Customers Bancorp Reports Results for Fourth Quarter and Full Year 2023
WEST READING, Pa., Jan. 25 /BusinessWire/ --
Customers Bancorp, Inc. (NYSE:CUBI):
Fourth Quarter 2023 Highlights
Q4 2023 net income available to common shareholders was $58.2 million, or $1.79 per diluted share; ROAA was 1.16% and ROCE was 15.93%.
Q4 2023 core earnings* were $61.6 million, or $1.90 per diluted share; Core ROAA* was 1.22% and Core ROCE* was 16.87%.
CET 1 capital ratio of 12.2%1 at December 31, 2023, compared to 11.3% at September 30, 2023, surpassing 11.0% - 11.5% target.
TCE / TA ratio* of 7.0% at December 31, 2023, compared to 6.5% at September 30, 2023, achieving stated target.
Q4 2023 net interest margin, tax equivalent ("NIM") was 3.31%, compared to Q3 2023 NIM of 3.70%. Q3 2023 NIM included the benefit of outsized discount accretion of roughly 50 basis points. Normalizing for this outsized accretion, Q4 2023 NIM expanded by 11 basis points.
Total deposits decreased by $275.1 million in Q4 2023 from Q3 2023 with a significant positive mix shift. Q4 2023 core deposit growth of $1.1 billion funded in part the repayment of maturing wholesale CDs of $0.7 billion and the planned outflow of student-related deposit accounts serviced by BMTX of $0.6 billion.
Total estimated insured deposits were 77%2 of total deposits at December 31, 2023, with immediately available liquidity covering uninsured deposits by approximately 202%.
Non-performing assets were $27.2 million, or 0.13% of total assets, at December 31, 2023 compared to 0.14% at September 30, 2023. Allowance for credit losses on loans and leases equaled 499% of non-performing loans at December 31, 2023, compared to 466% at September 30, 2023.
Q4 2023 provision for credit losses on loans and leases of $13.4 million was lower than Q3 2023 largely driven by lower balances in loans held for investment.
Q4 2023 book value per share and tangible book value per share* both grew by approximately $2.26, or 5.0% over Q3 2023, driven by strong quarterly earnings combined with decreased AOCI losses of $13.2 million over the same time period.
______________________________________________
*
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
Regulatory capital ratios as of December 31, 2023 are estimates.
2
Uninsured deposits (estimate) of $5.4 billion to be reported on the Bank's call report, less deposits of $1.1 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $118.0 million.
Full Year 2023 Highlights
2023 net income available to common shareholders was $235.4 million, or $7.32 per diluted share; ROAA was 1.16% and ROCE was 17.33%.
2023 core earnings* were $248.2 million, or $7.72 per diluted share; Core ROAA* was 1.22% and Core ROCE* was 18.27%.
Record 2023 net interest income of $687.4 million.
CET 1 capital ratio of 12.2%1 at December 31, 2023, compared to 9.6% at December 31, 2022, surpassing 11.0% - 11.5% target.
TCE / TA ratio* of 7.0% at December 31, 2023, compared to 6.0% at December 31, 2022.
2023 NIM was 3.29%, an increase of 10 basis points over 2022 NIM of 3.19%.
Non-performing assets were $27.2 million, or 0.13% of total assets, at December 31, 2023 compared to $30.8 million, or 0.15% of total assets, at December 31, 2022. Allowance for credit losses on loans and leases equaled 499% of non-performing loans at December 31, 2023, compared to 426% at December 31, 2022.
Book value per share and tangible book value per share* grew year over year by approximately $8.65 or 22.1%, driven by strong 2023 annual earnings combined with the decreased AOCI losses of $26.5 million over the same time period. Tangible book value per share* has grown at a 15% compound annual growth rate (CAGR) over the past 5 years, significantly higher than the regional bank peer median3 of 4%.
Repurchased 1,379,883 common shares at a weighted-average price of $28.58 for $39.8 million in 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 is included at the end of this document.
1
Regulatory capital ratios as of December 31, 2023 are estimates.
2
Uninsured deposits (estimate) of $5.4 billion to be reported on the Bank's call report, less deposits of $1.1 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $118.0 million.
3
Regional bank peers based on selected 2023 proxy peers with a reporting date on or before January 24, 2024 before market close.
CEO Commentary
"We are pleased to share our fourth quarter and full year 2023 results as we continued to execute on our strategic priorities and delivered again for shareholders," said Customers Bancorp Chairman and CEO Jay Sidhu. "While the banking industry has stabilized following the challenges in early 2023, higher interest rates and less liquidity in the banking system remain headwinds for all banks. We again demonstrated the sustainability of our differentiated deposit franchise by growing core deposits by $1.1 billion in the fourth quarter which funded in part the repayment of maturing wholesale CDs of $743 million and the planned outflow of student-related deposit accounts serviced by BMTX totaling approximately $637 million. Additional liquidity inflows primarily from sales of investment securities were used to payoff $340 million in callable FHLB advances. The core deposit growth was again broad-based with more than 20 different channels increasing balances and roughly half contributing $25 million or more. Non-interest bearing deposits as a percentage of total deposits remained relatively flat at 25%. Excluding the outsized accretion we experienced in the third quarter, our net interest margin continued to expand in the fourth quarter in contrast to the industry trends. Capital levels continued to increase substantially as evidenced by two consecutive quarters with a 50 basis point increase in our TCE / TA ratio* and a 90 basis point increase in our CET 1 ratio. In the last three quarters, we have increased our TCE / TA ratio* by 110 basis points to 7.0% and our CET 1 ratio by 260 basis points to 12.2%. We remain well-positioned to continue strengthening our deposit franchise, improve our profitability, and maintain our capital ratios," stated Jay Sidhu.
"Our Q4 2023 GAAP earnings were $58.2 million, or $1.79 per diluted share, and core earnings were $61.6 million, or $1.90 per diluted share, considerably above consensus estimates. At December 31, 2023, our deposit base was well diversified, with approximately 77%2 of total deposits insured. We maintain a strong liquidity position, with $8.5 billion of liquidity immediately available, which covers approximately 202% of uninsured deposits2 and our loan to deposit ratio was 74%. We continue to focus loan production where we have a holistic and primary relationship. We are seeing attractive new origination opportunities. We have ample liquidity and capital, which we plan to deploy in 2024, to support the needs of our customers. At December 31, 2023, we had $3.8 billion of cash on hand, which we believe is prudent balance sheet and liquidity management in the current environment. Asset quality remains exceptional with our NPA ratio down slightly at just 0.13% of total assets and reserve levels are robust at over 499% of total non-performing loans at the end of Q4 2023. Our exposure to higher risk commercial real estate such as the office and retail sectors is minimal, each representing only 1% of the loan portfolio. Continued execution on our strategic priorities has positioned us favorably for success in 2024 from a capital, credit, liquidity, interest rate risk and earnings perspective. We will remain disciplined, but opportunistic, with our balance sheet capacity to minimize risk and maintain robust capital levels. We are extremely proud of the progress we made in 2023 and are confident in our risk management capabilities and ability to provide excellent service to our clients in all operating environments. We are excited and optimistic about the opportunities in 2024 and beyond," Jay Sidhu continued.
______________________________________________
*
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
Regulatory capital ratios as of December 31, 2023 are estimates.
2
Uninsured deposits (estimate) of $5.4 billion to be reported on the Bank's call report, less deposits of $1.1 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $118.0 million.
