Customers Bancorp, Inc. (NYSE:CUBI):
First Quarter 2024 Highlights
- Q1 2024 net income available to common shareholders was $45.9 million, or $1.40 per diluted share; ROAA was 0.94% and ROCE was 12.08%.
- Q1 2024 core earnings* were $46.5 million, or $1.42 per diluted share; Core ROAA* was 0.95% and Core ROCE* was 12.24%.
- Q1 2024 adjusted core earnings* excluding certain one-time items were $55.1 million, or $1.68 per diluted share; Adjusted Core ROAA* excluding certain one-time items was 1.11% and Adjusted Core ROCE* excluding certain one-time items was 14.50%.
- CET 1 ratio of 12.5%1 at March 31, 2024, compared to 12.2% at December 31, 2023, above the approximately 11.5% target.
- TCE / TA ratio* of 7.3% at March 31, 2024, compared to 7.0% at December 31, 2023, on track to achieve 7.5% target within one to two quarters.
- Q1 2024 net interest margin, tax equivalent (“NIM”) was 3.10%, compared to Q4 2023 NIM of 3.31%, due to higher cash balances and lower average loans during the quarter.
- Total deposits increased by $41.1 million in Q1 2024 from Q4 2023 with a significant positive mix shift. Q1 2024 business unit deposit*2 growth of $1.2 billion funded the repayment of maturing wholesale CDs of $1.2 billion.
- Non-interest bearing deposits increased by $266.4 million in Q1 2024 from Q4 2023 and represented 26% of total deposits.
- Total estimated insured deposits were 78%3 of total deposits at March 31, 2024, with immediately available liquidity covering estimated uninsured deposits3 by approximately 224%.
- Non-performing assets were $35.8 million, or 0.17% of total assets, at March 31, 2024 compared to 0.13% at December 31, 2023. Allowance for credit losses on loans and leases equaled 374% of non-performing loans at March 31, 2024, compared to 499% at December 31, 2023.
- Q1 2024 provision for credit losses on loans and leases was $16.0 million compared to $13.4 million in Q4 2023 and the coverage of credit loss reserves for loans and leases held for investment was 1.12%. The coverage of credit loss reserves for loans and leases held for investment decreased modestly from 1.13% in Q4 2023 largely driven by lower consumer installment loans held for investment.
- Q1 2024 book value per share and tangible book value per share* both grew by approximately $1.56, or 3.3% over Q4 2023, driven by strong quarterly earnings and a decrease in AOCI losses of $4.3 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 March 31, 2024 are estimates. |
|
2 |
Total deposits excluding wholesale CDs and BMTX student-related deposits. |
|
3 |
Uninsured deposits (estimate) of $5.2 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 $124.5 million. |
CEO Commentary
“Following an exceptional year in 2023, we are pleased to share continued progress on the execution of our strategic priorities which we believe will grow our franchise value, our margins and net interest income in 2024 and beyond,” said Customers Bancorp Chairman and CEO Jay Sidhu. “We are excited to announce that in April we welcomed 10 new, very experienced, banking teams to Customers Bank that are commercial focused deposit generators in the New York metropolitan area and in selected markets in California and Nevada. These commercial and business banking teams are highly experienced, have worked together for decades and have longstanding and deep client relationships. We expect the addition of these teams to accelerate the continued improvement of our deposit franchise with low cost, granular, primary relationship-based deposit accounts. We look forward to delivering exceptional service to their clients with our single point of contact, high-touch, technology-enabled banking capabilities. In the quarter, we once again demonstrated the momentum of our deposit franchise transformation by growing business unit deposits*2 by $1.2 billion which funded the repayment of maturing wholesale CDs in the amount of $1.2 billion. This was our fourth consecutive quarter of approximately $1 billion of business unit deposit*2 growth. The business unit deposit*2 growth was, once again, broad-based with more than 20 different channels increasing balances and roughly half contributing $25 million or more. Non-interest bearing deposits increased by $266.4 million during the quarter and represented 26 percent of total deposits. Our net interest margin moderated in the first quarter to 3.10% driven primarily by elevated cash balances resulting from strong business unit deposit*2 growth and the timing associated with replenishing higher yielding interest-earning assets that exited in the fourth quarter as we continue to remain focused on loan growth supporting holistic relationships. Capital levels continued to build as evidenced by a 24 basis point increase in our TCE / TA ratio* and an increase in our CET 1 ratio to 12.5%1. We are confident in our ability to achieve the 7.5% TCE / TA ratio* target that we disclosed last quarter. Enhanced by the addition of our new banking teams, we believe we are extremely well-positioned to continue to strengthen our deposit franchise, improve our profitability, and maintain our already strong capital ratios,” stated Jay Sidhu.
“Our Q1 2024 GAAP earnings were $45.9 million, or $1.40 per diluted share, and core earnings* were $46.5 million, or $1.42 per diluted share. Excluding certain one-time items incurred during the quarter, our adjusted core earnings* were $55.1 million, or $1.68 per diluted share. At March 31, 2024, our deposit base was well diversified, with approximately 78%3 of total deposits insured. We maintain a strong liquidity position, with $8.9 billion of liquidity immediately available, which covers approximately 224% of uninsured deposits3 and our loan to deposit ratio was 74%. We continue to focus loan production where we have a holistic and primary relationship. Commercial loans grew by $123.0 million though gross loan balances remained relatively flat given targeted reductions in consumer installment loans in the quarter. Our loan pipeline grew meaningfully through the first quarter, and we remain confident in the 10% – 15% loan growth outlook previously provided. We have ample liquidity and capital to support the needs of our customers. At March 31, 2024, we had $3.7 billion of cash on hand, to fund strategic loan growth as well as prudent balance sheet and liquidity management. Asset quality remains strong with our NPA ratio at just 0.17% of total assets and reserve levels are robust at over 370% of total non-performing loans at the end of Q1 2024. Our exposure to the higher risk commercial real estate office sector is minimal, representing approximately 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 manage risk and maintain robust capital levels. We are confident in our risk management capabilities and ability to provide excellent and differentiated service to our clients. We are excited and optimistic about the opportunities we had entering 2024, which will only be enhanced by the addition of the new banking teams,” 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 March 31, 2024 are estimates. |
|
2 |
Total deposits excluding wholesale CDs and BMTX student-related deposits. |
|
3 |
Uninsured deposits (estimate) of $5.2 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 $124.5 million. |
Financial Highlights
(Dollars in thousands, except per share data) |
|
At or Three Months Ended |
|
Increase (Decrease) |
|||||||||||
|
March 31, 2024 |
|
December 31, 2023 |
|
|||||||||||
Profitability Metrics: |
|
|
|
|
|
|
|
|
|||||||
Net income available for common shareholders |
|
$ |
45,926 |
|
|
$ |
58,223 |
|
|
$ |
(12,297 |
) |
|
(21.1 |
)% |
Diluted earnings per share |
|
$ |
1.40 |
|
|
$ |
1.79 |
|
|
$ |
(0.39 |
) |
|
(21.8 |
)% |
Core earnings* |
|
$ |
46,532 |
|
|
$ |
61,633 |
|
|
$ |
(15,101 |
) |
|
(24.5 |
)% |
Adjusted core earnings* |
|
$ |
55,137 |
|
|
$ |
61,633 |
|
|
$ |
(6,496 |
) |
|
(10.5 |
)% |
Core earnings per share* |
|
$ |
1.42 |
|
|
$ |
1.90 |
|
|
$ |
(0.48 |
) |
|
(25.3 |
)% |
Adjusted core earnings per share* |
|
$ |
1.68 |
|
|
$ |
1.90 |
|
|
$ |
(0.22 |
) |
|
(11.6 |
)% |
Return on average assets (“ROAA”) |
|
|
0.94 |
% |
|
|
1.16 |
% |
|
|
(0.22 |
) |
|
|
|
Core ROAA* |
|
|
0.95 |
% |
|
|
1.22 |
% |
|
|
(0.27 |
) |
|
|
|
Adjusted core ROAA* |
|
|
1.11 |
% |
|
|
1.22 |
% |
|
|
(0.11 |
) |
|
|
|
Return on average common equity (“ROCE”) |
|
|
12.08 |
% |
|
|
15.93 |
% |
|
|
(3.85 |
) |
|
|
|
Core ROCE* |
|
|
12.24 |
% |
|
|
16.87 |
% |
|
|
(4.63 |
) |
|
|
|
Adjusted core ROCE* |
|
|
14.50 |
% |
|
|
16.87 |
% |
|
|
(2.37 |
) |
|
|
|
Core pre-tax pre-provision net income* |
|
$ |
83,674 |
|
|
$ |
101,884 |
|
|
$ |
(18,210 |
) |
|
(17.9 |
)% |
Adjusted core pre-tax pre-provision net income* |
|
$ |
94,988 |
|
|
$ |
101,884 |
|
|
$ |
(6,896 |
) |
|
(6.8 |
)% |
Net interest margin, tax equivalent |
|
|
3.10 |
% |
|
|
3.31 |
% |
|
|
(0.21 |
) |
|
|
|
Yield on loans (Loan yield) |
|
|
7.05 |
% |
|
|
7.30 |
% |
|
|
(0.25 |
) |
|
|
|
Cost of deposits |
|
|
3.45 |
% |
|
|
3.39 |
% |
|
|
0.06 |
|
|
|
|
Efficiency ratio |
|
|
54.58 |
% |
|
|
49.08 |
% |
|
|
5.50 |
|
|
|
|
Core efficiency ratio* |
|
|
54.24 |
% |
|
|
46.70 |
% |
|
|
7.54 |
|
|
|
|
Adjusted core efficiency ratio* |
|
|
48.02 |
% |
|
|
46.70 |
% |
|
|
1.32 |
|
|
|
|
Non-interest expense to average total assets |
