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Customers Bancorp Reports Record Third Quarter 2021 Results


Net Income of $110.2 million, or $3.25 Per Diluted Share, Up 120% Over Q3 2020

 ROAA of 2.33% and ROCE of 40.82%

Tangible Book Value Increased 35% Over Q3 2020

Customers Bank Instant Token (CBIT) for Real-Time Blockchain Payments Launched October 2021 Attracting $1.5 billion in Deposits

  • Q3 2021 net income available to common shareholders was $110.2 million, or $3.25 per diluted share, up 120% over Q3 2020.
  • Q3 2021 core earnings (a non-GAAP measure) were $113.9 million, or $3.36 per diluted share, up 178% over Q3 2020.
  • Q3 2021 ROAA was 2.33% and Core ROAA (a non-GAAP measure) was 2.35%. Q3 2020 ROAA was 1.12% and Core ROAA (a non-GAAP measure) was 0.93%.
  • Q3 2021 ROCE was 40.82% and Core ROCE (a non-GAAP measure) was 42.16%. Q3 2020 ROCE was 23.05% and Core ROCE (a non-GAAP measure) was 18.82%.
  • Adjusted pre-tax pre-provision net income (a non-GAAP measure) for Q3 2021 was $167.2 million, an increase of 161% over Q3 2020. Q3 2021 adjusted pre-tax pre-provision return on average assets (a non-GAAP measure) was 3.36% compared to 1.43% for Q3 2020.
  • Net interest income for Q3 2021 grew $81.1 million, or 58.5%, over Q2 2021 and $112.5 million, or 104.7%, over Q3 2020.
  • Q3 2021 net interest margin (a non-GAAP measure) increased to 4.59% from 2.98% in Q2 2021. Q3 2021 net interest margin, excluding the impact of Paycheck Protection Program ("PPP") loans (a non-GAAP measure), was 3.24%. Significant excess cash balances resulting from strong deposit growth negatively impacted net interest margin by about 16 basis points.
  • Non-interest bearing deposits increased $2.3 billion, or 84%, in Q3 2021, of which $1.5 billion was driven by new CBIT customers on the TassatPay real-time blockchain payments platform which launched in October 2021.
  • Total deposits increased $6.1 billion, or 56.6% year-over-year, which included a $5.3 billion, or 115.2%, increase in demand deposits. The total cost of deposits dropped 25 basis points from the year-ago quarter. Total deposits increased $3.1 billion, or 22.3%, over Q2 2021, with $1.5 billion coming from CBIT related deposits.
  • Commercial and industrial ("C&I") loans increased $417.9 million, or 19%, year-over-year, and consumer installment loans increased $390.7 million, or 32% year-over-year.
  • Purchased $529 million PPP loan portfolio from global fintech in September 2021 at a discount further increasing deferred revenue recognition in future quarters.
  • Achieved $1 billion in direct Customers Bank personal loan originations, all executed digitally.
  • Technology-led loans sales in Consumer and SBA Groups resulted in consumer loan gains of $4.0 million and SBA gains of $1.3 million in Q3 2021, bringing YTD September 2021 consumer loan gains to $4.5 million and YTD September 2021 SBA gains to $4.3 million. Expect recurring gain on sale strategy to continue over the next several quarters.
  • Redeemed all outstanding shares of our Series C and Series D Preferred Stock on September 15, 2021.
  • Adopted a one-year common stock repurchase program to repurchase up to 3.2 million shares, of which approximately 167,000 shares have been repurchased to date.
  • Added four commercial teams, including one new geography in North Carolina; three new verticals in Digital Asset Banking, Technology and Venture Capital Banking and Financial Institutions Group in Q3 2021; YTD 2021 includes four new market expansions and four new verticals.
  • Q3 2021 efficiency ratio was 33.42% compared to 46.76% for Q3 2020. Q3 2021 core efficiency ratio was 30.36% compared to 46.10% in Q3 2020 (non-GAAP measures).
  • Q3 2021 provision for credit losses on loans and leases was $13.2 million compared to $3.3 million in Q2 2021. At September 30, 2021, the coverage of credit loss reserves for loans and leases held for investment, excluding PPP loans (a non-GAAP measure), was 1.65% compared to 1.61% at June 30, 2021.
  • Non-performing assets were 0.27% of total assets at September 30, 2021 compared to 0.34% at September 30, 2020. Allowance for credit losses equaled 253% of non-performing loans at September 30, 2021, compared to 245% at September 30, 2020.
  • Total deferments declined to $80.1 million, or 0.8% of total loans and leases excluding PPP loans (a non-GAAP measure) at September 30, 2021, down from $98.2 million, or 0.9% of total loans and leases excluding PPP loans (a non-GAAP measure) at June 30, 2021.

WEST READING, Pa.--(BUSINESS WIRE)-- Customers Bancorp, Inc. (NYSE: CUBI), the parent company of Customers Bank (collectively "Customers" or "CUBI"), today reported third quarter 2021 ("Q3 2021") net income to common shareholders of $110.2 million, or $3.25 per diluted share, significantly up from second quarter 2021 ("Q2 2021") net income to common shareholders of $58.0 million, or $1.72 per diluted share. Core earnings for Q3 2021 totaled $113.9 million, or $3.36 per diluted share compared to Q2 2021 core earnings of $59.3 million, or $1.76 per diluted share (non-GAAP measures). Adjusted pre-tax pre-provision net income was $167.2 million for Q3 2021 compared to $86.5 million for Q2 2021 (non-GAAP measures). Net interest margin, tax equivalent ("NIM") increased to 4.59% for Q3 2021 from 2.98% in Q2 2021.

“This quarter's results mark a milestone in our company's history, with more income earned in a single quarter than any of our previous full-year earnings,” remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “Our organic growth rates remain remarkable, with our C&I loans growing 19% year-over-year, consumer installment loans growing 32%, and non-interest bearing deposits growing 113%. In addition, we funded, either directly or indirectly, about 347,000 PPP loans totaling $10 billion, helping those businesses deal with adversities related to the pandemic with most of them thriving today. We also earned $346 million of deferred origination fees from the SBA through the PPP loans and we could not be prouder of our participation in and execution of this program. As demonstrated this quarter, the recognition of the deferred fees is significantly accretive to our earnings and capital levels as these loans are forgiven by the government. We also recently launched a blockchain-based real time payments token that will immediately begin serving a growing array of B2B clients who want the benefit of instant payments, which is expected to significantly enhance our core low-to-no cost deposit franchise. This combined with our market expansion plans, new teams and lending verticals, and strong pipeline leave us very well positioned to support future growth. We remain optimistic about our future,” Mr. Sidhu concluded.

Launch of Customers Bank Instant Token (CBIT)

“We are thrilled to announce that CBIT on the TassatPay payments platform went live on October 18, 2021. We received $1.5 billion in new non-interest bearing demand deposits as of September 30, 2021 and are very pleased with meeting the needs of our business clients through this block-chain based payment processing system. We not only developed and implemented this new technology, in partnership with TassatPay, in record time, but did so following a very thorough strategic initiative process," commented Mr. Sidhu. "We believe our technology, compliance and customer service and support systems are among the best in the country," concluded Mr. Sidhu.

As of September 30, 2021, $1.5 billion in non-interest bearing demand deposits have been attracted to the Bank through this system. We expect these deposits to grow modestly over the next few quarters, giving us an opportunity to transform our deposits into high quality, low-to-no cost, stable and growing deposit franchise.

Recruitment of New Commercial Teams

To further build out our franchise and support the growth of our business banking initiatives, we are pleased to announce the onboarding of a new expansion market (North Carolina) and three new commercial verticals (Digital Asset Banking, Technology and Venture Capital Banking and Financial Institutions Group). In addition to the teams onboarded this quarter and year to date (Florida, Texas, Harrisburg and Fund Finance), we have several teams currently in the recruitment pipeline. “Our strategy of high tech supported by high touch private banking teams has proven to be a superior business model and growth strategy. The success of our commercial team recruitment to date has given us the confidence to continue to advance the strategy allowing us to deploy the low-to-no-cost deposits we are generating. This is resulting in optimism for future earnings and continued shareholder value creation,” commented Mr. Sidhu.

Key Balance Sheet Trends

Commercial and industrial loans and leases increased $417.9 million to $2.6 billion, commercial real estate owner occupied loans increased $98.4 million to $656.0 million, consumer installment loans increased $390.7 million to $1.6 billion and construction loans increased $75.6 million to $198.6 million. These increases in loans and leases were partially offset by planned decreases in multi-family loans of $563.1 million to $1.4 billion, commercial real estate non-owner occupied loans of $89.2 million to $1.1 billion and residential mortgages of $83.0 million to $260.8 million. “Looking ahead, we see continued growth in core C&I and consumer loans offsetting the continued expected seasonal and yield curve related decreases in loans to mortgage companies at the end of this year," stated Mr. Sidhu.

Total loans and leases decreased $1.1 billion, or 6.6%, to $15.5 billion at September 30, 2021 compared to the year-ago period. As expected, commercial loans to mortgage companies declined $1.3 billion to $2.6 billion compared to the year-ago period. PPP loans were $5.0 billion at September 30, 2021, relatively unchanged from the year-ago period, driven by $4.7 billion in originations and purchases from the latest round of PPP loans, offset by $4.7 billion in forgiveness, repayments and associated net deferred fees from the new round and earlier rounds of PPP loans. Excluding PPP loans and commercial loans to mortgage companies, total loans and leases increased $238.4 million, or 3.1%, as the loan mix continued to improve year-over-year.

