CUBI 8-K
Customers Bancorp, Inc. (CUBI)
8-K
2021-10-27
For: 2021-10-27
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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): October 27, 2021
(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 October 27, 2021 , Customers Bancorp, Inc. (the "Company") issued a press release announcing unaudited financial information for the quarter ended September 30, 2021, 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 October 27, 2021 | ||||||||
| Slide presentation dated Q3 2021 | ||||||||
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: October 27, 2021
EXHIBIT INDEX
Exhibit 99.1
Customers Bancorp, Inc.
701 Reading Avenue
West Reading, PA 19611
Contacts:
Jay Sidhu, Chairman & CEO 610-935-8693
Sam Sidhu, President 484-744-8985
Carla Leibold, CFO 484-923-8802
Jay Sidhu, Chairman & CEO 610-935-8693
Sam Sidhu, President 484-744-8985
Carla Leibold, CFO 484-923-8802
Customers Bancorp Reports Record Third Quarter 2021 Results
Net Income of $110.2 million, or $3.25 Per Diluted Share,
Up 120% Over Q3 2020
Up 120% Over Q3 2020
ROAA of 2.33% and ROCE of 40.82%
Tangible Book Value Increased 35% Over Q3 2020
Tangible Book Value Increased 35% Over Q3 2020
Customers Bank Instant Token (CBIT) for Real-Time Blockchain Payments
Launched October 2021 Attracting $1.5 billion in Deposits
Launched October 2021 Attracting $1.5 billion in Deposits
•Q3 2021 net income available to common shareholders was $110.2 million, or $3.25 per diluted share, up 120% over Q3 2020.
•Q3 2021 core earnings (a non-GAAP measure) were $113.9 million, or $3.36 per diluted share, up 178% over Q3 2020.
•Q3 2021 ROAA was 2.33% and Core ROAA (a non-GAAP measure) was 2.35%. Q3 2020 ROAA was 1.12% and Core ROAA (a non-GAAP measure) was 0.93%.
•Q3 2021 ROCE was 40.82% and Core ROCE (a non-GAAP measure) was 42.16%. Q3 2020 ROCE was 23.05% and Core ROCE (a non-GAAP measure) was 18.82%.
•Adjusted pre-tax pre-provision net income (a non-GAAP measure) for Q3 2021 was $167.2 million, an increase of 161% over Q3 2020. Q3 2021 adjusted pre-tax pre-provision return on average assets (a non-GAAP measure) was 3.36% compared to 1.43% for Q3 2020.
•Net interest income for Q3 2021 grew $81.1 million, or 58.5%, over Q2 2021 and $112.5 million, or 104.7%, over Q3 2020.
•Q3 2021 net interest margin (a non-GAAP measure) increased to 4.59% from 2.98% in Q2 2021. Q3 2021 net interest margin, excluding the impact of Paycheck Protection Program ("PPP") loans (a non-GAAP measure), was 3.24%. Significant excess cash balances resulting from strong deposit growth negatively impacted net interest margin by about 16 basis points.
•Non-interest bearing deposits increased $2.3 billion, or 84%, in Q3 2021, of which $1.5 billion was driven by new CBIT customers on the TassatPay real-time blockchain payments platform which launched in October 2021.
•Total deposits increased $6.1 billion, or 56.6% year-over-year, which included a $5.3 billion, or 115.2%, increase in demand deposits. The total cost of deposits dropped 25 basis points from the year-ago quarter. Total deposits increased $3.1 billion, or 22.3%, over Q2 2021, with $1.5 billion coming from CBIT related deposits.
•Commercial and industrial ("C&I") loans increased $417.9 million, or 19%, year-over-year, and consumer installment loans increased $390.7 million, or 32% year-over-year.
•Purchased $529 million PPP loan portfolio from global fintech in September 2021 at a discount further increasing deferred revenue recognition in future quarters.
•Achieved $1 billion in direct Customers Bank personal loan originations, all executed digitally.
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•Technology-led loans sales in Consumer and SBA Groups resulted in consumer loan gains of $4.0 million and SBA gains of $1.3 million in Q3 2021, bringing YTD September 2021 consumer loan gains to $4.5 million and YTD September 2021 SBA gains to $4.3 million. Expect recurring gain on sale strategy to continue over the next several quarters.
•Redeemed all outstanding shares of our Series C and Series D Preferred Stock on September 15, 2021.
•Adopted a one-year common stock repurchase program to repurchase up to 3.2 million shares, of which approximately 167,000 shares have been repurchased to date.
•Added four commercial teams, including one new geography in North Carolina; three new verticals in Digital Asset Banking, Technology and Venture Capital Banking and Financial Institutions Group in Q3 2021; YTD 2021 includes four new market expansions and four new verticals.
•Q3 2021 efficiency ratio was 33.42% compared to 46.76% for Q3 2020. Q3 2021 core efficiency ratio was 30.36% compared to 46.10% in Q3 2020 (non-GAAP measures).
•Q3 2021 provision for credit losses on loans and leases was $13.2 million compared to $3.3 million in Q2 2021. At September 30, 2021, the coverage of credit loss reserves for loans and leases held for investment, excluding PPP loans (a non-GAAP measure), was 1.65% compared to 1.61% at June 30, 2021.
•Non-performing assets were 0.27% of total assets at September 30, 2021 compared to 0.34% at September 30, 2020. Allowance for credit losses equaled 253% of non-performing loans at September 30, 2021, compared to 245% at September 30, 2020.
•Total deferments declined to $80.1 million, or 0.8% of total loans and leases excluding PPP loans (a non-GAAP measure) at September 30, 2021, down from $98.2 million, or 0.9% of total loans and leases excluding PPP loans (a non-GAAP measure) at June 30, 2021.
West Reading, PA, October 27, 2021 - Customers Bancorp, Inc. (NYSE: CUBI), the parent company of Customers Bank (collectively "Customers" or "CUBI"), today reported third quarter 2021 ("Q3 2021") net income to common shareholders of $110.2 million, or $3.25 per diluted share, significantly up from second quarter 2021 ("Q2 2021") net income to common shareholders of $58.0 million, or $1.72 per diluted share. Core earnings for Q3 2021 totaled $113.9 million, or $3.36 per diluted share compared to Q2 2021 core earnings of $59.3 million, or $1.76 per diluted share (non-GAAP measures). Adjusted pre-tax pre-provision net income was $167.2 million for Q3 2021 compared to $86.5 million for Q2 2021 (non-GAAP measures). Net interest margin, tax equivalent ("NIM") increased to 4.59% for Q3 2021 from 2.98% in Q2 2021.
“This quarter's results mark a milestone in our company's history, with more income earned in a single quarter than any of our previous full-year earnings,” remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “Our organic growth rates remain remarkable, with our C&I loans growing 19% year-over-year, consumer installment loans growing 32%, and non-interest bearing deposits growing 113%. In addition, we funded, either directly or indirectly, about 347,000 PPP loans totaling $10 billion, helping those businesses deal with adversities related to the pandemic with most of them thriving today. We also earned $346 million of deferred origination fees from the SBA through the PPP loans and we could not be prouder of our participation in and execution of this program. As demonstrated this quarter, the recognition of the deferred fees is significantly accretive to our earnings and capital levels as these loans are forgiven by the government. We also recently launched a blockchain-based real time payments token that will immediately begin serving a growing array of B2B clients who want the benefit of instant payments, which is expected to significantly enhance our core low-to-no cost deposit franchise. This combined with our market expansion plans, new teams and lending verticals, and strong pipeline leave us very well positioned to support future growth. We remain optimistic about our future,” Mr. Sidhu concluded.
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Launch of Customers Bank Instant Token (CBIT)
“We are thrilled to announce that CBIT on the TassatPay payments platform went live on October 18, 2021. We received $1.5 billion in new non-interest bearing demand deposits as of September 30, 2021 and are very pleased with meeting the needs of our business clients through this block-chain based payment processing system. We not only developed and implemented this new technology, in partnership with TassatPay, in record time, but did so following a very thorough strategic initiative process," commented Mr. Sidhu. "We believe our technology, compliance and customer service and support systems are among the best in the country," concluded Mr. Sidhu.
