WEST READING, Pa.--(BUSINESS WIRE)--Customers Bancorp, Inc. (NYSE:CUBI)
First Quarter 2023 Highlights
- Q1 2023 net income available to common shareholders was $50.3 million, or $1.55 per diluted share; ROAA was 1.03% and ROCE was 16.00%.
- Q1 2023 core earnings* were $51.1 million, or $1.58 per diluted share; Core ROAA* was 1.05% and Core ROCE* was 16.28%.
- Q1 2023 core earnings excluding Paycheck Protection Program* ("PPP") were $41.5 million, or $1.28 per diluted share.
- Q1 2023 adjusted pre-tax pre-provision net income* was $89.3 million; adjusted pre-tax pre-provision ROAA* was 1.72%; and adjusted pre-tax pre-provision ROCE* was 27.33%.
- PPP loans decreased $751.9 million over Q4 2022, with less than $250 million outstanding at March 31, 2023.
- Q1 2023 core loans* were flat over Q4 2022, with loan yields (excluding PPP)* up 60 basis points in Q1 2023.
- Q1 2023 non-interest bearing deposits grew by $1.6 billion, or 85%, over Q4 2022, leading to a March 31, 2023 spot cost of deposits decline of 14 basis points.
- Total insured deposits were 81%1 of total deposits at March 31, 2023, with immediately available liquidity covering uninsured deposits by 272%.
- Q1 2023 net interest margin, tax equivalent was 2.96%. Q1 2023 net interest margin, tax equivalent, excluding the impact of PPP loans* was 2.80%. High levels of cash negatively impacted net interest margin by about 6 basis points2 in Q1 2023.
- Q1 2023 provision for credit losses on loans and leases of $18.0 million was largely driven by the recognition of weaker macroeconomic forecasts.
- Non-performing assets were $32.3 million, or 0.15% of total assets, at March 31, 2023, relatively unchanged from December 31, 2022. Allowance for credit losses on loans and leases equaled 406% of non-performing loans at March 31, 2023, compared to 426% at December 31, 2022.
- Q1 2023 book value per share and tangible book value per share* grew by $2.00 and $1.99, or 5.1%, respectively, with decreased AOCI losses of $6.8 million over the same time period.
- Repurchased 1,379,883 common shares for $39.8 million in Q1 2023, approximately at 70% of tangible book value per share* at March 31, 2023, leaving 497,509 common shares available for repurchase under the existing authorization.
- All capital ratios remained stable in Q1 2023. Goal to bring CET 1 ratio to 11.0% - 11.5% by year-end 2023.
* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. | ||||
1 Uninsured deposits of $3.9 billion less state and municipal deposits of $393.9 million collateralized by our line of credit from FHLB and from our affiliates of $54.9 million. | ||||
2 Assuming cash balance of $0.5 billion. | ||||
CEO Commentary
"The first quarter brought unexpected turmoil in the banking industry and I would like to commend our leadership team and all our team members for their remarkable performance navigating these challenges," said Customers Bancorp Chairman and CEO, Jay Sidhu. "Our first quarter performance is a testament to the strength of our risk management practices and our steadfast focus on strong core banking fundamentals which we refer to as critical success factors. Our Q1 2023 GAAP earnings were $50.3 million, or $1.55 per diluted share. Core earnings* were $51.1 million, or $1.58 per diluted share, and core earnings excluding PPP* were $41.5 million, or $1.28 per diluted share, well above consensus estimates. Importantly, our non-interest bearing deposits grew by $1.6 billion, an impressive 85% increase from year-end balances. This growth came from opening new operating accounts during the quarter, facilitated by our technology and service offerings, coupled with our decision not to pay up for volatile deposits. We also acquired several new relationships from failed banks. At March 31, 2023, our deposit base was well diversified, with approximately 81% of total deposits insured. We maintain a strong liquidity position, with $9.4 billion of liquidity immediately available, which covers approximately 272% of uninsured deposits and our loan to deposit ratio stayed at about 80%," stated Jay Sidhu.
"In 2022, we took proactive measures to moderate loan growth, focusing on floating rate, low-to-no credit risk verticals, to grow and diversify our low-to-no-cost deposit franchise, to prudently manage the duration and return in our securities portfolio, and to maintain strong liquidity. We continued to purposely moderate loan growth in the first quarter 2023 to further improve our capital ratios. At March 31, 2023, we had slightly over $2.0 billion of cash on hand, which negatively impacted net interest margin by roughly 6 basis points, but we believe was prudent given persisting levels of uncertainty. Asset quality remains exceptional and credit reserves are extremely robust at 406% of total non-performing loans at the end of Q1 2023. The prudent risk management strategic actions that we have taken over the past several quarters have us well positioned from a capital, credit, liquidity, interest rate risk, and earnings perspective as we continue through a highly uncertain 2023. With the looming recession, we believe it is prudent to moderate growth, or even shrink the balance sheet somewhat, and focus on further strengthening the balance sheet and improving capital ratios. We are committed to improving our CET 1 ratio to 11.0% - 11.5% by year-end 2023 by retained earnings and balance sheet optimization. We are confident in our ability to manage our credit, interest rate, and liquidity risks, and superbly service our clients in all operating environments. We remain very optimistic about our future," Jay Sidhu continued.
Financial Highlights
(Dollars in thousands, except per share data) | At or Three Months Ended | Increase (Decrease) | |||||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||||||
Profitability Metrics: | |||||||||||||||
Net income available for common shareholders | $ | 50,265 | $ | 25,623 | $ | 24,642 | 96.2 | % | |||||||
Diluted earnings per share | $ | 1.55 | $ | 0.77 | $ | 0.78 | 101.3 | % | |||||||
Core earnings* | $ | 51,143 | $ | 39,368 | $ | 11,775 | 29.9 | % | |||||||
Core earnings per share* | $ | 1.58 | $ | 1.19 | $ | 0.39 | 32.8 | % | |||||||
Core earnings, excluding PPP* | $ | 41,537 | $ | 45,324 | $ | (3,787 | ) | (8.4 | )% | ||||||
Core earnings per share, excluding PPP* | $ | 1.28 | $ | 1.37 | $ | (0.09 | ) | (6.6 | )% | ||||||
Return on average assets ("ROAA") | 1.03 | % | 0.55 | % | 0.48 | ||||||||||
Core ROAA* | 1.05 | % | 0.81 | % | 0.24 | ||||||||||
Core ROAA, excluding PPP* | 0.87 | % | 0.93 | % | (0.06 | ) | |||||||||
Return on average common equity ("ROCE") | 16.00 | % | 8.05 | % | 7.95 | ||||||||||
Core ROCE* | 16.28 | % | 12.36 | % | 3.92 | ||||||||||
Adjusted pre-tax pre-provision net income* | $ | 89,282 | $ | 81,377 | $ | 7,905 | 9.7 | % | |||||||
Adjusted pre-tax pre-provision net income ROAA, excluding PPP* | 1.53 | % | 1.67 | % | (0.14 | ) | |||||||||
Net interest margin, tax equivalent | 2.96 | % | 2.67 | % | 0.29 | ||||||||||
Net interest margin, tax equivalent, excluding PPP* | 2.80 | % | 2.87 | % | (0.07 | ) | |||||||||
Loan yield | 6.70 | % | 5.64 | % | 1.06 | ||||||||||
Loan yield, excluding PPP* | 6.46 | % | 5.86 | % | 0.60 | ||||||||||
Cost of deposits | 3.32 | % | 2.73 | % | 0.59 | ||||||||||
Efficiency ratio | 47.71 | % | 49.20 | % | (1.49 | ) | |||||||||
Core efficiency ratio* | 47.09 | % | 49.12 | % | (2.03 | ) | |||||||||
Balance Sheet Trends: | |||||||||||||||
Total assets | $ | 21,751,614 | $ | 20,896,112 | $ | 855,502 | 4.1 | % | |||||||
Total loans and leases | $ | 15,063,034 | $ | 15,794,671 | $ | (731,637 | ) | (4.6 | )% | ||||||
Total loans and leases, excluding PPP* | $ | 14,816,776 | $ | 14,796,518 | $ | 20,258 | 0.1 | % | |||||||
Non-interest bearing demand deposits | $ | 3,487,517 | $ | 1,885,045 | $ | 1,602,472 | 85.0 | % | |||||||
Total deposits | $ | 17,723,617 | $ | 18,156,953 | $ | (433,336 | ) | (2.4 | )% | ||||||
Capital Metrics: | |||||||||||||||
Common Equity | $ | 1,283,226 | $ | 1,265,167 | $ | 18,059 | 1.4 | % | |||||||
Tangible Common Equity* | $ | 1,279,597 | $ | 1,261,538 | $ | 18,059 | 1.4 | % | |||||||
Common Equity to Total Assets | 5.9 | % | 6.1 | % | (0.2 | ) | |||||||||
Tangible Common Equity to Tangible Assets* | 5.9 | % | 6.0 | % | (0.1 | ) | |||||||||
Tangible Common Equity to Tangible Assets, excluding PPP* | 6.0 | % | 6.3 | % | (0.3 | ) | |||||||||
Book Value per common share | $ | 41.08 | $ | 39.08 | $ | 2.00 | 5.1 | % | |||||||
Tangible Book Value per common share* | $ | 40.96 | $ | 38.97 | $ | 1.99 | 5.1 | % | |||||||
Common equity Tier 1 capital ratio (1) | 9.6 | % | 9.6 | % | - | ||||||||||
Total risk based capital ratio (1) | 12.3 | % | 12.2 | % | 0.1 | ||||||||||
(1) Regulatory capital ratios as of March 31, 2023 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 are included at the end of this document. | |||||||||||||||
Financial Highlights
(Dollars in thousands, except per share data) | At or Three Months Ended | Increase (Decrease) | |||||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||||||
Profitability Metrics: | |||||||||||||||
Net income available for common shareholders | $ | 50,265 | $ | 74,896 | $ | (24,631 | ) | (32.9 | )% | ||||||
Diluted earnings per share | $ | 1.55 | $ | 2.18 | $ | (0.63 | ) | (28.9 | )% | ||||||
Core earnings* | $ | 51,143 | $ | 75,410 | $ | (24,267 | ) | (32.2 | )% | ||||||
Core earnings per share* | $ | 1.58 | $ | 2.20 | $ | (0.62 | ) | (28.2 | )% | ||||||
Core earnings, excluding PPP* | $ | 41,537 | $ | 50,697 | $ | (9,160 | ) | (18.1 | )% | ||||||
Core earnings per share, excluding PPP* | $ | 1.28 | $ | 1.48 | $ | (0.20 | ) | (13.5 | )% | ||||||
Return on average assets ("ROAA") | 1.03 | % | 1.63 | % | (0.60 | ) | |||||||||
Core ROAA* | 1.05 | % | 1.64 | % | (0.59 | ) | |||||||||
Core ROAA, excluding PPP* | 0.87 | % | 1.11 | % | (0.24 | ) | |||||||||
Return on average common equity ("ROCE") | 16.00 | % | 24.26 | % | (8.26 | ) | |||||||||
Core ROCE* | 16.28 | % | 24.43 | % | (8.15 | ) | |||||||||
Adjusted pre-tax pre-provision net income* | $ | 89,282 | $ | 112,649 | $ | (23,367 | ) | (20.7 | )% | ||||||
Adjusted pre-tax pre-provision net income ROAA, excluding PPP* | 1.53 | % | 1.86 | % | (0.33 | ) | |||||||||
Net interest margin, tax equivalent | 2.96 | % | 3.60 | % | (0.64 | ) | |||||||||
Net interest margin, tax equivalent, excluding PPP* | 2.80 | % | 3.32 | % | (0.52 | ) | |||||||||
Loan yield | 6.70 | % | 4.67 | % | 2.03 | ||||||||||
Loan yield, excluding PPP* | 6.46 | % | 4.43 | % | 2.03 | ||||||||||
Cost of deposits | 3.32 | % | 0.33 | % | 2.99 | ||||||||||
Efficiency ratio | 47.71 | % | 39.42 | % | 8.29 | ||||||||||
Core efficiency ratio* | 47.09 | % | 39.47 | % | 7.62 | ||||||||||
Balance Sheet Trends: | |||||||||||||||
Total assets | $ | 21,751,614 | $ | 19,163,708 | $ | 2,587,906 | 13.5 | % | |||||||
Total loans and leases | $ | 15,063,034 | $ | 14,073,518 | $ | 989,516 | 7.0 | % | |||||||
Total loans and leases, excluding PPP* | $ | 14,816,776 | $ | 11,877,616 | $ | 2,939,160 | 24.7 | % | |||||||
Non-interest bearing demand deposits | $ | 3,487,517 | $ | 4,594,428 | $ | (1,106,911 | ) | (24.1 | )% | ||||||
Total deposits | $ | 17,723,617 | $ | 16,415,560 | $ | 1,308,057 | 8.0 | % | |||||||
Capital Metrics: | |||||||||||||||
Common Equity | $ | 1,283,226 | $ | 1,239,612 | $ | 43,614 | 3.5 | % | |||||||
Tangible Common Equity* | $ | 1,279,597 | $ | 1,235,934 | $ | 43,663 | 3.5 | % | |||||||
Common Equity to Total Assets | 5.9 | % | 6.5 | % | (0.6 | ) | |||||||||
