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Customers Bancorp Reports First Quarter 2021 Results


Net Income of $33.2 million, or $1.01 Per Diluted Share, Record Core Earnings of $70.3 million, or $2.14 Per Diluted Share

5th Largest PPP Lender (Round 3) in U.S. and #1 in Peer Group
~$200 million of Expected Deferred Origination Fees Earned In Just 2.5 Months of 2021

  • Q1 2021 net income available to common shareholders was $33.2 million, or $1.01 per diluted share. Q1 2021 results were impacted by $38 million of one-time merger-related and tax expenses resulting from the divestiture of BankMobile Technologies, Inc. ("BMT") on January 4, 2021. These items and BMT’s historical financial results for periods prior to the divestiture have been reflected in the consolidated financial statements as discontinued operations. Current and prior period core earnings exclude the impact of discontinued operations.
  • Q1 2021 core earnings (a non-GAAP measure) were $70.3 million, or $2.14 per diluted share, up 29% over Q4 2020 and 1,282% over Q1 2020.
  • Q1 2021 ROAA was 0.80% and Core ROAA (a non-GAAP measure) was 1.61%. Q4 2020 ROAA was 1.23% and Core ROAA (a non GAAP measure) was 1.26%.
  • Q1 2021 ROCE was 14.66% and Core ROCE (a non-GAAP measure) was 31.03%. Q4 2020 ROCE was 24.26% and Core ROCE (a non-GAAP measure) was 25.06%.
  • Adjusted pre-tax pre-provision net income (a non-GAAP measure) for Q1 2021 was $86.8 million, an increase of 11% over Q4 2020 and 96% over Q1 2020. Q1 2021 adjusted pre-tax pre-provision return on average assets (a non-GAAP measure) was 1.90% compared to 1.70% for Q4 2020 and 1.54% for Q1 2020.
  • Q1 2021 results include a net benefit to (or release from) provision for credit losses on loans and leases of $2.9 million. At March 31, 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 1.71% compared to 1.90% at December 31, 2020.
  • Non-performing assets were 0.26% of total assets at March 31, 2021 compared to 0.39% at December 31, 2020. Allowance for credit losses equaled 264% of non-performing loans at March 31, 2021, up from 204% at December 31, 2020.
  • Net interest income for Q1 2021 grew $9.8 million, or 8.0%, over Q4 2020 and $51.4 million, or 63.2% over Q1 2020.
  • Q1 2021 net interest margin (a non-GAAP measure) increased 22 basis points from Q4 2020 to 3.00%, mostly due to PPP loans at an average yield of 3.41% due to the acceleration of deferred fee recognition upon loan forgiveness. Q1 2021 net interest margin, excluding the impact of PPP loans (a non-GAAP measure), was stable at about 3.0%.
  • Q1 2021 balance sheet restructuring, which included terminating $850 million of cash flow hedges and selling $325 million of investment securities is expected to contribute to net interest margin expansion of about 15 basis points while neutral to Q1 2021 capital levels.
  • Total loans and leases increased $5.8 billion, or 56.6% year-over-year, driven by PPP loans of $5.2 billion and strong growth in short-term commercial loans to mortgage companies of $890.1 million. Total loans and leases, excluding PPP loans (a non-GAAP measure), increased $668.8 million, or 6.5% year-over-year.
  • Total deposits increased $4.1 billion, or 48.2% year-over-year, which included a $2.9 billion or 96.4% increase in demand deposits. The total cost of deposits dropped to 0.53% in Q1 2021, a decline of 98 basis points from 1.51% in the year-ago quarter.
  • Total deferments declined to $189.1 million, or 1.7% of total loans and leases excluding PPP loans (a non-GAAP measure) at March 31, 2021, down from $750.5 million, or 7.3% of total loans and leases excluding PPP loans (a non-GAAP measure) at July 24, 2020.
  • Q1 2021 efficiency ratio was 48.89% compared to 54.48% for Q1 2020. Q1 2021 core efficiency ratio was 41.13% compared to 52.97% in Q1 2020 (non-GAAP measures).
  • 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.

 

WEST READING, Pa.--(BUSINESS WIRE)-- Customers Bancorp, Inc. (NYSE: CUBI), the parent company of Customers Bank (collectively "Customers" or "CUBI"), today reported first quarter 2021 ("Q1 2021") net income to common shareholders of $33.2 million, or $1.01 per diluted share, down from fourth quarter 2020 ("Q4 2020") net income to common shareholders of $52.8 million, or $1.65 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. Core earnings for Q1 2021 totaled $70.3 million, or $2.14 per diluted share, up from Q4 2020 core earnings of $54.6 million, or $1.71 per diluted share (non-GAAP measures). Net interest margin, tax equivalent ("NIM") expanded 22 basis points during Q1 2021 to 3.00% from 2.78% in Q4 2020 (non-GAAP measures).

“We are extremely pleased with our financial results for the first quarter and are excited that 2021 is off to a great start,” remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “At this time, we have close to 200,000 of loans approved by the SBA in Round 3 of the Paycheck Protection Program ("PPP") as we continue to support small businesses, not-for-profits, and the communities we serve while improving the financial position of Customers Bank at the same time. In total, we expect to generate approximately $400 million of pre-tax revenues from our participation in this program, placing us in the Top 5 in the U.S., all because of our entrepreneurial style, effective risk management and technology-based execution. We also continue to make great strides in improving our core profitability while maintaining superior asset quality. The restructuring of our balance sheet in Q1 2021 combined with the on-going efforts to reduce total deposit costs is expected to drive further net interest margin expansion in future quarters. Our tremendously successful execution on these initiatives will result in significant capital accretion, leaving us well positioned to support future growth and to possibly consider adopting a common stock repurchase program or redeeming all or a portion of our preferred stock in 2021 or 2022,” Mr. Sidhu concluded.

Key Balance Sheet Trends

Total loans and leases increased $5.8 billion, or 56.6%, to $16.2 billion at March 31, 2021 compared to the year-ago period. PPP loans were $5.2 billion at March 31, 2021. Additionally, the loan mix improved year-over-year as commercial loans to mortgage companies increased $0.9 billion to $3.5 billion, commercial and industrial loans and leases increased $147.2 million to $2.2 billion, consumer installment loans increased $89.9 million to $1.4 billion, commercial real estate owner occupied loans increased $46.1 million to $590.1 million and construction loans increased $41.4 million to $156.8 million. The commercial loans to mortgage companies trend has been a function of greater refinance activity due to sharply lower interest rates, an increase in home purchase volumes, and market share gains from other banks. These increases in loans and leases were partially offset by decreases in multi-family loans of $409.5 million to $1.7 billion, residential mortgages of $69.1 million to $295.7 million and commercial real estate non-owner occupied loans of $58.0 million to $1.2 billion. “Looking ahead, we see continued growth in core C&I loans offsetting some of the expected decreases in loans to mortgage companies in the second half of this year," stated Sidhu.

Total deposits increased $4.1 billion, or 48.2%, to $12.5 billion at March 31, 2021 compared to the year-ago period. Total demand deposits increased $2.9 billion, or 96.4%, to $5.9 billion, money market deposits increased $1.6 billion, or 55.5%, to $4.4 billion, and savings deposits increased $315.4 million, or 27.0%, to $1.5 billion. These increases were offset, in part, by a decrease in time deposits of $0.7 billion, or 52.4%, to $665.9 million. The total cost of deposits declined by 98 basis points to 0.53% in Q1 2021 from 1.51% in the year-ago quarter.

