CUBI 8-K
Customers Bancorp, Inc. (CUBI)
8-K
2023-01-25
For: 2023-01-25
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Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): January 25, 2023
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (Commission File number) | (IRS Employer Identification No.) | ||||||
(Address of principal executive offices, including zip code)
(610 ) 933-2000
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instructions A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(g) of the Act:
| Title of Each Class | Trading Symbols | Name of Each Exchange on which Registered | ||||||||||||
Preferred Stock, Series E, par value $1.00 per share | ||||||||||||||
Preferred Stock, Series F, par value $1.00 per share | ||||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On January 25, 2023 , Customers Bancorp, Inc. (the "Company") issued a press release announcing unaudited financial information for the quarter ended December 31, 2022, a copy of which is included as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
Item 7.01 Regulation FD Disclosure
The Company has posted to its website a slide presentation which is attached hereto as Exhibit 99.2 to this Current Report on Form 8-K and incorporated into this Item 7.01 by reference.
The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto and incorporated by reference into Item 2.02 and Item 7.01, respectively, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, such information, including the exhibits attached hereto, shall not be deemed incorporated by reference into any of the Company's reports or filings with the SEC, whether made before or after the date hereof, except as expressly set forth by specific reference in such report or filing. The information in this Current Report on Form 8-K, including the exhibits attached hereto, shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
| Exhibit | Description | |||||||
| Press Release dated January 25, 2023 | ||||||||
| Slide presentation dated January 2023 | ||||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| CUSTOMERS BANCORP, INC. | |||||
By: /s/ Carla A. Leibold | |||||
| Name: Carla A. Leibold | |||||
| Title: Executive Vice President - Chief Financial Officer | |||||
Date: January 25, 2023
EXHIBIT INDEX
| Exhibit No. | Description | |||||||
| Press Release dated January 25, 2023 | ||||||||
| Slide presentation dated January 2023 | ||||||||
Exhibit 99.1
Customers Bancorp, Inc. (NYSE:CUBI)
701 Reading Avenue
West Reading, PA 19611
Contact:
David W. Patti, Communications Director 610-451-9452
David W. Patti, Communications Director 610-451-9452
Customers Bancorp Reports Results for Full Year and Fourth Quarter 2022
Full Year 2022 Highlights
•2022 net income available to common shareholders was $218.4 million, or $6.51 per diluted share; ROAA was 1.13% and ROCE was 17.40%.
•2022 core earnings* were $256.4 million, or $7.63 per diluted share; Core ROAA* was 1.32% and Core ROCE* was 20.43%.
•2022 core earnings excluding Paycheck Protection Program* ("PPP") were $218.7 million, or $6.51 per diluted share, up 46.2% over 2021. This included a pre-tax provision release of $36.8 million, or $0.86 per diluted share, from the sale of $500.0 million of consumer installment loans in Q3 2022, and other full year 2022 core earnings (excluding PPP)* of $5.65.
•2022 adjusted pre-tax pre-provision net income* was $400.7 million; adjusted pre-tax pre-provision ROAA* was 1.99%; adjusted pre-tax pre-provision ROCE* was 31.16%.
•Year-over-year loan growth was $1.2 billion, or 8.4%. Year-over-year loan growth excluding PPP* was $3.5 billion, or 30.7%, led by our low-risk variable rate corporate and specialty lending verticals.
•Year-over-year deposit growth was $1.4 billion, up 8.2%.
•2022 net interest margin, tax equivalent was 3.19%. 2022 net interest margin, tax equivalent, excluding the impact of PPP loans* was 3.16%.
•2022 provision for credit losses on loans and leases of $59.5 million was largely driven by the impact of loan growth, net of the sale of consumer installment loans in Q3 2022, the recognition of weaker macroeconomic forecasts, and certain one-time charge-offs.
•Non-performing assets were $30.8 million, or 0.15% of total assets, at December 31, 2022 compared to $49.8 million, or 0.25% of total assets, at December 31, 2021. Allowance for credit losses on loans and leases equaled 426% of non-performing loans at December 31, 2022, compared to 278% at December 31, 2021.
•Book value per share and tangible book value per share* grew year over year by $1.76 or 4.7%, despite increased AOCI losses of $158.1 million over the same time period. Tangible book value per share* has grown by 77.9% over the past 5 years, significantly higher than the industry average of 2% for mid-cap banks (1).
•Repurchased 830,145 common shares for $33.2 million in 2022, leaving 1.9 million of common shares authorized to be repurchased by September 2023.
*Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. | ||||||||||||||
| (1) Mid-cap banks as reported by KRX Index. | ||||||||||||||
1
Fourth Quarter 2022 Highlights
•Q4 2022 net income available to common shareholders was $25.6 million, or $0.77 per diluted share; ROAA was 0.55% and ROCE was 8.05%.
•Q4 2022 core earnings* were $39.4 million, or $1.19 per diluted share; Core ROAA* was 0.81% and Core ROCE* was 12.36%.
•Q4 2022 core earnings (excluding PPP)* were $45.3 million, or $1.37 per diluted share, up 22.9% over Q4 2021.
•Q4 2022 adjusted pre-tax pre-provision net income* was $81.4 million; adjusted pre-tax pre-provision ROAA* was 1.56%; adjusted pre-tax pre-provision ROCE* was 24.59%.
•Q4 2022 loan growth was $458.0 million, or 3.0%. Q4 2022 loan growth excluding PPP* was $614.5 million, or 4.3%, led by our low-risk variable rate corporate and specialty lending verticals.
•Q4 2022 deposit growth was $634.5 million, or 3.6%.
•Q4 2022 net interest margin, tax equivalent was 2.67%. Q4 2022 net interest margin, tax equivalent, excluding the impact of PPP loans* was 2.87%.
•Q4 2022 provision for credit losses on loans and leases of $27.9 million was largely driven by the impact of loan growth, the recognition of weaker macroeconomic forecasts, and one-time charge-offs of $11.0 million for loans originated pursuant to the PPP program.
•Non-performing assets were $30.8 million, or 0.15% of total assets, at December 31, 2022 compared to $28.0 million, or 0.14% of total assets, at September 30, 2022. Allowance for credit losses on loans and leases equaled 426% of non-performing loans at December 31, 2022, compared to 466% at September 30, 2022.
•Q4 2022 book value per share and tangible book value per share* grew by $0.62 or 1.6%, despite increased AOCI losses of $7.0 million over the same time period.
•Repurchased 166,000 common shares for $5.3 million in Q4 2022.
CEO Commentary
West Reading, PA, January 25, 2023 - “We delivered another solid quarter and are extremely pleased with our 2022 results despite the challenging interest rate and economic environment,” said Customers Bancorp Chairman and CEO, Jay Sidhu. “Our Q4 2022 GAAP earnings were negatively impacted by after-tax securities net losses of $13.5 million, or $0.41 per diluted share, which will benefit net interest margin in the short-term and has an earn back of roughly one year as well as after-tax net losses on PPP loans of $6.0 million, or $0.18 per diluted share. However, we are very pleased to report that Q4 2022 earnings from the core bank* were $1.37 per diluted share, beating internal targets and estimates, and bringing full year 2022 core earnings (excluding PPP)* per share to $6.51. Our responsible organic growth strategy is laser focused on credit quality with 90% of our growth in low credit risk verticals. We have taken prudent risk management strategic actions over the past several quarters to ensure we are well positioned from a capital, credit, liquidity and earnings perspective especially as we head into a highly uncertain 2023. We are also pleased to report that we beat the upper end of our 2022 core earnings per share, excluding PPP* target of $4.75 - $5.00 by 13%, even before considering the Q3 2022 pre-tax provision release of $36.8 million. Core loan* growth in 2022 was led by increases in low-risk variable rate specialty lending verticals of $3.0 billion. Asset quality remains exceptional and credit reserves are extremely robust at 426% of total non-performing loans. Our loan and deposit pipelines remain strong and we are very focused on improving our margins, moderating our growth, controlling our expenses, actively buying back common shares to the extent we are trading below book value, and creating exceptional value for our shareholders. We remain very optimistic about our future,” Mr. Jay Sidhu continued.
2
Core earnings excluding PPP* for Q4 2022 were $45.3 million, or $1.37 per diluted share, calculated as shown below.
| (Dollars in thousands, except per share data) | USD | Per share | |||||||||
| GAAP net income available to shareholders | $ | 25,623 | $ | 0.77 | |||||||
| Less: PPP net loss, after-tax | (5,956) | (0.18) | |||||||||
| GAAP net income to common shareholders, excluding PPP | 31,579 | 0.95 | |||||||||
| Losses on investment securities | 13,543 | 0.41 | |||||||||
| Derivative credit valuation adjustment | 202 | 0.01 | |||||||||
| Core earnings, excluding PPP | $ | 45,324 | $ | 1.37 | |||||||
3
Financial Highlights
(Dollars in thousands, except per share data) | At or Three Months Ended | Increase (Decrease) | Twelve Months Ended | Increase (Decrease) | ||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Profitability Metrics: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income available for common shareholders | $ | 25,623 | $ | 98,647 | $ | (73,024) | (74.0) | % | $ | 218,402 | $ | 300,134 | $ | (81,732) | (27.2) | % | ||||||||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 0.77 | $ | 2.87 | $ | (2.10) | (73.2) | % | $ | 6.51 | $ | 8.91 | $ | (2.40) | (26.9) | % | ||||||||||||||||||||||||||||||||||
| Core earnings* | $ | 39,368 | $ | 101,213 | $ | (61,845) | (61.1) | % | $ | 256,415 | $ | 344,700 | $ | (88,285) | (25.6) | % | ||||||||||||||||||||||||||||||||||
| Core earnings per share* | $ | 1.19 | $ | 2.95 | $ | (1.76) | (59.7) | % | $ | 7.63 | $ | 10.23 | $ | (2.60) | (25.4) | % | ||||||||||||||||||||||||||||||||||
| Core earnings, excluding PPP* | $ | 45,324 | $ | 36,890 | $ | 8,434 | 22.9 | % | $ | 218,746 | $ | 149,650 | $ | 69,096 | 46.2 | % | ||||||||||||||||||||||||||||||||||
| Core earnings per share, excluding PPP* | $ | 1.37 | $ | 1.07 | $ | 0.30 | 28.0 | % | $ | 6.51 | $ | 4.44 | $ | 2.07 | 46.6 | % | ||||||||||||||||||||||||||||||||||
| Return on average assets ("ROAA") | 0.55 | % | 2.08 | % | (1.53) | 1.13 | % | 1.64 | % | (0.51) | ||||||||||||||||||||||||||||||||||||||||
| Core ROAA* | 0.81 | % | 2.13 | % | (1.32) | 1.32 | % | 1.86 | % | (0.54) | ||||||||||||||||||||||||||||||||||||||||
| Core ROAA, excluding PPP* | 0.93 | % | 0.80 | % | 0.13 | 1.14 | % | 0.84 | % | 0.30 | ||||||||||||||||||||||||||||||||||||||||
| Return on average common equity ("ROCE") | 8.05 | % | 33.18 | % | (25.13) | 17.40 | % | 28.75 | % | (11.35) | ||||||||||||||||||||||||||||||||||||||||
| Core ROCE* | 12.36 | % | 34.04 | % | (21.68) | 20.43 | % | 33.02 | % | (12.59) | ||||||||||||||||||||||||||||||||||||||||
| Adjusted pre-tax pre-provision net income* | $ | 81,377 | $ | 130,595 | $ | (49,218) | (37.7) | % | $ | 400,712 | $ | 471,046 | $ | (70,334) | (14.9) | % | ||||||||||||||||||||||||||||||||||
| Adjusted pre-tax pre-provision net income ROAA, excluding PPP* | 1.67 | % | 1.37 | % | 0.30 | 1.81 | % | 1.44 | % | 0.37 | ||||||||||||||||||||||||||||||||||||||||
| Net interest margin, tax equivalent | 2.67 | % | 4.14 | % | (1.47) | 3.19 | % | 3.70 | % | (0.51) | ||||||||||||||||||||||||||||||||||||||||
| Net interest margin, tax equivalent, excluding PPP loans* | 2.87 | % | 3.12 | % | (0.25) | 3.16 | % | 3.16 | % | — | ||||||||||||||||||||||||||||||||||||||||
| Loan yield | 5.64 | % | 5.48 | % | 0.16 | 5.00 | % | 4.73 | % | 0.27 | ||||||||||||||||||||||||||||||||||||||||
| Loan yield, excluding PPP* | 5.86 | % | 4.41 | % | 1.45 | 5.05 | % | 4.37 | % | 0.68 | ||||||||||||||||||||||||||||||||||||||||
| Cost of deposits | 2.73 | % | 0.36 | % | 2.37 | 1.31 | % | 0.44 | % | 0.87 | ||||||||||||||||||||||||||||||||||||||||
| Efficiency ratio | 49.20 | % | 38.70 | % | 10.50 | 44.81 | % | 40.38 | % | 4.43 | ||||||||||||||||||||||||||||||||||||||||
| Core efficiency ratio* | 49.12 | % | 38.14 | % | 10.98 | 43.02 | % | 37.54 | % | 5.48 | ||||||||||||||||||||||||||||||||||||||||
| Balance Sheet Trends: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 20,896,112 | $ | 19,575,028 | $ | 1,321,084 | 6.7 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total assets, excluding PPP* | $ | 19,897,959 | $ | 16,325,020 | $ | 3,572,939 | 21.9 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | 15,794,671 | $ | 14,568,885 | $ | 1,225,786 | 8.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases, excluding PPP* | $ | 14,796,518 | $ | 11,318,877 | $ | 3,477,641 | 30.7 | % | ||||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing demand deposits | $ | 1,885,045 | $ | 4,459,790 | $ | (2,574,745) | (57.7) | % | ||||||||||||||||||||||||||||||||||||||||||
| Total deposits | $ | 18,156,953 | $ | 16,777,924 | $ | 1,379,029 | 8.2 | % | ||||||||||||||||||||||||||||||||||||||||||
| Capital Metrics: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity | $ | 1,265,167 | $ | 1,228,423 | $ | 36,744 | 3.0 | % | ||||||||||||||||||||||||||||||||||||||||||
| Tangible Common Equity* | $ | 1,261,538 | $ | 1,224,687 | $ | 36,851 | 3.0 | % | ||||||||||||||||||||||||||||||||||||||||||
| Common Equity to Total Assets | 6.05 | % | 6.28 | % | (0.23) | |||||||||||||||||||||||||||||||||||||||||||||
| Tangible Common Equity to Tangible Assets* | 6.04 | % | 6.26 | % | (0.22) | |||||||||||||||||||||||||||||||||||||||||||||
| Tangible Common Equity to Tangible Assets, excluding PPP* | 6.34 | % | 7.50 | % | (1.16) | |||||||||||||||||||||||||||||||||||||||||||||
| Book Value per common share | $ | 39.08 | $ | 37.32 | $ | 1.76 | 4.7 | % | ||||||||||||||||||||||||||||||||||||||||||
| Tangible Book Value per common share* | $ | 38.97 | $ | 37.21 | $ | 1.76 | 4.7 | % | ||||||||||||||||||||||||||||||||||||||||||
Common equity Tier 1 capital ratio (1) | 9.5 | % | 10.0 | % | (0.5) | |||||||||||||||||||||||||||||||||||||||||||||
Total risk based capital ratio (1) | 12.0 | % | 12.9 | % | (0.9) | |||||||||||||||||||||||||||||||||||||||||||||
(1) Regulatory capital ratios as of December 31, 2022 are estimates. | ||||||||||||||||||||||||||||||||||||||||||||||||||
*Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. | ||||||||||||||||||||||||||||||||||||||||||||||||||
4
Paycheck Protection Program (PPP)
We funded, either directly or indirectly, about 358,000 loans totaling $10.3 billion. Through the program, we earned close to $350 million of deferred origination fees from the SBA, which was significantly accretive to our earnings and capital levels as these loans were forgiven by the government. In Q4 2022, we recognized only $4 million of these fees in earnings as forgiveness levels were slower than expected, bringing total fees recognized to date to $322 million, and $26 million remaining to be recognized in 2023. "As we've stated previously, it is difficult to predict the timing of PPP forgiveness. We expect most of the fees to be recognized over the next two quarters; however, because we fully paid off the FRB PPP liquidity facility in third quarter 2021, these loans are currently being funded with higher cost funding, reducing their short-term profitability. This was particularly evident in Q4 2022 as higher PPP-related expenses resulted in a total negative impact to Q4 2022 earnings of $0.18 per diluted share. This included negative net interest income of $2.8 million resulting from higher funding costs, $11.0 million of one-time charge-offs increasing provision expense, and a $7.5 million gain resulting from a legal settlement with one of our third party PPP service providers. These one-time charge-offs are before the impact of any contractual indemnities or recoveries we may receive in future periods," commented Customers Bancorp CFO, Carla Leibold.
Key Balance Sheet Trends
Loans and Leases
The following table presents the composition of total loans and leases as of the dates indicated:
| (Dollars in thousands) | December 31, 2022 | % of Total | September 30, 2022 | % of Total | December 31, 2021 | % of Total | |||||||||||||||||||||||||||||
| Commercial: | |||||||||||||||||||||||||||||||||||
| Commercial & industrial: | |||||||||||||||||||||||||||||||||||
| Specialty lending | $ | 5,412,887 | 34.3 | % | $ | 5,103,974 | 33.3 | % | $ | 2,403,991 | 16.5 | % | |||||||||||||||||||||||
| Other commercial & industrial | 1,135,336 | 7.2 | 1,064,332 | 7.0 | 942,679 | 6.5 | |||||||||||||||||||||||||||||
| Multifamily | 2,217,098 | 14.0 | 2,267,376 | 14.8 | 1,486,308 | 10.2 | |||||||||||||||||||||||||||||
| Loans to mortgage companies | 1,447,919 | 9.2 | 1,708,587 | 11.1 | 2,362,438 | 16.2 | |||||||||||||||||||||||||||||
| Commercial real estate owner occupied | 885,339 | 5.6 | 726,670 | 4.7 | 654,922 | 4.5 | |||||||||||||||||||||||||||||
| Loans receivable, PPP | 998,153 | 6.3 | 1,154,632 | 7.5 | 3,250,008 | 22.3 | |||||||||||||||||||||||||||||
| Commercial real estate non-owner occupied | 1,290,730 | 8.2 | 1,263,211 | 8.2 | 1,121,238 | 7.7 | |||||||||||||||||||||||||||||
| Construction | 162,009 | 1.0 | 136,133 | 0.9 | 198,981 | 1.4 | |||||||||||||||||||||||||||||
| Total commercial loans and leases | 13,549,471 | 85.8 | 13,424,915 | 87.5 | 12,420,565 | 85.3 | |||||||||||||||||||||||||||||
| Consumer: | |||||||||||||||||||||||||||||||||||
| Residential | 498,781 | 3.1 | 466,888 | 3.0 | 350,984 | 2.4 | |||||||||||||||||||||||||||||
| Manufactured housing | 45,076 | 0.3 | 46,990 | 0.3 | 52,861 | 0.3 | |||||||||||||||||||||||||||||
| Installment: | |||||||||||||||||||||||||||||||||||
| Personal | 1,306,376 | 8.3 | 1,056,432 | 6.9 | 1,392,862 | 9.6 | |||||||||||||||||||||||||||||
| Other | 394,967 | 2.5 | 341,463 | 2.3 | 351,613 | 2.4 | |||||||||||||||||||||||||||||
| Total consumer loans | 2,245,200 | 14.2 | 1,911,773 | 12.5 | 2,148,320 | 14.7 | |||||||||||||||||||||||||||||
| Total loans and leases | $ | 15,794,671 | 100.0 | % | $ | 15,336,688 | 100.0 | % | $ | 14,568,885 | 100.0 | % | |||||||||||||||||||||||
Commercial and industrial ("C&I") loans and leases, including specialty lending, increased $3.2 billion, or 95.7% year-over-year, to $6.5 billion. Practically all of the increases in outstanding balances were in the low-risk variable rate secured categories of Capital Call Lines and Lender Finance (collectively referred to as Fund Finance). Multifamily loans increased $730.8 million, or 49.2%, to $2.2 billion, commercial real estate owner occupied loans increased $230.4 million, or 35.2%, to $885.3 million, commercial real estate non-owner occupied loans increased $169.5 million, or 15.1% to $1.3 billion and residential loans increased $147.8 million, or 42.1%, to $498.8 million year-over-year. These increases in loans and leases were partially offset by a decrease in total consumer installment loans of $43.1 million, or 2.5%, to $1.7 billion primarily due to the sale of $500.0 million of consumer installment loans in Q3 2022 offsetting new originations and originations and purchases of certain consumer installment loans with the intent to sell and a decrease in construction loans of $37.0 million, or 18.6%, to $162.0 million.