Tangible Common Equity to Tangible Assets* | 5.9 | % | 6.5 | % | (0.6 | ) | |||||||||
Tangible Common Equity to Tangible Assets, excluding PPP* | 6.0 | % | 7.3 | % | (1.3 | ) | |||||||||
Book Value per common share | $ | 41.08 | $ | 37.61 | $ | 3.47 | 9.2 | % | |||||||
Tangible Book Value per common share* | $ | 40.96 | $ | 37.50 | $ | 3.46 | 9.2 | % | |||||||
Common equity Tier 1 capital ratio (1) | 9.6 | % | 9.9 | % | (0.3 | ) | |||||||||
Total risk based capital ratio (1) | 12.3 | % | 12.9 | % | (0.6 | ) | |||||||||
(1) Regulatory capital ratios as of March 31, 2023 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 are included at the end of this document. | |||||||||||||||
Paycheck Protection Program (PPP)
We funded, either directly or indirectly, about 358,000 loans totaling $10.3 billion. Through the program, we earned close to $350 million of deferred origination fees from the SBA, which was significantly accretive to our earnings and capital levels as these loans were forgiven or guaranteed by the government. In Q1 2023, we recognized $22 million of these fees in earnings, leaving only $3 million to be recognized in future periods. "In Q1 2023, $752 million of PPP loans were repaid, leaving less than $250 million on our balance sheet at March 31, 2023. As we near completion of this program, we are extremely proud of our success in the PPP program and the role we played in supporting small businesses across the country. This program has been a tremendous benefit to our franchise, going forward we will no longer report certain financial metrics excluding PPP," 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) | March 31, 2023 | % of Total | December 31, 2022 | % of Total | March 31, 2022 | % of Total | |||||||||||
Loans and Leases Held for Investment | |||||||||||||||||
Commercial: | |||||||||||||||||
Commercial & industrial: | |||||||||||||||||
Specialty lending | $ | 5,519,176 | 37.7 | % | $ | 5,412,887 | 35.0 | % | $ | 2,973,544 | 21.1 | % | |||||
Other commercial & industrial | 1,168,161 | 8.0 | 1,135,336 | 7.3 | 947,895 | 6.8 | |||||||||||
Multifamily | 2,195,211 | 15.0 | 2,213,019 | 14.3 | 1,705,027 | 12.1 | |||||||||||
Loans to mortgage companies | 1,374,894 | 9.4 | 1,447,919 | 9.4 | 1,830,121 | 13.0 | |||||||||||
Commercial real estate owner occupied | 895,314 | 6.1 | 885,339 | 5.7 | 701,893 | 5.0 | |||||||||||
Loans receivable, PPP | 246,258 | 1.7 | 998,153 | 6.5 | 2,195,902 | 15.6 | |||||||||||
Commercial real estate non-owner occupied | 1,245,248 | 8.5 | 1,290,730 | 8.4 | 1,140,311 | 8.1 | |||||||||||
Construction | 188,123 | 1.3 | 162,009 | 1.0 | 161,024 | 1.1 | |||||||||||
Total commercial loans and leases | 12,832,385 | 87.7 | 13,545,392 | 87.6 | 11,655,717 | 82.8 | |||||||||||
Consumer: | |||||||||||||||||
Residential | 494,815 | 3.4 | % | 497,952 | 3.2 | % | 466,423 | 3.3 | % | ||||||||
Manufactured housing | 43,272 | 0.3 | 45,076 | 0.3 | 50,669 | 0.4 | |||||||||||
Installment: | |||||||||||||||||
Personal | 849,420 | 5.8 | 964,641 | 6.2 | 1,584,011 | 11.3 | |||||||||||
Other | 419,085 | 2.8 | 413,298 | 2.7 | 313,695 | 2.2 | |||||||||||
Total installment loans | 1,268,505 | 8.6 | 1,377,939 | 8.9 | 1,897,706 | 13.5 | |||||||||||
Total consumer loans | 1,806,592 | 12.3 | 1,920,967 | 12.4 | 2,414,798 | 17.2 | |||||||||||
Total loans and leases held for investment | $ | 14,638,977 | 100.0 | % | $ | 15,466,359 | 100.0 | % | $ | 14,070,515 | 100.0 | % | |||||
Loans Held for Sale | |||||||||||||||||
Commercial: | |||||||||||||||||
Multifamily | $ | 4,051 | 1.0 | % | $ | 4,079 | 1.2 | % | $ | - | - | % | |||||
Commercial real estate non-owner occupied | 16,000 | 3.7 | - | - | - | - | |||||||||||
Total commercial loans and leases | 20,051 | 4.7 | 4,079 | 1.2 | - | - | |||||||||||
Consumer: | |||||||||||||||||
Residential | 821 | 0.2 | 829 | 0.2 | 3,003 | 100.0 | |||||||||||
Installment: | |||||||||||||||||
Personal | 307,336 | 72.5 | 133,801 | 40.8 | - | - | |||||||||||
Other | 95,849 | 22.6 | 189,603 | 57.8 | - | - | |||||||||||
Total installment loans | 403,185 | 95.1 | 323,404 | 98.6 | - | - | |||||||||||
Total consumer loans | 404,006 | 95.3 | 324,233 | 98.8 | 3,003 | 100.0 | |||||||||||
Total loans held for sale | $ | 424,057 | 100.0 | % | $ | 328,312 | 100.0 | % | $ | 3,003 | 100.0 | % | |||||
Total loans and leases portfolio | $ | 15,063,034 | $ | 15,794,671 | $ | 14,073,518 | |||||||||||
Loans and Leases Held for Investment
Loans and leases held for investment were $14.6 billion at March 31, 2023, down $827.4 million, or 5.3%, from December 31, 2022. Excluding PPP loans, core loans and leases held for investment* decreased $75.5 million to $14.4 billion at March 31, 2023.
Consumer installment loans held for investment decreased $109.4 million, or 7.9% quarter-over-quarter, to $1.3 billion and commercial real estate non-owner occupied loans decreased $45.5 million, or 3.5% quarter-over-quarter, to $1.2 billion as we continue to reduce risk by remixing our held-for-investment loan and lease portfolio. Loans to mortgage companies decreased $73.0 million, or 5.0% quarter-over-quarter. These decreases were offset in part by increases in commercial and industrial ("C&I") loans and leases of $139.1 million, or 2.1% quarter-over-quarter, to $6.7 billion, led by our variable rate low-to-no credit risk specialty lending verticals.
Loans Held for Sale
Loans held for sale increased $95.7 million quarter-over-quarter, and $421.1 million year-over-year, to $424.1 million at March 31, 2023 primarily due to increased consumer installment loans as we continue to build out our Banking-as-a-Service/Marketplace Lending (BaaS/MPL) strategy in 2023.
Allowance for Credit Losses on Loans and Leases
The following table presents the allowance for credit losses on loans and leases as of the dates and for the periods presented:
At or Three Months Ended | Increase (Decrease) | At or Three Months Ended | Increase (Decrease) | ||||||||||||||||||||
(Dollars in thousands) | March 31, 2023 | December 31, 2022 | March 31, 2023 | March 31, 2022 | |||||||||||||||||||
Allowance for credit losses on loans and leases | $ | 130,281 | $ | 130,924 | $ | (643 | ) | $ | 130,281 | $ | 145,847 | $ | (15,566 | ) | |||||||||
Provision for credit losses on loans and leases | $ | 18,008 | $ | 27,891 | $ | (9,883 | ) | $ | 18,008 | $ | 15,269 | $ | 2,739 | ||||||||||
Net charge-offs from loans held for investment | $ | 18,651 | $ | 27,164 | $ | (8,513 | ) | $ | 18,651 | $ | 7,226 | $ | 11,425 | ||||||||||
Annualized net charge-offs to average loans and leases | 0.49 | % | 0.70 | % | 0.49 | % | 0.21 | % | |||||||||||||||
Coverage of credit loss reserves for loans and leases held for investment | 0.97 | % | 0.93 | % | 0.97 | % | 1.18 | % | |||||||||||||||
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP* | 0.99 | % | 1.00 | % | 0.99 | % | 1.44 | % | |||||||||||||||
* 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 are included at the end of this document. | |||||||||||||||||||||||
The decrease in net charge-offs in Q1 2023 compared to Q4 2022 was primarily due to one-time charge-offs of $11.0 million for certain loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and ultimately deemed uncollectible in Q4 2022.
The increase in net charge-offs in Q1 2023 compared to Q1 2022 was primarily due to an increase in consumer installment net charge-offs in Q1 2023 compared to Q1 2022.
Provision for Credit Losses
Three Months Ended | Increase (Decrease) | Three Months Ended | Increase (Decrease) | |||||||||||||||||
(Dollars in thousands) | March 31, 2023 | December 31, 2022 | March 31, 2023 | March 31, 2022 | ||||||||||||||||
Provision for credit losses on loans and leases | $ | 18,008 | $ | 27,891 | $ | (9,883 | ) | $ | 18,008 | $ | 15,269 | $ | 2,739 | |||||||
Provision for credit losses on available for sale debt securities | 1,595 | 325 | 1,270 | 1,595 | 728 | 867 | ||||||||||||||
Provision for credit losses | 19,603 | 28,216 | (8,613 | ) | 19,603 | 15,997 | 3,606 | |||||||||||||
Provision (benefit) for credit losses on unfunded commitments | 280 | 153 | 127 | 280 | (109 | ) | 389 | |||||||||||||
Total provision for credit losses | $ | 19,883 | $ | 28,369 | $ | (8,486 | ) | $ | 19,883 | $ | 15,888 | $ | 3,995 | |||||||
The provision for credit losses on loans and leases in Q1 2023 was $18.0 million, compared to $27.9 million in Q4 2022. The provision in Q1 2023 was primarily due to our recognition of weaker macroeconomic forecasts, as compared to provision in Q4 2022, which was primarily due to one-time charge-offs of $11.0 million for certain loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and ultimately deemed uncollectible, as well as loan growth and our recognition of weaker macroeconomic forecasts. The provision for credit losses on available for sale investment securities in Q1 2023 was $1.6 million compared to provision of $0.3 million in Q4 2022.
The provision for credit losses on loans and leases in Q1 2023 was $18.0 million, compared to $15.3 million in Q1 2022. The provision in Q1 2023 was primarily due to our recognition of weaker macroeconomic forecasts, as compared to provision in Q1 2022, which was primarily due to loan growth. The provision for credit losses on available for sale investment securities in Q1 2023 was $1.6 million compared to $0.7 million in Q1 2022.
Asset Quality
The following table presents asset quality metrics as of the dates indicated:
(Dollars in thousands) | March 31, 2023 | December 31, 2022 | Increase (Decrease) | March 31, 2023 | March 31, 2022 | Increase (Decrease) | |||||||||||||||||
Non-performing assets ("NPAs"): | |||||||||||||||||||||||
Nonaccrual / non-performing loans ("NPLs") | $ | 32,124 | $ | 30,737 | $ | 1,387 | $ | 32,124 | $ | 43,778 | $ | (11,654 | ) | ||||||||||
Non-performing assets | $ | 32,260 | $ | 30,783 | $ | 1,477 | $ | 32,260 | $ | 43,864 | $ | (11,604 | ) | ||||||||||
NPLs to total loans and leases | 0.21 | % | 0.19 | % | 0.21 | % | 0.31 | % | |||||||||||||||
Reserves to NPLs | 405.56 | % | 425.95 | % | 405.56 | % | 333.15 | % | |||||||||||||||
NPAs to total assets | 0.15 | % | 0.15 | % | 0.15 | % | 0.23 | % | |||||||||||||||
Loans and leases (1) risk ratings: | |||||||||||||||||||||||
Commercial loans and leases (2) | |||||||||||||||||||||||
Pass | $ | 10,928,620 | $ | 10,793,980 | $ | 134,640 | $ | 10,928,620 | $ | 7,274,294 | $ | 3,654,326 | |||||||||||
Special Mention | 136,986 | 138,829 | (1,843 | ) | 136,986 | 128,622 | 8,364 | ||||||||||||||||
Substandard | 273,154 | 291,118 | (17,964 | ) | 273,154 | 301,141 | (27,987 | ) | |||||||||||||||
Total commercial loans and leases | 11,338,760 | 11,223,927 | 114,833 | 11,338,760 | 7,704,057 | 3,634,703 | |||||||||||||||||
Consumer loans | |||||||||||||||||||||||
Performing | 1,787,123 | 1,899,376 | (112,253 | ) | 1,787,123 | 2,399,860 | (612,737 | ) | |||||||||||||||
Non-performing | 19,469 | 21,591 | (2,122 | ) | 19,469 | 14,938 | 4,531 | ||||||||||||||||
Total consumer loans | 1,806,592 | 1,920,967 | (114,375 | ) | 1,806,592 | 2,414,798 | (608,206 | ) | |||||||||||||||
Loans and leases receivable (1) | $ | 13,145,352 | $ | 13,144,894 | $ | 458 | $ | 13,145,352 | $ | 10,118,855 | $ | 3,026,497 | |||||||||||
(1) Risk ratings are assigned to loans and leases held for investment, and excludes loans held for sale and loans receivable, mortgage warehouse, at fair value. | |||||||||||||||||||||||
(2) Excludes loan receivable, PPP, as eligible 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 multifamily 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 an 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.