Total deposits increased $6.1 billion, or 56.6%, to $17.0 billion at September 30, 2021 compared to the year-ago period. Total demand deposits increased $5.3 billion, or 115.2%, to $10.0 billion, money market deposits increased $1.0 billion, or 25.5%, to $5.1 billion, and savings deposits increased $136.7 million, or 11.6%, to $1.3 billion. These increases were offset, in part, by a decrease in time deposits of $379.3 million, or 39.0%, to $593.1 million. The total cost of deposits declined by 25 basis points to 0.42% in Q3 2021 from 0.67% in the year-ago quarter. "Our current spot cost of deposits is approximately 32 basis points and we expect our deposit costs to be below 30 basis points by December 31, 2021, a dramatic improvement in our deposit franchise," stated Mr. Sidhu.

Other borrowings increased $99.2 million to $223.2 million at September 30, 2021 compared to the year-ago period from the issuance of our 2.875% fixed-to-floating rate senior notes, the proceeds of which were used to redeem all outstanding shares of our Series C and Series D Preferred Stock.

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

Customers experienced significant improvements in regulatory capital ratios in Q3 2021 as compared to a year ago. Customers Bancorp's tangible common equity (a non-GAAP measure) increased by $323.1 million to $1.1 billion at September 30, 2021 from $819.6 million at September 30, 2020, and the tangible book value per common share (a non-GAAP measure) increased to $35.12 at September 30, 2021 from $25.97 at September 30, 2020, an increase of 35.2%. 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 13.4% and 8.1%, respectively, at September 30, 2021. At June 30, 2021, Customers Bancorp's total risk based capital ratio and TCE ratio, excluding PPP loans (a non-GAAP measure), were 13.3% and 7.7%, respectively.

Loan Portfolio Management During the COVID-19 Crisis

Over the last decade, Customers has developed a suite of commercial and retail loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s C&I, mortgage warehouse, specialty finance lines of business, and multi-family loans for example, are characterized by conservative underwriting standards and low loss rates. Because of this emphasis, the Bank’s credit quality to-date has been healthy despite a highly adverse economic environment. Maintaining strong asset quality also requires a highly active portfolio monitoring process. In addition to frequent client outreach and monitoring at the individual loan level, Customers employs a bottom-up data driven approach to analyze its commercial portfolio.

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

  • Total commercial deferments declined to $73.4 million, or 0.7% of total loans and leases, excluding PPP loans (a non-GAAP measure), at September 30, 2021, down from $89.8 million, or 0.8% of total loans and leases, excluding PPP loans, at June 30, 2021. Customers' commercial deferments peaked at about $1.2 billion in July 2020.
  • Exposure to industry segments significantly impacted by COVID-19 is not substantial. At September 30, 2021, Customers had $83.2 million in energy and utilities exposure (with no deferments); $62.0 million in colleges and universities (with no deferments); $62.8 million in CRE retail sales exposure (mostly auto sales; with no deferments); $45.6 million in franchise restaurants and dining (with no deferments); and $23.8 million in entertainment only businesses (with no deferments).
  • At September 30, 2021, the hospitality portfolio was $397.2 million, or 3.8% of total loans and leases, excluding PPP loans (a non-GAAP measure), with $59.2 million in deferment. Approximately 80% ($317.7 million) represents “flagged” facilities, with the majority of the non-flagged being high-end destination hotels in Cape May (NJ), Avalon (NJ), and Long Island (NY). We believe the majority of the hotels have sufficient cash resources to get through the COVID-19 crisis.
  • At September 30, 2021, the healthcare portfolio was approximately $420.6 million, comprised predominantly of skilled nursing, which has been deemed an essential business and through a number of federal and state actions has been provided immunity from liability for COVID-19 related deaths. No deferments have been requested and there are no delinquencies.
  • The multi-family portfolio is highly seasoned, with a weighted average loan to value of 61.7% as of quarter-end. 54.3% of the portfolio was in New York City, of which 70.6% was in rent controlled/regulated properties. As of September 30, 2021, no deferments have been requested.
  • At September 30, 2021, investment CRE had a weighted average loan to value of 62.9%, with approximately 48.1% of the portfolio housed in New York, Philadelphia and surrounding markets. As of September 30, 2021, none of the portfolio was on deferment.

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

  • Total consumer-related deferments declined to $6.7 million, or 0.1% of total loans and leases, excluding PPP loans (a non-GAAP measure), at September 30, 2021, down from $8.4 million at June 30, 2021.
  • The $1.6 billion consumer installment loan portfolio outperformed industry peers with deferments dropping to 0.26% and 30+ day delinquency at only 0.80%. 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 Q3 2021.
  • The consumer installment portfolio has been managed to moderate growth and strengthening credit quality, by replacing run-off with CB Direct originations with higher FICO scores.

Key Profitability Trends

Net Interest Income

Net interest income totaled $219.9 million in Q3 2021, an increase of $81.1 million from Q2 2021, primarily due to a $334.8 million net increase in average interest-earning assets and a decrease in the cost of interest-bearing liabilities. Interest-earning asset growth was driven by increases in commercial and industrial loans, consumer loans and the purchases of PPP loans, offset by PPP loan forgiveness from the first two rounds and the latest round, which accelerated the recognition of net deferred loan origination fees, and decreases in commercial loans to mortgage companies and multi-family loans. Compared to Q2 2021, total loan yields increased 197 basis points to 5.71%. The increase is attributable to increased forgiveness of PPP loans and higher yields on C&I loans. Total borrowing costs increased by 12 basis points to 0.89% primarily due to the issuance of fixed-to-floating rate senior notes, the proceeds of which were used to redeem all outstanding shares of our Series C and Series D preferred stock offset by less reliance on borrowings due to higher deposits including the repayment of the FRB PPP Liquidity Facility, costing 0.35%. "As we've stated previously, it is difficult to predict net interest income in future periods because the timing of PPP forgiveness results in the accelerated recognition of net deferred fees and also affects the amount of net interest income expected to be earned while the PPP loans are held on our balance sheet," commented Mr. Sidhu.

Provision for Credit Losses

The provision for credit losses on loans and leases in Q3 2021 was $13.2 million, compared to a $3.3 million provision in Q2 2021. The provision in Q3 2021 was primarily to support continued growth in CB Direct consumer installment loan originations. The allowance for credit losses on loans and leases represented 1.65% of total loans and leases receivable, excluding PPP loans (a non-GAAP measure) at September 30, 2021, compared to 1.61% at June 30, 2021 and 2.02% at September 30, 2020. Customers' non-performing loans at September 30, 2021 were only 0.34% of total loans and leases, an improvement from 0.38% at September 30, 2020.

Non-Interest Income

Non-interest income totaled $25.6 million for Q3 2021, an increase of $8.8 million compared to Q2 2021. A technology-led new initiative for selling excess consumer installment loans into securitizations was launched earlier this year. This resulted in a $4.0 million gain on sale in Q3 2021, bringing YTD September 2021 consumer loan gains to $4.5 million. The SBA gains were $1.3 million in Q3 2021, bringing the YTD September 2021 SBA gains to $4.3 million. "We will continue to grow this initiative," commented Mr. Sidhu. The $6.1 million of gains realized from the sale of investment securities were used to offset a $6.2 million make-whole fee paid to a single high-cost deposit customer in Q3 2021.

Non-Interest Expense

The management of non-interest expenses remains a priority at Customers. However, this will not be at the expense of not making adequate investments with new technologies. Our Q3 2021 normalized expenses were about unchanged over Q2 2021, although our financial statements show an increase of $9.2 million compared to Q2 2021. The increase was primarily due to over $8.0 million of certain one-time or other transitory items including a $6.2 million make-whole fee paid to a single high-cost deposit customer, a litigation settlement amount of $1.2 million, and $0.6 million of increased outside service expense to assist with the PPP forgiveness process, and higher technology and servicing-related expenses of $1.7 million and a $0.6 million increase in the provision to credit losses for unfunded commitments. These increases were offset in part by a net decrease of $1.8 million in salaries and employee benefits primarily resulting from approximately $2.5 million of compensation expense associated with an executive's retirement and other one-time benefits in Q2 2021.

Taxes

Income tax expense from continuing operations increased by $16.2 million to $36.3 million in Q3 2021 from $20.1 million in Q2 2021 primarily due to an increase in projected pre-tax income from continuing operations. The effective tax rate from continuing operations remained relatively constant at approximately 24%. Customers expects the full-year 2021 effective tax rate from continuing operations to be approximately 20% to 25%.

Net Loss From Discontinued Operations

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

Outlook

“Looking ahead, we are very optimistic about the prospects of our company. The best in class tech agility of Customers Bancorp has allowed us to be a major participant in the PPP program and to incubate new lines of businesses that leverage our fintech relationships. We recently launched 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've achieved significant accretion in our capital levels over the past 12 months and our credit quality is expected to remain in line with or better than peers. The financial benefits of PPP aside, we project our recurring core earnings power to be $4.00 in 2021; $4.75 - $5.00 in 2022, an increase of 20% - 25% over 2021 core earnings; and we expect to achieve $6.00 in core EPS even sooner than the guidance we had provided for 2025,” concluded Mr. Sidhu.

Webcast

Date:

       

Thursday, October 28, 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 3rd Quarter Earnings Webcast.

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

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

Institutional Background

Customers Bancorp, Inc. (NYSE:CUBI) is a bank holding company located in West Reading, Pennsylvania engaged in banking and related businesses through its bank subsidiary, Customers Bank, a full-service bank with $19.1 billion in assets at September 30, 2021. A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender that provides a range of banking and lending services to small and medium-sized businesses, professionals, individuals and families. Services and products are available wherever permitted by law through mobile-first apps, online portals, and a network of offices and branches. Customers Bank provides blockchain-based digital payments via the Customers Bank Instant Token (CBIT) which allows clients to make real-time payments in US dollars, 24 hours a day, 7 days a week, 365 days a year.