5
Allowance for Credit Losses on Loans and Leases
| At or Three Months Ended | Increase (Decrease) | At or Three Months Ended | Increase (Decrease) | ||||||||||||||||||||||||||||||||
| (Dollars in thousands) | December 31, 2022 | September 30, 2022 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||
| Allowance for credit losses on loans and leases | $ | 130,924 | $ | 130,197 | $ | 727 | $ | 130,924 | $ | 137,804 | $ | (6,880) | |||||||||||||||||||||||
| Provision (benefit) for credit losses on loans and leases | $ | 27,891 | $ | (7,836) | $ | 35,727 | $ | 27,891 | $ | 13,890 | $ | 14,001 | |||||||||||||||||||||||
| Net charge-offs (recoveries) from loans held for investment | $ | 27,164 | $ | 18,497 | $ | 8,667 | $ | 27,164 | $ | 7,582 | $ | 19,582 | |||||||||||||||||||||||
| Annualized net charge-offs (recoveries) to average loans and leases | 0.70 | % | 0.47 | % | 0.70 | % | 0.21 | % | |||||||||||||||||||||||||||
| Coverage of credit loss reserves for loans and leases held for investment | 0.93 | % | 0.95 | % | 0.93 | % | 1.12 | % | |||||||||||||||||||||||||||
| Coverage of credit loss reserves for loans and leases held for investment, excluding PPP* | 1.00 | % | 1.03 | % | 1.00 | % | 1.53 | % | |||||||||||||||||||||||||||
*Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. | |||||||||||||||||||||||||||||||||||
The increase in net charge-offs in Q4 2022 compared to Q3 2022 was primarily due to one-time charge-offs of $11.0 million for certain loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and were deemed uncollectible.
Provision (Benefit) for Credit Losses
| Three Months Ended | Increase (Decrease) | Three Months Ended | Increase (Decrease) | |||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | December 31, 2022 | September 30, 2022 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Provision (benefit) for credit losses on loans and leases | $ | 27,891 | $ | (7,836) | $ | 35,727 | $ | 27,891 | $ | 13,890 | $ | 14,001 | ||||||||||||||||||||||||||
| Provision (benefit) for credit losses on available for sale debt securities | 325 | (158) | 483 | 325 | — | 325 | ||||||||||||||||||||||||||||||||
| Provision (benefit) for credit losses | 28,216 | (7,994) | 36,210 | 28,216 | 13,890 | 14,326 | ||||||||||||||||||||||||||||||||
| Provision (benefit) for credit losses on unfunded commitments | 153 | 254 | (101) | 153 | 352 | (199) | ||||||||||||||||||||||||||||||||
| Total provision (benefit) for credit losses | $ | 28,369 | $ | (7,740) | $ | 36,109 | $ | 28,369 | $ | 14,242 | $ | 14,127 | ||||||||||||||||||||||||||
The provision for credit losses on loans and leases in Q4 2022 was $27.9 million, compared to a benefit to provision of $7.8 million in Q3 2022. The provision in Q4 2022 was primarily due to loan growth, one-time charge-offs of $11.0 million for certain loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and ultimately deemed uncollectible and our recognition of weaker macroeconomic forecasts, as compared to a benefit to provision in Q3 2022 primarily from the sale of $500.0 million of consumer installment loans in connection with the Company's balance sheet optimization initiatives. The sale transaction resulted in approximately $36.8 million of release in allowance for credit losses in Q3 2022, which was included in core earnings* and contributed approximately $0.86 per diluted share. The provision for credit losses on available for sale investment securities in Q4 2022 was $0.3 million compared to a benefit to provision of $0.2 million in Q3 2022.
The provision for credit losses on loans and leases in Q4 2022 was $27.9 million, compared to a provision of $13.9 million in Q4 2021. The provision in Q4 2022 was primarily due to loan growth, one-time charge-offs of $11.0 million for certain loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and ultimately deemed uncollectible and our recognition of weaker macroeconomic forecasts. The provision for credit losses on available for sale investment securities in Q4 2022 was $0.3 million compared to no provision in Q4 2021.
6
Asset Quality
The following table presents asset quality metrics as of the dates indicated:
| (Dollars in thousands) | December 31, 2022 | September 30, 2022 | Increase (Decrease) | December 31, 2022 | December 31, 2021 | Increase (Decrease) | |||||||||||||||||||||||||||||
| Non-performing assets ("NPAs"): | |||||||||||||||||||||||||||||||||||
| Nonaccrual / non-performing loans ("NPLs") | $ | 30,737 | $ | 27,919 | $ | 2,818 | $ | 30,737 | $ | 49,620 | $ | (18,883) | |||||||||||||||||||||||
| Non-performing assets | $ | 30,783 | $ | 27,965 | $ | 2,818 | $ | 30,783 | $ | 49,760 | $ | (18,977) | |||||||||||||||||||||||
NPLs to total loans and leases | 0.19 | % | 0.18 | % | 0.19 | % | 0.34 | % | |||||||||||||||||||||||||||
Reserves to NPLs | 425.95 | % | 466.34 | % | 425.95 | % | 277.72 | % | |||||||||||||||||||||||||||
| NPAs to total assets | 0.15 | % | 0.14 | % | 0.15 | % | 0.25 | % | |||||||||||||||||||||||||||
| Loans and leases risk ratings: | |||||||||||||||||||||||||||||||||||
Commercial loans and leases (1) | |||||||||||||||||||||||||||||||||||
| Pass | $ | 10,793,980 | $ | 10,262,647 | $ | 531,333 | $ | 10,793,980 | $ | 6,389,228 | $ | 4,404,752 | |||||||||||||||||||||||
| Special Mention | 138,829 | 104,560 | 34,269 | 138,829 | 230,065 | (91,236) | |||||||||||||||||||||||||||||
| Substandard | 291,118 | 329,878 | (38,760) | 291,118 | 266,939 | 24,179 | |||||||||||||||||||||||||||||
| Total commercial loans and leases | 11,223,927 | 10,697,085 | 526,842 | 11,223,927 | 6,886,232 | 4,337,695 | |||||||||||||||||||||||||||||
| Consumer loans | |||||||||||||||||||||||||||||||||||
| Performing | 1,899,376 | 1,893,977 | 5,399 | 1,899,376 | 2,114,950 | (215,574) | |||||||||||||||||||||||||||||
| Non-performing | 21,591 | 16,680 | 4,911 | 21,591 | 17,116 | 4,475 | |||||||||||||||||||||||||||||
| Total consumer loans | 1,920,967 | 1,910,657 | 10,310 | 1,920,967 | 2,132,066 | (211,099) | |||||||||||||||||||||||||||||
| Loans and leases receivable | $ | 13,144,894 | $ | 12,607,742 | $ | 537,152 | $ | 13,144,894 | $ | 9,018,298 | $ | 4,126,596 | |||||||||||||||||||||||
(1) Excludes loan receivable, PPP, as eligible PPP loans are fully guaranteed by the Small Business Administration.
Over the last decade, we have developed a suite of commercial loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s C&I, loans to mortgage companies, corporate and specialty lending lines of business, and multifamily loans for example, are characterized by conservative underwriting standards and low loss rates. Because of this emphasis, the Bank’s credit quality to date has been incredibly healthy despite an adverse economic environment. Maintaining strong asset quality also requires a highly active portfolio monitoring process. In addition to frequent client outreach and monitoring at the individual loan level, we employ a bottom-up data driven approach to analyze the commercial portfolio. Exposure to industry segments and CRE significantly impacted by COVID-19 initially is not substantial.
Total consumer installment loans were approximately 8.1% of total assets at December 31, 2022, 10.8% of total loans and leases and 11.5% of core loans*, and were supported by an allowance for credit losses of $68.7 million. At December 31, 2022, our consumer installment portfolio had the following characteristics: average original FICO score of 740, average debt-to-income of 19.0% and average borrower income of $107 thousand.
Non-performing loans at December 31, 2022 were essentially flat at 0.19% of total loans and leases, compared to 0.18% at September 30, 2022 and 0.34% at December 31, 2021.
Deposits
The following table presents the composition of our deposit portfolio as of the dates indicated:
| (Dollars in thousands) | December 31, 2022 | % of Total | September 30, 2022 | % of Total | December 31, 2021 | % of Total | |||||||||||||||||||||||||||||
| Demand, non-interest bearing | $ | 1,885,045 | 10.4 | % | $ | 2,993,793 | 17.1 | % | $ | 4,459,790 | 26.6 | % | |||||||||||||||||||||||
| Demand, interest bearing | 8,476,027 | 46.7 | 7,124,663 | 40.7 | 6,488,406 | 38.7 | |||||||||||||||||||||||||||||
| Total demand deposits | 10,361,072 | 57.1 | 10,118,456 | 57.8 | 10,948,196 | 65.3 | |||||||||||||||||||||||||||||
| Savings | 811,798 | 4.5 | 592,002 | 3.4 | 973,317 | 5.8 | |||||||||||||||||||||||||||||
| Money market | 2,734,217 | 15.1 | 4,913,967 | 28.0 | 4,349,073 | 25.9 | |||||||||||||||||||||||||||||
| Time deposits | 4,249,866 | 23.3 | 1,898,013 | 10.8 | 507,338 | 3.0 | |||||||||||||||||||||||||||||
| Total deposits | $ | 18,156,953 | 100.0 | % | $ | 17,522,438 | 100.0 | % | $ | 16,777,924 | 100.0 | % | |||||||||||||||||||||||
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Total deposits increased $1.4 billion, or 8.2%, to $18.2 billion at December 31, 2022 as compared to a year ago. Time deposits increased $3.7 billion, or 737.7%, to $4.2 billion. This increase was offset partially by decreases in money market deposits of $1.6 billion, or 37.1%, to $2.7 billion, total demand deposits of $587.1 million, or 5.4%, to $10.4 billion and savings deposits of $161.5 million, or 16.6%, to $811.8 million. The total cost of deposits increased by 237 basis points to 2.73% in Q4 2022 from 0.36% in the prior year primarily due to higher market interest rates and a shift in deposit mix.
Capital
The following table presents certain capital amounts and ratios as of the dates indicated:
| (Dollars in thousands except per share data) | December 31, 2022 | September 30, 2022 | December 31, 2021 | ||||||||||||||
| Customers Bancorp, Inc. | |||||||||||||||||
| Common Equity | $ | 1,265,167 | $ | 1,249,137 | $ | 1,228,423 | |||||||||||
| Tangible Common Equity* | $ | 1,261,538 | $ | 1,245,508 | $ | 1,224,687 | |||||||||||
| Common Equity to Total Assets | 6.05 | % | 6.13 | % | 6.28 | % | |||||||||||
| Tangible Common Equity to Tangible Assets* | 6.04 | % | 6.12 | % | 6.26 | % | |||||||||||
| Tangible Common Equity to Tangible Assets, excluding PPP* | 6.34 | % | 6.48 | % | 7.50 | % | |||||||||||
| Book Value per common share | $ | 39.08 | $ | 38.46 | $ | 37.32 | |||||||||||
| Tangible Book Value per common share* | $ | 38.97 | $ | 38.35 | $ | 37.21 | |||||||||||
Common equity Tier 1 capital ratio (1) | 9.5 | % | 9.8 | % | 10.0 | % | |||||||||||
Total risk based capital ratio (1) | 12.0 | % | 12.5 | % | 12.9 | % | |||||||||||
(1) Regulatory capital ratios as of December 31, 2022 are estimates. | |||||||||||||||||
*Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. | |||||||||||||||||
Customers Bancorp's common equity increased $36.7 million to $1.3 billion, and tangible common equity* increased $36.9 million to $1.3 billion at December 31, 2022 compared to a year ago, respectively, as earnings of $218.4 million more than offset a negative impact to accumulated other comprehensive income ("AOCI") from increased unrealized losses on investment securities of $158.1 million (net of taxes). Similarly, book value per common share increased to $39.08 from $37.32, and tangible book value per common share* increased to $38.97 at December 31, 2022 from $37.21 at December 31, 2021, respectively. Customers remains well capitalized by all regulatory measures.
At the Customers Bancorp level, the total risk based capital ratio (estimate), common equity to total assets ratio and tangible common equity to tangible assets ratio ("TCE ratio"), excluding PPP loans*, were 12.0%, 6.05% and 6.34%, respectively, at December 31, 2022.
At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At December 31, 2022, estimated Tier 1 capital and total risk-based capital were 11.1% and 12.2%, respectively.
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Key Profitability Trends
Net Interest Income
Net interest income totaled $135.1 million in Q4 2022, a decrease of $23.9 million from Q3 2022, primarily due to lower PPP net interest income of $12.4 million resulting from reduced recognition of deferred fees of $7.0 million driven by lower loan forgiveness in Q4 2022 and increased funding costs of $5.0 million, reflecting increases in funding rates. Net interest income earned by the core bank* decreased $11.5 million over Q3 2022, reflecting the $500.0 million consumer loan sale in Q3 2022, higher funding costs, and shift in funding mix. The increase in interest income on investment securities and core loans* of $12.4 million and $25.7 million, respectively, mostly due to higher interest rates on variable loans in specialty lending, were offset by higher expenses paid on deposits, fed funds, FHLB advances and other borrowings of $57.6 million from a shift in deposit mix and higher interest rates during Q4 2022. Excluding PPP loans, average interest-earning assets increased $0.5 billion. Interest-earning asset growth was primarily driven by increases in C&I loans and leases, mostly in specialty lending, investment securities and interest earning deposits, partially offset by decreases in commercial loans to mortgage companies and consumer installment loans. Compared to Q3 2022, total loan yields increased 56 basis points to 5.64% primarily due to higher interest rates on variable rate loans in specialty lending. Excluding PPP loans, the Q4 2022 total loan yield* was 71 basis points higher than Q3 2022 reflecting increased interest rates and the variable rate nature of the loan portfolio.
Net interest income totaled $135.1 million in Q4 2022, a decrease of $58.6 million from Q4 2021, primarily due to lower PPP interest income of $74.8 million resulting from reduced recognition of deferred fees of $68.0 million driven by lower loan forgiveness in Q4 2022. This decrease was offset in part by increased net interest income earned by the core bank of $22.9 million, up 20% over Q4 2021, including increased interest income on investment securities and core loans* of $27.8 million and $95.6 million, respectively, mostly due to higher average balances and interest rates on variable loans in specialty lending. In addition, higher expenses paid on deposits, fed funds, FHLB advances and other borrowings of $114.2 million resulted mainly from a shift in deposit mix and higher interest rates during Q4 2022. Excluding PPP loans, average interest-earning assets increased $4.5 billion. Interest-earning asset growth was primarily driven by increases in C&I loans and leases, mostly in specialty lending, investment securities, multifamily loans and residential mortgages, offset in part by decreases in commercial loans to mortgage companies and interest earning deposits. Compared to Q4 2021, total loan yields increased 16 basis points to 5.64% primarily due to higher interest rates on variable rate loans in specialty lending, partially offset by lower PPP yields driven by lower deferred fee recognition. Excluding PPP loans, the Q4 2022 total loan yield* was 145 basis points higher than Q4 2021 reflecting increased interest rates and the variable rate nature of the loan portfolio.
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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, 2022 | September 30, 2022 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||
| Interchange and card revenue | $ | 71 | $ | 72 | $ | (1) | $ | 71 | $ | 84 | $ | (13) | |||||||||||||||||||||||
| Deposit fees | 958 | 989 | (31) | 958 | 1,026 | (68) | |||||||||||||||||||||||||||||
| Commercial lease income | 8,135 | 7,097 | 1,038 | 8,135 | 5,378 | 2,757 | |||||||||||||||||||||||||||||
| Bank-owned life insurance | 1,975 | 3,449 | (1,474) | 1,975 | 1,984 | (9) | |||||||||||||||||||||||||||||
| Mortgage warehouse transactional fees | 1,295 | 1,545 | (250) | 1,295 | 2,262 | (967) | |||||||||||||||||||||||||||||
| Gain (loss) on sale of SBA and other loans | — | 106 | (106) | — | 2,493 | (2,493) | |||||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | (23,465) | 23,465 | — | — | — | |||||||||||||||||||||||||||||
| Loan fees | 4,017 | 3,008 | 1,009 | 4,017 | 2,513 | 1,504 | |||||||||||||||||||||||||||||
| Mortgage banking income | 90 | 125 | (35) | 90 | 262 | (172) | |||||||||||||||||||||||||||||
| Gain (loss) on sale of investment securities | (16,937) | (2,135) | (14,802) | (16,937) | (49) | (16,888) | |||||||||||||||||||||||||||||
| Unrealized gain (loss) on investment securities | 28 | (259) | 287 | 28 | — | 28 | |||||||||||||||||||||||||||||
| Unrealized gain (loss) on derivatives | 43 | 563 | (520) | 43 | 586 | (543) | |||||||||||||||||||||||||||||
| Legal settlement gain | 7,519 | — | 7,519 | 7,519 | — | 7,519 | |||||||||||||||||||||||||||||
| Other | 151 | (112) | 263 | 151 | 452 | (301) | |||||||||||||||||||||||||||||
| Total non-interest income | $ | 7,345 | $ | (9,017) | $ | 16,362 | $ | 7,345 | $ | 16,991 | $ | (9,646) | |||||||||||||||||||||||
Non-interest income totaled $7.3 million for Q4 2022, an increase of $16.4 million compared to Q3 2022. The increase was primarily due to $23.5 million of loss realized from the sale of $500 million of consumer installment loans as part of our balance sheet optimization initiatives in Q3 2022, which included the write-off of deferred origination costs and other transaction-related expenses, a $7.5 million gain from a court-approved settlement with a third party PPP service provider in Q4 2022 and higher commercial lease income and loan fees from continued growth. These increases were partially offset by higher losses realized from the sale of investment securities of $14.8 million to rebalance the investment portfolio with higher interest-earning securities and lower bank-owned life insurance income primarily due to death benefits received in Q3 2022.
Non-interest income totaled $7.3 million for Q4 2022, a decrease of $9.6 million compared to Q4 2021. The decrease was primarily due to lower gains realized from the sales of SBA and other loans, higher losses realized from the sale of investment securities of $16.9 million to rebalance the investment portfolio with higher interest-earning securities and lower mortgage warehouse transactional fees in Q4 2022 compared to Q4 2021 from lower housing activity due to rising interest rates, offset partially by $7.5 million of the gain from a court-approved settlement with a third party PPP service provider in Q4 2022 and higher commercial lease income and loan fees from continued growth.
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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, 2022 | September 30, 2022 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||
| Salaries and employee benefits | $ | 29,194 | $ | 31,230 | $ | (2,036) | $ | 29,194 | $ | 29,940 | $ | (746) | |||||||||||||||||||||||
| Technology, communication and bank operations | 18,604 | 19,588 | (984) | 18,604 | 22,657 | (4,053) | |||||||||||||||||||||||||||||
| Professional services | 6,825 | 6,269 | 556 | 6,825 | 7,058 | (233) | |||||||||||||||||||||||||||||
| Occupancy | 3,672 | 2,605 | 1,067 | 3,672 | 4,336 | (664) | |||||||||||||||||||||||||||||
| Commercial lease depreciation | 6,518 | 5,966 | 552 | 6,518 | 4,625 | 1,893 | |||||||||||||||||||||||||||||
| FDIC assessments, non-income taxes and regulatory fees | 2,339 | 2,528 | (189) | 2,339 | 2,427 | (88) | |||||||||||||||||||||||||||||
| Loan servicing | 4,460 | 3,851 | 609 | 4,460 | 4,361 | 99 | |||||||||||||||||||||||||||||
| Loan workout | 714 | 217 | 497 | 714 | 226 | 488 | |||||||||||||||||||||||||||||
| Advertising and promotion | 1,111 | 762 | 349 | 1,111 | 344 | 767 | |||||||||||||||||||||||||||||
| Other | 4,982 | 3,182 | 1,800 | 4,982 | 5,574 | (592) | |||||||||||||||||||||||||||||
| Total non-interest expense | $ | 78,419 | $ | 76,198 | $ | 2,221 | $ | 78,419 | $ | 81,548 | $ | (3,129) | |||||||||||||||||||||||
The management of non-interest expenses remains a priority for us. However, this will not be at the expense of not making adequate investments with new technologies to support efficient and responsible growth.
Non-interest expenses totaled $78.4 million in Q4 2022, $2.2 million higher than Q3 2022. The increase was primarily attributable to increases of $1.1 million in occupancy mostly due to increased lease related expenses, $0.6 million in loan servicing for consumer installment loans, $0.6 million in professional fees primarily for legal fees associated with a settlement with a third party SBA service provider, $0.6 million in commercial lease depreciation from continued growth in our equipment finance business, $0.5 million in loan workout related legal fees mostly related to a commercial mortgage warehouse borrower that filed for bankruptcy and $1.8 million in other non-interest expenses primarily associated with our team members' return to office and increases in business development related expenses and charitable contributions. These increases were offset partially by decreases in salaries and employee benefits of $2.0 million primarily due to lower headcount and incentives, $1.4 million in one-time severance expenses recorded in Q3 2022 and $1.0 million in technology, processing and deposit servicing-related expenses mostly due to lower deposit servicing fees paid to BM Technologies offset by higher software licenses and fees paid for software as a service.