Total consumer installment loans held for investment at March 31, 2023 were less than 6% of total assets, less than 9% of total loans and leases held for investment, and were supported by an allowance for credit losses of $62.1 million. At March 31, 2023, our consumer installment portfolio had the following characteristics: average original FICO score of 737, average debt-to-income of 20% and average borrower income of $106 thousand.
Non-performing loans at March 31, 2023 were essentially flat at 0.21% of total loans and leases, compared to 0.19% at December 31, 2022, and decreased from 0.31% at March 31, 2022.
Investment Securities
Our investment securities portfolio, including debt securities available for sale ("AFS") and held to maturity ("HTM") provides periodic cash flows through regular maturities and amortization, can be used as collateral to secure additional funding, and is an important component of our liquidity position.
The following table presents the composition of our investment securities portfolio as of the dates indicated:
(Dollars in thousands) | March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||
Debt securities, available for sale | $ | 2,900,259 | $ | 2,961,015 | $ | 4,144,029 | ||
Equity securities | 26,710 | 26,485 | 25,824 | |||||
Investment securities, at fair value | 2,926,969 | 2,987,500 | 4,169,853 | |||||
Debt securities, held to maturity | 870,294 | 840,259 | - | |||||
Total investment securities portfolio | $ | 3,797,263 | $ | 3,827,759 | $ | 4,169,853 | ||
Critically important to performance during the recent banking crisis are the characteristics of a bank's securities portfolio. While there may be virtually no credit risk in some of these portfolios, holding longer term and lower yielding securities is creating challenges for many banks. Our securities portfolio is highly liquid, short in duration, and high in yield. Our AFS debt securities portfolio has a spot yield of 4.91%, an effective duration of approximately 1.5 years, and approximately 47% are variable rate. Additionally, 62% of our AFS securities portfolio was AAA rated at March 31, 2023.
Our HTM debt securities portfolio represents only 4.0% of our total assets at March 31, 2023, and has a spot yield of 3.77% and an effective duration of approximately 4.0 years. Additionally, approximately 51% of our HTM securities are AAA rated and 37% are credit enhanced asset backed securities with no current expectation of credit losses.
Deposits
The following table presents the composition of our deposit portfolio as of the dates indicated:
(Dollars in thousands) | March 31, 2023 | % of Total | December 31, 2022 | % of Total | March 31, 2022 | % of Total | |||||||||||
Demand, non-interest bearing | $ | 3,487,517 | 19.7 | % | $ | 1,885,045 | 10.4 | % | $ | 4,594,428 | 28.0 | % | |||||
Demand, interest bearing | 5,791,302 | 32.7 | 8,476,027 | 46.7 | 5,591,468 | 34.1 | |||||||||||
Total demand deposits | 9,278,819 | 52.4 | 10,361,072 | 57.1 | 10,185,896 | 62.1 | |||||||||||
Savings | 924,359 | 5.2 | 811,798 | 4.5 | 802,395 | 4.9 | |||||||||||
Money market | 2,019,633 | 11.4 | 2,734,217 | 15.1 | 4,981,077 | 30.3 | |||||||||||
Time deposits | 5,500,806 | 31.0 | 4,249,866 | 23.3 | 446,192 | 2.7 | |||||||||||
Total deposits | $ | 17,723,617 | 100.0 | % | $ | 18,156,953 | 100.0 | % | $ | 16,415,560 | 100.0 | % | |||||
Total deposits decreased $433.3 million, or 2.4%, to $17.7 billion at March 31, 2023 as compared to the prior quarter. Importantly, non-interest bearing demand deposits increased $1.6 billion, or 85.0%, to $3.5 billion. Time deposits increased $1.3 billion, or 29.4%, to $5.5 billion and savings deposits increased $112.6 million, or 13.9%, to $924.4 million. These increases were offset by decreases in interest bearing demand deposits of $2.7 billion, or 31.7%, to $5.8 billion and money market deposits of $714.6 million, or 26.1%, to $2.0 billion. The total average cost of deposits increased by 59 basis points to 3.32% in Q1 2023 from 2.73% in the prior quarter primarily due to higher market interest rates and a shift in deposit mix. Total estimated uninsured deposits was $3.5 billion1, or 19% of total deposits (inclusive of accrued interest) at March 31, 2023. We are also highly focused on total deposits with contractual term to manage our liquidity profile and the funding of loans and securities.
Total deposits increased $1.3 billion, or 8.0%, to $17.7 billion at March 31, 2023 as compared to a year ago. Time deposits increased $5.1 billion to $5.5 billion. Interest bearing demand deposits increased $199.8 million, or 3.6%, to $5.8 billion. Savings deposits increased $122.0 million, or 15.2%, to $924.4 million. These increases were offset in part by decreases in money market deposits of $3.0 billion, or 59.5%, to $2.0 billion and non-interest bearing demand deposits of $1.1 billion, or 24.1%, to $3.5 billion. The total average cost of deposits increased by 299 basis points to 3.32% in Q1 2023 from 0.33% in the prior year primarily due to higher market interest rates and a shift in deposit mix.
__________________________________
1 Uninsured deposits of $3.9 billion less state and municipal deposits of $393.9 million collateralized by our line of credit from FHLB and from our affiliates of $54.9 million.
Borrowings
The following table presents the composition of our borrowings as of the dates indicated:
(Dollars in thousands) | March 31, 2023 | December 31, 2022 | March 31, 2022 | |||||
Federal funds purchased | $ | - | $ | - | $ | 700,000 | ||
FHLB advances | 2,052,143 | 800,000 | - | |||||
Senior notes | 123,645 | 123,580 | 223,230 | |||||
Subordinated debt | 182,021 | 181,952 | 181,742 | |||||
Total borrowings | $ | 2,357,809 | $ | 1,105,532 | $ | 1,104,972 | ||
Total borrowings increased $1.3 billion, or 113.3%, to $2.4 billion at March 31, 2023 as compared to both the prior quarter and the year-ago quarter. This increase primarily resulted from increased FHLB borrowings to ensure ample cash on hand given the heightened liquidity risk in the banking system, particularly among regional banks in early March 2023. As of March 31, 2023, Customers' borrowing capacity with the FRB and FHLB was approximately $9.8 billion, of which $2.1 billion of available capacity was utilized in borrowings and $397.2 million was utilized to collateralize state and municipal deposits.
Capital
The following table presents certain capital amounts and ratios as of the dates indicated:
(Dollars in thousands except per share data) | March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||
Customers Bancorp, Inc. | |||||||||||
Common Equity | $ | 1,283,226 | $ | 1,265,167 | $ | 1,239,612 | |||||
Tangible Common Equity* | $ | 1,279,597 | $ | 1,261,538 | $ | 1,235,934 | |||||
Common Equity to Total Assets | 5.9 | % | 6.1 | % | 6.5 | % | |||||
Tangible Common Equity to Tangible Assets* | 5.9 | % | 6.0 | % | 6.5 | % | |||||
Tangible Common Equity to Tangible Assets, excluding PPP* | 6.0 | % | 6.3 | % | 7.3 | % | |||||
Book Value per common share | $ | 41.08 | $ | 39.08 | $ | 37.61 | |||||
Tangible Book Value per common share* | $ | 40.96 | $ | 38.97 | $ | 37.50 | |||||
Common equity Tier 1 capital ratio (1) | 9.6 | % | 9.6 | % | 9.9 | % | |||||
Total risk based capital ratio (1) | 12.3 | % | 12.2 | % | 12.9 | % | |||||
(1) Regulatory capital ratios as of March 31, 2023 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 are included at the end of this document. | |||||||||||
Customers Bancorp's common equity increased $18.1 million to $1.3 billion, and tangible common equity* increased $18.1 million to $1.3 billion, at March 31, 2023 compared to the prior quarter, respectively, primarily due to earnings of $50.3 million, and reduced unrealized losses on investment securities of $6.8 million (net of taxes) deferred in accumulated other comprehensive income ("AOCI"). These increases were offset in part by $39.8 million of common share repurchases during Q1 2023. Similarly, book value per common share increased to $41.08 from $39.08, and tangible book value per common share* increased to $40.96 from $38.97, at March 31, 2023 and December 31, 2022, respectively.
Customers Bancorp's common equity increased $43.6 million to $1.3 billion, and tangible common equity* increased $43.7 million to $1.3 billion, at March 31, 2023 compared to a year ago, respectively, as earnings of $193.8 million more than offset a negative impact to AOCI from increased unrealized losses on investment securities of $93.7 million (net of taxes). Similarly, book value per common share increased to $41.08 from $37.61, and tangible book value per common share* increased to $40.96 from $37.50, at March 31, 2023 and March 31, 2022, respectively.
At the Customers Bancorp level, the total risk based capital ratio (estimate), common equity to total assets ratio and tangible common equity to tangible assets ratio ("TCE ratio"), excluding PPP loans*, were 12.3%, 5.9% and 6.0%, respectively, at March 31, 2023.
At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At March 31, 2023, estimated Tier 1 capital and total risk-based capital were 11.3% and 12.6%, respectively.
Even though Customers remains well capitalized by all regulatory measures, its goal is to increase its CET 1 ratio at year-end 2023 to be between 11.0% - 11.5%, up about 150 basis points over current levels. "It is prudent to moderate or even shrink our balance sheet in this uncertain environment and have strong capital ratios," stated Jay Sidhu.
Key Profitability Trends
Net Interest Income
Net interest income totaled $149.9 million in Q1 2023, an increase of $14.8 million from Q4 2022, primarily due to higher PPP net interest income of $16.9 million resulting from increased recognition of deferred fees of $18.0 million mainly driven by higher loan forgiveness and guarantee payments by the SBA in Q1 2023. Net interest income earned by the core bank* decreased $2.1 million over Q4 2022, reflecting a shift in funding mix and two less days in Q1 2023. The increase in interest income on investment securities and core loans* of $4.4 million and $20.9 million, respectively, mostly due to higher interest rates on investment securities and variable loans in our commercial loan verticals, were offset by higher expenses paid on deposits and other borrowings of $30.5 million from a shift in funding mix and higher interest rates during Q1 2023. Excluding PPP loans, average interest-earning assets increased $480.3 million. Interest-earning asset growth was primarily driven by increases in interest earning deposits, specialty lending and consumer installment loans held for sale, partially offset by decreases in commercial loans to mortgage companies due to lower mortgage activity from rising interest rates. Compared to Q4 2022, total loan yields increased 106 basis points to 6.70% primarily due to higher interest rates on variable rate loans in commercial loans. Excluding PPP loans, the Q1 2023 total loan yield* was 60 basis points higher than Q4 2022 reflecting increased interest rates and the variable rate nature of the loan portfolio.
Net interest income totaled $149.9 million in Q1 2023, a decrease of $14.8 million from Q1 2022, primarily due to lower PPP net interest income of $20.5 million resulting from reduced recognition of deferred fees of $8.1 million driven by lower loan forgiveness in Q1 2023 and increased funding costs of $7.2 million, reflecting increases in funding rates. This decrease was offset in part by increased net interest income earned by the core bank* of $5.7 million, up 4.4% over Q1 2022, including increased interest income on investment securities and core loans* of $27.0 million and $112.1 million, respectively, mostly due to higher average balances and interest rates on variable loans in specialty lending. In addition, higher expenses paid on deposits and other borrowings of $146.3 million resulted mainly from a shift in funding mix and higher interest rates during Q1 2023. Excluding PPP loans, average interest-earning assets increased $3.7 billion. Interest-earning asset growth was primarily driven by increases in C&I loans and leases, mostly in the variable rate low-to-no credit risk specialty lending verticals and multifamily loans, offset in part by decreases in commercial loans to mortgage companies due to lower mortgage activity from rising interest rates. Total consumer installment loans decreased in Q1 2023 as compared to Q1 2022, as installment loans held for investment decreased primarily for risk management purposes. Compared to Q1 2022, total loan yields increased 203 basis points to 6.70% primarily due to higher interest rates on variable rate loans in specialty lending, partially offset by lower PPP yields driven by lower deferred fee recognition. Excluding PPP loans, the Q1 2023 total loan yield* was 203 basis points higher than Q1 2022 reflecting increased interest rates and the variable rate nature of the loan portfolio.
