgage companies

2,737,629

 

3.09%

 

3,122,098

 

3.09%

 

2,456,067

 

2.91%

Multi-family loans

1,551,370

 

3.88%

 

1,689,174

 

3.80%

 

2,009,847

 

3.87%

Commercial and industrial loans and leases (2)

2,878,045

 

3.59%

 

2,848,328

 

3.97%

 

2,460,060

 

4.05%

Loans receivable, PPP

6,133,184

 

2.69%

 

4,623,213

 

3.41%

 

2,754,920

 

1.71%

Non-owner occupied commercial real estate loans

1,368,695

 

3.86%

 

1,348,938

 

3.85%

 

1,392,131

 

3.81%

Residential mortgages

346,284

 

3.62%

 

373,497

 

3.78%

 

429,609

 

3.53%

Installment loans

1,467,595

 

9.37%

 

1,323,863

 

9.04%

 

1,288,999

 

8.72%

Total loans and leases (3)

16,482,802

 

3.74%

 

15,329,111

 

4.02%

 

12,791,633

 

3.72%

Other interest-earning assets

57,208

 

5.32%

 

79,960

 

3.64%

 

98,377

 

2.06%

Total interest-earning assets

18,698,996

 

3.49%

 

17,943,944

 

3.64%

 

13,980,021

 

3.60%

Non-interest-earning assets

607,952

 

 

 

581,777

 

 

 

616,683

 

 

Assets of discontinued operations

 

 

 

 

 

 

78,880

 

 

Total assets

$

19,306,948

 

 

 

$

18,525,721

 

 

 

$

14,675,584

 

 

Liabilities

 

 

 

 

 

 

 

 

Interest checking accounts

$

3,503,242

 

0.76%

 

$

2,691,723

 

0.84%

 

$

2,482,222

 

0.75%

Money market deposit accounts

4,859,614

 

0.47%

 

4,435,930

 

0.55%

 

3,034,457

 

0.85%

Other savings accounts

1,456,777

 

0.57%

 

1,414,350

 

0.69%

 

1,177,554

 

1.94%

Certificates of deposit

658,698

 

0.78%

 

666,239

 

0.97%

 

1,734,062

 

1.51%

Total interest-bearing deposits (4)

10,478,331

 

0.60%

 

9,208,242

 

0.69%

 

8,428,295

 

1.11%

FRB PPP liquidity facility

3,858,733

 

0.35%

 

3,941,718

 

0.35%

 

942,258

 

0.35%

Borrowings

531,757

 

3.85%

 

1,171,826

 

3.23%

 

2,282,761

 

1.62%

Total interest-bearing liabilities

14,868,821

 

0.65%

 

14,321,786

 

0.80%

 

11,653,314

 

1.15%

Non-interest-bearing deposits (4)

2,889,781

 

 

 

2,819,871

 

 

 

1,890,955

 

 

Total deposits and borrowings

17,758,602

 

0.54%

 

17,141,657

 

0.67%

 

13,544,269

 

0.99%

Other non-interest-bearing liabilities

328,251

 

 

 

247,798

 

 

 

88,913

 

 

Liabilities of discontinued operations

 

 

 

 

 

 

53,268

 

 

Total liabilities

18,086,853

 

 

 

17,389,455

 

 

 

13,686,450

 

 

Shareholders' equity

1,220,095

 

 

 

1,136,266

 

 

 

989,134

 

 

Total liabilities and shareholders' equity

$

19,306,948

 

 

 

$

18,525,721

 

 

 

$

14,675,584

 

 

Interest spread

 

2.95%

 

 

2.97%

 

 

2.61%

Net interest margin

 

2.98%

 

 

3.00%

 

 

2.65%

Net interest margin tax equivalent (5)

 

2.98%

 

 

3.00%

 

 

2.65%

Net interest margin tax equivalent excl. PPP (6)

 

3.30%

 

 

2.99%

 

 

2.97%

(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 0.47%, 0.53% and 0.91% for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

(5)

 

Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, 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, 2021, March 31, 2021 and June 30, 2020, 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.