Financial Highlights
(Dollars in thousands, except per share data)
At or Three Months Ended
Increase (Decrease)
December 31, 2023
September 30, 2023
Profitability Metrics:
Net income available for common shareholders
$
58,223
$
82,953
$
(24,730
)
(29.8
)%
Diluted earnings per share
$
1.79
$
2.58
$
(0.79
)
(30.6
)%
Core earnings*
$
61,633
$
83,294
$
(21,661
)
(26.0
)%
Core earnings per share*
$
1.90
$
2.59
$
(0.69
)
(26.6
)%
Return on average assets ("ROAA")
1.16
%
1.57
%
(0.41
)
Core ROAA*
1.22
%
1.57
%
(0.35
)
Return on average common equity ("ROCE")
15.93
%
23.97
%
(8.04
)
Core ROCE*
16.87
%
24.06
%
(7.19
)
Adjusted pre-tax pre-provision net income*
$
101,884
$
128,564
$
(26,680
)
(20.8
)%
Net interest margin, tax equivalent
3.31
%
3.70
%
(0.39
)
Yield on loans (Loan yield)
7.30
%
7.87
%
(0.57
)
Cost of deposits
3.39
%
3.24
%
0.15
Efficiency ratio
49.08
%
41.01
%
8.07
Core efficiency ratio*
46.70
%
41.04
%
5.66
Non-interest expense to average total assets
1.75
%
1.62
%
0.13
Core non-interest expense to average total assets*
1.67
%
1.62
%
0.05
Balance Sheet Trends:
Total assets
$
21,316,265
$
21,857,152
$
(540,887
)
(2.5
)%
Total cash and investment securities
$
7,355,156
$
7,371,551
$
(16,395
)
(0.2
)%
Total loans and leases
$
13,202,084
$
13,713,482
$
(511,398
)
(3.7
)%
Non-interest bearing demand deposits
$
4,422,494
$
4,758,682
$
(336,188
)
(7.1
)%
Total deposits
$
17,920,236
$
18,195,364
$
(275,128
)
(1.5
)%
Capital Metrics:
Common Equity
$
1,500,600
$
1,423,813
$
76,787
5.4
%
Tangible Common Equity*
$
1,496,971
$
1,420,184
$
76,787
5.4
%
Common Equity to Total Assets
7.0
%
6.5
%
0.5
Tangible Common Equity to Tangible Assets*
7.0
%
6.5
%
0.5
Book Value per common share
$
47.73
$
45.47
$
2.26
5.0
%
Tangible Book Value per common share*
$
47.61
$
45.36
$
2.25
5.0
%
Common equity Tier 1 capital ratio (1)
12.2
%
11.3
%
0.9
Total risk based capital ratio (1)
15.3
%
14.3
%
1.0
(1) Regulatory capital ratios as of December 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)
Twelve Months Ended
Increase (Decrease)
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Profitability Metrics:
Net income available for common shareholders
$
58,223
$
25,623
$
32,600
127.2
%
$
235,448
$
218,402
$
17,046
7.8
%
Diluted earnings per share
$
1.79
$
0.77
$
1.02
132.5
%
$
7.32
$
6.51
$
0.81
12.4
%
Core earnings*
$
61,633
$
39,368
$
22,265
56.6
%
$
248,233
$
256,415
$
(8,182
)
(3.2
)%
Core earnings per share*
$
1.90
$
1.19
$
0.71
59.7
%
$
7.72
$
7.63
$
0.09
1.2
%
Return on average assets ("ROAA")
1.16
%
0.55
%
0.61
1.16
%
1.13
%
0.03
Core ROAA*
1.22
%
0.81
%
0.41
1.22
%
1.32
%
(0.10
)
Return on average common equity ("ROCE")
15.93
%
8.05
%
7.88
17.33
%
17.40
%
(0.07
)
Core ROCE*
16.87
%
12.36
%
4.51
18.27
%
20.43
%
(2.16
)
Adjusted pre-tax pre-provision net income*
$
101,884
$
81,377
$
20,507
25.2
%
$
416,563
$
400,712
$
15,851
4.0
%
Net interest margin, tax equivalent
3.31
%
2.67
%
0.64
3.29
%
3.19
%
0.10
Yield on loans (Loan yield)
7.30
%
5.64
%
1.66
7.16
%
5.00
%
2.16
Cost of deposits
3.39
%
2.73
%
0.66
3.27
%
1.31
%
1.96
Efficiency ratio
49.08
%
49.20
%
(0.12
)
46.49
%
44.81
%
1.68
Core efficiency ratio*
46.70
%
49.12
%
(2.42
)
45.45
%
43.02
%
2.43
Non-interest expense to average total assets
1.75
%
1.50
%
0.25
1.64
%
1.51
%
0.13
Core non-interest expense to average total assets*
1.67
%
1.50
%
0.17
1.62
%
1.50
%
0.12
Balance Sheet Trends:
Total assets
$
21,316,265
$
20,896,112
$
420,153
2.0
%
Total cash and investment securities
$
7,355,156
$
4,283,565
$
3,071,591
71.7
%
Total loans and leases
$
13,202,084
$
15,794,671
$
(2,592,587
)
(16.4
)%
Non-interest bearing demand deposits
$
4,422,494
$
1,885,045
$
2,537,449
134.6
%
Total deposits
$
17,920,236
$
18,156,953
$
(236,717
)
(1.3
)%
Capital Metrics:
Common Equity
$
1,500,600
$
1,265,167
$
235,433
18.6
%
Tangible Common Equity*
$
1,496,971
$
1,261,538
$
235,433
18.7
%
Common Equity to Total Assets
7.0
%
6.0
%
1.0
Tangible Common Equity to Tangible Assets*
7.0
%
6.0
%
1.0
Book Value per common share
$
47.73
$
39.08
$
8.65
22.1
%
Tangible Book Value per common share*
$
47.61
$
38.97
$
8.64
22.2
%
Common equity Tier 1 capital ratio (1)
12.2
%
9.6
%
2.6
Total risk based capital ratio (1)
15.3
%
12.2
%
3.1
(1) Regulatory capital ratios as of December 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.
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)
December 31, 2023
% of Total
September 30, 2023
% of Total
December 31, 2022
% of Total
Loans and Leases Held for Investment
Commercial:
Commercial & industrial:
Specialty lending
$
5,006,693
38.9
%
$
5,422,161
40.0
%
$
5,412,887
35.0
%
Other commercial & industrial
1,087,582
8.5
1,115,364
8.2
1,135,336
7.4
Loans to mortgage companies
1,014,742
7.9
1,042,549
7.7
1,447,919
9.4
Multifamily
2,138,622
16.6
2,130,213
15.7
2,213,019
14.3
Commercial real estate owner occupied
797,319
6.2
794,815
5.9
885,339
5.7
Loans receivable, PPP
74,735
0.6
137,063
1.0
998,153
6.5
Commercial real estate non-owner occupied
1,177,650
9.2
1,178,203
8.7
1,290,730
8.3
Construction
166,393
1.2
252,588
1.8
162,009
1.0
Total commercial loans and leases
11,463,736
89.1
12,072,956
89.0
13,545,392
87.6
Consumer:
Residential
484,435
3.8
483,133
3.6
497,952
3.3
Manufactured housing
38,670
0.3
40,129
0.3
45,076
0.3
Installment:
Personal
555,533
4.3
629,843
4.6
964,641
6.2
Other
319,393
2.5
337,053
2.5
413,298
2.7
Total installment loans
874,926
6.8
966,896
7.1
1,377,939
8.9
Total consumer loans
1,398,031
10.9
1,490,158
11.0
1,920,967
12.4
Total loans and leases held for investment
$
12,861,767
100.0
%
$
13,563,114
100.0
%
$
15,466,359
100.0
%
Loans Held for Sale
Commercial:
Multifamily
$
-
-
%
$
-
-
%
$
4,079
1.2
%
Commercial real estate non-owner occupied
-
-
-
-
-
-
Total commercial loans and leases
-
-
-
-
4,079
1.2
Consumer:
Residential
1,215
0.3
1,005
0.7
829
0.3
Installment:
Personal
151,040
44.4
124,848
83.0
133,801
40.8
Other
188,062
55.3
24,515
16.3
189,603
57.8
Total installment loans
339,102
99.7
149,363
99.3
323,404
98.6
Total consumer loans
340,317
100.0
150,368
100.0
324,233
98.8
Total loans held for sale
$
340,317
100.0
%
$
150,368
100.0
%
$
328,312
100.0
%
Total loans and leases portfolio
$
13,202,084
$
13,713,482
$
15,794,671
Loans and Leases Held for Investment
Loans and leases held for investment were $12.9 billion at December 31, 2023, down $701.3 million, or 5.2%, from September 30, 2023. Specialty lending decreased $415.5 million, or 7.7% quarter-over-quarter, to $5.0 billion. Construction loans decreased $86.2 million, or 34.1% quarter-over-quarter, to $166.4 million. Loans to mortgage companies decreased $27.8 million, or 2.7% quarter-over-quarter due to lower mortgage activity. Consumer installment loans held for investment decreased $92.0 million, or 9.5% quarter-over-quarter, to $874.9 million due to the continued build out of the held-for-sale strategy and de-risking of the held-for-investment loan portfolio in 2023.
Loans and leases held for investment of $12.9 billion at December 31, 2023 was down $2.6 billion, or 16.8%, year-over-year, largely driven by reduced balances in PPP loans of $923.4 million, consumer installment loans of $503.0 million, or 36.5% year-over-year, loans to mortgage companies of $433.2 million and specialty lending of $406.2 million.
Loans Held for Sale
Loans held for sale increased $189.9 million quarter-over-quarter, and were $340.3 million at December 31, 2023 due to the continued build out of the held-for-sale 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)
December 31, 2023
September 30, 2023
December 31, 2023
December 31, 2022
Allowance for credit losses on loans and leases
$
135,311
$
139,213
$
(3,902
)
$
135,311
$
130,924
$
4,387
Provision (benefit) for credit losses on loans and leases
$
13,420
$
17,055
$
(3,635
)
$
13,420
$
27,891
$
(14,471
)
Net charge-offs from loans held for investment
$
17,322
$
17,498
$
(176
)
$
17,322
$
27,164
$
(9,842
)
Annualized net charge-offs to average loans and leases
0.51
%
0.50
%
0.51
%
0.70
%
Coverage of credit loss reserves for loans and leases held for investment
1.13
%
1.10
%
1.13
%
0.93
%
Net charge-offs were relatively stable with $17.3 million in Q4 2023, compared to $17.5 million in Q3 2023 and decreased compared to $27.2 million in Q4 2022.
Provision (benefit) for Credit Losses
Three Months Ended
Increase (Decrease)
Three Months Ended
Increase (Decrease)
(Dollars in thousands)
December 31, 2023
September 30, 2023
December 31, 2023
December 31, 2022
Provision for credit losses on loans and leases
$
13,420
$
17,055
$
(3,635
)
$
13,420
$
27,891
$
(14,471
)
Provision (benefit) for credit losses on available for sale debt securities
103
801
(698
)
103
325
(222
)
Provision for credit losses
13,523
17,856
(4,333
)
13,523
28,216
(14,693
)
Provision (benefit) for credit losses on unfunded commitments
(136
)
48
(184
)
(136
)
153
(289
)
Total provision for credit losses
$
13,387
$
17,904
$
(4,517
)
$
13,387
$
28,369
$
(14,982
)
The provision for credit losses on loans and leases in Q4 2023 was $13.4 million, compared to $17.1 million in Q3 2023 and $27.9 million in Q4 2022. The lower provision in Q4 2023 was primarily due to lower balances in loans held for investment.