“Safe Harbor” Statement

In addition to historical information, this press release may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: the adverse impact on the U.S. economy, including the markets in which we operate, of the coronavirus outbreak, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan and lease portfolio, the market value of our investment securities, the demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply; actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships; and the effects of any changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2020, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.

Q3 2021 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended September 30, 2021 and the preceding four quarters:

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

 

 

 

EARNINGS SUMMARY - UNAUDITED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Q3

Q2

Q1

Q4

Q3

Nine Months Ended

September 30,

 

2021

2021

2021

2020

2020

2021

2020

 

 

 

 

 

 

 

 

 

 

 

GAAP Profitability Metrics:

 

 

 

 

 

 

 

 

Net income available to common shareholders

(from continuing and discontinued operations)

$

110,241

 

$

58,042

 

$

33,204

 

$

52,831

 

$

47,085

 

$

201,487

 

$

65,706

 

 

Per share amounts:

 

 

 

 

 

 

 

 

 

Earnings per share - basic

$

3.40

 

$

1.80

 

$

1.04

 

$

1.67

 

$

1.49

 

$

6.26

 

$

2.09

 

 

 

Earnings per share - diluted

$

3.25

 

$

1.72

 

$

1.01

 

$

1.65

 

$

1.48

 

$

6.02

 

$

2.07

 

 

 

Book value per common share (1)

$

35.24

 

$

31.94

 

$

30.13

 

$

28.37

 

$

26.43

 

$

35.24

 

$

26.43

 

 

 

CUBI stock price (1)

$

43.02

 

$

38.99

 

$

31.82

 

$

18.18

 

$

11.20

 

$

43.02

 

$

11.20

 

 

 

CUBI stock price as % of book value (1)

122

%

122

%

106

%

64

%

42

%

122

%

42

%

 

Average shares outstanding - basic

32,449,853

 

32,279,625

 

31,883,946

 

31,638,447

 

31,517,504

 

32,206,547

 

31,462,284

 

 

Average shares outstanding - diluted

33,868,553

 

33,741,468

 

32,841,711

 

31,959,100

 

31,736,311

 

33,487,672

 

31,666,027

 

 

Shares outstanding (1)

32,537,976

 

32,353,256

 

32,238,762

 

31,705,088

 

31,555,124

 

32,537,976

 

31,555,124

 

 

Return on average assets ("ROAA")

2.33

%

1.27

%

0.80

%

1.23

%

1.12

%

1.49

%

0.69

%

 

Return on average common equity ("ROCE")

40.82

%

23.22

%

14.66

%

24.26

%

23.05

%

26.99

%

11.01

%

 

Efficiency ratio

33.42

%

46.59

%

48.89

%

43.56

%

46.76

%

41.07

%

50.28

%

 

Non-GAAP Profitability Metrics (2):

 

 

 

 

 

 

 

 

Core earnings

$

113,876

 

$

59,303

 

$

70,308

 

$

54,588

 

$

38,439

 

$

243,487

 

$

64,939

 

 

Adjusted pre-tax pre-provision net income

$

167,215

 

$

86,467

 

$

86,769

 

$

77,896

 

$

64,146

 

$

340,451

 

$

162,302

 

 

Per share amounts:

 

 

 

 

 

 

 

 

 

Core earnings per share - diluted

$

3.36

 

$

1.76

 

$

2.14

 

$

1.71

 

$

1.21

 

$

7.27

 

$

2.05

 

 

 

Tangible book value per common share (1)

$

35.12

 

$

31.82

 

$

30.01

 

$

27.92

 

$

25.97

 

$

35.12

 

$

25.97

 

 

 

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

122

%

123

%

106

%

65

%

43

%

122

%

43

%

 

Core ROAA

2.35

%

1.30

%

1.61

%

1.26

%

0.93

%

1.76

%

0.69

%

 

Core ROCE

42.16

%

23.72

%

31.03

%

25.06

%

18.82

%

32.61

%

10.88

%

 

Adjusted ROAA - pre-tax and pre-provision

3.36

%

1.80

%

1.90

%

1.70

%

1.43

%

2.37

%

1.47

%

 

Adjusted ROCE - pre-tax and pre-provision

60.81

%

33.27

%

36.80

%

34.20

%

29.73

%

44.30

%

25.41

%

 

Net interest margin, tax equivalent

4.59

%

2.98

%

3.00

%

2.78

%

2.50

%

3.55

%

2.68

%

 

Net interest margin, tax equivalent, excluding PPP loans

3.24

%

3.30

%

2.99

%

3.04

%

2.86

%

3.17

%

2.93

%

 

Core efficiency ratio

30.36

%

44.33

%

41.13

%

42.89

%

46.10

%

37.31

%

48.68

%

 

Asset Quality:

 

 

 

 

 

 

 

 

Net charge-offs

$

7,104

 

$

6,591

 

$

12,521

 

$

8,472

 

$

17,299

 

$

26,216

 

$

46,335

 

 

Annualized net charge-offs to average total loans and leases

0.17

%

0.16

%

0.33

%

0.21

%

0.45

%

0.22

%

0.49

%

 

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

0.34

%

0.27

%

0.30

%

0.45

%

0.38

%

0.34

%

0.38

%

 

Reserves to NPLs (1)

252.68

%

269.96

%

264.21

%

204.48

%

244.70

%

252.68

%

244.70

%

 

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

0.27

%

0.24

%

0.26

%

0.39

%

0.34

%

0.27

%

0.34

%

 

Customers Bank Capital Ratios (3):

 

 

 

 

 

 

 

 

Common equity Tier 1 capital to risk-weighted assets

12.77

%

12.40

%

11.75

%

10.62

%

10.12

%

12.77

%

10.12

%

 

Tier 1 capital to risk-weighted assets

12.77

%

12.40

%

11.75

%

10.62

%

10.12

%

12.77

%

10.12

%

 

Total capital to risk-weighted assets

14.16

%

13.77

%

13.11

%

12.06

%

11.62

%

14.16

%

11.62

%

 

Tier 1 capital to average assets (leverage ratio)

8.66

%

9.07

%

9.35

%

9.21

%

9.29

%

8.66

%

9.29

%

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

(2) Non-GAAP measures exclude net loss from discontinued operations, loss on sale of foreign subsidiaries, unrealized gains (losses) on loans held for sale, investment securities gains and losses, loss on cash flow hedge derivative terminations, severance expense, merger and acquisition-related expenses, losses realized from the sale of non-QM residential mortgage loans, loss upon acquisition of interest-only GNMA securities, legal reserves, credit valuation adjustments on derivatives, risk participation agreement mark-to-market adjustments, deposit relationship adjustment fees, loss on redemption of preferred stock, goodwill and intangible assets, and PPP loans. These notable items are not included in Customers' disclosures of core earnings and other core profitability metrics. Please note that not each of the aforementioned adjustments affected the reported amount in each of the periods presented. Customers' reasons for the use of these non-GAAP measures and a detailed reconciliation between the non-GAAP measures and the comparable GAAP amounts are included at the end of this document.

 

(3) Regulatory capital ratios are estimated for Q3 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 Q3 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)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

Q3

 

Q2

 

Q1

 

Q4

 

Q3

 

September 30,

 

2021

 

2021

 

2021

 

2020

 

2020

 

2021

 

2020

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

$

233,097

 

 

$

153,608

 

 

$

152,117

 

 

$

145,414

 

 

$

132,107

 

 

$

538,822

 

 

$

366,634

 

Investment securities

8,905

 

 

8,327

 

 

7,979

 

 

6,777

 

 

6,297

 

 

25,211

 

 

17,429

 

Other

849

 

 

946

 

 

1,019

 

 

902

 

 

1,246

 

 

2,814

 

 

6,149

 

Total interest income

242,851

 

 

162,881

 

 

161,115

 

 

153,093

 

 

139,650

 

 

566,847

 

 

390,212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

15,915

 

 

15,653

 

 

15,658

 

 

16,107

 

 

18,347

 

 

47,226

 

 

75,939

 

FHLB advances

5

 

 

963

 

 

5,192

 

 

5,749

 

 

5,762

 

 

6,160

 

 

15,889

 

Subordinated debt

2,689

 

 

2,689

 

 

2,689

 

 

2,688

 

 

2,689

 

 

8,067

 

 

8,066

 

FRB PPP liquidity facility, federal funds purchased and other

borrowings

4,350

 

 

4,819

 

 

4,845

 

 

5,603

 

 

5,413

 

 

14,014

 

 

9,576

 

Total interest expense

22,959

 

 

24,124

 

 

28,384

 

 

30,147

 

 

32,211

 

 

75,467

 

 

109,470

 

Net interest income

219,892

 

 

138,757

 

 

132,731

 

 

122,946

 

 

107,439

 

 

491,380

 

 

280,742

 

Provision (benefit) for credit losses on loans and leases

13,164

 

 

3,291

 

 

(2,919)

 

 

(2,913)

 

 

12,955

 

 

13,536

 

 

65,688

 

Net interest income after provision (benefit)

for credit losses on loans and leases

206,728

 

 

135,466

 

 

135,650

 

 

125,859

 

 

94,484

 

 

477,844

 

 

215,054

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interchange and card revenue

83

 

 

84

 

 

85

 

 

91

 

 

92

 

 

252

 

 

555

 

