Search
Generic filters
Contact Us

Customers Bancorp Reports Results for Third Quarter 2022


Customers Bancorp, Inc.(NYSE:CUBI)

Third Quarter 2022 Results

 

 

 

 

 

 

 

Earnings

 

Earnings Per Share

 

Return on Assets

 

Return on Common Equity

 

 

 

 

 

 

 

$61.4 million

 

$1.85

 

1.24%

 

19.33%

Net Income

 

Diluted Earnings Per Share

 

ROAA

 

ROCE

 

 

 

 

 

 

 

$82.3 million

 

$2.48

 

1.64%

 

25.91%

Core Earnings*

 

Core Earnings Per Diluted Share*

 

Core ROAA*

 

Core ROCE*

 

 

 

 

 

 

 

$76.4 million

 

$2.30

 

1.95%

 

31.01%

Core Earnings, excluding PPP*

 

Core Earnings Per Diluted Share, excluding PPP*

 

Pre-tax and Pre-provision Adjusted ROAA*

 

Pre-tax and Pre-provision Adjusted ROCE*

Third Quarter 2022 Highlights

  • Q3 2022 net income available to common shareholders was $61.4 million, or $1.85 per diluted share; ROAA was 1.24% and ROCE was 19.33%.
  • Q3 2022 core earnings* were $82.3 million, or $2.48 per diluted share; Core ROAA* was 1.64% and Core ROCE* was 25.91%.
  • Q3 2022 core earnings excluding Paycheck Protection Program* ("PPP") were $76.4 million, or $2.30 per diluted share, up 134.9% over Q3 2021, and bringing year-to-date core earnings (excluding PPP)* to $5.15.
  • Q3 2022 adjusted pre-tax pre-provision net income* was $101.0 million; ROAA* was 1.95%, ROCE* was 31.01%.
  • Year-over-year loan growth (excluding loans to mortgage companies and PPP*) was $4.5 billion, or 57.3%, led by our low-risk variable rate specialty lending verticals.
  • Year-over-year deposit growth was $551.4 million, up 3.2%. Total demand deposits increased $141.0 million, or 1.4% year-over-year. Time deposits increased $1.3 billion, or 220.0%. CBIT-related deposits had a balance of $1.9 billion at September 30, 2022, down $191.7 million from June 30, 2022.
  • Q3 2022 net interest margin, tax equivalent* was 3.16%. Q3 2022 net interest margin, tax equivalent, excluding the impact of PPP loans* was 3.18%.
  • Onboarded 111 new CBIT customers in Q3 2022, bringing total customers to 301.
  • Total operating expenses were flat in Q3 2022 compared to Q2 2022 and down $3.8 million over Q3 2021.
  • Q3 2022 benefit to provision for credit losses on loans and leases of $7.8 million was largely driven by the sale of $500.0 million of consumer installment loans, offset in part by the impact of loan growth and our recognition of weaker macroeconomic forecasts.
  • Non-performing assets were $28.0 million, or 0.14% of total assets, at September 30, 2022 compared to $28.2 million, or 0.14% of total assets, at June 30, 2022 and $52.4 million, or 0.27% of total assets, at September 30, 2021. Allowance for credit losses on loans and leases equaled 466% of non-performing loans at September 30, 2022, compared to 558% at June 30, 2022 and 253% at September 30, 2021.
  • Extended one-year common stock repurchase program an additional year, resulting in approximately 2.0 million shares available to be repurchased through September 2023.
  • Tangible book value per share* grew year over year by $3.23, or 9.2%, despite increased AOCI losses of $157.6 million over the same time period. Tangible book value per share* has grown by 74.5% over the past 5 years.

 

 

 

 

 

* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.

CEO Commentary

West Reading, PA, October 26, 2022 - “We delivered another solid quarter and are extremely pleased with our third quarter results despite the challenging interest rate and economic environment,” remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “We remain laser focused on our responsible organic growth strategy and have taken prudent risk management strategic actions over the past several quarters to ensure we are well positioned from a capital, credit, liquidity and earnings perspective. We are also pleased to report that we have already beat our 2022 core earnings per share, excluding PPP* target of $4.75 - $5.00. Core earnings per share, excluding PPP* for third quarter 2022 were $2.30, bringing year-to-date September 2022 core earnings per share, excluding PPP* to $5.15. In addition, core ROAA* was 1.64% and core ROCE* was 25.91% for the third quarter. Q3 2022 net interest income generated by the core bank was up 2% (~10% annualized) over Q2 2022 and 38% year-over-year. Core loan growth was led by increases in low-risk variable rate specialty lending verticals of $0.5 billion, which were largely offset by a decline in loans to mortgage companies of $0.3 billion and a sale of $0.5 billion of consumer installment loans executed as part of our balance sheet optimization initiatives. Asset quality remains exceptional and credit reserves are robust. Our loan and deposit pipelines remain strong and we are very focused on maintaining our margins, moderating our growth, improving our capital ratios, and controlling our expenses. We remain very optimistic about our future,” Mr. Jay Sidhu continued.

Financial Highlights

(Dollars in thousands, except per share data)

 

At or Three Months Ended

 

Increase
(Decrease)

 

Nine Months Ended

 

Increase
(Decrease)

 

September 30,
2022

 

September 30,
2021

 

 

September 30,
2022

 

September 30,
2021

 

Profitability Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available for common shareholders

 

$

61,364

 

 

$

110,241

 

 

$

(48,877

)

 

(44.3

)%

 

$

192,779

 

 

$

201,487

 

 

$

(8,708

)

 

(4.3

)%

Diluted earnings per share

 

$

1.85

 

 

$

3.25

 

 

$

(1.40

)

 

(43.1

)%

 

$

5.72

 

 

$

6.02

 

 

$

(0.30

)

 

(5.0

)%

Core earnings*

 

$

82,270

 

 

$

113,876

 

 

$

(31,606

)

 

(27.8

)%

 

$

217,047

 

 

$

243,487

 

 

$

(26,440

)

 

(10.9

)%

Core earnings per share*

 

$

2.48

 

 

$

3.36

 

 

$

(0.88

)

 

(26.2

)%

 

$

6.44

 

 

$

7.27

 

 

$

(0.83

)

 

(11.4

)%

Core earnings, excluding PPP*

 

$

76,424

 

 

$

32,539

 

 

$

43,885

 

 

134.9

%

 

$

173,422

 

 

$

112,759

 

 

$

60,663

 

 

53.8

%

Core earnings per share, excluding PPP*

 

$

2.30

 

 

$

0.96

 

 

$

1.34

 

 

139.6

%

 

$

5.15

 

 

$

3.37

 

 

$

1.78

 

 

52.8

%

Return on average assets ("ROAA")

 

 

1.24

%

 

 

2.33

%

 

 

(1.09

)

 

 

 

 

1.34

%

 

 

1.49

%

 

 

(0.15

)

 

 

Core ROAA*

 

 

1.64

%

 

 

2.35

%

 

 

(0.71

)

 

 

 

 

1.50

%

 

 

1.76

%

 

 

(0.26

)

 

 

Return on average common equity ("ROCE")

 

 

19.33

%

 

 

40.82

%

 

 

(21.49

)

 

 

 

 

20.58

%

 

 

26.99

%

 

 

(6.41

)

 

 

Core ROCE*

 

 

25.91

%

 

 

42.16

%

 

 

(16.25

)

 

 

 

 

23.17

%

 

 

32.61

%

 

 

(9.44

)

 

 

Adjusted pre-tax pre-provision net income*

 

$

100,994

 

 

$

167,215

 

 

$

(66,221

)

 

(39.6

)%

 

$

319,335

 

 

$

340,451

 

 

$

(21,116

)

 

(6.2

)%

Net interest margin, tax equivalent*

 

 

3.16

%

 

 

4.59

%

 

 

(1.43

)

 

 

 

 

3.38

%

 

 

3.55

%

 

 

(0.17

)

 

 

Net interest margin, tax equivalent, excluding PPP loans*

 

 

3.18

%

 

 

3.24

%

 

 

(0.06

)

 

 

 

 

3.27

%

 

 

3.17

%

 

 

0.10

 

 

 

Loan yield, excluding PPP*

 

 

5.15

%

 

 

4.42

%

 

 

0.73

 

 

 

 

 

4.75

%

 

 

4.36

%

 

 

0.39

 

 

 

Cost of deposits

 

 

1.48

%

 

 

0.42

%

 

 

1.06

 

 

 

 

 

0.80

%

 

 

0.47

%

 

 

0.33

 

 

 

Efficiency ratio

 

 

50.00

%

 

 

33.42

%

 

 

16.58

 

 

 

 

 

43.46

%

 

 

41.07

%

 

 

2.39

 

 

 

Core efficiency ratio*

 

 

42.57

%

 

 

30.36

%

 

 

12.21

 

 

 

 

 

41.23

%

 

 

37.31

%

 

 

3.92

 

 

 