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

Six Months Ended

 

June 30, 2021

 

June 30, 2020

 

Average
Balance

Average Yield
or Cost (%)

 

Average
Balance

Average Yield
or Cost (%)

Assets

 

 

 

 

 

Interest earning deposits

$

910,362

 

0.11%

 

$

578,435

 

1.03%

Investment securities (1)

1,435,529

 

2.27%

 

635,838

 

3.50%

Loans and leases:

 

 

 

 

 

Commercial loans to mortgage companies

2,928,802

 

3.09%

 

2,148,863

 

3.30%

Multi-family loans

1,619,891

 

3.84%

 

2,111,853

 

3.97%

Commercial and industrial loans and leases (2)

2,863,268

 

3.78%

 

2,460,435

 

4.37%

Loans receivable, PPP

5,382,370

 

3.00%

 

1,377,460

 

1.71%

Non-owner occupied commercial real estate loans

1,358,871

 

3.86%

 

1,363,795

 

4.07%

Residential mortgages

359,815

 

3.71%

 

437,782

 

3.75%

Installment loans

1,396,126

 

9.22%

 

1,274,024

 

8.93%

Total loans and leases (3)

15,909,143

 

3.88%

 

11,174,212

 

4.22%

Other interest-earning assets

68,521

 

4.34%

 

89,890

 

4.31%

Total interest-earning assets

18,323,555

 

3.56%

 

12,478,375

 

4.04%

Non-interest-earning assets

594,936

 

 

 

565,304

 

 

Assets of discontinued operations

 

 

 

80,816

 

 

Total assets

$

18,918,491

 

 

 

$

13,124,495

 

 

Liabilities

 

 

 

 

 

Interest checking accounts

$

3,099,725

 

0.80%

 

$

1,888,160

 

0.98%

Money market deposit accounts

4,648,942

 

0.51%

 

3,335,006

 

1.37%

Other savings accounts

1,435,681

 

0.63%

 

1,159,479

 

1.99%

Certificates of deposit

662,447

 

0.87%

 

1,629,416

 

1.76%

Total interest-bearing deposits (4)

9,846,795

 

0.64%

 

8,012,061

 

1.45%

FRB PPP liquidity facility

3,899,996

 

0.35%

 

471,129

 

0.35%

Borrowings

850,024

 

3.42%

 

1,756,080

 

2.16%

Total interest-bearing liabilities

14,596,815

 

0.72%

 

10,239,270

 

1.52%

Non-interest-bearing deposits (4)

2,855,019

 

 

 

1,732,163

 

 

Total deposits and borrowings

17,451,834

 

0.61%

 

11,971,433

 

1.30%

Other non-interest-bearing liabilities

288,246

 

 

 

92,218

 

 

Liabilities of discontinued operations

 

 

 

53,600

 

 

Total liabilities

17,740,080

 

 

 

12,117,251

 

 

Shareholders' equity

1,178,411

 

 

 

1,007,244

 

 

Total liabilities and shareholders' equity

$

18,918,491

 

 

 

$

13,124,495

 

 

Interest spread

 

2.96%

 

 

2.74%

Net interest margin

 

2.99%

 

 

2.79%

Net interest margin tax equivalent (5)

 

2.99%

 

 

2.80%

Net interest margin tax equivalent excl. PPP (6)

 

3.14%

 

 

2.98%

(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 0.50% and 1.19% for the six months ended June 30, 2021 and 2020, respectively.

(5)

Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the six months ended June 30, 2021 and 2020, 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, 2021 and 2020, 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.

 
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,

 

2021

 

2021

 

2020

 

2020

 

2020

Commercial:

 

 

 

 

 

 

 

 

 

Multi-family

$

1,497,485

 

 

$

1,659,529

 

 

$

1,761,301

 

 

$

1,950,300

 

 

$

2,023,571

 

Loans to mortgage companies

2,922,217

 

 

3,463,490

 

 

3,657,350

 

 

3,947,828

 

 

2,832,112

 

Commercial & industrial

2,293,723

 

 

2,164,784

 

 

2,304,206

 

 

2,186,480

 

 

2,060,494

 

Commercial real estate owner occupied

653,649

 

 

590,093

 

 

572,338

 

 

557,595

 

 

544,772

 

Loans receivable, PPP

6,305,056

 

 

5,178,089

 

 

4,561,365

 

 

4,964,105

 

 

4,760,427

 

Commercial real estate non-owner occupied

1,206,646

 

 

1,194,832

 

 

1,213,815

 

 

1,233,882

 

 

1,262,373

 

Construction

179,198

 

 

156,837

 

 

140,905

 

 

122,963

 

 

128,834

 

Total commercial loans and leases

15,057,974

 