Non-interest expenses totaled $78.4 million in Q4 2022, a decrease of $3.1 million compared to Q4 2021. The decrease was primarily attributable to decreases of $4.1 million in technology, processing and deposit servicing-related expenses mostly due to lower deposit servicing and interchange maintenance fees paid to BM Technologies, $0.7 million in salaries and employee benefits primarily due to lower incentives and $0.7 million in occupancy primarily due to expenses associated with the relocation of the Bank headquarters recorded in Q4 2021. These decreases were offset in part by increases of $1.9 million in commercial lease depreciation from continued growth and $0.8 million in advertising and promotion due to higher spending on media for our deposit products.
Taxes
Income tax expense from continuing operations decreased by $10.8 million to $7.1 million in Q4 2022 from $17.9 million in Q3 2022 primarily due to lower pre-tax income and increased investment tax credits.
Income tax expense from continuing operations decreased by $5.9 million to $7.1 million in Q4 2022 from $13.0 million in Q4 2021 primarily due to lower pre-tax income, partially offset by reduced investment tax credits.
The effective tax rate from continuing operations for Q4 2022 was 19.9% and 21.7% for the twelve months ended December 31, 2022. Customers expects the full-year 2023 effective tax rate from continuing operations to be approximately 22% to 24%.
11
Outlook
“Looking ahead, we expect to moderate growth as we optimize the balance sheet, further build out our deposit franchise, maximize our efficiency ratio with prudent expense management, and actively buy back common shares to the extent we remain trading below book value. We expect 2023 core loan growth to be in the low-to-mid single digits with tighter margins in the first half of 2023 and wider margins in the second half of 2023. Deposits are expected to remain relatively flat with a focus on reducing high cost deposits. Full year 2023 net interest margin is expected to be between 2.85% - 3.05%. 2023 Core EPS (excluding PPP) is expected to be between $6.00 - $6.25 with a return on common equity of over 15%. Core non interest expense (excluding BM Technologies expense) is expected to increase between 8% - 10% in 2023 and we are targeting a CET 1 ratio of approximately 9.5%. We are focused on improving the quality of our balance sheet and deposit franchise, improving our net interest margin, and achieving a book value in excess of $45 by year-end 2023. Customers Bancorp stock at the close of business on January 20, 2023 was trading at $31.12, only 0.8 times tangible book value* at December 31, 2022,” concluded Mr. 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. | ||||||||||||||
12
Webcast
Date: Thursday, January 26, 2023
Time: 9:00 AM EDT
The live audio webcast, presentation slides, and earnings press release will be made available at https://www.customersbank.com/investor-relations/ and at the Customers Bancorp 4th Quarter Earnings Webcast.
You may submit questions in advance of the live webcast by emailing our Communications Director, David Patti at [email protected]; questions may also be asked during the webcast through the webcast application.
The webcast will be archived for viewing on the Customers Bank Investor Relations page and available beginning approximately two hours after the conclusion of the live event.
Institutional Background
Customers Bancorp, Inc. (NYSE:CUBI) is one of the nation’s top-performing banking companies with over $20 billion in assets, making it one of the 100 largest bank holding companies in the US. Through its primary subsidiary, Customers Bank, commercial and consumer clients benefit from a full suite of technology-enabled tailored product experience delivered by best-in-class customer service. A pioneer in Banking-as-a-Service and digital banking products, Customers Bank is one of the very few banks that provides a blockchain-based 24/7/365 digital payment solution. In addition to traditional lines such as C&I lending, commercial real estate lending, and multifamily lending, Customers Bank also provides a number of national corporate banking services for Fund Finance, Equipment Finance, Financial Institutions, Technology and Venture, and Healthcare clients. Major accolades include:
•#3 top-performing bank with over $10 billion in assets at year-end 2021 per S&P Global S&P Global Market Intelligence,
•#6 in top-performing banks with assets between $10 billion and $50 billion in 2021 per American Banker, and
•#21 out of the 100 largest publicly traded banks in 2022 per Forbes.
A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender. Learn more: www.customersbank.com.
“Safe Harbor” Statement
In addition to historical information, this press release may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “project,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: the impact of the ongoing pandemic on the U.S. economy and customer behavior, the impact that changes in the economy have on the performance of our loan and lease portfolio, the market value of our investment securities, the continued success and acceptance of our blockchain payments system, the demand for our products and services and the availability of sources of funding, the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply, actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships, higher inflation and its impacts, and the effects of any changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any
13
such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2021, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.
14
Q4 2022 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended December 31, 2022 and the preceding four quarters, and full year 2022 and 2021:
| 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, | |||||||||||||||||||||||||||||||||||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||
| GAAP Profitability Metrics: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income available to common shareholders (from continuing and discontinued operations) | $ | 25,623 | $ | 61,364 | $ | 56,519 | $ | 74,896 | $ | 98,647 | $ | 218,402 | $ | 300,134 | |||||||||||||||||||||||||||||||||
Per share amounts: | |||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share - basic | $ | 0.79 | $ | 1.89 | $ | 1.73 | $ | 2.27 | $ | 3.02 | $ | 6.69 | $ | 9.29 | |||||||||||||||||||||||||||||||||
| Earnings per share - diluted | $ | 0.77 | $ | 1.85 | $ | 1.68 | $ | 2.18 | $ | 2.87 | $ | 6.51 | $ | 8.91 | |||||||||||||||||||||||||||||||||
Book value per common share (1) | $ | 39.08 | $ | 38.46 | $ | 37.46 | $ | 37.61 | $ | 37.32 | $ | 39.08 | $ | 37.32 | |||||||||||||||||||||||||||||||||
CUBI stock price (1) | $ | 28.34 | $ | 29.48 | $ | 33.90 | $ | 52.14 | $ | 65.37 | $ | 28.34 | $ | 65.37 | |||||||||||||||||||||||||||||||||
CUBI stock price as % of book value (1) | 73 | % | 77 | % | 90 | % | 139 | % | 175 | % | 73 | % | 175 | % | |||||||||||||||||||||||||||||||||
| Average shares outstanding - basic | 32,413,459 | 32,455,814 | 32,712,616 | 32,957,033 | 32,625,960 | 32,632,751 | 32,312,262 | ||||||||||||||||||||||||||||||||||||||||
| Average shares outstanding - diluted | 33,075,422 | 33,226,607 | 33,579,013 | 34,327,065 | 34,320,327 | 33,547,706 | 33,697,547 | ||||||||||||||||||||||||||||||||||||||||
Shares outstanding (1) | 32,373,697 | 32,475,502 | 32,449,486 | 32,957,847 | 32,913,267 | 32,373,697 | 32,913,267 | ||||||||||||||||||||||||||||||||||||||||
| Return on average assets ("ROAA") | 0.55 | % | 1.24 | % | 1.17 | % | 1.63 | % | 2.08 | % | 1.13 | % | 1.64 | % | |||||||||||||||||||||||||||||||||
| Return on average common equity ("ROCE") | 8.05 | % | 19.33 | % | 18.21 | % | 24.26 | % | 33.18 | % | 17.40 | % | 28.75 | % | |||||||||||||||||||||||||||||||||
| Net interest margin, tax equivalent | 2.67 | % | 3.16 | % | 3.39 | % | 3.60 | % | 4.14 | % | 3.19 | % | 3.70 | % | |||||||||||||||||||||||||||||||||
| Efficiency ratio | 49.20 | % | 50.00 | % | 42.14 | % | 39.42 | % | 38.70 | % | 44.81 | % | 40.38 | % | |||||||||||||||||||||||||||||||||
Non-GAAP Profitability Metrics (2): | |||||||||||||||||||||||||||||||||||||||||||||||
| Core earnings | $ | 39,368 | $ | 82,270 | $ | 59,367 | $ | 75,410 | $ | 101,213 | $ | 256,415 | $ | 344,700 | |||||||||||||||||||||||||||||||||
| Adjusted pre-tax pre-provision net income | $ | 81,377 | $ | 100,994 | $ | 105,692 | $ | 112,649 | $ | 130,595 | $ | 400,712 | $ | 471,046 | |||||||||||||||||||||||||||||||||
| Per share amounts: | |||||||||||||||||||||||||||||||||||||||||||||||
| Core earnings per share - diluted | $ | 1.19 | $ | 2.48 | $ | 1.77 | $ | 2.20 | $ | 2.95 | $ | 7.63 | $ | 10.23 | |||||||||||||||||||||||||||||||||
Tangible book value per common share (1) | $ | 38.97 | $ | 38.35 | $ | 37.35 | $ | 37.50 | $ | 37.21 | $ | 38.97 | $ | 37.21 | |||||||||||||||||||||||||||||||||
CUBI stock price as % of tangible book value (1) | 73 | % | 77 | % | 91 | % | 139 | % | 176 | % | 73 | % | 176 | % | |||||||||||||||||||||||||||||||||
| Core ROAA | 0.81 | % | 1.64 | % | 1.23 | % | 1.64 | % | 2.13 | % | 1.32 | % | 1.86 | % | |||||||||||||||||||||||||||||||||
| Core ROCE | 12.36 | % | 25.91 | % | 19.13 | % | 24.43 | % | 34.04 | % | 20.43 | % | 33.02 | % | |||||||||||||||||||||||||||||||||
| Adjusted ROAA - pre-tax and pre-provision | 1.56 | % | 1.95 | % | 2.11 | % | 2.39 | % | 2.70 | % | 1.99 | % | 2.45 | % | |||||||||||||||||||||||||||||||||
| Adjusted ROCE - pre-tax and pre-provision | 24.59 | % | 31.01 | % | 33.37 | % | 35.89 | % | 43.25 | % | 31.16 | % | 44.00 | % | |||||||||||||||||||||||||||||||||
| Net interest margin, tax equivalent, excluding PPP loans | 2.87 | % | 3.18 | % | 3.32 | % | 3.32 | % | 3.12 | % | 3.16 | % | 3.16 | % | |||||||||||||||||||||||||||||||||
| Core efficiency ratio | 49.12 | % | 42.57 | % | 41.74 | % | 39.47 | % | 38.14 | % | 43.02 | % | 37.54 | % | |||||||||||||||||||||||||||||||||
| Asset Quality: | |||||||||||||||||||||||||||||||||||||||||||||||
| Net charge-offs | $ | 27,164 | $ | 18,497 | $ | 13,481 | $ | 7,226 | $ | 7,582 | $ | 66,368 | $ | 33,798 | |||||||||||||||||||||||||||||||||
| Annualized net charge-offs to average total loans and leases | 0.70 | % | 0.47 | % | 0.36 | % | 0.21 | % | 0.21 | % | 0.45 | % | 0.22 | % | |||||||||||||||||||||||||||||||||
Non-performing loans ("NPLs") to total loans and leases (1) | 0.19 | % | 0.18 | % | 0.18 | % | 0.31 | % | 0.34 | % | 0.19 | % | 0.34 | % | |||||||||||||||||||||||||||||||||
Reserves to NPLs (1) | 425.95 | % | 466.34 | % | 557.76 | % | 333.15 | % | 277.72 | % | 425.95 | % | 277.72 | % | |||||||||||||||||||||||||||||||||
| Non-performing assets ("NPAs") to total assets | 0.15 | % | 0.14 | % | 0.14 | % | 0.23 | % | 0.25 | % | 0.15 | % | 0.25 | % | |||||||||||||||||||||||||||||||||
Customers Bank Capital Ratios (3): | |||||||||||||||||||||||||||||||||||||||||||||||
| Common equity Tier 1 capital to risk-weighted assets | 11.07 | % | 11.42 | % | 11.46 | % | 11.60 | % | 11.83 | % | 11.07 | % | 11.83 | % | |||||||||||||||||||||||||||||||||
| Tier 1 capital to risk-weighted assets | 11.07 | % | 11.42 | % | 11.46 | % | 11.60 | % | 11.83 | % | 11.07 | % | 11.83 | % | |||||||||||||||||||||||||||||||||
| Total capital to risk-weighted assets | 12.24 | % | 12.65 | % | 12.91 | % | 13.03 | % | 13.11 | % | 12.24 | % | 13.11 | % | |||||||||||||||||||||||||||||||||
| Tier 1 capital to average assets (leverage ratio) | 8.15 | % | 8.10 | % | 8.09 | % | 8.21 | % | 7.93 | % | 8.15 | % | 7.93 | % | |||||||||||||||||||||||||||||||||
| (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 2022 and actual for the remaining periods. In accordance with regulatory capital rules, Customers elected to apply the CECL capital transition provisions which delayed the effects of CECL on regulatory capital for two years until January 1, 2022, followed by a three-year transition period. The cumulative CECL capital transition impact as of December 31, 2021 which amounted to $61.6 million will be phased in at 25% per year beginning on January 1, 2022 through December 31, 2024. As of December 31, 2022, our regulatory capital ratios reflected 75%, or $46.2 million, benefit associated with the CECL transition provisions. | |||||||||||||||||||||||||||||||||||||||||||||||
15
| 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, | ||||||||||||||||||||||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||||||||||||||
| Loans and leases | $ | 218,740 | $ | 200,457 | $ | 168,941 | $ | 157,175 | $ | 198,000 | $ | 745,313 | $ | 736,822 | |||||||||||||||||||||||||||
| Investment securities | 42,953 | 30,546 | 25,442 | 20,295 | 15,202 | 119,236 | 40,413 | ||||||||||||||||||||||||||||||||||
| Interest earning deposits | 6,754 | 2,949 | 919 | 330 | 604 | 10,952 | 1,585 | ||||||||||||||||||||||||||||||||||
| Other | 1,200 | 1,964 | 1,032 | 5,676 | 231 | 9,872 | 2,064 | ||||||||||||||||||||||||||||||||||
| Total interest income | 269,647 | 235,916 | 196,334 | 183,476 | 214,037 | 885,373 | 780,884 | ||||||||||||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||||||||||||||
| Deposits | 124,366 | 65,380 | 22,781 | 13,712 | 15,415 | 226,239 | 62,641 | ||||||||||||||||||||||||||||||||||
| FHLB advances | 4,464 | 4,684 | 2,316 | — | 51 | 11,464 | 6,211 | ||||||||||||||||||||||||||||||||||
| Subordinated debt | 2,688 | 2,689 | 2,689 | 2,689 | 2,688 | 10,755 | 10,755 | ||||||||||||||||||||||||||||||||||
| FRB PPP liquidity facility and other borrowings | 2,992 | 4,131 | 3,696 | 2,376 | 2,189 | 13,195 | 16,203 | ||||||||||||||||||||||||||||||||||
| Total interest expense | 134,510 | 76,884 | 31,482 | 18,777 | 20,343 | 261,653 | 95,810 | ||||||||||||||||||||||||||||||||||
| Net interest income | 135,137 | 159,032 | 164,852 | 164,699 | 193,694 | 623,720 | 685,074 | ||||||||||||||||||||||||||||||||||
| Provision (benefit) for credit losses | 28,216 | (7,994) | 23,847 | 15,997 | 13,890 | 60,066 | 27,426 | ||||||||||||||||||||||||||||||||||
| Net interest income after provision (benefit) for credit losses | 106,921 | 167,026 | 141,005 | 148,702 | 179,804 | 563,654 | 657,648 | ||||||||||||||||||||||||||||||||||
| Non-interest income: | |||||||||||||||||||||||||||||||||||||||||
| Interchange and card revenue | 71 | 72 | 24 | 76 | 84 | 243 | 336 | ||||||||||||||||||||||||||||||||||
| Deposit fees | 958 | 989 | 964 | 940 | 1,026 | 3,851 | 3,774 | ||||||||||||||||||||||||||||||||||
| Commercial lease income | 8,135 | 7,097 | 6,592 | 5,895 | 5,378 | 27,719 | 21,107 | ||||||||||||||||||||||||||||||||||
| Bank-owned life insurance | 1,975 | 3,449 | 1,947 | 8,326 | 1,984 | 15,697 | 8,416 | ||||||||||||||||||||||||||||||||||
| Mortgage warehouse transactional fees | 1,295 | 1,545 | 1,883 | 2,015 | 2,262 | 6,738 | 12,874 | ||||||||||||||||||||||||||||||||||
| Gain (loss) on sale of SBA and other loans | — | 106 | 1,542 | 1,507 | 2,493 | 3,155 | 11,327 | ||||||||||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | (23,465) | — | — | — | (23,465) | — | ||||||||||||||||||||||||||||||||||
| Loan fees | 4,017 | 3,008 | 2,618 | 2,545 | 2,513 | 12,188 | 7,527 | ||||||||||||||||||||||||||||||||||
| Mortgage banking income | 90 | 125 | 173 | 481 | 262 | 869 | 1,536 | ||||||||||||||||||||||||||||||||||
| Gain (loss) on sale of investment securities | (16,937) | (2,135) | (3,029) | (1,063) | (49) | (23,164) | 31,392 | ||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on investment securities | 28 | (259) | (203) | (276) | — | (710) | 2,720 | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | — | — | — | — | (2,840) | ||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on derivatives | 43 | 563 | 821 | 964 | 586 | 2,391 | 3,208 | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | — | — | (24,467) | ||||||||||||||||||||||||||||||||||
| Legal settlement gain | 7,519 | — | — | — | — | 7,519 | — | ||||||||||||||||||||||||||||||||||
| Other | 151 | (112) | (586) | (212) | 452 | (759) | 957 | ||||||||||||||||||||||||||||||||||
| Total non-interest income | 7,345 | (9,017) | 12,746 | 21,198 | 16,991 | 32,272 | 77,867 | ||||||||||||||||||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 29,194 | 31,230 | 25,334 | 26,607 | 29,940 | 112,365 | 108,202 | ||||||||||||||||||||||||||||||||||
| Technology, communication and bank operations | 18,604 | 19,588 | 22,738 | 24,068 | 22,657 | 84,998 | 83,544 | ||||||||||||||||||||||||||||||||||
| Professional services | 6,825 | 6,269 | 7,415 | 6,956 | 7,058 | 27,465 | 26,688 | ||||||||||||||||||||||||||||||||||
| Occupancy | 3,672 | 2,605 | 4,279 | 3,050 | 4,336 | 13,606 | 12,143 | ||||||||||||||||||||||||||||||||||
| Commercial lease depreciation | 6,518 | 5,966 | 5,552 | 4,942 | 4,625 | 22,978 | 17,824 | ||||||||||||||||||||||||||||||||||
| FDIC assessments, non-income taxes and regulatory fees | 2,339 | 2,528 | 1,619 | 2,383 | 2,427 | 8,869 | 10,061 | ||||||||||||||||||||||||||||||||||
| Loan servicing | 4,460 | 3,851 | 4,341 | 2,371 | 4,361 | 15,023 | 10,763 | ||||||||||||||||||||||||||||||||||
| Merger and acquisition related expenses | — | — | — | — | — | — | 418 | ||||||||||||||||||||||||||||||||||
| Loan workout | 714 | 217 | 179 | (38) | 226 | 1,072 | 265 | ||||||||||||||||||||||||||||||||||
| Advertising and promotion | 1,111 | 762 | 353 | 315 | 344 | 2,541 | 1,520 | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | — | — | — | — | — | — | 6,216 | ||||||||||||||||||||||||||||||||||
| Other | 4,982 | 3,182 | 4,395 | 3,153 | 5,574 | 15,712 | 16,663 | ||||||||||||||||||||||||||||||||||
| Total non-interest expense | 78,419 | 76,198 | 76,205 | 73,807 | 81,548 | 304,629 | 294,307 | ||||||||||||||||||||||||||||||||||
| Income before income tax expense | 35,847 | 81,811 | 77,546 | 96,093 | 115,247 | 291,297 | 441,208 | ||||||||||||||||||||||||||||||||||
| Income tax expense | 7,136 | 17,899 | 18,896 | 19,332 | 12,993 | 63,263 | 86,940 | ||||||||||||||||||||||||||||||||||
| Net income from continuing operations | $ | 28,711 | $ | 63,912 | $ | 58,650 | $ | 76,761 | $ | 102,254 | $ | 228,034 | $ | 354,268 | |||||||||||||||||||||||||||
(continued) | |||||||||||||||||||||||||||||||||||||||||
16
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||
| Q4 | Q3 | Q2 | Q1 | Q4 | December 31, | ||||||||||||||||||||||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
| Loss from discontinued operations before income taxes | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (20,354) | |||||||||||||||||||||||||||
| Income tax expense (benefit) from discontinued operations | — | — | — | — | 1,585 | — | 19,267 | ||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | — | — | (1,585) | — | (39,621) | ||||||||||||||||||||||||||||||||||
| Net income | 28,711 | 63,912 | 58,650 | 76,761 | 100,669 | 228,034 | 314,647 | ||||||||||||||||||||||||||||||||||
| Preferred stock dividends | 3,088 | 2,548 | 2,131 | 1,865 | 2,022 | 9,632 | 11,693 | ||||||||||||||||||||||||||||||||||
| Loss on redemption of preferred stock | — | — | — | — | — | — | 2,820 | ||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 25,623 | $ | 61,364 | $ | 56,519 | $ | 74,896 | $ | 98,647 | $ | 218,402 | $ | 300,134 | |||||||||||||||||||||||||||
| Basic earnings per common share from continuing operations | $ | 0.79 | $ | 1.89 | $ | 1.73 | $ | 2.27 | $ | 3.07 | $ | 6.69 | $ | 10.51 | |||||||||||||||||||||||||||
| Basic earnings per common share | 0.79 | 1.89 | 1.73 | 2.27 | 3.02 | 6.69 | 9.29 | ||||||||||||||||||||||||||||||||||
| Diluted earnings per common share from continuing operations | 0.77 | 1.85 | 1.68 | 2.18 | 2.92 | 6.51 | 10.08 | ||||||||||||||||||||||||||||||||||
| Diluted earnings per common share | 0.77 | 1.85 | 1.68 | 2.18 | 2.87 | 6.51 | 8.91 | ||||||||||||||||||||||||||||||||||
17
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
CONSOLIDATED BALANCE SHEET - UNAUDITED | |||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 58,025 | $ | 41,520 | $ | 66,703 | $ | 55,515 | $ | 35,238 | |||||||||||||||||||
| Interest earning deposits | 397,781 | 362,945 | 178,475 | 219,085 | 482,794 | ||||||||||||||||||||||||
| Cash and cash equivalents | 455,806 | 404,465 | 245,178 | 274,600 | 518,032 | ||||||||||||||||||||||||
| Investment securities, at fair value | 2,987,500 | 2,943,694 | 3,144,882 | 4,169,853 | 3,817,150 | ||||||||||||||||||||||||
| Investment securities held to maturity | 840,259 | 886,294 | 495,039 | — | — | ||||||||||||||||||||||||
| Loans held for sale | 328,312 | 5,224 | 6,595 | 3,003 | 16,254 | ||||||||||||||||||||||||