Balance Sheet Trends:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

20,367,621

 

 

$

19,108,922

 

 

$

1,258,699

 

 

6.6

%

 

 

 

 

 

 

 

 

Total assets, excluding PPP*

 

$

19,212,989

 

 

$

14,151,565

 

 

$

5,061,424

 

 

35.8

%

 

 

 

 

 

 

 

 

Total loans and leases

 

$

15,336,688

 

 

$

15,515,537

 

 

$

(178,849

)

 

(1.2

)%

 

 

 

 

 

 

 

 

Total loans and leases, excluding PPP*

 

$

14,182,056

 

 

$

10,558,180

 

 

$

3,623,876

 

 

34.3

%

 

 

 

 

 

 

 

 

Non-interest bearing demand deposits

 

$

2,993,793

 

 

$

4,954,331

 

 

$

(1,960,538

)

 

(39.6

)%

 

 

 

 

 

 

 

 

Total deposits

 

$

17,522,438

 

 

$

16,971,025

 

 

$

551,413

 

 

3.2

%

 

 

 

 

 

 

 

 

Capital Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity

 

$

1,249,137

 

 

$

1,146,505

 

 

$

102,632

 

 

9.0

%

 

 

 

 

 

 

 

 

Tangible Common Equity*

 

$

1,245,508

 

 

$

1,142,711

 

 

$

102,797

 

 

9.0

%

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets*

 

 

6.12

%

 

 

5.98

%

 

 

0.14

 

 

 

 

 

 

 

 

 

 

 

Tangible Common Equity to Tangible Assets, excluding PPP*

 

 

6.48

%

 

 

8.08

%

 

 

(1.60

)

 

 

 

 

 

 

 

 

 

 

Tangible Book Value per common share*

 

$

38.35

 

 

$

35.12

 

 

$

3.23

 

 

9.2

%

 

 

 

 

 

 

 

 

Common equity Tier 1 capital ratio (1)

 

 

10.1

%

 

 

10.4

%

 

 

(0.3

)

 

 

 

 

 

 

 

 

 

 

Total risk based capital ratio (1)

 

 

12.8

%

 

 

13.6

%

 

 

(0.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Regulatory capital ratios as of September 30, 2022 are estimates.

* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.

Customers Bank Instant Token (CBIT)

"Despite significant market volatility that continues in the digital asset space, we are very pleased with our progress to date. In Q3 2022, we onboarded 111 new CBIT-related customers to the Digital Bank, once again beating our internal target, and bringing total customers to 301. Our digital asset-related deposits have stabilized and ended the third quarter at $1.9 billion. We continue to expect digital asset-related deposits to grow in fourth quarter 2022 as our pipelines remain strong, giving us an opportunity to further transform our deposits into a high quality, low-cost, stable and growing deposit franchise. We believe our technology, compliance and customer service and support systems remain among the best in the country," commented Mr. Sam Sidhu, President and CEO of Customers Bank.

Paycheck Protection Program (PPP)

We funded, either directly or indirectly, about 256,000 PPP loans totaling $5.2 billion in 2021, bringing total PPP loans funded to approximately 358,000 and $10.3 billion. We also earned close to $350 million of deferred origination fees from the SBA through the PPP loans, which is significantly accretive to our earnings and capital levels as these loans are forgiven by the government. In Q3 2022, we recognized $11 million of these fees in earnings, bringing total fees recognized to date to $318 million, resulting in approximately $30 million remaining to be recognized throughout 2022 and early 2023. "As we've stated previously, it is difficult to predict the timing of PPP forgiveness. We expect most of the fees to be recognized over the next two quarters," commented Customers Bancorp CFO, Carla Leibold.

Key Balance Sheet Trends

Loans and Leases

The following table presents the composition of total loans and leases as of the dates indicated:

(Dollars in thousands)

September 30,
2022

 

% of Total

 

June 30,
2022

 

% of Total

 

September 30,
2021

 

% of Total

Commercial:

 

 

 

 

 

 

 

 

 

 

 

Specialty lending

$

5,103,974

 

33.3

%

 

$

4,599,640

 

29.4

%

 

$

1,736,966

 

11.2

%

Other commercial & industrial

 

1,064,332

 

7.0

 

 

 

1,037,443

 

6.6

 

 

 

867,401

 

5.6

 

Multi-family

 

2,267,376

 

14.8

 

 

 

2,012,920

 

12.9

 

 

 

1,387,166

 

8.9

 

Loans to mortgage companies

 

1,708,587

 

11.1

 

 

 

1,975,189

 

12.6

 

 

 

2,626,483

 

16.9

 

Commercial real estate owner occupied

 

726,670

 

4.7

 

 

 

710,577

 

4.5

 

 

 

656,044

 

4.2

 

Loans receivable, PPP

 

1,154,632

 

7.5

 

 

 

1,570,160

 

10.0

 

 

 

4,957,357

 

32.0

 

Commercial real estate non-owner occupied

 

1,263,211

 

8.2

 

 

 

1,152,869

 

7.4

 

 

 

1,144,643

 

7.4

 

Construction

 

136,133

 

0.9

 

 

 

195,687

 

1.2

 

 

 

198,607

 

1.3

 

Total commercial loans and leases

 

13,424,915

 

87.5

 

 

 

13,254,485

 

84.6

 

 

 

13,574,667

 

87.5

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

Residential

 

466,888

 

3.0

 

 

 

460,228

 

2.9

 

 

 

260,820

 

1.7

 

Manufactured housing

 

46,990

 

0.3

 

 

 

48,570

 

0.3

 

 

 

55,635

 

0.3

 

Personal

 

1,079,267

 

7.0

 

 

 

1,641,748

 

10.5

 

 

 

1,342,650

 

8.7

 

Other

 

318,628

 

2.2

 

 

 

259,322

 

1.7

 

 

 

281,765

 

1.8

 

Total consumer loans

 

1,911,773

 

12.5

 

 

 

2,409,868

 

15.4

 

 

 

1,940,870

 

12.5

 

Total loans and leases

$

15,336,688

 

100.0

%

 

$

15,664,353

 

100.0

%

 

$

15,515,537

 

100.0

%

C&I loans and leases, including specialty lending, increased $3.6 billion, or 136.8% year-over-year, to $6.2 billion. Practically all of the increases in outstanding balances were in the low-risk variable rate secured categories of Fund Finance and Lender Finance. Multi-family loans increased $880.2 million, or 63.5%, to $2.3 billion, residential loans increased $206.1 million, or 79.0%, to $466.9 million, commercial real estate non-owner occupied loans increased $118.6 million, or 10.4% year-over-year to $1.3 billion and commercial real estate owner occupied loans increased $70.6 million, or 10.8%, to $726.7 million. These increases in loans and leases were partially offset by a decrease in total consumer installment loans of $226.5 million, or 13.9%, to $1.4 billion primarily due to the sale of a $500.0 million of consumer installment loans and a decrease in construction loans of $62.5 million, or 31.5%, to $136.1 million.

Allowance for Credit Losses on Loans and Leases

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

 

At or Three Months Ended

 

Increase
(Decrease)

 

At or Three Months Ended

 

Increase
(Decrease)

(Dollars in thousands)

September 30,
2022

 

June 30,
2022

 

 

September 30,
2022

 

September 30,
2021

 

Allowance for credit losses on loans and leases

$

130,197

 

 

$

156,530

 

 

$

(26,333

)

 

$

130,197

 

 

$

131,496

 

 

$

(1,299

)

Provision (benefit) for credit losses on loans and leases

 

(7,836

)

 

 

24,164

 

 

 

(32,000

)

 

 

(7,836

)

 

 

13,164

 

 

 

(21,000

)

Net charge-offs (recoveries)

 

18,498

 

 

 

13,481

 

 

 

5,017

 

 

 

18,498

 

 

 

7,104

 

 

 

11,394

 

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

 

0.47

%

 

 

0.36

%

 

 

 

 

0.47

%

 

 

0.17

%

 

 

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

 

0.95

%

 

 

1.14

%

 

 

 

 

0.95

%

 

 

1.02

%

 

 

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

 

1.03

%

 

 

1.28

%

 

 

 

 

1.03

%

 

 

1.65

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.

The increase in net charge-offs in Q3 2022 compared to Q2 2022 was primarily due to a partial charge-off of $7.0 million for one performing commercial real estate collateral dependent loan that we felt prudent in exiting at this time. Our consumer net charge-offs were flat in Q3 2022 compared to Q2 2022.