|
|
1.87 |
% |
|
|
1.75 |
% |
|
|
0.12 |
|
|
|
|
Core non-interest expense to average total assets* |
|
|
1.86 |
% |
|
|
1.67 |
% |
|
|
0.19 |
|
|
|
|
Adjusted core non-interest expense to average total assets* |
|
|
1.65 |
% |
|
|
1.67 |
% |
|
|
(0.02 |
) |
|
|
|
Balance Sheet Trends: |
|
|
|
|
|
|
|
|
|||||||
Total assets |
|
$ |
21,347,367 |
|
|
$ |
21,316,265 |
|
|
$ |
31,102 |
|
|
0.1 |
% |
Total cash and investment securities |
|
$ |
7,338,025 |
|
|
$ |
7,355,156 |
|
|
$ |
(17,131 |
) |
|
(0.2 |
)% |
Total loans and leases |
|
$ |
13,256,871 |
|
|
$ |
13,202,084 |
|
|
$ |
54,787 |
|
|
0.4 |
% |
Non-interest bearing demand deposits |
|
$ |
4,688,880 |
|
|
$ |
4,422,494 |
|
|
$ |
266,386 |
|
|
6.0 |
% |
Total deposits |
|
$ |
17,961,383 |
|
|
$ |
17,920,236 |
|
|
$ |
41,147 |
|
|
0.2 |
% |
Capital Metrics: |
|
|
|
|
|
|
|
|
|||||||
Common Equity |
|
$ |
1,553,823 |
|
|
$ |
1,500,600 |
|
|
$ |
53,223 |
|
|
3.5 |
% |
Tangible Common Equity* |
|
$ |
1,550,194 |
|
|
$ |
1,496,971 |
|
|
$ |
53,223 |
|
|
3.6 |
% |
Common Equity to Total Assets |
|
|
7.3 |
% |
|
|
7.0 |
% |
|
|
0.3 |
|
|
|
|
Tangible Common Equity to Tangible Assets* |
|
|
7.3 |
% |
|
|
7.0 |
% |
|
|
0.3 |
|
|
|
|
Book Value per common share |
|
$ |
49.29 |
|
|
$ |
47.73 |
|
|
$ |
1.56 |
|
|
3.3 |
% |
Tangible Book Value per common share* |
|
$ |
49.18 |
|
|
$ |
47.61 |
|
|
$ |
1.57 |
|
|
3.3 |
% |
Common equity Tier 1 capital ratio (1) |
|
|
12.5 |
% |
|
|
12.2 |
% |
|
|
0.3 |
|
|
|
|
Total risk based capital ratio (1) |
|
|
15.6 |
% |
|
|
15.3 |
% |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
(1) Regulatory capital ratios as of March 31, 2024 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, 2024 |
|
March 31, 2023 |
|
|||||||||||
Profitability Metrics: |
|
|
|
|
|
|
|
|
|||||||
Net income available for common shareholders |
|
$ |
45,926 |
|
|
$ |
50,265 |
|
|
$ |
(4,339 |
) |
|
(8.6 |
)% |
Diluted earnings per share |
|
$ |
1.40 |
|
|
$ |
1.55 |
|
|
$ |
(0.15 |
) |
|
(9.7 |
)% |
Core earnings* |
|
$ |
46,532 |
|
|
$ |
51,143 |
|
|
$ |
(4,611 |
) |
|
(9.0 |
)% |
Adjusted core earnings* |
|
$ |
55,137 |
|
|
$ |
51,143 |
|
|
$ |
3,994 |
|
|
7.8 |
% |
Core earnings per share* |
|
$ |
1.42 |
|
|
$ |
1.58 |
|
|
$ |
(0.16 |
) |
|
(10.1 |
)% |
Adjusted core earnings per share* |
|
$ |
1.68 |
|
|
$ |
1.58 |
|
|
$ |
0.10 |
|
|
6.3 |
% |
Return on average assets (“ROAA”) |
|
|
0.94 |
% |
|
|
1.03 |
% |
|
|
(0.09 |
) |
|
|
|
Core ROAA* |
|
|
0.95 |
% |
|
|
1.05 |
% |
|
|
(0.10 |
) |
|
|
|
Adjusted core ROAA* |
|
|
1.11 |
% |
|
|
1.05 |
% |
|
|
0.06 |
|
|
|
|
Return on average common equity (“ROCE”) |
|
|
12.08 |
% |
|
|
16.00 |
% |
|
|
(3.92 |
) |
|
|
|
Core ROCE* |
|
|
12.24 |
% |
|
|
16.28 |
% |
|
|
(4.04 |
) |
|
|
|
Adjusted core ROCE* |
|
|
14.50 |
% |
|
|
16.28 |
% |
|
|
(1.78 |
) |
|
|
|
Core pre-tax pre-provision net income* |
|
$ |
83,674 |
|
|
$ |
89,282 |
|
|
$ |
(5,608 |
) |
|
(6.3 |
)% |
Adjusted core pre-tax pre-provision net income* |
|
$ |
94,988 |
|
|
$ |
89,282 |
|
|
$ |
5,706 |
|
|
6.4 |
% |
Net interest margin, tax equivalent |
|
|
3.10 |
% |
|
|
2.96 |
% |
|
|
0.14 |
|
|
|
|
Yield on loans (Loan yield) |
|
|
7.05 |
% |
|
|
6.70 |
% |
|
|
0.35 |
|
|
|
|
Cost of deposits |
|
|
3.45 |
% |
|
|
3.32 |
% |
|
|
0.13 |
|
|
|
|
Efficiency ratio |
|
|
54.58 |
% |
|
|
47.71 |
% |
|
|
6.87 |
|
|
|
|
Core efficiency ratio* |
|
|
54.24 |
% |
|
|
47.09 |
% |
|
|
7.15 |
|
|
|
|
Adjusted core efficiency ratio* |
|
|
48.02 |
% |
|
|
47.09 |
% |
|
|
0.93 |
|
|
|
|
Non-interest expense to average total assets |
|
|
1.87 |
% |
|
|
1.54 |
% |
|
|
0.33 |
|
|
|
|
Core non-interest expense to average total assets* |
|
|
1.86 |
% |
|
|
1.53 |
% |
|
|
0.33 |
|
|
|
|
Adjusted core non-interest expense to average total assets* |
|
|
1.65 |
% |
|
|
1.53 |
% |
|
|
0.12 |
|
|
|
|
Balance Sheet Trends: |
|
|
|
|
|
|
|
|
|||||||
Total assets |
|
$ |
21,347,367 |
|
|
$ |
21,751,614 |
|
|
$ |
(404,247 |
) |
|
(1.9 |
)% |
Total cash and investment securities |
|
$ |
7,338,025 |
|
|
$ |
5,843,948 |
|
|
$ |
1,494,077 |
|
|
25.6 |
% |
Total loans and leases |
|
$ |
13,256,871 |
|
|
$ |
15,063,034 |
|
|
$ |
(1,806,163 |
) |
|
(12.0 |
)% |
Non-interest bearing demand deposits |
|
$ |
4,688,880 |
|
|
$ |
3,487,517 |
|
|
$ |
1,201,363 |
|
|
34.4 |
% |
Total deposits |
|
$ |
17,961,383 |
|
|
$ |
17,723,617 |
|
|
$ |
237,766 |
|
|
1.3 |
% |
Capital Metrics: |
|
|
|
|
|
|
|
|
|||||||
Common Equity |
|
$ |
1,553,823 |
|
|
$ |
1,283,226 |
|
|
$ |
270,597 |
|
|
21.1 |
% |
Tangible Common Equity* |
|
$ |
1,550,194 |
|
|
$ |
1,279,597 |
|
|
$ |
270,597 |
|
|
21.1 |
% |
Common Equity to Total Assets |
|
|
7.3 |
% |
|
|
5.9 |
% |
|
|
1.4 |
|
|
|
|
Tangible Common Equity to Tangible Assets* |
|
|
7.3 |
% |
|
|
5.9 |
% |
|
|
1.4 |
|
|
|
|
Book Value per common share |
|
$ |
49.29 |
|
|
$ |
41.08 |
|
|
$ |
8.21 |
|
|
20.0 |
% |
Tangible Book Value per common share* |
|
$ |
49.18 |
|
|
$ |
40.96 |
|
|
$ |
8.22 |
|
|
20.1 |
% |
Common equity Tier 1 capital ratio (1) |
|
|
12.5 |
% |
|
|
9.6 |
% |
|
|
2.9 |
|
|
|
|
Total risk based capital ratio (1) |
|
|
15.6 |
% |
|
|
12.3 |
% |
|
|
3.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
(1) Regulatory capital ratios as of March 31, 2024 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) |
March 31, 2024 |
|
% of Total |
|
December 31, 2023 |
|
% of Total |
|
March 31, 2023 |
|
% of Total |
||||||
Loans and Leases Held for Investment |
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial & industrial: |
|
|
|
|
|
|
|
|
|
|
|
||||||
Specialized lending |
$ |
5,104,405 |
|
39.6 |
% |
|
$ |
5,006,693 |
|
38.9 |
% |
|
$ |
5,519,176 |
|
37.7 |
% |
Other commercial & industrial (1) |
|
1,113,517 |
|
8.6 |
|
|
|
1,162,317 |
|
9.0 |
|
|
|
1,414,419 |
|
9.7 |
|
Mortgage finance |
|
1,071,146 |
|
8.3 |
|
|
|
1,014,742 |
|
7.9 |
|
|
|
1,374,894 |
|
9.4 |
|
Multifamily |
|
2,123,675 |
|
16.5 |
|
|
|
2,138,622 |
|
16.6 |
|
|
|
2,195,211 |
|
15.0 |
|
Commercial real estate owner occupied |
|
806,278 |
|
6.3 |
|
|
|
797,319 |
|
6.2 |
|
|
|
895,314 |
|
6.1 |
|
Commercial real estate non-owner occupied |
|
1,182,084 |
|
9.2 |
|
|
|
1,177,650 |
|
9.2 |
|
|
|
1,245,248 |
|
8.5 |
|
Construction |
|
185,601 |
|
1.3 |
|
|
|
166,393 |
|
1.3 |
|
|
|
188,123 |
|
1.3 |
|
Total commercial loans and leases |
|
11,586,706 |
|
89.8 |
|
|
|
11,463,736 |
|
89.1 |
|
|
|
12,832,385 |
|
87.7 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential |
|
482,537 |
|
3.8 |
|
|
|
484,435 |
|
3.8 |
|
|
|
494,815 |
|
3.4 |
|
Manufactured housing |
|
37,382 |
|
0.3 |
|
|
|
38,670 |
|
0.3 |
|
|
|
43,272 |
|
0.3 |
|
Installment: |
|
|
|
|
|
|
|
|
|
|
|
||||||
Personal |
|
492,892 |
|
3.8 |
|
|
|
555,533 |
|
4.3 |
|
|
|
849,420 |
|
5.8 |
|
Other |
|
299,714 |
|
2.3 |
|
|
|
319,393 |
|
2.5 |
|
|
|
419,085 |
|
2.8 |
|
Total installment loans |
|
792,606 |
|
6.1 |
|
|
|
874,926 |
|
6.8 |
|
|
|
1,268,505 |
|
8.6 |
|
Total consumer loans |
|
1,312,525 |
|
10.2 |
|
|
|
1,398,031 |
|
10.9 |
|
|
|
1,806,592 |
|
12.3 |
|
Total loans and leases held for investment |
$ |
12,899,231 |
|
100.0 |
% |
|
$ |
12,861,767 |
|
100.0 |
% |
|
$ |
14,638,977 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans Held for Sale |
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
||||||
Multifamily |
$ |
— |
|
— |
% |
|
$ |
— |
|
— |
% |
|
$ |
4,051 |
|
1.0 |
% |
Commercial real estate non-owner occupied |
|
— |
|
— |
|
|
|
— |
|
— |
|
|
|
16,000 |
|
3.7 |
|
Total commercial loans and leases |
|
— |
|
— |
|
|
|
— |
|
— |
|
|
|
20,051 |
|
4.7 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential |
|
870 |
|
0.2 |
|
|
|
1,215 |
|
0.3 |
|
|
|
821 |
|
0.2 |
|
Installment: |
|
|
|
|
|
|
|
|
|
|
|
||||||
Personal |
|
137,755 |
|
38.5 |
|
|
|
151,040 |
|
44.4 |
|
|
|
307,336 |
|
72.5 |
|
Other |
|
219,015 |
|
61.3 |
|
|
|
188,062 |
|
55.3 |
|
|
|
95,849 |
|
22.6 |
|
Total installment loans |
|
356,770 |
|
99.8 |
|
|
|
339,102 |
|
99.7 |
|
|
|
403,185 |
|
95.1 |
|
Total consumer loans |
|
357,640 |
|
100.0 |
|
|
|
340,317 |
|
100.0 |
|
|
|
404,006 |
|
95.3 |
|
Total loans held for sale |
$ |
357,640 |
|
100.0 |
% |
|
$ |
340,317 |
|
100.0 |
% |
|
$ |
424,057 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total loans and leases portfolio |
$ |
13,256,871 |
|
|
|
$ |
13,202,084 |
|
|
|
$ |
15,063,034 |
|
|
|||
(1) Includes PPP loans of $52.0 million, $74.7 million and $246.3 million as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively. |
Loans and Leases Held for Investment
Loans and leases held for investment were $12.9 billion at March 31, 2024, up $37.5 million, or 0.3%, from December 31, 2023. Specialized lending increased $97.7 million, or 2.0% quarter-over-quarter, to $5.1 billion. Mortgage finance loans increased $56.4 million, or 5.6% quarter-over-quarter due to higher mortgage activity. Construction loans increased $19.2 million, or 11.5% quarter-over-quarter, to $185.6 million. Consumer installment loans held for investment decreased $82.3 million, or 9.4% quarter-over-quarter, to $792.6 million due to the continued build out of the held-for-sale strategy and de-risking of the held-for-investment loan portfolio. Other commercial and industrial loans decreased $48.8 million, or 4.2% quarter-over-quarter, to $1.1 billion, which included a decrease in PPP loans primarily from guarantee payments.