| Loans receivable, mortgage warehouse, at fair value | 1,323,312 | 1,569,090 | 1,874,603 | 1,755,758 | 2,284,325 | ||||||||||||||||||||||||
| Loans receivable, PPP | 998,153 | 1,154,632 | 1,570,160 | 2,195,902 | 3,250,008 | ||||||||||||||||||||||||
| Loans and leases receivable | 13,144,894 | 12,607,742 | 12,212,995 | 10,118,855 | 9,018,298 | ||||||||||||||||||||||||
| Allowance for credit losses on loans and leases | (130,924) | (130,197) | (156,530) | (145,847) | (137,804) | ||||||||||||||||||||||||
| Total loans and leases receivable, net of allowance for credit losses on loans and leases | 15,335,435 | 15,201,267 | 15,501,228 | 13,924,668 | 14,414,827 | ||||||||||||||||||||||||
| FHLB, Federal Reserve Bank, and other restricted stock | 74,196 | 64,112 | 74,626 | 54,553 | 64,584 | ||||||||||||||||||||||||
| Accrued interest receivable | 123,374 | 107,621 | 98,727 | 94,669 | 92,239 | ||||||||||||||||||||||||
| Bank premises and equipment, net | 9,025 | 6,610 | 6,755 | 8,233 | 8,890 | ||||||||||||||||||||||||
| Bank-owned life insurance | 338,441 | 336,130 | 335,153 | 332,239 | 333,705 | ||||||||||||||||||||||||
| Goodwill and other intangibles | 3,629 | 3,629 | 3,629 | 3,678 | 3,736 | ||||||||||||||||||||||||
| Other assets | 400,135 | 408,575 | 340,184 | 298,212 | 305,611 | ||||||||||||||||||||||||
| Total assets | $ | 20,896,112 | $ | 20,367,621 | $ | 20,251,996 | $ | 19,163,708 | $ | 19,575,028 | |||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||
| Demand, non-interest bearing deposits | $ | 1,885,045 | $ | 2,993,793 | $ | 4,683,030 | $ | 4,594,428 | $ | 4,459,790 | |||||||||||||||||||
| Interest bearing deposits | 16,271,908 | 14,528,645 | 12,261,689 | 11,821,132 | 12,318,134 | ||||||||||||||||||||||||
| Total deposits | 18,156,953 | 17,522,438 | 16,944,719 | 16,415,560 | 16,777,924 | ||||||||||||||||||||||||
| Federal funds purchased | — | 365,000 | 770,000 | 700,000 | 75,000 | ||||||||||||||||||||||||
| FHLB advances | 800,000 | 500,000 | 635,000 | — | 700,000 | ||||||||||||||||||||||||
| Other borrowings | 123,580 | 123,515 | 123,450 | 223,230 | 223,086 | ||||||||||||||||||||||||
| Subordinated debt | 181,952 | 181,882 | 181,812 | 181,742 | 181,673 | ||||||||||||||||||||||||
| Accrued interest payable and other liabilities | 230,666 | 287,855 | 243,625 | 265,770 | 251,128 | ||||||||||||||||||||||||
| Total liabilities | 19,493,151 | 18,980,690 | 18,898,606 | 17,786,302 | 18,208,811 | ||||||||||||||||||||||||
| Preferred stock | 137,794 | 137,794 | 137,794 | 137,794 | 137,794 | ||||||||||||||||||||||||
| Common stock | 35,012 | 34,948 | 34,922 | 34,882 | 34,722 | ||||||||||||||||||||||||
| Additional paid in capital | 551,721 | 549,066 | 545,670 | 542,402 | 542,391 | ||||||||||||||||||||||||
| Retained earnings | 924,134 | 898,511 | 837,147 | 780,628 | 705,732 | ||||||||||||||||||||||||
| Accumulated other comprehensive income (loss), net | (163,096) | (156,126) | (124,881) | (62,548) | (4,980) | ||||||||||||||||||||||||
| Treasury stock, at cost | (82,604) | (77,262) | (77,262) | (55,752) | (49,442) | ||||||||||||||||||||||||
| Total shareholders' equity | 1,402,961 | 1,386,931 | 1,353,390 | 1,377,406 | 1,366,217 | ||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 20,896,112 | $ | 20,367,621 | $ | 20,251,996 | $ | 19,163,708 | $ | 19,575,028 | |||||||||||||||||||
18
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest Income or Expense | Average Yield or Cost (%) | Average Balance | Interest Income or Expense | Average Yield or Cost (%) | Average Balance | Interest Income or Expense | Average Yield or Cost (%) | |||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest earning deposits | $ | 693,563 | $ | 6,754 | 3.86% | $ | 528,001 | $ | 2,949 | 2.22% | $ | 1,568,510 | $ | 604 | 0.15% | ||||||||||||||||||||||||||||||||||||||
Investment securities (1) | 4,061,555 | 42,953 | 4.23% | 3,770,922 | 30,546 | 3.24% | 2,621,844 | 15,202 | 2.32% | ||||||||||||||||||||||||||||||||||||||||||||
| Loans and leases: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial & industrial: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Specialty lending loans and leases (2) | 5,529,567 | 90,885 | 6.52% | 5,064,730 | 64,753 | 5.07% | 2,206,910 | 19,998 | 3.60% | ||||||||||||||||||||||||||||||||||||||||||||
Other commercial & industrial loans (2) | 1,670,000 | 22,796 | 5.42% | 1,585,136 | 18,794 | 4.70% | 1,307,276 | 12,905 | 3.92% | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial loans to mortgage companies | 1,376,760 | 17,701 | 5.10% | 1,623,624 | 17,092 | 4.18% | 2,289,061 | 17,425 | 3.02% | ||||||||||||||||||||||||||||||||||||||||||||
| Multifamily loans | 2,235,885 | 22,481 | 3.99% | 2,206,953 | 20,427 | 3.67% | 1,327,732 | 12,462 | 3.72% | ||||||||||||||||||||||||||||||||||||||||||||
| Loans receivable, PPP | 1,065,919 | 7,249 | 2.70% | 1,349,403 | 14,666 | 4.31% | 3,898,607 | 82,086 | 8.35% | ||||||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate loans | 1,430,420 | 18,536 | 5.14% | 1,372,244 | 15,595 | 4.51% | 1,334,184 | 12,793 | 3.80% | ||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgages | 524,344 | 5,462 | 4.13% | 513,694 | 5,008 | 3.87% | 314,551 | 2,919 | 3.68% | ||||||||||||||||||||||||||||||||||||||||||||
| Installment loans | 1,555,108 | 33,630 | 8.58% | 1,938,199 | 44,122 | 9.03% | 1,657,049 | 37,412 | 8.96% | ||||||||||||||||||||||||||||||||||||||||||||
Total loans and leases (3) | 15,388,003 | 218,740 | 5.64% | 15,653,983 | 200,457 | 5.08% | 14,335,370 | 198,000 | 5.48% | ||||||||||||||||||||||||||||||||||||||||||||
| Other interest-earning assets | 67,907 | 1,200 | 7.01% | 68,549 | 1,964 | 11.37% | 50,709 | 231 | 1.81% | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 20,211,028 | 269,647 | 5.30% | 20,021,455 | 235,916 | 4.68% | 18,576,433 | 214,037 | 4.57% | ||||||||||||||||||||||||||||||||||||||||||||
| Non-interest-earning assets | 506,334 | 492,911 | 637,808 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 20,717,362 | $ | 20,514,366 | $ | 19,214,241 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest checking accounts | 8,536,962 | 70,041 | 3.26% | 6,669,787 | 33,685 | 2.00% | 5,258,982 | 7,676 | 0.58% | ||||||||||||||||||||||||||||||||||||||||||||
| Money market deposit accounts | 3,094,206 | 21,220 | 2.72% | 5,789,991 | 24,348 | 1.67% | 5,293,529 | 5,683 | 0.43% | ||||||||||||||||||||||||||||||||||||||||||||
| Other savings accounts | 669,466 | 3,368 | 2.00% | 625,908 | 1,818 | 1.15% | 1,189,899 | 1,357 | 0.45% | ||||||||||||||||||||||||||||||||||||||||||||
| Certificates of deposit | 3,259,801 | 29,737 | 3.62% | 1,141,970 | 5,529 | 1.92% | 541,528 | 699 | 0.51% | ||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing deposits (4) | 15,560,435 | 124,366 | 3.17% | 14,227,656 | 65,380 | 1.82% | 12,283,938 | 15,415 | 0.50% | ||||||||||||||||||||||||||||||||||||||||||||
| Federal funds purchased | 151,467 | 1,437 | 3.76% | 513,011 | 2,871 | 2.22% | 815 | 1 | 0.15% | ||||||||||||||||||||||||||||||||||||||||||||
| Borrowings | 819,032 | 8,707 | 4.22% | 874,497 | 8,633 | 3.92% | 465,600 | 4,927 | 4.20% | ||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 16,530,934 | 134,510 | 3.23% | 15,615,164 | 76,884 | 1.95% | 12,750,353 | 20,343 | 0.63% | ||||||||||||||||||||||||||||||||||||||||||||
Non-interest-bearing deposits (4) | 2,514,316 | 3,245,963 | 4,817,835 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total deposits and borrowings | 19,045,250 | 2.80% | 18,861,127 | 1.62% | 17,568,188 | 0.46% | |||||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest-bearing liabilities | 271,129 | 255,735 | 328,782 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 19,316,379 | 19,116,862 | 17,896,970 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders' equity | 1,400,983 | 1,397,504 | 1,317,271 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 20,717,362 | $ | 20,514,366 | $ | 19,214,241 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 135,137 | 159,032 | 193,694 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax-equivalent adjustment | 342 | 334 | 276 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest earnings | $ | 135,479 | $ | 159,366 | $ | 193,970 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest spread | 2.50% | 3.06% | 4.11% | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 2.66% | 3.16% | 4.14% | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin tax equivalent | 2.67% | 3.16% | 4.14% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin tax equivalent excl. PPP (5) | 2.87% | 3.18% | 3.12% | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (continued) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
19
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (2) Includes owner occupied commercial real estate loans. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (3) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) Total costs of deposits (including interest bearing and non-interest bearing) were 2.73%, 1.48% and 0.36% for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
20
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
| AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Twelve Months Ended | |||||||||||||||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Average Balance | Interest Income or Expense | Average Yield or Cost (%) | Average Balance | Interest Income or Expense | Average Yield or Cost (%) | ||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||
| Interest earning deposits | $ | 620,071 | $ | 10,952 | 1.77% | $ | 1,169,416 | $ | 1,585 | 0.14% | |||||||||||||||||||||||||
Investment securities (1) | 3,992,934 | 119,236 | 2.99% | 1,753,649 | 40,413 | 2.30% | |||||||||||||||||||||||||||||
| Loans and leases: | |||||||||||||||||||||||||||||||||||
| Commercial & industrial: | |||||||||||||||||||||||||||||||||||
Specialty lending loans and leases (2) | 4,357,995 | 218,189 | 5.01% | 1,723,516 | 63,656 | 3.69% | |||||||||||||||||||||||||||||
Other commercial & industrial loans (2) | 1,540,435 | 69,564 | 4.52% | 1,344,489 | 51,536 | 3.83% | |||||||||||||||||||||||||||||
| Commercial loans to mortgage companies | 1,682,471 | 64,413 | 3.83% | 2,699,300 | 83,350 | 3.09% | |||||||||||||||||||||||||||||
| Multifamily loans | 1,957,672 | 73,987 | 3.78% | 1,501,878 | 56,582 | 3.77% | |||||||||||||||||||||||||||||
| Loans receivable, PPP | 1,724,659 | 79,381 | 4.60% | 5,108,192 | 279,158 | 5.46% | |||||||||||||||||||||||||||||
| Non-owner occupied commercial real estate loans | 1,356,086 | 59,087 | 4.36% | 1,349,563 | 51,430 | 3.81% | |||||||||||||||||||||||||||||
| Residential mortgages | 492,870 | 19,048 | 3.86% | 339,845 | 12,405 | 3.65% | |||||||||||||||||||||||||||||
| Installment loans | 1,798,977 | 161,644 | 8.99% | 1,517,165 | 138,705 | 9.14% | |||||||||||||||||||||||||||||
Total loans and leases (3) | 14,911,165 | 745,313 | 5.00% | 15,583,948 | 736,822 | 4.73% | |||||||||||||||||||||||||||||
| Other interest-earning assets | 64,204 | 9,872 | NM (6) | 59,308 | 2,064 | 3.48% | |||||||||||||||||||||||||||||
| Total interest-earning assets | 19,588,374 | 885,373 | 4.52% | 18,566,321 | 780,884 | 4.21% | |||||||||||||||||||||||||||||
| Non-interest-earning assets | 521,370 | 633,615 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 20,109,744 | $ | 19,199,936 | |||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||
| Interest checking accounts | $ | 6,853,533 | $ | 125,100 | 1.83% | $ | 4,006,354 | $ | 27,605 | 0.69% | |||||||||||||||||||||||||
| Money market deposit accounts | 4,615,574 | 57,765 | 1.25% | 4,933,027 | 22,961 | 0.47% | |||||||||||||||||||||||||||||
| Other savings accounts | 716,838 | 6,727 | 0.94% | 1,358,708 | 7,584 | 0.56% | |||||||||||||||||||||||||||||
| Certificates of deposit | 1,352,787 | 36,647 | 2.71% | 619,859 | 4,491 | 0.72% | |||||||||||||||||||||||||||||
Total interest-bearing deposits (4) | 13,538,732 | 226,239 | 1.67% | 10,917,948 | 62,641 | 0.57% | |||||||||||||||||||||||||||||
| Federal funds purchased | 349,581 | 5,811 | 1.66% | 22,110 | 16 | 0.07% | |||||||||||||||||||||||||||||
| FRB PPP liquidity facility | — | — | —% | 2,636,925 | 9,229 | 0.35% | |||||||||||||||||||||||||||||
| Borrowings | 792,563 | 29,603 | 3.74% | 610,503 | 23,924 | 3.92% | |||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 14,680,876 | 261,653 | 1.78% | 14,187,486 | 95,810 | 0.68% | |||||||||||||||||||||||||||||
Non-interest-bearing deposits (4) | 3,780,185 | 3,470,788 | |||||||||||||||||||||||||||||||||
| Total deposits and borrowings | 18,461,061 | 1.42% | 17,658,274 | 0.54% | |||||||||||||||||||||||||||||||
| Other non-interest-bearing liabilities | 255,911 | 304,078 | |||||||||||||||||||||||||||||||||
| Total liabilities | 18,716,972 | 17,962,352 | |||||||||||||||||||||||||||||||||
| Shareholders' equity | 1,392,772 | 1,237,584 | |||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 20,109,744 | $ | 19,199,936 | |||||||||||||||||||||||||||||||
| Net interest income | 623,720 | 685,074 | |||||||||||||||||||||||||||||||||
| Tax-equivalent adjustment | 1,185 | 1,147 | |||||||||||||||||||||||||||||||||
| Net interest earnings | $ | 624,905 | $ | 686,221 | |||||||||||||||||||||||||||||||
| Interest spread | 3.10% | 3.66% | |||||||||||||||||||||||||||||||||
| Net interest margin | 3.18% | 3.69% | |||||||||||||||||||||||||||||||||
| Net interest margin tax equivalent | 3.19% | 3.70% | |||||||||||||||||||||||||||||||||
Net interest margin tax equivalent excl. PPP (5) | 3.16% | 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 1.31% and 0.44% for the twelve months ended December 31, 2022 and 2021, respectively. | |||||||||||||||||||||||||||||||||||
| (continued) | |||||||||||||||||||||||||||||||||||
21
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
| AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the twelve months ended December 31, 2022 and 2021, 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. | |||||||||||||||||||||||||||||||||||
22
| 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, | |||||||||||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||||||||||||
| Commercial: | |||||||||||||||||||||||||||||
| Commercial & industrial: | |||||||||||||||||||||||||||||
| Specialty lending | $ | 5,412,887 | $ | 5,103,974 | $ | 4,599,640 | $ | 2,973,544 | $ | 2,403,991 | |||||||||||||||||||
| Other commercial & industrial | 1,135,336 | 1,064,332 | 1,037,443 | 947,895 | 942,679 | ||||||||||||||||||||||||
| Multifamily | 2,217,098 | 2,267,376 | 2,012,920 | 1,705,027 | 1,486,308 | ||||||||||||||||||||||||
| Loans to mortgage companies | 1,447,919 | 1,708,587 | 1,975,189 | 1,830,121 | 2,362,438 | ||||||||||||||||||||||||
| Commercial real estate owner occupied | 885,339 | 726,670 | 710,577 | 701,893 | 654,922 | ||||||||||||||||||||||||
| Loans receivable, PPP | 998,153 | 1,154,632 | 1,570,160 | 2,195,902 | 3,250,008 | ||||||||||||||||||||||||
| Commercial real estate non-owner occupied | 1,290,730 | 1,263,211 | 1,152,869 | 1,140,311 | 1,121,238 | ||||||||||||||||||||||||
| Construction | 162,009 | 136,133 | 195,687 | 161,024 | 198,981 | ||||||||||||||||||||||||
| Total commercial loans and leases | 13,549,471 | 13,424,915 | 13,254,485 | 11,655,717 | 12,420,565 | ||||||||||||||||||||||||
| Consumer: | |||||||||||||||||||||||||||||
| Residential | 498,781 | 466,888 | 460,228 | 469,426 | 350,984 | ||||||||||||||||||||||||
| Manufactured housing | 45,076 | 46,990 | 48,570 | 50,669 | 52,861 | ||||||||||||||||||||||||
| Installment: | |||||||||||||||||||||||||||||
| Personal | 1,306,376 | 1,056,432 | 1,613,628 | 1,584,011 | 1,392,862 | ||||||||||||||||||||||||
| Other | 394,967 | 341,463 | 287,442 | 313,695 | 351,613 | ||||||||||||||||||||||||
| Total consumer loans | 2,245,200 | 1,911,773 | 2,409,868 | 2,417,801 | 2,148,320 | ||||||||||||||||||||||||
| Total loans and leases | $ | 15,794,671 | $ | 15,336,688 | $ | 15,664,353 | $ | 14,073,518 | $ | 14,568,885 | |||||||||||||||||||
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| PERIOD END DEPOSIT COMPOSITION - UNAUDITED | |||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||||||||||||
| Demand, non-interest bearing | $ | 1,885,045 | $ | 2,993,793 | $ | 4,683,030 | $ | 4,594,428 | $ | 4,459,790 | |||||||||||||||||||
| Demand, interest bearing | 8,476,027 | 7,124,663 | 6,644,398 | 5,591,468 | 6,488,406 | ||||||||||||||||||||||||
| Total demand deposits | 10,361,072 | 10,118,456 | 11,327,428 | 10,185,896 | 10,948,196 | ||||||||||||||||||||||||
| Savings | 811,798 | 592,002 | 640,062 | 802,395 | 973,317 | ||||||||||||||||||||||||
| Money market | 2,734,217 | 4,913,967 | 4,254,205 | 4,981,077 | 4,349,073 | ||||||||||||||||||||||||
| Time deposits | 4,249,866 | 1,898,013 | 723,024 | 446,192 | 507,338 | ||||||||||||||||||||||||
| Total deposits | $ | 18,156,953 | $ | 17,522,438 | $ | 16,944,719 | $ | 16,415,560 | $ | 16,777,924 | |||||||||||||||||||
23
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ASSET QUALITY - UNAUDITED | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | As of December 31, 2022 | As of September 30, 2022 | As of December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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) | $ | 6,672,830 | $ | 1,761 | $ | 17,582 | 0.03 | % | 998.41 | % | $ | 6,307,803 | $ | 4,078 | $ | 15,131 | 0.06 | % | 371.04 | % | $ | 3,424,783 | $ | 6,096 | $ | 12,702 | 0.18 | % | 208.37 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Multifamily | 2,213,019 | 1,143 | 14,541 | 0.05 | % | 1272.18 | % | 2,263,268 | 1,158 | 14,244 | 0.05 | % | 1230.05 | % | 1,486,308 | 22,654 | 4,477 | 1.52 | % | 19.76 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate owner occupied | 885,339 | 2,768 | 6,454 | 0.31 | % | 233.16 | % | 726,670 | 2,198 | 6,220 | 0.30 | % | 282.98 | % | 654,922 | 2,475 | 3,213 | 0.38 | % | 129.82 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate non-owner occupied | 1,290,730 | — | 11,219 | — | % | — | % | 1,263,211 | — | 11,332 | — | % | — | % | 1,121,238 | 2,815 | 6,210 | 0.25 | % | 220.60 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Construction | 162,009 | — | 1,913 | — | % | — | % | 136,133 | — | 1,614 | — | % | — | % | 198,981 | — | 692 | — | % | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial loans and leases receivable | 11,223,927 | 5,672 | 51,709 | 0.05 | % | 911.65 | % | 10,697,085 | 7,434 | 48,541 | 0.07 | % | 652.96 | % | 6,886,232 | 34,040 | 27,294 | 0.49 | % | 80.18 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential | 497,952 | 6,922 | 6,094 | 1.39 | % | 88.04 | % | 465,772 | 6,438 | 5,453 | 1.38 | % | 84.70 | % | 334,730 | 7,727 | 2,383 | 2.31 | % | 30.84 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Manufactured housing | 45,076 | 2,410 | 4,430 | 5.35 | % | 183.82 | % | 46,990 | 2,584 | 4,482 | 5.50 | % | 173.45 | % | 52,861 | 3,563 | 4,278 | 6.74 | % | 120.07 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Installment | 1,377,939 | 9,527 | 68,691 | 0.69 | % | 721.01 | % | 1,397,895 | 6,848 | 71,721 | 0.49 | % | 1047.33 | % | 1,744,475 | 3,783 | 103,849 | 0.22 | % | 2745.15 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer loans receivable | 1,920,967 | 18,859 | 79,215 | 0.98 | % | 420.04 | % | 1,910,657 | 15,870 | 81,656 | 0.83 | % | 514.53 | % | 2,132,066 | 15,073 | 110,510 | 0.71 | % | 733.17 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and leases receivable (1) | 13,144,894 | 24,531 | 130,924 | 0.19 | % | 533.71 | % | 12,607,742 | 23,304 | 130,197 | 0.18 | % | 558.69 | % | 9,018,298 | 49,113 | 137,804 | 0.54 | % | 280.59 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans receivable, PPP | 998,153 | — | — | — | % | — | % | 1,154,632 | — | — | — | % | — | % | 3,250,008 | — | — | — | % | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans receivable, mortgage warehouse, at fair value | 1,323,312 | — | — | — | % | — | % | 1,569,090 | — | — | — | % | — | % | 2,284,325 | — | — | — | % | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans held for sale | 328,312 | 6,206 | — | 1.89 | % | — | % | 5,224 | 4,615 | — | 88.34 | % | — | % | 16,254 | 507 | — | 3.12 | % | — | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total portfolio | $ | 15,794,671 | $ | 30,737 | $ | 130,924 | 0.19 | % | 425.95 | % | $ | 15,336,688 | $ | 27,919 | $ | 130,197 | 0.18 | % | 466.34 | % | $ | 14,568,885 | $ | 49,620 | $ | 137,804 | 0.34 | % | 277.72 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(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.