Provision (Benefit) for Credit Losses

 

 

Three Months Ended

 

Increase
(Decrease)

(Dollars in thousands)

 

September 30,
2022

 

June 30,
2022

 

Provision (benefit) for credit losses on loans and leases

 

$

(7,836

)

 

$

24,164

 

 

$

(32,000

)

Provision (benefit) for credit losses on unfunded commitments

 

 

254

 

 

 

608

 

 

 

(354

)

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

 

 

(158

)

 

 

(317

)

 

 

159

 

Total provision (benefit) for credit losses

 

$

(7,740

)

 

$

24,455

 

 

$

(32,195

)

The benefit to provision for credit losses on loans and leases in Q3 2022 was $7.8 million, compared to provision expense of $24.2 million in Q2 2022. The benefit to provision in Q3 2022 was primarily due to the sale of $500.0 million of unsecured consumer installment loans in connection with the Company's balance sheet optimization initiatives, partially offset by loan growth and our recognition of weaker macroeconomic forecasts. This sale transaction resulted in approximately $36.8 million of release in allowance for credit losses, which is included in core earnings*. The benefit to provision for credit losses on available for sale investment securities in Q3 2022 was $0.2 million compared to $0.3 million in Q2 2022.

Asset Quality

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

(Dollars in thousands)

September 30,
2022

 

June 30,
2022

 

Increase
(Decrease)

 

September 30,
2022

 

September 30,
2021

 

Increase
(Decrease)

Non-performing assets ("NPAs"):

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual / non-performing loans ("NPLs")

$

27,919

 

 

$

28,064

 

 

$

(145

)

 

$

27,919

 

 

$

52,041

 

 

$

(24,122

)

Non-performing assets

 

27,965

 

 

 

28,150

 

 

 

(185

)

 

 

27,965

 

 

 

52,377

 

 

 

(24,412

)

NPLs to total loans and leases (1)

 

0.18

%

 

 

0.18

%

 

 

 

 

0.18

%

 

 

0.34

%

 

 

Reserves to NPLs (1)

 

466.34

%

 

 

557.76

%

 

 

 

 

466.34

%

 

 

252.68

%

 

 

NPAs to total assets

 

0.14

%

 

 

0.14

%

 

 

 

 

0.14

%

 

 

0.27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases risk ratings:

 

 

 

 

 

 

 

 

 

 

 

Commercial loans and leases (1)

 

 

 

 

 

 

 

 

 

 

 

Pass

$

10,262,647

 

 

$

9,355,846

 

 

$

906,801

 

 

$

10,262,647

 

 

$

5,586,462

 

 

$

4,676,185

 

Special Mention

 

104,560

 

 

 

106,566

 

 

 

(2,006

)

 

 

104,560

 

 

 

195,663

 

 

 

(91,103

)

Substandard

 

329,878

 

 

 

343,175

 

 

 

(13,297

)

 

 

329,878

 

 

 

260,271

 

 

 

69,607

 

Total commercial loans and leases

 

10,697,085

 

 

 

9,805,587

 

 

 

891,498

 

 

 

10,697,085

 

 

 

6,042,396

 

 

 

4,654,689

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

 

Performing

 

1,893,977

 

 

 

2,392,852

 

 

 

(498,875

)

 

 

1,893,977

 

 

 

1,912,393

 

 

 

(18,416

)

Non-performing

 

16,680

 

 

 

14,556

 

 

 

2,124

 

 

 

16,680

 

 

 

15,810

 

 

 

870

 

Total consumer loans

 

1,910,657

 

 

 

2,407,408

 

 

 

(496,751

)

 

 

1,910,657

 

 

 

1,928,203

 

 

 

(17,546

)

Loans and leases receivable

$

12,607,742

 

 

$

12,212,995

 

 

$

394,747

 

 

$

12,607,742

 

 

$

7,970,599

 

 

$

4,637,143

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Excludes loan receivable, PPP, as PPP loans are fully guaranteed by the Small Business Administration.

Over the last decade, we have developed a suite of commercial loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s C&I, loans to mortgage companies, corporate and specialty lending 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 incredibly healthy despite a highly adverse economic environment. Maintaining strong asset quality also requires a highly active portfolio monitoring process. In addition to frequent client outreach and monitoring at the individual loan level, we employ a bottom-up data driven approach to analyze the commercial portfolio. Exposure to industry segments and CRE significantly impacted by COVID-19 initially is not substantial.

Total consumer installment loans were approximately 6.9% of total assets at September 30, 2022 and 9.9% of core loans* were supported by an allowance for credit losses of $71.7 million. At September 30, 2022, our consumer installment portfolio had the following characteristics: average original FICO score of 736, average debt-to-income of 17.9% and average borrower income of $106 thousand.

Non-performing loans at September 30, 2022 were essentially flat at 0.18% of total loans and leases, compared to 0.18% at June 30, 2022 and 0.34% at September 30, 2021.

Deposits

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

(Dollars in thousands)

September 30,
2022

 

% of Total

 

June 30,
2022

 

% of Total

 

September 30,
2021

 

% of Total

Demand, non-interest bearing

$

2,993,793

 

17.1

%

 

$

4,683,030

 

27.6

%

 

$

4,954,331

 

29.2

%

Demand, interest bearing

 

7,124,663

 

40.7

 

 

 

6,644,398

 

39.2

 

 

 

5,023,081

 

29.6

 

Total demand deposits

 

10,118,456

 

57.8

 

 

 

11,327,428

 

66.8

 

 

 

9,977,412

 

58.8

 

Savings

 

592,002

 

3.4

 

 

 

640,062

 

3.8

 

 

 

1,310,343

 

7.7

 

Money market

 

4,913,967

 

28.0

 

 

 

4,254,205

 

25.1

 

 

 

5,090,121

 

30.0

 

Time deposits

 

1,898,013

 

10.8

 

 

 

723,024

 

4.3

 

 

 

593,149

 

3.5

 

Total deposits

$

17,522,438

 

100.0

%

 

$

16,944,719

 

100.0

%

$

16,971,025

 

100.0

%

Total deposits increased $551.4 million, or 3.2%, to $17.5 billion at September 30, 2022 as compared to a year ago. Time deposits increased $1.3 billion, or 220.0%, to $1.9 billion and total demand deposits increased $141.0 million, or 1.4%, to $10.1 billion. These increases were offset partially by decreases in savings deposits of $718.3 million, or 54.8%, to $592.0 million and money market deposits of $176.2 million, or 3.5%, to $4.9 billion. The total cost of deposits increased by 106 basis points to 1.48% in Q3 2022 from 0.42% in the prior year primarily due to higher market interest rates and a shift in deposit mix.

Capital

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

(Dollars in thousands except per share data)

September 30,
2022

 

June 30,
2022

 

September 30,
2021

Customers Bancorp, Inc.

 

 

 

 

 

Common Equity

$

1,249,137

 

 

$

1,215,596

 

 

$

1,146,505

 

Tangible Common Equity*

 

1,245,508

 

 

 

1,211,967

 

 

 

1,142,711

 

Tangible Common Equity to Tangible Assets*

 

6.12

%

 

 

5.99

%

 

 

5.98

%

Tangible Common Equity to Tangible Assets, excluding PPP*

 

6.48

%

 

 

6.49

%

 

 

8.08

%

Tangible Book Value per common share*

$

38.35

 

 

$

37.35

 

 

$

35.12

 

Common equity Tier 1 capital ratio (1)

 

10.1

%

 

 

9.7

%

 

 

10.4

%

Total risk based capital ratio (1)

 

12.8

%

 

 

12.6

%

 

 

13.6

%

 

 

 

 

 

 

(1) Regulatory capital ratios as of September 30, 2022 are estimates.

* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.

Customers Bancorp's tangible common equity* increased $102.8 million to $1.2 billion at September 30, 2022 compared to a year ago, as earnings of $291.4 million more than offset a negative impact to accumulated other comprehensive income ("AOCI") from increased unrealized losses on investment securities of $157.6 million (net of taxes). Similarly, tangible book value per common share* increased to $38.35 at September 30, 2022 from $35.12 at September 30, 2021. Customers remains well capitalized by all regulatory measures.

At the Customers Bancorp level, the total risk based capital ratio (estimate) and tangible common equity to tangible assets ratio ("TCE ratio"), excluding PPP loans*, were 12.8% and 6.48%, respectively, at September 30, 2022. "We expect our TCE ratio to be about 7.5% over the next 3 - 4 quarters, supported by growth in retained earnings and prudent balance sheet management," stated Mr. Sam Sidhu.

At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At September 30, 2022, estimated Tier 1 capital and total risk-based capital were 11.7% and 13.0%, respectively.

Key Profitability Trends

Net Interest Income

Net interest income totaled $159.0 million in Q3 2022, a decrease of $5.8 million from Q2 2022, primarily due to lower PPP interest income of $5.9 million resulting from reduced recognition of deferred fees of $4.8 million driven by lower loan forgiveness in Q3 2022. This decrease was offset in part by increased net interest income earned by the core bank of $3.5 million, up 2% (~10% annualized) over Q2 2022, including increased interest income on investment securities and core loans* of $5.1 million and $37.4 million, respectively, mostly due to higher average balances. In addition, higher expenses paid on deposits, fed funds, FHLB advances and other borrowings of $45.4 million resulted mainly from a shift in deposit mix and higher interest rates during Q3 2022. Excluding PPP loans, average interest-earning assets increased $1.0 billion. Interest-earning asset growth was primarily driven by increases in C&I loans and leases, mostly in specialty lending, and some lower-yielding multi-family loans that didn't close until Q3 2022. Compared to Q2 2022, total loan yields increased 54 basis points to 5.08% primarily due to higher interest rates on variable rate loans in specialty lending. Excluding PPP loans, the Q3 2022 total loan yield was 59 basis points higher than Q2 2022 reflecting increased interest rates and the variable rate nature of the loan portfolio.