As of September 30, 2021, $1.5 billion in non-interest bearing demand deposits have been attracted to the Bank through this system. We expect these deposits to grow modestly over the next few quarters, giving us an opportunity to transform our deposits into high quality, low-to-no cost, stable and growing deposit franchise.
Recruitment of New Commercial Teams
To further build out our franchise and support the growth of our business banking initiatives, we are pleased to announce the onboarding of a new expansion market (North Carolina) and three new commercial verticals (Digital Asset Banking, Technology and Venture Capital Banking and Financial Institutions Group). In addition to the teams onboarded this quarter and year to date (Florida, Texas, Harrisburg and Fund Finance), we have several teams currently in the recruitment pipeline. “Our strategy of high tech supported by high touch private banking teams has proven to be a superior business model and growth strategy. The success of our commercial team recruitment to date has given us the confidence to continue to advance the strategy allowing us to deploy the low-to-no-cost deposits we are generating. This is resulting in optimism for future earnings and continued shareholder value creation,” commented Mr. Sidhu.
Key Balance Sheet Trends
Commercial and industrial loans and leases increased $417.9 million to $2.6 billion, commercial real estate owner occupied loans increased $98.4 million to $656.0 million, consumer installment loans increased $390.7 million to $1.6 billion and construction loans increased $75.6 million to $198.6 million. These increases in loans and leases were partially offset by planned decreases in multi-family loans of $563.1 million to $1.4 billion, commercial real estate non-owner occupied loans of $89.2 million to $1.1 billion and residential mortgages of $83.0 million to $260.8 million. “Looking ahead, we see continued growth in core C&I and consumer loans offsetting the continued expected seasonal and yield curve related decreases in loans to mortgage companies at the end of this year," stated Mr. Sidhu.
Total loans and leases decreased $1.1 billion, or 6.6%, to $15.5 billion at September 30, 2021 compared to the year-ago period. As expected, commercial loans to mortgage companies declined $1.3 billion to $2.6 billion compared to the year-ago period. PPP loans were $5.0 billion at September 30, 2021, relatively unchanged from the year-ago period, driven by $4.7 billion in originations and purchases from the latest round of PPP loans, offset by $4.7 billion in forgiveness, repayments and associated net deferred fees from the new round and earlier rounds of PPP loans. Excluding PPP loans and commercial loans to mortgage companies, total loans and leases increased $238.4 million, or 3.1%, as the loan mix continued to improve year-over-year.
Total deposits increased $6.1 billion, or 56.6%, to $17.0 billion at September 30, 2021 compared to the year-ago period. Total demand deposits increased $5.3 billion, or 115.2%, to $10.0 billion, money market deposits increased $1.0 billion, or 25.5%, to $5.1 billion, and savings deposits increased $136.7 million, or 11.6%, to $1.3 billion. These increases were offset, in part, by a decrease in time deposits of $379.3 million, or 39.0%, to $593.1 million. The total cost of deposits declined by 25 basis points to 0.42% in Q3 2021 from 0.67% in the year-ago quarter. "Our current spot cost of deposits is approximately 32 basis points and we expect our deposit costs to be below 30 basis points by December 31, 2021, a dramatic improvement in our deposit franchise," stated Mr. Sidhu.
Other borrowings increased $99.2 million to $223.2 million at September 30, 2021 compared to the year-ago period from the issuance of our 2.875% fixed-to-floating rate senior notes, the proceeds of which were used to redeem all outstanding shares of our Series C and Series D Preferred Stock.
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Very Strong Growth in Tangible Common Equity and Tangible Book Value Per Share
Customers experienced significant improvements in regulatory capital ratios in Q3 2021 as compared to a year ago. Customers Bancorp's tangible common equity (a non-GAAP measure) increased by $323.1 million to $1.1 billion at September 30, 2021 from $819.6 million at September 30, 2020, and the tangible book value per common share (a non-GAAP measure) increased to $35.12 at September 30, 2021 from $25.97 at September 30, 2020, an increase of 35.2%. Customers remains well capitalized by all regulatory measures.
At the Customers Bancorp level, the total risk based capital ratio (estimate) and tangible common equity to tangible assets ratio ("TCE ratio"), excluding PPP loans (a non-GAAP measure), were 13.4% and 8.1%, respectively, at September 30, 2021. At June 30, 2021, Customers Bancorp's total risk based capital ratio and TCE ratio, excluding PPP loans (a non-GAAP measure), were 13.3% and 7.7%, respectively.
Loan Portfolio Management During the COVID-19 Crisis
Over the last decade, Customers has developed a suite of commercial and retail loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s C&I, mortgage warehouse, specialty finance lines of business, and multi-family loans for example, are characterized by conservative underwriting standards and low loss rates. Because of this emphasis, the Bank’s credit quality to-date has been healthy despite a highly adverse economic environment. Maintaining strong asset quality also requires a highly active portfolio monitoring process. In addition to frequent client outreach and monitoring at the individual loan level, Customers employs a bottom-up data driven approach to analyze its commercial portfolio.
Strong commercial loan portfolio with very low concentration in COVID-19 impacted industries and CRE
•Total commercial deferments declined to $73.4 million, or 0.7% of total loans and leases, excluding PPP loans (a non-GAAP measure), at September 30, 2021, down from $89.8 million, or 0.8% of total loans and leases, excluding PPP loans, at June 30, 2021. Customers' commercial deferments peaked at about $1.2 billion in July 2020.
•Exposure to industry segments significantly impacted by COVID-19 is not substantial. At September 30, 2021, Customers had $83.2 million in energy and utilities exposure (with no deferments); $62.0 million in colleges and universities (with no deferments); $62.8 million in CRE retail sales exposure (mostly auto sales; with no deferments); $45.6 million in franchise restaurants and dining (with no deferments); and $23.8 million in entertainment only businesses (with no deferments).
•At September 30, 2021, the hospitality portfolio was $397.2 million, or 3.8% of total loans and leases, excluding PPP loans (a non-GAAP measure), with $59.2 million in deferment. Approximately 80% ($317.7 million) represents “flagged” facilities, with the majority of the non-flagged being high-end destination hotels in Cape May (NJ), Avalon (NJ), and Long Island (NY). We believe the majority of the hotels have sufficient cash resources to get through the COVID-19 crisis.
•At September 30, 2021, the healthcare portfolio was approximately $420.6 million, comprised predominantly of skilled nursing, which has been deemed an essential business and through a number of federal and state actions has been provided immunity from liability for COVID-19 related deaths. No deferments have been requested and there are no delinquencies.
•The multi-family portfolio is highly seasoned, with a weighted average loan to value of 61.7% as of quarter-end. 54.3% of the portfolio was in New York City, of which 70.6% was in rent controlled/regulated properties. As of September 30, 2021, no deferments have been requested.
•At September 30, 2021, investment CRE had a weighted average loan to value of 62.9%, with approximately 48.1% of the portfolio housed in New York, Philadelphia and surrounding markets. As of September 30, 2021, none of the portfolio was on deferment.
Consumer installment, mortgage and home equity loan portfolios continue to perform well
•Total consumer-related deferments declined to $6.7 million, or 0.1% of total loans and leases, excluding PPP loans (a non-GAAP measure), at September 30, 2021, down from $8.4 million at June 30, 2021.
•The $1.6 billion consumer installment loan portfolio outperformed industry peers with deferments dropping to 0.26% and 30+ day delinquency at only 0.80%. Strong credit quality (avg. FICO at origination: 740), low concentration in at-risk job segments, and outstanding performance of CB Direct originations have resulted in solid results through the end of Q3 2021.
•The consumer installment portfolio has been managed to moderate growth and strengthening credit quality, by replacing run-off with CB Direct originations with higher FICO scores.