Non-Interest Income
The following table presents details of non-interest income for the periods indicated:
Three Months Ended | Increase (Decrease) | Three Months Ended | Increase (Decrease) | ||||||||||||||||||
(Dollars in thousands) | March 31, 2023 | December 31, 2022 | March 31, 2023 | March 31, 2022 | |||||||||||||||||
Commercial lease income | $ | 9,326 | $ | 8,135 | $ | 1,191 | $ | 9,326 | $ | 5,895 | $ | 3,431 | |||||||||
Loan fees | 3,990 | 4,017 | (27 | ) | 3,990 | 2,545 | 1,445 | ||||||||||||||
Bank-owned life insurance | 2,647 | 1,975 | 672 | 2,647 | 8,326 | (5,679 | ) | ||||||||||||||
Mortgage warehouse transactional fees | 1,074 | 1,295 | (221 | ) | 1,074 | 2,015 | (941 | ) | |||||||||||||
Gain (loss) on sale of SBA and other loans | - | - | - | - | 1,507 | (1,507 | ) | ||||||||||||||
Net gain (loss) on sale of investment securities | - | (16,937 | ) | 16,937 | - | (1,063 | ) | 1,063 | |||||||||||||
Legal settlement gain | - | 7,519 | (7,519 | ) | - | - | - | ||||||||||||||
Other | 1,084 | 1,341 | (257 | ) | 1,084 | 1,973 | (889 | ) | |||||||||||||
Total non-interest income | $ | 18,121 | $ | 7,345 | $ | 10,776 | $ | 18,121 | $ | 21,198 | $ | (3,077 | ) | ||||||||
Non-interest income totaled $18.1 million for Q1 2023, an increase of $10.8 million compared to Q4 2022. The increase was primarily due to losses realized from the sale of investment securities of $16.9 million to rebalance the investment portfolio with higher interest-earning securities in Q4 2022, higher commercial lease income of $1.2 million from continued growth and death benefits paid by insurance carriers under the bank-owned life insurance policies of $0.7 million. These increases were partially offset by a $7.5 million gain from a court-approved settlement with a third party PPP service provider in Q4 2022.
Non-interest income totaled $18.1 million for Q1 2023, a decrease of $3.1 million compared to Q1 2022. The decrease was primarily due to lower death benefits paid by insurance carriers under the bank-owned life insurance policies of $5.7 million, reduced mortgage warehouse transactional fees from lower housing activity due to rising interest rates of $0.9 million, and reduced gains realized from sales of SBA loans of $1.5 million as there were no such sales in Q1 2023. These decreases were offset partially by increases in commercial lease income of $3.4 million and loan fees of $1.4 million resulting from continued growth and reduced losses on securities sales of $1.1 million as there were no such sales in Q1 2023.
Non-Interest Expense
The following table presents details of non-interest expense for the periods indicated:
Three Months Ended | Increase (Decrease) | Three Months Ended | Increase (Decrease) | ||||||||||||||||
(Dollars in thousands) | March 31, 2023 | December 31, 2022 | March 31, 2023 | March 31, 2022 | |||||||||||||||
Salaries and employee benefits | $ | 32,345 | $ | 29,194 | $ | 3,151 | $ | 32,345 | $ | 26,607 | $ | 5,738 | |||||||
Technology, communication and bank operations | 16,589 | 18,604 | (2,015 | ) | 16,589 | 24,068 | (7,479 | ) | |||||||||||
Commercial lease depreciation | 7,875 | 6,518 | 1,357 | 7,875 | 4,942 | 2,933 | |||||||||||||
Professional services | 7,596 | 6,825 | 771 | 7,596 | 6,956 | 640 | |||||||||||||
Loan servicing | 4,661 | 4,460 | 201 | 4,661 | 2,371 | 2,290 | |||||||||||||
Occupancy | 2,760 | 3,672 | (912 | ) | 2,760 | 3,050 | (290 | ) | |||||||||||
FDIC assessments, non-income taxes and regulatory fees | 2,728 | 2,339 | 389 | 2,728 | 2,383 | 345 | |||||||||||||
Advertising and promotion | 1,049 | 1,111 | (62 | ) | 1,049 | 315 | 734 | ||||||||||||
Other | 4,530 | 5,696 | (1,166 | ) | 4,530 | 3,115 | 1,415 | ||||||||||||
Total non-interest expense | $ | 80,133 | $ | 78,419 | $ | 1,714 | $ | 80,133 | $ | 73,807 | $ | 6,326 | |||||||
The management of non-interest expenses remains a priority for us. However, this will not deter us from making investments in new technologies to support efficient and responsible growth in the future.
Non-interest expenses totaled $80.1 million in Q1 2023, an increase of $1.7 million compared to Q4 2022. The increase was primarily attributable to increased salaries and employee benefits of $3.2 million driven by higher payroll taxes, benefits and severance accruals and higher commercial lease depreciation of $1.4 million resulting from continued growth in our equipment finance business. These increases were offset in part by decreases of $2.0 million in deposit servicing-related expenses resulting from lower servicing fees and the discontinuation of interchange maintenance fees paid to BM Technologies offset in part by higher software-related expenses and reduced other expenses of $1.2 million primarily due to lower loan workout expenses.
Non-interest expenses totaled $80.1 million in Q1 2023, an increase of $6.3 million compared to Q1 2022. The increase was primarily attributable to increases of $5.7 million in salaries and employee benefits due to higher headcount, annual merit increases, severance accruals and SERP expenses, $2.9 million in commercial lease depreciation from continued growth, $2.3 million in loan servicing for portfolios serviced by third parties, $0.7 million in advertising and promotion mostly due to higher spending on media and advertising agencies for our deposit products and $1.4 million in other expenses mostly due to higher provision for credit losses on unfunded lending commitments and operating losses. These increases were offset in part by a decrease of $7.5 million in deposit servicing-related expenses mostly due to lower servicing fees and the discontinuation of interchange maintenance fees paid to BM Technologies, offset by higher software licenses, fees paid for software as a service and other technology-related expenses.
Taxes
Income tax expense increased by $7.4 million to $14.6 million in Q1 2023 from $7.1 million in Q4 2022 primarily due to higher pre-tax income.
Income tax expense decreased by $4.8 million to $14.6 million in Q1 2023 from $19.3 million in Q1 2022 primarily due to lower pre-tax income and increased income tax credits.
The effective tax rate for Q1 2023 was 21%. Customers expects the full-year 2023 effective tax rate to be approximately 22% to 24%.
Outlook
"Looking ahead, we will continue to moderate growth, or even reduce the size of the balance sheet, as we optimize the balance sheet and materially improve our capital ratios, maximize our efficiency ratio with prudent expense management, and continue to improve deposits and liquidity. We expect 2023 core loans to be essentially flat to down. Deposits are expected to remain relatively flat with a focus on improving our funding profile and reducing high cost deposits. We believe our net interest margin has troughed with expansion opportunities throughout the remainder of 2023. We expect net interest margin, excluding PPP* to increase throughout 2023 by about 20 basis points to 3.00% or higher. 2023 Core EPS (excluding PPP)* is still expected to be about $6.00 with a return on common equity of over 15%. Core non-interest expense* is expected to increase between 5% - 7% in 2023 and we are targeting a CET 1 ratio of approximately 11% - 11.5% by year-end 2023. We are focused on improving the quality of our balance sheet and deposit franchise, improving capital and liquidity, maintaining superior credit quality, expanding our net interest margin, and achieving our tangible book value guidance in excess of $45 by year-end 2023," concluded 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 are included at the end of this document. | ||||
Webcast
| Date: | Friday, April 28, 2023 | ||||||
| Time: | 9:00 AM EDT |
The live audio webcast, presentation slides, and earnings press release will be made available at https://www.customersbank.com/investor-relations/ and at the Customers Bancorp 1st Quarter Earnings Webcast.
You may submit questions in advance of the live webcast by emailing our Communications Director, David Patti at dpatti@customersbank.com; 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 multifamily lending, Customers Bank also provides a number of national corporate banking services to Specialty Lending clients. Major accolades include:
- #34 out of the 100 largest publicly traded banks in 2023 per Forbes;
- #64 on Fortune Magazine's 2022 list of the 100 fastest growing companies in America;
- #6 in top-performing banks with assets between $10 billion and $50 billion in 2021 per American Banker; and
- #3 top-performing bank with over $10 billion in assets at year-end 2021 per S&P Global S&P Global Market Intelligence.
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, 2022, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.
Q1 2023 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended March 31, 2023 and the preceding four quarters:
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||
EARNINGS SUMMARY - UNAUDITED | |||||||||||||||||||||
(Dollars in thousands, except per share data and stock price data) | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||
2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||||
GAAP Profitability Metrics: | |||||||||||||||||||||
Net income available to common shareholders | $ | 50,265 | $ | 25,623 | $ | 61,364 | $ | 56,519 | $ | 74,896 | |||||||||||
Per share amounts: | |||||||||||||||||||||
Earnings per share - basic | $ | 1.58 | $ | 0.79 | $ | 1.89 | $ | 1.73 | $ | 2.27 | |||||||||||
Earnings per share - diluted | $ | 1.55 | $ | 0.77 | $ | 1.85 | $ | 1.68 | $ | 2.18 | |||||||||||
Book value per common share (1) | $ | 41.08 | $ | 39.08 | $ | 38.46 | $ | 37.46 | $ | 37.61 | |||||||||||
CUBI stock price (1) | $ | 18.52 | $ | 28.34 | $ | 29.48 | $ | 33.90 | $ | 52.14 | |||||||||||
CUBI stock price as % of book value (1) | 45 | % | 73 | % | 77 | % | 90 | % | 139 | % | |||||||||||
Average shares outstanding - basic | 31,819,203 | 32,413,459 | 32,455,814 | 32,712,616 | 32,957,033 | ||||||||||||||||
Average shares outstanding - diluted | 32,345,017 | 33,075,422 | 33,226,607 | 33,579,013 | 34,327,065 | ||||||||||||||||
Shares outstanding (1) | 31,239,750 | 32,373,697 | 32,475,502 | 32,449,486 | 32,957,847 | ||||||||||||||||
Return on average assets ("ROAA") | 1.03 | % | 0.55 | % | 1.24 | % | 1.17 | % | 1.63 | % | |||||||||||
Return on average common equity ("ROCE") | 16.00 | % | 8.05 | % | 19.33 | % | 18.21 | % | 24.26 | % | |||||||||||
Net interest margin, tax equivalent | 2.96 | % | 2.67 | % | 3.16 | % | 3.39 | % | 3.60 | % | |||||||||||
Efficiency ratio | 47.71 | % | 49.20 | % | 50.00 | % | 42.14 | % | 39.42 | % | |||||||||||
Non-GAAP Profitability Metrics (2): | |||||||||||||||||||||
Core earnings | $ | 51,143 | $ | 39,368 | $ | 82,270 | $ | 59,367 | $ | 75,410 | |||||||||||
Adjusted pre-tax pre-provision net income | $ | 89,282 | $ | 81,377 | $ | 100,994 | $ | 105,692 | $ | 112,649 | |||||||||||
Per share amounts: | |||||||||||||||||||||
Core earnings per share - diluted | $ | 1.58 | $ | 1.19 | $ | 2.48 | $ | 1.77 | $ | 2.20 | |||||||||||
Tangible book value per common share (1) | $ | 40.96 | $ | 38.97 | $ | 38.35 | $ | 37.35 | $ | 37.50 | |||||||||||