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

Customers experienced significant improvements in regulatory capital ratios in Q1 2021 as compared to a year ago. Customers Bancorp's tangible common equity (a non-GAAP measure) increased by $235.0 million to $967.3 million at March 31, 2021 from $732.3 million at March 31, 2020, and the tangible book value per common share (a non-GAAP measure) increased to $30.01 at March 31, 2021 from $23.27 at March 31, 2020, an increase of 29%. "This increase in tangible common equity and tangible book value per common share was achieved in spite of a decrease in retained earnings of $61 million recorded on January 1, 2020 upon the adoption of CECL," commented Mr. Sidhu. 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 (a non-GAAP measure), were 12.5% and 7.1%, respectively, at March 31, 2021. At December 31, 2020, Customers Bancorp's total risk based capital ratio and TCE ratio, excluding PPP loans (a non-GAAP measure), were 11.9% and 6.4%, 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 by the second half of 2021 with the TCE ratio excluding PPP loans to be about 8.5% 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 multifamily, mortgage warehouse, and specialty finance lines of business, 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 $176.1 million, or 1.6% of total loans and leases, excluding PPP loans (a non-GAAP measure), at March 31, 2021, down from $202.1 million, or 1.8% of total loans and leases, excluding PPP loans, at December 31, 2020. Of the $176.1 million in total commercial deferments, $83.1 million, or 47.2%, were principal only deferments. 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 March 31, 2021, Customers had $84.6 million in energy and utilities exposure (with no deferments); $62.0 million in colleges and universities (no deferments requested); $66.2 million in CRE retail sales exposure (mostly auto sales; with no deferments); $30.4 million in franchise restaurants and dining (with no deferments); and $26.9 million in entertainment only businesses (with no deferments).
  • At March 31, 2021, the hospitality portfolio was $400.6 million, or 3.6% of total loans and leases, excluding PPP loans, with $125.9 million in deferment. Approximately 79.7% ($318.8 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). The majority of the hotels, based on our recent assessment, have sufficient cash resources to get through the COVID-19 crisis and, for those who may need assistance, the Bank is working with them to bridge any potential cash flow gaps.
  • At March 31, 2021, the healthcare portfolio was approximately $385 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 62% as of quarter-end. 55% of the portfolio was in New York City, of which 71% was in rent controlled/regulated properties. As of March 31, 2021, $9.3 million of the portfolio was on deferment.
  • At March 31, 2021, investment CRE had a weighted average loan to value of 64%, with approximately 53% of the portfolio housed in the New York and Philadelphia and surrounding markets. As of March 31, 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 $13.0 million, or 0.1% of total loans and leases, excluding PPP loans (a non-GAAP measure), at March 31, 2021, down from $16.4 million at December 31, 2020.
  • The $1.4 billion consumer installment loan portfolio outperformed industry peers with deferments dropping to 0.5% and 30+ DPD delinquency at only 0.8%. 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 Q1 2021.
  • The consumer installment portfolio has been managed to moderate growth and strengthening credit quality, by replacing run-off with CB Direct originations with strong FICO scores.

Key Profitability Trends

Net Interest Income

Net interest income totaled $132.7 million in Q1 2021, an increase of $9.8 million from Q4 2020, primarily due to a $341.9 million net increase in average interest-earning assets. Earning assets were driven by increases in consumer and commercial and industrial loans, investment securities and the new 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. The benefit of this net growth resulted in a 22 basis point linked-quarter increase in NIM (a non-GAAP measure) to 3.00%. Compared to Q4 2020, total loan yields increased 40 basis points to 4.02%. The increase is attributable to increased originations of consumer installment loans and PPP loan forgiveness from the first two rounds. The cost of interest-bearing deposits in Q1 2021 decreased by 7 basis points to 0.69% due to the on-going efforts to reduce the total cost of deposits and strategic decisions to reallocate deposit funding to lower cost deposits. Total borrowing costs increased by 6 basis points to 1.00% primarily due to lower utilization of the FRB PPP Liquidity Facility, costing 0.35%, due to PPP loan forgiveness from the first two rounds and excess cash available to fund PPP round 3 originations.

Provision for Credit Losses

The provision for credit losses on loans and leases in Q1 2021 was a $2.9 million benefit to (or release from) the provision, compared to a $2.9 million benefit (release) in Q4 2020. The benefit (release) in Q1 2021 primarily resulted from a continuing improvement in forecasts of macroeconomic conditions since Q4 2020. The allowance for credit losses on loans and leases represented 1.7% of total loans and leases receivable, excluding PPP loans (a non-GAAP measure) at March 31, 2021, compared to 1.9% at December 31, 2020, 2.0% at March 31, 2020, and 0.8% at December 31, 2019. Customers' non-performing loans at March 31, 2021 were only 0.3% of total loans and leases.

Non-Interest Income

Non-interest income totaled $18.5 million for Q1 2021, an increase of $2.4 million compared to Q4 2020. The increase in non-interest income primarily resulted from increases of $23.5 million in gain on sale of investment securities, $1.7 million in unrealized gain on derivatives, $1.1 million in other non-interest income, $0.6 million in mortgage warehouse transactional fees and $0.4 million in commercial lease income, partially offset by a $24.5 million increase in loss on cash flow hedge derivative terminations and $0.4 million decrease in unrealized gains on equity securities issued by a foreign entity.

The increase in gain on sale of investment securities primarily resulted from the sales of approximately $325 million of investment securities in Q1 2021, compared to sales of $10 million during Q4 2020. The increase in other non-interest income was driven by an unrealized loss on a loan held for sale of $1.1 million related to one commercial credit in Q4 2020. The increase in unrealized gain on derivatives was primarily due to an increased credit valuation adjustment of $0.9 million resulting from changes in market interest rates and increased interest rate swap fees of $0.8 million driven by higher volumes. The increase in mortgage warehouse transactional fees primarily resulted from a utilization surcharge, partially offset by a decrease in volume from lower seasonal demand. The increase in commercial lease income was driven by continued organic growth. The increase in losses realized from terminations of derivatives designated in cash flow hedging relationships resulted from the restructuring of the liability side of the balance sheet to improve overall funding mix and utilize excess cash on the balance sheet. The decrease in unrealized gain on equity securities resulted from a smaller improvement in fair value of equity securities issued by a foreign entity in Q1 2021 compared to Q4 2020.

Non-Interest Expense

Non-interest expense totaled $61.9 million for Q1 2021, an increase of $2.0 million compared to Q4 2020. The increase in non-interest expense primarily resulted from increases of $4.0 million in technology, communication and bank operations, $0.8 million in professional services, $0.6 million in advertising and promotion and $0.3 million in commercial lease depreciation, partially offset by decreases of $1.6 million in salaries and employee benefits, $1.3 million in other non-interest expense, $0.4 million in loan workout expenses and $0.3 million in merger and acquisition related expenses.

The increase in technology, communication and bank operations resulted from higher deposit servicing fees and interchange maintenance fees paid to BM Technologies, Inc., the successor entity of BMT that was divested on January 4, 2021, due to increased deposit balances and debit card transactions. The increase in professional services was primarily due to outside professional services used to support the PPP forgiveness process and our participation in PPP round 3. The increase in advertising and promotion was due to lower spend and credits from advertising agencies in 2020. The increase in commercial lease depreciation was driven by continued organic growth. The decrease in salaries and employee benefits was primarily due to lower incentives, sales commissions, and stock based compensation expense, partially offset by higher employee benefits and payroll taxes in Q1 2021. The decrease in loan workout expenses primarily resulted from a recovery from a commercial relationship. The decrease in merger and acquisition related expenses primarily resulted from a decrease in the Bank's direct costs incurred as the divestiture of BMT was completed on January 4, 2021.

Taxes

Income tax expense from continuing operations decreased by $5.8 million to $17.6 million in Q1 2021 from $23.4 million in Q4 2020 primarily due to an increase in investment tax credits in 2021 and the recording of net discrete tax benefits associated with the divestiture of BMT and the recognition of a deferred tax asset related to the outside basis difference of its foreign subsidiaries. Customers expects the full-year 2021 effective tax rate from continuing operations to be approximately 23% to 24%, which is comparable to previous years.

Net Loss From Discontinued Operations

The divestiture of BMT was completed on January 4, 2021, and BMT's historical financial results are presented as discontinued operations. The net loss from discontinued operations of $38.0 million, net of income tax expense of $17.7 million in Q1 2021 primarily resulted from previously reported restricted stock awards granted to certain team members of BMT and the effect of the divestiture being treated as a taxable asset sale for tax purposes, offset in part by a tax benefit related to the restricted stock awards. BMT’s historical financial results for periods prior to the divestiture have been reflected in Customers' consolidated financial statements as discontinued operations.