24
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||
| NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Q4 | Q3 | Q2 | Q1 | Q4 | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
Loan type | |||||||||||||||||||||||||||||||||||||||||
Commercial & industrial, including specialty lending (1) | $ | 12,960 | $ | 2,581 | $ | (416) | $ | (59) | $ | 240 | $ | 15,066 | $ | 448 | |||||||||||||||||||||||||||
| Multifamily | — | — | 1,990 | (337) | — | 1,653 | 1,132 | ||||||||||||||||||||||||||||||||||
| Commercial real estate owner occupied | (2) | — | (42) | (7) | 66 | (51) | 249 | ||||||||||||||||||||||||||||||||||
| Commercial real estate non-owner occupied | 972 | 4,831 | 159 | (8) | (14) | 5,954 | 860 | ||||||||||||||||||||||||||||||||||
| Construction | (10) | (10) | (103) | (113) | (3) | (236) | (125) | ||||||||||||||||||||||||||||||||||
| Residential | 7 | (13) | (39) | (2) | (6) | (47) | 76 | ||||||||||||||||||||||||||||||||||
| Installment | 13,237 | 11,108 | 11,932 | 7,752 | 7,299 | 44,029 | 31,158 | ||||||||||||||||||||||||||||||||||
| Total net charge-offs (recoveries) from loans held for investment | $ | 27,164 | $ | 18,497 | $ | 13,481 | $ | 7,226 | $ | 7,582 | $ | 66,368 | $ | 33,798 | |||||||||||||||||||||||||||
(1) Includes $11.0 million of one-time charge-offs from certain loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and were deemed uncollectible during the three and twelve months ended December 31, 2022.
25
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 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | 25,623 | $ | 0.77 | $ | 61,364 | $ | 1.85 | $ | 56,519 | $ | 1.68 | $ | 74,896 | $ | 2.18 | $ | 98,647 | $ | 2.87 | $ | 218,402 | $ | 6.51 | $ | 300,134 | $ | 8.91 | ||||||||||||||||||||||||||||||||||
| Reconciling items (after tax): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | — | — | — | — | — | — | 1,585 | 0.05 | — | — | 39,621 | 1.18 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Severance expense | — | — | 1,058 | 0.03 | — | — | — | — | — | — | 1,058 | 0.03 | 1,517 | 0.05 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Impairments on fixed assets and leases | — | — | 126 | 0.00 | 705 | 0.02 | 220 | 0.01 | 1,118 | 0.03 | 1,051 | 0.03 | 1,118 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Merger and acquisition related expenses | — | — | — | — | — | — | — | — | — | — | — | — | 320 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | — | 18,221 | 0.55 | — | — | — | — | — | — | 18,221 | 0.54 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal reserves | — | — | — | — | — | — | — | — | — | — | — | — | 897 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | 13,543 | 0.41 | 1,859 | 0.06 | 2,494 | 0.07 | 1,030 | 0.03 | 43 | 0.00 | 18,926 | 0.56 | (26,015) | (0.77) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | — | — | — | — | — | — | — | — | — | — | 2,150 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | — | — | — | — | — | — | — | — | 18,716 | 0.56 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | 202 | 0.01 | (358) | (0.01) | (351) | (0.01) | (736) | (0.02) | (180) | (0.01) | (1,243) | (0.04) | (1,285) | (0.04) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | — | — | — | — | — | — | — | — | — | — | — | — | 4,707 | 0.14 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on redemption of preferred stock | — | — | — | — | — | — | — | — | — | — | — | — | 2,820 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Core earnings | $ | 39,368 | $ | 1.19 | $ | 82,270 | $ | 2.48 | $ | 59,367 | $ | 1.77 | $ | 75,410 | $ | 2.20 | $ | 101,213 | $ | 2.95 | $ | 256,415 | $ | 7.63 | $ | 344,700 | $ | 10.23 | ||||||||||||||||||||||||||||||||||
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
Core Earnings, excluding PPP - Customers Bancorp | Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | 25,623 | $ | 0.77 | $ | 61,364 | $ | 1.85 | $ | 56,519 | $ | 1.68 | $ | 74,896 | $ | 2.18 | $ | 98,647 | $ | 2.87 | $ | 218,402 | $ | 6.51 | $ | 300,134 | $ | 8.91 | ||||||||||||||||||||||||||||||||||
| Less: PPP net income (loss) (after tax) | (5,956) | (0.18) | 5,846 | 0.18 | 13,066 | 0.39 | 24,713 | 0.72 | 64,323 | 1.87 | 37,669 | 1.12 | 195,050 | 5.79 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income to common shareholders, excluding PPP | 31,579 | 0.95 | 55,518 | 1.67 | 43,453 | 1.29 | 50,183 | 1.46 | 34,324 | 1.00 | 180,733 | 5.39 | 105,084 | 3.12 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciling items (after tax): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | — | — | — | — | — | — | 1,585 | 0.05 | — | — | 39,621 | 1.18 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Severance expense | — | — | 1,058 | 0.03 | — | — | — | — | — | — | 1,058 | 0.03 | 1,517 | 0.05 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Impairments on fixed assets and leases | — | — | 126 | 0.00 | 705 | 0.02 | 220 | 0.01 | 1,118 | 0.03 | 1,051 | 0.03 | 1,118 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Merger and acquisition related expenses | — | — | — | — | — | — | — | — | — | — | — | — | 320 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | — | 18,221 | 0.55 | — | — | — | — | — | — | 18,221 | 0.54 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal reserves | — | — | — | — | — | — | — | — | — | — | — | — | 897 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | 13,543 | 0.41 | 1,859 | 0.06 | 2,494 | 0.07 | 1,030 | 0.03 | 43 | 0.00 | 18,926 | 0.56 | (26,015) | (0.77) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | — | — | — | — | — | — | — | — | — | — | 2,150 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | — | — | — | — | — | — | — | — | 18,716 | 0.56 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | 202 | 0.01 | (358) | (0.01) | (351) | (0.01) | (736) | (0.02) | (180) | (0.01) | (1,243) | (0.04) | (1,285) | (0.04) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | — | — | — | — | — | — | — | — | — | — | — | — | 4,707 | 0.14 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on redemption of preferred stock | — | — | — | — | — | — | — | — | — | — | — | — | 2,820 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Core earnings, excluding PPP | $ | 45,324 | $ | 1.37 | $ | 76,424 | $ | 2.30 | $ | 46,301 | $ | 1.38 | $ | 50,697 | $ | 1.48 | $ | 36,890 | $ | 1.07 | $ | 218,746 | $ | 6.51 | $ | 149,650 | $ | 4.44 | ||||||||||||||||||||||||||||||||||
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
| Core Return on Average Assets - Customers Bancorp | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| GAAP net income | $ | 28,711 | $ | 63,912 | $ | 58,650 | $ | 76,761 | $ | 100,669 | $ | 228,034 | $ | 314,647 | |||||||||||||||||||||||||||
| Reconciling items (after tax): | |||||||||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | — | — | 1,585 | — | 39,621 | ||||||||||||||||||||||||||||||||||
| Severance expense | — | 1,058 | — | — | — | 1,058 | 1,517 | ||||||||||||||||||||||||||||||||||
| Impairments on fixed assets and leases | — | 126 | 705 | 220 | 1,118 | 1,051 | 1,118 | ||||||||||||||||||||||||||||||||||
Merger and acquisition related expenses | — | — | — | — | — | — | 320 | ||||||||||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | 18,221 | — | — | — | 18,221 | — | ||||||||||||||||||||||||||||||||||
| Legal reserves | — | — | — | — | — | — | 897 | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | 13,543 | 1,859 | 2,494 | 1,030 | 43 | 18,926 | (26,015) | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | — | — | — | — | 2,150 | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | — | — | 18,716 | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | 202 | (358) | (351) | (736) | (180) | (1,243) | (1,285) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | — | — | — | — | — | — | 4,707 | ||||||||||||||||||||||||||||||||||
Core net income | $ | 42,456 | $ | 84,818 | $ | 61,498 | $ | 77,275 | $ | 103,235 | $ | 266,047 | $ | 356,393 | |||||||||||||||||||||||||||
Average total assets | $ | 20,717,362 | $ | 20,514,366 | $ | 20,056,020 | $ | 19,129,330 | $ | 19,214,241 | $ | 20,109,744 | $ | 19,199,936 | |||||||||||||||||||||||||||
| Core return on average assets | 0.81 | % | 1.64 | % | 1.23 | % | 1.64 | % | 2.13 | % | 1.32 | % | 1.86 | % | |||||||||||||||||||||||||||
| Core Return on Average Assets, excluding PPP - Customers Bancorp | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| GAAP net income | $ | 28,711 | $ | 63,912 | $ | 58,650 | $ | 76,761 | $ | 100,669 | $ | 228,034 | $ | 314,647 | |||||||||||||||||||||||||||
| Less: PPP net income (loss) (after tax) | (5,956) | 5,846 | 13,066 | 24,713 | 64,323 | 37,669 | 195,050 | ||||||||||||||||||||||||||||||||||
| Net income, excluding PPP | 34,667 | 58,066 | 45,584 | 52,048 | 36,346 | 190,365 | 119,597 | ||||||||||||||||||||||||||||||||||
| Reconciling items (after tax): | |||||||||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | — | — | 1,585 | — | 39,621 | ||||||||||||||||||||||||||||||||||
| Severance expense | — | 1,058 | — | — | — | 1,058 | 1,517 | ||||||||||||||||||||||||||||||||||
| Impairments on fixed assets and leases | — | 126 | 705 | 220 | 1,118 | 1,051 | 1,118 | ||||||||||||||||||||||||||||||||||
Merger and acquisition related expenses | — | — | — | — | — | — | 320 | ||||||||||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | 18,221 | — | — | — | 18,221 | — | ||||||||||||||||||||||||||||||||||
| Legal reserves | — | — | — | — | — | — | 897 | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | 13,543 | 1,859 | 2,494 | 1,030 | 43 | 18,926 | (26,015) | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | — | — | — | — | 2,150 | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | — | — | 18,716 | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | 202 | (358) | (351) | (736) | (180) | (1,243) | (1,285) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | — | — | — | — | — | — | 4,707 | ||||||||||||||||||||||||||||||||||
Core net income, excluding PPP | $ | 48,412 | $ | 78,972 | $ | 48,432 | $ | 52,562 | $ | 38,912 | $ | 228,378 | $ | 161,343 | |||||||||||||||||||||||||||
Average total assets | $ | 20,717,362 | $ | 20,514,366 | $ | 20,056,020 | $ | 19,129,330 | $ | 19,214,241 | $ | 20,109,744 | $ | 19,199,936 | |||||||||||||||||||||||||||
| Core return on average assets, excluding PPP | 0.93 | % | 1.53 | % | 0.97 | % | 1.11 | % | 0.80 | % | 1.14 | % | 0.84 | % | |||||||||||||||||||||||||||
28
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
| 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 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| GAAP net income | $ | 28,711 | $ | 63,912 | $ | 58,650 | $ | 76,761 | $ | 100,669 | $ | 228,034 | $ | 314,647 | |||||||||||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||||||||||||||
Income tax expense | 7,136 | 17,899 | 18,896 | 19,332 | 12,993 | 63,263 | 86,940 | ||||||||||||||||||||||||||||||||||
Provision (benefit) for credit losses | 28,216 | (7,994) | 23,847 | 15,997 | 13,890 | 60,066 | 27,426 | ||||||||||||||||||||||||||||||||||
| Provision (benefit) for credit losses on unfunded commitments | 153 | 254 | 608 | (109) | 352 | 906 | (220) | ||||||||||||||||||||||||||||||||||
| Severance expense | — | 1,363 | — | — | — | 1,363 | 2,004 | ||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | — | — | 1,585 | — | 39,621 | ||||||||||||||||||||||||||||||||||
| Impairments on fixed assets and leases | — | 162 | 914 | 286 | 1,260 | 1,362 | 1,260 | ||||||||||||||||||||||||||||||||||
Merger and acquisition related expenses | — | — | — | — | — | — | 418 | ||||||||||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | 23,465 | — | — | — | 23,465 | — | ||||||||||||||||||||||||||||||||||
| Legal reserves | — | — | — | — | — | — | 1,185 | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | 16,909 | 2,394 | 3,232 | 1,339 | 49 | 23,874 | (34,112) | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | — | — | — | — | 2,840 | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | — | — | 24,467 | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | 252 | (461) | (455) | (957) | (203) | (1,621) | (1,646) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | — | — | — | — | — | — | 6,216 | ||||||||||||||||||||||||||||||||||
Adjusted net income - pre-tax pre-provision | $ | 81,377 | $ | 100,994 | $ | 105,692 | $ | 112,649 | $ | 130,595 | $ | 400,712 | $ | 471,046 | |||||||||||||||||||||||||||
Average total assets | $ | 20,717,362 | $ | 20,514,366 | $ | 20,056,020 | $ | 19,129,330 | $ | 19,214,241 | $ | 20,109,744 | $ | 19,199,936 | |||||||||||||||||||||||||||
| Adjusted ROAA - pre-tax pre-provision | 1.56 | % | 1.95 | % | 2.11 | % | 2.39 | % | 2.70 | % | 1.99 | % | 2.45 | % | |||||||||||||||||||||||||||
| 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 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| GAAP net income | $ | 28,711 | $ | 63,912 | $ | 58,650 | $ | 76,761 | $ | 100,669 | $ | 228,034 | $ | 314,647 | |||||||||||||||||||||||||||
| Less: PPP net income (loss) (after tax) | (5,956) | 5,846 | 13,066 | 24,713 | 64,323 | 37,669 | 195,050 | ||||||||||||||||||||||||||||||||||
| Net income, excluding PPP | 34,667 | 58,066 | 45,584 | 52,048 | 36,346 | 190,365 | 119,597 | ||||||||||||||||||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||||||||||||||
Income tax expense | 7,136 | 17,899 | 18,896 | 19,332 | 12,993 | 63,263 | 86,940 | ||||||||||||||||||||||||||||||||||
Provision (benefit) for credit losses | 28,216 | (7,994) | 23,847 | 15,997 | 13,890 | 60,066 | 27,426 | ||||||||||||||||||||||||||||||||||
| Provision (benefit) for credit losses on unfunded commitments | 153 | 254 | 608 | (109) | 352 | 906 | (220) | ||||||||||||||||||||||||||||||||||
| Severance expense | — | 1,363 | — | — | — | 1,363 | 2,004 | ||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | — | — | 1,585 | — | 39,621 | ||||||||||||||||||||||||||||||||||
| Impairments on fixed assets and leases | — | 162 | 914 | 286 | 1,260 | 1,362 | 1,260 | ||||||||||||||||||||||||||||||||||
Merger and acquisition related expenses | — | — | — | — | — | — | 418 | ||||||||||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | 23,465 | — | — | — | 23,465 | — | ||||||||||||||||||||||||||||||||||
| Legal reserves | — | — | — | — | — | — | 1,185 | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | 16,909 | 2,394 | 3,232 | 1,339 | 49 | 23,874 | (34,112) | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | — | — | — | — | 2,840 | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | — | — | 24,467 | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | 252 | (461) | (455) | (957) | (203) | (1,621) | (1,646) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | — | — | — | — | — | — | 6,216 | ||||||||||||||||||||||||||||||||||
Adjusted net income - pre-tax pre-provision, excluding PPP | $ | 87,333 | $ | 95,148 | $ | 92,626 | $ | 87,936 | $ | 66,272 | $ | 363,043 | $ | 275,996 | |||||||||||||||||||||||||||
Average total assets | $ | 20,717,362 | $ | 20,514,366 | $ | 20,056,020 | $ | 19,129,330 | $ | 19,214,241 | $ | 20,109,744 | $ | 19,199,936 | |||||||||||||||||||||||||||
| Adjusted ROAA - pre-tax pre-provision, excluding PPP | 1.67 | % | 1.84 | % | 1.85 | % | 1.86 | % | 1.37 | % | 1.81 | % | 1.44 | % | |||||||||||||||||||||||||||
29
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
| Core Return on Average Common Equity - Customers Bancorp | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| GAAP net income to common shareholders | $ | 25,623 | $ | 61,364 | $ | 56,519 | $ | 74,896 | $ | 98,647 | $ | 218,402 | $ | 300,134 | |||||||||||||||||||||||||||
| Reconciling items (after tax): | |||||||||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | — | — | 1,585 | — | 39,621 | ||||||||||||||||||||||||||||||||||
| Severance expense | — | 1,058 | — | — | — | 1,058 | 1,517 | ||||||||||||||||||||||||||||||||||
| Impairments on fixed assets and leases | — | 126 | 705 | 220 | 1,118 | 1,051 | 1,118 | ||||||||||||||||||||||||||||||||||
| Merger and acquisition related expenses | — | — | — | — | — | — | 320 | ||||||||||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | 18,221 | — | — | — | 18,221 | — | ||||||||||||||||||||||||||||||||||
| Legal reserves | — | — | — | — | — | — | 897 | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | 13,543 | 1,859 | 2,494 | 1,030 | 43 | 18,926 | (26,015) | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | — | — | — | — | 2,150 | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | — | — | 18,716 | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | 202 | (358) | (351) | (736) | (180) | (1,243) | (1,285) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | — | — | — | — | — | — | 4,707 | ||||||||||||||||||||||||||||||||||
| Loss on redemption of preferred stock | — | — | — | — | — | — | 2,820 | ||||||||||||||||||||||||||||||||||
| Core earnings | $ | 39,368 | $ | 82,270 | $ | 59,367 | $ | 75,410 | $ | 101,213 | $ | 256,415 | $ | 344,700 | |||||||||||||||||||||||||||
| Average total common shareholders' equity | $ | 1,263,190 | $ | 1,259,711 | $ | 1,244,819 | $ | 1,252,022 | $ | 1,179,478 | $ | 1,254,979 | $ | 1,043,906 | |||||||||||||||||||||||||||
| Core return on average common equity | 12.36 | % | 25.91 | % | 19.13 | % | 24.43 | % | 34.04 | % | 20.43 | % | 33.02 | % | |||||||||||||||||||||||||||
| Adjusted ROCE - Pre-Tax Pre-Provision - Customers Bancorp | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| GAAP net income to common shareholders | $ | 25,623 | $ | 61,364 | $ | 56,519 | $ | 74,896 | $ | 98,647 | $ | 218,402 | $ | 300,134 | |||||||||||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||||||||||||||
Income tax expense | 7,136 | 17,899 | 18,896 | 19,332 | 12,993 | 63,263 | 86,940 | ||||||||||||||||||||||||||||||||||
Provision (benefit) for credit losses | 28,216 | (7,994) | 23,847 | 15,997 | 13,890 | 60,066 | 27,426 | ||||||||||||||||||||||||||||||||||
| Provision (benefit) for credit losses on unfunded commitments | 153 | 254 | 608 | (109) | 352 | 906 | (220) | ||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | — | — | 1,585 | — | 39,621 | ||||||||||||||||||||||||||||||||||
| Severance expense | — | 1,363 | — | — | — | 1,363 | 2,004 | ||||||||||||||||||||||||||||||||||
| Impairments on fixed assets and leases | — | 162 | 914 | 286 | 1,260 | 1,362 | 1,260 | ||||||||||||||||||||||||||||||||||
| Merger and acquisition related expenses | — | — | — | — | — | — | 418 | ||||||||||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | 23,465 | — | — | — | 23,465 | — | ||||||||||||||||||||||||||||||||||
| Legal reserves | — | — | — | — | — | — | 1,185 | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | 16,909 | 2,394 | 3,232 | 1,339 | 49 | 23,874 | (34,112) | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | — | — | — | — | 2,840 | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | — | — | 24,467 | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | 252 | (461) | (455) | (957) | (203) | (1,621) | (1,646) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | — | — | — | — | — | — | 6,216 | ||||||||||||||||||||||||||||||||||
| Loss on redemption of preferred stock | — | — | — | — | — | — | 2,820 | ||||||||||||||||||||||||||||||||||