The provision for credit losses on available for sale investment securities in Q4 2023 was $0.1 million, compared to provision of $0.8 million in Q3 2023 and $0.3 million in Q4 2022.
Asset Quality
The following table presents asset quality metrics as of the dates indicated:
(Dollars in thousands)
December 31, 2023
September 30, 2023
Increase (Decrease)
December 31, 2023
December 31, 2022
Increase (Decrease)
Non-performing assets ("NPAs"):
Nonaccrual / non-performing loans ("NPLs")
$
27,110
$
29,867
$
(2,757
)
$
27,110
$
30,737
$
(3,627
)
Non-performing assets
$
27,209
$
29,970
$
(2,761
)
$
27,209
$
30,783
$
(3,574
)
NPLs to total loans and leases
0.21
%
0.22
%
0.21
%
0.19
%
Reserves to NPLs
499.12
%
466.11
%
499.12
%
425.95
%
NPAs to total assets
0.13
%
0.14
%
0.13
%
0.15
%
Loans and leases (1) risk ratings:
Commercial loans and leases (2)
Pass
$
9,955,243
$
10,503,731
$
(548,488
)
$
9,955,243
$
10,793,980
$
(838,737
)
Special Mention
196,182
189,329
6,853
196,182
138,829
57,353
Substandard
339,664
280,267
59,397
339,664
291,118
48,546
Total commercial loans and leases
10,491,089
10,973,327
(482,238
)
10,491,089
11,223,927
(732,838
)
Consumer loans
Performing
1,379,603
1,473,493
(93,890
)
1,379,603
1,899,376
(519,773
)
Non-performing
18,428
16,665
1,763
18,428
21,591
(3,163
)
Total consumer loans
1,398,031
1,490,158
(92,127
)
1,398,031
1,920,967
(522,936
)
Loans and leases receivable (1)
$
11,889,120
$
12,463,485
$
(574,365
)
$
11,889,120
$
13,144,894
$
(1,255,774
)
(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, the Bank has 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, management employs a bottom-up data driven approach to analyze the commercial portfolio.
Total consumer installment loans held for investment at December 31, 2023 were less than 5% of total assets and approximately 7% of total loans and leases held for investment, and were supported by an allowance for credit losses of $56.4 million. At December 31, 2023, the consumer installment portfolio had the following characteristics: average original FICO score of 734, average debt-to-income of 19% and average borrower income of $107 thousand.
Non-performing loans at December 31, 2023 remained relatively stable at 0.21% of total loans and leases, compared to 0.22% at September 30, 2023 and 0.19% at December 31, 2022.
Investment Securities
The investment securities portfolio, including debt securities classified as 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 the Bank's liquidity position.
The following table presents the composition of the investment securities portfolio as of the dates indicated:
(Dollars in thousands)
December 31, 2023
September 30, 2023
December 31, 2022
Debt securities, available for sale
$
2,376,860
$
2,746,729
$
2,961,015
Equity securities
28,780
26,478
26,485
Investment securities, at fair value
2,405,640
2,773,207
2,987,500
Debt securities, held to maturity
1,103,170
1,178,370
840,259
Total investment securities portfolio
$
3,508,810
$
3,951,577
$
3,827,759
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. Customers' securities portfolio is highly liquid, short in duration, and high in yield. At December 31, 2023, the AFS debt securities portfolio had a spot yield of 5.12%, an effective duration of approximately 1.5 years, and approximately 41% are variable rate. Additionally, 59% of the AFS securities portfolio was AAA rated at December 31, 2023.
At December 31, 2023, the HTM debt securities portfolio represented only 5.2% of total assets at December 31, 2023, had a spot yield of 4.31% and an effective duration of approximately 3.0 years. Additionally, at December 31, 2023, approximately 39% of the HTM securities were AAA rated and 52% were 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)
December 31, 2023
% of Total
September 30, 2023
% of Total
December 31, 2022
% of Total
Demand, non-interest bearing
$
4,422,494
24.7
%
$
4,758,682
26.2
%
$
1,885,045
10.4
%
Demand, interest bearing
5,580,527
31.1
5,824,410
32.0
8,476,027
46.7
Total demand deposits
10,003,021
55.8
10,583,092
58.2
10,361,072
57.1
Savings
1,402,941
7.8
1,118,353
6.1
811,798
4.5
Money market
3,226,395
18.0
2,499,593
13.7
2,734,217
15.1
Time deposits
3,287,879
18.4
3,994,326
22.0
4,249,866
23.3
Total deposits
$
17,920,236
100.0
%
$
18,195,364
100.0
%
$
18,156,953
100.0
%
Total deposits decreased $275.1 million, or 1.5%, to $17.9 billion at December 31, 2023 as compared to the prior quarter. Money market deposits increased $726.8 million, or 29.1%, to $3.2 billion and savings deposits increased $284.6 million, or 25.4%, to $1.4 billion. These increases were offset by decreases in time deposits of $706.4 million, or 17.7%, to $3.3 billion, non-interest bearing demand deposits of $336.2 million, or 7.1%, to $4.4 billion and interest bearing demand deposits of $243.9 million, or 4.2%, to $5.6 billion. There was also an outflow of student-related deposit accounts serviced by BMTX of $0.6 billion, including the planned transfer of approximately $430.0 million to a new partner bank on December 1st and expected seasonal outflows of $0.2 billion. The total average cost of deposits increased by 15 basis points to 3.39% in Q4 2023 from 3.24% in the prior quarter largely driven by the increase in market interest rates and a shift in deposit mix during the fourth quarter including the outflow of student-related deposits serviced by BMTX. Total estimated uninsured deposits was $4.2 billion1, or 23% of total deposits (inclusive of accrued interest) at December 31, 2023. Customers is also highly focused on total deposits with contractual term to manage its liquidity profile and the funding of loans and securities.
Total deposits decreased $236.7 million, or 1.3%, to $17.9 billion at December 31, 2023 as compared to a year ago. Non-interest bearing demand deposits increased $2.5 billion, or 134.6%, to $4.4 billion, savings deposits increased $591.1 million, or 72.8%, to $1.4 billion and money market deposits increased $492.2 million, or 18.0%, to $3.2 billion. These increases were offset by decreases in interest bearing demand deposits of $2.9 billion, or 34.2%, to $5.6 billion and time deposits of $962.0 million, or 22.6% to $3.3 billion. The total average cost of deposits increased by 66 basis points to 3.39% in Q4 2023 from 2.73% in the prior year primarily due to higher market interest rates and a shift in deposit mix.
__________________________________
1
Uninsured deposits (estimate) of $5.4 billion to be reported on the Bank's call report, less deposits of $1.1 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $118.0 million.
Borrowings
The following table presents the composition of our borrowings as of the dates indicated:
(Dollars in thousands)
December 31, 2023
September 30, 2023
December 31, 2022
FHLB advances
$
1,203,207
$
1,529,839
$
800,000
Senior notes
123,840
123,775
123,580
Subordinated debt
182,230
182,161
181,952
Total borrowings
$
1,509,277
$
1,835,775
$
1,105,532
Total borrowings decreased $326.5 million, or 17.8%, to $1.5 billion at December 31, 2023 as compared to the prior quarter. This decrease primarily resulted from the repayment of $340.0 million in callable FHLB advances. As of December 31, 2023, Customers' immediately available borrowing capacity with the FRB and FHLB was approximately $6.9 billion, of which $1.2 billion of available capacity was utilized in borrowings and $1.1 billion was utilized to collateralize deposits.
Total borrowings increased $403.7 million, or 36.5%, to $1.5 billion at December 31, 2023 as compared to a year ago. This increase primarily resulted from an increase in FHLB advances to ensure ample cash on hand given the heightened liquidity risk in the banking system, particularly among regional banks since early March 2023, net of repayments of $340.0 million and $510.0 million in callable FHLB advances in Q4 2023 and Q3 2023, respectively.
Capital
The following table presents certain capital amounts and ratios as of the dates indicated:
(Dollars in thousands except per share data)
December 31, 2023
September 30, 2023
December 31, 2022
Customers Bancorp, Inc.
Common Equity
$
1,500,600
$
1,423,813
$
1,265,167
Tangible Common Equity*
$
1,496,971
$
1,420,184
$
1,261,538
Common Equity to Total Assets
7.0
%
6.5
%
6.0
%
Tangible Common Equity to Tangible Assets*
7.0
%
6.5
%
6.0
%
Book Value per common share
$
47.73
$
45.47
$
39.08
Tangible Book Value per common share*
$
47.61
$
45.36
$
38.97
Common equity Tier 1 ("CET 1") capital ratio (1)
12.2
%
11.3
%
9.6
%
Total risk based capital ratio (1)
15.3
%
14.3
%
12.2
%
(1) Regulatory capital ratios as of December 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 $76.8 million to $1.5 billion, and tangible common equity* increased $76.8 million to $1.5 billion, at December 31, 2023 compared to the prior quarter, respectively, primarily from earnings of $58.2 million and decreased unrealized losses on investment securities of $13.2 million (net of taxes) deferred in accumulated other comprehensive income ("AOCI"). Similarly, book value per common share increased to $47.73 from $45.47, and tangible book value per common share* increased to $47.61 from $45.36, at December 31, 2023 and September 30, 2023, respectively.