Loans and leases held for investment of $12.9 billion at March 31, 2024 was down $1.7 billion, or 11.9%, year-over-year, largely driven by reduced balances in consumer installment loans of $475.9 million, or 37.5% year-over-year, specialized lending of $414.8 million, mortgage finance loans of $303.7 million and other commercial and industrial loans of $300.9 million, which included a decrease in PPP loans primarily from guarantee payments.
Loans Held for Sale
Loans held for sale increased $17.3 million quarter-over-quarter, and were $357.6 million at March 31, 2024 due to the continued build out of the held-for-sale strategy in 2024.
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, 2024 |
|
December 31, 2023 |
|
|
March 31, 2024 |
|
March 31, 2023 |
|
||||||||||||||
Allowance for credit losses on loans and leases |
$ |
133,296 |
|
|
$ |
135,311 |
|
|
$ |
(2,015 |
) |
|
$ |
133,296 |
|
|
$ |
130,281 |
|
|
$ |
3,015 |
|
Provision (benefit) for credit losses on loans and leases |
$ |
15,953 |
|
|
$ |
13,420 |
|
|
$ |
2,533 |
|
|
$ |
15,953 |
|
|
$ |
18,008 |
|
|
$ |
(2,055 |
) |
Net charge-offs from loans held for investment |
$ |
17,968 |
|
|
$ |
17,322 |
|
|
$ |
646 |
|
|
$ |
17,968 |
|
|
$ |
18,651 |
|
|
$ |
(683 |
) |
Annualized net charge-offs to average loans and leases |
|
0.55 |
% |
|
|
0.51 |
% |
|
|
|
|
0.55 |
% |
|
|
0.49 |
% |
|
|
||||
Coverage of credit loss reserves for loans and leases held for investment |
|
1.12 |
% |
|
|
1.13 |
% |
|
|
|
|
1.12 |
% |
|
|
0.97 |
% |
|
|
Net charge-offs were relatively stable with $18.0 million in Q1 2024, compared to $17.3 million in Q4 2023 and $18.7 million in Q1 2023.
Provision (benefit) for Credit Losses
|
Three Months Ended |
|
Increase (Decrease) |
|
Three Months Ended |
|
Increase (Decrease) |
||||||||||||
(Dollars in thousands) |
March 31, 2024 |
|
December 31, 2023 |
|
|
March 31, 2024 |
|
March 31, 2023 |
|
||||||||||
Provision (benefit) for credit losses on loans and leases |
$ |
15,953 |
|
$ |
13,420 |
|
|
$ |
2,533 |
|
$ |
15,953 |
|
$ |
18,008 |
|
$ |
(2,055 |
) |
Provision (benefit) for credit losses on available for sale debt securities |
|
1,117 |
|
|
103 |
|
|
|
1,014 |
|
|
1,117 |
|
|
1,595 |
|
|
(478 |
) |
Provision for credit losses |
|
17,070 |
|
|
13,523 |
|
|
|
3,547 |
|
|
17,070 |
|
|
19,603 |
|
|
(2,533 |
) |
Provision (benefit) for credit losses on unfunded commitments |
|
430 |
|
|
(136 |
) |
|
|
566 |
|
|
430 |
|
|
280 |
|
|
150 |
|
Total provision for credit losses |
$ |
17,500 |
|
$ |
13,387 |
|
|
$ |
4,113 |
|
$ |
17,500 |
|
$ |
19,883 |
|
$ |
(2,383 |
) |
The provision for credit losses on loans and leases in Q1 2024 was $16.0 million, compared to $13.4 million in Q4 2023. The higher provision in Q1 2024 was primarily due to increased uncertainty and slightly weaker macroeconomic forecasts, partially offset by lower balances in consumer installment loans held for investment.
The provision for credit losses on available for sale investment securities in Q1 2024 was $1.1 million, compared to provision of $0.1 million in Q4 2023.
The provision for credit losses on loans and leases in Q1 2024 was $16.0 million, compared to $18.0 million in Q1 2023. The lower provision in Q1 2024 compared to the year ago period was primarily due to lower balances in loans held for investment.
The provision for credit losses on available for sale investment securities in Q1 2024 was $1.1 million compared to provision of $1.6 million in Q1 2023.
Asset Quality
The following table presents asset quality metrics as of the dates indicated:
(Dollars in thousands) |
March 31, 2024 |
|
December 31, 2023 |
|
Increase (Decrease) |
|
March 31, 2024 |
|
March 31, 2023 |
|
Increase (Decrease) |
||||||||||||
Non-performing assets (“NPAs”): |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Nonaccrual / non-performing loans (“NPLs”) |
$ |
35,654 |
|
|
$ |
27,110 |
|
|
$ |
8,544 |
|
|
$ |
35,654 |
|
|
$ |
32,124 |
|
|
$ |
3,530 |
|
Non-performing assets |
$ |
35,753 |
|
|
$ |
27,209 |
|
|
$ |
8,544 |
|
|
$ |
35,753 |
|
|
$ |
32,260 |
|
|
$ |
3,493 |
|
NPLs to total loans and leases |
|
0.27 |
% |
|
|
0.21 |
% |
|
|
|
|
0.27 |
% |
|
|
0.21 |
% |
|
|
||||
Reserves to NPLs |
|
373.86 |
% |
|
|
499.12 |
% |
|
|
|
|
373.86 |
% |
|
|
405.56 |
% |
|
|
||||
NPAs to total assets |
|
0.17 |
% |
|
|
0.13 |
% |
|
|
|
|
0.17 |
% |
|
|
0.15 |
% |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Loans and leases (1) risk ratings: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commercial loans and leases |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pass |
$ |
10,095,611 |
|
|
$ |
9,955,243 |
|
|
$ |
140,368 |
|
|
$ |
10,095,611 |
|
|
$ |
10,928,620 |
|
|
$ |
(833,009 |
) |
Special Mention |
|
194,365 |
|
|
|
196,182 |
|
|
|
(1,817 |
) |
|
|
194,365 |
|
|
|
136,986 |
|
|
|
57,379 |
|
Substandard |
|
282,163 |
|
|
|
339,664 |
|
|
|
(57,501 |
) |
|
|
282,163 |
|
|
|
273,154 |
|
|
|
9,009 |
|
Total commercial loans and leases |
|
10,572,139 |
|
|
|
10,491,089 |
|
|
|
81,050 |
|
|
|
10,572,139 |
|
|
|
11,338,760 |
|
|
|
(766,621 |
) |
Consumer loans |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Performing |
|
1,293,457 |
|
|
|
1,379,603 |
|
|
|
(86,146 |
) |
|
|
1,293,457 |
|
|
|
1,787,123 |
|
|
|
(493,666 |
) |
Non-performing |
|
19,068 |
|
|
|
18,428 |
|
|
|
640 |
|
|
|
19,068 |
|
|
|
19,469 |
|
|
|
(401 |
) |
Total consumer loans |
|
1,312,525 |
|
|
|
1,398,031 |
|
|
|
(85,506 |
) |
|
|
1,312,525 |
|
|
|
1,806,592 |
|
|
|
(494,067 |
) |
Loans and leases receivable (1) |
$ |
11,884,664 |
|
|
$ |
11,889,120 |
|
|
$ |
(4,456 |
) |
|
$ |
11,884,664 |
|
|
$ |
13,145,352 |
|
|
$ |
(1,260,688 |
) |
(1) Risk ratings are assigned to loans and leases held for investment, and excludes loans held for sale, loans receivable, mortgage finance, at fair value and eligible PPP loans that 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 commercial and industrial (“C&I”), mortgage finance, corporate and specialized 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 March 31, 2024 were less than 4% of total assets and approximately 6% of total loans and leases held for investment, and were supported by an allowance for credit losses of $50.7 million. At March 31, 2024, the consumer installment portfolio had the following characteristics: average original FICO score of 737, average debt-to-income of 20% and average borrower income of $107 thousand.