CUBI stock price as % of tangible book value (1) | 45 | % | 73 | % | 77 | % | 91 | % | 139 | % | |||||||||||
Core ROAA | 1.05 | % | 0.81 | % | 1.64 | % | 1.23 | % | 1.64 | % | |||||||||||
Core ROCE | 16.28 | % | 12.36 | % | 25.91 | % | 19.13 | % | 24.43 | % | |||||||||||
Adjusted ROAA - pre-tax and pre-provision | 1.72 | % | 1.56 | % | 1.95 | % | 2.11 | % | 2.39 | % | |||||||||||
Adjusted ROCE - pre-tax and pre-provision | 27.33 | % | 24.59 | % | 31.01 | % | 33.37 | % | 35.89 | % | |||||||||||
Net interest margin, tax equivalent, excluding PPP loans | 2.80 | % | 2.87 | % | 3.18 | % | 3.32 | % | 3.32 | % | |||||||||||
Core efficiency ratio | 47.09 | % | 49.12 | % | 42.57 | % | 41.74 | % | 39.47 | % | |||||||||||
Asset Quality: | |||||||||||||||||||||
Net charge-offs | $ | 18,651 | $ | 27,164 | $ | 18,497 | $ | 13,481 | $ | 7,226 | |||||||||||
Annualized net charge-offs to average total loans and leases | 0.49 | % | 0.70 | % | 0.47 | % | 0.36 | % | 0.21 | % | |||||||||||
Non-performing loans ("NPLs") to total loans and leases (1) | 0.21 | % | 0.19 | % | 0.18 | % | 0.18 | % | 0.31 | % | |||||||||||
Reserves to NPLs (1) | 405.56 | % | 425.95 | % | 466.34 | % | 557.76 | % | 333.15 | % | |||||||||||
Non-performing assets ("NPAs") to total assets | 0.15 | % | 0.15 | % | 0.14 | % | 0.14 | % | 0.23 | % | |||||||||||
Customers Bank Capital Ratios (3): | |||||||||||||||||||||
Common equity Tier 1 capital to risk-weighted assets | 11.3 | % | 11.21 | % | 11.42 | % | 11.46 | % | 11.60 | % | |||||||||||
Tier 1 capital to risk-weighted assets | 11.3 | % | 11.21 | % | 11.42 | % | 11.46 | % | 11.60 | % | |||||||||||
Total capital to risk-weighted assets | 12.6 | % | 12.40 | % | 12.65 | % | 12.91 | % | 13.03 | % | |||||||||||
Tier 1 capital to average assets (leverage ratio) | 8.1 | % | 8.15 | % | 8.10 | % | 8.09 | % | 8.21 | % | |||||||||||
(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 Q1 2023 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 March 31, 2023, our regulatory capital ratios reflected 50%, or $30.8 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) | ||||||||||||||||||
Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||
2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||
Interest income: | ||||||||||||||||||
Loans and leases | $ | 244,212 | $ | 217,471 | $ | 200,438 | $ | 168,920 | $ | 157,120 | ||||||||
Investment securities | 47,316 | 42,953 | 30,546 | 25,442 | 20,295 | |||||||||||||
Loans held for sale | 11,701 | 1,269 | 19 | 21 | 55 | |||||||||||||
Interest earning deposits | 10,395 | 6,754 | 2,949 | 919 | 330 | |||||||||||||
Other | 1,321 | 1,200 | 1,964 | 1,032 | 5,676 | |||||||||||||
Total interest income | 314,945 | 269,647 | 235,916 | 196,334 | 183,476 | |||||||||||||
Interest expense: | ||||||||||||||||||
Deposits | 143,930 | 124,366 | 65,380 | 22,781 | 13,712 | |||||||||||||
FHLB advances | 10,370 | 4,464 | 4,684 | 2,316 | - | |||||||||||||
FRB advances | 6,286 | - | - | - | - | |||||||||||||
Subordinated debt | 2,689 | 2,688 | 2,689 | 2,689 | 2,689 | |||||||||||||
Other borrowings | 1,771 | 2,992 | 4,131 | 3,696 | 2,376 | |||||||||||||
Total interest expense | 165,046 | 134,510 | 76,884 | 31,482 | 18,777 | |||||||||||||
Net interest income | 149,899 | 135,137 | 159,032 | 164,852 | 164,699 | |||||||||||||
Provision (benefit) for credit losses | 19,603 | 28,216 | (7,994 | ) | 23,847 | 15,997 | ||||||||||||
Net interest income after provision (benefit) for credit losses | 130,296 | 106,921 | 167,026 | 141,005 | 148,702 | |||||||||||||
Non-interest income: | ||||||||||||||||||
Commercial lease income | 9,326 | 8,135 | 7,097 | 6,592 | 5,895 | |||||||||||||
Loan fees | 3,990 | 4,017 | 3,008 | 2,618 | 2,545 | |||||||||||||
Bank-owned life insurance | 2,647 | 1,975 | 3,449 | 1,947 | 8,326 | |||||||||||||
Mortgage warehouse transactional fees | 1,074 | 1,295 | 1,545 | 1,883 | 2,015 | |||||||||||||
Gain (loss) on sale of SBA and other loans | - | - | 106 | 1,542 | 1,507 | |||||||||||||
Gain (loss) on sale of consumer installment loans | - | - | (23,465 | ) | - | - | ||||||||||||
Net gain (loss) on sale of investment securities | - | (16,937 | ) | (2,135 | ) | (3,029 | ) | (1,063 | ) | |||||||||
Legal settlement gain | - | 7,519 | - | - | - | |||||||||||||
Other | 1,084 | 1,341 | 1,378 | 1,193 | 1,973 | |||||||||||||
Total non-interest income | 18,121 | 7,345 | (9,017 | ) | 12,746 | 21,198 | ||||||||||||
Non-interest expense: | ||||||||||||||||||
Salaries and employee benefits | 32,345 | 29,194 | 31,230 | 25,334 | 26,607 | |||||||||||||
Technology, communication and bank operations | 16,589 | 18,604 | 19,588 | 22,738 | 24,068 | |||||||||||||
Commercial lease depreciation | 7,875 | 6,518 | 5,966 | 5,552 | 4,942 | |||||||||||||
Professional services | 7,596 | 6,825 | 6,269 | 7,415 | 6,956 | |||||||||||||
Loan servicing | 4,661 | 4,460 | 3,851 | 4,341 | 2,371 | |||||||||||||
Occupancy | 2,760 | 3,672 | 2,605 | 4,279 | 3,050 | |||||||||||||
FDIC assessments, non-income taxes and regulatory fees | 2,728 | 2,339 | 2,528 | 1,619 | 2,383 | |||||||||||||
Advertising and promotion | 1,049 | 1,111 | 762 | 353 | 315 | |||||||||||||
Other | 4,530 | 5,696 | 3,399 | 4,574 | 3,115 | |||||||||||||
Total non-interest expense | 80,133 | 78,419 | 76,198 | 76,205 | 73,807 | |||||||||||||
Income before income tax expense | 68,284 | 35,847 | 81,811 | 77,546 | 96,093 | |||||||||||||
Income tax expense | 14,563 | 7,136 | 17,899 | 18,896 | 19,332 | |||||||||||||
Net income | 53,721 | 28,711 | 63,912 | 58,650 | 76,761 | |||||||||||||
Preferred stock dividends | 3,456 | 3,088 | 2,548 | 2,131 | 1,865 | |||||||||||||
Net income available to common shareholders | $ | 50,265 | $ | 25,623 | $ | 61,364 | $ | 56,519 | $ | 74,896 | ||||||||
Basic earnings per common share | $ | 1.58 | $ | 0.79 | $ | 1.89 | $ | 1.73 | $ | 2.27 | ||||||||
Diluted earnings per common share | 1.55 | 0.77 | 1.85 | 1.68 | 2.18 | |||||||||||||
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||
CONSOLIDATED BALANCE SHEET - UNAUDITED | |||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
ASSETS | |||||||||||||||||||
Cash and due from banks | $ | 77,251 | $ | 58,025 | $ | 41,520 | $ | 66,703 | $ | 55,515 | |||||||||
Interest earning deposits | 1,969,434 | 397,781 | 362,945 | 178,475 | 219,085 | ||||||||||||||
Cash and cash equivalents | 2,046,685 | 455,806 | 404,465 | 245,178 | 274,600 | ||||||||||||||
Investment securities, at fair value | 2,926,969 | 2,987,500 | 2,943,694 | 3,144,882 | 4,169,853 | ||||||||||||||
Investment securities held to maturity | 870,294 | 840,259 | 886,294 | 495,039 | - | ||||||||||||||
Loans held for sale | 424,057 | 328,312 | 5,224 | 6,595 | 3,003 | ||||||||||||||
Loans receivable, mortgage warehouse, at fair value | 1,247,367 | 1,323,312 | 1,569,090 | 1,874,603 | 1,755,758 | ||||||||||||||
Loans receivable, PPP | 246,258 | 998,153 | 1,154,632 | 1,570,160 | 2,195,902 | ||||||||||||||
Loans and leases receivable | 13,145,352 | 13,144,894 | 12,607,742 | 12,212,995 | 10,118,855 | ||||||||||||||
Allowance for credit losses on loans and leases |
| (130,281 | ) | (130,924 | ) | (130,197 | ) | (156,530 | ) | (145,847 | ) | ||||||||
Total loans and leases receivable, net of allowance for credit losses on loans and leases | 14,508,696 | 15,335,435 | 15,201,267 | 15,501,228 | 13,924,668 | ||||||||||||||
FHLB, Federal Reserve Bank, and other restricted stock | 124,733 | 74,196 | 64,112 | 74,626 | 54,553 | ||||||||||||||
Accrued interest receivable | 123,754 | 123,374 | 107,621 | 98,727 | 94,669 | ||||||||||||||
Bank premises and equipment, net | 8,581 | 9,025 | 6,610 | 6,755 | 8,233 | ||||||||||||||
Bank-owned life insurance | 339,607 | 338,441 | 336,130 | 335,153 | 332,239 | ||||||||||||||
Goodwill and other intangibles | 3,629 | 3,629 | 3,629 | 3,629 | 3,678 | ||||||||||||||
Other assets | 374,609 | 400,135 | 408,575 | 340,184 | 298,212 | ||||||||||||||
Total assets | $ | 21,751,614 | $ | 20,896,112 | $ | 20,367,621 | $ | 20,251,996 | $ | 19,163,708 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
Demand, non-interest bearing deposits | $ | 3,487,517 | $ | 1,885,045 | $ | 2,993,793 | $ | 4,683,030 | $ | 4,594,428 | |||||||||
Interest bearing deposits | 14,236,100 | 16,271,908 | 14,528,645 | 12,261,689 | 11,821,132 | ||||||||||||||
Total deposits | 17,723,617 | 18,156,953 | 17,522,438 | 16,944,719 | 16,415,560 | ||||||||||||||
Federal funds purchased | - | - | 365,000 | 770,000 | 700,000 | ||||||||||||||
FHLB advances | 2,052,143 | 800,000 | 500,000 | 635,000 | - | ||||||||||||||
Other borrowings | 123,645 | 123,580 | 123,515 | 123,450 | 223,230 | ||||||||||||||
Subordinated debt | 182,021 | 181,952 | 181,882 | 181,812 | 181,742 | ||||||||||||||
Accrued interest payable and other liabilities | 249,168 | 230,666 | 287,855 | 243,625 | 265,770 | ||||||||||||||
Total liabilities | 20,330,594 | 19,493,151 | 18,980,690 | 18,898,606 | 17,786,302 | ||||||||||||||
Preferred stock | 137,794 | 137,794 | 137,794 | 137,794 | 137,794 | ||||||||||||||
Common stock | 35,258 | 35,012 | 34,948 | 34,922 | 34,882 | ||||||||||||||
Additional paid in capital | 552,255 | 551,721 | 549,066 | 545,670 | 542,402 | ||||||||||||||
Retained earnings | 974,399 | 924,134 | 898,511 | 837,147 | 780,628 | ||||||||||||||
Accumulated other comprehensive income (loss), net | (156,276 | ) | (163,096 | ) | (156,126 | ) | (124,881 | ) | (62,548 | ) | |||||||||
Treasury stock, at cost | (122,410 | ) | (82,604 | ) | (77,262 | ) | (77,262 | ) | (55,752 | ) | |||||||||
Total shareholders' equity | 1,421,020 | 1,402,961 | 1,386,931 | 1,353,390 | 1,377,406 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 21,751,614 | $ | 20,896,112 | $ | 20,367,621 | $ | 20,251,996 | $ | 19,163,708 | |||||||||
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED | ||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||||||||||||
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 | $ | 914,149 | $ | 10,395 | 4.61 | % | $ | 693,563 | $ | 6,754 | 3.86 | % | $ | 826,240 | $ | 329 | 0.16 | % | ||||||||
Investment securities (1) | 4,031,247 | 47,316 | 4.69 | % | 4,061,555 | 42,953 | 4.23 | % | 4,036,966 | 20,295 | 2.01 | % | ||||||||||||||
Loans and leases: | ||||||||||||||||||||||||||
Commercial & industrial: | ||||||||||||||||||||||||||
Specialty lending loans and leases (2) | 5,694,168 | 103,688 | 7.38 | % | 5,529,567 | 90,885 | 6.52 | % | 2,730,990 | 23,391 | 3.47 | % | ||||||||||||||
Other commercial & industrial loans (2) | 1,705,205 | 25,570 | 6.08 | % | 1,670,000 | 22,796 | 5.42 | % | 1,393,418 | 13,268 | 3.86 | % | ||||||||||||||
Commercial loans to mortgage companies | 1,262,139 | 17,412 | 5.59 | % | 1,376,760 | 17,701 | 5.10 | % | 1,836,647 | 14,006 | 3.09 | % | ||||||||||||||
Multifamily loans | 2,206,600 | 20,470 | 3.76 | % | 2,235,885 | 22,481 | 3.99 | % | 1,531,846 | 13,766 | 3.64 | % | ||||||||||||||
Loans receivable, PPP | 889,235 | 23,551 | 10.74 | % | 1,065,919 | 7,249 | 2.70 | % | 2,641,318 | 36,894 | 5.66 | % | ||||||||||||||
Non-owner occupied commercial real estate loans | 1,449,722 | 20,199 | 5.65 | % | 1,430,420 | 18,536 | 5.14 | % | 1,312,210 | 12,207 | 3.77 | % | ||||||||||||||
Residential mortgages | 542,909 | 5,598 | 4.18 | % | 524,344 | 5,462 | 4.13 | % | 416,417 | 3,680 | 3.58 | % | ||||||||||||||