Customers Bancorp's common equity increased $235.4 million to $1.5 billion, and tangible common equity* increased $235.4 million to $1.5 billion, at December 31, 2023 compared to a year ago, respectively, primarily from earnings of $235.4 million and decreased unrealized losses on investment securities in AOCI of $26.5 million (net of taxes), partially offset by $39.8 million of common share repurchases. Similarly, book value per common share increased to $47.73 from $39.08, and tangible book value per common share* increased to $47.61 from $38.97, at December 31, 2023 and December 31, 2022, respectively.
At the Customers Bancorp level, the CET 1 capital ratio (estimate), total risk based capital ratio (estimate), common equity to total assets ratio and tangible common equity to tangible assets ratio* ("TCE / TA ratio") were 12.2%, 15.3%, 7.0%, and 7.0%, respectively, at December 31, 2023.
At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At December 31, 2023, Tier 1 capital (estimate) and total risk based capital (estimate) were 13.7% and 15.3%, respectively.
"Even though we remain well capitalized by all regulatory measures, we are committed to maintaining our CET 1 ratio around 11.5% and growing our TCE / TA ratio* to 7.5% in 2024," stated Jay Sidhu.
Key Profitability Trends
Net Interest Income
Net interest income totaled $172.5 million in Q4 2023, a decrease of $27.3 million from Q3 2023, primarily due to lower interest income from the acquired Venture Banking portfolio that had outsized discount accretion in Q3 2023.
"We experienced continued momentum in net interest income in the fourth quarter, despite elective reductions in loan balances. Loan balance reductions were in part due to exiting certain credits with less attractive pricing and clients without holistic banking relationships. Excluding the outsized accretion recognized in the third quarter on the acquired loan portfolio from the FDIC, our fourth quarter net interest income was in-line relative to the third quarter," stated Customers Bancorp President Sam Sidhu.
Net interest income totaled $172.5 million in Q4 2023, an increase of $37.4 million from Q4 2022. This increase was due to higher interest income of $76.3 million on variable rate lower credit risk specialty lending verticals, which included the acquired Venture Banking portfolio, investment securities and interest earning deposits, offset in part by higher interest expenses on deposits and other borrowings of $38.9 million primarily resulting from increased market interest rates and higher average balances of other borrowings. Interest-earning asset growth was primarily driven by an increase in interest earning deposits, offset in part by decreases in PPP loans, as the PPP program was substantially completed in Q1 2023, consumer installment loans and commercial loans to mortgage companies. Total consumer installment loans decreased in Q4 2023 as compared to Q4 2022, as installment loans held for investment decreased primarily for risk management purposes and the implementation of a held-for-sale strategy.
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)
December 31, 2023
September 30, 2023
December 31, 2023
December 31, 2022
Commercial lease income
$
9,035
$
8,901
$
134
$
9,035
$
8,135
$
900
Loan fees
5,926
6,029
(103
)
5,926
4,017
1,909
Bank-owned life insurance
2,160
1,973
187
2,160
1,975
185
Mortgage warehouse transactional fees
927
1,018
(91
)
927
1,295
(368
)
Gain (loss) on sale of SBA and other loans
(91
)
(348
)
257
(91
)
-
(91
)
Net gain (loss) on sale of investment securities
(145
)
(429
)
284
(145
)
(16,937
)
16,792
Legal settlement gain
-
-
-
-
7,519
(7,519
)
Other
860
631
229
860
1,341
(481
)
Total non-interest income
$
18,672
$
17,775
$
897
$
18,672
$
7,345
$
11,327
Non-interest income totaled $18.7 million for Q4 2023, an increase of $0.9 million compared to Q3 2023. The increase was primarily due to decreases in losses on sales of loans and investment securities, and increases in death benefits paid by insurance carriers under bank-owned life insurance policies and commercial lease income.
Non-interest income totaled $18.7 million for Q4 2023, an increase of $11.3 million compared to Q4 2022. The increase was primarily due to a decrease of $16.8 million in net loss realized from the sales of investment securities, and an increase in loan fees of $1.9 million resulting from increased servicing-related revenue and unused line of credit fees, 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 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)
December 31, 2023
September 30, 2023
December 31, 2023
December 31, 2022
Salaries and employee benefits
$
33,965
$
33,845
$
120
$
33,965
$
29,194
$
4,771
Technology, communication and bank operations
16,887
15,667
1,220
16,887
18,604
(1,717
)
Commercial lease depreciation
7,357
7,338
19
7,357
6,518
839
Professional services
9,820
8,569
1,251
9,820
6,825
2,995
Loan servicing
3,779
3,858
(79
)
3,779
4,460
(681
)
Occupancy
2,320
2,471
(151
)
2,320
3,672
(1,352
)
FDIC assessments, non-income taxes and regulatory fees
13,977
8,551
5,426
13,977
2,339
11,638
Advertising and promotion
850
650
200
850
1,111
(261
)
Legal settlement expense
-
4,096
(4,096
)
-
-
-
Other
4,812
4,421
391
4,812
5,696
(884
)
Total non-interest expense
$
93,767
$
89,466
$
4,301
$
93,767
$
78,419
$
15,348
Non-interest expenses totaled $93.8 million in Q4 2023, an increase of $4.3 million compared to Q3 2023. The increase was primarily attributable to increases of $5.4 million in FDIC assessments, non-income taxes and regulatory fees resulting from higher FDIC assessments including the special assessment of $3.7 million, $1.3 million in professional fees and $1.2 million in technology, communication and bank operations mostly due to higher processing and software fees offset by lower servicing fees paid to BMTX. These increases were partially offset by $4.1 million of expenses from a settlement with a third party PPP service provider in Q3 2023. Q4 2023 core non-interest expenses* were $89.4 million, flat over Q3 2023.
Non-interest expenses totaled $93.8 million in Q4 2023, an increase of $15.3 million compared to Q4 2022. The increase was primarily attributable to increases of $11.6 million in FDIC assessments, non-income taxes and regulatory fees resulting primarily from higher FDIC assessments including the special assessment of $3.7 million, $4.8 million in salaries and employee benefits primarily due to higher headcount, annual merit increases and severance, and $3.0 million in professional fees. These increases were partially offset by decreases of $1.7 million in deposit servicing-related expenses mostly due to lower servicing fees and the discontinuation of interchange maintenance fees paid to BMTX offset by higher fees for processing and software as a service, and $1.4 million in occupancy mostly due to lower lease and maintenance expenses.
Taxes
Income tax expense decreased by $1.7 million to $21.8 million in Q4 2023 from $23.5 million in Q3 2023 primarily due to lower pre-tax income, partially offset by lower income tax credits.
Income tax expense increased by $14.7 million to $21.8 million in Q4 2023 from $7.1 million in Q4 2022 primarily due to higher pre-tax income and lower income tax credits.
The effective tax rate for Q4 2023 was 26%, and 24% for the full year 2023. Customers expects the full-year 2024 effective tax rate to be approximately 22% to 24%.
Outlook
"Looking forward, our strategy and risk management principles will remain unchanged. We're focused on managing risk, strengthening our deposit franchise, further improving our profitability and maintaining our higher capital ratios. Our deposits are expected to grow modestly with continued improvement in the quality of deposits, reducing higher cost wholesale deposits with lower cost core deposits. We see attractive opportunities to deploy securities cash flows and cash into franchise-enhancing loan growth in 2024. Core EPS (excluding PPP)* significantly exceeded our target of $6.00 per diluted share and core return on common equity* was well in excess of our target of 15%. We also achieved the tangible book value per share* target of $45.00, inclusive of the impact of AOCI, a full quarter early, ending at $47.61. The management of non-interest expenses remains a priority for us. However, this will not deter us from making investments in deposit teams and new technologies to support efficient and responsible growth in the future. Operating efficiency has and will continue to be a differentiator of our business model, and we will continue to only make investments that generate long-term positive operating leverage and enable the organization to operate at a mid-40's efficiency ratio. We remain committed to maintaining a CET 1 ratio around 11.5% in 2024, and growing our TCE / TA ratio* to 7.5%. We are committed to preserving superior credit quality, managing interest rate risk, maintaining robust liquidity, operating with higher capital ratios and generating positive operating leverage," concluded Sam 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, January 26, 2024
Time:
9:00 AM EST
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 4th 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 about $21 billion in assets, making it one of the 80 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 experiences delivered by best-in-class customer service. 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:
#5 in top-performing banks with assets between $10 billion and $50 billion in 2022 per American Banker list;
#34 out of the 100 largest publicly traded banks in 2023 per Forbes; and
#64 on Fortune Magazine's 2022 list of the 100 fastest growing companies in America.
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: a continuation of the recent turmoil in the banking industry, responsive measures taken by us and regulatory authorities to mitigate and manage related risks, regulatory actions taken that address related issues and the costs and obligations associated therewith, such as the FDIC special assessments, the impact of COVID-19 and its variants 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.