Non-performing loans at March 31, 2024 increased to 0.27% of total loans and leases, compared to 0.21% at December 31, 2023 and 0.21% at March 31, 2023.
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) |
March 31, 2024 |
|
December 31, 2023 |
|
March 31, 2023 |
|||
Debt securities, available for sale |
$ |
2,571,139 |
|
$ |
2,376,860 |
|
$ |
2,900,259 |
Equity securities |
|
33,729 |
|
|
28,780 |
|
|
26,710 |
Investment securities, at fair value |
|
2,604,868 |
|
|
2,405,640 |
|
|
2,926,969 |
Debt securities, held to maturity |
|
1,032,037 |
|
|
1,103,170 |
|
|
870,294 |
Total investment securities portfolio |
$ |
3,636,905 |
|
$ |
3,508,810 |
|
$ |
3,797,263 |
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 March 31, 2024, the AFS debt securities portfolio had a spot yield of 5.33%, an effective duration of approximately 1.7 years, and approximately 40% are variable rate. Additionally, 62% of the AFS securities portfolio was AAA rated at March 31, 2024.
At March 31, 2024, the HTM debt securities portfolio represented only 4.8% of total assets at March 31, 2024, had a spot yield of 4.26% and an effective duration of approximately 3.0 years. Additionally, at March 31, 2024, approximately 41% of the HTM securities were AAA rated and 49% 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) |
March 31, 2024 |
|
% of Total |
|
December 31, 2023 |
|
% of Total |
|
March 31, 2023 |
|
% of Total |
||||||
Demand, non-interest bearing |
$ |
4,688,880 |
|
26.1 |
% |
|
$ |
4,422,494 |
|
24.7 |
% |
|
$ |
3,487,517 |
|
19.7 |
% |
Demand, interest bearing |
|
5,661,775 |
|
31.5 |
|
|
|
5,580,527 |
|
31.1 |
|
|
|
5,791,302 |
|
32.7 |
|
Total demand deposits |
|
10,350,655 |
|
57.6 |
|
|
|
10,003,021 |
|
55.8 |
|
|
|
9,278,819 |
|
52.4 |
|
Savings |
|
2,080,374 |
|
11.6 |
|
|
|
1,402,941 |
|
7.8 |
|
|
|
924,359 |
|
5.2 |
|
Money market |
|
3,347,843 |
|
18.6 |
|
|
|
3,226,395 |
|
18.0 |
|
|
|
2,019,633 |
|
11.4 |
|
Time deposits |
|
2,182,511 |
|
12.2 |
|
|
|
3,287,879 |
|
18.4 |
|
|
|
5,500,806 |
|
31.0 |
|
Total deposits |
$ |
17,961,383 |
|
100.0 |
% |
|
$ |
17,920,236 |
|
100.0 |
% |
|
$ |
17,723,617 |
|
100.0 |
% |
Total deposits increased $41.1 million, or 0.2%, to $18.0 billion at March 31, 2024 as compared to the prior quarter. Non-interest bearing demand deposits increased $266.4 million, or 6.0%, to $4.7 billion, savings deposits increased $677.4 million, or 48.3%, to $2.1 billion, money market deposits increased $121.4 million, or 3.8%, to $3.3 billion and interest bearing demand deposits of $81.2 million, or 1.5%, to $5.7 billion. These increases were offset by a decrease in time deposits of $1.1 billion, or 33.6%, to $2.2 billion. The total average cost of deposits increased modestly by 6 basis points to 3.45% in Q1 2024 from 3.39% in the prior quarter largely driven by continued competitive dynamics in the deposit market that the industry continues to experience. Total estimated uninsured deposits were $4.0 billion1, or 22% of total deposits (inclusive of accrued interest) at March 31, 2024. 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 increased $237.8 million, or 1.3%, to $18.0 billion at March 31, 2024 as compared to a year ago. Non-interest bearing demand deposits increased $1.2 billion, or 34.4%, to $4.7 billion, money market deposits increased $1.3 billion, or 65.8%, to $3.3 billion and savings deposits increased $1.2 billion, or 125.1%, to $2.1 billion. These increases were offset by decreases in time deposits of $3.3 billion, or 60.3% to $2.2 billion and interest bearing demand deposits of $129.5 million, or 2.2%, to $5.7 billion. The total average cost of deposits increased modestly by 13 basis points to 3.45% in Q1 2024 from 3.32% in the prior year primarily due to higher market interest rates, offsetting a positive shift in deposit mix.
______________________________________________ |
||
1 |
Uninsured deposits (estimate) of $5.2 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 $124.5 million. |
Borrowings
The following table presents the composition of our borrowings as of the dates indicated:
(Dollars in thousands) |
March 31, 2024 |
|
December 31, 2023 |
|
March 31, 2023 |
|||
FHLB advances |
$ |
1,195,088 |
|
$ |
1,203,207 |
|
$ |
2,052,143 |
Senior notes |
|
123,905 |
|
|
123,840 |
|
|
123,645 |
Subordinated debt |
|
182,300 |
|
|
182,230 |
|
|
182,021 |
Total borrowings |
$ |
1,501,293 |
|
$ |
1,509,277 |
|
$ |
2,357,809 |
Total borrowings decreased $8.0 million, or 0.5%, to $1.5 billion at March 31, 2024 as compared to the prior quarter. As of March 31, 2024, Customers’ immediately available borrowing capacity with the FRB and FHLB was approximately $7.5 billion, of which $1.2 billion of available capacity was utilized in borrowings and $1.1 billion was utilized to collateralize deposits.
Total borrowings decreased $856.5 million, or 36.3%, to $1.5 billion at March 31, 2024 as compared to a year ago. This decrease primarily resulted from 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) |
March 31, 2024 |
|
December 31, 2023 |
|
March 31, 2023 |
||||||
Customers Bancorp, Inc. |
|
|
|
|
|
||||||
Common Equity |
$ |
1,553,823 |
|
|
$ |
1,500,600 |
|
|
$ |
1,283,226 |
|
Tangible Common Equity* |
$ |
1,550,194 |
|
|
$ |
1,496,971 |
|
|
$ |
1,279,597 |
|
Common Equity to Total Assets |
|
7.3 |
% |
|
|
7.0 |
% |
|
|
5.9 |
% |
Tangible Common Equity to Tangible Assets* |
|
7.3 |
% |
|
|
7.0 |
% |
|
|
5.9 |
% |
Book Value per common share |
$ |
49.29 |
|
|
$ |
47.73 |
|
|
$ |
41.08 |
|
Tangible Book Value per common share* |
$ |
49.18 |
|
|
$ |
47.61 |
|
|
$ |
40.96 |
|
Common equity Tier 1 (“CET 1”) capital ratio (1) |
|
12.5 |
% |
|
|
12.2 |
% |
|
|
9.6 |
% |
Total risk based capital ratio (1) |
|
15.6 |
% |
|
|
15.3 |
% |
|
|
12.3 |
% |
|
|
|
|
|
|
||||||
(1) Regulatory capital ratios as of March 31, 2024 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 $53.2 million to $1.6 billion, and tangible common equity* increased $53.2 million to $1.6 billion, at March 31, 2024 compared to the prior quarter, respectively, primarily from earnings of $45.9 million and decreased unrealized losses on investment securities of $4.3 million (net of taxes) deferred in accumulated other comprehensive income (“AOCI”). Similarly, book value per common share increased to $49.29 from $47.73, and tangible book value per common share* increased to $49.18 from $47.61, at March 31, 2024 and December 31, 2023, respectively.
Customers Bancorp’s common equity increased $270.6 million to $1.6 billion, and tangible common equity* increased $270.6 million to $1.6 billion, at March 31, 2024 compared to a year ago, respectively, primarily from earnings of $231.1 million and decreased unrealized losses on investment securities in AOCI of $24.0 million (net of taxes). Similarly, book value per common share increased to $49.29 from $41.08, and tangible book value per common share* increased to $49.18 from $40.96, at March 31, 2024 and March 31, 2023, respectively.
At the Customers Bancorp level, the CET 1 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 12.5%, 15.6%, 7.3%, and 7.3%, respectively, at March 31, 2024.
At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At March 31, 2024, Tier 1 capital (estimate) and total risk based capital (estimate) were 14.0% and 15.7%, 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 $160.4 million in Q1 2024, a decrease of $12.1 million from Q4 2023. This decrease was due to lower interest income of $14.1 million primarily due to the reduction of higher yielding loans and securities that exited the bank in the fourth quarter, and the measured pace of replenishing those interest-earning assets in the first quarter. Partially offsetting this decline was lower interest expense of $2.0 million due to the reduction of FHLB advances and positive remix of wholesale CDs with business unit deposits*2 that we executed in the fourth and first quarters.
“We experienced a modest decline in net interest income in the first quarter due to the selective reduction of higher yielding loans and securities in last quarter. This quarter we also reserved loan growth capacity in anticipation of the onboarding of the new teams. As we deploy excess liquidity, currently on the balance sheet in cash and securities, our net interest income is expected to grow and our net interest margin is expected to expand over the remainder of the year. Our loan pipeline grew meaningfully in the first quarter, which will benefit interest income and margin for the remainder of the year. For the second quarter in a row we reported lower interest expense compared to the prior quarter. The continued replacement of wholesale deposits and the remix of higher cost less strategic business unit deposits*2 is expected to continue to drive interest expense lower going forward. The combination of these efforts will benefit our net interest income throughout 2024 and beyond,” stated Customers Bancorp President Sam Sidhu.
Net interest income totaled $160.4 million in Q1 2024, an increase of $10.5 million from Q1 2023. This increase was due to higher interest income of $16.8 million primarily due to variable rate lower credit risk specialized lending verticals and interest earning deposits from higher market interest rates, and lower interest expense from lower average balances of borrowings, offset in part by higher interest expense on deposits of $9.8 million primarily resulting from increased market interest rates. The decrease in interest-earning assets was primarily driven by decreases in specialized lending verticals, consumer installment loans, mortgage finance loans and PPP loans included in other C&I loans. Total consumer installment loans decreased in Q1 2024 as compared to Q1 2023, as installment loans held for investment decreased primarily for risk management purposes and the implementation of a held-for-sale strategy.