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Key Profitability Trends
Net Interest Income
Net interest income totaled $219.9 million in Q3 2021, an increase of $81.1 million from Q2 2021, primarily due to a $334.8 million net increase in average interest-earning assets and a decrease in the cost of interest-bearing liabilities. Interest-earning asset growth was driven by increases in commercial and industrial loans, consumer loans and the purchases of PPP loans, offset by PPP loan forgiveness from the first two rounds and the latest round, which accelerated the recognition of net deferred loan origination fees, and decreases in commercial loans to mortgage companies and multi-family loans. Compared to Q2 2021, total loan yields increased 197 basis points to 5.71%. The increase is attributable to increased forgiveness of PPP loans and higher yields on C&I loans. Total borrowing costs increased by 12 basis points to 0.89% primarily due to the issuance of fixed-to-floating rate senior notes, the proceeds of which were used to redeem all outstanding shares of our Series C and Series D preferred stock offset by less reliance on borrowings due to higher deposits including the repayment of the FRB PPP Liquidity Facility, costing 0.35%. "As we've stated previously, it is difficult to predict net interest income in future periods because the timing of PPP forgiveness results in the accelerated recognition of net deferred fees and also affects the amount of net interest income expected to be earned while the PPP loans are held on our balance sheet," commented Mr. Sidhu.
Provision for Credit Losses
The provision for credit losses on loans and leases in Q3 2021 was $13.2 million, compared to a $3.3 million provision in Q2 2021. The provision in Q3 2021 was primarily to support continued growth in CB Direct consumer installment loan originations. The allowance for credit losses on loans and leases represented 1.65% of total loans and leases receivable, excluding PPP loans (a non-GAAP measure) at September 30, 2021, compared to 1.61% at June 30, 2021 and 2.02% at September 30, 2020. Customers' non-performing loans at September 30, 2021 were only 0.34% of total loans and leases, an improvement from 0.38% at September 30, 2020.
Non-Interest Income
Non-interest income totaled $25.6 million for Q3 2021, an increase of $8.8 million compared to Q2 2021. A technology-led new initiative for selling excess consumer installment loans into securitizations was launched earlier this year. This resulted in a $4.0 million gain on sale in Q3 2021, bringing YTD September 2021 consumer loan gains to $4.5 million. The SBA gains were $1.3 million in Q3 2021, bringing the YTD September 2021 SBA gains to $4.3 million. "We will continue to grow this initiative," commented Mr. Sidhu. The $6.1 million of gains realized from the sale of investment securities were used to offset a $6.2 million make-whole fee paid to a single high-cost deposit customer in Q3 2021.
Non-Interest Expense
The management of non-interest expenses remains a priority at Customers. However, this will not be at the expense of not making adequate investments with new technologies. Our Q3 2021 normalized expenses were about unchanged over Q2 2021, although our financial statements show an increase of $9.2 million compared to Q2 2021. The increase was primarily due to over $8.0 million of certain one-time or other transitory items including a $6.2 million make-whole fee paid to a single high-cost deposit customer, a litigation settlement amount of $1.2 million, and $0.6 million of increased outside service expense to assist with the PPP forgiveness process, and higher technology and servicing-related expenses of $1.7 million and a $0.6 million increase in the provision to credit losses for unfunded commitments. These increases were offset in part by a net decrease of $1.8 million in salaries and employee benefits primarily resulting from approximately $2.5 million of compensation expense associated with an executive's retirement and other one-time benefits in Q2 2021.
Taxes
Income tax expense from continuing operations increased by $16.2 million to $36.3 million in Q3 2021 from $20.1 million in Q2 2021 primarily due to an increase in projected pre-tax income from continuing operations. The effective
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tax rate from continuing operations remained relatively constant at approximately 24%. Customers expects the full-year 2021 effective tax rate from continuing operations to be approximately 20% to 25%.
Net Loss From Discontinued Operations
The divestiture of BankMobile Technologies, Inc. was completed on January 4, 2021, and its historical financial results are presented as discontinued operations.
Outlook
“Looking ahead, we are very optimistic about the prospects of our company. The best in class tech agility of Customers Bancorp has allowed us to be a major participant in the PPP program and to incubate new lines of businesses that leverage our fintech relationships. We recently launched a private real-time, blockchain-based B2B payments platform with integration of digital and legacy payment rails. The platform will deliver enhanced payments functionality for our business clients and is expected to generate additional deposit growth in targeted niches, such as real estate, monetary and currency exchanges and institutional investments. We've achieved significant accretion in our capital levels over the past 12 months and our credit quality is expected to remain in line with or better than peers. The financial benefits of PPP aside, we project our recurring core earnings power to be $4.00 in 2021; $4.75 - $5.00 in 2022, an increase of 20% - 25% over 2021 core earnings; and we expect to achieve $6.00 in core EPS even sooner than the guidance we had provided for 2025,” concluded Mr. Sidhu.
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Webcast
Date: Thursday, October 28, 2021
Time: 9:00 AM EDT
The live audio webcast, presentation slides, and earnings press release will be made available at https://www.customersbank.com/investor-relations/ and at the Customers Bancorp 3rd Quarter Earnings Webcast.
You may submit questions in advance of the live webcast by emailing Customers' Communications & Marketing Director, David Patti at [email protected]; questions may also be asked during the webcast through the webcast application.
The webcast will be archived for viewing on the Customers Bancorp Investor Relations page and available beginning approximately two hours after the conclusion of the live event.
Institutional Background
Customers Bancorp, Inc. (NYSE:CUBI) is a bank holding company located in West Reading, Pennsylvania engaged in banking and related businesses through its bank subsidiary, Customers Bank, a full-service bank with $19.1 billion in assets at September 30, 2021. A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender that provides a range of banking and lending services to small and medium-sized businesses, professionals, individuals and families. Services and products are available wherever permitted by law through mobile-first apps, online portals, and a network of offices and branches. Customers Bank provides blockchain-based digital payments via the Customers Bank Instant Token (CBIT) which allows clients to make real-time payments in US dollars, 24 hours a day, 7 days a week, 365 days a year.
“Safe Harbor” Statement
In addition to historical information, this press release may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: the adverse impact on the U.S. economy, including the markets in which we operate, of the coronavirus outbreak, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan and lease portfolio, the market value of our investment securities, the demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply; actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships; and the effects of any changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2020, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.