| Pre-tax pre-provision adjusted net income available to common shareholders | $ | 78,289 | $ | 98,446 | $ | 103,561 | $ | 110,784 | $ | 128,573 | $ | 391,080 | $ | 459,353 | |||||||||||||||||||||||||||
| Average total common shareholders' equity | $ | 1,263,190 | $ | 1,259,711 | $ | 1,244,819 | $ | 1,252,022 | $ | 1,179,478 | $ | 1,254,979 | $ | 1,043,906 | |||||||||||||||||||||||||||
| Adjusted ROCE - pre-tax pre-provision | 24.59 | % | 31.01 | % | 33.37 | % | 35.89 | % | 43.25 | % | 31.16 | % | 44.00 | % | |||||||||||||||||||||||||||
30
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
| Net Interest Margin, Tax Equivalent, excluding PPP - Customers Bancorp | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| GAAP net interest income | $ | 135,137 | $ | 159,032 | $ | 164,852 | $ | 164,699 | $ | 193,694 | $ | 623,720 | $ | 685,074 | |||||||||||||||||||||||||||
| PPP net interest (income) expense | 2,791 | (9,632) | (18,946) | (34,615) | (78,647) | (60,402) | (261,279) | ||||||||||||||||||||||||||||||||||
| Tax-equivalent adjustment | 342 | 334 | 270 | 239 | 276 | 1,185 | 1,147 | ||||||||||||||||||||||||||||||||||
| Net interest income, tax equivalent, excluding PPP | $ | 138,270 | $ | 149,734 | $ | 146,176 | $ | 130,323 | $ | 115,323 | $ | 564,503 | $ | 424,942 | |||||||||||||||||||||||||||
| GAAP average total interest earning assets | $ | 20,211,028 | $ | 20,021,455 | $ | 19,525,936 | $ | 18,572,308 | $ | 18,576,433 | $ | 19,588,374 | $ | 18,566,321 | |||||||||||||||||||||||||||
| Average PPP loans | (1,065,919) | (1,349,403) | (1,863,429) | (2,641,318) | (3,898,607) | (1,724,659) | (5,108,192) | ||||||||||||||||||||||||||||||||||
| Adjusted average total interest earning assets | $ | 19,145,109 | $ | 18,672,052 | $ | 17,662,507 | $ | 15,930,990 | $ | 14,677,826 | $ | 17,863,715 | $ | 13,458,129 | |||||||||||||||||||||||||||
| Net interest margin, tax equivalent, excluding PPP | 2.87 | % | 3.18 | % | 3.32 | % | 3.32 | % | 3.12 | % | 3.16 | % | 3.16 | % | |||||||||||||||||||||||||||
| Loan Yield, excluding PPP | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| Interest income on loans and leases | $ | 218,740 | $ | 200,457 | $ | 168,941 | $ | 157,175 | $ | 198,000 | $ | 745,313 | $ | 736,822 | |||||||||||||||||||||||||||
| PPP interest income | (7,249) | (14,666) | (20,572) | (36,894) | (82,086) | (79,381) | (279,157) | ||||||||||||||||||||||||||||||||||
| Interest income on core loans (Loans and leases, excluding PPP) | $ | 211,491 | $ | 185,791 | $ | 148,369 | $ | 120,281 | $ | 115,914 | $ | 665,932 | $ | 457,665 | |||||||||||||||||||||||||||
| Average total loans and leases | $ | 15,388,003 | $ | 15,653,983 | $ | 14,918,498 | $ | 13,656,991 | $ | 14,335,370 | $ | 14,911,165 | $ | 15,583,948 | |||||||||||||||||||||||||||
| Average PPP loans | (1,065,919) | (1,349,403) | (1,863,429) | (2,641,318) | (3,898,607) | (1,724,659) | (5,108,192) | ||||||||||||||||||||||||||||||||||
| Adjusted average total loans and leases | $ | 14,322,084 | $ | 14,304,580 | $ | 13,055,069 | $ | 11,015,673 | $ | 10,436,763 | $ | 13,186,506 | $ | 10,475,756 | |||||||||||||||||||||||||||
| Loan yield, excluding PPP | 5.86 | % | 5.15 | % | 4.56 | % | 4.43 | % | 4.41 | % | 5.05 | % | 4.37 | % | |||||||||||||||||||||||||||
| Core Efficiency Ratio - Customers Bancorp | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
| GAAP net interest income | $ | 135,137 | $ | 159,032 | $ | 164,852 | $ | 164,699 | $ | 193,694 | $ | 623,720 | $ | 685,074 | |||||||||||||||||||||||||||
| GAAP non-interest income | $ | 7,345 | $ | (9,017) | $ | 12,746 | $ | 21,198 | $ | 16,991 | $ | 32,272 | $ | 77,867 | |||||||||||||||||||||||||||
| Loss on sale of consumer installment loans | — | 23,465 | — | — | — | 23,465 | — | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | 16,909 | 2,394 | 3,232 | 1,339 | 49 | 23,874 | (34,112) | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | 252 | (461) | (455) | (957) | (203) | (1,621) | (1,646) | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | — | — | 24,467 | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | — | — | — | — | 2,840 | ||||||||||||||||||||||||||||||||||
| Core non-interest income | 24,506 | 16,381 | 15,523 | 21,580 | 16,837 | 77,990 | 69,416 | ||||||||||||||||||||||||||||||||||
| Core revenue | $ | 159,643 | $ | 175,413 | $ | 180,375 | $ | 186,279 | $ | 210,531 | $ | 701,710 | $ | 754,490 | |||||||||||||||||||||||||||
| GAAP non-interest expense | $ | 78,419 | $ | 76,198 | $ | 76,205 | $ | 73,807 | $ | 81,548 | $ | 304,629 | $ | 294,307 | |||||||||||||||||||||||||||
| Severance expense | — | (1,363) | — | — | — | (1,363) | (2,004) | ||||||||||||||||||||||||||||||||||
| Impairments on fixed assets and leases | — | (162) | (914) | (286) | (1,260) | (1,362) | (1,260) | ||||||||||||||||||||||||||||||||||
| Legal reserves | — | — | — | — | — | — | (1,185) | ||||||||||||||||||||||||||||||||||
| Merger and acquisition related expenses | — | — | — | — | — | — | (418) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | — | — | — | — | — | — | (6,216) | ||||||||||||||||||||||||||||||||||
| Core non-interest expense | $ | 78,419 | $ | 74,673 | $ | 75,291 | $ | 73,521 | $ | 80,288 | $ | 301,904 | $ | 283,224 | |||||||||||||||||||||||||||
Core efficiency ratio (1) | 49.12 | % | 42.57 | % | 41.74 | % | 39.47 | % | 38.14 | % | 43.02 | % | 37.54 | % | |||||||||||||||||||||||||||
(1) Core efficiency ratio calculated as core non-interest expense divided by core revenue.
31
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
| Tangible Common Equity to Tangible Assets - Customers Bancorp | |||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||
| GAAP total shareholders' equity | $ | 1,402,961 | $ | 1,386,931 | $ | 1,353,390 | $ | 1,377,406 | $ | 1,366,217 | |||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||
| Preferred stock | (137,794) | (137,794) | (137,794) | (137,794) | (137,794) | ||||||||||||||||||||||||
| Goodwill and other intangibles | (3,629) | (3,629) | (3,629) | (3,678) | (3,736) | ||||||||||||||||||||||||
| Tangible common equity | $ | 1,261,538 | $ | 1,245,508 | $ | 1,211,967 | $ | 1,235,934 | $ | 1,224,687 | |||||||||||||||||||
| GAAP total assets | $ | 20,896,112 | $ | 20,367,621 | $ | 20,251,996 | $ | 19,163,708 | $ | 19,575,028 | |||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||
| Goodwill and other intangibles | (3,629) | (3,629) | (3,629) | (3,678) | (3,736) | ||||||||||||||||||||||||
| Tangible assets | $ | 20,892,483 | $ | 20,363,992 | $ | 20,248,367 | $ | 19,160,030 | $ | 19,571,292 | |||||||||||||||||||
| Tangible common equity to tangible assets | 6.04 | % | 6.12 | % | 5.99 | % | 6.45 | % | 6.26 | % | |||||||||||||||||||
| Tangible Common Equity to Tangible Assets, excluding PPP - Customers Bancorp | |||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||
| GAAP total shareholders' equity | $ | 1,402,961 | $ | 1,386,931 | $ | 1,353,390 | $ | 1,377,406 | $ | 1,366,217 | |||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||
| Preferred stock | (137,794) | (137,794) | (137,794) | (137,794) | (137,794) | ||||||||||||||||||||||||
| Goodwill and other intangibles | (3,629) | (3,629) | (3,629) | (3,678) | (3,736) | ||||||||||||||||||||||||
| Tangible common equity | $ | 1,261,538 | $ | 1,245,508 | $ | 1,211,967 | $ | 1,235,934 | $ | 1,224,687 | |||||||||||||||||||
| GAAP total assets | $ | 20,896,112 | $ | 20,367,621 | $ | 20,251,996 | $ | 19,163,708 | $ | 19,575,028 | |||||||||||||||||||
| Loans receivable, PPP | (998,153) | (1,154,632) | (1,570,160) | (2,195,902) | (3,250,008) | ||||||||||||||||||||||||
| Total assets, excluding PPP | $ | 19,897,959 | $ | 19,212,989 | $ | 18,681,836 | $ | 16,967,806 | $ | 16,325,020 | |||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||
| Goodwill and other intangibles | (3,629) | (3,629) | (3,629) | (3,678) | (3,736) | ||||||||||||||||||||||||
| Tangible assets, excluding PPP | $ | 19,894,330 | $ | 19,209,360 | $ | 18,678,207 | $ | 16,964,128 | $ | 16,321,284 | |||||||||||||||||||
| Tangible common equity to tangible assets, excluding PPP | 6.34 | % | 6.48 | % | 6.49 | % | 7.29 | % | 7.50 | % | |||||||||||||||||||
| Tangible Book Value per Common Share - Customers Bancorp | |||||||||||||||||||||||||||||
| (Dollars in thousands except share and per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||
| GAAP total shareholders' equity | $ | 1,402,961 | $ | 1,386,931 | $ | 1,353,390 | $ | 1,377,406 | $ | 1,366,217 | |||||||||||||||||||
| Reconciling Items: | |||||||||||||||||||||||||||||
| Preferred stock | (137,794) | (137,794) | (137,794) | (137,794) | (137,794) | ||||||||||||||||||||||||
| Goodwill and other intangibles | (3,629) | (3,629) | (3,629) | (3,678) | (3,736) | ||||||||||||||||||||||||
| Tangible common equity | $ | 1,261,538 | $ | 1,245,508 | $ | 1,211,967 | $ | 1,235,934 | $ | 1,224,687 | |||||||||||||||||||
| Common shares outstanding | 32,373,697 | 32,475,502 | 32,449,486 | 32,957,847 | 32,913,267 | ||||||||||||||||||||||||
| Tangible book value per common share | $ | 38.97 | $ | 38.35 | $ | 37.35 | $ | 37.50 | $ | 37.21 | |||||||||||||||||||
| Core Loans (Total Loans and Leases, excluding PPP) | |||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||
| Total loans and leases | $ | 15,794,671 | $ | 15,336,688 | $ | 15,664,353 | $ | 14,073,518 | $ | 14,568,885 | |||||||||||||||||||
| Loans receivable, PPP | (998,153) | (1,154,632) | (1,570,160) | (2,195,902) | (3,250,008) | ||||||||||||||||||||||||
| Core Loans (Loans and leases, excluding PPP) | $ | 14,796,518 | $ | 14,182,056 | $ | 14,094,193 | $ | 11,877,616 | $ | 11,318,877 | |||||||||||||||||||
32
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
| Total Assets, excluding PPP | |||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||
| Total assets | $ | 20,896,112 | $ | 20,367,621 | $ | 20,251,996 | $ | 19,163,708 | $ | 19,575,028 | |||||||||||||||||||
| Loans receivable, PPP | (998,153) | (1,154,632) | (1,570,160) | (2,195,902) | (3,250,008) | ||||||||||||||||||||||||
| Total assets, excluding PPP | $ | 19,897,959 | $ | 19,212,989 | $ | 18,681,836 | $ | 16,967,806 | $ | 16,325,020 | |||||||||||||||||||
| Coverage of credit loss reserves for loans and leases held for investment, excluding PPP | |||||||||||||||||||||||||||||
| (Dollars in thousands except per share data) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||
| Loans and leases receivable | $ | 14,143,047 | $ | 13,762,374 | $ | 13,783,155 | $ | 12,314,757 | $ | 12,268,306 | |||||||||||||||||||
| Loans receivable, PPP | (998,153) | (1,154,632) | (1,570,160) | (2,195,902) | (3,250,008) | ||||||||||||||||||||||||
| Loans and leases held for investment, excluding PPP | $ | 13,144,894 | $ | 12,607,742 | $ | 12,212,995 | $ | 10,118,855 | $ | 9,018,298 | |||||||||||||||||||
| Allowance for credit losses on loans and leases | $ | 130,924 | $ | 130,197 | $ | 156,530 | $ | 145,847 | $ | 137,804 | |||||||||||||||||||
| Coverage of credit loss reserves for loans and leases held for investment, excluding PPP | 1.00 | % | 1.03 | % | 1.28 | % | 1.44 | % | 1.53 | % | |||||||||||||||||||
33
“A Digital-Forward Super-Community Bank“ Investor Presentation: Q4 2022 / FY 2022 Let’s take on tomorrow. January 2023
2 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp In addition to historical information, this presentation may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “project”, or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: The impact of the ongoing pandemic on the U.S. economy and customer behavior, the impact that changes in economy have on the performance of our loan and lease portfolio, the market value of our investment securities, the demand for our products and services and the availability of sources of funding, the continued success and acceptance of our blockchain payments system; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that effect market interest rates and the money supply; the 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 changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2021, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law. This does not constitute an offer to sell, or a solicitation of an offer to buy, any security in any state or jurisdiction in which such offer, solicitation or sale would be unlawful. Forward-Looking Statements
3 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Customers Bancorp, Inc. NYSE: CUBI Headquarters West Reading, PA Offices1 33 FTE Employees 668 Market Capitalization As of 01/20/2023 $1.0B Total Assets $20.9B Tangible Book Value2 $38.97 Share price As of 01/20/2023 $31.12 Data as of 12/31/2022, unless otherwise noted. (1) Offices includes branches, executive offices, Private Banking Offices and Loan Production Offices. (2) Non-GAAP Measure, refer to Appendix for reconciliation. A forward thinking super-community bank focused on superior customer service through high-tech, high-touch model 1. Includes Capital Call lines and Lender Finance Digital Banking Consumer – Checking & Saving accounts, Personal/Student Loans, Credit Cards Commercial– Fintech Banking (BaaS/MPL), Transaction Banking (Payments & Treasury Services, CBITTM), SMB Bundle and Credit Cards Community Banking Regional C&I, Investment CRE, Multifamily, SBA and Residential Mortgages with presence in Northeast and limited presence in Carolinas, Florida and Texas Checking & Saving accounts, CDs, Credit Cards Customers Bancorp Snapshot Corporate & Specialty Banking National corporate niche businesses, including Fund Finance1, Real Estate Specialty Finance, Financial Institutions Group (FIG), Loans to Mortgage Companies, Equipment Finance, Tech & Venture and Healthcare
4 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpCommunity Banking: Single point of contact model delivers best in class customer service with branch-lite footprint • Deep community ties resulting in primary banking relationship, with only 7 traditional branches • 40% market share in home market Regional C&I SBA 25% 25% 38% 9% Regional C&I SBA Investment CRE Multifamily Mortgages • Top 40 nationwide SBA lender • 96% of portfolio in Q4’22 is government guaranteed Community Banking-Loans Q4’22, percent Total portfolio: $5.9 billion Footprint Expansion geographies Multifamily • Long standing relationships with local owners, generational families and investors 4%
5 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpCorporate & Specialty Banking: Highly experienced, specialized teams serving corporate clients through diversified product offering • Capital call line business grew to over $900 million by year end 2022 • Lender Finance business led to strong cross-sell opportunities with PE/Venture Capital managers across multiple products which is leading to deposit pipeline growth • Targeted decline from 32% of total loans ex PPP2 in Q4’20 to 10% in Q4’22 • Stable balances at $1.4-$1.5 billion and a significant proportion still funded with NIB deposits even with industry decline in liquidity and deposits Fund Finance1 Loans to Mortgage Companies 51% 20% 10% 6% 6% 6% Fund Finance1 Equipment Finance Real Estate Specialty Finance Loans to Mortgage Companies Tech & Venture Healthcare FIG Corporate & Specialty Banking-Loans Q4’22, percent1% 2018 $7.2 2022 $2.2 35% Corporate & Specialty Banking-Loans 2018-2022, $ billions 1. Includes Capital Call lines and Lender Finance 2. Non-GAAP Measure, refer to Appendix for reconciliation. Total portfolio: $7.2 billion • Growth of $400 million+ since inception in Q1’22 • Leveraging deep relationships with top VCs and sponsors and building a strong reputation in the market • Significant low cost deposit pipeline Tech & Venture 1%
6 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpDigital Banking: Strong growth in lending and fees while attracting significant deposits • Banking partner to best in class fintechs who use our API enabled infrastructure to scale their business • Recurring high-margin and sticky revenue • Pass through funding model allows for transaction fees and interest income with negligible credit risk • Crossed over $2.5 billion in consumer installment originations with ~100k customers • Funded 350k+ PPP loans for over $10.0 billion earning more than $350 million in origination fees plus interest income Fintech Banking (Banking-as- a-Service) Digital Lending Transaction Banking • 24/7 API enabled fully integrated Treasury and Payments offerings supporting low cost deposit growth and fee income generation 2019 $1.4 2022 $1.2 Digital Banking – Loans ex PPP1 2019-2022, $ billions 1. Consumer Installment HFI loans only API-enabled Digital Solutions Digital Onboarding API Enabled FX CBIT & Crypto On/Off Ramps ERP Integrations Customer Facing API Library API Enabled Wires and ACH
7 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpCustomers Bank has demonstrated continued organic growth while maintaining low credit risk profile 26% annual growth in total deposits $8.4 billion increase in total assets ex PPP1 (2019- 2022) as PPP loans were reinvested into core loans and AFS portfolio Continued loan growth will be fueled by normalization of AFS portfolio $3.3 $20.9 2018 $16.3$13.9 2019 2020 $4.6 2021 $1.0 $11.5 $19.9 2022 $9.8 $18.4 $19.6 21% Total Assets $ billions PPP $11.3 2018 202220212019 $11.3 $4.6 $15.8$14.6 2020 $3.3 $1.0 $14.8 $8.5 $10.1 $15.8 17% Investments AFS portfolio $ billions Total Loans $ billions Total Deposits $ billions 2018 2019 $18.2 2022 $11.3 2020 $7.1 2021 $8.6 $16.826% 120% 116% 100% 67% 81%Loans ex PPP1 to Deposits 1. Non-GAAP Measure, refer to Appendix for reconciliation. 2019 20202018 20222021 $0.7 $0.6 $1.2 $3.8 $3.0 46%
8 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpCustomers Bank growth has come with a dramatic increase in profitability and margins NII ex PPP1 has more than doubled over the last four years Recurring earnings power has increased ~2.5x since 2019 2021 $424$349 2018 2019 $685 $55 $261 2020 $59 $565 2022 $258 $277 $404 $624 25% NII $ millions PPP $1.31 $1.12 20214 $8.91 20183 20193 20203 $3.12$2.05 20224 $1.78 $3.74 $6.51 38% NIM ex PPP1 percent EPS per share ROE2 percent 2.58% 20202018 2021 2.75% 2019 2.96% 3.16% 3.16% 2022 1. Non-GAAP Measure, refer to Appendix for reconciliation. 2. Includes impact of PPP 3. As originally reported, inclusive of continuing and discontinued operations. 4. Includes continuing operations 7.9% 8.3% 14.6% 17.4% 2020320183 20193 28.8% 20214 20224 $2.43 $5.39 $5.79
9 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Q4’22 (vs. Q4’21) Profitability Balance Sheet Credit 2.67% vs. 4.14% NIM $20.9B +7% Total Assets 0.15% -10 bps NPA Ratio 0.55% vs. 2.08% ROAA $15.8B +8% Total Loans and Leases $30.7M -38% NPLs $18.2B +8% Total Deposits 426.0% vs. 277.7% Reserves to NPLs Highlights – GAAP 1. Net income to common shareholders Highlights Q4’22 FY’22 $6.51$0.77 Diluted EPS $218.4 M$25.6 M 17.4%8.0% Net income1 ROCE