 

14,407,654

 

 

14,211,280

 

 

14,963,153

 

 

13,612,583

 

Consumer:

 

 

 

 

 

 

 

 

 

Residential

273,493

 

 

295,654

 

 

323,322

 

 

343,775

 

 

352,941

 

Manufactured housing

57,904

 

 

59,977

 

 

62,243

 

 

64,638

 

 

66,865

 

Installment

1,577,651

 

 

1,405,021

 

 

1,235,406

 

 

1,233,713

 

 

1,257,813

 

Total consumer loans

1,909,048

 

 

1,760,652

 

 

1,620,971

 

 

1,642,126

 

 

1,677,619

 

Total loans and leases

$

16,967,022

 

 

$

16,168,306

 

 

$

15,832,251

 

 

$

16,605,279

 

 

$

15,290,202

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END DEPOSIT COMPOSITION - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

2021

 

2021

 

2020

 

2020

 

2020

 

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing

$

2,699,869

 

 

$

2,687,628

 

 

$

2,356,998

 

 

$

2,327,017

 

 

$

1,879,789

 

Demand, interest bearing

4,206,355

 

 

3,228,941

 

 

2,384,691

 

 

2,308,627

 

 

2,666,209

 

Total demand deposits

6,906,224

 

 

5,916,569

 

 

4,741,689

 

 

4,635,644

 

 

4,545,998

 

Savings

1,431,756

 

 

1,483,482

 

 

1,314,817

 

 

1,173,641

 

 

1,144,788

 

Money market

4,908,809

 

 

4,406,508

 

 

4,601,492

 

 

4,057,366

 

 

3,404,709

 

Time deposits

627,150

 

 

665,881

 

 

651,931

 

 

972,426

 

 

1,870,380

 

Total deposits

$

13,873,939

 

 

$

12,472,440

 

 

$

11,309,929

 

 

$

10,839,077

 

 

$

10,965,875

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY - UNAUDITED

(Dollars in thousands)

As of June 30, 2021

As of March 31, 2021

As of June 30, 2020

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

$

1,497,485

 

$

21,595

 

$

5,028

 

1.44

%

23.28

%

$

1,640,278

 

$

20,530

 

$

8,026

 

1.25

%

39.09

%

$

1,581,839

 

$

7,013

 

$

14,697

 

0.44

%

209.57

%

Commercial & industrial(1)

2,360,656

 

6,717

 

8,127

 

0.28

%

120.99

%

2,220,652

 

7,544

 

7,503

 

0.34

%

99.46

%

2,099,442

 

9,974

 

12,302

 

0.48

%

123.34

%

Commercial real estate owner occupied

653,649

 

2,688

 

4,464

 

0.41

%

166.07

%

590,093

 

3,242

 

5,935

 

0.55

%

183.07

%

544,772

 

4,022

 

11,405

 

0.74

%

283.57

%

Commercial real estate non-owner occupied

1,206,646

 

 

7,374

 

%

%

1,194,832

 

2,356

 

11,621

 

0.20

%

493.25

%

1,244,773

 

30,257

 

26,493

 

2.43

%

87.56

%

Construction

179,198

 

 

2,643

 

%

%

156,837

 

 

4,103

 

%

%

128,834

 

 

5,297

 

%

%

Total commercial loans and leases receivable

5,897,634

 

31,000

 

27,636

 

0.53

%

89.15

%

5,802,692

 

33,672

 

37,188

 

0.58

%

110.44

%

5,599,660

 

51,266

 

70,194

 

0.92

%

136.92

%

Residential

266,911

 

8,991

 

2,299

 

3.37

%

25.57

%

293,805

 

9,353

 

3,209

 

3.18

%

34.31

%

348,109

 

7,857

 

4,550

 

2.26

%

57.91

%

Manufactured housing

57,904

 

3,239

 

4,372

 

5.59

%

134.98

%

59,977

 

2,871

 

4,799

 

4.79

%

167.15

%

66,865

 

3,331

 

6,014

 

4.98

%

180.55

%

Installment

1,549,693

 

2,728

 

91,129

 

0.18

%

3340.51

%

1,380,015

 

2,185

 

83,540

 

0.16

%

3823.34

%

1,257,813

 

4,887

 

79,147

 

0.39

%

1619.54

%

Total consumer loans receivable

1,874,508

 

14,958

 

97,800

 