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Q3 2021 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended September 30, 2021 and the preceding four quarters:
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| EARNINGS SUMMARY - UNAUDITED | |||||||||||||||||||||||||||||
| (Dollars in thousands, except per share data and stock price data) | Q3 | Q2 | Q1 | Q4 | Q3 | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| GAAP Profitability Metrics: | |||||||||||||||||||||||||||||
| Net income available to common shareholders (from continuing and discontinued operations) | $ | 110,241 | $ | 58,042 | $ | 33,204 | $ | 52,831 | $ | 47,085 | $ | 201,487 | $ | 65,706 | |||||||||||||||
| Per share amounts: | |||||||||||||||||||||||||||||
| Earnings per share - basic | $ | 3.40 | $ | 1.80 | $ | 1.04 | $ | 1.67 | $ | 1.49 | $ | 6.26 | $ | 2.09 | |||||||||||||||
| Earnings per share - diluted | $ | 3.25 | $ | 1.72 | $ | 1.01 | $ | 1.65 | $ | 1.48 | $ | 6.02 | $ | 2.07 | |||||||||||||||
Book value per common share (1) | $ | 35.24 | $ | 31.94 | $ | 30.13 | $ | 28.37 | $ | 26.43 | $ | 35.24 | $ | 26.43 | |||||||||||||||
CUBI stock price (1) | $ | 43.02 | $ | 38.99 | $ | 31.82 | $ | 18.18 | $ | 11.20 | $ | 43.02 | $ | 11.20 | |||||||||||||||
CUBI stock price as % of book value (1) | 122 | % | 122 | % | 106 | % | 64 | % | 42 | % | 122 | % | 42 | % | |||||||||||||||
| Average shares outstanding - basic | 32,449,853 | 32,279,625 | 31,883,946 | 31,638,447 | 31,517,504 | 32,206,547 | 31,462,284 | ||||||||||||||||||||||
| Average shares outstanding - diluted | 33,868,553 | 33,741,468 | 32,841,711 | 31,959,100 | 31,736,311 | 33,487,672 | 31,666,027 | ||||||||||||||||||||||
Shares outstanding (1) | 32,537,976 | 32,353,256 | 32,238,762 | 31,705,088 | 31,555,124 | 32,537,976 | 31,555,124 | ||||||||||||||||||||||
| Return on average assets ("ROAA") | 2.33 | % | 1.27 | % | 0.80 | % | 1.23 | % | 1.12 | % | 1.49 | % | 0.69 | % | |||||||||||||||
| Return on average common equity ("ROCE") | 40.82 | % | 23.22 | % | 14.66 | % | 24.26 | % | 23.05 | % | 26.99 | % | 11.01 | % | |||||||||||||||
| Efficiency ratio | 33.42 | % | 46.59 | % | 48.89 | % | 43.56 | % | 46.76 | % | 41.07 | % | 50.28 | % | |||||||||||||||
Non-GAAP Profitability Metrics (2): | |||||||||||||||||||||||||||||
| Core earnings | $ | 113,876 | $ | 59,303 | $ | 70,308 | $ | 54,588 | $ | 38,439 | $ | 243,487 | $ | 64,939 | |||||||||||||||
| Adjusted pre-tax pre-provision net income | $ | 167,215 | $ | 86,467 | $ | 86,769 | $ | 77,896 | $ | 64,146 | $ | 340,451 | $ | 162,302 | |||||||||||||||
| Per share amounts: | |||||||||||||||||||||||||||||
| Core earnings per share - diluted | $ | 3.36 | $ | 1.76 | $ | 2.14 | $ | 1.71 | $ | 1.21 | $ | 7.27 | $ | 2.05 | |||||||||||||||
Tangible book value per common share (1) | $ | 35.12 | $ | 31.82 | $ | 30.01 | $ | 27.92 | $ | 25.97 | $ | 35.12 | $ | 25.97 | |||||||||||||||
CUBI stock price as % of tangible book value (1) | 122 | % | 123 | % | 106 | % | 65 | % | 43 | % | 122 | % | 43 | % | |||||||||||||||
| Core ROAA | 2.35 | % | 1.30 | % | 1.61 | % | 1.26 | % | 0.93 | % | 1.76 | % | 0.69 | % | |||||||||||||||
| Core ROCE | 42.16 | % | 23.72 | % | 31.03 | % | 25.06 | % | 18.82 | % | 32.61 | % | 10.88 | % | |||||||||||||||
| Adjusted ROAA - pre-tax and pre-provision | 3.36 | % | 1.80 | % | 1.90 | % | 1.70 | % | 1.43 | % | 2.37 | % | 1.47 | % | |||||||||||||||
| Adjusted ROCE - pre-tax and pre-provision | 60.81 | % | 33.27 | % | 36.80 | % | 34.20 | % | 29.73 | % | 44.30 | % | 25.41 | % | |||||||||||||||
| Net interest margin, tax equivalent | 4.59 | % | 2.98 | % | 3.00 | % | 2.78 | % | 2.50 | % | 3.55 | % | 2.68 | % | |||||||||||||||
| Net interest margin, tax equivalent, excluding PPP loans | 3.24 | % | 3.30 | % | 2.99 | % | 3.04 | % | 2.86 | % | 3.17 | % | 2.93 | % | |||||||||||||||
| Core efficiency ratio | 30.36 | % | 44.33 | % | 41.13 | % | 42.89 | % | 46.10 | % | 37.31 | % | 48.68 | % | |||||||||||||||
| Asset Quality: | |||||||||||||||||||||||||||||
| Net charge-offs | $ | 7,104 | $ | 6,591 | $ | 12,521 | $ | 8,472 | $ | 17,299 | $ | 26,216 | $ | 46,335 | |||||||||||||||
| Annualized net charge-offs to average total loans and leases | 0.17 | % | 0.16 | % | 0.33 | % | 0.21 | % | 0.45 | % | 0.22 | % | 0.49 | % | |||||||||||||||
Non-performing loans ("NPLs") to total loans and leases (1) | 0.34 | % | 0.27 | % | 0.30 | % | 0.45 | % | 0.38 | % | 0.34 | % | 0.38 | % | |||||||||||||||
Reserves to NPLs (1) | 252.68 | % | 269.96 | % | 264.21 | % | 204.48 | % | 244.70 | % | 252.68 | % | 244.70 | % | |||||||||||||||
| Non-performing assets ("NPAs") to total assets | 0.27 | % | 0.24 | % | 0.26 | % | 0.39 | % | 0.34 | % | 0.27 | % | 0.34 | % | |||||||||||||||
Customers Bank Capital Ratios (3): | |||||||||||||||||||||||||||||
| Common equity Tier 1 capital to risk-weighted assets | 12.77 | % | 12.40 | % | 11.75 | % | 10.62 | % | 10.12 | % | 12.77 | % | 10.12 | % | |||||||||||||||
| Tier 1 capital to risk-weighted assets | 12.77 | % | 12.40 | % | 11.75 | % | 10.62 | % | 10.12 | % | 12.77 | % | 10.12 | % | |||||||||||||||
| Total capital to risk-weighted assets | 14.16 | % | 13.77 | % | 13.11 | % | 12.06 | % | 11.62 | % | 14.16 | % | 11.62 | % | |||||||||||||||
| Tier 1 capital to average assets (leverage ratio) | 8.66 | % | 9.07 | % | 9.35 | % | 9.21 | % | 9.29 | % | 8.66 | % | 9.29 | % | |||||||||||||||
| (1) Metric is a spot balance for the last day of each quarter presented. | |||||||||||||||||||||||||||||
| (2) Non-GAAP measures exclude net loss from discontinued operations, loss on sale of foreign subsidiaries, unrealized gains (losses) on loans held for sale, investment securities gains and losses, loss on cash flow hedge derivative terminations, severance expense, merger and acquisition-related expenses, losses realized from the sale of non-QM residential mortgage loans, loss upon acquisition of interest-only GNMA securities, legal reserves, credit valuation adjustments on derivatives, risk participation agreement mark-to-market adjustments, deposit relationship adjustment fees, loss on redemption of preferred stock, goodwill and intangible assets, and PPP loans. These notable items are not included in Customers' disclosures of core earnings and other core profitability metrics. Please note that not each of the aforementioned adjustments affected the reported amount in each of the periods presented. Customers' reasons for the use of these non-GAAP measures and a detailed reconciliation between the non-GAAP measures and the comparable GAAP amounts are included at the end of this document. | |||||||||||||||||||||||||||||