Installment loans | 1,727,995 | 39,425 | 9.25 | % | 1,555,108 | 33,630 | 8.58 | % | 1,794,145 | 39,963 | 9.03 | % | ||||||||||||||
Total loans and leases (3) | 15,477,973 | 255,913 | 6.70 | % | 15,388,003 | 218,740 | 5.64 | % | 13,656,991 | 157,175 | 4.67 | % | ||||||||||||||
Other interest-earning assets | 91,308 | 1,321 | 5.87 | % | 67,907 | 1,200 | 7.01 | % | 52,111 | 5,677 | NM(6) | |||||||||||||||
Total interest-earning assets | 20,514,677 | 314,945 | 6.21 | % | 20,211,028 | 269,647 | 5.30 | % | 18,572,308 | 183,476 | 4.00 | % | ||||||||||||||
Non-interest-earning assets | 538,243 | 506,334 | 557,022 | |||||||||||||||||||||||
Total assets | $ | 21,052,920 | $ | 20,717,362 | $ | 19,129,330 | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Interest checking accounts | $ | 7,494,379 | $ | 70,485 | 3.81 | % | $ | 8,536,962 | $ | 70,041 | 3.26 | % | $ | 5,769,372 | $ | 7,730 | 0.54 | % | ||||||||
Money market deposit accounts | 2,470,004 | 20,783 | 3.41 | % | 3,094,206 | 21,220 | 2.72 | % | 4,880,051 | 4,674 | 0.39 | % | ||||||||||||||
Other savings accounts | 822,312 | 6,286 | 3.10 | % | 669,466 | 3,368 | 2.00 | % | 880,113 | 784 | 0.36 | % | ||||||||||||||
Certificates of deposit | 4,504,333 | 46,376 | 4.18 | % | 3,259,801 | 29,737 | 3.62 | % | 450,644 | 524 | 0.47 | % | ||||||||||||||
Total interest-bearing deposits (4) | 15,291,028 | 143,930 | 3.82 | % | 15,560,435 | 124,366 | 3.17 | % | 11,980,180 | 13,712 | 0.46 | % | ||||||||||||||
Federal funds purchased | 15,333 | 188 | 4.97 | % | 151,467 | 1,437 | 3.76 | % | 88,611 | 73 | 0.33 | % | ||||||||||||||
Borrowings | 1,788,116 | 20,928 | 4.75 | % | 819,032 | 8,707 | 4.22 | % | 532,610 | 4,992 | 3.80 | % | ||||||||||||||
Total interest-bearing liabilities | 17,094,477 | 165,046 | 3.91 | % | 16,530,934 | 134,510 | 3.23 | % | 12,601,401 | 18,777 | 0.60 | % | ||||||||||||||
Non-interest-bearing deposits (4) | 2,299,295 | 2,514,316 | 4,900,983 | |||||||||||||||||||||||
Total deposits and borrowings | 19,393,772 | 3.45 | % | 19,045,250 | 2.80 | % | 17,502,384 | 0.43 | % | |||||||||||||||||
Other non-interest-bearing liabilities | 247,575 | 271,129 | 237,131 | |||||||||||||||||||||||
Total liabilities | 19,641,347 | 19,316,379 | 17,739,515 | |||||||||||||||||||||||
Shareholders' equity | 1,411,573 | 1,400,983 | 1,389,815 | |||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 21,052,920 | $ | 20,717,362 | $ | 19,129,330 | ||||||||||||||||||||
Net interest income | 149,899 | 135,137 | 164,699 | |||||||||||||||||||||||
Tax-equivalent adjustment | 375 | 342 | 239 | |||||||||||||||||||||||
Net interest earnings | $ | 150,274 | $ | 135,479 | $ | 164,938 | ||||||||||||||||||||
Interest spread | 2.76 | % | 2.50 | % | 3.57 | % | ||||||||||||||||||||
Net interest margin | 2.95 | % | 2.66 | % | 3.59 | % | ||||||||||||||||||||
Net interest margin tax equivalent | 2.96 | % | 2.67 | % | 3.60 | % | ||||||||||||||||||||
Net interest margin tax equivalent excl. PPP (5) | 2.80 | % | 2.87 | % | 3.32 | % | ||||||||||||||||||||
(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 3.32%, 2.73% and 0.33% for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively. | ||||||||||||||||||||||||||
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, presented to approximate interest income as a taxable asset and 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. | ||||||||||||||||||||||||||
(6) Not meaningful. | ||||||||||||||||||||||||||
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||
PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED | ||||||||||||||
(Dollars in thousands) | ||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||
Loans and leases held for investment | ||||||||||||||
Commercial: | ||||||||||||||
Commercial & industrial: | ||||||||||||||
Specialty lending | $ | 5,519,176 | $ | 5,412,887 | $ | 5,103,974 | $ | 4,599,640 | $ | 2,973,544 | ||||
Other commercial & industrial | 1,168,161 | 1,135,336 | 1,064,332 | 1,037,444 | 947,895 | |||||||||
Multifamily | 2,195,211 | 2,213,019 | 2,263,268 | 2,008,784 | 1,705,027 | |||||||||
Loans to mortgage companies | 1,374,894 | 1,447,919 | 1,708,587 | 1,975,189 | 1,830,121 | |||||||||
Commercial real estate owner occupied | 895,314 | 885,339 | 726,670 | 710,577 | 701,893 | |||||||||
Loans receivable, PPP | 246,258 | 998,153 | 1,154,632 | 1,570,160 | 2,195,902 | |||||||||
Commercial real estate non-owner occupied | 1,245,248 | 1,290,730 | 1,263,211 | 1,152,869 | 1,140,311 | |||||||||
Construction | 188,123 | 162,009 | 136,133 | 195,687 | 161,024 | |||||||||
Total commercial loans and leases | 12,832,385 | 13,545,392 | 13,420,807 | 13,250,350 | 11,655,717 | |||||||||
Consumer: | ||||||||||||||
Residential | 494,815 | 497,952 | 465,772 | 457,768 | 466,423 | |||||||||
Manufactured housing | 43,272 | 45,076 | 46,990 | 48,570 | 50,669 | |||||||||
Installment: | ||||||||||||||
Personal | 849,420 | 964,641 | 1,056,432 | 1,613,628 | 1,584,011 | |||||||||
Other | 419,085 | 413,298 | 341,463 | 287,442 | 313,695 | |||||||||
Total installment loans | 1,268,505 | 1,377,939 | 1,397,895 | 1,901,070 | 1,897,706 | |||||||||
Total consumer loans | 1,806,592 | 1,920,967 | 1,910,657 | 2,407,408 | 2,414,798 | |||||||||
Total loans and leases held for investment | $ | 14,638,977 | $ | 15,466,359 | $ | 15,331,464 | $ | 15,657,758 | $ | 14,070,515 | ||||
Loans held for sale | ||||||||||||||
Commercial: | ||||||||||||||
Multifamily | $ | 4,051 | $ | 4,079 | $ | 4,108 | $ | 4,136 | $ | - | ||||
Commercial real estate non-owner occupied | 16,000 | - | - | - | - | |||||||||
Total commercial loans and leases | 20,051 | 4,079 | 4,108 | 4,136 | - | |||||||||
Consumer: | ||||||||||||||
Residential | 821 | 829 | 1,116 | 2,459 | 3,003 | |||||||||
Installment: | ||||||||||||||
Personal | 307,336 | 133,801 | - | - | - | |||||||||
Other | 95,849 | 189,603 | - | - | - | |||||||||
Total installment loans | 403,185 | 323,404 | - | - | - | |||||||||
Total consumer loans | 404,006 | 324,233 | 1,116 | 2,459 | 3,003 | |||||||||
Total loans held for sale | $ | 424,057 | $ | 328,312 | $ | 5,224 | $ | 6,595 | $ | 3,003 | ||||
Total loans and leases portfolio | $ | 15,063,034 | $ | 15,794,671 | $ | 15,336,688 | $ | 15,664,353 | $ | 14,073,518 | ||||
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||
PERIOD END DEPOSIT COMPOSITION - UNAUDITED | ||||||||||||||
(Dollars in thousands) | ||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||
Demand, non-interest bearing | $ | 3,487,517 | $ | 1,885,045 | $ | 2,993,793 | $ | 4,683,030 | $ | 4,594,428 | ||||
Demand, interest bearing | 5,791,302 | 8,476,027 | 7,124,663 | 6,644,398 | 5,591,468 | |||||||||
Total demand deposits | 9,278,819 | 10,361,072 | 10,118,456 | 11,327,428 | 10,185,896 | |||||||||
Savings | 924,359 | 811,798 | 592,002 | 640,062 | 802,395 | |||||||||
Money market | 2,019,633 | 2,734,217 | 4,913,967 | 4,254,205 | 4,981,077 | |||||||||
Time deposits | 5,500,806 | 4,249,866 | 1,898,013 | 723,024 | 446,192 | |||||||||
Total deposits | $ | 17,723,617 | $ | 18,156,953 | $ | 17,522,438 | $ | 16,944,719 | $ | 16,415,560 | ||||
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||||||
ASSET QUALITY - UNAUDITED | |||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | As of March 31, 2023 | As of December 31, 2022 | As of March 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||
Total loans | Non accrual /NPLs | Allowance for credit losses | Total NPLs to total loans | Total reserves to total NPLs | Total loans | Non accrual /NPLs | Allowance for credit losses | Total NPLs to total loans | Total reserves to total NPLs | Total loans | Non accrual /NPLs | Allowance for credit losses | Total NPLs to total loans | Total reserves to total NPLs | |||||||||||||||||||||||||||||||
Loan type | |||||||||||||||||||||||||||||||||||||||||||||
Commercial & industrial, including specialty lending (1) | $ | 6,814,864 | $ | 3,886 | $ | 20,050 | 0.06 | % | 515.95 | % | $ | 6,672,830 | $ | 1,761 | $ | 17,582 | 0.03 | % | 998.41 | % | $ | 3,995,802 | $ | 5,490 | $ | 10,765 | 0.14 | % | 196.08 | % | |||||||||||||||
Multifamily | 2,195,211 | 881 | 15,084 | 0.04 | % | 1712.15 | % | 2,213,019 | 1,143 | 14,541 | 0.05 | % | 1272.18 | % | 1,705,027 | 17,869 | 7,437 | 1.05 | % | 41.62 | % | ||||||||||||||||||||||||
Commercial real estate owner occupied | 895,314 | 3,621 | 8,472 | 0.40 | % | 233.97 | % | 885,339 | 2,768 | 6,454 | 0.31 | % | 233.16 | % | 701,893 | 2,191 | 3,841 | 0.31 | % | 175.31 | % | ||||||||||||||||||||||||
Commercial real estate non-owner occupied | 1,245,248 | - | 11,032 | - | % | - | % | 1,290,730 | - | 11,219 | - | % | - | % | 1,140,311 | 1,302 | 5,955 | 0.11 | % | 457.37 | % | ||||||||||||||||||||||||
Construction | 188,123 | - | 2,336 | - | % | - | % | 162,009 | - | 1,913 | - | % | - | % | 161,024 | - | 939 | - | % | - | % | ||||||||||||||||||||||||
Total commercial loans and leases receivable | 11,338,760 | 8,388 | 56,974 | 0.07 | % | 679.23 | % | 11,223,927 | 5,672 | 51,709 | 0.05 | % | 911.65 | % | 7,704,057 | 26,852 | 28,937 | 0.35 | % | 107.76 | % | ||||||||||||||||||||||||
Residential | 494,815 | 6,473 | 6,853 | 1.31 | % | 105.87 | % | 497,952 | 6,922 | 6,094 | 1.39 | % | 88.04 | % | 466,423 | 8,124 | 4,685 | 1.74 | % | 57.67 | % | ||||||||||||||||||||||||
Manufactured housing | 43,272 | 2,568 | 4,339 | 5.93 | % | 168.96 | % | 45,076 | 2,410 | 4,430 | 5.35 | % | 183.82 | % | 50,669 | 3,430 | 4,342 | 6.77 | % | 126.59 | % | ||||||||||||||||||||||||
Installment | 1,268,505 | 8,720 | 62,115 | 0.69 | % | 712.33 | % | 1,377,939 | 9,527 | 68,691 | 0.69 | % | 721.01 | % | 1,897,706 | 4,865 | 107,883 | 0.26 | % | 2217.53 | % | ||||||||||||||||||||||||
Total consumer loans receivable | 1,806,592 | 17,761 | 73,307 | 0.98 | % | 412.74 | % | 1,920,967 | 18,859 | 79,215 | 0.98 | % | 420.04 | % | 2,414,798 | 16,419 | 116,910 | 0.68 | % | 712.04 | % | ||||||||||||||||||||||||
Loans and leases receivable (1) | 13,145,352 | 26,149 | 130,281 | 0.20 | % | 498.23 | % | 13,144,894 | 24,531 | 130,924 | 0.19 | % | 533.71 | % | 10,118,855 | 43,271 | 145,847 | 0.43 | % | 337.05 | % | ||||||||||||||||||||||||
Loans receivable, PPP | 246,258 | - | - | - | % | - | % | 998,153 | - | - | - | % | - | % | 2,195,902 | - | - | - | % | - | % | ||||||||||||||||||||||||
Loans receivable, mortgage warehouse, at fair value | 1,247,367 | - | - | - | % | - | % | 1,323,312 | - | - | - | % | - | % | 1,755,758 | - | - | - | % | - | % | ||||||||||||||||||||||||
Total loans held for sale | 424,057 | 5,975 | - | 1.41 | % | - | % | 328,312 | 6,206 | - | 1.89 | % | - | % | 3,003 | 507 | - | 16.88 | % | - | % | ||||||||||||||||||||||||
Total portfolio | $ | 15,063,034 | $ | 32,124 | $ | 130,281 | 0.21 | % | 405.56 | % | $ | 15,794,671 | $ | 30,737 | $ | 130,924 | 0.19 | % | 425.95 | % | $ | 14,073,518 | $ | 43,778 | $ | 145,847 | 0.31 | % | 333.15 | % | |||||||||||||||
(1) Excluding loans receivable, PPP from total loans and leases receivable is a non-GAAP measure. Management believes the use of these non-GAAP measures provides additional clarity when assessing Customers' financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. Please refer to the reconciliation schedules that follow this table.