0.80

%

653.83

%

1,733,797

 

14,409

 

91,548

 

0.83

%

635.35

%

1,672,787

 

16,075

 

89,711

 

0.96

%

558.08

%

Loans and leases receivable(1)

7,772,142

 

45,958

 

125,436

 

0.59

%

272.94

%

7,536,489

 

48,081

 

128,736

 

0.64

%

267.75

%

7,272,447

 

67,341

 

159,905

 

0.93

%

237.46

%

Loans receivable, PPP

6,305,056

 

 

 

%

%

5,178,089

 

 

 

%

%

4,760,427

 

 

 

%

%

Loans receivable, mortgage warehouse, at fair value

2,855,284

 

 

 

%

%

3,407,622

 

 

 

%

%

2,793,164

 

 

 

%

%

Total loans held for sale

34,540

 

507

 

 

1.47

%

%

46,106

 

643

 

 

1.39

%

%

464,164

 

18,925

 

 

4.08

%

%

Total portfolio

$

16,967,022

 

$

46,465

 

$

125,436

 

0.27

%

269.96

%

$

16,168,306

 

$

48,724

 

$

128,736

 

0.30

%

264.21

%

$

15,290,202

 

$

86,266

 

$

159,905

 

0.56

%

185.36

%

(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,

 

2021

 

2021

 

2020

 

2020

 

2020

 

2021

 

2020

Loan type

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

$

 

 

$

1,132

 

 

$

 

 

$

 

 

$

 

 

$

1,132

 

 

$

 

Commercial & industrial

(283)

 

 

375

 

 

155

 

 

(55)

 

 

(4)

 

 

92

 

 

39

 

Commercial real estate owner occupied

(1)

 

 

134

 

 

12

 

 

44

 

 

(2)

 

 

133

 

 

(5)

 

Commercial real estate non-owner occupied

(59)

 

 

(10)

 

 

(35)

 

 

8,923

 

 

2,801

 

 

(69)

 

 

15,598

 

Construction

(114)

 

 

(5)

 

 

(6)

 

 

(6)

 

 

(113)

 

 

(119)

 

 

(116)

 

Residential

(12)

 

 

40

 

 

46

 

 

(17)

 

 

(26)

 

 

28

 

 

(55)

 

Installment

7,060

 

 

10,855

 

 

8,300

 

 

8,410

 

 

7,669

 

 

17,915

 

 

13,575

 

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

$

6,591

 

 

$

12,521

 

 

$

8,472

 

 

$

17,299

 

 

$

10,325

 

 

$

19,112

 

 

$

29,036

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED

Customers believes 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 Customers' 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 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

2021

 

2020

(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

$

58,042

 

$

1.72

 

 

$

33,204

 

$

1.01

 

 

$

52,831

 

$

1.65

 

 

$

47,085

 

$

1.48

 

 

$

19,137

 

$

0.61

 

 

$

91,246

 

$

2.74

 

 

$

18,621

 

$

0.59

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

 

 

38,036

 

1.16

 

 

2,317

 

0.07

 

 

532

 

0.02

 

 

2,258

 

0.07

 

 

38,036

 

1.14

 

 

7,612

 

0.24

 

Severance expense

1,517

 

0.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,517

 

0.05

 

 

 

 

Merger and acquisition related expenses

 

 

 

320

 

0.01

 

 

508

 

0.02

 

 

530

 

0.02

 

 

 

 

 

320

 

0.01

 

 

 

 

Legal reserves

 

 

 

 

 

 

 

 

 

258

 

0.01

 

 

 

 

 

 

 

 

 

 

(Gains) losses on investment securities

(2,694)

 

(0.08)

 

 

(18,773)

 

(0.57)

 

 

(1,419)

 

(0.04)

 

 

(9,662)

 

(0.30)

 

 

(4,543)

 

(0.14)

 

 

(21,467)

 

(0.64)

 

 

(6,331)

 

(0.20)

 

Loss on sale of foreign subsidiaries

2,150

 

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,150

 

0.06

 

 

 

 

Loss on cash flow hedge derivative terminations

 

 

 

18,716

 

0.57

 

 

 

 

 

 

 

 

 

 

 

18,716

 

0.56

 

 

 

 

Derivative credit valuation adjustment

288

 

0.01

 

 

(1,195)

 

(0.04)

 

 

(448)

 

(0.01)

 

 