Outlook

“Looking ahead, we are very optimistic about the prospects of our company. The ongoing digital transformation 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 about the $4.00 level during 2021 and 2022 and remain on track to achieve $6.00 in core EPS in 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-$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 about 8.5% by year-end 2021.
  • We project the NIM excluding PPP loans to expand into the 3.10%-3.30% range by Q4 2021.
  • We project an effective tax rate from continuing operations for 2021 of 23.0%-24.0%.
  • We expect to earn at least $5.00 in core EPS in 2021 and 2022 and remain on track to earn $6.00 in core EPS in 2026. Our core EPS guidance includes the net interest income expected to be earned on the PPP loans.

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 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 40 basis points by Q2 2021.

BankMobile Technologies, Inc.:

  • On January 4, 2021, Customers completed the previously announced divestiture of BMT, the technology arm of the BankMobile segment, to Megalith Financial Acquisition Corp., a Delaware corporation ("Megalith"). In connection with the closing of the divestiture, Megalith changed its name to “BM Technologies, Inc.” ("BMTX"). Following the completion of the divestiture of BMT, BankMobile segment's serviced deposits and loans and the related net interest income have been combined with Customers’ financial condition and the results of operations as a single reportable segment. BMT’s historical financial results for periods prior to the divestiture have been reflected in Customers' consolidated financial statements as discontinued operations. The assets and liabilities of BMT have been presented as "Assets of discontinued operations" and "Liabilities of discontinued operations" on the consolidated balance sheets. BMT's operating results have been presented as "Discontinued operations" within the consolidated financial statements and prior period amounts have been reclassified to conform with the current period presentation.
  • All Customers Bancorp shareholders on record on December 18, 2020 received approximately $73 million in value of BMTX stock at closing date of the transaction in the form of a special distribution.

Webcast

 

 

 

 

 

Date:

 

Thursday, April 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 1st 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 $18.8 billion in assets at March 31, 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 effect 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 changes in accounting standards or policies, including Accounting Standards Update ("ASU") 2016-13, Financial Instruments—Credit Losses ("CECL"). 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.

Q1 2021 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended March 31, 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)

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

 

2021

 

2020

 

2020

 

2020

 

2020

 

 

 

 

 

 

 

 

 

 

 

GAAP Profitability Metrics:

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders
(from continuing and discontinued operations)

 

$

33,204

 

 

$

52,831

 

 

$

47,085

 

 

$

19,137

 

 

$

(515)

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

 

$

1.04

 

 

$

1.67

 

 

$

1.49

 

 

$

0.61

 

 

$

(0.02)

 

Earnings per share - diluted

 

$

1.01

 

 

$

1.65

 

 

$

1.48

 

 

$

0.61

 

 

$

(0.02)

 

Book value per common share (1)

 

$

30.13

 

 

$

28.37

 

 

$

26.43

 

 

$

25.08

 

 

$

23.74

 

CUBI stock price (1)

 

$

31.82

 

 

$

18.18

 

 

$

11.20

 

 

$

12.02

 

 

$

10.93

 

CUBI stock price as % of book value (1)

 

106

%

 

64

%

 

42

%

 

48

%

 

46

%

Average shares outstanding - basic

 

31,883,946

 

 

31,638,447

 

 

31,517,504

 

 

31,477,591

 

 

31,391,151

 

Average shares outstanding - diluted

 

32,841,711

 

 

31,959,100

 

 

31,736,311

 

 

31,625,771

 

 

31,391,151

 

Shares outstanding (1)

 

32,238,762

 

 

31,705,088

 

 

31,555,124

 

 

31,510,287

 

 

31,470,026

 

Return on average assets ("ROAA")

 

0.80

%

 

1.23

%

 

1.12

%

 

0.62

%

 

0.11

%

Return on average common equity ("ROCE")

 

14.66

%

 

24.26

%

 

23.05

%

 

9.97

%

 

(0.26)

%

Efficiency ratio

 

48.89

%

 

43.56

%

 

46.76

%

 

50.73

%

 

54.48

%

Non-GAAP Profitability Metrics (2):

 

 

 

 

 

 

 

 

 

 

Core earnings

 

$

70,308

 

 

$

54,588

 

 

$

38,439

 

 

$

21,413

 

 

$

5,087

 

Adjusted pre-tax pre-provision net income

 

$

86,769

 

 

$

77,896

 

 

$

64,146

 

 

$

53,931

 

 

$

44,225

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

Core earnings per share - diluted

 

$

2.14

 

 

$

1.71

 

 

$

1.21

 

 

$

0.68

 

 

$

0.16

 

Tangible book value per common share (1)

 

$

30.01

 

 

$

27.92

 

 

$

25.97

 

 

$

24.62

 

 

$

23.27

 

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

 

106

%

 

65

%

 

43

%

 

49

%

 

47

%

Core ROAA

 

1.61

%

 

1.26

%

 

0.93

%

 

0.68

%

 

0.30

%

Core ROCE

 

31.03

%

 

25.06

%

 

18.82

%

 

11.16

%

 

2.53

%

Adjusted ROAA - pre-tax and pre-provision

 

1.90

%

 

1.70

%

 

1.43

%

 

1.48

%

 

1.54

%

Adjusted ROCE - pre-tax and pre-provision

 

36.80

%

 

34.20

%

 

29.73

%

 

26.24

%

 

20.22

%

Net interest margin, tax equivalent

 

3.00

%

 

2.78

%

 

2.50

%

 

2.65

%

 

2.99

%

Net interest margin, tax equivalent, excluding PPP loans

 

2.99

%

 

3.04

%

 

2.86

%

 

2.97

%

 

2.99

%

Core efficiency ratio

 

41.13

%

 

42.89

%

 

46.10

%

 

47.84

%

 

52.97

%

Asset Quality:

 

 

 

 

 

 

 

 

 

 

Net charge-offs

 

$

12,521

 

 

$

8,472

 

 

$

17,299

 

 

$

10,325

 

 

$

18,711

 

Annualized net charge-offs to average total loans and leases

 

0.33

%

 

0.21

%

 

0.45

%

 

0.32

%

 

0.79

%

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

 

0.30

%

 

0.45

%

 

0.38

%

 

0.56

%

 

0.49

%

Reserves to NPLs (1)

 

264.21

%

 

204.48

%

 

244.70

%

 

185.36

%

 

296.44

%

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

 

0.26

%

 

0.39

%

 

0.34

%

 

0.48

%

 

0.53

%

Customers Bank Capital Ratios (3):

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital to risk-weighted assets

 

11.86

%

 

10.62

%

 

10.12

%

 

10.64

%

 

10.60

%

Tier 1 capital to risk-weighted assets

 

11.86

%

 

10.62

%

 

10.12

%

 

10.64

%

 

10.60

%

Total capital to risk-weighted assets

 

13.23

%

 

12.06

%

 

11.62

%

 

12.30

%

 

12.21

%

Tier 1 capital to average assets (leverage ratio)

 

9.41

%

 

9.21

%

 

9.29

%

 

9.59

%

 

9.99

%

 

 

 

 

 

 

 

 

 

 

 

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

(2) Non-GAAP measures exclude net loss from discontinued operations, unrealized gains (losses) on loans HFS, 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, and goodwill and intangible assets. 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 Q1 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 Q1 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)

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

 

 

2021

 

2020

 

2020

 

2020

 

2020

Interest income:

 

 

 

 

 

 

 

 

 

 

Loans and leases

 

$

152,117

 

$

145,414

 

$

132,107

 

$

118,447

 

$

116,080

Investment securities

 

7,979

 

6,777

 

6,297

 

6,155

 

4,977

Other

 

1,019

 

902

 

1,246

 

616

 

4,286

Total interest income

 

161,115

 

153,093

 

139,650

 

125,218

 

125,343

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

15,658

 

16,107

 

18,347

 

23,238

 

34,353

FHLB advances

 

5,192

 

5,749

 

5,762

 

4,736

 

5,390

Subordinated debt

 

2,689

 

2,688

 

2,689

 

2,689

 

2,689

FRB PPP liquidity facility, federal funds purchased and other borrowings

 