10 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Q4’22 (vs. Q4’21)1 Profitability Balance Sheet Credit 2.87% vs. 3.12% NIM1,2 $19.9B +22% Core Assets1,2 0.15% -10 bps NPA Ratio4 0.93% vs. 0.80 Core ROAA ex PPP1,2 $14.8B +31% Total Loans and Leases1,2 $30.7M -38% NPLs4 1.67% vs. 1.37% Adjusted PTPP ROAA ex PPP1,2 $18.2B +8% Total Deposits4 426.0% vs. 277.7% Reserves to NPLs4 Highlights – Adjusted/Core 1. Non-GAAP Measure, refer to Appendix for reconciliation. 2. Ex PPP 3. Adjusted for pre-tax provision release of $36.8 million, or $0.86 per diluted share, from the sale of $500 million of consumer installment loans in Q3 2022 4. GAAP metric Highlights Q4’22 FY’22 $5.65$1.37 Core EPS ex PPP1,2,3 $190.0 M$45.3 M 20.4%12.4% Core earnings ex PPP1,2,3 Core ROCE1 +28% +27% +23% +27%
11 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Loans ex PPP-HFI1 $ billions PPP loans Strong core bank loan growth driven by low credit risk Corporate & Specialty Banking vertical $1.2 2018 $6.3 $2.2 2019 $11.3 $5.2 $5.5 $3.4 $4.9 2021 $1.2 2020 $4.6 $5.0 $1.7 $5.9 $7.2 $11.3 $1.4 2022 $8.5 $10.0 $14.5+14% Community Banking2 Corporate & Specialty Banking3 Digital Banking4 1. Non-GAAP Measure, refer to Appendix for reconciliation 2. Includes Multifamily ($2.2B), Regional C&I ($1.5B), Investment CRE ($1.5B), Mortgages ($0.5B), SBA ($0.2B) 3. Includes Capital Call lines & Lender Finance ($3.7B), Loans to Mortgage Companies ($1.4B), Equipment Finance ($0.7B), Real Estate Specialty Finance ($0.5B), Tech & Venture ($0.4B), Healthcare ($0.4B) 4. Consumer Installment HFI portfolio - - $1.0$4.6 $3.3 • HFI loan growth ex PPP1: +$0.3B (2%) QoQ, +$3.2B (28%) YoY • Net growth of $0.3B in Q4’22 driven by Corporate & Specialty Banking ($0.2B) and Community Banking ($0.1B) • Corporate & Specialty Banking primary growth driver in 2022. These are high credit quality verticals targeting 300+ bps spread over SOFR
12 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpSignificant deposit growth while increasing share of DDAs $4.7 $7.8$1.9 $8.6 2021 $6.6 $10.4 $5.2 20192018 $5.8 2022 $7.1 $11.3 $16.8 $18.2 $6.1 2020 $10.9 $2.6 +26% DDA Non-DDA1 Deposits $ billions • Total deposit growth: +$1.4B YoY, 8% YoY • Proportion of DDAs has increased from 27% in 2018 to 57% in 2022 and is well above the pre-pandemic levels • Mix shift and organic growth has resulted in 52% CAGR for DDAs • Institutional customers’ shift from NIB to IB DDAs was the primary driver behind higher interest expense in Q4’22 30% 42% 65% 57%27%% DDA 1. Non-DDA includes savings, money market and CDs
13 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp • $1.5 billion cash flows from AFS and PPP to be reinvested at 400 bps higher than the current yield • Investment securities at 20% of IEA ex PPP provides capacity for loan growth at much higher yields Continued upside from reinvestment of lower yielding assets into higher yielding assets 1. Non-GAAP Measure, refer to Appendix for reconciliation. 2. Includes cash and other interest earning assets Interest earning assets ex PPP1 $ billions 2022 $0.2 $0.1 $19.0 $0.7 $8.5 2018 $0.4 $3.8 $11.3 2021 $0.3 $3.8 2019 $9.3 $0.6 $10.9 $13.0 $15.6 $1.2 $0.6 $11.3 2020 $10.1 $14.8 26% +22% Cash & other2 Loans ex PPP1 Investment securities Spot yields (Q4’22) 4.74% AFS Investments 6.49% Loan yield ex PPP1
14 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpContinued growth in core bank NII 2.80% 3.00% 0.00% 2.90% 2.70% 3.10% 3.20% 3.16% 2.58% 2018 2.75% 2019 2.96% 2020 2021 3.16% 2022 NIM ex PPP1 percent $563 20192018 2020 $258 2021 2022 $277 $349 $424 +22% NII ex PPP1 $ millions 1. Non-GAAP Measure, refer to Appendix for reconciliation • Strong NII growth: +22% CAGR over the last four years • NII growth driven by strong loan growth in C&I including specialty lending verticals • Total PPP NII of ~$376 million in the last 3 years • Significant margin expansion since 2018 • Disciplined loan pricing despite remix into low credit risk floating rate verticals • Higher than usual average cash balances in Q4’22 had negative impact of ~3bps on Q4’22 margin - - $55 $261 $60PPP NII +33%
15 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Core non-interest expense1,2 $ millions • Efficient business model and Operational Excellence related productivity improvements have led to substantial improvement in our efficiency ratio • 2018-22 CAGR- Core non-interest expense1,2: +9%, PPNR: +20% Material improvement in efficiency ratio and strong positive operating leverage 1. Non-GAAP Measure, refer to Appendix for reconciliation. 2. As originally reported, inclusive of continuing and discontinued operations for 2018-2020. Includes continuing operations for 2021-2022 400 300 150 0 350 50 100 200 250 2018 2022 $214 $302+9% Core efficiency ratio1,2 percent 63% 43% 30% 40% 35% 45% 50% 65% 55% 60% 2018 2019 2020 2021 2022 -20%
16 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp 12.9% 12.9% 12.6% 12.5% 12.0% Q4’21 Q1’22 Q3’22Q2’22 Q4’221 Total risk-based capital percent 7.5% 7.3% 6.5% 6.5% 6.3% Q3’22Q2’22Q4’21 7.2% Q1’22 Q4’22 TCE/TA excl PPP2,3 percent 1. Capital ratios are estimated pending final regulatory report. 2. TCE/TA excl PPP negatively impacted by ~0.82% due to AOCI 3. Non-GAAP Measure, refer to Appendix for reconciliation. Strong capital position AOCI 0.8% 10.0% 9.9% 9.7% 9.8% 9.5% Q4’221Q3’22Q4’21 Q1’22 Q2’22 CET1 risk-based capital percent • Total risk-based capital and CET1 risk-based capital within the operating range and well above the regulatory thresholds • TCE/TA excluding PPP2,3 and AOCI was 7.2% in Q4’22
17 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Tangible book value1 Per share • Tangible book value1 has increased by 14% CAGR since 2018 or ~1.7x compared to 1.02x for Mid-Cap Banks2 • Tangible book value1 increased by ~5% in 2022 despite AOCI headwinds Consistent growth in tangible book value 1. Non-GAAP Measure, refer to Appendix for reconciliation. 2. Mid-Cap Banks represented by the KRX index. AOCI 2020 $26.17 2022 $23.32 2018 2019 $27.92 $37.21 2021 $38.97 $4.90 14% $43.87
18 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp~70% of loan book and 90% of loan growth in low-to-no credit risk verticals 1. Includes Capital Call lines and Lender Finance 2. Includes Mortgages, Real Estate Specialty Finance, Tech & Venture, Healthcare and SBA government guaranteed $3.7 $2.2 $1.4 $0.7 $2.0 Low-to-no Credit Risk Loan Portfolio Q4’22, $ billions Other2Fund Finance1 Multifamily Equipment Finance Loans to Mortgage companies ~70% of loan book and 90% of loan growth in 2022 ($3.1 billion out of total $3.5 billion) was in low-to-no risk credit risk verticals Fund Finance1 • No experienced losses since inception in 2015 • Asset-based structure provides solid credit enhancement Multifamily • Only $3.7 million in losses since inception in 2010 • All loans originated with LTV of < 75%. Average DSCR of ~1.47 Loans to Mortgage companies • Only $4.5 million in losses since inception in 2010 • “Agency” product continues to comprise a majority of the portfolio (~90%) Equipment Finance • Only $100k in losses since inception in 2015 • Target markets that are less susceptible to economic stress
19 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp $50 $44 $28 $28 $31 Q4’22Q3’22Q4’21 Q2’22Q1’22 NPL $ millions Commercial NCO percent 0.25% 0.23% 0.14% 0.14% 0.15% Q4’22Q4’21 Q1’22 Q2’22 Q3’22 NPA as percent of total assets percent Credit quality remains strong and reserves are over 400% of NPLs 0.05% 0.22% -0.02% 0.08%1,3 Q4’22Q4’21 0.01% Q3’22Q1’22 Q2’22 • Reserves/NPLs was 426.0% at Q4’22 • Credit quality remains excellent as evidenced by NPAs/Total Assets of only 0.15% at Q4’22 • The Bank has also undertaken several steps to minimize loss risk given the current and forward-looking economic environment 1. Excluding PPP related one time charge-offs of ~$11.0 million in Q4’22 (prior to $7.5 million legal settlement gain and impact of contractual indemnities and recoveries we may receive in future periods) 2. Excludes net charge-offs excludes $2.2 million charge-offs of deposit overdrawn accounts for consumer serviced deposits 3. Non-GAAP Measure, refer to Appendix for reconciliation. 1.47% 1.42% 1.80% 2.53% Q4’22Q4’21 Q1’22 Q2’22 Q3’22 1.61%2,3 0.21% 0.21% 0.47% Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 0.42%1,30.30%2,3 Consumer NCO percent Total NCO percent
20 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp2023 Outlook Metrics Outlook for FY 2023 Loans ex PPP1 NIM ex PPP1 Core EPS ex PPP1,2 Tax rate Tangible book value1 Buyback Core non interest expenseex BMTX1 2022 $14.8 billion $245 million $5.65 22% 9.5% 3.16% CET1 ratio $38.97 Low-mid single digits growth 8-10% growth $6.00-6.25 22-24% 9.5% 2.85-3.05% 1.9 million shares+ $45.00+ Core ROCE1 20.4% 15.0%+ 1. Non-GAAP Measure, refer to Appendix for reconciliation. 2. Adjusted for provision release of $36.8 million ($0.86 per share) in Q3’22 relating to sale of consumer installment loans. Total Core EPS ex PPP of $6.51 for FY 2022 0.8 million shares Deposits $18.2 billion Flattish with focus on reducing high-cost deposits
21 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpKey Investment Highlights Well positioned to manage the risks of dynamic environment o Moderating growth in this environment to maintain/expand margin, improve capital ratios while maintaining profitability o Selective in growing loans, emphasizing growth in no-to-low risk credit verticals o Exceptional credit quality and strong capital ratios o Significant positive operating leverage driven by prudent expense management Strong balance sheet with ample liquidity and funding o Well positioned for meaningful share repurchases as we look to moderate growth and aggressively buyback stock in the near term o ~$9.0 billion in available liquidity to weather any market shocks Strong offense to drive strong performance over the medium term o Demonstrated industry leading proprietary technological capabilities as a high-tech, high-touch bank o Strengthened presence and reputation in local markets laying the foundation for continued loan and deposit growth and team recruitment o Long term investments in fee-generation capabilities Attractive Valuation o Trading at ~0.8X1 tangible book value and ~5X1 2023E consensus. o Buyback authorization of ~1.9 million shares Let’s take on tomorrow. 1 2 3 4 1. Based on share price as of Jan 20, 2023 and 2023 consensus estimates
ANALYST COVERAGE D.A. Davidson Companies Peter Winter Hovde Group David Bishop Jefferies Group LLC Casey Haire Keefe, Bruyette & Woods Inc. Michael Perito Maxim Group Inc. Michael Diana Piper Sandler Companies Frank Schiraldi Stephens Inc. Matt Breese Wedbush Securities Inc. David Chiaverini B. Riley Financial, Inc.
23 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpLiquidity (1) Includes CLOs Liquidity Sources ($000's) 4Q 22 3Q 22 2Q 22 1Q 22 4Q 21 YOY Change Cash and Cash Equivalents $455,807 $404,465 $245,178 $274,600 $518,032 ($62,225) FHLB Available Borrowing Capacity $2,265,499 $2,999,524 $2,924,637 $3,213,767 $1,798,374 $467,124 FRB Available Borrowing Capacity $2,510,189 $2,557,704 $244,802 $214,908 $191,000 $2,319,189 Investments (MV AFS + HTM) US Gov't & Agency Debt $0 $0 $0 $0 $0 $0 Agency & Non-Agency MBS & CMO $1,811,633 $1,844,043 $1,900,917 $2,194,349 $1,838,872 ($27,238) Municipals $0 $7,351 $7,737 $7,950 $8,430 ($8,430) Corporates $595,253 $532,655 $546,336 $593,749 $580,046 $15,207 ABS1 $1,394,388 $1,421,075 $1,160,160 $1,347,981 $1,364,227 $30,161 Other AFS $26,485 $24,864 $24,771 $25,824 $25,575 $910 Less: Pledged Securities HTM ($16,749) ($17,464) ($19,325) ($16,972) ($11,315) ($5,433) Net Unpledged Securities $3,811,010 $3,812,525 $3,620,596 $4,152,881 $3,805,835 $5,176 Total $9,042,505 $9,774,219 $7,035,212 $7,856,156 $6,313,241 $2,729,264
24 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp (1) Utilized Moody’s December 2022 baseline and adverse forecast scenario with qualitative adjustments for Q4 2022 provision. (2) Excludes loans to mortgage companies reported at fair value, loans held for sale and PPP Loans. (3) Non-GAAP measure, refer to non-GAAP reconciliation schedules Credit: Allowance for Credit Losses for Loans and Leases December 31, 2022 ($ in thousands) Amortized Cost Allowance for Credit Losses Lifetime Loss Rate Loans and Leases Receivable: Commercial: Multifamily $ 2,213,019 $ 14,541 0.66% Commercial and Industrial 6,672,830 17,582 0.26% Commercial Real Estate Owner Occupied 885,339 6,454 0.73% Commercial Real Estate Non-Owner Occupied 1,290,730 11,219 0.87% Construction 162,009 1,913 1.18% Total Commercial Loans and Leases Receivable $ 11,223,927 $ 51,709 0.46% Consumer: Residential real estate $ 497,952 $ 6,094 1.22% Manufactured housing 45,076 4,430 9.83% Installment 1,377,939 68,691 4.99% Total Consumer Loans Receivable $ 1,920,967 $ 79,215 4.12% Total Loans and Leases $ 13,144,894 $ 130,924 1.00%3
25 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp 1. DTI and FICO score at time of origination. Note: Data as of December 31, 2022 18% 45% 36% 1% FICO Score1 660-679 750+680-699 700-749 21% 32%24% 13% 6% 4% 0-9.99% 10 – 19.99% 40 – 49.99% 20 – 29.99% 30 – 39.99% > 50% Unknown Geog raphy Profession Deb t to Income ratio Borrower Income 16% 43% 41% <$50K $50K -$100K >$100K 20% 12% 19% 27% 22% West Midwest NortheastSouthwest Southeast Consumer Installment Loans Purp ose 65% 24% 6%5% Personal Loan Student LoanSpecialty Home Improvement 94% 4% 2% Non COVID-19 Impacted Segments Non-Professional Retail & Restaurants Average FICO Score1 ~740 Average DTI ~19.0% Average borrower income ~$107k Weighted average life of ~1.7 years Note: Includes consumer installment HFS
26 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpCUBI Consumer Loans – Portfolio Characteristics Portfolio borrower income trends • 84% of consumer loans with borrower income greater than 50k • 41% of consumer loans with borrower income greater than 100k 4% 1% 14% 18% 43% 45% 39% 36% 50% 20% 60% 0% 40% 10% 30% Q1’ 21 Q4’ 21 Q1’ 20 Q2’ 20 Q3’ 20 Q4’ 20 Q2’ 21 Q3’ 21 Q1’ 22 Q2’ 22 Q3’ 22 Q4’ 22 Portfolio FICO1 score trends 660-679 680-699 700-749 750+ • No consumer loans with FICO score < 660 • 81% of consumer loans with FICO score greater than 700 • Loans with FICO scores>750 increase from 25% in Q2’22 to 36% in Q4’22 14% 16% 41% 43%42% 41% 0% 60% 20% 10% 30% 50% 40% Q1’ 20 Q2’ 20 Q3’ 20 Q4’ 20 Q1’ 21 Q2’ 21 Q3’ 21 Q4’ 21 Q1’ 22 Q2’ 22 Q3’ 22 Q4’ 222 <50k 50k-99.99k >100k 1. FICO score at time of origination. Note: Includes consumer installment HFS
27 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Note: Customers Bancorp’s impairment percentages are considered 1 day+ delinquent or in forbearance. Industry chart is from DV01 Insights Performance Report-Consumer Credit Updated as of November 30, 2022 for Industry and December 31, 2022 for CUBI. December’22 Industry report yet to be released. Impairment of consumer installment loans Percent 06/20 06/2109/20 5.0 12/20 03/2109/19 09/2106/19 12/2103/19 03/2212/19 06/22 10.0 03/20 09/22 0.0 15.0 12/22 CUBI Industry CUBI Consumer installment loans impairment remains well below industry levels and underwriting • CUBI portfolio impairment well below industry levels • CUBI portfolio has outperformed since origination and continues to perform better than underwriting
28 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in Customers' industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. The non-GAAP measures presented are not necessarily comparable to non-GAAP measures that may be presented by other financial institutions. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP. The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document. Reconciliation of Non-GAAP Measures - Unaudited
29 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpReconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Earnings, Excluding PPP - Customers Bancorp ($ in thousands, not including per share amounts) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Twelve Months Ended December 31, 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 $ 25,623 $ 0.77 $ 61,364 $ 1.85 $ 56,519 $ 1.68 $ 74,896 $ 2.18 $ 98,647 $ 2.87 $218,402 $ 6.51 $300,134 $ 8.91 Less: PPP net income (loss) (after tax) (5,956) (0.18) 5,846 0.18 13,066 0.39 24,713 0.72 64,323 1.87 37,669 1.12 195,050 5.79 Net income to common shareholders, excluding PPP 31,579 0.95 55,518 1.67 43,453 1.29 50,183 1.46 34,324 1.00 180,733 5.39 105,084 3.12 Reconciling items (after tax): Net loss from discontinued operations - - - - - - - - 1,585 0.05 - - 39,621 1.18 Severance expense - - 1,058 0.03 - - - - - - 1,058 0.03 1,517 0.05 Impairments on fixed assets and leases - - 126 0.00 705 0.02 220 0.01 1,118 0.03 1,051 0.03 1,118 0.03 Merger and acquisition related expenses - - - - - - - - - - - - 320 0.01 Loss on sale of consumer installment loans - - 18,221 0.55 - - - - - - 18,221 0.54 - - Legal reserves - - - - - - - - - - - - 897 0.03 (Gain) losses on investment securities 13,543 0.41 1,859 0.06 2,494 0.07 1,030 0.03 43 0.00 18,926 0.56 (26,015) (0.77) Loss on sale of foreign subsidiaries - - - - - - - - - - - - 2,150 0.06 Loss on cash flow hedge derivative terminations - - - - - - - - - - - - 18,716 0.56 Derivative credit valuation adjustment 202 0.01 (358) (0.01) (351) (0.01) (736) (0.02) (180) (0.01) (1,243) (0.04) (1,285) (0.04) Deposit relationship adjustment fees - - - - - - - - - - - - 4,707 0.14 Loss on redemption of preferred stock - - - - - - - - - - - - 2,820 0.08 Core earnings, excluding PPP $ 45,324 $ 1.37 $ 76,424 $ 2.30 $ 46,301 $ 1.38 $ 50,697 $ 1.48 $ 36,890 $ 1.07 $218,746 $ 6.51 $149,650 $ 4.44 Less: After tax credit provision release (28,807) (0.86) - - Total Core earnings, excluding PPP and Provision release $189,939 $ 5.65 $149,650 $ 4.44
30 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Core Return on Average Assets, excluding PPP - Customers Bancorp ($ in thousands) Twelve Months Ended December 31, Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 2022 2021 GAAP net income $ 28,711 $ 63,912 $ 58,650 $ 76,761 $ 100,669 $ 228,034 $ 314,647 Less: PPP net income (loss) (after tax) (5,956) 5,846 13,066 24,713 64,323 37,669 195,050 $ 34,667 $ 58,066 $ 45,584 $ 52,048 $ 36,346 $ 190,365 $ 119,597 Reconciling items (after tax): Net loss from discontinued operations - - - - 1,585 - 39,621 Severance expense - 1,058 - - - 1,058 1,517 Impairments on fixed assets and leases - 126 705 220 1,118 1,051 1,118 Merger and acquisition related expenses - - - - - - 320 Loss on sale of consumer installment loans - 18,221 - - - 18,221 - Legal reserves - - - - - - 897 (Gains) Loss on sinvestment securities 13,543 1,859 2,494 1,030 43 18,926 (26,015) Loss on sale of foreign subsidiaries - - - - - - 2,150 Loss on cash flow hedge derivative terminations - - - - - - 18,716 Derivative credit valuation adjustment 202 (358) (351) (736) (180) (1,243) (1,285) Deposit relationship adjustment fees - - - - - - 4,707 Core net income $ 48,412 $ 78,972 $ 48,432 $ 52,562 $ 38,912 $ 228,378 $ 161,343 Average total assets $ 20,717,362 $ 20,514,366 $ 20,056,020 $ 19,129,330 $ 19,214,241 $ 20,109,744 $ 19,199,936 Core return on average assets, excluding PPP 0.93% 1.53% 0.97% 1.11% 0.80% 1.14% 0.84% Reconciliation of Non-GAAP Measures – Unaudited (Contd.)