Deposit fees

994

 

 

891

 

 

863

 

 

823

 

 

650

 

 

2,748

 

 

1,703

 

Commercial lease income

5,213

 

 

5,311

 

 

5,205

 

 

4,853

 

 

4,510

 

 

15,729

 

 

13,286

 

Bank-owned life insurance

1,988

 

 

2,765

 

 

1,679

 

 

1,744

 

 

1,746

 

 

6,432

 

 

5,265

 

Mortgage warehouse transactional fees

3,100

 

 

3,265

 

 

4,247

 

 

3,681

 

 

3,320

 

 

10,612

 

 

7,854

 

Gain (loss) on sale of SBA and other loans

5,359

 

 

1,900

 

 

1,575

 

 

1,689

 

 

286

 

 

8,834

 

 

320

 

Mortgage banking income (loss)

425

 

 

386

 

 

463

 

 

346

 

 

1,013

 

 

1,274

 

 

1,347

 

Gain (loss) on sale of investment securities

6,063

 

 

1,812

 

 

23,566

 

 

44

 

 

11,707

 

 

31,441

 

 

20,035

 

Unrealized gain (loss) on investment securities

 

 

1,746

 

 

974

 

 

1,387

 

 

238

 

 

2,720

 

 

60

 

Loss on sale of foreign subsidiaries

 

 

(2,840)

 

 

 

 

 

 

 

 

(2,840)

 

 

 

Unrealized gain (loss) on derivatives

524

 

 

(439)

 

 

2,537

 

 

804

 

 

549

 

 

2,622

 

 

(4,755)

 

Loss on cash flow hedge derivative terminations

 

 

 

 

(24,467)

 

 

 

 

 

 

(24,467)

 

 

 

Other

1,837

 

 

1,941

 

 

1,741

 

 

621

 

 

753

 

 

5,519

 

 

2,066

 

Total non-interest income

25,586

 

 

16,822

 

 

18,468

 

 

16,083

 

 

24,864

 

 

60,876

 

 

47,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

26,268

 

 

28,023

 

 

23,971

 

 

25,600

 

 

24,752

 

 

78,262

 

 

68,467

 

Technology, communication and bank operations

21,281

 

 

19,618

 

 

19,988

 

 

16,021

 

 

13,005

 

 

60,887

 

 

34,647

 

Professional services

8,249

 

 

8,234

 

 

6,289

 

 

5,449

 

 

4,421

 

 

22,772

 

 

10,939

 

Occupancy

2,704

 

 

2,482

 

 

2,621

 

 

2,742

 

 

3,368

 

 

7,807

 

 

8,620

 

Commercial lease depreciation

4,493

 

 

4,415

 

 

4,291

 

 

3,982

 

 

3,663

 

 

13,199

 

 

10,733

 

FDIC assessments, non-income taxes and regulatory fees

2,313

 

 

2,602

 

 

2,719

 

 

2,642

 

 

3,784

 

 

7,634

 

 

9,019

 

Merger and acquisition related expenses

 

 

 

 

418

 

 

709

 

 

658

 

 

418

 

 

658

 

Loan workout

198

 

 

102

 

 

(261)

 

 

123

 

 

846

 

 

39

 

 

3,020

 

Advertising and promotion

302

 

 

313

 

 

561

 

 

 

 

 

 

1,176

 

 

1,795

 

Deposit relationship adjustment fees

6,216

 

 

 

 

 

 

 

 

 

 

6,216

 

 

 

Other

7,985

 

 

5,034

 

 

1,330

 

 

2,665

 

 

1,788

 

 

14,349

 

 

7,145

 

Total non-interest expense

80,009

 

 

70,823

 

 

61,927

 

 

59,933

 

 

56,285

 

 

212,759

 

 

155,043

 

Income before income tax expense

152,305

 

 

81,465

 

 

92,191

 

 

82,009

 

 

63,063

 

 

325,961

 

 

107,747

 

Income tax expense

36,263

 

 

20,124

 

 

17,560

 

 

23,447

 

 

12,016

 

 

73,947

 

 

23,270

 

Net income from continuing operations

116,042

 

 

61,341

 

 

74,631

 

 

58,562

 

 

51,047

 

 

252,014

 

 

84,477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations before income taxes

 

 

 

 

(20,354)

 

 

(3,539)

 

 

(347)

 

 

(20,354)

 

 

(10,259)

 

Income tax expense (benefit) from discontinued operations

 

 

 

 

17,682

 

 

(1,222)

 

 

185

 

 

17,682

 

 

(2,114)

 

Net loss from discontinued operations

 

 

 

 

(38,036)

 

 

(2,317)

 

 

(532)

 

 

(38,036)

 

 

(8,145)

 

Net income

116,042

 

 

61,341

 

 

36,595

 

 

56,245

 

 

50,515

 

 

213,978

 

 

76,332

 

Preferred stock dividends

2,981

 

 

3,299

 

 

3,391

 

 

3,414

 

 

3,430

 

 

9,671

 

 

10,626

 

Loss on redemption of preferred stock

2,820

 

 

 

 

 

 

 

 

 

 

2,820

 

 

 

Net income available to common shareholders

$

110,241

 

 

$

58,042

 

 

$

33,204

 

 

$

52,831

 

 

$

47,085

 

 

$

201,487

 

 

$

65,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share from continuing operations

$

3.40

 

 

$

1.80

 

 

$

2.23

 

 

$

1.74

 

 

$

1.51

 

 

$

7.44

 

 

$

2.35

 

Basic earnings per common share

$

3.40

 

 

$

1.80

 

 

$

1.04

 

 

$

1.67

 

 

$

1.49

 

 

$

6.26

 

 

$

2.09

 

Diluted earnings per common share from continuing operations

$

3.25

 

 

$

1.72

 

 

$

2.17

 

 

$

1.73

 

 

$

1.50

 

 

$

7.15

 

 

$

2.33

 

Diluted earnings per common share

$

3.25

 

 

$

1.72

 

 

$

1.01

 

 

$

1.65

 

 

$

1.48

 

 

$

6.02

 

 

$

2.07

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET - UNAUDITED

(Dollars in thousands)

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

2021

 

2021

 

2021

 

2020

 

2020

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

51,169

 

 

$

36,837

 

 

$

3,123

 

 

$

78,090

 

 

$

5,822

 

Interest earning deposits

1,000,885

 

 

393,663

 

 

512,241

 

 

615,264

 

 

325,594

 

Cash and cash equivalents

1,052,054

 

 

430,500

 

 

515,364

 

 

693,354

 

 

331,416

 

Investment securities, at fair value

1,866,697

 

 

1,526,792

 

 

1,441,904

 

 

1,210,285

 

 

1,133,831

 

Loans held for sale

29,957

 

 

34,540

 

 

46,106

 

 

79,086

 

 

26,689

 

Loans receivable, mortgage warehouse, at fair value

2,557,624

 

 

2,855,284

 

 

3,407,622

 

 

3,616,432

 

 

3,913,593

 

Loans receivable, PPP

4,957,357

 

 

6,305,056

 

 

5,178,089

 

 

4,561,365

 

 

4,964,105

 

Loans and leases receivable

7,970,599

 

 

7,772,142

 

 

7,536,489

 

 

7,575,368

 

 

7,700,892

 

Allowance for credit losses on loans and leases

(131,496)

 

 

(125,436)

 

 

(128,736)

 

 

(144,176)

 

 

(155,561)

 

Total loans and leases receivable, net of allowance for credit

losses on loans and leases

15,354,084

 

 

16,807,046

 

 

15,993,464

 

 

15,608,989

 

 

16,423,029

 

FHLB, Federal Reserve Bank, and other restricted stock

57,184

 

 

39,895

 

 

69,420

 

 

71,368

 

 

70,387

 

Accrued interest receivable

93,514

 

 

90,009

 

 

83,186

 

 

80,412

 

 

65,668

 

Bank premises and equipment, net

9,944

 

 

10,391

 

 

10,943

 

 

11,225

 

 

11,308

 

Bank-owned life insurance

331,423

 

 

329,421

 

 

281,923

 

 

280,067

 

 

277,826

 

Goodwill and other intangibles

3,794

 

 

3,853

 

 

3,911

 

 

3,969

 

 

4,028

 

Other assets

310,271

 

 

362,661

 

 

371,439

 

 

338,438

 

 

354,010

 

Assets of discontinued operations

 

 

 

 

 

 

62,055

 

 

80,535

 

Total assets

$

19,108,922

 

 

$

19,635,108

 

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing deposits

$

4,954,331

 

 

$

2,699,869

 

 

$

2,687,628

 

 

$

2,356,998

 

 

$

2,327,017

 

Interest bearing deposits

12,016,694

 

 

11,174,070

 

 

9,784,812

 

 

8,952,931

 

 

8,512,060

 

Total deposits

16,971,025

 

 

13,873,939

 

 

12,472,440

 

 

11,309,929

 

 

10,839,077

 

Federal funds purchased

 

 

 

 

365,000

 

 

250,000

 

 

680,000

 

FHLB advances

 

 

 

 

850,000

 

 

850,000

 

 

850,000

 

Other borrowings

223,151

 

 

124,240

 

 

124,138

 

 

124,037

 

 

123,935

 

Subordinated debt

181,603

 

 

181,534

 

 

181,464

 

 

181,394

 

 

181,324

 

FRB PPP liquidity facility

 

 

3,865,865

 

 

3,284,156

 

 

4,415,016

 

 

4,811,009

 

Accrued interest payable and other liabilities

448,844

 

 

338,801

 

 

351,741

 

 

152,082

 

 