(304)

 

(0.01)

 

 

4,527

 

0.14

 

 

(907)

 

(0.03)

 

 

6,563

 

0.21

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

 

 

 

 

(1,080)

 

(0.03)

 

 

 

 

 

(1,080)

 

(0.03)

 

Unrealized losses on loans held for sale

 

 

 

 

 

 

799

 

0.03

 

 

 

 

 

1,114

 

0.04

 

 

 

 

 

1,114

 

0.04

 

Core earnings

$

59,303

 

$

1.76

 

 

$

70,308

 

$

2.14

 

 

$

54,588

 

$

1.71

 

 

$

38,439

 

$

1.21

 

 

$

21,413

 

$

0.68

 

 

$

129,611

 

$

3.89

 

 

$

26,499

 

$

0.84

 

 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)
 

Core Return on Average Assets - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30,

(dollars in thousands except per share data)

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

2021

 

2020

GAAP net income

$

61,341

 

 

$

36,595

 

 

$

56,245

 

 

$

50,515

 

 

$

22,718

 

 

$

97,936

 

 

$

25,817

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

 

38,036

 

 

2,317

 

 

532

 

 

2,258

 

 

38,036

 

 

7,612

 

Severance expense

1,517

 

 

 

 

 

 

 

 

 

 

1,517

 

 

 

Merger and acquisition related expenses

 

 

320

 

 

508

 

 

530

 

 

 

 

320

 

 

 

Legal reserves

 

 

 

 

 

 

258

 

 

 

 

 

 

 

(Gains) losses on investment securities

(2,694)

 

 

(18,773)

 

 

(1,419)

 

 

(9,662)

 

 

(4,543)

 

 

(21,467)

 

 

(6,331)

 

Loss on sale of foreign subsidiaries

2,150

 

 

 

 

 

 

 

 

 

 

2,150

 

 

 

Loss on cash flow hedge derivative terminations

 

 

18,716

 

 

 

 

 

 

 

 

18,716

 

 

 

Derivative credit valuation adjustment

288

 

 

(1,195)

 

 

(448)

 

 

(304)

 

 

4,527

 

 

(907)

 

 

6,563

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

(1,080)

 

 

 

 

(1,080)

 

Unrealized losses on loans held for sale

 

 

 

 

799

 

 

 

 

1,114

 

 

 

 

1,114

 

Core net income

$

62,602

 

 

$

73,699

 

 

$

58,002

 

 

$

41,869

 

 

$

24,994

 

 

$

136,301

 

 

$

33,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

19,306,948

 

 

$

18,525,721

 

 

$

18,250,719

 

 

$

17,865,574

 

 

$

14,675,584

 

 

$

18,918,491

 

 

$

13,124,495

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core return on average assets

1.30

%

 

1.61

%

 

1.26

%

 

0.93

%

 

0.68

%

 

1.45

%

 

0.52

%

Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision -

Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30,

(dollars in thousands except per share data)

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

2021

 

2020

GAAP net income

$

61,341

 

 

$

36,595

 

 

$

56,245

 

 

$

50,515

 

 

$

22,718

 

 

$

97,936

 

 

$

25,817

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

20,124

 

 

17,560

 

 

23,447

 

 

12,016

 

 

7,980

 

 

37,684

 

 

11,254

 

Provision (benefit) for credit losses on loans and leases

3,291

 

 

(2,919)

 

 

(2,913)

 

 

12,955

 

 

20,946

 

 

372

 

 

52,732

 

Provision (benefit) for credit losses on unfunded commitments

45

 

 

(1,286)

 

 

(968)

 

 

(527)

 

 

(356)

 

 

(1,241)

 

 

395

 

Severance expense

2,004

 

 

 

 

 

 

 

 

 

 

2,004

 

 

 

Net loss from discontinued operations

 

 

38,036

 

 

2,317

 

 

532

 

 

2,258

 

 

38,036

 

 

7,612

 

Merger and acquisition related expenses

 

 

418

 

 

709

 

 

658

 

 

 

 

418

 

 

 

Legal reserves

 

 

 

 

 

 

320

 

 

 

 

 

 

 

(Gains) losses on investment securities

(3,558)

 

 

(24,540)

 

 

(1,431)

 

 

(11,945)

 

 

(5,553)

 

 

(28,098)

 

 

(8,150)

 

Loss on sale of foreign subsidiaries

2,840

 