Non-Interest Income

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

 

Three Months Ended

 

Increase
(Decrease)

(Dollars in thousands)

September 30,
2022

 

June 30,
2022

 

Interchange and card revenue

$

72

 

 

$

24

 

 

$

48

 

Deposit fees

 

989

 

 

 

964

 

 

 

25

 

Commercial lease income

 

7,097

 

 

 

6,592

 

 

 

505

 

Bank-owned life insurance

 

3,449

 

 

 

1,947

 

 

 

1,502

 

Mortgage warehouse transactional fees

 

1,545

 

 

 

1,883

 

 

 

(338

)

Gain (loss) on sale of SBA and other loans

 

106

 

 

 

1,542

 

 

 

(1,436

)

Loss on sale of consumer installment loans

 

(23,465

)

 

 

 

 

 

(23,465

)

Loan fees

 

3,008

 

 

 

2,618

 

 

 

390

 

Mortgage banking income (loss)

 

125

 

 

 

173

 

 

 

(48

)

Gain (loss) on sale of investment securities

 

(2,135

)

 

 

(3,029

)

 

 

894

 

Unrealized gain (loss) on investment securities

 

(259

)

 

 

(203

)

 

 

(56

)

Unrealized gain (loss) on derivatives

 

563

 

 

 

821

 

 

 

(258

)

Other

 

(112

)

 

 

(586

)

 

 

474

 

Total non-interest income

$

(9,017

)

 

$

12,746

 

 

$

(21,763

)

Non-interest income totaled $(9.0) million for Q3 2022, a decrease of $21.8 million compared to Q2 2022. The decrease was primarily due to $23.5 million of loss realized from the sale of $500 million of consumer installment loans as part of our balance sheet optimization initiatives, which included the write-off of deferred origination costs and other transaction-related expenses, and lower gains realized on sales of SBA loans in Q3 2022 compared to Q2 2022, partially offset by higher bank-owned life insurance income primarily due to death benefits, lower realized losses from the sale of investment securities and higher commercial lease income and loan fees from continued growth.

Non-Interest Expense

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

 

Three Months Ended

 

Increase
(Decrease)

(Dollars in thousands)

September 30,
2022

 

June 30,
2022

 

Salaries and employee benefits

$

31,230

 

$

25,334

 

$

5,896

 

Technology, communication and bank operations

 

19,588

 

 

22,738

 

 

(3,150

)

Professional services

 

6,269

 

 

7,415

 

 

(1,146

)

Occupancy

 

2,605

 

 

4,279

 

 

(1,674

)

Commercial lease depreciation

 

5,966

 

 

5,552

 

 

414

 

FDIC assessments, non-income taxes and regulatory fees

 

2,528

 

 

1,619

 

 

909

 

Loan servicing

 

3,851

 

 

4,341

 

 

(490

)

Loan workout

 

217

 

 

179

 

 

38

 

Advertising and promotion

 

762

 

 

353

 

 

409

 

Other

 

3,182

 

 

4,395

 

 

(1,213

)

Total non-interest expense

$

76,198

 

$

76,205

 

$

(7

)

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

Non-interest expenses totaled $76.2 million in Q3 2022, relatively unchanged from Q2 2022 and $3.8 million lower than Q3 2021. The offsetting items this quarter included a $3.2 million decrease in technology, processing and deposit servicing-related expenses mostly due to lower deposit servicing fees paid to BM Technologies, $1.7 million decrease in occupancy mostly due to $0.9 million of impairment charges for consolidation of five branches into other existing locations in Southeastern Pennsylvania recorded in Q2 2022 and $1.1 million decrease in professional fees primarily associated with the PPP loan forgiveness. These decreases were offset in part by higher salaries and employee benefits of $5.9 million primarily due to higher average headcount, incentives and $1.4 million in one-time severance expenses.

Taxes

Income tax expense from continuing operations decreased by $1.0 million to $17.9 million in Q3 2022 from $18.9 million in Q2 2022 primarily due to higher investment tax credits and death benefits on bank owned life insurance policies. The effective tax rate from continuing operations for Q3 2022 and for the nine months ended September 30, 2022 was 22%. Customers expects the full-year 2022 effective tax rate from continuing operations to be approximately 21% to 23%.

Outlook

“Looking ahead, we envision moderate sustainable and responsible organic core growth, maintenance of our margins, improved capital ratios, and higher profitability and are very optimistic about the prospects of our company. We are focused on improving the quality of our balance sheet and deposit franchise and are not focused on growth just for the sake of growth. With about $500 million of loan growth expected in our low-risk specialty lending verticals in fourth quarter 2022, we will have mostly completed our portfolio remix into lower credit risk variable rate loans. As such, we believe that our margin will likely trough in 2022 and we expect margin expansion in 2023 or through the projected rate-hike cycle. Through a combination of revenue growth and prudent expense management, we expect our efficiency ratio to be in the low to mid 40's by early 2023. Customers Bancorp stock at the close of business on October 21, 2022 was trading at $31.17, only 0.8 times tangible book value* at September 30, 2022. Even after selling $500 million of higher yielding consumer installment loans, we continue to expect over $6.00 of core earnings in 2023, two to three years ahead of our previous guidance of $6.00 by 2025/2026,” concluded Mr. Jay Sidhu.

 

 

 

 

 

* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.

Webcast

Date: Thursday, October 27, 2022
Time: 9:00 AM EDT

The live audio webcast, presentation slides, and earnings press release will be made available at https://www.customersbank.com/investor-relations/ and at the Customers Bancorp 3rd Quarter Earnings Webcast.

You may submit questions in advance of the live webcast by emailing our Communications Director, David Patti at [email protected]; questions may also be asked during the webcast through the webcast application.

The webcast will be archived for viewing on the Customers Bank Investor Relations page and available beginning approximately two hours after the conclusion of the live event.

Institutional Background

Customers Bancorp, Inc. (NYSE:CUBI) is one of the nation’s top-performing banking companies with over $20 billion in assets, making it one of the 100 largest bank holding companies in the US. Through its primary subsidiary, Customers Bank, commercial and consumer clients benefit from a full suite of technology-enabled tailored product experience delivered by best-in-class customer service. A pioneer in Banking-as-a-Service and digital banking products, Customers Bank is one of the very few banks that provides a blockchain-based 24/7/365 digital payment solution. In addition to traditional lines such as C&I lending, commercial real estate lending, and multi-family lending, Customers Bank also provides a number of national corporate banking services for Lender Finance, Fund Finance, Financial Institutions, Technology and Venture, and Healthcare clients. Major accolades include:

  • #3 top-performing bank with over $10 billion in assets at year-end 2021 per S&P Global S&P Global Market Intelligence,
  • #6 in top-performing banks with assets between $10 billion and 50 billion in 2021 per American Banker, and
  • #21 out of the 100 largest publicly traded banks in 2022 per Forbes.

A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender. Learn more: www.customersbank.com.

“Safe Harbor” Statement

In addition to historical information, this press release may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “project,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: the impact of the ongoing pandemic on the U.S. economy and customer behavior, the impact that changes in the economy have on the performance of our loan and lease portfolio, the market value of our investment securities, the continued success and acceptance of our blockchain payments system, the demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply, actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships, higher inflation and its impacts, and the effects of any changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2021, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.