185,927

 

Liabilities of discontinued operations

 

 

 

 

 

 

39,704

 

 

55,964

 

Total liabilities

17,824,623

 

 

18,384,379

 

 

17,628,939

 

 

17,322,162

 

 

17,727,236

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

137,794

 

 

217,471

 

 

217,471

 

 

217,471

 

 

217,471

 

Common stock

33,818

 

 

33,634

 

 

33,519

 

 

32,986

 

 

32,836

 

Additional paid in capital

525,894

 

 

519,294

 

 

515,318

 

 

455,592

 

 

452,965

 

Retained earnings

607,085

 

 

496,844

 

 

438,802

 

 

438,581

 

 

385,750

 

Accumulated other comprehensive income (loss)

1,488

 

 

5,266

 

 

5,391

 

 

(5,764)

 

 

(15,751)

 

Treasury stock, at cost

(21,780)

 

 

(21,780)

 

 

(21,780)

 

 

(21,780)

 

 

(21,780)

 

Total shareholders' equity

1,284,299

 

 

1,250,729

 

 

1,188,721

 

 

1,117,086

 

 

1,051,491

 

Total liabilities & shareholders' equity

$

19,108,922

 

 

$

19,635,108

 

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

September 30, 2021

 

June 30, 2021

 

September 30, 2020

 

Average

Balance

Average

Yield or

Cost (%)

 

Average

Balance

Average

Yield or

Cost (%)

 

Average

Balance

Average

Yield or

Cost (%)

Assets

 

 

 

 

 

 

 

 

Interest earning deposits

$

1,279,983

 

0.15%

 

$

646,342

 

0.12%

 

$

686,928

 

0.12%

Investment securities (1)

1,511,319

 

2.36%

 

1,512,644

 

2.20%

 

950,723

 

2.65%

Loans and leases:

 

 

 

 

 

 

 

 

Commercial loans to mortgage companies

2,658,020

 

3.14%

 

2,737,629

 

3.09%

 

2,847,169

 

2.90%

Multi-family loans

1,443,846

 

3.64%

 

1,551,370

 

3.88%

 

1,989,074

 

3.72%

Commercial and industrial loans and leases (2)

3,024,620

 

3.76%

 

2,878,045

 

3.59%

 

2,599,806

 

3.82%

Loans receivable, PPP

5,778,367

 

8.04%

 

6,133,184

 

2.69%

 

4,909,197

 

1.97%

Non-owner occupied commercial real estate loans

1,346,629

 

3.73%

 

1,368,695

 

3.86%

 

1,388,306

 

3.70%

Residential mortgages

325,851

 

3.50%

 

346,284

 

3.62%

 

414,781

 

3.97%

Installment loans

1,615,411

 

9.21%

 

1,467,595

 

9.37%

 

1,255,505

 

8.37%

Total loans and leases (3)

16,192,744

 

5.71%

 

16,482,802

 

3.74%

 

15,403,838

 

3.41%

Other interest-earning assets

49,780

 

2.86%

 

57,208

 

5.32%

 

79,656

 

5.23%

Total interest-earning assets

19,033,826

 

5.06%

 

18,698,996

 

3.49%

 

17,121,145

 

3.25%

Non-interest-earning assets

705,514

 

 

 

607,952

 

 

 

666,477

 

 

Assets of discontinued operations

 

 

 

 

 

 

77,952

 

 

Total assets

$

19,739,340

 

 

 

$

19,306,948

 

 

 

$

17,865,574

 

 

Liabilities

 

 

 

 

 

 

 

 

Interest checking accounts

$

4,537,421

 

0.67%

 

$

3,503,242

 

0.76%

 

$

2,370,709

 

0.78%

Money market deposit accounts

5,131,433

 

0.43%

 

4,859,614

 

0.47%

 

3,786,032

 

0.65%

Other savings accounts

1,376,077

 

0.50%

 

1,456,777

 

0.57%

 

1,125,273

 

1.06%

Certificates of deposit

614,404

 

0.59%

 

658,698

 

0.78%

 

1,344,134

 

1.35%

Total interest-bearing deposits (4)

11,659,335

 

0.54%

 

10,478,331

 

0.60%

 

8,626,148

 

0.85%

FRB PPP liquidity facility

2,788,897

 

0.35%

 

3,858,733

 

0.35%

 

4,479,036

 

0.35%

Borrowings

371,077

 

4.90%

 

531,757

 

3.85%

 

1,236,127

 

3.19%

Total interest-bearing liabilities

14,819,309

 

0.62%

 

14,868,821

 

0.65%

 

14,341,311

 

0.89%

Non-interest-bearing deposits (4)

3,335,198

 

 

 

2,889,781

 

 

 

2,194,689

 

 

Total deposits and borrowings

18,154,507

 

0.50%

 

17,758,602

 

0.54%

 

16,536,000

 

0.78%

Other non-interest-bearing liabilities

310,519

 

 

 

328,251

 

 

 

243,812

 

 

Liabilities of discontinued operations

 

 

 

 

 

 

55,714

 

 

Total liabilities

18,465,026

 

 

 

18,086,853

 

 

 

16,835,526

 

 

Shareholders' equity

1,274,314

 

 

 

1,220,095

 

 

 

1,030,048

 

 

Total liabilities and shareholders' equity

$

19,739,340

 

 

 

$

19,306,948

 

 

 

$

17,865,574

 

 

Interest spread

 

4.56%

 

 

2.95%

 

 

2.47%

Net interest margin

 

4.58%

 

 

2.98%

 

 

2.50%

Net interest margin tax equivalent (5)

 

4.59%

 

 

2.98%

 

 

2.50%

Net interest margin tax equivalent excl. PPP ( 6)

 

3.24%

 

 

3.30%

 

 

2.86%

 

 

 

 

 

 

 

 

 

(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 0.42%, 0.47% and 0.67% for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

(6) Non-GAAP tax-equivalent basis, as described in note (5) for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

Nine Months Ended

 

September 30, 2021

 

September 30, 2020

 

Average Balance

Average Yield

or Cost (%)

 

Average Balance

Average Yield

or Cost (%)

Assets

 

 

 

 

 

Interest earning deposits

$

1,034,923

 

0.13%

 

$

614,863

 

0.69%

Investment securities (1)

1,461,070

 

2.30%

 

741,566

 

3.13%

Loans and leases:

 

 

 

 

 

Commercial loans to mortgage companies

2,837,549

 

3.11%

 

2,383,331

 

3.14%

Multi-family loans

1,560,565

 

3.78%

 

2,070,564

 

3.89%

Commercial and industrial loans and leases (2)

2,917,643

 

3.77%

 

2,507,231

 

4.18%

Loans receivable, PPP

5,515,819

 

4.78%

 

2,563,299

 

1.88%

Non-owner occupied commercial real estate loans

1,354,745

 

3.81%

 

1,372,090

 

3.94%

Residential mortgages

348,369

 

3.64%

 

430,058

 

3.82%

Installment loans

1,470,024

 

9.21%

 

1,267,806

 

8.74%

Total loans and leases (3)

16,004,714

 

4.50%

 

12,594,379

 

3.89%

Other interest-earning assets

62,205

 

3.94%

 

86,454

 

4.60%

Total interest-earning assets

18,562,912

 

4.08%

 

14,037,262

 

3.71%

Non-interest-earning assets

632,202

 

 

 

599,274

 

 

Assets of discontinued operations

 

 

 

79,854

 

 

Total assets

$

19,195,114

 

 

 

$

14,716,390

 

 

Liabilities

 

 

 

 

 

Interest checking accounts

$

3,584,223

 

0.74%

 

$

2,050,184

 

0.90%

Money market deposit accounts

4,811,540

 

0.48%

 

3,486,445

 

1.10%

Other savings accounts

1,415,595

 

0.59%

 

1,147,994

 

1.68%

Certificates of deposit

646,257

 

0.78%

 

1,533,628

 

1.64%

Total interest-bearing deposits (4)

10,457,615

 

0.60%

 

8,218,251

 

1.23%

FRB PPP liquidity facility

3,525,560

 

0.35%

 

1,816,849

 

0.35%

Borrowings

688,620

 

3.69%

 

1,581,498

 

2.43%

Total interest-bearing liabilities

14,671,795

 

0.69%

 

11,616,598

 

1.26%

Non-interest-bearing deposits (4)

3,016,837

 

 

 

1,887,463

 

 

Total deposits and borrowings

17,688,632

 

0.57%

 

13,504,061

 

1.08%

Other non-interest-bearing liabilities

295,752

 

 

 

143,118

 

 

Liabilities of discontinued operations

 

 

 

54,310

 

 

Total liabilities

17,984,384

 

 

 

13,701,489

 

 

Shareholders' equity

1,210,730

 

 

 

1,014,901

 

 

Total liabilities and shareholders' equity

$

19,195,114

 

 

 

$

14,716,390

 

 

Interest spread

 

3.51%

 

 

2.63%

Net interest margin

 

3.54%

 

 

2.67%

Net interest margin tax equivalent (5)

 

3.55%

 

 

2.68%

Net interest margin tax equivalent excl. PPP (6)

 

3.17%

 

 

2.93%

 

 

 

 

 

 

(1) For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.

(2) Includes owner occupied commercial real estate loans.

(3) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees.

(4) Total costs of deposits (including interest bearing and non-interest bearing) were 0.47% and 1.00% for the nine months ended September 30, 2021 and 2020, respectively.