______________________________________________ |
||
2 |
Total deposits excluding wholesale CDs and BMTX student-related deposits. |
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, 2024 |
|
December 31, 2023 |
|
|
March 31, 2024 |
|
March 31, 2023 |
|
|||||||||||||
Commercial lease income |
$ |
9,683 |
|
|
$ |
9,035 |
|
|
$ |
648 |
|
|
$ |
9,683 |
|
|
$ |
9,326 |
|
$ |
357 |
|
Loan fees |
|
5,280 |
|
|
|
5,926 |
|
|
|
(646 |
) |
|
|
5,280 |
|
|
|
3,990 |
|
|
1,290 |
|
Bank-owned life insurance |
|
3,261 |
|
|
|
2,160 |
|
|
|
1,101 |
|
|
|
3,261 |
|
|
|
2,647 |
|
|
614 |
|
Mortgage finance transactional fees |
|
946 |
|
|
|
927 |
|
|
|
19 |
|
|
|
946 |
|
|
|
1,074 |
|
|
(128 |
) |
Gain (loss) on sale of loans |
|
10 |
|
|
|
(91 |
) |
|
|
101 |
|
|
|
10 |
|
|
|
— |
|
|
10 |
|
Net gain (loss) on sale of investment securities |
|
(30 |
) |
|
|
(145 |
) |
|
|
115 |
|
|
|
(30 |
) |
|
|
— |
|
|
(30 |
) |
Other |
|
2,081 |
|
|
|
860 |
|
|
|
1,221 |
|
|
|
2,081 |
|
|
|
1,084 |
|
|
997 |
|
Total non-interest income |
$ |
21,231 |
|
|
$ |
18,672 |
|
|
$ |
2,559 |
|
|
$ |
21,231 |
|
|
$ |
18,121 |
|
$ |
3,110 |
|
Non-interest income totaled $21.2 million for Q1 2024, an increase of $2.6 million compared to Q4 2023. The increase was primarily due to increases in death benefits paid by insurance carriers under bank-owned life insurance policies, commercial lease income and other income.
Non-interest income totaled $21.2 million for Q1 2024, an increase of $3.1 million compared to Q1 2023. The increase was primarily due to increases in loan fees of $1.3 million resulting from increased servicing-related revenue and unused line of credit fees, death benefits paid by insurance carriers under bank-owned life insurance policies, commercial lease income and other income.
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, 2024 |
|
December 31, 2023 |
|
|
March 31, 2024 |
|
March 31, 2023 |
|
||||||||||
Salaries and employee benefits |
$ |
36,025 |
|
$ |
33,965 |
|
$ |
2,060 |
|
|
$ |
36,025 |
|
$ |
32,345 |
|
$ |
3,680 |
|
Technology, communication and bank operations |
|
21,904 |
|
|
16,887 |
|
|
5,017 |
|
|
|
21,904 |
|
|
16,589 |
|
|
5,315 |
|
Commercial lease depreciation |
|
7,970 |
|
|
7,357 |
|
|
613 |
|
|
|
7,970 |
|
|
7,875 |
|
|
95 |
|
Professional services |
|
6,353 |
|
|
9,820 |
|
|
(3,467 |
) |
|
|
6,353 |
|
|
7,596 |
|
|
(1,243 |
) |
Loan servicing |
|
4,031 |
|
|
3,779 |
|
|
252 |
|
|
|
4,031 |
|
|
4,661 |
|
|
(630 |
) |
Occupancy |
|
2,347 |
|
|
2,320 |
|
|
27 |
|
|
|
2,347 |
|
|
2,760 |
|
|
(413 |
) |
FDIC assessments, non-income taxes and regulatory fees |
|
13,469 |
|
|
13,977 |
|
|
(508 |
) |
|
|
13,469 |
|
|
2,728 |
|
|
10,741 |
|
Advertising and promotion |
|
682 |
|
|
850 |
|
|
(168 |
) |
|
|
682 |
|
|
1,049 |
|
|
(367 |
) |
Other |
|
6,388 |
|
|
4,812 |
|
|
1,576 |
|
|
|
6,388 |
|
|
4,530 |
|
|
1,858 |
|
Total non-interest expense |
$ |
99,169 |
|
$ |
93,767 |
|
$ |
5,402 |
|
|
$ |
99,169 |
|
$ |
80,133 |
|
$ |
19,036 |
|
Non-interest expenses totaled $99.2 million in Q1 2024, an increase of $5.4 million compared to Q4 2023. The increase was primarily attributable to certain one-time items which included deposit servicing-related fees of $7.1 million in technology, communications and bank operations and FDIC premiums of $4.2 million, both of which relate to periods prior to 2024. There was also an increase in the estimated industry-wide FDIC special assessment of $0.5 million in Q1 2024 from the $3.7 million FDIC special assessment fee recorded in Q4 2023. Excluding the impact of these amounts, total non-interest expenses were $87.4 million, which decreased $2.7 million in Q1 2024 compared to $90.0 million in Q4 2023. Other changes during the quarter include an increase of $2.1 million in salaries and employee benefits primarily due to higher incentives and stock awards and a decrease of $3.5 million in professional fees. Q1 2024 adjusted core non-interest expenses* were $87.4 million, a decrease of $2.1 million over Q4 2023.
Non-interest expenses totaled $99.2 million in Q1 2024, an increase of $19.0 million compared to Q1 2023. The increase was primarily attributable to increases of $10.7 million in FDIC assessments, non-income taxes and regulatory fees resulting primarily from higher FDIC assessments, one-time FDIC premiums of $4.2 million relating to periods prior to 2024 and an increase in the estimated industry-wide FDIC special assessment of $0.5 million, $5.3 million in technology, communications and bank operations which included the one-time deposit servicing-related fees and $3.7 million in salaries and employee benefits primarily due to higher headcount, annual merit increases and incentives. These increases were partially offset by a decrease of $1.2 million in professional fees.
Taxes
Income tax expense decreased by $6.1 million to $15.7 million in Q1 2024 from $21.8 million in Q4 2023 primarily due to lower pre-tax income.
Income tax expense increased by $1.1 million to $15.7 million in Q1 2024 from $14.6 million in Q1 2023 primarily due to a decrease in estimated income tax credits for 2024.
The effective tax rate for Q1 2024 was 24%. Customers expects the full-year 2024 effective tax rate to be approximately 22% to 24%.
Outlook
“Looking forward, our strategy and risk management principles remain unchanged. We are focused on managing risk, strengthening our deposit franchise, further improving our profitability and maintaining our strong capital ratios. Our deposits are expected to grow modestly with continued improvement in the quality of deposits, reducing higher cost business unit deposits*1 with lower cost deposits where we have a holistic and primary relationship. The addition of the new banking teams is expected to accelerate and enhance these efforts which were already well underway. We see attractive opportunities to deploy cash and securities cash flows into franchise-enhancing loan growth and our pipeline is strong. We remain confident in our ability to deliver 10% - 15% loan growth for the full year. The management of non-interest expenses remains a priority for us. Our adjusted core non-interest expense*, which excludes certain one-time items, declined from the core non-interest expense in the prior quarter. We expect the investments made in recruiting the new banking teams will produce significant benefits by increasing our net interest income and net interest margin primarily through lowering our interest expense costs as well as improving the overall quality of our deposit franchise. 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. The onboarding of our new banking teams will elevate our efficiency ratio temporarily, but we are confident in our ability to operate with a mid-40’s efficiency ratio over the medium term. 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 highly focused on 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. |
|
1 |
Total deposits excluding wholesale CDs and BMTX student-related deposits. |
Webcast |
||
Date: |
Friday, April 26, 2024 |
|
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.
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 nearly $22 billion in assets making it one of the 80 largest bank holding companies in the U.S. Customers Bank’s commercial and consumer clients benefit from a full suite of technology-enabled tailored product experiences delivered by best-in-class customer service distinguished by a Single Point of Contact approach. 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 specialized lending clients. Major accolades include:
- No. 5 on American Banker 2023 list of top-performing banks with $10B to $50B in assets
- No. 29 out of the 100 largest publicly traded banks in 2024 Forbes Best Banks list
- No. 52 on Investor’s Business Daily 100 Best Stocks for 2023
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, 2023, 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 2024 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended March 31, 2024 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 |
|||||||||||
2024 |
|
2023 |
|
2023 |
|
2023 |
|
2023 |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP Profitability Metrics: |
||||||||||||||||||||
Net income available to common shareholders
|
$ |
45,926 |
|
|
$ |
58,223 |
|
|
$ |
82,953 |
|
|
$ |
44,007 |
|
|
$ |
50,265 |
|
|
Per share amounts: |
|
|
|
|
|
|
|
|
|
|||||||||||
|
Earnings per share - basic |
$ |
1.46 |
|
|
$ |
1.86 |
|
|
$ |
2.65 |
|
|
$ |
1.41 |
|
|
$ |
1.58 |
|
|
Earnings per share - diluted |
$ |
1.40 |
|
|
$ |
1.79 |
|
|
$ |
2.58 |
|
|
$ |
1.39 |
|
|
$ |
1.55 |
|
|
Book value per common share (1) |
$ |
49.29 |
|
|
$ |
47.73 |
|
|
$ |
45.47 |
|
|
$ |
42.16 |
|
|
$ |
41.08 |
|
|
CUBI stock price (1) |
$ |
53.06 |
|
|
$ |
57.62 |
|
|
$ |
34.45 |
|
|
$ |
30.26 |
|
|
$ |
18.52 |
|
|
CUBI stock price as % of book value (1) |
|
108 |
% |
|
|
121 |
% |
|
|
76 |
% |
|
|
72 |
% |
|
|
45 |
% |
Average shares outstanding - basic |
|
31,473,424 |
|
|
|
31,385,043 |
|
|
|
31,290,581 |
|
|
|
31,254,125 |
|
|
|
31,819,203 |
|
|
Average shares outstanding - diluted |
|
32,854,534 |
|
|
|
32,521,787 |
|
|
|
32,175,084 |
|
|
|
31,591,142 |
|
|
|
32,345,017 |
|
|
Shares outstanding (1) |
|
31,521,931 |
|
|
|
31,440,906 |
|
|
|
31,311,254 |
|
|
|
31,282,318 |
|
|
|
31,239,750 |
|
|
Return on average assets (“ROAA”) |
|
0.94 |
% |
|
|
1.16 |
% |
|
|
1.57 |
% |
|
|
0.88 |
% |
|
|
1.03 |
% |
|
Return on average common equity (“ROCE”) |
|
12.08 |
% |
|
|
15.93 |
% |
|
|
23.97 |
% |
|
|
13.22 |
% |
|
|
16.00 |
% |
|
Net interest margin, tax equivalent |
|
3.10 |
% |
|
|
3.31 |
% |
|
|
3.70 |
% |
|
|
3.15 |
% |
|
|
2.96 |
% |
|
Efficiency ratio |
|
54.58 |
% |
|
|
49.08 |
% |
|
|
41.01 |
% |
|
|
49.25 |
% |
|
|
47.71 |
% |
|
Non-GAAP Profitability Metrics (2): |
|
|
|
|
|
|
|
|
|
|||||||||||
Core earnings |
$ |
46,532 |
|
|
$ |
61,633 |
|
|
$ |
83,294 |
|
|
$ |
52,163 |
|
|
$ |
51,143 |
|
|
Core pre-tax pre-provision net income |
$ |
83,674 |
|
|
$ |
101,884 |
|
|
$ |
128,564 |
|
|
$ |
96,833 |
|
|
$ |
89,282 |
|
|
Per share amounts: |
|
|
|
|
|
|
|
|
|
|||||||||||
|
Core earnings per share - diluted |
$ |
1.42 |
|
|
$ |
1.90 |
|
|
$ |
2.59 |
|
|
$ |
1.65 |
|
|
$ |
1.58 |
|
|
Tangible book value per common share (1) |
$ |
49.18 |
|
|
$ |
47.61 |
|
|
$ |
45.36 |
|
|
$ |
42.04 |
|
|
$ |
40.96 |
|
|
CUBI stock price as % of tangible book value (1) |
|
108 |
% |
|
|
121 |
% |
|
|
76 |
% |
|
|
72 |
% |
|
|
45 |
% |
Core ROAA |
|
0.95 |
% |
|
|
1.22 |
% |
|
|
1.57 |
% |
|
|
1.03 |
% |
|
|
1.05 |
% |
|
Core ROCE |
|
12.24 |
% |
|
|
16.87 |
% |
|
|
24.06 |
% |
|
|
15.67 |
% |
|
|
16.28 |
% |
|
Core pre-tax pre-provision ROAA |
|
1.58 |
% |
|
|
1.90 |
% |
|
|
2.32 |
% |
|
|
1.79 |
% |
|
|
1.72 |
% |
|
Core pre-tax pre-provision ROCE |
|
21.01 |
% |
|
|
26.82 |
% |
|
|
36.04 |
% |
|
|
28.01 |
% |
|
|
27.33 |
% |
|
Core efficiency ratio |
|
54.24 |
% |
|
|
46.70 |
% |
|
|
41.04 |
% |
|
|
47.84 |
% |
|
|
47.09 |
% |
|
Asset Quality: |
|
|
|
|
|
|
|
|
|
|||||||||||
Net charge-offs |
$ |
17,968 |
|
|
$ |
17,322 |
|
|
$ |
17,498 |
|
|
$ |
15,564 |
|
|
$ |
18,651 |
|
|
Annualized net charge-offs to average total loans and leases |
|
0.55 |
% |
|
|
0.51 |
% |
|
|
0.50 |
% |
|
|
0.42 |
% |
|
|
0.49 |
% |
|
Non-performing loans (“NPLs”) to total loans and leases (1) |
|
0.27 |
% |
|
|
0.21 |
% |
|
|
0.22 |
% |
|
|
0.20 |
% |
|
|
0.21 |
% |
|
Reserves to NPLs (1) |
|
373.86 |
% |
|
|
499.12 |
% |
|
|
466.11 |
% |
|
|
494.46 |
% |
|
|
405.56 |
% |
|
Non-performing assets (“NPAs”) to total assets |
|
0.17 |
% |
|
|
0.13 |
% |
|
|
0.14 |
% |
|
|
0.13 |
% |
|
|
0.15 |
% |
|
Customers Bank Capital Ratios (3): |
|
|
|
|
|
|
|
|
|
|||||||||||
Common equity Tier 1 capital to risk-weighted assets |
|
14.0 |
% |
|
|
13.77 |
% |
|
|
12.97 |
% |
|
|
11.96 |
% |
|
|
11.31 |
% |
|
Tier 1 capital to risk-weighted assets |
|
14.0 |
% |
|
|
13.77 |
% |
|
|
12.97 |
% |
|
|
11.96 |
% |
|
|
11.31 |
% |
|
Total capital to risk-weighted assets |
|
15.7 |
% |
|
|
15.28 |
% |
|
|
14.45 |
% |
|
|
13.38 |
% |
|
|
12.64 |
% |
|
Tier 1 capital to average assets (leverage ratio) |
|
8.8 |
% |
|
|
8.71 |
% |
|
|
8.25 |
% |
|
|
8.00 |
% |
|
|
8.09 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(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 2024 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, 2024, our regulatory capital ratios reflected 25%, or $15.4 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 |
|||||||||
|
2024 |
|
2023 |
|
2023 |
|
2023 |
|
2023 |
|||||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|||||||||
Loans and leases |
$ |
217,999 |
|
|
$ |
239,453 |
|
|
$ |
271,107 |
|
|
$ |
241,745 |
|
|
$ |
244,212 |
Investment securities |
|
46,802 |
|
|
|
51,074 |
|
|
|
54,243 |
|
|
|
48,026 |
|
|
|
47,316 |
Interest earning deposits |
|
52,817 |
|
|
|
44,104 |
|
|
|
43,800 |
|
|
|
27,624 |
|
|
|
10,395 |
Loans held for sale |
|
12,048 |
|
|
|
8,707 |
|
|
|
4,664 |
|
|
|
11,149 |
|
|
|
11,701 |
Other |
|
2,111 |
|
|
|
2,577 |
|
|
|
2,526 |
|
|
|
1,616 |
|
|
|
1,321 |
Total interest income |
|
331,777 |
|
|
|
345,915 |
|
|
|
376,340 |
|
|
|
330,160 |
|
|
|
314,945 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|||||||||
Deposits |
|
153,725 |
|
|
|
150,307 |
|
|
|
145,825 |
|
|
|
136,375 |
|
|
|
143,930 |
FHLB advances |
|
13,485 |
|
|
|
18,868 |
|
|
|
26,485 |
|
|
|
24,285 |
|
|
|
10,370 |
FRB advances |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,286 |
Subordinated debt |
|
2,689 |
|
|
|
2,688 |
|
|
|
2,689 |
|
|
|
2,689 |
|
|
|
2,689 |
Other borrowings |
|
1,493 |
|
|
|
1,546 |
|
|
|
1,568 |
|
|
|
1,540 |
|
|
|
1,771 |
Total interest expense |
|
171,392 |
|
|
|
173,409 |
|
|
|
176,567 |
|
|
|
164,889 |
|
|
|
165,046 |
Net interest income |
|
160,385 |
|
|
|
172,506 |
|
|
|
199,773 |
|
|
|
165,271 |
|
|
|
149,899 |
Provision for credit losses |
|
17,070 |
|
|
|
13,523 |
|
|
|
17,856 |
|
|
|
23,629 |
|
|
|
19,603 |
Net interest income after provision for credit losses |
|
143,315 |
|
|
|
158,983 |
|
|
|
181,917 |
|
|
|
141,642 |
|
|
|
130,296 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Non-interest income: |
|
|
|
|
|
|
|
|
|
|||||||||
Commercial lease income |
|
9,683 |
|
|
|
9,035 |
|
|
|
8,901 |
|
|
|
8,917 |
|
|
|
9,326 |
Loan fees |
|
5,280 |
|
|
|
5,926 |
|
|
|
6,029 |
|
|
|
4,271 |
|
|
|
3,990 |
Bank-owned life insurance |
|
3,261 |
|
|
|
2,160 |
|
|
|
1,973 |
|
|
|
4,997 |
|
|
|
2,647 |
Mortgage finance transactional fees |
|
946 |
|
|
|
927 |
|
|
|
1,018 |
|
|
|
1,376 |
|
|
|
1,074 |
Gain (loss) on sale of loans |
|
10 |
|
|
|
(91 |
) |
|
|
(348 |
) |
|
|
(761 |
) |
|
|
— |
Loss on sale of capital call lines of credit |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,037 |
) |
|
|
— |
Net gain (loss) on sale of investment securities |
|
(30 |
) |
|
|
(145 |
) |
|
|
(429 |
) |
|
|
— |
|
|
|
— |
Other |
|
2,081 |
|
|
|
860 |
|
|
|
631 |
|
|
|
2,234 |
|
|
|
1,084 |
Total non-interest income |
|
21,231 |
|
|
|
18,672 |
|
|
|
17,775 |
|
|
|
15,997 |
|
|
|
18,121 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Non-interest expense: |
|
|
|
|
|
|
|
|
|
|||||||||
Salaries and employee benefits |
|
36,025 |
|
|
|
33,965 |
|
|
|
33,845 |
|