Q4 2023 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended December 31, 2023 and the preceding four quarters, and full year 2023 and 2022:
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED
(Dollars in thousands, except per share data and stock price data)
Q4
Q3
Q2
Q1
Q4
Twelve Months Ended December 31,
2023
2023
2023
2023
2022
2023
2022
GAAP Profitability Metrics:
Net income available to common shareholders
$
58,223
$
82,953
$
44,007
$
50,265
$
25,623
$
235,448
$
218,402
Per share amounts:
Earnings per share - basic
$
1.86
$
2.65
$
1.41
$
1.58
$
0.79
$
7.49
$
6.69
Earnings per share - diluted
$
1.79
$
2.58
$
1.39
$
1.55
$
0.77
$
7.32
$
6.51
Book value per common share (1)
$
47.73
$
45.47
$
42.16
$
41.08
$
39.08
$
47.73
$
39.08
CUBI stock price (1)
$
57.62
$
34.45
$
30.26
$
18.52
$
28.34
$
57.62
$
28.34
CUBI stock price as % of book value (1)
121
%
76
%
72
%
45
%
73
%
121
%
73
%
Average shares outstanding - basic
31,385,043
31,290,581
31,254,125
31,819,203
32,413,459
31,435,647
32,632,751
Average shares outstanding - diluted
32,521,787
32,175,084
31,591,142
32,345,017
33,075,422
32,158,788
33,547,706
Shares outstanding (1)
31,440,906
31,311,254
31,282,318
31,239,750
32,373,697
31,440,906
32,373,697
Return on average assets ("ROAA")
1.16
%
1.57
%
0.88
%
1.03
%
0.55
%
1.16
%
1.13
%
Return on average common equity ("ROCE")
15.93
%
23.97
%
13.22
%
16.00
%
8.05
%
17.33
%
17.40
%
Net interest margin, tax equivalent
3.31
%
3.70
%
3.15
%
2.96
%
2.67
%
3.29
%
3.19
%
Efficiency ratio
49.08
%
41.01
%
49.25
%
47.71
%
49.20
%
46.49
%
44.81
%
Non-GAAP Profitability Metrics (2):
Core earnings
$
61,633
$
83,294
$
52,163
$
51,143
$
39,368
$
248,233
$
256,415
Adjusted pre-tax pre-provision net income
$
101,884
$
128,564
$
96,833
$
89,282
$
81,377
$
416,563
$
400,712
Per share amounts:
Core earnings per share - diluted
$
1.90
$
2.59
$
1.65
$
1.58
$
1.19
$
7.72
$
7.63
Tangible book value per common share (1)
$
47.61
$
45.36
$
42.04
$
40.96
$
38.97
$
47.61
$
38.97
CUBI stock price as % of tangible book value (1)
121
%
76
%
72
%
45
%
73
%
121
%
73
%
Core ROAA
1.22
%
1.57
%
1.03
%
1.05
%
0.81
%
1.22
%
1.32
%
Core ROCE
16.87
%
24.06
%
15.67
%
16.28
%
12.36
%
18.27
%
20.43
%
Adjusted ROAA - pre-tax and pre-provision
1.90
%
2.32
%
1.79
%
1.72
%
1.56
%
1.94
%
1.99
%
Adjusted ROCE - pre-tax and pre-provision
26.82
%
36.04
%
28.01
%
27.33
%
24.59
%
29.58
%
31.16
%
Net interest margin, tax equivalent, excluding PPP loans
3.33
%
3.75
%
3.20
%
2.80
%
2.87
%
3.28
%
3.16
%
Core efficiency ratio
46.70
%
41.04
%
47.84
%
47.09
%
49.12
%
45.45
%
43.02
%
Asset Quality:
Net charge-offs
$
17,322
$
17,498
$
15,564
$
18,651
$
27,164
$
69,035
$
66,368
Annualized net charge-offs to average total loans and leases
0.51
%
0.50
%
0.42
%
0.49
%
0.70
%
0.48
%
0.45
%
Non-performing loans ("NPLs") to total loans and leases (1)
0.21
%
0.22
%
0.20
%
0.21
%
0.19
%
0.21
%
0.19
%
Reserves to NPLs (1)
499.12
%
466.11
%
494.46
%
405.56
%
425.95
%
499.12
%
425.95
%
Non-performing assets ("NPAs") to total assets
0.13
%
0.14
%
0.13
%
0.15
%
0.15
%
0.13
%
0.15
%
Customers Bank Capital Ratios (3):
Common equity Tier 1 capital to risk-weighted assets
13.7
%
12.97
%
11.96
%
11.31
%
11.21
%
13.7
%
11.21
%
Tier 1 capital to risk-weighted assets
13.7
%
12.97
%
11.96
%
11.31
%
11.21
%
13.7
%
11.21
%
Total capital to risk-weighted assets
15.3
%
14.45
%
13.38
%
12.64
%
12.40
%
15.3
%
12.40
%
Tier 1 capital to average assets (leverage ratio)
8.7
%
8.25
%
8.00
%
8.09
%
8.15
%
8.7
%
8.15
%
(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 Q4 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 December 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)
Twelve Months Ended
Q4
Q3
Q2
Q1
Q4
December 31,
2023
2023
2023
2023
2022
2023
2022
Interest income:
Loans and leases
$
239,453
$
271,107
$
241,745
$
244,212
$
217,471
$
996,517
$
743,949
Investment securities
51,074
54,243
48,026
47,316
42,953
200,659
119,236
Interest earning deposits
44,104
43,800
27,624
10,395
6,754
125,923
10,952
Loans held for sale
8,707
4,664
11,149
11,701
1,269
36,221
1,364
Other
2,577
2,526
1,616
1,321
1,200
8,040
9,872
Total interest income
345,915
376,340
330,160
314,945
269,647
1,367,360
885,373
Interest expense:
Deposits
150,307
145,825
136,375
143,930
124,366
576,437
226,239
FHLB advances
18,868
26,485
24,285
10,370
4,464
80,008
11,464
FRB advances
-
-
-
6,286
-
6,286
-
Subordinated debt
2,688
2,689
2,689
2,689
2,688
10,755
10,755
Other borrowings
1,546
1,568
1,540
1,771
2,992
6,425
13,195
Total interest expense
173,409
176,567
164,889
165,046
134,510
679,911
261,653
Net interest income
172,506
199,773
165,271
149,899
135,137
687,449
623,720
Provision for credit losses
13,523
17,856
23,629
19,603
28,216
74,611
60,066
Net interest income after provision for credit losses
158,983
181,917
141,642
130,296
106,921
612,838
563,654
Non-interest income:
Commercial lease income
9,035
8,901
8,917
9,326
8,135
36,179
27,719
Loan fees
5,926
6,029
4,271
3,990
4,017
20,216
12,188
Bank-owned life insurance
2,160
1,973
4,997
2,647
1,975
11,777
15,697
Mortgage warehouse transactional fees
927
1,018
1,376
1,074
1,295
4,395
6,738
Gain (loss) on sale of SBA and other loans
(91
)
(348
)
(761
)
-
-
(1,200
)
3,155
Loss on sale of capital call lines of credit
-
-
(5,037
)
-
-
(5,037
)
-
Loss on sale of consumer installment loans
-
-
-
-
-
-
(23,465
)
Net gain (loss) on sale of investment securities
(145
)
(429
)
-
-
(16,937
)
(574
)
(23,164
)
Legal settlement gain
-
-
-
-
7,519
-
7,519
Other
860
631
2,234
1,084
1,341
4,809
5,885
Total non-interest income
18,672
17,775
15,997
18,121
7,345
70,565
32,272
Non-interest expense:
Salaries and employee benefits
33,965
33,845
33,120
32,345
29,194
133,275
112,365
Technology, communication and bank operations
16,887
15,667
16,407
16,589
18,604
65,550
84,998
Commercial lease depreciation
7,357
7,338
7,328
7,875
6,518
29,898
22,978
Professional services
9,820
8,569
9,192
7,596
6,825
35,177
27,465
Loan servicing
3,779
3,858
4,777
4,661
4,460
17,075
15,023
Occupancy
2,320
2,471
2,519
2,760
3,672
10,070
13,606
FDIC assessments, non-income taxes and regulatory fees
13,977
8,551
9,780
2,728
2,339
35,036
8,869
Advertising and promotion
850
650
546
1,049
1,111
3,095
2,541
Legal settlement expense
-
4,096
-
-
-
4,096
-
Other
4,812
4,421
5,628
4,530
5,696
19,391
16,784
Total non-interest expense
93,767
89,466
89,297
80,133
78,419
352,663
304,629
Income before income tax expense
83,888
110,226
68,342
68,284
35,847
330,740
291,297
Income tax expense
21,796
23,470
20,768
14,563
7,136
80,597
63,263
Net income
62,092
86,756
47,574
53,721
28,711
250,143
228,034
Preferred stock dividends
3,869
3,803
3,567
3,456
3,088
14,695
9,632
Net income available to common shareholders
$
58,223
$
82,953
$
44,007
$
50,265
$
25,623
$
235,448
$
218,402
Basic earnings per common share
$
1.86
$
2.65
$
1.41
$
1.58
$
0.79
$
7.49
$
6.69
Diluted earnings per common share
1.79
2.58
1.39
1.55
0.77
7.32
6.51
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - UNAUDITED
(Dollars in thousands)
December 31,
September 30,
June 30,
March 31,
December 31,
2023
2023
2023
2023
2022
ASSETS
Cash and due from banks
$
45,210
$
68,288
$
54,127
$
77,251
$
58,025
Interest earning deposits
3,801,136
3,351,686
3,101,097
1,969,434
397,781
Cash and cash equivalents
3,846,346
3,419,974
3,155,224
2,046,685
455,806
Investment securities, at fair value
2,405,640
2,773,207
2,824,638
2,926,969
2,987,500
Investment securities held to maturity
1,103,170
1,178,370
1,258,560
870,294
840,259
Loans held for sale
340,317
150,368
78,108
424,057
328,312
Loans receivable, mortgage warehouse, at fair value
897,912
962,566
1,006,268
1,247,367
1,323,312
Loans receivable, PPP
74,735
137,063
188,763
246,258
998,153
Loans and leases receivable
11,889,120
12,463,485
12,637,768
13,145,352
13,144,894
Allowance for credit losses on loans and leases
(135,311
)
(139,213
)
(139,656
)
(130,281
)
(130,924
)
Total loans and leases receivable, net of allowance for credit losses on loans and leases
12,726,456