 

 

 

 

 

 

 

 

 

2,840

 

 

 

Loss on cash flow hedge derivative terminations

 

 

24,467

 

 

 

 

 

 

 

 

24,467

 

 

 

Derivative credit valuation adjustment

380

 

 

(1,562)

 

 

(625)

 

 

(378)

 

 

5,895

 

 

(1,182)

 

 

8,451

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

(1,407)

 

 

 

 

(1,407)

 

Unrealized losses on loans held for sale

 

 

 

 

1,115

 

 

 

 

1,450

 

 

 

 

1,450

 

Adjusted net income - pre-tax pre-provision

$

86,467

 

 

$

86,769

 

 

$

77,896

 

 

$

64,146

 

 

$

53,931

 

 

$

173,236

 

 

$

98,154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

19,306,948

 

 

$

18,525,721

 

 

$

18,250,719

 

 

$

17,865,574

 

 

$

14,675,584

 

 

$

18,918,491

 

 

$

13,124,495

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted ROAA - pre-tax pre-provision

1.80

%

 

1.90

%

 

1.70

%

 

1.43

%

 

1.48

%

 

1.85

%

 

1.50

%

 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)
 

Core Return on Average Common Equity - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30,

(dollars in thousands except per share data)

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

2021

 

2020

GAAP net income to common shareholders

$

58,042

 

 

$

33,204

 

 

$

52,831

 

 

$

47,085

 

 

$

19,137

 

 

$

91,246

 

 

$

18,621

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

 

38,036

 

 

2,317

 

 

532

 

 

2,258

 

 

38,036

 

 

7,612

 

Severance expense

1,517

 

 

 

 

 

 

 

 

 

 

1,517

 

 

 

Merger and acquisition related expenses

 

 

320

 

 

508

 

 

530

 

 

 

 

320

 

 

 

Legal reserves

 

 

 

 

 

 

258

 

 

 

 

 

 

 

(Gains) losses on investment securities

(2,694)

 

 

(18,773)

 

 

(1,419)

 

 

(9,662)

 

 

(4,543)

 

 

(21,467)

 

 

(6,331)

 

Loss on sale of foreign subsidiaries

2,150

 

 

 

 

 

 

 

 

 

 

2,150

 

 

 

Loss on cash flow hedge derivative terminations

 

 

18,716

 

 

 

 

 

 

 

 

18,716

 

 

 

Derivative credit valuation adjustment

288

 

 

(1,195)

 

 

(448)

 

 

(304)

 

 

4,527

 

 

(907)

 

 

6,563

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

(1,080)

 

 

 

 

(1,080)

 

Unrealized losses on loans held for sale

 

 

 

 

799

 

 

 

 

1,114

 

 

 

 

1,114

 

Core earnings

$

59,303

 

 

$

70,308

 

 

$

54,588

 

 

$

38,439

 

 

$

21,413

 

 

$

129,611

 

 

$

26,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total common shareholders' equity

$

1,002,624

 

 

$

918,795

 

 

$

866,411

 

 

$

812,577

 

 

$

771,663

 

 

$

960,940

 

 

$

789,774

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core return on average common equity

23.72

%

 

31.03

%

 

25.06

%

 

18.82

%

 

11.16

%

 

27.20

%

 

6.75

%

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

 

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30,

(dollars in thousands except per share data)

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

2021

 

2020

GAAP net income to common shareholders

$

58,042

 

 

$

33,204

 

 

$

52,831

 

 

$

47,085

 

 

$

19,137

 

 

$

91,246

 

 

$

18,621

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

20,124

 

 

17,560

 

 

23,447

 

 

12,016

 

 

7,980

 

 

37,684

 

 

11,254

 

Provision (benefit) for credit losses on loan and leases

3,291

 

 

(2,919)

 

 

(2,913)

 

 

12,955

 

 

20,946

 

 

372

 

 

52,732

 

Provision (benefit) for credit losses on unfunded commitments

45

 

 

(1,286)

 

 

(968)

 

 

(527)

 

 

(356)

 

 

(1,241)

 

 

395

 

Net loss from discontinued operations

 

 

38,036

 

 

2,317

 

 

532

 

 

2,258

 

 

38,036

 

 

7,612

 

Severance expense

2,004

 

 

 

 

 

 

 

 

 

 

2,004

 

 

 

Merger and acquisition related expenses

 

 

418

 