|
|
33,120 |
|
|
|
32,345 |
Technology, communication and bank operations |
|
21,904 |
|
|
|
16,887 |
|
|
|
15,667 |
|
|
|
16,407 |
|
|
|
16,589 |
Commercial lease depreciation |
|
7,970 |
|
|
|
7,357 |
|
|
|
7,338 |
|
|
|
7,328 |
|
|
|
7,875 |
Professional services |
|
6,353 |
|
|
|
9,820 |
|
|
|
8,569 |
|
|
|
9,192 |
|
|
|
7,596 |
Loan servicing |
|
4,031 |
|
|
|
3,779 |
|
|
|
3,858 |
|
|
|
4,777 |
|
|
|
4,661 |
Occupancy |
|
2,347 |
|
|
|
2,320 |
|
|
|
2,471 |
|
|
|
2,519 |
|
|
|
2,760 |
FDIC assessments, non-income taxes and regulatory fees |
|
13,469 |
|
|
|
13,977 |
|
|
|
8,551 |
|
|
|
9,780 |
|
|
|
2,728 |
Advertising and promotion |
|
682 |
|
|
|
850 |
|
|
|
650 |
|
|
|
546 |
|
|
|
1,049 |
Legal settlement expense |
|
— |
|
|
|
— |
|
|
|
4,096 |
|
|
|
— |
|
|
|
— |
Other |
|
6,388 |
|
|
|
4,812 |
|
|
|
4,421 |
|
|
|
5,628 |
|
|
|
4,530 |
Total non-interest expense |
|
99,169 |
|
|
|
93,767 |
|
|
|
89,466 |
|
|
|
89,297 |
|
|
|
80,133 |
Income before income tax expense |
|
65,377 |
|
|
|
83,888 |
|
|
|
110,226 |
|
|
|
68,342 |
|
|
|
68,284 |
Income tax expense |
|
15,651 |
|
|
|
21,796 |
|
|
|
23,470 |
|
|
|
20,768 |
|
|
|
14,563 |
Net income |
|
49,726 |
|
|
|
62,092 |
|
|
|
86,756 |
|
|
|
47,574 |
|
|
|
53,721 |
Preferred stock dividends |
|
3,800 |
|
|
|
3,869 |
|
|
|
3,803 |
|
|
|
3,567 |
|
|
|
3,456 |
Net income available to common shareholders |
$ |
45,926 |
|
|
$ |
58,223 |
|
|
$ |
82,953 |
|
|
$ |
44,007 |
|
|
$ |
50,265 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per common share |
$ |
1.46 |
|
|
$ |
1.86 |
|
|
$ |
2.65 |
|
|
$ |
1.41 |
|
|
$ |
1.58 |
Diluted earnings per common share |
|
1.40 |
|
|
|
1.79 |
|
|
|
2.58 |
|
|
|
1.39 |
|
|
|
1.55 |
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
|||||||||||||||||||
CONSOLIDATED BALANCE SHEET - UNAUDITED |
|||||||||||||||||||
(Dollars in thousands) |
|||||||||||||||||||
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
||||||||||
|
2024 |
|
2023 |
|
2023 |
|
2023 |
|
2023 |
||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks |
$ |
51,974 |
|
|
$ |
45,210 |
|
|
$ |
68,288 |
|
|
$ |
54,127 |
|
|
$ |
77,251 |
|
Interest earning deposits |
|
3,649,146 |
|
|
|
3,801,136 |
|
|
|
3,351,686 |
|
|
|
3,101,097 |
|
|
|
1,969,434 |
|
Cash and cash equivalents |
|
3,701,120 |
|
|
|
3,846,346 |
|
|
|
3,419,974 |
|
|
|
3,155,224 |
|
|
|
2,046,685 |
|
Investment securities, at fair value |
|
2,604,868 |
|
|
|
2,405,640 |
|
|
|
2,773,207 |
|
|
|
2,824,638 |
|
|
|
2,926,969 |
|
Investment securities held to maturity |
|
1,032,037 |
|
|
|
1,103,170 |
|
|
|
1,178,370 |
|
|
|
1,258,560 |
|
|
|
870,294 |
|
Loans held for sale |
|
357,640 |
|
|
|
340,317 |
|
|
|
150,368 |
|
|
|
78,108 |
|
|
|
424,057 |
|
Loans and leases receivable |
|
11,936,621 |
|
|
|
11,963,855 |
|
|
|
12,600,548 |
|
|
|
12,826,531 |
|
|
|
13,391,610 |
|
Loans receivable, mortgage finance, at fair value |
|
962,610 |
|
|
|
897,912 |
|
|
|
962,566 |
|
|
|
1,006,268 |
|
|
|
1,247,367 |
|
Allowance for credit losses on loans and leases |
|
(133,296 |
) |
|
|
(135,311 |
) |
|
|
(139,213 |
) |
|
|
(139,656 |
) |
|
|
(130,281 |
) |
Total loans and leases receivable, net of allowance for credit losses on loans and leases |
|
12,765,935 |
|
|
|
12,726,456 |
|
|
|
13,423,901 |
|
|
|
13,693,143 |
|
|
|
14,508,696 |
|
FHLB, Federal Reserve Bank, and other restricted stock |
|
100,067 |
|
|
|
109,548 |
|
|
|
126,098 |
|
|
|
126,240 |
|
|
|
124,733 |
|
Accrued interest receivable |
|
120,123 |
|
|
|
114,766 |
|
|
|
123,984 |
|
|
|
119,501 |
|
|
|
123,754 |
|
Bank premises and equipment, net |
|
7,253 |
|
|
|
7,371 |
|
|
|
7,789 |
|
|
|
8,031 |
|
|
|
8,581 |
|
Bank-owned life insurance |
|
293,400 |
|
|
|
292,193 |
|
|
|
291,670 |
|
|
|
290,322 |
|
|
|
339,607 |
|
Goodwill and other intangibles |
|
3,629 |
|
|
|
3,629 |
|
|
|
3,629 |
|
|
|
3,629 |
|
|
|
3,629 |
|
Other assets |
|
361,295 |
|
|
|
366,829 |
|
|
|
358,162 |
|
|
|
471,169 |
|
|
|
374,609 |
|
Total assets |
$ |
21,347,367 |
|
|
$ |
21,316,265 |
|
|
$ |
21,857,152 |
|
|
$ |
22,028,565 |
|
|
$ |
21,751,614 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
||||||||||
Demand, non-interest bearing deposits |
$ |
4,688,880 |
|
|
$ |
4,422,494 |
|
|
$ |
4,758,682 |
|
|
$ |
4,490,198 |
|
|
$ |
3,487,517 |
|
Interest bearing deposits |
|
13,272,503 |
|
|
|
13,497,742 |
|
|
|
13,436,682 |
|
|
|
13,460,233 |
|
|
|
14,236,100 |
|
Total deposits |
|
17,961,383 |
|
|
|
17,920,236 |
|
|
|
18,195,364 |
|
|
|
17,950,431 |
|
|
|
17,723,617 |
|
FHLB advances |
|
1,195,088 |
|
|
|
1,203,207 |
|
|
|
1,529,839 |
|
|
|
2,046,142 |
|
|
|
2,052,143 |
|
Other borrowings |
|
123,905 |
|
|
|
123,840 |
|
|
|
123,775 |
|
|
|
123,710 |
|
|
|
123,645 |
|
Subordinated debt |
|
182,300 |
|
|
|
182,230 |
|
|
|
182,161 |
|
|
|
182,091 |
|
|
|
182,021 |
|
Accrued interest payable and other liabilities |
|
193,074 |
|
|
|
248,358 |
|
|
|
264,406 |
|
|
|
269,539 |
|
|
|
249,168 |
|
Total liabilities |
|
19,655,750 |
|
|
|
19,677,871 |
|
|
|
20,295,545 |
|
|
|
20,571,913 |
|
|
|
20,330,594 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Preferred stock |
|
137,794 |
|
|
|
137,794 |
|
|
|
137,794 |
|
|
|
137,794 |
|
|
|
137,794 |
|
Common stock |
|
35,540 |
|
|
|
35,459 |
|
|
|
35,330 |
|
|
|
35,301 |
|
|
|
35,258 |
|
Additional paid in capital |
|
567,490 |
|
|
|
564,538 |
|
|
|
559,346 |
|
|
|
555,737 |
|
|
|
552,255 |
|
Retained earnings |
|
1,205,508 |
|
|
|
1,159,582 |
|
|
|
1,101,359 |
|
|
|
1,018,406 |
|
|
|
974,399 |
|
Accumulated other comprehensive income (loss), net |
|
(132,305 |
) |
|
|
(136,569 |
) |
|
|
(149,812 |
) |
|
|
(168,176 |
) |
|
|
(156,276 |
) |
Treasury stock, at cost |
|
(122,410 |
) |
|
|
(122,410 |
) |
|
|
(122,410 |
) |
|
|
(122,410 |
) |
|
|
(122,410 |
) |
Total shareholders’ equity |
|
1,691,617 |
|
|
|
1,638,394 |
|
|
|
1,561,607 |
|
|
|
1,456,652 |
|
|
|
1,421,020 |
|
Total liabilities and shareholders’ equity |
$ |
21,347,367 |
|
|
$ |
21,316,265 |
|
|
$ |
21,857,152 |
|
|
$ |
22,028,565 |
|
|
$ |
21,751,614 |
|
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||||||||||||||
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED |
||||||||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||||||||
|
Three Months Ended |
|||||||||||||||||||||||||
|
March 31, 2024 |
|
December 31, 2023 |
|
March 31, 2023 |
|||||||||||||||||||||
|
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 |
$ |
3,865,028 |
|
$ |
52,817 |
|
5.50 |
% |
|
$ |
3,191,677 |
|
$ |
44,104 |
|
5.48 |
% |
|
$ |
914,149 |
|
$ |
10,395 |
|
4.61 |
% |
Investment securities (1) |
|
3,771,097 |
|
|
46,802 |
|
4.99 |
% |
|
|
4,007,418 |
|
|
51,074 |
|
5.10 |
% |
|
|
4,031,247 |
|
|
47,316 |
|
4.69 |
% |
Loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial & industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Specialized lending loans and leases (2) |
|
5,268,345 |
|
|
115,590 |
|
8.82 |
% |
|
|
5,574,149 |
|
|
130,838 |
|
9.31 |
% |
|
|
5,694,168 |
|
|
103,688 |
|
7.38 |
% |
Other commercial & industrial loans (2)(3) |
|
1,654,665 |
|
|
26,714 |
|
6.49 |
% |
|
|
1,666,052 |
|
|
28,053 |
|
6.68 |
% |
|
|
2,594,440 |
|
|
49,121 |
|
7.68 |
% |
Mortgage finance loans |
|
1,033,177 |
|
|
12,830 |
|
4.99 |
% |
|
|
997,353 |
|
|
13,726 |
|
5.46 |
% |
|
|
1,262,139 |
|
|
17,412 |
|
5.59 |
% |
Multifamily loans |
|
2,121,650 |
|
|
21,255 |
|
4.03 |
% |
|
|
2,131,750 |
|
|
22,347 |
|
4.16 |
% |
|
|
2,206,600 |
|
|
20,470 |
|
3.76 |
% |
Non-owner occupied commercial real estate loans |
|
1,348,468 |
|
|
20,179 |
|
6.02 |
% |
|
|
1,392,684 |
|
|
20,686 |
|
5.89 |
% |
|
|
1,449,722 |
|
|
20,199 |
|
5.65 |
% |