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the nine months ended September 30, 2021 and 2020, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

(6) Non-GAAP tax-equivalent basis as described in note (5), for the nine months ended September 30, 2021 and 2020, excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

2021

 

2021

 

2021

 

2020

 

2020

Commercial:

 

 

 

 

 

 

 

 

 

Multi-family

$

1,387,166

 

 

$

1,497,485

 

 

$

1,659,529

 

 

$

1,761,301

 

 

$

1,950,300

 

Loans to mortgage companies

2,626,483

 

 

2,922,217

 

 

3,463,490

 

 

3,657,350

 

 

3,947,828

 

Commercial & industrial

2,604,367

 

 

2,293,723

 

 

2,164,784

 

 

2,304,206

 

 

2,186,480

 

Commercial real estate owner occupied

656,044

 

 

653,649

 

 

590,093

 

 

572,338

 

 

557,595

 

Loans receivable, PPP

4,957,357

 

 

6,305,056

 

 

5,178,089

 

 

4,561,365

 

 

4,964,105

 

Commercial real estate non-owner occupied

1,144,643

 

 

1,206,646

 

 

1,194,832

 

 

1,213,815

 

 

1,233,882

 

Construction

198,607

 

 

179,198

 

 

156,837

 

 

140,905

 

 

122,963

 

Total commercial loans and leases

13,574,667

 

 

15,057,974

 

 

14,407,654

 

 

14,211,280

 

 

14,963,153

 

Consumer:

 

 

 

 

 

 

 

 

 

Residential

260,820

 

 

273,493

 

 

295,654

 

 

323,322

 

 

343,775

 

Manufactured housing

55,635

 

 

57,904

 

 

59,977

 

 

62,243

 

 

64,638

 

Installment

1,624,415

 

 

1,577,651

 

 

1,405,021

 

 

1,235,406

 

 

1,233,713

 

Total consumer loans

1,940,870

 

 

1,909,048

 

 

1,760,652

 

 

1,620,971

 

 

1,642,126

 

Total loans and leases

$

15,515,537

 

 

$

16,967,022

 

 

$

16,168,306

 

 

$

15,832,251

 

 

$

16,605,279

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END DEPOSIT COMPOSITION - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

2021

 

2021

 

2021

 

2020

 

2020

 

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing

$

4,954,331

 

 

$

2,699,869

 

 

$

2,687,628

 

 

$

2,356,998

 

 

$

2,327,017

 

Demand, interest bearing

5,023,081

 

 

4,206,355

 

 

3,228,941

 

 

2,384,691

 

 

2,308,627

 

Total demand deposits

9,977,412

 

 

6,906,224

 

 

5,916,569

 

 

4,741,689

 

 

4,635,644

 

Savings

1,310,343

 

 

1,431,756

 

 

1,483,482

 

 

1,314,817

 

 

1,173,641

 

Money market

5,090,121

 

 

4,908,809

 

 

4,406,508

 

 

4,601,492

 

 

4,057,366

 

Time deposits

593,149

 

 

627,150

 

 

665,881

 

 

651,931

 

 

972,426

 

Total deposits

$

16,971,025

 

 

$

13,873,939

 

 

$

12,472,440

 

 

$

11,309,929

 

 

$

10,839,077

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY - UNAUDITED

(Dollars in thousands)

As of September 30, 2021

As of June 30, 2021

As of September 30, 2020

 

Total loans

Non accrual /NPLs

Allowance for credit losses

Total NPLs

to total

loans

Total reserves to total NPLs

Total loans

Non accrual /NPLs

Allowance for credit losses

Total NPLs to total loans

Total reserves to total NPLs

Total loans

Non accrual /NPLs

Allowance for credit losses

Total NPLs to total loans

Total reserves to total NPLs

 

Loan type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

$

1,369,876

 

$

24,524

 

$

4,397

 

1.79

%

17.93

%

$

1,497,485

 

$

21,595

 

$

5,028

 

1.44

%

23.28

%

$

1,950,300

 

$

11,710

 

$

15,026

 

0.60

%

128.32

%

Commercial & industrial(1)

2,673,226

 

6,951

 

10,860

 

0.26

%

156.24

%

2,360,656

 

6,717

 

8,127

 

0.28

%

120.99

%

2,220,715

 

9,633

 

12,926

 

0.43

%

134.18

%

Commercial real estate owner occupied

656,044

 

2,412

 

3,617

 

0.37

%

149.96

%

653,649

 

2,688

 

4,464

 

0.41

%

166.07

%

557,595

 

3,599

 

9,552

 

0.65

%

265.41

%

Commercial real estate non-owner occupied

1,144,643

 

2,845

 

7,375

 

0.25

%

259.23

%

1,206,646

 

 

7,374

 

%

%

1,215,516

 

2,408

 

20,200

 

0.20

%

838.87

%

Construction

198,607

 

 

886

 

%

%

179,198

 

 

2,643

 

%

%

122,963

 

 

6,423

 

%

%

Total commercial loans and leases receivable

6,042,396

 

36,732

 

27,135

 

0.61

%

73.87

%

5,897,634

 

31,000

 

27,636

 

0.53

%

89.15

%

6,067,089

 

27,350

 

64,127

 

0.45

%

234.47

%

Residential

248,153

 

7,738

 

1,912

 

3.12

%

24.71

%

266,911

 

8,991

 

2,299

 

3.37

%

25.57

%

335,452

 

10,634

 

4,649

 

3.17

%

43.72

%

Manufactured housing

55,635

 

3,520

 

4,410

 

6.33

%

125.28

%

57,904

 

3,239

 

4,372

 

5.59

%

134.98

%

64,638

 

2,778

 

5,625

 

4.30

%

202.48

%

Installment

1,624,415

 

3,544

 

98,039

 

0.22

%

2766.34

%

1,549,693

 

2,728

 

91,129

 

0.18

%

3340.51

%

1,233,713

 

3,118

 

81,160

 

0.25

%

2602.95

%

Total consumer loans receivable

1,928,203

 

14,802

 

104,361

 

0.77

%

705.05

%

1,874,508

 

14,958

 

97,800

 

0.80

%

653.83

%

1,633,803

 

16,530

 

91,434

 

1.01

%

553.14

%

Loans and leases receivable(1)

7,970,599

 

51,534

 

131,496

 

0.65

%

255.16

%

7,772,142

 

45,958

 

125,436

 

0.59

%

272.94

%

7,700,892

 

43,880

 

155,561

 

0.57

%

354.51

%

Loans receivable, PPP

4,957,357

 

 

 

%

%

6,305,056

 

 

 

%

%

4,964,105

 

 

 

%

%

Loans receivable, mortgage warehouse, at fair value

2,557,624

 

 

 

%

%

2,855,284

 

 

 

%

%

3,913,593

 

 

 

%

%

Total loans held for sale

29,957

 

507

 

 

1.69

%

%

34,540

 

507

 

 

1.47

%

%

26,689

 

19,691

 

 

73.78

%

%

Total portfolio

$

15,515,537

 

$

52,041

 

$

131,496

 

0.34

%

252.68

%

$

16,967,022

 

$

46,465

 

$

125,436

 

0.27

%

269.96

%

$

16,605,279

 

$

63,571

 

$

155,561

 

0.38

%

244.70

%

(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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3

 

Q2

 

Q1

 

Q4

 

Q3

 

Nine Months Ended September 30,

 

2021

 

2021

 

2021

 

2020

 

2020

 

2021

 

2020

Loan type

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

$

 

 

$

 

 

$

1,132

 

 

$

 

 

$

 

 

$

1,132

 

 

$

 

Commercial & industrial

116

 

 

(283)

 

 

375

 

 

155

 

 

(55)

 

 

208

 

 

(16)

 

Commercial real estate owner occupied

50

 

 

(1)

 

 

134

 

 

12

 

 

44

 

 

183

 

 

39

 

Commercial real estate non-owner occupied

943

 

 

(59)

 

 

(10)

 

 

(35)

 

 

8,923

 

 

874

 

 

24,521

 

Construction

(3)

 

 

(114)

 

 

(5)

 

 

(6)

 

 

(6)

 

 

(122)

 

 

(122)

 

Residential

54

 

 

(12)

 

 

40

 

 

46

 

 

(17)

 

 

82

 

 

(72)

 

Installment

5,944

 

 

7,060

 

 

10,855

 

 

8,300

 

 

8,410

 

 

23,859

 

 

21,985

 

Total net charge-offs (recoveries)

from loans held for investment

$

7,104

 

 

$

6,591

 

 

$

12,521

 

 

$

8,472

 

 

$

17,299

 

 

$

26,216

 

 

$

46,335

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

Q3 2021

 

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

2021

 

2020

(dollars in thousands except per share data)

USD

Per share

 

USD

Per share

 

USD

Per share

 

USD

Per share

 

USD

Per share

 

USD

Per share

 

USD

Per share

GAAP net income to common shareholders

$

110,241

 

$

3.25

 

 

$

58,042

 

$

1.72

 

 

$

33,204

 

$

1.01

 

 

$

52,831

 

$

1.65

 

 

$

47,085

 

$

1.48

 

 

$

201,487

 

$

6.02

 

 

$

65,706

 

$

2.07

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

 

 

 

 

 

38,036

 

1.16

 

 

2,317

 

0.07

 

 

532

 

0.02

 

 

38,036

 

1.14

 

 

8,145

 

0.26

 

Severance expense

 

 

 

1,517

 

0.04

 

 

 

 

 

 

 

 

 

 

 

1,517

 

0.05

 

 

 

 

Merger and acquisition related expenses

 

 

 

 

 

 

320

 

0.01

 

 

508

 

0.02

 

 

530

 

0.02

 

 

320

 

0.01

 

 

530

 

0.02

 

Legal reserves

897

 