| (3) Regulatory capital ratios are estimated for Q3 2021 and actual for the remaining periods. In accordance with regulatory capital rules, Customers elected an option to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending January 1, 2025. As a result, capital ratios and amounts as of Q3 2021 exclude the impact of the increased allowance for credit losses on loans and leases and unfunded loan commitments attributed to the adoption of CECL and 25% of the quarterly provision for credit losses for subsequent quarters through Q4 2021. | |||||||||||||||||||||||||||||
8
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||
| Q3 | Q2 | Q1 | Q4 | Q3 | September 30, | ||||||||||||||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||||||||||||||||||||
| Loans and leases | $ | 233,097 | $ | 153,608 | $ | 152,117 | $ | 145,414 | $ | 132,107 | $ | 538,822 | $ | 366,634 | |||||||||||||||||||||||||||
| Investment securities | 8,905 | 8,327 | 7,979 | 6,777 | 6,297 | 25,211 | 17,429 | ||||||||||||||||||||||||||||||||||
| Other | 849 | 946 | 1,019 | 902 | 1,246 | 2,814 | 6,149 | ||||||||||||||||||||||||||||||||||
| Total interest income | 242,851 | 162,881 | 161,115 | 153,093 | 139,650 | 566,847 | 390,212 | ||||||||||||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||||||||||||||
| Deposits | 15,915 | 15,653 | 15,658 | 16,107 | 18,347 | 47,226 | 75,939 | ||||||||||||||||||||||||||||||||||
| FHLB advances | 5 | 963 | 5,192 | 5,749 | 5,762 | 6,160 | 15,889 | ||||||||||||||||||||||||||||||||||
| Subordinated debt | 2,689 | 2,689 | 2,689 | 2,688 | 2,689 | 8,067 | 8,066 | ||||||||||||||||||||||||||||||||||
| FRB PPP liquidity facility, federal funds purchased and other borrowings | 4,350 | 4,819 | 4,845 | 5,603 | 5,413 | 14,014 | 9,576 | ||||||||||||||||||||||||||||||||||
| Total interest expense | 22,959 | 24,124 | 28,384 | 30,147 | 32,211 | 75,467 | 109,470 | ||||||||||||||||||||||||||||||||||
| Net interest income | 219,892 | 138,757 | 132,731 | 122,946 | 107,439 | 491,380 | 280,742 | ||||||||||||||||||||||||||||||||||
| Provision (benefit) for credit losses on loans and leases | 13,164 | 3,291 | (2,919) | (2,913) | 12,955 | 13,536 | 65,688 | ||||||||||||||||||||||||||||||||||
| Net interest income after provision (benefit) for credit losses on loans and leases | 206,728 | 135,466 | 135,650 | 125,859 | 94,484 | 477,844 | 215,054 | ||||||||||||||||||||||||||||||||||
| Non-interest income: | |||||||||||||||||||||||||||||||||||||||||
| Interchange and card revenue | 83 | 84 | 85 | 91 | 92 | 252 | 555 | ||||||||||||||||||||||||||||||||||
| Deposit fees | 994 | 891 | 863 | 823 | 650 | 2,748 | 1,703 | ||||||||||||||||||||||||||||||||||
| Commercial lease income | 5,213 | 5,311 | 5,205 | 4,853 | 4,510 | 15,729 | 13,286 | ||||||||||||||||||||||||||||||||||
| Bank-owned life insurance | 1,988 | 2,765 | 1,679 | 1,744 | 1,746 | 6,432 | 5,265 | ||||||||||||||||||||||||||||||||||
| Mortgage warehouse transactional fees | 3,100 | 3,265 | 4,247 | 3,681 | 3,320 | 10,612 | 7,854 | ||||||||||||||||||||||||||||||||||
| Gain (loss) on sale of SBA and other loans | 5,359 | 1,900 | 1,575 | 1,689 | 286 | 8,834 | 320 | ||||||||||||||||||||||||||||||||||
| Mortgage banking income (loss) | 425 | 386 | 463 | 346 | 1,013 | 1,274 | 1,347 | ||||||||||||||||||||||||||||||||||
| Gain (loss) on sale of investment securities | 6,063 | 1,812 | 23,566 | 44 | 11,707 | 31,441 | 20,035 | ||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on investment securities | — | 1,746 | 974 | 1,387 | 238 | 2,720 | 60 | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | (2,840) | — | — | — | (2,840) | — | ||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) on derivatives | 524 | (439) | 2,537 | 804 | 549 | 2,622 | (4,755) | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | (24,467) | — | — | (24,467) | — | ||||||||||||||||||||||||||||||||||
| Other | 1,837 | 1,941 | 1,741 | 621 | 753 | 5,519 | 2,066 | ||||||||||||||||||||||||||||||||||
| Total non-interest income | 25,586 | 16,822 | 18,468 | 16,083 | 24,864 | 60,876 | 47,736 | ||||||||||||||||||||||||||||||||||
| Non-interest expense: | |||||||||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 26,268 | 28,023 | 23,971 | 25,600 | 24,752 | 78,262 | 68,467 | ||||||||||||||||||||||||||||||||||
| Technology, communication and bank operations | 21,281 | 19,618 | 19,988 | 16,021 | 13,005 | 60,887 | 34,647 | ||||||||||||||||||||||||||||||||||
| Professional services | 8,249 | 8,234 | 6,289 | 5,449 | 4,421 | 22,772 | 10,939 | ||||||||||||||||||||||||||||||||||
| Occupancy | 2,704 | 2,482 | 2,621 | 2,742 | 3,368 | 7,807 | 8,620 | ||||||||||||||||||||||||||||||||||
| Commercial lease depreciation | 4,493 | 4,415 | 4,291 | 3,982 | 3,663 | 13,199 | 10,733 | ||||||||||||||||||||||||||||||||||
| FDIC assessments, non-income taxes and regulatory fees | 2,313 | 2,602 | 2,719 | 2,642 | 3,784 | 7,634 | 9,019 | ||||||||||||||||||||||||||||||||||
| Merger and acquisition related expenses | — | — | 418 | 709 | 658 | 418 | 658 | ||||||||||||||||||||||||||||||||||
| Loan workout | 198 | 102 | (261) | 123 | 846 | 39 | 3,020 | ||||||||||||||||||||||||||||||||||
| Advertising and promotion | 302 | 313 | 561 | — | — | 1,176 | 1,795 | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | 6,216 | — | — | — | — | 6,216 | — | ||||||||||||||||||||||||||||||||||
| Other | 7,985 | 5,034 | 1,330 | 2,665 | 1,788 | 14,349 | 7,145 | ||||||||||||||||||||||||||||||||||
| Total non-interest expense | 80,009 | 70,823 | 61,927 | 59,933 | 56,285 | 212,759 | 155,043 | ||||||||||||||||||||||||||||||||||
| Income before income tax expense | 152,305 | 81,465 | 92,191 | 82,009 | 63,063 | 325,961 | 107,747 | ||||||||||||||||||||||||||||||||||
| Income tax expense | 36,263 | 20,124 | 17,560 | 23,447 | 12,016 | 73,947 | 23,270 | ||||||||||||||||||||||||||||||||||
| Net income from continuing operations | 116,042 | 61,341 | 74,631 | 58,562 | 51,047 | 252,014 | 84,477 | ||||||||||||||||||||||||||||||||||
| Loss from discontinued operations before income taxes | — | — | (20,354) | (3,539) | (347) | (20,354) | (10,259) | ||||||||||||||||||||||||||||||||||
| Income tax expense (benefit) from discontinued operations | — | — | 17,682 | (1,222) | 185 | 17,682 | (2,114) | ||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | (38,036) | (2,317) | (532) | (38,036) | (8,145) | ||||||||||||||||||||||||||||||||||
| Net income | 116,042 | 61,341 | 36,595 | 56,245 | 50,515 | 213,978 | 76,332 | ||||||||||||||||||||||||||||||||||
| Preferred stock dividends | 2,981 | 3,299 | 3,391 | 3,414 | 3,430 | 9,671 | 10,626 | ||||||||||||||||||||||||||||||||||
| Loss on redemption of preferred stock | 2,820 | — | — | — | — | 2,820 | — | ||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 110,241 | $ | 58,042 | $ | 33,204 | $ | 52,831 | $ | 47,085 | $ | 201,487 | $ | 65,706 | |||||||||||||||||||||||||||
| Basic earnings per common share from continuing operations | $ | 3.40 | $ | 1.80 | $ | 2.23 | $ | 1.74 | $ | 1.51 | $ | 7.44 | $ | 2.35 | |||||||||||||||||||||||||||