13,423,901
13,693,143
14,508,696
15,335,435
FHLB, Federal Reserve Bank, and other restricted stock
109,548
126,098
126,240
124,733
74,196
Accrued interest receivable
114,766
123,984
119,501
123,754
123,374
Bank premises and equipment, net
7,371
7,789
8,031
8,581
9,025
Bank-owned life insurance
292,193
291,670
290,322
339,607
338,441
Goodwill and other intangibles
3,629
3,629
3,629
3,629
3,629
Other assets
366,829
358,162
471,169
374,609
400,135
Total assets
$
21,316,265
$
21,857,152
$
22,028,565
$
21,751,614
$
20,896,112
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand, non-interest bearing deposits
$
4,422,494
$
4,758,682
$
4,490,198
$
3,487,517
$
1,885,045
Interest bearing deposits
13,497,742
13,436,682
13,460,233
14,236,100
16,271,908
Total deposits
17,920,236
18,195,364
17,950,431
17,723,617
18,156,953
FHLB advances
1,203,207
1,529,839
2,046,142
2,052,143
800,000
Other borrowings
123,840
123,775
123,710
123,645
123,580
Subordinated debt
182,230
182,161
182,091
182,021
181,952
Accrued interest payable and other liabilities
248,358
264,406
269,539
249,168
230,666
Total liabilities
19,677,871
20,295,545
20,571,913
20,330,594
19,493,151
Preferred stock
137,794
137,794
137,794
137,794
137,794
Common stock
35,459
35,330
35,301
35,258
35,012
Additional paid in capital
564,538
559,346
555,737
552,255
551,721
Retained earnings
1,159,582
1,101,359
1,018,406
974,399
924,134
Accumulated other comprehensive income (loss), net
(136,569
)
(149,812
)
(168,176
)
(156,276
)
(163,096
)
Treasury stock, at cost
(122,410
)
(122,410
)
(122,410
)
(122,410
)
(82,604
)
Total shareholders' equity
1,638,394
1,561,607
1,456,652
1,421,020
1,402,961
Total liabilities and shareholders' equity
$
21,316,265
$
21,857,152
$
22,028,565
$
21,751,614
$
20,896,112
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED
(Dollars in thousands)
Three Months Ended
December 31, 2023
September 30, 2023
December 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
$
3,191,677
$
44,104
5.48
%
$
3,211,753
$
43,800
5.41
%
$
693,563
$
6,754
3.86
%
Investment securities (1)
4,007,418
51,074
5.10
%
4,240,116
54,243
5.12
%
4,061,555
42,953
4.23
%
Loans and leases:
Commercial & industrial:
Specialty lending loans and leases (2)
5,574,149
130,838
9.31
%
5,717,252
157,671
10.94
%
5,529,567
90,885
6.52
%
Other commercial & industrial loans (2)
1,550,201
27,214
6.96
%
1,613,614
28,012
6.89
%
1,670,000
22,796
5.42
%
Commercial loans to mortgage companies
997,353
13,726
5.46
%
1,159,698
16,916
5.79
%
1,376,760
17,701
5.10
%
Multifamily loans
2,131,750
22,347
4.16
%
2,141,384
21,292
3.94
%
2,235,885
22,481
3.99
%
Loans receivable, PPP
115,851
839
2.87
%
166,164
604
1.44
%
1,065,919
7,249
2.70
%
Non-owner occupied commercial real estate loans
1,392,684
20,686
5.89
%
1,425,831
21,208
5.90
%
1,430,420
18,536
5.14
%
Residential mortgages
526,422
5,942
4.48
%
528,022
5,965
4.48
%
524,344
5,462
4.13
%
Installment loans
1,198,043
26,568
8.80
%
1,147,069
24,103
8.34
%
1,555,108
33,630
8.58
%
Total loans and leases (3)
13,486,453
248,160
7.30
%
13,899,034
275,771
7.87
%
15,388,003
218,740
5.64
%
Other interest-earning assets
116,756
2,577
8.75
%
134,416
2,526
7.45
%
67,907
1,200
7.01
%
Total interest-earning assets
20,802,304
345,915
6.61
%
21,485,319
376,340
6.96
%
20,211,028
269,647
5.30
%
Non-interest-earning assets
449,969
492,691
506,334
Total assets
$
21,252,273
$
21,978,010
$
20,717,362
Liabilities
Interest checking accounts
$
5,656,212
$
62,041
4.35
%
$
5,758,215
$
58,637
4.04
%
$
8,536,962
$
70,041
3.26
%
Money market deposit accounts
2,802,309
29,990
4.25
%
2,181,184
22,983
4.18
%
3,094,206
21,220
2.72
%
Other savings accounts
1,218,118
13,849
4.51
%
1,077,298
11,582
4.27
%
669,466
3,368
2.00
%
Certificates of deposit
3,625,311
44,427
4.86
%
4,466,522
52,623
4.67
%
3,259,801
29,737
3.62
%
Total interest-bearing deposits (4)
13,301,950
150,307
4.48
%
13,483,219
145,825
4.29
%
15,560,435
124,366
3.17
%
Federal funds purchased
-
-
-
%
-
-
-
%
151,467
1,437
3.76
%
Borrowings
1,816,047
23,102
5.05
%
2,328,955
30,742
5.24
%
819,032
8,707
4.22
%
Total interest-bearing liabilities
15,117,997
173,409
4.55
%
15,812,174
176,567
4.43
%
16,530,934
134,510
3.23
%
Non-interest-bearing deposits (4)
4,270,557
4,347,977
2,514,316
Total deposits and borrowings
19,388,554
3.55
%
20,160,151
3.48
%
19,045,250
2.80
%
Other non-interest-bearing liabilities
276,198
306,822
271,129
Total liabilities
19,664,752
20,466,973
19,316,379
Shareholders' equity
1,587,521
1,511,037
1,400,983
Total liabilities and shareholders' equity
$
21,252,273
$
21,978,010
$
20,717,362
Net interest income
172,506
199,773
135,137
Tax-equivalent adjustment
398
405
342
Net interest earnings
$
172,904
$
200,178
$
135,479
Interest spread
3.06
%
3.48
%
2.50
%
Net interest margin
3.30
%
3.70
%
2.66
%
Net interest margin tax equivalent
3.31
%
3.70
%
2.67
%
Net interest margin tax equivalent excl. PPP (5)
3.33
%
3.75
%
2.87
%
(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 3.39%, 3.24% and 2.73% for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively.
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended December 31, 2023, September 30, 2023 and December 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.
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED)
(Dollars in thousands)
Twelve Months Ended
December 31, 2023
December 31, 2022
Average Balance
Interest Income or Expense
Average Yield or Cost (%)
Average Balance
Interest Income or Expense
Average Yield or Cost (%)
Assets
Interest earning deposits
$
2,375,488
$
125,923
5.30
%
$
620,071
$
10,952
1.77
%
Investment securities (1)
4,057,564
200,659
4.95
%
3,992,934
119,236
2.99
%
Loans and leases:
Commercial & industrial:
Specialty lending loans and leases (2)
5,704,220
513,976
9.01
%
4,357,995
218,189
5.01
%
Other commercial & industrial loans (2)
1,634,937
106,824
6.53
%
1,540,435
69,564
4.52
%
Commercial loans to mortgage companies
1,179,141
67,660
5.74
%
1,682,471
64,413
3.83
%
Multifamily loans
2,165,067
85,204
3.94
%
1,957,672
73,987
3.78
%
Loans receivable, PPP
341,987
26,627
7.79
%
1,724,659
79,381
4.60
%
Non-owner occupied commercial real estate loans
1,423,929
81,970
5.76
%
1,356,086
59,087
4.36
%
Residential mortgages
533,213
23,240
4.36
%
492,870
19,048
3.86
%
Installment loans
1,437,078
127,237
8.85
%
1,798,977
161,644
8.99
%
Total loans and leases (3)
14,419,572
1,032,738
7.16
%
14,911,165
745,313
5.00
%
Other interest-earning assets
118,574
8,040
6.78
%
64,204
9,872
NM (6)
Total interest-earning assets
20,971,198
1,367,360
6.52
%
19,588,374
885,373
4.52
%
Non-interest-earning assets
515,185
521,370
Total assets
$
21,486,383
$
20,109,744
Liabilities
Interest checking accounts
$
6,048,797
$
241,025
3.98
%
$
6,853,533
$
125,100
1.83
%
Money market deposit accounts
2,358,437
93,434
3.96
%
4,615,574
57,765
1.25
%
Other savings accounts
1,029,951
41,556
4.03
%
716,838
6,727
0.94
%
Certificates of deposit
4,401,855
200,422
4.55
%
1,352,787
36,647
2.71
%
Total interest-bearing deposits (4)
13,839,040
576,437
4.17
%
13,538,732
226,239
1.67
%
Federal funds purchased
3,781
188
4.97
%
349,581
5,811
1.66
%
Borrowings
2,073,553
103,286
4.98
%
792,563
29,603
3.74
%
Total interest-bearing liabilities
15,916,374
679,911
4.27
%
14,680,876
261,653
1.78
%
Non-interest-bearing deposits (4)
3,801,053
3,780,185
Total deposits and borrowings
19,717,427
3.45
%
18,461,061
1.42
%
Other non-interest-bearing liabilities
272,599
255,911
Total liabilities
19,990,026
18,716,972
Shareholders' equity
1,496,357
1,392,772
Total liabilities and shareholders' equity
$
21,486,383
$
20,109,744
Net interest income
687,449
623,720
Tax-equivalent adjustment
1,568
1,185
Net interest earnings
$
689,017
$
624,905
Interest spread
3.07
%
3.10
%
Net interest margin
3.28
%
3.18
%
Net interest margin tax equivalent
3.29
%
3.19
%
Net interest margin tax equivalent excl. PPP (5)
3.28
%
3.16
%
(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 3.27% and 1.31% for the twelve months ended December 31, 2023 and 2022, respectively.