4,845

 

5,603

 

5,413

 

2,573

 

1,590

Total interest expense

 

28,384

 

30,147

 

32,211

 

33,236

 

44,022

Net interest income

 

132,731

 

122,946

 

107,439

 

91,982

 

81,321

Provision (benefit) for credit losses on loans and leases

 

(2,919)

 

(2,913)

 

12,955

 

20,946

 

31,786

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

 

135,650

 

125,859

 

94,484

 

71,036

 

49,535

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

Interchange and card revenue

 

85

 

91

 

92

 

193

 

270

Deposit fees

 

863

 

823

 

650

 

502

 

551

Commercial lease income

 

5,205

 

4,853

 

4,510

 

4,508

 

4,268

Bank-owned life insurance

 

1,679

 

1,744

 

1,746

 

1,757

 

1,762

Mortgage warehouse transactional fees

 

4,247

 

3,681

 

3,320

 

2,582

 

1,952

Gain (loss) on sale of SBA and other loans

 

1,575

 

1,689

 

286

 

23

 

11

Mortgage banking income (loss)

 

463

 

346

 

1,013

 

38

 

296

Gain (loss) on sale of investment securities

 

23,566

 

44

 

11,707

 

4,353

 

3,974

Unrealized gain (loss) on investment securities

 

974

 

1,387

 

238

 

1,200

 

(1,378)

Unrealized gain (loss) on derivatives

 

2,537

 

804

 

549

 

(4,158)

 

(1,146)

Loss on cash flow hedge derivative terminations

 

(24,467)

 

 

 

 

Other

 

1,741

 

621

 

753

 

713

 

600

Total non-interest income

 

18,468

 

16,083

 

24,864

 

11,711

 

11,160

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

23,971

 

25,600

 

24,752

 

23,192

 

20,523

Technology, communication and bank operations

 

19,988

 

16,021

 

13,005

 

11,103

 

10,539

Professional services

 

6,289

 

5,449

 

4,421

 

2,974

 

3,544

Occupancy

 

2,621

 

2,742

 

3,368

 

2,639

 

2,613

Commercial lease depreciation

 

4,291

 

3,982

 

3,663

 

3,643

 

3,427

FDIC assessments, non-income taxes and regulatory fees

 

2,719

 

2,642

 

3,784

 

2,368

 

2,867

Merger and acquisition related expenses

 

418

 

709

 

658

 

 

Loan workout

 

(261)

 

123

 

846

 

1,808

 

366

Advertising and promotion

 

561

 

 

 

372

 

1,424

Other

 

1,330

 

2,665

 

1,788

 

1,692

 

3,664

Total non-interest expense

 

61,927

 

59,933

 

56,285

 

49,791

 

48,967

Income before income tax expense

 

92,191

 

82,009

 

63,063

 

32,956

 

11,728

Income tax expense

 

17,560

 

23,447

 

12,016

 

7,980

 

3,274

Net income from continuing operations

 

74,631

 

58,562

 

51,047

 

24,976

 

8,454

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations before income taxes

 

(20,354)

 

(3,539)

 

(347)

 

(3,190)

 

(6,722)

Income tax expense (benefit) from discontinued operations

 

17,682

 

(1,222)

 

185

 

(932)

 

(1,368)

Net loss from discontinued operations

 

(38,036)

 

(2,317)

 

(532)

 

(2,258)

 

(5,354)

Net income

 

36,595

 

56,245

 

50,515

 

22,718

 

3,100

Preferred stock dividends

 

3,391

 

3,414

 

3,430

 

3,581

 

3,615

Net income available to common shareholders

 

$

33,204

 

$

52,831

 

$

47,085

 

$

19,137

 

$

(515)

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share from continuing operations

 

$

2.23

 

$

1.74

 

$

1.51

 

$

0.68

 

$

0.15

Basic earnings per common share

 

$

1.04

 

$

1.67

 

$

1.49

 

$

0.61

 

$

(0.02)

Diluted earnings per common share from continuing operations

 

$

2.17

 

$

1.73

 

$

1.50

 

$

0.68

 

$

0.15

Diluted earnings per common share

 

$

1.01

 

$

1.65

 

$

1.48

 

$

0.61

 

$

(0.02)

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET - UNAUDITED

(Dollars in thousands)

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

 

2021

 

2020

 

2020

 

2020

 

2020

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

3,123

 

 

$

78,090

 

 

$

5,822

 

 

$

44,577

 

 

$

18,842

 

Interest earning deposits

 

512,241

 

 

615,264

 

 

325,594

 

 

1,022,753

 

 

237,390

 

Cash and cash equivalents

 

515,364

 

 

693,354

 

 

331,416

 

 

1,067,330

 

 

256,232

 

Investment securities, at fair value

 

1,441,904

 

 

1,210,285

 

 

1,133,831

 

 

681,382

 

 

712,657

 

Loans held for sale

 

46,106

 

 

79,086

 

 

26,689

 

 

464,164

 

 

450,157

 

Loans receivable, mortgage warehouse, at fair value

 

3,407,622

 

 

3,616,432

 

 

3,913,593

 

 

2,793,164

 

 

2,518,012

 

Loans receivable, PPP

 

5,178,089

 

 

4,561,365

 

 

4,964,105

 

 

4,760,427

 

 

 

Loans and leases receivable

 

7,536,489

 

 

7,575,368

 

 

7,700,892

 

 

7,272,447

 

 

7,353,262

 

Allowance for credit losses on loans and leases

 

(128,736)

 

 

(144,176)

 

 

(155,561)

 

 

(159,905)

 

 

(149,283)

 

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

 

15,993,464

 

 

15,608,989

 

 

16,423,029

 

 

14,666,133

 

 

9,721,991

 

FHLB, Federal Reserve Bank, and other restricted stock

 

69,420

 

 

71,368

 

 

70,387

 

 

91,023

 

 

87,140

 

Accrued interest receivable

 

83,186

 

 

80,412

 

 

65,668

 

 

49,911

 

 

40,570

 

Bank premises and equipment, net

 

10,943

 

 

11,225

 

 

11,308

 

 

7,879

 

 

8,314

 

Bank-owned life insurance

 

281,923

 

 

280,067

 

 

277,826

 

 

275,842

 

 

273,576

 

Goodwill and other intangibles

 

3,911

 

 

3,969

 

 

4,028

 

 

4,086

 

 

4,145

 

Other assets

 

371,439

 

 

338,438

 

 

354,010

 

 

512,209

 

 

384,379

 

Assets of discontinued operations

 

 

 

62,055

 

 

80,535

 

 

83,159

 

 

79,638

 

Total assets

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

 

$

17,903,118

 

 

$

12,018,799

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing deposits

 

$

2,687,628

 

 

$

2,356,998

 

 

$

2,327,017

 

 

$

1,879,789

 

 

$

1,435,151

 

Interest bearing deposits

 

9,784,812

 

 

8,952,931

 

 

8,512,060

 

 

9,086,086

 

 

6,978,492

 

Total deposits

 

12,472,440

 

 

11,309,929

 

 

10,839,077

 

 

10,965,875

 

 

8,413,643

 

FRB advances

 

 

 

 

 

 

 

 

 

175,000

 

Federal funds purchased

 

365,000

 

 

250,000

 

 

680,000

 

 

 

 

705,000

 

FHLB advances

 

850,000

 

 

850,000

 

 

850,000

 

 

850,000

 

 

1,260,000

 

Other borrowings

 

124,138

 

 

124,037

 

 

123,935

 

 

123,833

 

 

123,732

 

Subordinated debt

 

181,464

 

 

181,394

 

 

181,324

 

 

181,255

 

 

181,185

 

FRB PPP liquidity facility

 

3,284,156

 

 

4,415,016

 

 

4,811,009

 

 

4,419,967

 

 

 

Accrued interest payable and other liabilities

 

351,741

 

 

152,082

 

 

185,927

 

 

296,192

 

 

143,126

 

Liabilities of discontinued operations

 

 

 

39,704

 

 

55,964

 

 

58,149

 

 

52,477

 

Total liabilities

 

17,628,939

 

 

17,322,162

 