Q3 2022 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended September 30, 2022 and the preceding four quarters:

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

 

EARNINGS SUMMARY - UNAUDITED

 

 

 

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

Q3

 

Q2

 

Q1

 

Q4

 

Q3

 

Nine Months Ended
September 30,

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Profitability Metrics:

 

Net income available to common shareholders

(from continuing and discontinued operations)

$

61,364

 

 

$

56,519

 

 

$

74,896

 

 

$

98,647

 

 

$

110,241

 

 

$

192,779

 

 

$

201,487

 

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

1.89

 

 

$

1.73

 

 

$

2.27

 

 

$

3.02

 

 

$

3.40

 

 

$

5.89

 

 

$

6.26

 

 

Earnings per share - diluted

$

1.85

 

 

$

1.68

 

 

$

2.18

 

 

$

2.87

 

 

$

3.25

 

 

$

5.72

 

 

$

6.02

 

 

Book value per common share (1)

$

38.46

 

 

$

37.46

 

 

$

37.61

 

 

$

37.32

 

 

$

35.24

 

 

$

38.46

 

 

$

35.24

 

 

CUBI stock price (1)

$

29.48

 

 

$

33.90

 

 

$

52.14

 

 

$

65.37

 

 

$

43.02

 

 

$

29.48

 

 

$

43.02

 

 

CUBI stock price as % of book value (1)

 

77

%

 

 

90

%

 

 

139

%

 

 

175

%

 

 

122

%

 

 

77

%

 

 

122

%

 

Average shares outstanding - basic

 

32,455,814

 

 

 

32,712,616

 

 

 

32,957,033

 

 

 

32,625,960

 

 

 

32,449,853

 

 

 

32,706,652

 

 

 

32,206,547

 

 

Average shares outstanding - diluted

 

33,226,607

 

 

 

33,579,013

 

 

 

34,327,065

 

 

 

34,320,327

 

 

 

33,868,553

 

 

 

33,706,864

 

 

 

33,487,672

 

 

Shares outstanding (1)

 

32,475,502

 

 

 

32,449,486

 

 

 

32,957,847

 

 

 

32,913,267

 

 

 

32,537,976

 

 

 

32,475,502

 

 

 

32,537,976

 

 

Return on average assets ("ROAA")

 

1.24

%

 

 

1.17

%

 

 

1.63

%

 

 

2.08

%

 

 

2.33

%

 

 

1.34

%

 

 

1.49

%

 

Return on average common equity ("ROCE")

 

19.33

%

 

 

18.21

%

 

 

24.26

%

 

 

33.18

%

 

 

40.82

%

 

 

20.58

%

 

 

26.99

%

 

Efficiency ratio

 

50.00

%

 

 

42.14

%

 

 

39.42

%

 

 

38.70

%

 

 

33.42

%

 

 

43.46

%

 

 

41.07

%

 

Non-GAAP Profitability Metrics (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core earnings

$

82,270

 

 

$

59,367

 

 

$

75,410

 

 

$

101,213

 

 

$

113,876

 

 

$

217,047

 

 

$

243,487

 

 

Adjusted pre-tax pre-provision net income

$

100,994

 

 

$

105,692

 

 

$

112,649

 

 

$

130,595

 

 

$

167,215

 

 

$

319,335

 

 

$

340,451

 

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core earnings per share - diluted

$

2.48

 

 

$

1.77

 

 

$

2.20

 

 

$

2.95

 

 

$

3.36

 

 

$

6.44

 

 

$

7.27

 

 

Tangible book value per common share (1)

$

38.35

 

 

$

37.35

 

 

$

37.50

 

 

$

37.21

 

 

$

35.12

 

 

$

38.35

 

 

$

35.12

 

 

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

 

77

%

 

 

91

%

 

 

139

%

 

 

176

%

 

 

122

%

 

 

77

%

 

 

122

%

 

Core ROAA

 

1.64

%

 

 

1.23

%

 

 

1.64

%

 

 

2.13

%

 

 

2.35

%

 

 

1.50

%

 

 

1.76

%

 

Core ROCE

 

25.91

%

 

 

19.13

%

 

 

24.43

%

 

 

34.04

%

 

 

42.16

%

 

 

23.17

%

 

 

32.61

%

 

Adjusted ROAA - pre-tax and pre-provision

 

1.95

%

 

 

2.11

%

 

 

2.39

%

 

 

2.70

%

 

 

3.36

%

 

 

2.14

%

 

 

2.37

%

 

Adjusted ROCE - pre-tax and pre-provision

 

31.01

%

 

 

33.37

%

 

 

35.89

%

 

 

43.25

%

 

 

60.81

%

 

 

33.40

%

 

 

44.30

%

 

Net interest margin, tax equivalent

 

3.16

%

 

 

3.39

%

 

 

3.60

%

 

 

4.14

%

 

 

4.59

%

 

 

3.38

%

 

 

3.55

%

 

Net interest margin, tax equivalent, excluding PPP

 

3.18

%

 

 

3.32

%

 

 

3.32

%

 

 

3.12

%

 

 

3.24

%

 

 

3.27

%

 

 

3.17

%

 

Core efficiency ratio

 

42.57

%

 

 

41.74

%

 

 

39.47

%

 

 

38.14

%

 

 

30.36

%

 

 

41.23

%

 

 

37.31

%

 

Asset Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs

$

18,498

 

 

$

13,481

 

 

$

7,226

 

 

$

7,582

 

 

$

7,104

 

 

$

39,205

 

 

$

26,216

 

 

Annualized net charge-offs to average total loans and leases

 

0.47

%

 

 

0.36

%

 

 

0.21

%

 

 

0.21

%

 

 

0.17

%

 

 

0.36

%

 

 

0.22

%

 

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

 

0.18

%

 

 

0.18

%

 

 

0.31

%

 

 

0.34

%

 

 

0.34

%

 

 

0.18

%

 

 

0.34

%

 

Reserves to NPLs (1)

 

466.34

%

 

 

557.76

%

 

 

333.15

%

 

 

277.72

%

 

 

252.68

%

 

 

466.34

%

 

 

252.68

%

 

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

 

0.14

%

 

 

0.14

%

 

 

0.23

%

 

 

0.25

%

 

 

0.27

%

 

 

0.14

%

 

 

0.27

%

 

Customers Bank Capital Ratios (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity Tier 1 capital to risk-weighted assets

 

11.73

%

 

 

11.46

%

 

 

11.60

%

 

 

11.83

%

 

 

12.77

%

 

 

11.73

%

 

 

12.77

%

 

Tier 1 capital to risk-weighted assets

 

11.73

%

 

 

11.46

%

 

 

11.60

%

 

 

11.83

%

 

 

12.77

%

 

 

11.73

%

 

 

12.77

%

 

Total capital to risk-weighted assets

 

12.98

%

 

 

12.91

%

 

 

13.03

%

 

 

13.11

%

 

 

14.16

%

 

 

12.98

%

 

 

14.16

%

 

Tier 1 capital to average assets (leverage ratio)

 

8.10

%

 

 

8.09

%

 

 

8.21

%

 

 

7.93

%

 

 

8.66

%

 

 

8.10

%

 

 

8.66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

(2) Customers' reasons for the use of these non-GAAP measures and a detailed reconciliation between the non-GAAP measures and the comparable GAAP amounts are included at the end of this document.

 

(3) Regulatory capital ratios are estimated for Q3 2022 and actual for the remaining periods. In accordance with regulatory capital rules, Customers elected to apply the CECL capital transition provisions which delayed the effects of CECL on regulatory capital for two years until January 1, 2022, followed by a three-year transition period. The cumulative CECL capital transition impact as of December 31, 2021 which amounted to $61.6 million will be phased in at 25% per year beginning on January 1, 2022 through December 31, 2024. As of September 30, 2022, our regulatory capital ratios reflected 75%, or $46.2 million, benefit associated with the CECL transition provisions.

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

Q3

 

Q2

 

Q1

 

Q4

 

Q3

 

September 30,

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

$

200,457

 

 

$

168,941

 

 

$

157,175

 

 

$

198,000

 

 

$

233,097

 

 

$

526,573

 

 

$

538,822

 

Investment securities

 

30,546

 

 

 

25,442

 

 

 

20,295

 

 

 

15,202

 

 

 

8,905

 

 

 

76,283

 

 

 

25,211

 

Other

 

4,913

 

 

 

1,951

 

 

 

6,006

 

 

 

835

 

 

 

849

 

 

 

12,870

 

 

 

2,814

 

Total interest income

 

235,916

 

 

 

196,334

 

 

 

183,476

 

 

 

214,037

 

 

 

242,851

 

 

 

615,726

 

 

 

566,847

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

65,380

 

 

 

22,781

 

 

 

13,712

 

 

 

15,415

 

 

 

15,915

 

 

 

101,873

 

 

 

47,226

 

FHLB advances

 

4,684

 

 

 

2,316

 

 

 

 

 

 

51

 

 

 

5

 

 

 

7,000

 

 

 

6,160

 

Subordinated debt

 

2,689

 

 

 

2,689

 

 

 

2,689

 

 

 

2,688

 

 

 

2,689

 

 

 

8,067

 

 

 

8,067

 

FRB PPP liquidity facility, federal funds purchased and other borrowings

 

4,131

 

 

 

3,696

 

 

 

2,376

 

 

 

2,189

 

 

 

4,350

 

 

 

10,203

 

 

 

14,014

 

Total interest expense

 

76,884

 

 

 

31,482

 

 

 

18,777

 

 

 

20,343

 

 

 

22,959

 

 

 

127,143

 

 

 

75,467

 

Net interest income

 

159,032

 

 

 

164,852

 

 

 

164,699

 

 

 

193,694

 

 

 

219,892

 

 

 

488,583

 

 

 

491,380

 

Provision (benefit) for credit losses

 

(7,994

)

 

 

23,847

 

 

 

15,997

 

 

 

13,890

 

 

 

13,164

 

 

 

31,850

 

 

 

13,536

 

Net interest income after provision (benefit) for credit losses

 