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the twelve months ended December 31, 2023 and 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)
December 31,
September 30,
June 30,
March 31,
December 31,
2023
2023
2023
2023
2022
Loans and leases held for investment
Commercial:
Commercial & industrial:
Specialty lending
$
5,006,693
$
5,422,161
$
5,534,832
$
5,519,176
$
5,412,887
Other commercial & industrial
1,087,582
1,115,364
1,052,145
1,168,161
1,135,336
Loans to mortgage companies
1,014,742
1,042,549
1,108,598
1,374,894
1,447,919
Multifamily
2,138,622
2,130,213
2,151,734
2,195,211
2,213,019
Commercial real estate owner occupied
797,319
794,815
842,042
895,314
885,339
Loans receivable, PPP
74,735
137,063
188,763
246,258
998,153
Commercial real estate non-owner occupied
1,177,650
1,178,203
1,211,091
1,245,248
1,290,730
Construction
166,393
252,588
212,214
188,123
162,009
Total commercial loans and leases
11,463,736
12,072,956
12,301,419
12,832,385
13,545,392
Consumer:
Residential
484,435
483,133
487,199
494,815
497,952
Manufactured housing
38,670
40,129
41,664
43,272
45,076
Installment:
Personal
555,533
629,843
752,470
849,420
964,641
Other
319,393
337,053
250,047
419,085
413,298
Total installment loans
874,926
966,896
1,002,517
1,268,505
1,377,939
Total consumer loans
1,398,031
1,490,158
1,531,380
1,806,592
1,920,967
Total loans and leases held for investment
$
12,861,767
$
13,563,114
$
13,832,799
$
14,638,977
$
15,466,359
Loans held for sale
Commercial:
Multifamily
$
-
$
-
$
-
$
4,051
$
4,079
Commercial real estate non-owner occupied
-
-
-
16,000
-
Total commercial loans and leases
-
-
-
20,051
4,079
Consumer:
Residential
1,215
1,005
1,234
821
829
Installment:
Personal
151,040
124,848
76,874
307,336
133,801
Other
188,062
24,515
-
95,849
189,603
Total installment loans
339,102
149,363
76,874
403,185
323,404
Total consumer loans
340,317
150,368
78,108
404,006
324,233
Total loans held for sale
$
340,317
$
150,368
$
78,108
$
424,057
$
328,312
Total loans and leases portfolio
$
13,202,084
$
13,713,482
$
13,910,907
$
15,063,034
$
15,794,671
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION - UNAUDITED
(Dollars in thousands)
December 31,
September 30,
June 30,
March 31,
December 31,
2023
2023
2023
2023
2022
Demand, non-interest bearing
$
4,422,494
$
4,758,682
$
4,490,198
$
3,487,517
$
1,885,045
Demand, interest bearing
5,580,527
5,824,410
5,551,037
5,791,302
8,476,027
Total demand deposits
10,003,021
10,583,092
10,041,235
9,278,819
10,361,072
Savings
1,402,941
1,118,353
1,048,229
924,359
811,798
Money market
3,226,395
2,499,593
2,004,264
2,019,633
2,734,217
Time deposits
3,287,879
3,994,326
4,856,703
5,500,806
4,249,866
Total deposits
$
17,920,236
$
18,195,364
$
17,950,431
$
17,723,617
$
18,156,953
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY - UNAUDITED
(Dollars in thousands)
As of December 31, 2023
As of September 30, 2023
As of December 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)
$
6,211,105
$
4,436
$
23,503
0.07
%
529.82
%
$
6,617,508
$
5,767
$
24,986
0.09
%
433.26
%
$
6,672,830
$
1,761
$
17,582
0.03
%
998.41
%
Multifamily
2,138,622
-
16,343
-
%
-
%
2,130,213
-
15,870
-
%
-
%
2,213,019
1,143
14,541
0.05
%
1272.18
%
Commercial real estate owner occupied
797,319
5,869
9,882
0.74
%
168.38
%
794,815
7,442
10,363
0.94
%
139.25
%
885,339
2,768
6,454
0.31
%
233.16
%
Commercial real estate non-owner occupied
1,177,650
-
16,859
-
%
-
%
1,178,203
-
15,819
-
%
-
%
1,290,730
-
11,219
-
%
-
%
Construction
166,393
-
1,482
-
%
-
%
252,588
-
3,130
-
%
-
%
162,009
-
1,913
-
%
-
%
Total commercial loans and leases receivable
10,491,089
10,305
68,069
0.10
%
660.54
%
10,973,327
13,209
70,168
0.12
%
531.21
%
11,223,927
5,672
51,709
0.05
%
911.65
%
Residential
484,435
6,802
6,586
1.40
%
96.82
%
483,133
6,559
6,802
1.36
%
103.70
%
497,952
6,922
6,094
1.39
%
88.04
%
Manufactured housing
38,670
2,331
4,239
6.03
%
181.85
%
40,129
2,582
4,080
6.43
%
158.02
%
45,076
2,410
4,430
5.35
%
183.82
%
Installment
874,926
7,211
56,417
0.82
%
782.37
%
966,896
7,299
58,163
0.75
%
796.86
%
1,377,939
9,527
68,691
0.69
%
721.01
%
Total consumer loans receivable
1,398,031
16,344
67,242
1.17
%
411.42
%
1,490,158
16,440
69,045
1.10
%
419.98
%
1,920,967
18,859
79,215
0.98
%
420.04
%
Loans and leases receivable (1)
11,889,120
26,649
135,311
0.22
%
507.75
%
12,463,485
29,649
139,213
0.24
%
469.54
%
13,144,894
24,531
130,924
0.19
%
533.71
%
Loans receivable, PPP
74,735
-
-
-
%
-
%
137,063
-
-
-
%
-
%
998,153
-
-
-
%
-
%
Loans receivable, mortgage warehouse, at fair value
897,912
-
-
-
%
-
%
962,566
-
-
-
%
-
%
1,323,312
-
-
-
%
-
%
Total loans held for sale
340,317
461
-
0.14
%
-
%
150,368
218
-
0.14
%
-
%
328,312
6,206
-
1.89
%
-
%
Total portfolio
$
13,202,084
$
27,110
$
135,311
0.21
%
499.12
%
$
13,713,482
$
29,867
$
139,213
0.22
%
466.11
%
$
15,794,671
$
30,737
$
130,924
0.19
%
425.95
%
(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)
Q4
Q3
Q2
Q1
Q4
Twelve Months Ended December 31,
2023
2023
2023 (1)
2023
2022
2023
2022
Loan type
Commercial & industrial, including specialty lending
$
5,282
$
2,974
$
258
$
(71
)
$
12,960
$
8,443
$
15,066
Multifamily
127
1,999
1,448
-
-
3,574
1,653
Commercial real estate owner occupied
-
39
(34
)
-
(2
)
5
(51
)
Commercial real estate non-owner occupied
(288
)
-
266
4,234
972
4,212
5,954
Construction
-
-
-
(116
)
(10
)
(116
)
(236
)
Residential
(1
)
13
24
(2
)
7
34
(47
)
Installment
12,202
12,473
13,602
14,606
13,237
52,883
44,029
Total net charge-offs (recoveries) from loans held for investment
$
17,322
$
17,498
$
15,564
$
18,651
$
27,164
$
69,035
$
66,368
(1) Excludes $6.2 million of charge-offs for certain PCD loans acquired from the FDIC that were immediately applied against $8.7 million of allowance for credit losses on PCD loans recognized upon the acquisition of the loan portfolio on June 15, 2023. Subsequent recoveries and charge-offs of these PCD loans will be included in the period in which they occur.