0.03

 

 

 

 

 

 

 

 

 

 

 

258

 

0.01

 

 

897

 

0.03

 

 

258

 

0.01

 

(Gains) losses on investment securities

(4,591)

 

(0.14)

 

 

(2,694)

 

(0.08)

 

 

(18,773)

 

(0.57)

 

 

(1,419)

 

(0.04)

 

 

(9,662)

 

(0.30)

 

 

(26,058)

 

(0.78)

 

 

(15,993)

 

(0.51)

 

Loss on sale of foreign subsidiaries

 

 

 

2,150

 

0.06

 

 

 

 

 

 

 

 

 

 

 

2,150

 

0.06

 

 

 

 

Loss on cash flow hedge derivative terminations

 

 

 

 

 

 

18,716

 

0.57

 

 

 

 

 

 

 

 

18,716

 

0.56

 

 

 

 

Derivative credit valuation adjustment

(198)

 

(0.01)

 

 

288

 

0.01

 

 

(1,195)

 

(0.04)

 

 

(448)

 

(0.01)

 

 

(304)

 

(0.01)

 

 

(1,105)

 

(0.03)

 

 

6,259

 

0.20

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,080)

 

(0.03)

 

Deposit relationship adjustment fees

4,707

 

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,707

 

0.14

 

 

 

 

Loss on redemption of preferred stock

2,820

 

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,820

 

0.08

 

 

 

 

Unrealized losses on loans held for sale

 

 

 

 

 

 

 

 

 

799

 

0.03

 

 

 

 

 

 

 

 

1,114

 

0.04

 

Core earnings

$

113,876

 

$

3.36

 

 

$

59,303

 

$

1.76

 

 

$

70,308

 

$

2.14

 

 

$

54,588

 

$

1.71

 

 

$

38,439

 

$

1.21

 

 

$

243,487

 

$

7.27

 

 

$

64,939

 

$

2.05

 

 

 

 

Core Return on Average Assets - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

(Dollars in thousands, except per share data)

Q3 2021

 

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

2021

 

2020

GAAP net income

$

116,042

 

 

$

61,341

 

 

$

36,595

 

 

$

56,245

 

 

$

50,515

 

 

$

213,978

 

 

$

76,332

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

 

 

 

38,036

 

 

2,317

 

 

532

 

 

38,036

 

 

8,145

 

Severance expense

 

 

1,517

 

 

 

 

 

 

 

 

1,517

 

 

 

Merger and acquisition related expenses

 

 

 

 

320

 

 

508

 

 

530

 

 

320

 

 

530

 

Legal reserves

897

 

 

 

 

 

 

 

 

258

 

 

897

 

 

258

 

(Gains) losses on investment securities

(4,591)

 

 

(2,694)

 

 

(18,773)

 

 

(1,419)

 

 

(9,662)

 

 

(26,058)

 

 

(15,993)

 

Loss on sale of foreign subsidiaries

 

 

2,150

 

 

 

 

 

 

 

 

2,150

 

 

 

Loss on cash flow hedge derivative terminations

 

 

 

 

18,716

 

 

 

 

 

 

18,716

 

 

 

Derivative credit valuation adjustment

(198)

 

 

288

 

 

(1,195)

 

 

(448)

 

 

(304)

 

 

(1,105)

 

 

6,259

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

 

 

 

 

(1,080)

 

Deposit relationship adjustment fees

4,707

 

 

 

 

 

 

 

 

 

 

4,707

 

 

 

Unrealized losses on loans held for sale

 

 

 

 

 

 

799

 

 

 

 

 

 

1,114

 

Core net income

$

116,857

 

 

$

62,602

 

 

$

73,699

 

 

$

58,002

 

 

$

41,869

 

 

$

253,158

 

 

$

75,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

19,739,340

 

 

$

19,306,948

 

 

$

18,525,721

 

 

$

18,250,719

 

 

$

17,865,574

 

 

$

19,195,114

 

 

$

14,716,390

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core return on average assets

2.35

%

 

1.30

%

 

1.61

%

 

1.26

%

 

0.93

%

 

1.76

%

 

0.69

%

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

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

(dollars in thousands except per share data)

Q3 2021

 

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

2021

 

2020

GAAP net income

$

116,042

 

 

$

61,341

 

 

$

36,595

 

 

$

56,245

 

 

$

50,515

 

 

$

213,978

 

 

$

76,332

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

36,263

 

 

20,124

 

 

17,560

 

 

23,447

 

 

12,016

 

 

73,947

 

 

23,270

 

Provision (benefit) for credit losses on loans and leases

13,164

 

 

3,291

 

 

(2,919)

 

 

(2,913)

 

 

12,955

 

 

13,536

 

 

65,688

 

Provision (benefit) for credit losses on unfunded commitments

669

 

 

45

 

 

(1,286)

 

 

(968)

 

 

(527)

 

 

(572)

 

 

(132)

 

Severance expense

 

 

2,004

 

 

 

 

 

 

 

 

2,004

 

 

 

Net loss from discontinued operations

 

 

 

 

38,036

 

 

2,317

 

 

532

 

 

38,036

 

 

8,145

 

Merger and acquisition related expenses

 

 

 

 

418

 

 

709

 

 

658

 

 

418

 

 

658

 

Legal reserves

1,185

 

 

 

 

 

 

 

 

320

 

 

1,185

 

 

320

 

(Gains) losses on investment securities

(6,063)

 

 

(3,558)

 

 

(24,540)

 

 

(1,431)

 

 

(11,945)

 

 

(34,161)

 

 

(20,095)

 

Loss on sale of foreign subsidiaries

 

 

2,840

 

 

 

 

 

 

 

 

2,840

 

 

 

Loss on cash flow hedge derivative terminations

 

 

 

 

24,467

 

 

 

 

 

 

24,467

 

 

 

Derivative credit valuation adjustment

(261)

 

 

380

 

 

(1,562)

 

 

(625)

 

 

(378)

 

 

(1,443)

 

 

8,073

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

 

 

 

 

(1,407)

 

Deposit relationship adjustment fees

6,216

 

 

 

 

 

 

 

 

 

 

6,216

 

 

 

Unrealized losses on loans held for sale

 

 

 

 

 

 

1,115

 

 

 

 

 

 

1,450

 

Adjusted net income - pre-tax pre-provision

$

167,215

 

 

$

86,467

 

 

$

86,769

 

 

$

77,896

 

 

$

64,146

 

 

$

340,451

 

 

$

162,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

19,739,340

 

 

$

19,306,948

 

 

$

18,525,721

 

 

$

18,250,719

 

 

$

17,865,574

 

 

$

19,195,114

 

 

$

14,716,390

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted ROAA - pre-tax pre-provision

3.36

%

 

1.80

%

 

1.90

%

 

1.70

%

 

1.43

%

 

2.37

%

 

1.47

%

 

 

Core Return on Average Common Equity - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

(dollars in thousands except per share data)

Q3 2021

 

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

2021

 

2020

GAAP net income to common shareholders

$

110,241

 

 

$

58,042

 

 

$

33,204

 

 

$

52,831

 

 

$

47,085

 

 

$

201,487

 

 

$

65,706

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from discontinued operations

 

 

 

 

38,036

 

 

2,317

 

 

532

 

 

38,036

 

 

8,145

 

Severance expense

 

 

1,517

 

 

 

 

 

 

 

 

1,517

 

 

 

Merger and acquisition related expenses

 

 

 

 

320

 

 

508

 

 

530

 

 

320

 

 

530

 

Legal reserves

897

 

 

 

 

 

 

 

 

258

 

 

897

 

 

258

 

(Gains) losses on investment securities

(4,591)

 

 

(2,694)

 

 

(18,773)

 

 

(1,419)

 

 

(9,662)

 

 

(26,058)

 

 

(15,993)

 

Loss on sale of foreign subsidiaries

 

 

2,150

 

 

 

 

 

 

 

 

2,150

 

 

 

Loss on cash flow hedge derivative terminations

 

 

 

 

18,716

 

 

 

 

 

 

18,716

 

 

 

Derivative credit valuation adjustment

(198)

 

 

288

 

 

(1,195)

 

 

(448)

 

 

(304)

 

 

(1,105)

 

 

6,259

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

 

 

 

 

(1,080)

 

Deposit relationship adjustment fees

4,707

 

 

 

 

 

 

 

 

 

 

4,707

 

 

 

Loss on redemption of preferred stock

2,820

 

 

 

 

 

 

 

 

 

 

2,820

 

 

 

Unrealized losses on loans held for sale

 

 

 

 

 

 

799

 

 

 

 

 

 

1,114

 

Core earnings

$

113,876

 

 

$

59,303

 

 

$

70,308

 

 

$

54,588

 

 

$

38,439

 

 

$

243,487

 

 

$

64,939

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total common shareholders' equity

$

1,071,566

 

 

$

1,002,624

 

 

$

918,795

 

 

$

866,411

 

 

$

812,577

 

 

$

998,221

 

 

$

797,430

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core return on average common equity

42.16

%

 

23.72

%

 

31.03

%

 

25.06

%

 

18.82

%

 

32.61

%

 

10.88

%

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

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

(dollars in thousands except per share data)

Q3 2021

 

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

2021

 

2020

GAAP net income to common shareholders

$

110,241

 

 

$

58,042

 

 

$

33,204

 

 

$

52,831

 

 

$

47,085

 

 

$

201,487

 

 

$

65,706

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

36,263

 

 

20,124

 

 

17,560

 

 

23,447

 

 

12,016

 

 

73,947

 

 

23,270

 

Provision (benefit) for credit losses on loan and leases

13,164

 