167,026

 

 

 

141,005

 

 

 

148,702

 

 

 

179,804

 

 

 

206,728

 

 

 

456,733

 

 

 

477,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interchange and card revenue

 

72

 

 

 

24

 

 

 

76

 

 

 

84

 

 

 

83

 

 

 

172

 

 

 

252

 

Deposit fees

 

989

 

 

 

964

 

 

 

940

 

 

 

1,026

 

 

 

994

 

 

 

2,893

 

 

 

2,748

 

Commercial lease income

 

7,097

 

 

 

6,592

 

 

 

5,895

 

 

 

5,378

 

 

 

5,213

 

 

 

19,584

 

 

 

15,729

 

Bank-owned life insurance

 

3,449

 

 

 

1,947

 

 

 

8,326

 

 

 

1,984

 

 

 

1,988

 

 

 

13,722

 

 

 

6,432

 

Mortgage warehouse transactional fees

 

1,545

 

 

 

1,883

 

 

 

2,015

 

 

 

2,262

 

 

 

3,100

 

 

 

5,443

 

 

 

10,612

 

Gain (loss) on sale of SBA and other loans

 

106

 

 

 

1,542

 

 

 

1,507

 

 

 

2,493

 

 

 

5,359

 

 

 

3,155

 

 

 

8,834

 

Loss on sale of consumer installment loans

 

(23,465

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,465

)

 

 

 

Loan fees

 

3,008

 

 

 

2,618

 

 

 

2,545

 

 

 

2,513

 

 

 

1,909

 

 

 

8,171

 

 

 

5,015

 

Mortgage banking income (loss)

 

125

 

 

 

173

 

 

 

481

 

 

 

262

 

 

 

425

 

 

 

779

 

 

 

1,274

 

Gain (loss) on sale of investment securities

 

(2,135

)

 

 

(3,029

)

 

 

(1,063

)

 

 

(49

)

 

 

6,063

 

 

 

(6,227

)

 

 

31,441

 

Unrealized gain (loss) on investment securities

 

(259

)

 

 

(203

)

 

 

(276

)

 

 

 

 

 

 

 

 

(738

)

 

 

2,720

 

Loss on sale of foreign subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,840

)

Unrealized gain (loss) on derivatives

 

563

 

 

 

821

 

 

 

964

 

 

 

586

 

 

 

524

 

 

 

2,348

 

 

 

2,622

 

Loss on cash flow hedge derivative terminations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,467

)

Other

 

(112

)

 

 

(586

)

 

 

(212

)

 

 

452

 

 

 

(72

)

 

 

(910

)

 

 

504

 

Total non-interest income

 

(9,017

)

 

 

12,746

 

 

 

21,198

 

 

 

16,991

 

 

 

25,586

 

 

 

24,927

 

 

 

60,876

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

31,230

 

 

 

25,334

 

 

 

26,607

 

 

 

29,940

 

 

 

26,268

 

 

 

83,171

 

 

 

78,262

 

Technology, communication and bank operations

 

19,588

 

 

 

22,738

 

 

 

24,068

 

 

 

22,657

 

 

 

21,281

 

 

 

66,394

 

 

 

60,887

 

Professional services

 

6,269

 

 

 

7,415

 

 

 

6,956

 

 

 

7,058

 

 

 

6,871

 

 

 

20,640

 

 

 

19,630

 

Occupancy

 

2,605

 

 

 

4,279

 

 

 

3,050

 

 

 

4,336

 

 

 

2,704

 

 

 

9,934

 

 

 

7,807

 

Commercial lease depreciation

 

5,966

 

 

 

5,552

 

 

 

4,942

 

 

 

4,625

 

 

 

4,493

 

 

 

16,460

 

 

 

13,199

 

FDIC assessments, non-income taxes and regulatory fees

 

2,528

 

 

 

1,619

 

 

 

2,383

 

 

 

2,427

 

 

 

2,313

 

 

 

6,530

 

 

 

7,634

 

Loan servicing

 

3,851

 

 

 

4,341

 

 

 

2,371

 

 

 

4,361

 

 

 

4,265

 

 

 

10,563

 

 

 

6,402

 

Merger and acquisition related expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

418

 

Loan workout

 

217

 

 

 

179

 

 

 

(38

)

 

 

226

 

 

 

198

 

 

 

358

 

 

 

39

 

Advertising and promotion

 

762

 

 

 

353

 

 

 

315

 

 

 

344

 

 

 

302

 

 

 

1,430

 

 

 

1,176

 

Deposit relationship adjustment fees

 

 

 

 

 

 

 

 

 

 

 

 

 

6,216

 

 

 

 

 

 

6,216

 

Other

 

3,182

 

 

 

4,395

 

 

 

3,153

 

 

 

5,574

 

 

 

5,098

 

 

 

10,730

 

 

 

11,089

 

Total non-interest expense

 

76,198

 

 

 

76,205

 

 

 

73,807

 

 

 

81,548

 

 

 

80,009

 

 

 

226,210

 

 

 

212,759

 

Income before income tax expense

 

81,811

 

 

 

77,546

 

 

 

96,093

 

 

 

115,247

 

 

 

152,305

 

 

 

255,450

 

 

 

325,961

 

Income tax expense

 

17,899

 

 

 

18,896

 

 

 

19,332

 

 

 

12,993

 

 

 

36,263

 

 

 

56,127

 

 

 

73,947

 

Net income from continuing operations

$

63,912

 

 

$

58,650

 

 

$

76,761

 

 

$

102,254

 

 

$

116,042

 

 

$

199,323

 

 

$

252,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED (CONTINUED)

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

Q3

 

Q2

 

Q1

 

Q4

 

Q3

 

September 30,

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Loss from discontinued operations before income taxes

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

(20,354

)

Income tax expense (benefit) from discontinued operations

 

 

 

 

 

 

 

 

 

 

1,585

 

 

 

 

 

 

 

 

 

17,682

 

Net loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

(1,585

)

 

 

 

 

 

 

 

 

(38,036

)

Net income

 

63,912

 

 

 

58,650

 

 

 

76,761

 

 

 

100,669

 

 

 

116,042

 

 

 

199,323

 

 

 

213,978

 

Preferred stock dividends

 

2,548

 

 

 

2,131

 

 

 

1,865

 

 

 

2,022

 

 

 

2,981

 

 

 

6,544

 

 

 

9,671

 

Loss on redemption of preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

2,820

 

 

 

 

 

 

2,820

 

Net income available to common shareholders

$

61,364

 

 

$

56,519

 

 

$

74,896

 

 

$

98,647

 

 

$

110,241

 

 

$

192,779

 

 

$

201,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share from continuing operations

$

1.89

 

 

$

1.73

 

 

$

2.27

 

 

$

3.07

 

 

$

3.40

 

 

$

5.89

 

 

$

7.44

 

Basic earnings per common share

 

1.89

 

 

 

1.73

 

 

 

2.27

 

 

 

3.02

 

 

 

3.40

 

 

 

5.89

 

 

 

6.26

 

Diluted earnings per common share from continuing operations

 

1.85

 

 

 

1.68

 

 

 

2.18

 

 

 

2.92

 

 

 

3.25

 

 

 

5.72

 

 

 

7.15

 

Diluted earnings per common share

 

1.85

 

 

 

1.68

 

 

 

2.18

 

 

 

2.87

 

 

 

3.25

 

 

 

5.72

 

 

 

6.02

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET - UNAUDITED

(Dollars in thousands)

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2021

 

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

41,520

 

 

$

66,703

 

 

$

55,515

 

 

$

35,238

 

 

$

51,169

 

Interest earning deposits

 

362,945

 

 

 

178,475

 

 

 

219,085

 

 

 

482,794

 

 

 

1,000,885

 

Cash and cash equivalents

 

404,465

 

 

 

245,178

 

 

 

274,600

 

 

 

518,032

 

 

 

1,052,054

 

Investment securities, at fair value

 

2,943,694

 

 

 

3,144,882

 

 

 

4,169,853

 

 

 

3,817,150

 

 

 

1,866,697

 

Investment securities held to maturity

 

886,294

 

 

 

495,039

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

5,224

 

 

 

6,595

 

 

 

3,003

 

 

 

16,254

 

 

 

29,957

 

Loans receivable, mortgage warehouse, at fair value

 

1,569,090

 

 

 

1,874,603

 

 

 

1,755,758

 

 

 

2,284,325

 

 

 

2,557,624

 

Loans receivable, PPP

 

1,154,632

 

 

 

1,570,160

 

 

 

2,195,902

 

 

 

3,250,008

 

 

 

4,957,357

 

Loans and leases receivable

 

12,607,742

 

 

 

12,212,995

 

 

 

10,118,855

 

 

 

9,018,298

 

 

 

7,970,599

 

Allowance for credit losses on loans and leases

 

(130,197

)

 

 

(156,530

)

 

 

(145,847

)

 

 

(137,804

)