| Basic earnings per common share | $ | 3.40 | $ | 1.80 | $ | 1.04 | $ | 1.67 | $ | 1.49 | $ | 6.26 | $ | 2.09 | |||||||||||||||||||||||||||
| Diluted earnings per common share from continuing operations | $ | 3.25 | $ | 1.72 | $ | 2.17 | $ | 1.73 | $ | 1.50 | $ | 7.15 | $ | 2.33 | |||||||||||||||||||||||||||
| Diluted earnings per common share | $ | 3.25 | $ | 1.72 | $ | 1.01 | $ | 1.65 | $ | 1.48 | $ | 6.02 | $ | 2.07 | |||||||||||||||||||||||||||
9
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEET - UNAUDITED | |||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | |||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 51,169 | $ | 36,837 | $ | 3,123 | $ | 78,090 | $ | 5,822 | |||||||||||||||||||
| Interest earning deposits | 1,000,885 | 393,663 | 512,241 | 615,264 | 325,594 | ||||||||||||||||||||||||
| Cash and cash equivalents | 1,052,054 | 430,500 | 515,364 | 693,354 | 331,416 | ||||||||||||||||||||||||
| Investment securities, at fair value | 1,866,697 | 1,526,792 | 1,441,904 | 1,210,285 | 1,133,831 | ||||||||||||||||||||||||
| Loans held for sale | 29,957 | 34,540 | 46,106 | 79,086 | 26,689 | ||||||||||||||||||||||||
| Loans receivable, mortgage warehouse, at fair value | 2,557,624 | 2,855,284 | 3,407,622 | 3,616,432 | 3,913,593 | ||||||||||||||||||||||||
| Loans receivable, PPP | 4,957,357 | 6,305,056 | 5,178,089 | 4,561,365 | 4,964,105 | ||||||||||||||||||||||||
| Loans and leases receivable | 7,970,599 | 7,772,142 | 7,536,489 | 7,575,368 | 7,700,892 | ||||||||||||||||||||||||
| Allowance for credit losses on loans and leases | (131,496) | (125,436) | (128,736) | (144,176) | (155,561) | ||||||||||||||||||||||||
| Total loans and leases receivable, net of allowance for credit losses on loans and leases | 15,354,084 | 16,807,046 | 15,993,464 | 15,608,989 | 16,423,029 | ||||||||||||||||||||||||
| FHLB, Federal Reserve Bank, and other restricted stock | 57,184 | 39,895 | 69,420 | 71,368 | 70,387 | ||||||||||||||||||||||||
| Accrued interest receivable | 93,514 | 90,009 | 83,186 | 80,412 | 65,668 | ||||||||||||||||||||||||
| Bank premises and equipment, net | 9,944 | 10,391 | 10,943 | 11,225 | 11,308 | ||||||||||||||||||||||||
| Bank-owned life insurance | 331,423 | 329,421 | 281,923 | 280,067 | 277,826 | ||||||||||||||||||||||||
| Goodwill and other intangibles | 3,794 | 3,853 | 3,911 | 3,969 | 4,028 | ||||||||||||||||||||||||
| Other assets | 310,271 | 362,661 | 371,439 | 338,438 | 354,010 | ||||||||||||||||||||||||
| Assets of discontinued operations | — | — | — | 62,055 | 80,535 | ||||||||||||||||||||||||
| Total assets | $ | 19,108,922 | $ | 19,635,108 | $ | 18,817,660 | $ | 18,439,248 | $ | 18,778,727 | |||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||
| Demand, non-interest bearing deposits | $ | 4,954,331 | $ | 2,699,869 | $ | 2,687,628 | $ | 2,356,998 | $ | 2,327,017 | |||||||||||||||||||
| Interest bearing deposits | 12,016,694 | 11,174,070 | 9,784,812 | 8,952,931 | 8,512,060 | ||||||||||||||||||||||||
| Total deposits | 16,971,025 | 13,873,939 | 12,472,440 | 11,309,929 | 10,839,077 | ||||||||||||||||||||||||
| Federal funds purchased | — | — | 365,000 | 250,000 | 680,000 | ||||||||||||||||||||||||
| FHLB advances | — | — | 850,000 | 850,000 | 850,000 | ||||||||||||||||||||||||
| Other borrowings | 223,151 | 124,240 | 124,138 | 124,037 | 123,935 | ||||||||||||||||||||||||
| Subordinated debt | 181,603 | 181,534 | 181,464 | 181,394 | 181,324 | ||||||||||||||||||||||||
| FRB PPP liquidity facility | — | 3,865,865 | 3,284,156 | 4,415,016 | 4,811,009 | ||||||||||||||||||||||||
| Accrued interest payable and other liabilities | 448,844 | 338,801 | 351,741 | 152,082 | 185,927 | ||||||||||||||||||||||||
| Liabilities of discontinued operations | — | — | — | 39,704 | 55,964 | ||||||||||||||||||||||||
| Total liabilities | 17,824,623 | 18,384,379 | 17,628,939 | 17,322,162 | 17,727,236 | ||||||||||||||||||||||||
| Preferred stock | 137,794 | 217,471 | 217,471 | 217,471 | 217,471 | ||||||||||||||||||||||||
| Common stock | 33,818 | 33,634 | 33,519 | 32,986 | 32,836 | ||||||||||||||||||||||||
| Additional paid in capital | 525,894 | 519,294 | 515,318 | 455,592 | 452,965 | ||||||||||||||||||||||||
| Retained earnings | 607,085 | 496,844 | 438,802 | 438,581 | 385,750 | ||||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | 1,488 | 5,266 | 5,391 | (5,764) | (15,751) | ||||||||||||||||||||||||
| Treasury stock, at cost | (21,780) | (21,780) | (21,780) | (21,780) | (21,780) | ||||||||||||||||||||||||
| Total shareholders' equity | 1,284,299 | 1,250,729 | 1,188,721 | 1,117,086 | 1,051,491 | ||||||||||||||||||||||||
| Total liabilities & shareholders' equity | $ | 19,108,922 | $ | 19,635,108 | $ | 18,817,660 | $ | 18,439,248 | $ | 18,778,727 | |||||||||||||||||||
10
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED | ||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| September 30, 2021 | June 30, 2021 | September 30, 2020 | ||||||||||||||||||||||||
| Average Balance | Average Yield or Cost (%) | Average Balance | Average Yield or Cost (%) | Average Balance | Average Yield or Cost (%) | |||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Interest earning deposits | $ | 1,279,983 | 0.15% | $ | 646,342 | 0.12% | $ | 686,928 | 0.12% | |||||||||||||||||
Investment securities (1) | 1,511,319 | 2.36% | 1,512,644 | 2.20% | 950,723 | 2.65% | ||||||||||||||||||||
| Loans and leases: | ||||||||||||||||||||||||||
| Commercial loans to mortgage companies | 2,658,020 | 3.14% | 2,737,629 | 3.09% | 2,847,169 | 2.90% | ||||||||||||||||||||
| Multi-family loans | 1,443,846 | 3.64% | 1,551,370 | 3.88% | 1,989,074 | 3.72% | ||||||||||||||||||||
Commercial and industrial loans and leases (2) | 3,024,620 | 3.76% | 2,878,045 | 3.59% | 2,599,806 | 3.82% | ||||||||||||||||||||
| Loans receivable, PPP | 5,778,367 | 8.04% | 6,133,184 | 2.69% | 4,909,197 | 1.97% | ||||||||||||||||||||
| Non-owner occupied commercial real estate loans | 1,346,629 | 3.73% | 1,368,695 | 3.86% | 1,388,306 | 3.70% | ||||||||||||||||||||
| Residential mortgages | 325,851 | 3.50% | 346,284 | 3.62% | 414,781 | 3.97% | ||||||||||||||||||||
| Installment loans | 1,615,411 | 9.21% | 1,467,595 | 9.37% | 1,255,505 | 8.37% | ||||||||||||||||||||
Total loans and leases (3) | 16,192,744 | 5.71% | 16,482,802 | 3.74% | 15,403,838 | 3.41% | ||||||||||||||||||||
| Other interest-earning assets | 49,780 | 2.86% | 57,208 | 5.32% | 79,656 | 5.23% | ||||||||||||||||||||
| Total interest-earning assets | 19,033,826 | 5.06% | 18,698,996 | 3.49% | 17,121,145 | 3.25% | ||||||||||||||||||||
| Non-interest-earning assets | 705,514 | 607,952 | 666,477 | |||||||||||||||||||||||
| Assets of discontinued operations | — | — | 77,952 | |||||||||||||||||||||||