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||
NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED | |||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
Loan type | |||||||||||||||||||
Commercial & industrial, including specialty lending (1) | $ | (71 | ) | $ | 12,960 | $ | 2,581 | $ | (416 | ) | $ | (59 | ) | ||||||
Multifamily | - | - | - | 1,990 | (337 | ) | |||||||||||||
Commercial real estate owner occupied | - | (2 | ) | - | (42 | ) | (7 | ) | |||||||||||
Commercial real estate non-owner occupied | 4,234 | 972 | 4,831 | 159 | (8 | ) | |||||||||||||
Construction | (116 | ) | (10 | ) | (10 | ) | (103 | ) | (113 | ) | |||||||||
Residential | (2 | ) | 7 | (13 | ) | (39 | ) | (2 | ) | ||||||||||
Installment | 14,606 | 13,237 | 11,108 | 11,932 | 7,752 | ||||||||||||||
Total net charge-offs (recoveries) from loans held for investment | $ | 18,651 | $ | 27,164 | $ | 18,497 | $ | 13,481 | $ | 7,226 | |||||||||
(1) Includes $11.0 million of one-time charge-offs from certain loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and were deemed uncollectible during the three months ended December 31, 2022.
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED |
We believe that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. The non-GAAP measures presented are not necessarily comparable to non-GAAP measures that may be presented by other financial institutions. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP.
The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document.
Core Earnings - Customers Bancorp | |||||||||||||||||||||||||||||||
Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | |||||||||||||||||||||||||||
(Dollars in thousands except per share data) | USD | Per share | USD | Per share | USD | Per share | USD | Per share | USD | Per share | |||||||||||||||||||||
GAAP net income to common shareholders | $ | 50,265 | $ | 1.55 | $ | 25,623 | $ | 0.77 | $ | 61,364 | $ | 1.85 | $ | 56,519 | $ | 1.68 | $ | 74,896 | $ | 2.18 | |||||||||||
Reconciling items (after tax): | |||||||||||||||||||||||||||||||
Severance expense | 637 | 0.02 | - | - | 1,058 | 0.03 | - | - | - | - | |||||||||||||||||||||
Impairments on fixed assets and leases | 86 | 0.00 | - | - | 126 | 0.00 | 705 | 0.02 | 220 | 0.01 | |||||||||||||||||||||
Loss on sale of consumer installment loans | - | - | - | - | 18,221 | 0.55 | - | - | - | - | |||||||||||||||||||||
(Gains) losses on investment securities | (49 | ) | 0.00 | 13,543 | 0.41 | 1,859 | 0.06 | 2,494 | 0.07 | 1,030 | 0.03 | ||||||||||||||||||||
Derivative credit valuation adjustment | 204 | 0.01 | 202 | 0.01 | (358 | ) | (0.01 | ) | (351 | ) | (0.01 | ) | (736 | ) | (0.02 | ) | |||||||||||||||
Core earnings | $ | 51,143 | $ | 1.58 | $ | 39,368 | $ | 1.19 | $ | 82,270 | $ | 2.48 | $ | 59,367 | $ | 1.77 | $ | 75,410 | $ | 2.20 | |||||||||||
Core Earnings, excluding PPP - Customers Bancorp | |||||||||||||||||||||||||||||||||
Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | |||||||||||||||||||||||||||||
(Dollars in thousands except per share data) | USD | Per share | USD | Per share | USD | Per share | USD | Per share | USD | Per share | |||||||||||||||||||||||
GAAP net income to common shareholders | $ | 50,265 | $ | 1.55 | $ | 25,623 | $ | 0.77 | $ | 61,364 | $ | 1.85 | $ | 56,519 | $ | 1.68 | $ | 74,896 | $ | 2.18 | |||||||||||||
Less: PPP net income (loss) (after tax) | 9,606 | 0.30 | (5,956 | ) | (0.18 | ) | 5,846 | 0.18 | 13,066 | 0.39 | 24,713 | 0.72 | |||||||||||||||||||||
Net income to common shareholders, excluding PPP | 40,659 | 1.26 | 31,579 | 0.95 | 55,518 | 1.67 | 43,453 | 1.29 | 50,183 | 1.46 | |||||||||||||||||||||||
Reconciling items (after tax): | |||||||||||||||||||||||||||||||||
Severance expense | 637 | 0.02 | - | - | 1,058 | 0.03 | - | - | - | - | |||||||||||||||||||||||
Impairments on fixed assets and leases | 86 | 0.00 | - | - | 126 | 0.00 | 705 | 0.02 | 220 | 0.01 | |||||||||||||||||||||||
Loss on sale of consumer installment loans | - | - | - | - | 18,221 | 0.55 | - | - | - | - | |||||||||||||||||||||||
(Gains) losses on investment securities | (49 | ) | 0.00 | 13,543 | 0.41 | 1,859 | 0.06 | 2,494 | 0.07 | 1,030 | 0.03 | ||||||||||||||||||||||
Derivative credit valuation adjustment | 204 | 0.01 | 202 | 0.01 | (358 | ) | (0.01 | ) | (351 | ) | (0.01 | ) | (736 | ) | (0.02 | ) | |||||||||||||||||
Core earnings, excluding PPP | $ | 41,537 | $ | 1.28 | $ | 45,324 | $ | 1.37 | $ | 76,424 | $ | 2.30 | $ | 46,301 | $ | 1.38 | $ | 50,697 | $ | 1.48 | |||||||||||||
Core Return on Average Assets - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP net income | $ | 53,721 | $ | 28,711 | $ | 63,912 | $ | 58,650 | $ | 76,761 | |||||||||
Reconciling items (after tax): | |||||||||||||||||||
Severance expense | 637 | - | 1,058 | - | - | ||||||||||||||
Impairments on fixed assets and leases | 86 | - | 126 | 705 | 220 | ||||||||||||||
Loss on sale of consumer installment loans | - | - | 18,221 | - | - | ||||||||||||||
(Gains) losses on investment securities | (49 | ) | 13,543 | 1,859 | 2,494 | 1,030 | |||||||||||||
Derivative credit valuation adjustment | 204 | 202 | (358 | ) | (351 | ) | (736 | ) | |||||||||||
Core net income | $ | 54,599 | $ | 42,456 | $ | 84,818 | $ | 61,498 | $ | 77,275 | |||||||||
Average total assets | $ | 21,052,920 | $ | 20,717,362 | $ | 20,514,366 | $ | 20,056,020 | $ | 19,129,330 | |||||||||
Core return on average assets | 1.05 | % | 0.81 | % | 1.64 | % | 1.23 | % | 1.64 | % | |||||||||
Core Return on Average Assets, excluding PPP - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP net income | $ | 53,721 | $ | 28,711 | $ | 63,912 | $ | 58,650 | $ | 76,761 | |||||||||
Less: PPP net income (loss) (after tax) | 9,606 | (5,956 | ) | 5,846 | 13,066 | 24,713 | |||||||||||||
Net income, excluding PPP | 44,115 | 34,667 | 58,066 | 45,584 | 52,048 | ||||||||||||||
Reconciling items (after tax): | |||||||||||||||||||
Severance expense | 637 | - | 1,058 | - | - | ||||||||||||||
Impairments on fixed assets and leases | 86 | - | 126 | 705 | 220 | ||||||||||||||
Loss on sale of consumer installment loans | - | - | 18,221 | - | - | ||||||||||||||
(Gains) losses on investment securities | (49 | ) | 13,543 | 1,859 | 2,494 | 1,030 | |||||||||||||
Derivative credit valuation adjustment | 204 | 202 | (358 | ) | (351 | ) | (736 | ) | |||||||||||
Core net income, excluding PPP | $ | 44,993 | $ | 48,412 | $ | 78,972 | $ | 48,432 | $ | 52,562 | |||||||||
Average total assets | $ | 21,052,920 | $ | 20,717,362 | $ | 20,514,366 | $ | 20,056,020 | $ | 19,129,330 | |||||||||
Core return on average assets, excluding PPP | 0.87 | % | 0.93 | % | 1.53 | % | 0.97 | % | 1.11 | % | |||||||||
Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP net income | $ | 53,721 | $ | 28,711 | $ | 63,912 | $ | 58,650 | $ | 76,761 | |||||||||
Reconciling items: | |||||||||||||||||||
Income tax expense | 14,563 | 7,136 | 17,899 | 18,896 | 19,332 | ||||||||||||||
Provision (benefit) for credit losses | 19,603 | 28,216 | (7,994 | ) | 23,847 | 15,997 | |||||||||||||
Provision (benefit) for credit losses on unfunded commitments | 280 | 153 | 254 | 608 | (109 | ) | |||||||||||||
Severance expense | 809 | - | 1,363 | - | - | ||||||||||||||
Impairments on fixed assets and leases | 109 | - | 162 | 914 | 286 | ||||||||||||||
Loss on sale of consumer installment loans | - | - | 23,465 | - | - | ||||||||||||||
(Gains) losses on investment securities | (62 | ) | 16,909 | 2,394 | 3,232 | 1,339 | |||||||||||||
Derivative credit valuation adjustment | 259 | 252 | (461 | ) | (455 | ) | (957 | ) | |||||||||||
Adjusted net income - pre-tax pre-provision | $ | 89,282 | $ | 81,377 | $ | 100,994 | $ | 105,692 | $ | 112,649 | |||||||||
Average total assets | $ | 21,052,920 | $ | 20,717,362 | $ | 20,514,366 | $ | 20,056,020 | $ | 19,129,330 | |||||||||
Adjusted ROAA - pre-tax pre-provision | 1.72 | % | 1.56 | % | 1.95 | % | 2.11 | % | 2.39 | % | |||||||||
Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision, excluding PPP - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP net income | $ | 53,721 | $ | 28,711 | $ | 63,912 | $ | 58,650 | $ | 76,761 | |||||||||
Less: PPP net income (loss) (after tax) | 9,606 | (5,956 | ) | 5,846 | 13,066 | 24,713 | |||||||||||||
Net income, excluding PPP | 44,115 | 34,667 | 58,066 | 45,584 | 52,048 | ||||||||||||||
Reconciling items: | |||||||||||||||||||
Income tax expense | 14,563 | 7,136 | 17,899 | 18,896 | 19,332 | ||||||||||||||
Provision (benefit) for credit losses | 19,603 | 28,216 | (7,994 | ) | 23,847 | 15,997 | |||||||||||||
Provision (benefit) for credit losses on unfunded commitments | 280 | 153 | 254 | 608 | (109 | ) | |||||||||||||
Severance expense | 809 | - | 1,363 | - | - | ||||||||||||||
Impairments on fixed assets and leases | 109 | - | 162 | 914 | 286 | ||||||||||||||
Loss on sale of consumer installment loans | - | - | 23,465 | - | - | ||||||||||||||
(Gains) losses on investment securities | (62 | ) | 16,909 | 2,394 | 3,232 | 1,339 | |||||||||||||
Derivative credit valuation adjustment | 259 | 252 | (461 | ) | (455 | ) | (957 | ) | |||||||||||
Adjusted net income - pre-tax pre-provision, excluding PPP | $ | 79,676 | $ | 87,333 | $ | 95,148 | $ | 92,626 | $ | 87,936 | |||||||||
Average total assets | $ | 21,052,920 | $ | 20,717,362 | $ | 20,514,366 | $ | 20,056,020 | $ | 19,129,330 | |||||||||
Adjusted ROAA - pre-tax pre-provision, excluding PPP | 1.53 | % | 1.67 | % | 1.84 | % | 1.85 | % | 1.86 | % | |||||||||
Core Return on Average Common Equity - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP net income to common shareholders | $ | 50,265 | $ | 25,623 | $ | 61,364 | $ | 56,519 | $ | 74,896 | |||||||||
Reconciling items (after tax): | |||||||||||||||||||
Severance expense | 637 | - | 1,058 | - | - | ||||||||||||||
Impairments on fixed assets and leases | 86 | - | 126 | 705 | 220 | ||||||||||||||
Loss on sale of consumer installment loans | - | - | 18,221 | - | - | ||||||||||||||
(Gains) losses on investment securities | (49 | ) | 13,543 | 1,859 | 2,494 | 1,030 | |||||||||||||
Derivative credit valuation adjustment | 204 | 202 | (358 | ) | (351 | ) | (736 | ) | |||||||||||
Core earnings | $ | 51,143 | $ | 39,368 | $ | 82,270 | $ | 59,367 | $ | 75,410 | |||||||||
Average total common shareholders' equity | $ | 1,273,780 | $ | 1,263,190 | $ | 1,259,711 | $ | 1,244,819 | $ | 1,252,022 | |||||||||