 

 

(131,496

)

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

 

15,201,267

 

 

 

15,501,228

 

 

 

13,924,668

 

 

 

14,414,827

 

 

 

15,354,084

 

FHLB, Federal Reserve Bank, and other restricted stock

 

64,112

 

 

 

74,626

 

 

 

54,553

 

 

 

64,584

 

 

 

57,184

 

Accrued interest receivable

 

107,621

 

 

 

98,727

 

 

 

94,669

 

 

 

92,239

 

 

 

93,514

 

Bank premises and equipment, net

 

6,610

 

 

 

6,755

 

 

 

8,233

 

 

 

8,890

 

 

 

9,944

 

Bank-owned life insurance

 

336,130

 

 

 

335,153

 

 

 

332,239

 

 

 

333,705

 

 

 

331,423

 

Goodwill and other intangibles

 

3,629

 

 

 

3,629

 

 

 

3,678

 

 

 

3,736

 

 

 

3,794

 

Other assets

 

408,575

 

 

 

340,184

 

 

 

298,212

 

 

 

305,611

 

 

 

310,271

 

Total assets

$

20,367,621

 

 

$

20,251,996

 

 

$

19,163,708

 

 

$

19,575,028

 

 

$

19,108,922

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing deposits

$

2,993,793

 

 

$

4,683,030

 

 

$

4,594,428

 

 

$

4,459,790

 

 

$

4,954,331

 

Interest bearing deposits

 

14,528,645

 

 

 

12,261,689

 

 

 

11,821,132

 

 

 

12,318,134

 

 

 

12,016,694

 

Total deposits

 

17,522,438

 

 

 

16,944,719

 

 

 

16,415,560

 

 

 

16,777,924

 

 

 

16,971,025

 

Federal funds purchased

 

365,000

 

 

 

770,000

 

 

 

700,000

 

 

 

75,000

 

 

 

 

FHLB advances

 

500,000

 

 

 

635,000

 

 

 

 

 

 

700,000

 

 

 

 

Other borrowings

 

123,515

 

 

 

123,450

 

 

 

223,230

 

 

 

223,086

 

 

 

223,151

 

Subordinated debt

 

181,882

 

 

 

181,812

 

 

 

181,742

 

 

 

181,673

 

 

 

181,603

 

Accrued interest payable and other liabilities

 

287,855

 

 

 

243,625

 

 

 

265,770

 

 

 

251,128

 

 

 

448,844

 

Total liabilities

 

18,980,690

 

 

 

18,898,606

 

 

 

17,786,302

 

 

 

18,208,811

 

 

 

17,824,623

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

137,794

 

 

 

137,794

 

 

 

137,794

 

 

 

137,794

 

 

 

137,794

 

Common stock

 

34,948

 

 

 

34,922

 

 

 

34,882

 

 

 

34,722

 

 

 

33,818

 

Additional paid in capital

 

549,066

 

 

 

545,670

 

 

 

542,402

 

 

 

542,391

 

 

 

525,894

 

Retained earnings

 

898,511

 

 

 

837,147

 

 

 

780,628

 

 

 

705,732

 

 

 

607,085

 

Accumulated other comprehensive income (loss), net

 

(156,126

)

 

 

(124,881

)

 

 

(62,548

)

 

 

(4,980

)

 

 

1,488

 

Treasury stock, at cost

 

(77,262

)

 

 

(77,262

)

 

 

(55,752

)

 

 

(49,442

)

 

 

(21,780

)

Total shareholders' equity

 

1,386,931

 

 

 

1,353,390

 

 

 

1,377,406

 

 

 

1,366,217

 

 

 

1,284,299

 

Total liabilities and shareholders' equity

$

20,367,621

 

 

$

20,251,996

 

 

$

19,163,708

 

 

$

19,575,028

 

 

$

19,108,922

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

 

Average
Balance

 

Interest
Income or
Expense

 

Average
Yield or
Cost (%)

 

Average
Balance

 

Interest
Income or
Expense

 

Average
Yield or
Cost (%)

 

Average
Balance

 

Interest
Income or
Expense

 

Average
Yield or
Cost (%)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning deposits

$

528,001

 

$

2,949

 

2.22

%

 

$

434,950

 

$

919

 

0.85

%

 

$

1,279,983

 

$

490

 

0.15

%

Investment securities (1)

 

3,770,922

 

 

30,546

 

3.24

%

 

 

4,104,463

 

 

25,442

 

2.48

%

 

 

1,511,319

 

 

8,905

 

2.36

%

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialty lending loans and leases (2)

 

5,064,730

 

 

64,753

 

5.07

%

 

 

4,068,175

 

 

39,160

 

3.86

%

 

 

1,732,323

 

 

16,393

 

3.75

%

Other commercial & industrial loans (2)

 

1,585,136

 

 

18,794

 

4.70

%

 

 

1,509,655

 

 

14,706

 

3.91

%

 

 

1,292,297

 

 

12,259

 

3.76

%

Commercial loans to mortgage companies

 

1,623,624

 

 

17,092

 

4.18

%

 

 

1,898,554

 

 

15,615

 

3.30

%

 

 

2,658,020

 

 

21,065

 

3.14

%

Multi-family loans

 

2,206,953

 

 

20,427

 

3.67

%

 

 

1,845,527

 

 

17,313

 

3.76

%

 

 

1,443,846

 

 

13,259

 

3.64

%

Loans receivable, PPP

 

1,349,403

 

 

14,666

 

4.31

%

 

 

1,863,429

 

 

20,572

 

4.43

%

 

 

5,778,367

 

 

117,102

 

8.04

%

Non-owner occupied commercial real estate loans

 

1,372,244

 

 

15,595

 

4.51

%

 

 

1,307,995

 

 

12,749

 

3.91

%

 

 

1,346,629

 

 

12,656

 

3.73

%

Residential mortgages

 

513,694

 

 

5,008

 

3.87

%

 

 

515,612

 

 

4,898

 

3.81

%

 

 

325,851

 

 

2,874

 

3.50

%

Installment loans

 

1,938,199

 

 

44,122

 

9.03

%

 

 

1,909,551

 

 

43,928

 

9.23

%

 

 

1,615,411

 

 

37,489

 

9.21

%

Total loans and leases (3)

 

15,653,983

 

 

200,457

 

5.08

%

 

 

14,918,498

 

 

168,941

 

4.54

%

 

 

16,192,744

 

 

233,097

 

5.71

%

Other interest-earning assets

 

68,549

 

 

1,964

 

11.37

%

 

 

68,025

 

 

1,032

 

6.09

%

 

 

49,780

 

 

359

 

2.86

%

Total interest-earning assets

 

20,021,455

 

 

235,916

 

4.68

%

 

 

19,525,936

 

 

196,334

 

4.03

%

 

 

19,033,826

 

 

242,851

 

5.06

%

Non-interest-earning assets

 

492,911

 

 

 

 

 

 

530,084

 

 

 

 

 

 

705,514

 

 

 

 

Total assets

$

20,514,366

 

 

 

 

 

$

20,056,020

 

 

 

 

 

$

19,739,340

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking accounts

 

6,669,787

 

 

33,685

 

2.00

%

 

 

6,409,617

 

 

13,644

 

0.85

%

 

 

4,537,421

 

 

7,677

 

0.67

%

Money market deposit accounts

 

5,789,991

 

 

24,348

 

1.67

%

 

 

4,704,767

 

 

7,523

 

0.64

%

 

 

5,131,433

 

 

5,569

 

0.43

%

Other savings accounts

 

625,908

 

 

1,818

 

1.15

%

 

 

695,176

 

 

758

 

0.44

%

 

 

1,376,077

 

 

1,750

 

0.50

%

Certificates of deposit

 

1,141,970

 

 

5,529

 

1.92

%

 

 

530,180

 

 

856

 

0.65

%

 

 

614,404

 

 

919

 

0.59

%

Total interest-bearing deposits (4)

 

14,227,656

 

 

65,380

 

1.82

%

 

 

12,339,740

 

 

22,781

 

0.74

%

 

 

11,659,335

 

 

15,915

 

0.54

%

Federal funds purchased

 

513,011

 

 

2,871

 

2.22

%

 

 

642,747

 

 

1,429

 

0.89

%

 

 

 

 

 

%

FRB PPP liquidity facility

 

 

 

 

%

 

 

 

 

 

%

 

 

2,788,897

 

 

2,460

 

0.35

%

Borrowings

 

874,497

 

 

8,633

 

3.92

%

 

 

940,068

 

 

7,272

 

3.10

%

 

 

371,077

 

 

4,584

 

4.90

%

Total interest-bearing liabilities

 

15,615,164

 

 

76,884

 

1.95

%

 

 

13,922,555

 

 

31,482

 

0.91

%

 

 

14,819,309

 

 

22,959

 

0.62

%

Non-interest-bearing deposits (4)

 

3,245,963

 

 

 

 

 

 

4,491,574

 