| Total assets | $ | 19,739,340 | $ | 19,306,948 | $ | 17,865,574 | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Interest checking accounts | $ | 4,537,421 | 0.67% | $ | 3,503,242 | 0.76% | $ | 2,370,709 | 0.78% | |||||||||||||||||
| Money market deposit accounts | 5,131,433 | 0.43% | 4,859,614 | 0.47% | 3,786,032 | 0.65% | ||||||||||||||||||||
| Other savings accounts | 1,376,077 | 0.50% | 1,456,777 | 0.57% | 1,125,273 | 1.06% | ||||||||||||||||||||
| Certificates of deposit | 614,404 | 0.59% | 658,698 | 0.78% | 1,344,134 | 1.35% | ||||||||||||||||||||
Total interest-bearing deposits (4) | 11,659,335 | 0.54% | 10,478,331 | 0.60% | 8,626,148 | 0.85% | ||||||||||||||||||||
| FRB PPP liquidity facility | 2,788,897 | 0.35% | 3,858,733 | 0.35% | 4,479,036 | 0.35% | ||||||||||||||||||||
| Borrowings | 371,077 | 4.90% | 531,757 | 3.85% | 1,236,127 | 3.19% | ||||||||||||||||||||
| Total interest-bearing liabilities | 14,819,309 | 0.62% | 14,868,821 | 0.65% | 14,341,311 | 0.89% | ||||||||||||||||||||
Non-interest-bearing deposits (4) | 3,335,198 | 2,889,781 | 2,194,689 | |||||||||||||||||||||||
| Total deposits and borrowings | 18,154,507 | 0.50% | 17,758,602 | 0.54% | 16,536,000 | 0.78% | ||||||||||||||||||||
| Other non-interest-bearing liabilities | 310,519 | 328,251 | 243,812 | |||||||||||||||||||||||
| Liabilities of discontinued operations | — | — | 55,714 | |||||||||||||||||||||||
| Total liabilities | 18,465,026 | 18,086,853 | 16,835,526 | |||||||||||||||||||||||
| Shareholders' equity | 1,274,314 | 1,220,095 | 1,030,048 | |||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 19,739,340 | $ | 19,306,948 | $ | 17,865,574 | ||||||||||||||||||||
| Interest spread | 4.56% | 2.95% | 2.47% | |||||||||||||||||||||||
| Net interest margin | 4.58% | 2.98% | 2.50% | |||||||||||||||||||||||
Net interest margin tax equivalent (5) | 4.59% | 2.98% | 2.50% | |||||||||||||||||||||||
Net interest margin tax equivalent excl. PPP (6) | 3.24% | 3.30% | 2.86% | |||||||||||||||||||||||
| (1) For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. | ||||||||||||||||||||||||||
| (2) Includes owner occupied commercial real estate loans. | ||||||||||||||||||||||||||
| (3) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees. | ||||||||||||||||||||||||||
(4) Total costs of deposits (including interest bearing and non-interest bearing) were 0.42%, 0.47% and 0.67% for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively. | ||||||||||||||||||||||||||
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. | ||||||||||||||||||||||||||
(6) Non-GAAP tax-equivalent basis, as described in note (5) for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. | ||||||||||||||||||||||||||
11
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||
| AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Nine Months Ended | |||||||||||||||||
| September 30, 2021 | September 30, 2020 | ||||||||||||||||
| Average Balance | Average Yield or Cost (%) | Average Balance | Average Yield or Cost (%) | ||||||||||||||
| Assets | |||||||||||||||||
| Interest earning deposits | $ | 1,034,923 | 0.13% | $ | 614,863 | 0.69% | |||||||||||
Investment securities (1) | 1,461,070 | 2.30% | 741,566 | 3.13% | |||||||||||||
| Loans and leases: | |||||||||||||||||
| Commercial loans to mortgage companies | 2,837,549 | 3.11% | 2,383,331 | 3.14% | |||||||||||||
| Multi-family loans | 1,560,565 | 3.78% | 2,070,564 | 3.89% | |||||||||||||
Commercial and industrial loans and leases (2) | 2,917,643 | 3.77% | 2,507,231 | 4.18% | |||||||||||||
| Loans receivable, PPP | 5,515,819 | 4.78% | 2,563,299 | 1.88% | |||||||||||||
| Non-owner occupied commercial real estate loans | 1,354,745 | 3.81% | 1,372,090 | 3.94% | |||||||||||||
| Residential mortgages | 348,369 | 3.64% | 430,058 | 3.82% | |||||||||||||
| Installment loans | 1,470,024 | 9.21% | 1,267,806 | 8.74% | |||||||||||||
Total loans and leases (3) | 16,004,714 | 4.50% | 12,594,379 | 3.89% | |||||||||||||
| Other interest-earning assets | 62,205 | 3.94% | 86,454 | 4.60% | |||||||||||||
| Total interest-earning assets | 18,562,912 | 4.08% | 14,037,262 | 3.71% | |||||||||||||
| Non-interest-earning assets | 632,202 | 599,274 | |||||||||||||||
| Assets of discontinued operations | — | 79,854 | |||||||||||||||
| Total assets | $ | 19,195,114 | $ | 14,716,390 | |||||||||||||
| Liabilities | |||||||||||||||||
| Interest checking accounts | $ | 3,584,223 | 0.74% | $ | 2,050,184 | 0.90% | |||||||||||
| Money market deposit accounts | 4,811,540 | 0.48% | 3,486,445 | 1.10% | |||||||||||||
| Other savings accounts | 1,415,595 | 0.59% | 1,147,994 | 1.68% | |||||||||||||
| Certificates of deposit | 646,257 | 0.78% | 1,533,628 | 1.64% | |||||||||||||
Total interest-bearing deposits (4) | 10,457,615 | 0.60% | 8,218,251 | 1.23% | |||||||||||||
| FRB PPP liquidity facility | 3,525,560 | 0.35% | 1,816,849 | 0.35% | |||||||||||||
| Borrowings | 688,620 | 3.69% | 1,581,498 | 2.43% | |||||||||||||
| Total interest-bearing liabilities | 14,671,795 | 0.69% | 11,616,598 | 1.26% | |||||||||||||
Non-interest-bearing deposits (4) | 3,016,837 | 1,887,463 | |||||||||||||||
| Total deposits and borrowings | 17,688,632 | 0.57% | 13,504,061 | 1.08% | |||||||||||||
| Other non-interest-bearing liabilities | 295,752 | 143,118 | |||||||||||||||
| Liabilities of discontinued operations | — | 54,310 | |||||||||||||||
| Total liabilities | 17,984,384 | 13,701,489 | |||||||||||||||
| Shareholders' equity | 1,210,730 | 1,014,901 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 19,195,114 | $ | 14,716,390 | |||||||||||||
| Interest spread | 3.51% | 2.63% | |||||||||||||||
| Net interest margin | 3.54% | 2.67% | |||||||||||||||
Net interest margin tax equivalent (5) | 3.55% | 2.68% | |||||||||||||||
Net interest margin tax equivalent excl. PPP (6) | 3.17% | 2.93% | |||||||||||||||
| (1) For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. | |||||||||||||||||
| (2) Includes owner occupied commercial real estate loans. | |||||||||||||||||
| (3) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees. | |||||||||||||||||
(4) Total costs of deposits (including interest bearing and non-interest bearing) were 0.47% and 1.00% for the nine months ended September 30, 2021 and 2020, respectively. | |||||||||||||||||
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the nine months ended September 30, 2021 and 2020, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. | |||||||||||||||||
(6) Non-GAAP tax-equivalent basis as described in note (5), for the nine months ended September 30, 2021 and 2020, excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. | |||||||||||||||||
12
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED | |||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | |||||||||||||||||||||||||
| Commercial: | |||||||||||||||||||||||||||||
| Multi-family | $ | 1,387,166 | $ | 1,497,485 | $ | 1,659,529 | $ | 1,761,301 | $ | 1,950,300 | |||||||||||||||||||