 

17,727,236

 

 

16,895,271

 

 

11,054,163

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

217,471

 

 

217,471

 

 

217,471

 

 

217,471

 

 

217,471

 

Common stock

 

33,519

 

 

32,986

 

 

32,836

 

 

32,791

 

 

32,751

 

Additional paid in capital

 

515,318

 

 

455,592

 

 

452,965

 

 

450,665

 

 

446,840

 

Retained earnings

 

438,802

 

 

438,581

 

 

385,750

 

 

338,665

 

 

319,529

 

Accumulated other comprehensive income (loss)

 

5,391

 

 

(5,764)

 

 

(15,751)

 

 

(9,965)

 

 

(30,175)

 

Treasury stock, at cost

 

(21,780)

 

 

(21,780)

 

 

(21,780)

 

 

(21,780)

 

 

(21,780)

 

Total shareholders' equity

 

1,188,721

 

 

1,117,086

 

 

1,051,491

 

 

1,007,847

 

 

964,636

 

Total liabilities & shareholders' equity

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

 

$

17,903,118

 

 

$

12,018,799

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 2021

 

December 31, 2020

 

March 31, 2020

 

 

Average
Balance

 

Average
Yield or
Cost (%)

 

Average
Balance

 

Average
Yield or
Cost (%)

 

Average
Balance

 

Average
Yield or
Cost (%)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning deposits

 

$

1,177,315

 

0.10%

 

$

413,381

 

0.12%

 

$

772,249

 

1.49%

Investment securities (1)

 

1,357,558

 

2.35%

 

1,120,491

 

2.42%

 

566,287

 

3.52%

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial loans to mortgage companies

 

3,122,098

 

3.09%

 

3,518,371

 

3.06%

 

1,841,659

 

3.82%

Multi-family loans

 

1,689,174

 

3.80%

 

1,871,956

 

3.70%

 

2,213,858

 

4.06%

Commercial and industrial loans and leases (2)

 

2,848,328

 

3.97%

 

2,801,172

 

3.96%

 

2,460,811

 

4.70%

Loans receivable, PPP

 

4,623,213

 

3.41%

 

4,782,606

 

2.45%

 

 

—%

Non-owner occupied commercial real estate loans

 

1,348,938

 

3.85%

 

1,358,541

 

3.80%

 

1,335,459

 

4.35%

Residential mortgages

 

373,497

 

3.78%

 

400,771

 

3.80%

 

445,953

 

3.97%

Installment loans

 

1,323,863

 

9.04%

 

1,253,679

 

8.50%

 

1,259,051

 

9.14%

Total loans and leases (3)

 

15,329,111

 

4.02%

 

15,987,096

 

3.62%

 

9,556,791

 

4.89%

Other interest-earning assets

 

79,960

 

3.64%

 

81,031

 

3.80%

 

81,404

 

7.04%

Total interest-earning assets

 

17,943,944

 

3.64%

 

17,601,999

 

3.46%

 

10,976,731

 

4.59%

Non-interest-earning assets

 

581,777

 

 

 

573,400

 

 

 

513,705

 

 

Assets of discontinued operations

 

 

 

 

75,320

 

 

 

82,970

 

 

Total assets

 

$

18,525,721

 

 

 

$

18,250,719

 

 

 

$

11,573,406

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking accounts

 

$

2,691,723

 

0.84%

 

$

2,240,959

 

0.86%

 

$

1,294,098

 

1.43%

Money market deposit accounts

 

4,435,930

 

0.55%

 

4,166,635

 

0.60%

 

3,635,554

 

1.79%

Other savings accounts

 

1,414,350

 

0.69%

 

1,205,592

 

0.74%

 

1,141,406

 

2.05%

Certificates of deposit

 

666,239

 

0.97%

 

833,689

 

1.30%

 

1,524,770

 

2.04%

Total interest-bearing deposits (4)

 

9,208,242

 

0.69%

 

8,446,875

 

0.76%

 

7,595,828

 

1.82%

FRB PPP liquidity facility

 

3,941,718

 

0.35%

 

4,684,756

 

0.35%

 

 

—%

Borrowings

 

1,171,826

 

3.23%

 

1,276,212

 

3.09%

 

1,229,399

 

3.16%

Total interest-bearing liabilities

 

14,321,786

 

0.80%

 

14,407,843

 

0.83%

 

8,825,227

 

2.01%

Non-interest-bearing deposits (4)

 

2,819,871

 

 

 

2,543,529

 

 

 

1,573,371

 

 

Total deposits and borrowings

 

17,141,657

 

0.67%

 

16,951,372

 

0.71%

 

10,398,598

 

1.70%

Other non-interest-bearing liabilities

 

247,798

 

 

 

162,723

 

 

 

96,874

 

 

Liabilities of discontinued operations

 

 

 

 

52,742

 

 

 

52,579

 

 

Total liabilities

 

17,389,455

 

 

 

17,166,837

 

 

 

10,548,051

 

 

Shareholders' equity

 

1,136,266

 

 

 

1,083,882

 

 

 

1,025,355

 

 

Total liabilities and shareholders' equity

 

$

18,525,721

 

 

 

$

18,250,719

 

 

 

$

11,573,406

 

 

Interest spread

 

 

 

2.97%

 

 

 

2.75%

 

 

 

2.89%

Net interest margin

 

 

 

3.00%

 

 

 

2.78%

 

 

 

2.98%

Net interest margin tax equivalent (5)

 

 

 

3.00%

 

 

 

2.78%

 

 

 

2.99%

Net interest margin tax equivalent excl. PPP ( 6)

 

 

 

2.99%

 

 

 

3.04%

 

 

 

2.99%

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 0.53%, 0.58% and 1.51% for the three months ended March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended March 31, 2021, December 31, 2020 and March 31, 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 March 31, 2021, December 31, 2020 and March 31, 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)

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

 

2021

 

2020

 

2020

 

2020

 

2020

Commercial:

 

 

 

 

 

 

 

 

 

 

Multi-family

 

$

1,659,529

 

 

$

1,761,301

 

 

$

1,950,300

 

 

$

2,023,571

 

 

$

2,069,077

 

Loans to mortgage companies

 

3,463,490

 

 

3,657,350

 

 

3,947,828

 

 

2,832,112

 

 

2,573,397

 

Commercial & industrial

 

2,164,784

 

 

2,304,206

 

 

2,186,480

 

 

2,060,494

 

 

2,017,567

 

Commercial real estate owner occupied

 

590,093

 

 

572,338

 

 

557,595

 

 

544,772

 

 

543,945

 

Loans receivable, PPP

 

5,178,089

 

 

4,561,365

 

 

4,964,105

 

 

4,760,427

 

 

 

Commercial real estate non-owner occupied

 

1,194,832

 

 

1,213,815

 

 

1,233,882

 

 

1,262,373

 

 

1,252,826

 

Construction

 

156,837

 

 

140,905

 

 

122,963

 

 

128,834

 

 

115,448

 

Total commercial loans and leases

 

14,407,654

 

 

14,211,280

 

 

14,963,153

 

 

13,612,583

 

 

8,572,260

 

Consumer:

 

 

 

 

 

 

 

 

 

 

Residential

 

295,654

 

 

323,322

 

 

343,775

 

 

352,941

 

 

364,760

 

Manufactured housing

 

59,977

 

 

62,243

 

 

64,638

 

 

66,865

 

 

69,240

 

Installment

 

1,405,021

 

 

1,235,406

 

 

1,233,713

 

 

1,257,813

 

 

1,315,171

 

Total consumer loans

 

1,760,652

 

 

1,620,971

 

 

1,642,126

 

 

1,677,619

 

 

1,749,171

 

Total loans and leases

 

$

16,168,306

 

 

$

15,832,251

 

 

$

16,605,279

 

 

$

15,290,202

 

 

$

10,321,431

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END DEPOSIT COMPOSITION - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

 

2021

 

2020

 

2020

 

2020

 

2020

 

 

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing

 

$

2,687,628

 

 

$

2,356,998

 

 

$

2,327,017

 

 

$

1,879,789

 

 

$

1,435,151

 