Core return on average common equity | 16.28 | % | 12.36 | % | 25.91 | % | 19.13 | % | 24.43 | % | |||||||||
Adjusted ROCE - Pre-Tax Pre-Provision - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP net income to common shareholders | $ | 50,265 | $ | 25,623 | $ | 61,364 | $ | 56,519 | $ | 74,896 | |||||||||
Reconciling items: | |||||||||||||||||||
Income tax expense | 14,563 | 7,136 | 17,899 | 18,896 | 19,332 | ||||||||||||||
Provision (benefit) for credit losses | 19,603 | 28,216 | (7,994 | ) | 23,847 | 15,997 | |||||||||||||
Provision (benefit) for credit losses on unfunded commitments | 280 | 153 | 254 | 608 | (109 | ) | |||||||||||||
Severance expense | 809 | - | 1,363 | - | - | ||||||||||||||
Impairments on fixed assets and leases | 109 | - | 162 | 914 | 286 | ||||||||||||||
Loss on sale of consumer installment loans | - | - | 23,465 | - | - | ||||||||||||||
(Gains) losses on investment securities | (62 | ) | 16,909 | 2,394 | 3,232 | 1,339 | |||||||||||||
Derivative credit valuation adjustment | 259 | 252 | (461 | ) | (455 | ) | (957 | ) | |||||||||||
Pre-tax pre-provision adjusted net income available to common shareholders | $ | 85,826 | $ | 78,289 | $ | 98,446 | $ | 103,561 | $ | 110,784 | |||||||||
Average total common shareholders' equity | $ | 1,273,780 | $ | 1,263,190 | $ | 1,259,711 | $ | 1,244,819 | $ | 1,252,022 | |||||||||
Adjusted ROCE - pre-tax pre-provision | 27.33 | % | 24.59 | % | 31.01 | % | 33.37 | % | 35.89 | % | |||||||||
| Net Interest Margin, Tax Equivalent, excluding PPP - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP net interest income | $ | 149,899 | $ | 135,137 | $ | 159,032 | $ | 164,852 | $ | 164,699 | |||||||||
PPP net interest (income) expense | (14,106 | ) | 2,791 | (9,632 | ) | (18,946 | ) | (34,615 | ) | ||||||||||
Tax-equivalent adjustment | 375 | 342 | 334 | 270 | 239 | ||||||||||||||
Net interest income, tax equivalent, excluding PPP | $ | 136,168 | $ | 138,270 | $ | 149,734 | $ | 146,176 | $ | 130,323 | |||||||||
GAAP average total interest earning assets | $ | 20,514,677 | $ | 20,211,028 | $ | 20,021,455 | $ | 19,525,936 | $ | 18,572,308 | |||||||||
Average PPP loans | (889,235 | ) | (1,065,919 | ) | (1,349,403 | ) | (1,863,429 | ) | (2,641,318 | ) | |||||||||
Adjusted average total interest earning assets, excluding PPP | $ | 19,625,442 | $ | 19,145,109 | $ | 18,672,052 | $ | 17,662,507 | $ | 15,930,990 | |||||||||
Net interest margin, tax equivalent, excluding PPP | 2.80 | % | 2.87 | % | 3.18 | % | 3.32 | % | 3.32 | % | |||||||||
Loan Yield, excluding PPP | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
Interest income on loans and leases | $ | 255,913 | $ | 218,740 | $ | 200,457 | $ | 168,941 | $ | 157,175 | |||||||||
PPP interest income | (23,551 | ) | (7,249 | ) | (14,666 | ) | (20,572 | ) | (36,894 | ) | |||||||||
Interest income on core loans (Loans and leases, excluding PPP) | $ | 232,362 | $ | 211,491 | $ | 185,791 | $ | 148,369 | $ | 120,281 | |||||||||
Average total loans and leases | $ | 15,477,973 | $ | 15,388,003 | $ | 15,653,983 | $ | 14,918,498 | $ | 13,656,991 | |||||||||
Average PPP loans | (889,235 | ) | (1,065,919 | ) | (1,349,403 | ) | (1,863,429 | ) | (2,641,318 | ) | |||||||||
Adjusted average total loans and leases | $ | 14,588,738 | $ | 14,322,084 | $ | 14,304,580 | $ | 13,055,069 | $ | 11,015,673 | |||||||||
Loan yield, excluding PPP | 6.46 | % | 5.86 | % | 5.15 | % | 4.56 | % | 4.43 | % | |||||||||
Core Efficiency Ratio - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP net interest income | $ | 149,899 | $ | 135,137 | $ | 159,032 | $ | 164,852 | $ | 164,699 | |||||||||
GAAP non-interest income | $ | 18,121 | $ | 7,345 | $ | (9,017 | ) | $ | 12,746 | $ | 21,198 | ||||||||
Loss on sale of consumer installment loans | - | - | 23,465 | - | - | ||||||||||||||
(Gains) losses on investment securities | (62 | ) | 16,909 | 2,394 | 3,232 | 1,339 | |||||||||||||
Derivative credit valuation adjustment | 259 | 252 | (461 | ) | (455 | ) | (957 | ) | |||||||||||
Core non-interest income | 18,318 | 24,506 | 16,381 | 15,523 | 21,580 | ||||||||||||||
Core revenue | $ | 168,217 | $ | 159,643 | $ | 175,413 | $ | 180,375 | $ | 186,279 | |||||||||
GAAP non-interest expense | $ | 80,133 | $ | 78,419 | $ | 76,198 | $ | 76,205 | $ | 73,807 | |||||||||
Severance expense | (809 | ) | - | (1,363 | ) | - | - | ||||||||||||
Impairments on fixed assets and leases | (109 | ) | - | (162 | ) | (914 | ) | (286 | ) | ||||||||||
Core non-interest expense | $ | 79,215 | $ | 78,419 | $ | 74,673 | $ | 75,291 | $ | 73,521 | |||||||||
Core efficiency ratio (1) | 47.09 | % | 49.12 | % | 42.57 | % | 41.74 | % | 39.47 | % | |||||||||
(1) Core efficiency ratio calculated as core non-interest expense divided by core revenue.
Tangible Common Equity to Tangible Assets - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP total shareholders' equity | $ | 1,421,020 | $ | 1,402,961 | $ | 1,386,931 | $ | 1,353,390 | $ | 1,377,406 | |||||||||
Reconciling items: | |||||||||||||||||||
Preferred stock | (137,794 | ) | (137,794 | ) | (137,794 | ) | (137,794 | ) | (137,794 | ) | |||||||||
Goodwill and other intangibles | (3,629 | ) | (3,629 | ) | (3,629 | ) | (3,629 | ) | (3,678 | ) | |||||||||
Tangible common equity | $ | 1,279,597 | $ | 1,261,538 | $ | 1,245,508 | $ | 1,211,967 | $ | 1,235,934 | |||||||||
GAAP total assets | $ | 21,751,614 | $ | 20,896,112 | $ | 20,367,621 | $ | 20,251,996 | $ | 19,163,708 | |||||||||
Reconciling items: | |||||||||||||||||||
Goodwill and other intangibles | (3,629 | ) | (3,629 | ) | (3,629 | ) | (3,629 | ) | (3,678 | ) | |||||||||
Tangible assets | $ | 21,747,985 | $ | 20,892,483 | $ | 20,363,992 | $ | 20,248,367 | $ | 19,160,030 | |||||||||
Tangible common equity to tangible assets | 5.9 | % | 6.0 | % | 6.1 | % | 6.0 | % | 6.5 | % | |||||||||
Tangible Common Equity to Tangible Assets, excluding PPP - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP total shareholders' equity | $ | 1,421,020 | $ | 1,402,961 | $ | 1,386,931 | $ | 1,353,390 | $ | 1,377,406 | |||||||||
Reconciling items: | |||||||||||||||||||
Preferred stock | (137,794 | ) | (137,794 | ) | (137,794 | ) | (137,794 | ) | (137,794 | ) | |||||||||
Goodwill and other intangibles | (3,629 | ) | (3,629 | ) | (3,629 | ) | (3,629 | ) | (3,678 | ) | |||||||||
Tangible common equity | $ | 1,279,597 | $ | 1,261,538 | $ | 1,245,508 | $ | 1,211,967 | $ | 1,235,934 | |||||||||
GAAP total assets | $ | 21,751,614 | $ | 20,896,112 | $ | 20,367,621 | $ | 20,251,996 | $ | 19,163,708 | |||||||||
Loans receivable, PPP | (246,258 | ) | (998,153 | ) | (1,154,632 | ) | (1,570,160 | ) | (2,195,902 | ) | |||||||||
Total assets, excluding PPP | $ | 21,505,356 | $ | 19,897,959 | $ | 19,212,989 | $ | 18,681,836 | $ | 16,967,806 | |||||||||
Reconciling items: | |||||||||||||||||||
Goodwill and other intangibles | (3,629 | ) | (3,629 | ) | (3,629 | ) | (3,629 | ) | (3,678 | ) | |||||||||
Tangible assets, excluding PPP | $ | 21,501,727 | $ | 19,894,330 | $ | 19,209,360 | $ | 18,678,207 | $ | 16,964,128 | |||||||||
Tangible common equity to tangible assets, excluding PPP | 6.0 | % | 6.3 | % | 6.5 | % | 6.5 | % | 7.3 | % | |||||||||
Tangible Book Value per Common Share - Customers Bancorp | |||||||||||||||||||
(Dollars in thousands except share and per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
GAAP total shareholders' equity | $ | 1,421,020 | $ | 1,402,961 | $ | 1,386,931 | $ | 1,353,390 | $ | 1,377,406 | |||||||||
Reconciling Items: | |||||||||||||||||||
Preferred stock | (137,794 | ) | (137,794 | ) | (137,794 | ) | (137,794 | ) | (137,794 | ) | |||||||||
Goodwill and other intangibles | (3,629 | ) | (3,629 | ) | (3,629 | ) | (3,629 | ) | (3,678 | ) | |||||||||
Tangible common equity | $ | 1,279,597 | $ | 1,261,538 | $ | 1,245,508 | $ | 1,211,967 | $ | 1,235,934 | |||||||||
Common shares outstanding | 31,239,750 | 32,373,697 | 32,475,502 | 32,449,486 | 32,957,847 | ||||||||||||||
Tangible book value per common share | $ | 40.96 | $ | 38.97 | $ | 38.35 | $ | 37.35 | $ | 37.50 | |||||||||
Core Loans (Total Loans and Leases, excluding PPP) | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
Total loans and leases | $ | 15,063,034 | $ | 15,794,671 | $ | 15,336,688 | $ | 15,664,353 | $ | 14,073,518 | |||||||||
| |||||||||||||||||||
Loans receivable, PPP | (246,258 | ) | (998,153 | ) | (1,154,632 | ) | (1,570,160 | ) | (2,195,902 | ) | |||||||||
Core Loans (Total loans and leases, excluding PPP) | $ | 14,816,776 | $ | 14,796,518 | $ | 14,182,056 | $ | 14,094,193 | $ | 11,877,616 | |||||||||
Core Loans Held for Investment (Total Loans and Leases Held for Investment, excluding PPP) | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
Total loans and leases, held for investment | $ | 14,638,977 | $ | 15,466,359 | $ | 15,331,464 | $ | 15,657,758 | $ | 14,070,515 | |||||||||
Loans receivable, PPP | (246,258 | ) | (998,153 | ) | (1,154,632 | ) | (1,570,160 | ) | (2,195,902 | ) | |||||||||
Core Loans Held for Investment (Total loans and leases held for investment, excluding PPP) | $ | 14,392,719 | $ | 14,468,206 | $ | 14,176,832 | $ | 14,087,598 | $ | 11,874,613 | |||||||||
Total Assets, excluding PPP | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
Total assets | $ | 21,751,614 | $ | 20,896,112 | $ | 20,367,621 | $ | 20,251,996 | $ | 19,163,708 | |||||||||
Loans receivable, PPP | (246,258 | ) | (998,153 | ) | (1,154,632 | ) | (1,570,160 | ) | (2,195,902 | ) | |||||||||
Total assets, excluding PPP | $ | 21,505,356 | $ | 19,897,959 | $ | 19,212,989 | $ | 18,681,836 | $ | 16,967,806 | |||||||||
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP | |||||||||||||||||||
(Dollars in thousands except per share data) | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | ||||||||||||||
Loans and leases receivable | $ | 13,391,610 | $ | 14,143,047 | $ | 13,762,374 | $ | 13,783,155 | $ | 12,314,757 | |||||||||
Loans receivable, PPP | (246,258 | ) | (998,153 | ) | (1,154,632 | ) | (1,570,160 | ) | (2,195,902 | ) | |||||||||
Loans and leases held for investment, excluding PPP | $ | 13,145,352 | $ | 13,144,894 | $ | 12,607,742 | $ | 12,212,995 | $ | 10,118,855 | |||||||||
Allowance for credit losses on loans and leases | $ | 130,281 | $ | 130,924 | $ | 130,197 | $ | 156,530 | $ | 145,847 | |||||||||
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP | 0.99 | % | 1.00 | % | 1.03 | % | 1.28 | % | 1.44 | % | |||||||||
Contacts
David W. Patti, Communications Director 610-451-9452