 

 

 

 

 

3,335,198

 

 

 

 

Total deposits and borrowings

 

18,861,127

 

 

 

1.62

%

 

 

18,414,129

 

 

 

0.69

%

 

 

18,154,507

 

 

 

0.50

%

Other non-interest-bearing liabilities

 

255,735

 

 

 

 

 

 

259,279

 

 

 

 

 

 

310,519

 

 

 

 

Total liabilities

 

19,116,862

 

 

 

 

 

 

18,673,408

 

 

 

 

 

 

18,465,026

 

 

 

 

Shareholders' equity

 

1,397,504

 

 

 

 

 

 

1,382,612

 

 

 

 

 

 

1,274,314

 

 

 

 

Total liabilities and shareholders' equity

$

20,514,366

 

 

 

 

 

$

20,056,020

 

 

 

 

 

$

19,739,340

 

 

 

 

Net interest income

 

 

 

159,032

 

 

 

 

 

 

164,852

 

 

 

 

 

 

219,892

 

 

Tax-equivalent adjustment (5)

 

 

 

334

 

 

 

 

 

 

270

 

 

 

 

 

 

290

 

 

Net interest earnings

 

 

$

159,366

 

 

 

 

 

$

165,122

 

 

 

 

 

$

220,182

 

 

Interest spread

 

 

 

 

3.06

%

 

 

 

 

 

3.35

%

 

 

 

 

 

4.56

%

Net interest margin

 

 

 

 

3.16

%

 

 

 

 

 

3.38

%

 

 

 

 

 

4.58

%

Net interest margin tax equivalent (5)

 

 

 

 

3.16

%

 

 

 

 

 

3.39

%

 

 

 

 

 

4.59

%

Net interest margin tax equivalent excl. PPP (6)

 

 

 

 

3.18

%

 

 

 

 

 

3.32

%

 

 

 

 

 

3.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED)

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 1.48%, 0.54% and 0.42% for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively.

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

(6) Non-GAAP tax-equivalent basis, as described in note (5) for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED)

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

September 30, 2022

 

September 30, 2021

 

Average
Balance

 

Interest
Income or
Expense

 

Average
Yield or
Cost (%)

 

Average
Balance

 

Interest
Income or
Expense

 

Average
Yield or
Cost (%)

Assets

 

 

 

 

 

 

 

 

 

 

 

Interest earning deposits

$

595,305

 

$

4,197

 

0.94

%

 

$

1,034,923

 

$

980

 

0.13

%

Investment securities (1)

 

3,969,809

 

 

76,283

 

2.56

%

 

 

1,461,070

 

 

25,211

 

2.30

%

Loans and leases:

 

 

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

 

 

Specialty lending loans and leases (2)

 

3,963,180

 

 

127,304

 

4.29

%

 

 

1,560,615

 

 

43,658

 

3.74

%

Other commercial & industrial loans (2)

 

1,496,772

 

 

46,768

 

4.18

%

 

 

1,357,028

 

 

38,631

 

3.81

%

Commercial loans to mortgage companies

 

1,785,495

 

 

46,713

 

3.50

%

 

 

2,837,549

 

 

65,925

 

3.11

%

Multi-family loans

 

1,863,915

 

 

51,506

 

3.69

%

 

 

1,560,565

 

 

44,120

 

3.78

%

Loans receivable, PPP

 

1,946,651

 

 

72,132

 

4.95

%

 

 

5,515,819

 

 

197,071

 

4.78

%

Non-owner occupied commercial real estate loans

 

1,331,037

 

 

40,551

 

4.07

%

 

 

1,354,745

 

 

38,637

 

3.81

%

Residential mortgages

 

482,263

 

 

13,586

 

3.77

%

 

 

348,369

 

 

9,486

 

3.64

%

Installment loans

 

1,881,160

 

 

128,013

 

9.10

%

 

 

1,470,024

 

 

101,294

 

9.21

%

Total loans and leases (3)

 

14,750,473

 

 

526,573

 

4.77

%

 

 

16,004,714

 

 

538,822

 

4.50

%

Other interest-earning assets

 

62,955

 

 

8,673

 

NM (7)

 

 

62,205

 

 

1,834

 

3.94

%

Total interest-earning assets

 

19,378,542

 

 

615,726

 

4.25

%

 

 

18,562,912

 

 

566,847

 

4.08

%

Non-interest-earning assets

 

526,437

 

 

 

 

 

 

632,202

 

 

 

 

Total assets

$

19,904,979

 

 

 

 

 

$

19,195,114

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest checking accounts

$

6,286,224

 

$

55,059

 

1.17

%

 

$

3,584,223

 

$

19,929

 

0.74

%

Money market deposit accounts

 

5,128,270

 

 

36,545

 

0.95

%

 

 

4,811,540

 

 

17,278

 

0.48

%

Other savings accounts

 

732,801

 

 

3,359

 

0.61

%

 

 

1,415,595

 

 

6,227

 

0.59

%

Certificates of deposit

 

710,130

 

 

6,910

 

1.30

%

 

 

646,257

 

 

3,792

 

0.78

%

Total interest-bearing deposits (4)

 

12,857,425

 

 

101,873

 

1.06

%

 

 

10,457,615

 

 

47,226

 

0.60

%

Federal funds purchased

 

416,344

 

 

4,374

 

1.40

%

 

 

29,286

 

 

15

 

0.07

%

FRB PPP liquidity facility

 

 

 

 

%

 

 

3,525,560

 

 

9,229

 

0.35

%

Borrowings

 

783,644

 

 

20,896

 

3.57

%

 

 

659,334

 

 

18,997

 

3.85

%

Total interest-bearing liabilities

 

14,057,413

 

 

127,143

 

1.21

%

 

 

14,671,795

 

 

75,467

 

0.69

%

Non-interest-bearing deposits (4)

 

4,206,778

 

 

 

 

 

 

3,016,837

 

 

 

 

Total deposits and borrowings

 

18,264,191

 

 

 

0.93

%

 

 

17,688,632

 

 

 

0.57

%

Other non-interest-bearing liabilities

 

250,783

 

 

 

 

 

 

295,752

 

 

 

 

Total liabilities

 

18,514,974

 

 

 

 

 

 

17,984,384

 

 

 

 

Shareholders' equity

 

1,390,005

 

 

 

 

 

 

1,210,730

 

 

 

 

Total liabilities and shareholders' equity

$

19,904,979

 

 

 

 

 

$

19,195,114

 

 

 

 

Net interest income

 

 

 

488,583

 

 

 

 

 

 

491,380

 

 

Tax-equivalent adjustment (5)

 

 

 

843

 

 

 

 

 

 

871

 

 

Net interest earnings

 

 

$

489,426

 

 

 

 

 

$

492,251

 

 

Interest spread

 

 

 

 

3.32

%

 

 

 

 

 

3.51

%

Net interest margin

 

 

 

 

3.37

%

 

 

 

 

 

3.54

%

Net interest margin tax equivalent (5)

 

 

 

 

3.38

%

 

 

 

 

 

3.55

%

Net interest margin tax equivalent excl. PPP (6)

 

 

 

 

3.27

%

 

 

 

 

 

3.17

%

 

 

 

 

 

 

 

 

 

 

 

 

(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 0.80% and 0.47% for the nine months ended September 30, 2022 and 2021, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

(continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED)

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the nine months ended September 30, 2022 and 2021, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

(6) Non-GAAP tax-equivalent basis as described in note (5), for the nine months ended September 30, 2022 and 2021, excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

(7) Not meaningful.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

September 30,
2022

 

June 30,
2022

 

March 31,
2022

 

December 31,
2021

 

September 30,
2021

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

 

 

Commercial & industrial:

 

 

 

 

 

 

 

 

 

Specialty lending

$

5,103,974

 

$

4,599,640

 

$

2,973,544

 

$

2,403,991

 

$

1,736,966

Other commercial & industrial

 

1,064,332

 

 

1,037,443

 

 

947,895

 

 

942,679

 

 

867,401

Multi-family

 

2,267,376

 

 

2,012,920

 

 

1,705,027

 

 

1,486,308

 

 

1,387,166

Loans to mortgage companies

 

1,708,587

 

 

1,975,189

 

 

1,830,121

 

 

2,362,438

 

 

2,626,483

Commercial real estate owner occupied

 

726,670

 

 

710,577

 

 

701,893

 

 

654,922

 

 

656,044

Loans receivable, PPP

 

1,154,632

 

 

1,570,160

 

 

2,195,902

 

 

3,250,008

 

 

4,957,357

Commercial real estate non-owner occupied

 

1,263,211

 

 

1,152,869

 

 

1,140,311

 

 

1,121,238

 

 

1,144,643

Construction

 

136,133

 

 

195,687

 

 

161,024

 

 

198,981

 

 

198,607

Total commercial loans and leases

 

13,424,915

 

 

13,254,485

 

 

11,655,717

 

 

12,420,565