Residential mortgages |
|
522,528 |
|
|
5,708 |
|
4.39 |
% |
|
|
526,422 |
|
|
5,942 |
|
4.48 |
% |
|
|
542,909 |
|
|
5,598 |
|
4.18 |
% |
Installment loans |
|
1,179,721 |
|
|
27,771 |
|
9.47 |
% |
|
|
1,198,043 |
|
|
26,568 |
|
8.80 |
% |
|
|
1,727,995 |
|
|
39,425 |
|
9.25 |
% |
Total loans and leases (4) |
|
13,128,554 |
|
|
230,047 |
|
7.05 |
% |
|
|
13,486,453 |
|
|
248,160 |
|
7.30 |
% |
|
|
15,477,973 |
|
|
255,913 |
|
6.70 |
% |
Other interest-earning assets |
|
107,525 |
|
|
2,111 |
|
7.90 |
% |
|
|
116,756 |
|
|
2,577 |
|
8.75 |
% |
|
|
91,308 |
|
|
1,321 |
|
5.87 |
% |
Total interest-earning assets |
|
20,872,204 |
|
|
331,777 |
|
6.39 |
% |
|
|
20,802,304 |
|
|
345,915 |
|
6.61 |
% |
|
|
20,514,677 |
|
|
314,945 |
|
6.21 |
% |
Non-interest-earning assets |
|
463,025 |
|
|
|
|
|
|
449,969 |
|
|
|
|
|
|
538,243 |
|
|
|
|
||||||
Total assets |
$ |
21,335,229 |
|
|
�� |
|
|
$ |
21,252,273 |
|
|
|
|
|
$ |
21,052,920 |
|
|
|
|
||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest checking accounts |
$ |
5,538,846 |
|
$ |
61,531 |
|
4.47 |
% |
|
$ |
5,656,212 |
|
$ |
62,041 |
|
4.35 |
% |
|
$ |
7,494,379 |
|
$ |
70,485 |
|
3.81 |
% |
Money market deposit accounts |
|
3,233,103 |
|
|
36,811 |
|
4.58 |
% |
|
|
2,802,309 |
|
|
29,990 |
|
4.25 |
% |
|
|
2,470,004 |
|
|
20,783 |
|
3.41 |
% |
Other savings accounts |
|
1,753,118 |
|
|
21,399 |
|
4.91 |
% |
|
|
1,218,118 |
|
|
13,849 |
|
4.51 |
% |
|
|
822,312 |
|
|
6,286 |
|
3.10 |
% |
Certificates of deposit |
|
2,750,788 |
|
|
33,984 |
|
4.97 |
% |
|
|
3,625,311 |
|
|
44,427 |
|
4.86 |
% |
|
|
4,504,333 |
|
|
46,376 |
|
4.18 |
% |
Total interest-bearing deposits (5) |
|
13,275,855 |
|
|
153,725 |
|
4.66 |
% |
|
|
13,301,950 |
|
|
150,307 |
|
4.48 |
% |
|
|
15,291,028 |
|
|
143,930 |
|
3.82 |
% |
Federal funds purchased |
|
— |
|
|
— |
|
— |
% |
|
|
— |
|
|
— |
|
— |
% |
|
|
15,333 |
|
|
188 |
|
4.97 |
% |
Borrowings |
|
1,506,707 |
|
|
17,667 |
|
4.72 |
% |
|
|
1,816,047 |
|
|
23,102 |
|
5.05 |
% |
|
|
1,788,116 |
|
|
20,928 |
|
4.75 |
% |
Total interest-bearing liabilities |
|
14,782,562 |
|
|
171,392 |
|
4.66 |
% |
|
|
15,117,997 |
|
|
173,409 |
|
4.55 |
% |
|
|
17,094,477 |
|
|
165,046 |
|
3.91 |
% |
Non-interest-bearing deposits (5) |
|
4,620,986 |
|
|
|
|
|
|
4,270,557 |
|
|
|
|
|
|
2,299,295 |
|
|
|
|
||||||
Total deposits and borrowings |
|
19,403,548 |
|
|
|
3.55 |
% |
|
|
19,388,554 |
|
|
|
3.55 |
% |
|
|
19,393,772 |
|
|
|
3.45 |
% |
|||
Other non-interest-bearing liabilities |
|
264,677 |
|
|
|
|
|
|
276,198 |
|
|
|
|
|
|
247,575 |
|
|
|
|
||||||
Total liabilities |
|
19,668,225 |
|
|
|
|
|
|
19,664,752 |
|
|
|
|
|
|
19,641,347 |
|
|
|
|
||||||
Shareholders’ equity |
|
1,667,004 |
|
|
|
|
|
|
1,587,521 |
|
|
|
|
|
|
1,411,573 |
|
|
|
|
||||||
Total liabilities and shareholders’ equity |
$ |
21,335,229 |
|
|
|
|
|
$ |
21,252,273 |
|
|
|
|
|
$ |
21,052,920 |
|
|
|
|
||||||
Net interest income |
|
|
|
160,385 |
|
|
|
|
|
|
172,506 |
|
|
|
|
|
|
149,899 |
|
|
||||||
Tax-equivalent adjustment |
|
|
|
394 |
|
|
|
|
|
|
398 |
|
|
|
|
|
|
375 |
|
|
||||||
Net interest earnings |
|
|
$ |
160,779 |
|
|
|
|
|
$ |
172,904 |
|
|
|
|
|
$ |
150,274 |
|
|
||||||
Interest spread |
|
|
|
|
2.84 |
% |
|
|
|
|
|
3.06 |
% |
|
|
|
|
|
2.76 |
% |
||||||
Net interest margin |
|
|
|
|
3.09 |
% |
|
|
|
|
|
3.30 |
% |
|
|
|
|
|
2.95 |
% |
||||||
Net interest margin tax equivalent (6) |
|
|
|
|
3.10 |
% |
|
|
|
|
|
3.31 |
% |
|
|
|
|
|
2.96 |
% |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(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 PPP loans. |
||||||||||||||||||||||||||
(4) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees. |
||||||||||||||||||||||||||
(5) Total costs of deposits (including interest bearing and non-interest bearing) were 3.45%, 3.39% and 3.32% for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively. |
||||||||||||||||||||||||||
(6) Tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, presented to approximate interest income as a taxable asset. |
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, |
|||||
|
2024 |
|
2023 |
|
2023 |
|
2023 |
|
2023 |
|||||
Loans and leases held for investment |
|
|
|
|
|
|
|
|
|
|||||
Commercial: |
|
|
|
|
|
|
|
|
|
|||||
Commercial & industrial: |
|
|
|
|
|
|
|
|
|
|||||
Specialized lending |
$ |
5,104,405 |
|
$ |
5,006,693 |
|
$ |
5,422,161 |
|
$ |
5,534,832 |
|
$ |
5,519,176 |
Other commercial & industrial (1) |
|
1,113,517 |
|
|
1,162,317 |
|
|
1,252,427 |
|
|
1,240,908 |
|
|
1,414,419 |
Mortgage finance |
|
1,071,146 |
|
|
1,014,742 |
|
|
1,042,549 |
|
|
1,108,598 |
|
|
1,374,894 |
Multifamily |
|
2,123,675 |
|
|
2,138,622 |
|
|
2,130,213 |
|
|
2,151,734 |
|
|
2,195,211 |
Commercial real estate owner occupied |
|
806,278 |
|
|
797,319 |
|
|
794,815 |
|
|
842,042 |
|
|
895,314 |
Commercial real estate non-owner occupied |
|
1,182,084 |
|
|
1,177,650 |
|
|
1,178,203 |
|
|
1,211,091 |
|
|
1,245,248 |
Construction |
|
185,601 |
|
|
166,393 |
|
|
252,588 |
|
|
212,214 |
|
|
188,123 |
Total commercial loans and leases |
|
11,586,706 |
|
|
11,463,736 |
|
|
12,072,956 |
|
|
12,301,419 |
|
|
12,832,385 |
Consumer: |
|
|
|
|
|
|
|
|
|
|||||
Residential |
|
482,537 |
|
|
484,435 |
|
|
483,133 |
|
|
487,199 |
|
|
494,815 |
Manufactured housing |
|
37,382 |
|
|
38,670 |
|
|
40,129 |
|
|
41,664 |
|
|
43,272 |
Installment: |
|
|
|
|
|
|
|
|
|
|||||
Personal |
|
492,892 |
|
|
555,533 |
|
|
629,843 |
|
|
752,470 |
|
|
849,420 |
Other |
|
299,714 |
|
|
319,393 |
|
|
337,053 |
|
|
250,047 |
|
|
419,085 |
Total installment loans |
|
792,606 |
|
|
874,926 |
|
|
966,896 |
|
|
1,002,517 |
|
|
1,268,505 |
Total consumer loans |
|
1,312,525 |
|
|
1,398,031 |
|
|
1,490,158 |
|
|
1,531,380 |
|
|
1,806,592 |
Total loans and leases held for investment |
$ |
12,899,231 |
|
$ |
12,861,767 |
|
$ |
13,563,114 |
|
$ |
13,832,799 |
|
$ |
14,638,977 |
|
|
|
|
|
|
|
|
|
|
|||||
Loans held for sale |
|
|
|
|
|
|
|
|
|
|||||
Commercial: |
|
|
|
|
|
|
|
|
|
|||||
Multifamily |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
4,051 |
Commercial real estate non-owner occupied |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
16,000 |
Total commercial loans and leases |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
20,051 |
Consumer: |
|
|
|
|
|
|
|
|
|
|||||
Residential |
|
870 |
|
|
1,215 |
|
|
1,005 |
|
|
1,234 |
|
|
821 |
Installment: |
|
|
|
|
|
|
|
|
|
|||||
Personal |
|
137,755 |
|
|
151,040 |
|
|
124,848 |
|
|
76,874 |
|
|
307,336 |
Other |
|
219,015 |
|
|
188,062 |
|
|
24,515 |
|
|
— |
|
|
95,849 |
Total installment loans |
|
356,770 |
|
|
339,102 |
|
|
149,363 |
|
|
76,874 |
|
|
403,185 |
Total consumer loans |
|
357,640 |
|
|
340,317 |
|
|
150,368 |
|
|
78,108 |
|
|
404,006 |
Total loans held for sale |
$ |
357,640 |
|
$ |
340,317 |
|
$ |
150,368 |
|
$ |
78,108 |
|
$ |
424,057 |
|
|
|
|
|
|
|
|
|
|
|||||
Total loans and leases portfolio |
$ |
13,256,871 |
|
$ |
13,202,084 |
|
$ |
13,713,482 |
|
$ |
13,910,907 |
|
$ |
15,063,034 |
(1) Includes PPP loans. |
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||
PERIOD END DEPOSIT COMPOSITION - UNAUDITED |
||||||||||||||
(Dollars in thousands) |
||||||||||||||
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|||||
|
2024 |
|
2023 |
|
2023 |
|
2023 |
|
2023 |
|||||
|
|
|
|
|
|
|
|
|
|
|||||
Demand, non-interest bearing |
$ |
4,688,880 |
|
$ |
4,422,494 |
|
$ |
4,758,682 |
|
$ |
4,490,198 |
|
$ |
3,487,517 |
Demand, interest bearing |
|
5,661,775 |
|
|
5,580,527 |
|
|
5,824,410 |
|
|
5,551,037 |
|
|
5,791,302 |
Total demand deposits |
|
10,350,655 |
|
|
10,003,021 |
|
|
10,583,092 |
|
|
10,041,235 |
|
|