 

709

 

 

658

 

 

 

 

418

 

 

 

Legal reserves

 

 

 

 

 

 

320

 

 

 

 

 

 

 

(Gains) losses on investment securities

(3,558)

 

 

(24,540)

 

 

(1,431)

 

 

(11,945)

 

 

(5,553)

 

 

(28,098)

 

 

(8,150)

 

Loss on sale of foreign subsidiaries

2,840

 

 

 

 

 

 

 

 

 

 

2,840

 

 

 

Loss on cash flow hedge derivative terminations

 

 

24,467

 

 

 

 

 

 

 

 

24,467

 

 

 

Derivative credit valuation adjustment

380

 

 

(1,562)

 

 

(625)

 

 

(378)

 

 

5,895

 

 

(1,182)

 

 

8,451

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

(1,407)

 

 

 

 

(1,407)

 

Unrealized losses on loans held for sale

 

 

 

 

1,115

 

 

 

 

1,450

 

 

 

 

1,450

 

Pre-tax pre-provision adjusted net income available to common shareholders

$

83,168

 

 

$

83,378

 

 

$

74,482

 

 

$

60,716

 

 

$

50,350

 

 

$

166,546

 

 

$

90,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total common shareholders' equity

$

1,002,624

 

 

$

918,795

 

 

$

866,411

 

 

$

812,577

 

 

$

771,663

 

 

$

960,940

 

 

$

789,774

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted ROCE - pre-tax pre-provision

33.27

%

 

36.80

%

 

34.20

%

 

29.73

%

 

26.24

%

 

34.95

%

 

23.16

%

 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)
 

Net Interest Margin, Tax Equivalent - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30,

(dollars in thousands except per share data)

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

2021

 

2020

GAAP net interest income

$

138,757

 

 

$

132,731

 

 

$

122,946

 

 

$

107,439

 

 

$

91,982

 

 

$

271,488

 

 

$

173,302

 

Tax-equivalent adjustment

289

 

 

292

 

 

219

 

 

225

 

 

225

 

 

581

 

 

430

 

Net interest income tax equivalent

$

139,046

 

 

$

133,023

 

 

$

123,165

 

 

$

107,664

 

 

$

92,207

 

 

$

272,069

 

 

$

173,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total interest earning assets

$

18,698,996

 

 

$

17,943,944

 

 

$

17,601,999

 

 

$

17,121,145

 

 

$

13,980,021

 

 

$

18,323,555

 

 

$

12,478,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin, tax equivalent

2.98

%

 

3.00

%

 

2.78

%

 

2.50

%

 

2.65

%

 

2.99

%

 

2.80

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Margin, Tax Equivalent, Excluding PPP - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30,

(dollars in thousands except per share data)

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

2021

 

2020

GAAP net interest income

$

138,757

 

 

$

132,731

 

 

$

122,946

 

 

$

107,439

 

 

$

91,982

 

 

$

271,488

 

 

$

173,302

 

PPP net interest income

(35,785)

 

 

(34,842)

 

 

(25,257)

 

 

(20,018)

 

 

(9,308)

 

 

(70,627)

 

 

(9,308)

 

Tax-equivalent adjustment

289

 

 

292

 

 

219

 

 

225

 

 

225

 

 

581

 

 

430

 

Net interest income, tax equivalent, excluding PPP

$

103,261

 

 

$

98,181

 

 

$

97,908

 

 

$

87,646

 

 

$

82,899

 

 

$

201,442

 

 

$

164,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP average total interest earning assets

$

18,698,996

 

 

$

17,943,944

 

 

$

17,601,999

 

 

$

17,121,145

 

 

$

13,980,021

 

 

$

18,323,555

 

 

$

12,478,375

 

Average PPP loans

(6,133,184)

 

 

(4,623,213)

 

 

(4,782,606)

 

 

(4,909,197)

 

 

(2,754,920)

 

 

(5,382,370)

 

 

(1,377,460)

 

Adjusted average total interest earning assets

$

12,565,812

 

 

$

13,320,731

 

 

$

12,819,393

 

 

$

12,211,948

 

 

$

11,225,101

 

 

$

12,941,185

 

 

$

11,100,915

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin, tax equivalent, excluding PPP

3.30

%

 

2.99

%

 

3.04

%

 

2.86

%

 

2.97

%

 

3.14

%

 