Demand, interest bearing

 

3,228,941

 

 

2,384,691

 

 

2,308,627

 

 

2,666,209

 

 

1,577,034

 

Total demand deposits

 

5,916,569

 

 

4,741,689

 

 

4,635,644

 

 

4,545,998

 

 

3,012,185

 

Savings

 

1,483,482

 

 

1,314,817

 

 

1,173,641

 

 

1,144,788

 

 

1,168,121

 

Money market

 

4,406,508

 

 

4,601,492

 

 

4,057,366

 

 

3,404,709

 

 

2,833,990

 

Time deposits

 

665,881

 

 

651,931

 

 

972,426

 

 

1,870,380

 

 

1,399,347

 

Total deposits

 

$

12,472,440

 

 

$

11,309,929

 

 

$

10,839,077

 

 

$

10,965,875

 

 

$

8,413,643

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY - UNAUDITED

(Dollars in thousands)

As of March 31, 2021

As of December 31, 2020

As of March 31, 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

$

1,640,278

 

$

20,530

 

$

8,026

 

1.25

%

39.09

%

$

1,761,301

 

$

21,728

 

$

12,620

 

1.23

%

58.08

%

$

1,621,633

 

$

4,020

 

$

8,750

 

0.25

%

217.66

%

Commercial & industrial(1)

2,220,652

 

7,544

 

7,503

 

0.34

%

99.46

%

2,289,441

 

8,453

 

12,239

 

0.37

%

144.79

%

2,072,952

 

9,993

 

18,806

 

0.48

%

188.19

%

Commercial real estate owner occupied

590,093

 

3,242

 

5,935

 

0.55

%

183.07

%

572,338

 

3,411

 

9,512

 

0.60

%

278.86

%

543,945

 

2,411

 

8,527

 

0.44

%

353.67

%

Commercial real estate non-owner occupied

1,194,832

 

2,356

 

11,621

 

0.20

%

493.25

%

1,196,564

 

2,356

 

19,452

 

0.20

%

825.64

%

1,252,826

 

21,479

 

18,530

 

1.71

%

86.27

%

Construction

156,837

 

 

4,103

 

%

%

140,905

 

 

5,871

 

%

%

115,448

 

 

1,934

 

%

%

Total commercial loans and leases receivable

5,802,692

 

33,672

 

37,188

 

0.58

%

110.44

%

5,960,549

 

35,948

 

59,694

 

0.60

%

166.06

%

5,606,804

 

37,903

 

56,547

 

0.68

%

149.19

%

Residential

293,805

 

9,353

 

3,209

 

3.18

%

34.31

%

317,170

 

9,911

 

3,977

 

3.12

%

40.13

%

362,047

 

6,054

 

4,180

 

1.67

%

69.05

%

Manufactured housing

59,977

 

2,871

 

4,799

 

4.79

%

167.15

%

62,243

 

2,969

 

5,189

 

4.77

%

174.77

%

69,240

 

2,558

 

4,987

 

3.69

%

194.96

%

Installment

1,380,015

 

2,185

 

83,540

 

0.16

%

3823.34

%

1,235,406

 

3,211

 

75,316

 

0.26

%

2345.56

%

1,315,171

 

2,519

 

83,569

 

0.19

%

3317.55

%

Total consumer loans receivable

1,733,797

 

14,409

 

91,548

 

0.83

%

635.35

%

1,614,819

 

16,091

 

84,482

 

1.00

%

525.03

%

1,746,458

 

11,131

 

92,736

 

0.64

%

833.13

%

Loans and leases receivable(1)

7,536,489

 

48,081

 

128,736

 

0.64

%

267.75

%

7,575,368

 

52,039

 

144,176

 

0.69

%

277.05

%

7,353,262

 

49,034

 

149,283

 

0.67

%

304.45

%

Loans receivable, PPP

5,178,089

 

 

 

%

%

4,561,365

 

 

 

%

%

 

 

 

%

%

Loans receivable, mortgage warehouse, at fair value

3,407,622

 

 

 

%

%

3,616,432

 

 

 

%

%

2,518,012

 

 

 

%

%

Total loans held for sale

46,106

 

643

 

 

1.39

%

%

79,086

 

18,469

 

 

23.35

%

%

450,157

 

1,325

 

 

0.29

%

%

Total portfolio

$

16,168,306

 

$

48,724

 

$

128,736

 

0.30

%

264.21

%

$

15,832,251

 

$

70,508

 

$

144,176

 

0.45

%

204.48

%

$

10,321,431

 

$

50,359

 

$

149,283

 

0.49

%

296.44

%

(1) Excluding loans receivable, PPP from total loans and leases receivable is a non-GAAP measure. Management believes the use of these non-GAAP measures provides additional clarity when assessing Customers' financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. Please refer to the reconciliation schedules that follow this table.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Q1

 

Q4

 

Q3

 

Q2

 

Q1

 

 

2021

 

2020

 

2020

 

2020

 

2020

Loan type

 

 

 

 

 

 

 

 

 

 

Multi-family

 

$

1,132

 

 

$

 

 

$

 

 

$

 

 

$

 

Commercial & industrial

 

375

 

 

155

 

 

(55

)

 

(4

)

 

43

 

Commercial real estate owner occupied

 

134

 

 

12

 

 

44

 

 

(2

)

 

(3

)

Commercial real estate non-owner occupied

 

(10

)

 

(35

)

 

8,923

 

 

2,801

 

 

12,797

 

Construction

 

(5

)

 

(6

)

 

(6

)

 

(113

)

 

(3

)

Residential

 

40

 

 

46

 

 

(17

)

 

(26

)

 

(29

)

Installment

 

10,855

 

 

8,300

 

 

8,410

 

 

7,669

 

 

5,906

 

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

 

$

12,521

 

 

$

8,472

 

 

$

17,299

 

 

$

10,325

 

 

$

18,711

 

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  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

(dollars in thousands except per share data)

 

USD

 

Per
share

 

USD

 

Per
share

 

USD

 

Per
share

 

USD

 

Per
share

 

USD

 

Per
share

GAAP net income to common shareholders

 

$

33,204

 

$

1.01

 

$

52,831

 

$

1.65

 

$

47,085

 

$

1.48

 

$

19,137

 

$

0.61

 

$

(515)

 

$

(0.02)

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

38,036

 

1.16

 

2,317

 

0.07

 

532

 

0.02

 

2,258

 

0.07

 

5,354

 

0.17

Merger and acquisition related expenses

 

320

 

0.01

 

508

 

0.02

 

530

 

0.02

 

 

 

 

Legal reserves

 

 

 

 

 

258

 

0.01

 

 

 

 

(Gains) losses on investment securities

 

(18,773)

 

(0.57)

 

(1,419)

 

(0.04)

 

(9,662)

 

(0.30)

 

(4,543)

 

(0.14)

 

(1,788)

 

(0.06)

Loss on cash flow hedge derivative terminations

 

18,716

 

0.57

 

 

 

 

 

 

 

 

Derivative credit valuation adjustment

 

(1,195)

 

(0.04)

 

(448)

 

(0.01)

 

(304)

 

(0.01)

 

4,527

 

0.14

 

2,036

 

0.06

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

(1,080)

 

(0.03)

 

 

Unrealized losses on loans held for sale

 

 

 

799

 

0.03

 

 

 

1,114

 

0.04

 

 

Core earnings

 

$

70,308

 

$

2.14

 

$

54,588

 

$

1.71

 

$

38,439

 

$

1.21

 

$

21,413

 

$

0.68

 

$

5,087

 

$

0.16

Core Return on Average Assets - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

GAAP net income

 

$

36,595

 

 

$

56,245

 

 

$

50,515

 

 

$

22,718

 

 

$

3,100

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

38,036

 

 

2,317

 

 

532

 

 

2,258

 

 

5,354

 

Merger and acquisition related expenses

 

320

 

 

508

 

 

530

 

 

 

 

 

Legal reserves

 

 

 

 

 

258

 

 

 

 

 

(Gains) losses on investment securities

 

(18,773)

 

 

(1,419)

 

 

(9,662)

 

 

(4,543)

 

 

(1,788)