 

3,291

 

 

(2,919)

 

 

(2,913)

 

 

12,955

 

 

13,536

 

 

65,688

 

Provision (benefit) for credit losses on unfunded commitments

669

 

 

45

 

 

(1,286)

 

 

(968)

 

 

(527)

 

 

(572)

 

 

(132)

 

Net loss from discontinued operations

 

 

 

 

38,036

 

 

2,317

 

 

532

 

 

38,036

 

 

8,145

 

Severance expense

 

 

2,004

 

 

 

 

 

 

 

 

2,004

 

 

 

Merger and acquisition related expenses

 

 

 

 

418

 

 

709

 

 

658

 

 

418

 

 

658

 

Legal reserves

1,185

 

 

 

 

 

 

 

 

320

 

 

1,185

 

 

320

 

(Gains) losses on investment securities

(6,063)

 

 

(3,558)

 

 

(24,540)

 

 

(1,431)

 

 

(11,945)

 

 

(34,161)

 

 

(20,095)

 

Loss on sale of foreign subsidiaries

 

 

2,840

 

 

 

 

 

 

 

 

2,840

 

 

 

Loss on cash flow hedge derivative terminations

 

 

 

 

24,467

 

 

 

 

 

 

24,467

 

 

 

Derivative credit valuation adjustment

(261)

 

 

380

 

 

(1,562)

 

 

(625)

 

 

(378)

 

 

(1,443)

 

 

8,073

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

 

 

 

 

(1,407)

 

Deposit relationship adjustment fees

6,216

 

 

 

 

 

 

 

 

 

 

6,216

 

 

 

Loss on redemption of preferred stock

2,820

 

 

 

 

 

 

 

 

 

 

2,820

 

 

 

Unrealized losses on loans held for sale

 

 

 

 

 

 

1,115

 

 

 

 

 

 

1,450

 

Pre-tax pre-provision adjusted net income available

to common shareholders

$

164,234

 

 

$

83,168

 

 

$

83,378

 

 

$

74,482

 

 

$

60,716

 

 

$

330,780

 

 

$

151,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total common shareholders' equity

$

1,071,566

 

 

$

1,002,624

 

 

$

918,795

 

 

$

866,411

 

 

$

812,577

 

 

$

998,221

 

 

$

797,430

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted ROCE - pre-tax pre-provision

60.81

%

 

33.27

%

 

36.80

%

 

34.20

%

 

29.73

%

 

44.30

%

 

25.41

%

 

 

Net Interest Margin, Tax Equivalent - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

(dollars in thousands except per share data)

Q3 2021

 

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

2021

 

2020

GAAP net interest income

$

219,892

 

 

$

138,757

 

 

$

132,731

 

 

$

122,946

 

 

$

107,439

 

 

$

491,380

 

 

$

280,742

 

Tax-equivalent adjustment

290

 

 

289

 

 

292

 

 

219

 

 

225

 

 

871

 

 

655

 

Net interest income tax equivalent

$

220,182

 

 

$

139,046

 

 

$

133,023

 

 

$

123,165

 

 

$

107,664

 

 

$

492,251

 

 

$

281,397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total interest earning assets

$

19,033,826

 

 

$

18,698,996

 

 

$

17,943,944

 

 

$

17,601,999

 

 

$

17,121,145

 

 

$

18,562,912

 

 

$

14,037,262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin, tax equivalent

4.59

%

 

2.98

%

 

3.00

%

 

2.78

%

 

2.50

%

 

3.55

%

 

2.68

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

(dollars in thousands except per share data)

Q3 2021

 

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

2021

 

2020

GAAP net interest income

$

219,892

 

 

$

138,757

 

 

$

132,731

 

 

$

122,946

 

 

$

107,439

 

 

$

491,380

 

 

$

280,742

 

PPP net interest income

(112,005)

 

 

(35,785)

 

 

(34,842)

 

 

(25,257)

 

 

(20,018)

 

 

(182,632)

 

 

(29,326)

 

Tax-equivalent adjustment

290

 

 

289

 

 

292

 

 

219

 

 

225

 

 

871

 

 

655

 

Net interest income, tax equivalent, excluding PPP

$

108,177

 

 

$

103,261

 

 

$

98,181

 

 

$

97,908

 

 

$

87,646

 

 

$

309,619

 

 

$

252,071

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP average total interest earning assets

$

19,033,826

 

 

$

18,698,996

 

 

$

17,943,944

 

 

$

17,601,999

 

 

$

17,121,145

 

 

$

18,562,912

 

 

$

14,037,262

 

Average PPP loans

(5,778,367)

 

 

(6,133,184)

 

 

(4,623,213)

 

 

(4,782,606)

 

 

(4,909,197)

 

 

(5,515,819)

 

 

(2,563,299)

 

Adjusted average total interest earning assets

$

13,255,459

 

 

$

12,565,812

 

 

$

13,320,731

 

 

$

12,819,393

 

 

$

12,211,948

 

 

$

13,047,093

 

 

$

11,473,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin, tax equivalent, excluding PPP

3.24

%

 

3.30

%

 

2.99

%

 

3.04

%

 

2.86

%

 

3.17

%

 

2.93

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Efficiency Ratio - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

September 30,

(dollars in thousands except per share data)

Q3 2021

 

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

 

2021

 

2020

GAAP net interest income

$

219,892

 

 

$

138,757

 

 

$

132,731

 

 

$

122,946

 

 

$

107,439

 

 

$

491,380

 

 

$

280,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP non-interest income

$

25,586

 

 

$

16,822

 

 

$

18,468

 

 

$

16,083

 

 

$

24,864

 

 

$

60,876

 

 

$

47,736

 

(Gains) losses on investment securities

(6,063)

 

 

(3,558)

 

 

(24,540)

 

 

(1,431)

 

 

(11,945)

 

 

(34,161)

 

 

(20,095)

 

Derivative credit valuation adjustment

(261)

 

 

380

 

 

(1,562)

 

 

(625)

 

 

(378)

 

 

(1,443)

 

 

8,073

 

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

 

 

 

 

 

 

24,467

 

 

 

Loss on sale of foreign subsidiaries

 

 

2,840

 

 

 

 

 

 

 

 

2,840

 

 

 

Core non-interest income

19,262

 

 

16,484

 

 

16,833

 

 

15,142

 

 

12,541

 

 

52,579

 

 

35,757

 

Core revenue

$

239,154

 

 

$

155,241

 

 

$

149,564

 

 

$

138,088

 

 

$

119,980

 

 

$

543,959

 

 

$

316,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP non-interest expense

$

80,009

 

 

$

70,823

 

 

$

61,927

 

 

$

59,933

 

 

$

56,285

 

 

$

212,759

 

 

$

155,043

 

Severance expense

 

 

(2,004)

 

 

 

 

 

 

 

 

(2,004)

 

 

 

Legal reserves

(1,185)

 

 

 

 

 

 

 

 

(320)

 

 

(1,185)

 

 

(320)

 

Merger and acquisition related expenses

 

 

 

 

(418)

 

 

(709)

 

 

(658)

 

 

(418)

 

 

(658)

 

Deposit relationship adjustment fees

(6,216)

 

 

 

 

 

 

 

 

 

 

(6,216)

 

 

 

Core non-interest expense

$

72,608

 

 

$

68,819

 

 

$

61,509

 

 

$

59,224

 

 

$

55,307

 

 

$

202,936

 

 

$

154,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core efficiency ratio (1)

30.36

%

 

44.33

%

 

41.13

%

 

42.89

%

 

46.10

%

 

37.31

%

 

48.68

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)

Q3 2021

 

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

GAAP total shareholders' equity

$

1,284,299

 

 

$

1,250,729

 

 

$

1,188,721

 

 

$

1,117,086

 

 

$

1,051,491

 

Reconciling items:

 

 

 

 

 

 

 

 

 

Preferred stock

(137,794)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

Goodwill and other intangibles (1)

(3,794)

 

 

(3,853)

 

 

(3,911)

 

 

(14,298)

 

 

(14,437)

 

Tangible common equity

$

1,142,711

 

 

$

1,029,405

 

 

$

967,339

 

 

$

885,317

 

 

$

819,583

 

 

 

 

 

 

 

 

 

 

 

GAAP total assets

$

19,108,922

 

 

$

19,635,108

 

 

$

18,817,660

 

 

$

18,439,248

 

 

$

18,778,727

 

Reconciling items:

 

 

 

 

 

 

 

 

 

Goodwill and other intangibles (1)

(3,794)

 

 

(3,853)

 

 

(3,911)

 

 

(14,298)

 

 

(14,437)

 

Tangible assets

$

19,105,128

 

 

$

19,631,255

 

 

$

18,813,749

 

 

$

18,424,950

 

 

$

18,764,290

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets

5.98

%

 

5.24

%

 

5.14

%

 

4.80

%

 

4.37

%

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

Tangible Book Value per Common Share - Customers Bancorp

 

 

 

 

 

 

 

 

 

(dollars in thousands except share and per share data)

Q3 2021

 

Q2 2021

 

Q1 2021

 

Q4 2020

 

Q3 2020

GAAP total shareholders' equity

$

1,284,299

 

 

$

1,250,729

 

 

$

1,188,721

 

 

$

1,117,086

 

 

$

1,051,491

 

Reconciling Items:

 

 

 

 

 

 

 

 

 

Preferred stock

(137,794)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

 

(217,471)

 

Goodwill and other intangibles (1)

(3,794)

 

 

(3,853)

 

 

(3,911)

 

 

(14,298)

 

 

(14,437)

 

Tangible common equity