31 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision, excluding PPP - Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 GAAP net income $ 28,711 $ 63,912 $ 58,650 $ 76,761 $ 100,669 Less: PPP net income (loss) (after tax) (5,956) 5,846 13,066 24,713 64,323 Net income, excluding PPP $ 34,667 $ 58,066 $ 45,584 $ 52,048 $ 36,346 Reconciling items: Income tax expense 7,136 17,899 18,896 19,332 12,993 Provision (benefit) for credit losses 28,216 (7,994) 23,847 15,997 13,890 Provision (benefit) for credit losses on unfunded commitments 153 254 608 (109) 352 Severance expense - 1,363 - - - Net loss from discontinued operations - - - - 1,585 Impairments on fixed assets and leases - 162 914 286 1,260 Losses on sale of consumer installment loans - 23,465 - - - (Gains) losses on investment securities 16,909 2,394 3,232 1,339 49 Derivative credit valuation adjustment 252 (461) (455) (957) (203) Adjusted net income - pre-tax pre-provision, excluding PPP $ 87,333 $ 95,148 $ 92,626 $ 87,936 $ 66,272 Average total assets $ 20,717,362 $ 20,514,366 $ 20,056,020 $ 19,129,330 $ 19,214,241 Adjusted ROAA - pre-tax pre-provision, excluding PPP 1.67% 1.84% 1.85% 1.86% 1.37% Reconciliation of Non-GAAP Measures – Unaudited (Contd.)
32 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Core Return on Average Common Equity – Customers Bancorp ($ in thousands) Twelve Months Ended December 31, Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 2022 2021 GAAP net income to common shareholders $ 25,623 $ 61,364 $ 56,519 $ 74,896 $ 98,647 $ 218,402 $ 300,134 Reconciling items (after tax): Net loss from discontinued operations - - - - 1,585 - 39,621 Severance expense - 1,058 - - - 1,058 1,517 Impairments on fixed assets and leases - 126 705 220 1,118 1,051 1,118 Merger and acquisition related expenses - - - - - - 320 Loss on sale of consumer installment loans - 18,221 - - - 18,221 - Legal reserves - - - - - - 897 (Gains) losses on investment securities 13,543 1,859 2,494 1,030 43 18,926 (26,015) Loss on sale of foreign subsidiaries - - - - - - 2,150 Loss on cash flow hedge derivative terminations - - - - - - 18,716 Derivative credit valuation adjustment 202 (358) (351) (736) (180) (1,243) (1,285) Deposit relationship adjustment fees - - - - - - 4,707 Loss on redemption of preferred stock - - - - - - 2,820 Core earnings $ 39,368 $ 82,270 $ 59,367 $ 75,410 $ 101,213 $ 256,415 $ 344,700 Average total common shareholders' equity $ 1,263,190 $ 1,259,711 $ 1,244,819 $ 1,252,022 $ 1,179,478 $ 1,254,979 $ 1,043,906 Core return on average common equity 12.36% 25.91% 19.13% 24.43% 34.04% 20.43% 33.02% Reconciliation of Non-GAAP Measures – Unaudited (Contd.)
33 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpReconciliation of Non-GAAP Measures – Unaudited (Contd.) Annualized Net Charge-Offs ($ in thousands, expect percentages) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Average balance Net charge- offs/(recov eries) Annualized net charge- off to average loans Average balance Net charge- offs /(recoveries) Annualized net charge-off to average loans Average balance Net charge- offs/ (recoveries) Annualized net charge-off to average loans Average balance Net charge- offs/ (recoveries) Annualized net charge-off to average loans Average balance Net charge- offs/ (recoveries) Annualized net charge-off to average loans Total Commercial Loans and Leases Receivable $13,308,551 $ 13,920 0.41% $13,202,090 $ 7,402 0.22% $12,493,335 $ 1,588 0.05% $ 11,446,429 $ (524) -0.02% $12,363,770 $ 289 0.01% One-time related PPP charge-off (11,044) 0.00% Adjusted Total Commercial Loans and Leases Receivable 13,308,551 2,876 0.08% 13,202,090 7,402 0.22% 12,493,335 1,588 0.05% 11,446,429 (524) -0.02% 12,363,770 289 0.01% Total Consumer Loans Receivable 2,079,452 13,244 2.53% 2,451,893 11,096 1.80% 2,425,163 11,893 1.97% 2,210,562 7,750 1.42% 1,971,600 7,293 1.47% One-time overdrawn charge- off (2,162) Adjusted Total Consumer Loans and Leases Receivable 2,079,452 13,244 2.53% 2,451,893 11,096 1.80% 2,425,163 9,731 1.61% 2,210,562 7,750 1.42% 1,971,600 7,293 1.47% Total loans and Leases 15,388,003 27,164 0.70% 15,653,983 18,498 0.47% 14,918,498 13,481 0.36% $ 13,656,991 $ 7,226 0.21% $14,335,370 $ 7,582 0.21% Adjusted Total Loans and Leases $ 15,388,003 $ 16,120 0.42% $15,653,983 $ 18,498 0.47% $ 14,918,498 $ 11,319 0.30% $ 13,656,991 $ 7,226 0.21% $14,335,370 $ 7,582 0.21%
34 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Core Efficiency Ratio - Customers Bancorp ($ in thousands) 2022 2021 2020 2019 2018 GAAP net interest income $ 623,720 $ 685,074 $ 403,688 $ 277,310 $ 257,877 GAAP non-interest income $ 32,272 $ 77,867 $ 101,734 $ 80,938 $ 58,998 Loss upon acquisition of interest-only GNMA securities - - - 7,476 - Loss on sale of consumer installment loans 23,465 - - - - (Gains) losses on investment securities 23,874 (34,112) (21,525) (2,300) 20,293 Derivative credit valuation adjustment (1,621) (1,646) 7,448 1,066 - Risk participation agreement mark-to-market adjustment - - (1,407) - - Unrealized losses on loans held for sale - - 2,565 - - Loss on sale of non-QM residential mortgage loans - - - 782 - Loss on sale of multifamily loans - - - - 1,161 Loss on cash flow hedge derivative terminations - 24,467 - - - Loss on sale of foreign subsidiaries - 2,840 - - - Core non-interest income 77,990 69,416 88,815 87,962 80,452 Core revenue $ 701,710 $ 754,490 $ 492,503 $ 365,272 $ 338,329 GAAP non-interest expense $ 304,629 $ 294,307 $ 266,690 $ 231,901 $ 220,179 Severance expense (1,363) (2,004) (239) (490) (1,869) Impairments on fixed assets and leases (1,362) (1,260) - - - Legal reserves - (1,185) (1.362) (2,000) - Merger & acquisition related expense - (418) (2,106) (100) (4,391) Deposit relationship adjustment fees - (6,216) - - - Core non-interest expense (1) $ 301,904 $ 283,224 $ 262,983 $ 229,311 $ 213,919 Core efficiency ratio (2) 43.02% 37.54% 53.40% 62.78% 63.23% Reconciliation of Non-GAAP Measures – Unaudited (Contd.) 1. Core non-interest expense for 2020 and prior years include BMTX non-interest expenses 2. Core efficiency ratio calculated as core non-interest expense divided by core revenue.
35 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorp Core non-interest expense, excluding BMTX - Customers Bancorp ($ in thousands) 2022 GAAP non-interest expense $ 304,629 Severance expense (1,363) Impairments on fixed assets and leases (1,362) Legal reserves - Merger & acquisition related expense - Deposit relationship adjustment fees - Core non-interest expense (1) $ 301,904 Less: BMTX expenses (57,044) Core non-interest expense, excluding BMTX - Customers Bancorp $244,860 Reconciliation of Non-GAAP Measures – Unaudited (Contd.)
36 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpReconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Book Value per Common Share - Customers Bancorp ($ in thousands, except per share data) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 GAAP - Total shareholders' equity $ 1,402,961 $ 1,386,931 $ 1,353,390 $ 1,377,406 $ 1,366,217 Reconciling items: Preferred stock (137,794) (137,794) (137,794) (137,794) (137,794) Goodwill and other intangibles (3,629) (3,629) (3,629) (3,678) (3,736) Tangible common equity $ 1,261,538 $ 1,245,508 $ 1,211,967 $ 1,235,934 $ 1,224,687 Common shares outstanding 32,373,697 32,475,502 32,449,486 32,957,847 32,913,267 Tangible book value per common share $ 38.97 $ 38.35 $ 37.35 $ 37.50 $ 37.21
37 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpReconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Common Equity to Tangible Assets, Excluding PPP - Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 GAAP - Total shareholders' equity $ 1,402,961 $ 1,386,931 $ 1,353,390 $ 1,377,406 $ 1,366,217 Reconciling items: Preferred stock (137,794) (137,794) (137,794) (137,794) (137,794) Goodwill and other intangibles (3,629) (3,629) (3,629) (3,678) (3,736) Tangible common equity $ 1,261,538 $ 1,245,508 $ 1,211,967 $ 1,235,934 $ 1,224,687 GAAP total assets $ 20,896,112 $ 20,367,621 $ 20,251,996 $ 19,163,708 $ 19,575,028 Reconciling items: Goodwill and other intangibles (3,629) (3,629) (3,629) (3,678) (3,736) PPP Loans (998,153) (1,154,632) (1,570,160) (2,195,902) (3,250,008) Tangible assets $ 19,894,330 $ 19,209,360 $ 18,678,207 $ 16,964,128 $ 16,321,284 Tangible common equity to tangible assets, excluding PPP 6.34% 6.48% 6.49% 7.29% 7.50%
38 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpReconciliation of Non-GAAP Measures – Unaudited (Contd.) Total loans and leases, excluding PPP (Core loans) – Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Total loans and leases $ 15,794,671 $ 15,336,688 $ 15,664,353 $ 14,073,518 $ 14,568,885 PPP loans (998,153) (1,154,632) (1,570,160) (2,195,902) (3,250,008) Loans and leases, excluding PPP $ 14,796,518 $ 14,182,056 $ 14,094,193 $ 11,877,616 $ 11,318,877 Total loans and leases, excluding PPP and Consumer HFS – Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Total loans and leases $ 15,794,671 $ 15,336,688 $ 15,664,353 $ 14,073,518 $ 14,568,885 PPP loans (998,153) (1,154,632) (1,570,160) (2,195,902) (3,250,008) Consumer HFS (324,233) (1,116) (2,459) (3,003) (16,254) Total loans and leases, excluding PPP and consumer HFS $ 14,472,285 $ 14,180,940 $ 14,091,734 $ 11,874,613 $ 11,302,623
39 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpReconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Loans (Total loans and leases, excluding PPP) to total deposits - Customers Bancorp ($ in thousands) 2022 2021 2020 2019 2018 Total loans and leases $ 15,794,671 $ 14,568,885 $ 15,832,251 $ 10,051,074 $ 8,545,001 PPP loans (998,153) (3,250,008) (4,561,365) - - Core Loans (Loans and leases, excluding PPP) $ 14,796,518 $ 11,318,877 $ 11,270,886 $ 10,051,074 $ 8,545,001 Total Deposits $ 18,156,953 $ 16,777,924 $ 11,309,929 $ 8,648,936 $ 7,142,236 Core Loans (Total loans and leases, excluding PPP) to total deposits 81% 67% 100% 116% 120% Core assets (Total assets, excluding PPP - Customers Bancorp) ($ in thousands) 2022 2021 2020 2019 2018 GAAP - Total assets $ 20,896,112 $ 19,575,028 $ 18,439,248 $ 11,520,717 $ 9,833,425 PPP loans (998,153) (3,250,008) (4,561,365) - - Total assets, excluding PPP $ 19,897,959 $ 16,325,020 $ 13,877,883 $ 11,520,717 $ 9,833,425
40 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpReconciliation of Non-GAAP Measures – Unaudited (Contd.) Interest earning assets, excluding PPP - Customers Bancorp ($ in thousands) 2022 2021 2020 2019 2018 Interest earning deposits $ 397,781 $ 482,794 $ 615,264 $ 179,410 $ 44,439 Investment securities, at FV 2,987,500 3,817,150 1,210,285 595,876 665,012 Investment securities held to maturity 840,259 - - - - Total Investment 4,225,540 4,299,944 1,825,549 775,286 709,451 Total loan and lease receivable 15,794,671 14,568,885 15,832,251 10,051,074 8,545,001 PPP loans (998,153) (3,250,008) (4,561,365) - - Total loan and lease receivable, exculding PPP 14,796,518 11,318,877 11,270,886 10,051,074 8,545,001 Total interest earning assets, excluding PPP $ 19,022,058 $ 15,618,821 $ 13,096,435 $ 10,826,360 $ 9,254,452 Core Loans (Total loans and leases, excluding PPP and Consumer HFS) – Customers Bancorp ($ in thousands) 2022 2021 2020 2019 2018 Total loans and leases $ 15,794,671 $ 14,568,885 $ 15,832,251 $ 10,051,074 $ 8,545,001 PPP loans (998,153) (3,250,008) (4,561,365) - - Consumer HFS (324,233) (16,254) (6,152) (3,455) (1,507) Core Loans (Loans and leases, excluding PPP and consumer HFS) $ 14,472,285 $ 11,302,623 $ 11,264,734 $ 10,047,619 $ 8,543,494
41 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpReconciliation of Non-GAAP Measures – Unaudited (Contd.) Coverage of credit loss reserves for loans and leases held for investment, excluding PPP – Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Loans and leases receivable $ 14,143,047 $ 13,762,374 $ 13,783,155 $ 12,314,757 $ 12,268,306 PPP loans (998,153) (1,154,632) (1,570,160) (2,195,902) (3,250,008) Loans and leases held for investment, excluding PPP $ 13,144,894 $ 12,607,742 $ 12,212,995 $ 10,118,855 $ 9,018,298 Allowance for credit losses on loans and leases $ 130,924 $ 130,197 $ 156,530 $ 145,847 $ 137,804 Coverage of credit loss reserves for loans and leases held for investment, excluding PPP 1.00% 1.03% 1.28% 1.44% 1.53%
42 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpReconciliation of Non-GAAP Measures – Unaudited (Contd.) Net Interest Margin, Tax Equivalent, Excluding PPP - Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 GAAP net interest income $ 135,137 $ 159,032 $ 164,852 $ 164,699 $ 193,694 PPP net interest income 2,791 (9,632) (18,946) (34,615) (78,647) Tax-equivalent adjustment 342 334 270 239 276 Net interest income, tax equivalent, excluding PPP $ 138,270 $ 149,734 $ 146,176 $ 130,323 $ 115,323 GAAP average total interest earning assets $ 20,211,028 $ 20,021,455 $ 19,525,936 $ 18,572,308 $ 18,576,433 Average PPP loans (1,065,919) (1,349,403) (1,863,429) (2,641,318) (3,898,607) Adjusted average total interest earning assets $ 19,145,109 $ 18,672,052 $ 17,662,507 $ 15,930,990 $ 14,677,826 Net interest margin, tax equivalent, excluding PPP 2.87% 3.18% 3.32% 3.32% 3.12% Loan Yield, excluding PPP – Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Interest income on loans and leases $ 218,740 $ 200,457 $ 168,941 $ 157,175 $ 198,000 Interest on PPP loans (7,249) (14,666) (20,572) (36,894) (82,086) Interest on loans and leases, excluding PPP $ 211,491 $ 185,791 $ 148,369 $ 120,281 $ 115,914 Average loans and leases $ 15,388,003 $ 15,653,983 $ 14,918,498 $ 13,656,991 $ 14,335,370 Average PPP loans (1,065,919) (1,349,403) (1,863,429) (2,641,318) (3,898,607) Adjusted average total interest earning assets $ 14,322,084 $ 14,304,580 $ 13,055,069 $ 11,015,673 $ 10,436,763 Loan yield, excluding PPP 5.86% 5.15% 4.56% 4.43% 4.41% Net Interest Income, Excluding PPP - Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 GAAP net interest income $ 135,137 $ 159,032 $ 164,852 $ 164,699 $ 193,694 PPP net interest income 2,791 (9,632) (18,946) (34,615) (78,647) Net interest income, excluding PPP $ 137,928 $ 149,400 $ 145,906 $ 130,084 $ 115,047
43 © 2023 C U STO M ERS BA N K / A LL RIG H TS RESERV ED Let’s take on tomorrow. customers bancorpReconciliation of Non-GAAP Measures – Unaudited (Contd.) Net Interest Margin, Tax Equivalent, Excluding PPP - Customers Bancorp ($ in thousands) 2022 2021 2020 2019 2018 GAAP net interest income $ 623,720 $ 685,074 $ 403,688 $ 277,310 $ 257,877 PPP net interest income (60,402) (261,279) (54,583) - - Tax-equivalent adjustment 1,185 1,147 874 735 685 Net interest income, tax equivalent, excluding PPP $ 564,503 $ 424,942 $ 349,979 $ 278,045 $ 258,562 GAAP average total interest earning assets $ 19,588,374 $ 18,566,321 $ 14,933,317 $ 10,123,708 $ 10,011,799 Average PPP loans (1,724,659) (5,108,192) (3,121,157) - - Adjusted average total interest earning assets $ 17,863,715 $ 13,458,129 $ 11,812,160 $ 10,123,708 $ 10,011,799 Net interest margin, tax equivalent, excluding PPP 3.16% 3.16% 2.96% 2.75% 2.58% Net Interest Income, excluding PPP - Customers Bancorp ($ in thousands) 2022 2021 2020 2019 2018 GAAP - net interest income $ 623,720 $ 685,074 $ 403,688 $ 277,310 $ 257,877 PPP net interest income (60,402) (261,279) (54,583) - - Net interest income, excluding PPP $ 563,318 $ 423,795 $ 349,105 $ 277,310 $ 257,877