 

Loss on cash flow hedge derivative terminations

 

18,716

 

 

 

 

 

 

 

 

 

Derivative credit valuation adjustment

 

(1,195)

 

 

(448)

 

 

(304)

 

 

4,527

 

 

2,036

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

(1,080)

 

 

 

Unrealized losses on loans held for sale

 

 

 

799

 

 

 

 

1,114

 

 

 

Core net income

 

$

73,699

 

 

$

58,002

 

 

$

41,869

 

 

$

24,994

 

 

$

8,702

 

Average total assets

 

$

18,525,721

 

 

$

18,250,719

 

 

$

17,865,574

 

 

$

14,675,584

 

 

$

11,573,406

 

Core return on average assets

 

1.61

%

 

1.26

%

 

0.93

%

 

0.68

%

 

0.30

%

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)

(Dollars in thousands, except per share data)

 
   

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

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

GAAP net income

 

$

36,595

 

 

$

56,245

 

 

$

50,515

 

 

$

22,718

 

 

$

3,100

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

17,560

 

 

23,447

 

 

12,016

 

 

7,980

 

 

3,274

 

Provision (benefit) for credit losses on loans and leases

 

(2,919)

 

 

(2,913)

 

 

12,955

 

 

20,946

 

 

31,786

 

Provision (benefit) for credit losses on unfunded commitments

 

(1,286)

 

 

(968)

 

 

(527)

 

 

(356)

 

 

751

 

Net loss from discontinued operations

 

38,036

 

 

2,317

 

 

532

 

 

2,258

 

 

5,354

 

Merger and acquisition related expenses

 

418

 

 

709

 

 

658

 

 

 

 

 

Legal reserves

 

 

 

 

 

320

 

 

 

 

 

(Gains) losses on investment securities

 

(24,540)

 

 

(1,431)

 

 

(11,945)

 

 

(5,553)

 

 

(2,596)

 

Loss on cash flow hedge derivative terminations

 

24,467

 

 

 

 

 

 

 

 

 

Derivative credit valuation adjustment

 

(1,562)

 

 

(625)

 

 

(378)

 

 

5,895

 

 

2,556

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

(1,407)

 

 

 

Unrealized losses on loans held for sale

 

 

 

1,115

 

 

 

 

1,450

 

 

 

Adjusted net income - pre-tax pre-provision

 

$

86,769

 

 

$

77,896

 

 

$

64,146

 

 

$

53,931

 

 

$

44,225

 

Average total assets

 

$

18,525,721

 

 

$

18,250,719

 

 

$

17,865,574

 

 

$

14,675,584

 

 

$

11,573,406

 

Adjusted ROAA - pre-tax pre-provision

 

1.90

%

 

1.70

%

 

1.43

%

 

1.48

%

 

1.54

%

Core Return on Average Common Equity - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

GAAP net income to common shareholders

 

$

33,204

 

 

$

52,831

 

 

$

47,085

 

 

$

19,137

 

 

$

(515)

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

38,036

 

 

2,317

 

 

532

 

 

2,258

 

 

5,354

 

Merger and acquisition related expenses

 

320

 

 

508

 

 

530

 

 

 

 

 

Legal reserves

 

 

 

 

 

258

 

 

 

 

 

(Gains) losses on investment securities

 

(18,773)

 

 

(1,419)

 

 

(9,662)

 

 

(4,543)

 

 

(1,788)

 

Loss on cash flow hedge derivative terminations

 

18,716

 

 

 

 

 

 

 

 

 

Derivative credit valuation adjustment

 

(1,195)

 

 

(448)

 

 

(304)

 

 

4,527

 

 

2,036

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

(1,080)

 

 

 

Unrealized losses on loans held for sale

 

 

 

799

 

 

 

 

1,114

 

 

 

Core earnings

 

$

70,308

 

 

$

54,588

 

 

$

38,439

 

 

$

21,413

 

 

$

5,087

 

Average total common shareholders' equity

 

$

918,795

 

 

$

866,411

 

 

$

812,577

 

 

$

771,663

 

 

$

807,884

 

Core return on average common equity

 

31.03

%

 

25.06

%

 

18.82

%

 

11.16

%

 

2.53

%

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)

(Dollars in thousands, except per share data)

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

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

GAAP net income to common shareholders

 

$

33,204

 

 

$

52,831

 

 

$

47,085

 

 

$

19,137

 

 

$

(515)

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

17,560

 

 

23,447

 

 

12,016

 

 

7,980

 

 

3,274

 

Provision (benefit) for credit losses on loan and leases

 

(2,919)

 

 

(2,913)

 

 

12,955

 

 

20,946

 

 

31,786

 

Provision (benefit) for credit losses on unfunded commitments

 

(1,286)

 

 

(968)

 

 

(527)

 

 

(356)

 

 

751

 

Net loss from discontinued operations

 

38,036

 

 

2,317

 

 

532

 

 

2,258

 

 

5,354

 

Merger and acquisition related expenses

 

418

 

 

709

 

 

658

 

 

 

 

 

Legal reserves

 

 

 

 

 

320

 

 

 

 

 

(Gains) losses on investment securities

 

(24,540)

 

 

(1,431)

 

 

(11,945)

 

 

(5,553)

 

 

(2,596)

 

Loss on cash flow hedge derivative terminations

 

24,467

 

 

 

 

 

 

 

 

 

Derivative credit valuation adjustment

 

(1,562)

 

 

(625)

 

 

(378)

 

 

5,895

 

 

2,556

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

(1,407)

 

 

 

Unrealized losses on loans held for sale

 

 

 

1,115

 

 

 

 

1,450

 

 

 

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

 

$

83,378

 

 

$

74,482

 

 

$

60,716

 

 

$

50,350

 

 

$

40,610

 

Average total common shareholders' equity

 

$

918,795

 

 

$

866,411

 

 

$

812,577

 

 

$

771,663

 

 

$

807,884

 

Adjusted ROCE - pre-tax pre-provision

 

36.80

%

 

34.20

%

 

29.73

%

 

26.24

%

 

20.22

%

Net Interest Margin, Tax Equivalent - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

GAAP net interest income

 

$

132,731

 

 

$

122,946

 

 

$

107,439

 

 

$

91,982

 

 

$

81,321

 

Tax-equivalent adjustment

 

292

 

 

219

 

 

225

 

 

225

 

 

205

 

Net interest income tax equivalent

 

$

133,023

 

 

$

123,165

 

 

$

107,664

 

 

$

92,207

 

 

$

81,526

 

Average total interest earning assets

 

$

17,943,944

 

 

$

17,601,999

 

 

$

17,121,145

 

 

$

13,980,021

 

 

$

10,976,731

 

Net interest margin, tax equivalent

 

3.00

%

 

2.78

%

 

2.50

%

 

2.65

%

 

2.99

%

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

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

GAAP net interest income

 

$

132,731

 

 

$

122,946

 

 

$

107,439

 

 

$

91,982

 

 

$

81,321

 

PPP net interest income

 

(34,842)

 

 

(25,257)

 

 

(20,018)

 

 

(9,308)

 

 

 

Tax-equivalent adjustment

 

292

 

 

219

 

 

225

 

 

225

 

 

205

 

Net interest income, tax equivalent, excluding PPP

 

$

98,181

 

 

$

97,908

 

 

$

87,646

 

 

$

82,899

 

 

$

81,526

 

GAAP average total interest earning assets

 

$

17,943,944

 

 

$

17,601,999

 

 

$

17,121,145

 

 

$

13,980,021

 

 

$

10,976,731

 

Average PPP loans

 

(4,623,213)

 

 

(4,782,606)

 

 

(4,909,197)

 

 

(2,754,920)

 

 

 

Adjusted average total interest earning assets

 

$

13,320,731

 

 

$

12,819,393

 

 

$

12,211,948

 

 

$

11,225,101

 

 

$

10,976,731

 

Net interest margin, tax equivalent, excluding PPP

 

2.99

%

 

3.04

%

 

2.86

%

 

2.97

%

 

2.99

%

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)

(Dollars in thousands, except per share data)

Core Efficiency Ratio - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

GAAP net interest income

 