2.98

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Efficiency Ratio - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Six Months Ended
June 30,

(dollars in thousands except per share data)

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

2021

 

2020

GAAP net interest income

$

138,757

 

 

$

132,731

 

 

$

122,946

 

 

$

107,439

 

 

$

91,982

 

 

$

271,488

 

 

$

173,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP non-interest income

$

16,822

 

 

$

18,468

 

 

$

16,083

 

 

$

24,864

 

 

$

11,711

 

 

$

35,290

 

 

$

22,871

 

(Gains) losses on investment securities

(3,558)

 

 

(24,540)

 

 

(1,431)

 

 

(11,945)

 

 

(5,553)

 

 

(28,098)

 

 

(8,150)

 

Derivative credit valuation adjustment

380

 

 

(1,562)

 

 

(625)

 

 

(378)

 

 

5,895

 

 

(1,182)

 

 

8,451

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

(1,407)

 

 

 

 

(1,407)

 

Unrealized losses on loans held for sale

 

 

 

 

1,115

 

 

 

 

1,450

 

 

 

 

1,450

 

Loss on cash flow hedge derivative terminations

 

 

24,467

 

 

 

 

 

 

 

 

24,467

 

 

 

Loss on sale of foreign subsidiaries

2,840

 

 

 

 

 

 

 

 

 

 

2,840

 

 

 

Core non-interest income

16,484

 

 

16,833

 

 

15,142

 

 

12,541

 

 

12,096

 

 

33,317

 

 

23,215

 

Core revenue

$

155,241

 

 

$

149,564

 

 

$

138,088

 

 

$

119,980

 

 

$

104,078

 

 

$

304,805

 

 

$

196,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP non-interest expense

$

70,823

 

 

$

61,927

 

 

$

59,933

 

 

$

56,285

 

 

$

49,791

 

 

$

132,750

 

 

$

98,758

 

Severance expense

(2,004)

 

 

 

 

 

 

 

 

 

 

(2,004)

 

 

 

Legal reserves

 

 

 

 

 

 

(320)

 

 

 

 

 

 

 

Merger and acquisition related expenses

 

 

(418)

 

 

(709)

 

 

(658)

 

 

 

 

(418)

 

 

 

Core non-interest expense

$

68,819

 

 

$

61,509

 

 

$

59,224

 

 

$

55,307

 

 

$

49,791

 

 

$

130,328

 

 

$

98,758

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core efficiency ratio (1)

44.33

%

 

41.13

%

 

42.89

%

 

46.10

%

 

47.84

%

 

42.76

%

 

50.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)

Tangible Common Equity to Tangible Assets - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

GAAP total shareholders' equity

$

1,250,729

 

 

$

1,188,721

 

 

$

1,117,086

 

 

$

1,051,491

 

 

$

1,007,847

 

Reconciling items:

 

 

 

 

 

 

 

 

 

Preferred stock

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

Goodwill and other intangibles (1)

(3,853)

 

 

(3,911)

 

 

(14,298)

 

 

(14,437)

 

 

(14,575)

 

Tangible common equity

$

1,029,405

 

 

$

967,339

 

 

$

885,317

 

 

$

819,583

 

 

$

775,801

 

 

 

 

 

 

 

 

 

 

 

GAAP total assets

$

19,635,108

 

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

 

$

17,903,118

 

Reconciling items:

 

 

 

 

 

 

 

 

 

Goodwill and other intangibles (1)

(3,853)

 

 

(3,911)

 

 

(14,298)

 

 

(14,437)

 

 

(14,575)

 

Tangible assets

$

19,631,255

 

 

$

18,813,749

 

 

$

18,424,950

 

 

$

18,764,290

 

 

$

17,888,543

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets

5.24

%

 

5.14

%

 

4.80

%

 

4.37

%

 

4.34

%

(1) Includes goodwill and other intangibles reported in assets of discontinued operations.

 
Tangible Book Value per Common Share - Customers Bancorp

 

 

 

 

 

 

 

 

 

(dollars in thousands except share and per share data)

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

GAAP total shareholders' equity

$

1,250,729

 

 

$

1,188,721

 

 

$

1,117,086

 

 

$

1,051,491

 

 

$

1,007,847

 

Reconciling Items:

 

 

 

 

 

 

 

 

 

Preferred stock

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

Goodwill and other intangibles (1)

(3,853)

 

 

(3,911)

 

 

(14,298)