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
Twelve Months Ended
December 31,
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Q4 2022
2023
2022
(Dollars in thousands, except per share data)
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
GAAP net income to common shareholders
$
58,223
$
1.79
$
82,953
$
2.58
$
44,007
$
1.39
$
50,265
$
1.55
$
25,623
$
0.77
$
235,448
$
7.32
$
218,402
$
6.51
Reconciling items (after tax):
Severance expense
473
0.01
-
-
141
0.00
637
0.02
-
-
1,251
0.04
1,058
0.03
Impairments on fixed assets and leases
-
-
-
-
12
0.00
86
0.00
-
-
98
0.00
1,051
0.03
Loss on sale of consumer installment loans
-
-
-
-
-
-
-
-
-
-
-
-
18,221
0.54
Loss on sale of capital call lines of credit
-
-
-
-
3,914
0.12
-
-
-
-
3,914
0.12
-
-
(Gains) losses on investment securities
(85
)
0.00
492
0.02
49
0.00
(49
)
0.00
13,543
0.41
407
0.01
18,926
0.56
Derivative credit valuation adjustment
267
0.01
(151
)
0.00
(101
)
0.00
204
0.01
202
0.01
219
0.01
(1,243
)
(0.04
)
Tax on surrender of bank-owned life insurance policies
-
-
-
-
4,141
0.13
-
-
-
-
4,141
0.13
-
-
FDIC special assessment
2,755
0.08
-
-
-
-
-
-
-
-
2,755
0.09
-
-
Core earnings
$
61,633
$
1.90
$
83,294
$
2.59
$
52,163
$
1.65
$
51,143
$
1.58
$
39,368
$
1.19
$
248,233
$
7.72
$
256,415
$
7.63
Core Earnings, excluding PPP - Customers Bancorp
Twelve Months Ended
December 31,
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Q4 2022
2023
2022
(Dollars in thousands, except per share data)
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
GAAP net income to common shareholders
$
58,223
$
1.79
$
82,953
$
2.58
$
44,007
$
1.39
$
50,265
$
1.55
$
25,623
$
0.77
$
235,448
$
7.32
$
218,402
$
6.51
Less: PPP net income (loss) (after tax)
(5,264
)
(0.16
)
(11,168
)
(0.35
)
(2,068
)
(0.07
)
9,606
0.30
(5,956
)
(0.18
)
(8,894
)
(0.28
)
37,669
1.12
Net income to common shareholders, excluding PPP
63,487
1.95
94,121
2.93
46,075
1.46
40,659
1.26
31,579
0.95
244,342
7.60
180,733
5.39
Reconciling items (after tax):
Severance expense
473
0.01
-
-
141
0.00
637
0.02
-
-
1,251
0.04
1,058
0.03
Impairments on fixed assets and leases
-
-
-
-
12
0.00
86
0.00
-
-
98
0.00
1,051
0.03
Loss on sale of consumer installment loans
-
-
-
-
-
-
-
-
-
-
-
-
18,221
0.54
Loss on sale of capital call lines of credit
-
-
-
-
3,914
0.12
-
-
-
-
3,914
0.12
-
-
(Gains) losses on investment securities
(85
)
0.00
492
0.02
49
0.00
(49
)
0.00
13,543
0.41
407
0.01
18,926
0.56
Derivative credit valuation adjustment
267
0.01
(151
)
0.00
(101
)
0.00
204
0.01
202
0.01
219
0.01
(1,243
)
(0.04
)
Tax on surrender of bank-owned life insurance policies
-
-
-
-
4,141
0.13
-
-
-
-
4,141
0.13
-
-
FDIC special assessment
2,755
0.08
-
-
-
-
-
-
-
-
2,755
0.09
-
-
Core earnings, excluding PPP
$
66,897
$
2.06
$
94,462
$
2.94
$
54,231
$
1.72
$
41,537
$
1.28
$
45,324
$
1.37
$
257,127
$
7.99
$
218,746
$
6.51
Core Return on Average Assets - Customers Bancorp
Twelve Months Ended
December 31,
(Dollars in thousands, except per share data)
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Q4 2022
2023
2022
GAAP net income
$
62,092
$
86,756
$
47,574
$
53,721
$
28,711
$
250,143
$
228,034
Reconciling items (after tax):
Severance expense
473
-
141
637
-
1,251
1,058
Impairments on fixed assets and leases
-
-
12
86
-
98
1,051
Loss on sale of consumer installment loans
-
-
-
-
-
-
18,221
Loss on sale of capital call lines of credit
-
-
3,914
-
-
3,914
-
(Gains) losses on investment securities
(85
)
492
49
(49
)
13,543
407
18,926
Derivative credit valuation adjustment
267
(151
)
(101
)
204
202
219
(1,243
)
Tax on surrender of bank-owned life insurance policies
-
-
4,141
-
-
4,141
-
FDIC special assessment
2,755
-
-
-
-
2,755
-
Core net income
$
65,502
$
87,097
$
55,730
$
54,599
$
42,456
$
262,928
$
266,047
Average total assets
$
21,252,273
$
21,978,010
$
21,654,735
$
21,052,920
$
20,717,362
$
21,486,383
$
20,109,744
Core return on average assets
1.22
%
1.57
%
1.03
%
1.05
%
0.81
%
1.22
%
1.32
%
Core Return on Average Assets, excluding PPP - Customers Bancorp
Twelve Months Ended
December 31,
(Dollars in thousands, except per share data)
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Q4 2022
2023
2022
GAAP net income
$
62,092
$
86,756
$
47,574
$
53,721
$
28,711
$
250,143
$
228,034
Less: PPP net income (loss) (after tax)
(5,264
)
(11,168
)
(2,068
)
9,606
(5,956
)
(8,894
)
37,669
Net income, excluding PPP
67,356
97,924
49,642
44,115
34,667
259,037
190,365
Reconciling items (after tax):
Severance expense
473
-
141
637
-
1,251
1,058
Impairments on fixed assets and leases
-
-
12
86
-
98
1,051
Loss on sale of consumer installment loans
-
-
-
-
-
-
18,221
Loss on sale of capital call lines of credit
-
-
3,914
-
-
3,914
-
(Gains) losses on investment securities
(85
)
492
49
(49
)
13,543
407
18,926
Derivative credit valuation adjustment
267
(151
)
(101
)
204
202
219
(1,243
)
Tax on surrender of bank-owned life insurance policies
-
-
4,141
-
-
4,141
-
FDIC special assessment
2,755
-
-
-
-
2,755
-
Core net income, excluding PPP
$
70,766
$
98,265
$
57,798
$
44,993
$
48,412
$
271,822
$
228,378
Average total assets
$
21,252,273
$
21,978,010
$
21,654,735
$
21,052,920
$
20,717,362
$
21,486,383
$
20,109,744
Core return on average assets, excluding PPP
1.32
%
1.77
%
1.07
%
0.87
%
0.93
%
1.27
%
1.14
%
Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp
Twelve Months Ended
December 31,
(Dollars in thousands, except per share data)
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Q4 2022
2023
2022
GAAP net income
$
62,092
$
86,756
$
47,574
$
53,721
$
28,711
$
250,143
$
228,034
Reconciling items:
Income tax expense
21,796
23,470
20,768
14,563
7,136
80,597
63,263
Provision (benefit) for credit losses
13,523
17,856
23,629
19,603
28,216
74,611
60,066
Provision (benefit) for credit losses on unfunded commitments
(136
)
48
(304
)
280
153
(112
)
906
Severance expense
639
-
182
809
-
1,630
1,363
Impairments on fixed assets and leases
-
-
15
109
-
124
1,362
Loss on sale of consumer installment loans
-
-
-
-
-
-
23,465
Loss on sale of capital call lines of credit
-
-
5,037
-
-
5,037
-
(Gains) losses on investment securities
(114
)
626
62
(62
)
16,909
512
23,874
Derivative credit valuation adjustment
361
(192
)
(130
)
259
252
298
(1,621
)
FDIC special assessment
3,723
-
-
-
-
3,723
-
Adjusted net income - pre-tax pre-provision
$
101,884
$
128,564
$
96,833
$
89,282
$
81,377
$
416,563
$
400,712
Average total assets
$
21,252,273
$
21,978,010
$
21,654,735
$
21,052,920
$
20,717,362
$
21,486,383
$
20,109,744
Adjusted ROAA - pre-tax pre-provision
1.90
%
2.32
%
1.79
%
1.72
%
1.56
%
1.94
%
1.99
%
Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision, excluding PPP - Customers Bancorp
Twelve Months Ended
December 31,
(Dollars in thousands, except per share data)
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Q4 2022
2023
2022
GAAP net income
$
62,092
$
86,756
$
47,574
$
53,721
$
28,711
$
250,143
$
228,034
Less: PPP net income (loss) (after tax)
(5,264
)
(11,168
)
(2,068
)
9,606
(5,956
)
(8,894
)
37,669
Net income, excluding PPP
67,356
97,924
49,642
44,115
34,667
259,037
190,365
Reconciling items:
Income tax expense
21,796
23,470
20,768
14,563
7,136
80,597
63,263
Provision (benefit) for credit losses
13,523
17,856
23,629
19,603
28,216
74,611
60,066
Provision (benefit) for credit losses on unfunded commitments
(136
)
48
(304
)
280
153
(112
)
906
Severance expense
639
-
182
809
-
1,630
1,363
Impairments on fixed assets and leases
-
-
15
109
-
124
1,362
Loss on sale of consumer installment loans
-
-
-
-
-
-
23,465
Loss on sale of capital call lines of credit
-
-
5,037
-
-
5,037
-
(Gains) losses on investment securities
(114
)
626
62
(62
)
16,909
512
23,874
Derivative credit valuation adjustment
361
(192
)
(130
)
259
252
298
(1,621
)
FDIC special assessment
3,723
-
-
-
-
3,723
-
Adjusted net income - pre-tax pre-provision, excluding PPP
0.78