$

132,731

 

 

$

122,946

 

 

$

107,439

 

 

$

91,982

 

 

$

81,321

 

 

 

 

 

 

 

 

 

 

 

 

GAAP non-interest income

 

$

18,468

 

 

$

16,083

 

 

$

24,864

 

 

$

11,711

 

 

$

11,160

 

(Gains) losses on investment securities

 

(24,540)

 

 

(1,431)

 

 

(11,945)

 

 

(5,553)

 

 

(2,596)

 

Derivative credit valuation adjustment

 

(1,562)

 

 

(625)

 

 

(378)

 

 

5,895

 

 

2,556

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

(1,407)

 

 

 

Unrealized losses on loans held for sale

 

 

 

1,115

 

 

 

 

1,450

 

 

 

Loss on cash flow hedge derivative terminations

 

24,467

 

 

 

 

 

 

 

 

 

Core non-interest income

 

16,833

 

 

15,142

 

 

12,541

 

 

12,096

 

 

11,120

 

Core revenue

 

$

149,564

 

 

$

138,088

 

 

$

119,980

 

 

$

104,078

 

 

$

92,441

 

 

GAAP non-interest expense

 

$

61,927

 

 

$

59,933

 

 

$

56,285

 

 

$

49,791

 

 

$

48,967

 

Legal reserves

 

 

 

 

 

(320)

 

 

 

 

 

Merger and acquisition related expenses

 

(418)

 

 

(709)

 

 

(658)

 

 

 

 

 

Core non-interest expense

 

$

61,509

 

 

$

59,224

 

 

$

55,307

 

 

$

49,791

 

 

$

48,967

 

Core efficiency ratio (1)

 

41.13

%

 

42.89

%

 

46.10

%

 

47.84

%

 

52.97

%

 

 

 

 

 

 

 

 

 

 

 

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

Tangible Common Equity to Tangible Assets - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

GAAP total shareholders' equity

 

$

1,188,721

 

 

$

1,117,086

 

 

$

1,051,491

 

 

$

1,007,847

 

 

$

964,636

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

Goodwill and other intangibles (1)

 

(3,911)

 

 

(14,298)

 

 

(14,437)

 

 

(14,575)

 

 

(14,870)

 

Tangible common equity

 

$

967,339

 

 

$

885,317

 

 

$

819,583

 

 

$

775,801

 

 

$

732,295

 

GAAP total assets

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

 

$

17,903,118

 

 

$

12,018,799

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

Goodwill and other intangibles (1)

 

(3,911)

 

 

(14,298)

 

 

(14,437)

 

 

(14,575)

 

 

(14,870)

 

Tangible assets

 

$

18,813,749

 

 

$

18,424,950

 

 

$

18,764,290

 

 

$

17,888,543

 

 

$

12,003,929

 

Tangible common equity to tangible assets

 

5.14

%

 

4.80

%

 

4.37

%

 

4.34

%

 

6.10

%

 

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

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)

(Dollars in thousands, except per share data)

Tangible Book Value per Common Share - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except share and per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

GAAP total shareholders' equity

 

$

1,188,721

 

 

$

1,117,086

 

 

$

1,051,491

 

 

$

1,007,847

 

 

$

964,636

 

Reconciling Items:

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

Goodwill and other intangibles (1)

 

(3,911)

 

 

(14,298)

 

 

(14,437)

 

 

(14,575)

 

 

(14,870)

 

Tangible common equity

 

$

967,339

 

 

$

885,317

 

 

$

819,583

 

 

$

775,801

 

 

$

732,295

 

Common shares outstanding

 

32,238,762

 

 

31,705,088

 

 

31,555,124

 

 

31,510,287

 

 

31,470,026

 

Tangible book value per common share

 

$

30.01

 

 

$

27.92

 

 

$

25.97

 

 

$

24.62

 

 

$

23.27

 

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

Total Loans and Leases, excluding PPP

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

Total loans and leases

 

$

16,168,306

 

 

$

15,832,251

 

 

$

16,605,279

 

 

$

15,290,202

 

 

$

10,321,431

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, PPP

 

(5,178,089)

 

 

(4,561,365)

 

 

(4,964,105)

 

 

(4,760,427)

 

 

 

Loans and leases, excluding PPP

 

$

10,990,217

 

 

$

11,270,886

 

 

$

11,641,174

 

 

$

10,529,775

 

 

$

10,321,431

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets, excluding PPP

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

Total assets

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

 

$

17,903,118

 

 

$

12,018,799

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, PPP

 

(5,178,089)

 

 

(4,561,365)

 

 

(4,964,105)

 

 

(4,760,427)

 

 

 

Total assets, excluding PPP

 

$

13,639,571

 

 

$

13,877,883

 

 

$

13,814,622

 

 

$

13,142,691

 

 

$

12,018,799

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

Loans and leases receivable

 

$

12,714,578

 

 

$

12,136,733

 

 

$

12,664,997

 

 

$

12,032,874

 

 

$

7,353,262

 

Loans receivable, PPP

 

(5,178,089)

 

 

(4,561,365)

 

 

(4,964,105)

 

 

(4,760,427)

 

 

 

Loans and leases held for investment, excluding PPP

 

$

7,536,489

 

 

$

7,575,368

 

 

$

7,700,892

 

 

$

7,272,447

 

 

$

7,353,262

 

Allowance for credit losses on loans and leases

 

$

128,736

 

 

$

144,176

 

 

$

155,561

 

 

$

159,905

 

 

$

149,283

 

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

 

1.71

%

 

1.90

%

 

2.02

%

 

2.20

%

 

2.03

%

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, excluding PPP - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

GAAP total shareholders' equity

 

$

1,188,721

 

 

$

1,117,086

 

 

$

1,051,491

 

 

$

1,007,847

 

 

$

964,636

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

Goodwill and other intangibles (1)

 

(3,911)

 

 

(14,298)

 

 

(14,437)

 

 

(14,575)

 

 

(14,870)

 

Tangible common equity

 

$

967,339

 

 

$

885,317

 

 

$

819,583

 

 

$

775,801

 

 

$

732,295

 

GAAP total assets

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

 

$

17,903,118

 

 

$

12,018,799

 

Loans receivable, PPP

 

(5,178,089)

 

 

(4,561,365)

 

 

(4,964,105)

 

 

(4,760,427)

 

 

 

Total assets, excluding PPP

 

$

13,639,571

 

 

$

13,877,883

 

 

$

13,814,622

 

 

$

13,142,691

 

 

$

12,018,799

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

Goodwill and other intangibles (1)

 

(3,911)

 

 

(14,298)

 

 

(14,437)

 

 

(14,575)

 

 

(14,870)

 

Tangible assets

 

$

13,635,660

 

 

$

13,863,585

 

 

$

13,800,185

 

 

$

13,128,116

 

 

$

12,003,929

 

Tangible common equity to tangible assets

 

7.09

%

 

6.39

%

 

5.94

%

 

5.91

%

 

6.10

%

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

Deferments to total loans and leases, excluding PPP

 

 

 

 

(dollars in thousands except per share data)

 

Q1 2021

 

Q4 2020

Total loans and leases

 

$

16,168,306

 

 

$

15,832,251

 

Loans receivable, PPP

 

(5,178,089)

 

 

(4,561,365)

 

Total loans and leases, excluding PPP

 

$

10,990,217

 

 

$

11,270,886

 

Commercial deferments

 

$

176,100

 

 

$

202,100

 

Consumer deferments

 

13,000

 

 

16,400

 

Total deferments

 

$

189,100

 

 

$

218,500

 

Commercial deferments to total loans and leases, excluding PPP

 

1.6

%

 

1.8

%

Consumer deferments to total loans and leases, excluding PPP

 

0.1

 

 

0.1

 

Total deferments to total loans and leases, excluding PPP

 

1.7

%

 

1.9

%

 

Jay Sidhu, Chairman & CEO 610-935-8693
Richard Ehst, President & COO 610-917-3263
Carla Leibold, CFO 484-923-8802

Sam Sidhu, Head of Corporate Development 212-843-2485

Source: Customers Bancorp, Inc.