| Loans to mortgage companies | 2,626,483 | 2,922,217 | 3,463,490 | 3,657,350 | 3,947,828 | ||||||||||||||||||||||||
| Commercial & industrial | 2,604,367 | 2,293,723 | 2,164,784 | 2,304,206 | 2,186,480 | ||||||||||||||||||||||||
| Commercial real estate owner occupied | 656,044 | 653,649 | 590,093 | 572,338 | 557,595 | ||||||||||||||||||||||||
| Loans receivable, PPP | 4,957,357 | 6,305,056 | 5,178,089 | 4,561,365 | 4,964,105 | ||||||||||||||||||||||||
| Commercial real estate non-owner occupied | 1,144,643 | 1,206,646 | 1,194,832 | 1,213,815 | 1,233,882 | ||||||||||||||||||||||||
| Construction | 198,607 | 179,198 | 156,837 | 140,905 | 122,963 | ||||||||||||||||||||||||
| Total commercial loans and leases | 13,574,667 | 15,057,974 | 14,407,654 | 14,211,280 | 14,963,153 | ||||||||||||||||||||||||
| Consumer: | |||||||||||||||||||||||||||||
| Residential | 260,820 | 273,493 | 295,654 | 323,322 | 343,775 | ||||||||||||||||||||||||
| Manufactured housing | 55,635 | 57,904 | 59,977 | 62,243 | 64,638 | ||||||||||||||||||||||||
| Installment | 1,624,415 | 1,577,651 | 1,405,021 | 1,235,406 | 1,233,713 | ||||||||||||||||||||||||
| Total consumer loans | 1,940,870 | 1,909,048 | 1,760,652 | 1,620,971 | 1,642,126 | ||||||||||||||||||||||||
| Total loans and leases | $ | 15,515,537 | $ | 16,967,022 | $ | 16,168,306 | $ | 15,832,251 | $ | 16,605,279 | |||||||||||||||||||
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| PERIOD END DEPOSIT COMPOSITION - UNAUDITED | |||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | |||||||||||||||||||||||||
| Demand, non-interest bearing | $ | 4,954,331 | $ | 2,699,869 | $ | 2,687,628 | $ | 2,356,998 | $ | 2,327,017 | |||||||||||||||||||
| Demand, interest bearing | 5,023,081 | 4,206,355 | 3,228,941 | 2,384,691 | 2,308,627 | ||||||||||||||||||||||||
| Total demand deposits | 9,977,412 | 6,906,224 | 5,916,569 | 4,741,689 | 4,635,644 | ||||||||||||||||||||||||
| Savings | 1,310,343 | 1,431,756 | 1,483,482 | 1,314,817 | 1,173,641 | ||||||||||||||||||||||||
| Money market | 5,090,121 | 4,908,809 | 4,406,508 | 4,601,492 | 4,057,366 | ||||||||||||||||||||||||
| Time deposits | 593,149 | 627,150 | 665,881 | 651,931 | 972,426 | ||||||||||||||||||||||||
| Total deposits | $ | 16,971,025 | $ | 13,873,939 | $ | 12,472,440 | $ | 11,309,929 | $ | 10,839,077 | |||||||||||||||||||
13
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||||||||
| ASSET QUALITY - UNAUDITED | |||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | As of September 30, 2021 | As of June 30, 2021 | As of September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||
| Total loans | Non accrual /NPLs | Allowance for credit losses | Total NPLs to total loans | Total reserves to total NPLs | Total loans | Non accrual /NPLs | Allowance for credit losses | Total NPLs to total loans | Total reserves to total NPLs | Total loans | Non accrual /NPLs | Allowance for credit losses | Total NPLs to total loans | Total reserves to total NPLs | |||||||||||||||||||||||||||||||||
| Loan type | |||||||||||||||||||||||||||||||||||||||||||||||
| Multi-family | $ | 1,369,876 | $ | 24,524 | $ | 4,397 | 1.79 | % | 17.93 | % | $ | 1,497,485 | $ | 21,595 | $ | 5,028 | 1.44 | % | 23.28 | % | $ | 1,950,300 | $ | 11,710 | $ | 15,026 | 0.60 | % | 128.32 | % | |||||||||||||||||
Commercial & industrial(1) | 2,673,226 | 6,951 | 10,860 | 0.26 | % | 156.24 | % | 2,360,656 | 6,717 | 8,127 | 0.28 | % | 120.99 | % | 2,220,715 | 9,633 | 12,926 | 0.43 | % | 134.18 | % | ||||||||||||||||||||||||||
| Commercial real estate owner occupied | 656,044 | 2,412 | 3,617 | 0.37 | % | 149.96 | % | 653,649 | 2,688 | 4,464 | 0.41 | % | 166.07 | % | 557,595 | 3,599 | 9,552 | 0.65 | % | 265.41 | % | ||||||||||||||||||||||||||
| Commercial real estate non-owner occupied | 1,144,643 | 2,845 | 7,375 | 0.25 | % | 259.23 | % | 1,206,646 | — | 7,374 | — | % | — | % | 1,215,516 | 2,408 | 20,200 | 0.20 | % | 838.87 | % | ||||||||||||||||||||||||||
| Construction | 198,607 | — | 886 | — | % | — | % | 179,198 | — | 2,643 | — | % | — | % | 122,963 | — | 6,423 | — | % | — | % | ||||||||||||||||||||||||||
| Total commercial loans and leases receivable | 6,042,396 | 36,732 | 27,135 | 0.61 | % | 73.87 | % | 5,897,634 | 31,000 | 27,636 | 0.53 | % | 89.15 | % | 6,067,089 | 27,350 | 64,127 | 0.45 | % | 234.47 | % | ||||||||||||||||||||||||||
| Residential | 248,153 | 7,738 | 1,912 | 3.12 | % | 24.71 | % | 266,911 | 8,991 | 2,299 | 3.37 | % | 25.57 | % | 335,452 | 10,634 | 4,649 | 3.17 | % | 43.72 | % | ||||||||||||||||||||||||||
| Manufactured housing | 55,635 | 3,520 | 4,410 | 6.33 | % | 125.28 | % | 57,904 | 3,239 | 4,372 | 5.59 | % | 134.98 | % | 64,638 | 2,778 | 5,625 | 4.30 | % | 202.48 | % | ||||||||||||||||||||||||||
| Installment | 1,624,415 | 3,544 | 98,039 | 0.22 | % | 2766.34 | % | 1,549,693 | 2,728 | 91,129 | 0.18 | % | 3340.51 | % | 1,233,713 | 3,118 | 81,160 | 0.25 | % | 2602.95 | % | ||||||||||||||||||||||||||
| Total consumer loans receivable | 1,928,203 | 14,802 | 104,361 | 0.77 | % | 705.05 | % | 1,874,508 | 14,958 | 97,800 | 0.80 | % | 653.83 | % | 1,633,803 | 16,530 | 91,434 | 1.01 | % | 553.14 | % | ||||||||||||||||||||||||||
Loans and leases receivable(1) | 7,970,599 | 51,534 | 131,496 | 0.65 | % | 255.16 | % | 7,772,142 | 45,958 | 125,436 | 0.59 | % | 272.94 | % | 7,700,892 | 43,880 | 155,561 | 0.57 | % | 354.51 | % | ||||||||||||||||||||||||||
| Loans receivable, PPP | 4,957,357 | — | — | — | % | — | % | 6,305,056 | — | — | — | % | — | % | 4,964,105 | — | — | — | % | — | % | ||||||||||||||||||||||||||
| Loans receivable, mortgage warehouse, at fair value | 2,557,624 | — | — | — | % | — | % | 2,855,284 | — | — | — | % | — | % | 3,913,593 | — | — | — | % | — | % | ||||||||||||||||||||||||||
| Total loans held for sale | 29,957 | 507 | — | 1.69 | % | — | % | 34,540 | 507 | — | 1.47 | % | — | % | 26,689 | 19,691 | — | 73.78 | % | — | % | ||||||||||||||||||||||||||
| Total portfolio | $ | 15,515,537 | $ | 52,041 | $ | 131,496 | 0.34 | % | 252.68 | % | $ | 16,967,022 | $ | 46,465 | $ | 125,436 | 0.27 | % | 269.96 | % | $ | 16,605,279 | $ | 63,571 | $ | 155,561 | 0.38 | % | 244.70 | % | |||||||||||||||||
(1) Excluding loans receivable, PPP from total loans and leases receivable is a non-GAAP measure. Management believes the use of these non-GAAP measures provides additional clarity when assessing Customers' financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. Please refer to the reconciliation schedules that follow this table.
14
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||
| NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Q3 | Q2 | Q1 | Q4 | Q3 | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||
| Loan type | |||||||||||||||||||||||||||||||||||||||||
| Multi-family | $ | — | $ | — | $ | 1,132 | $ | — | $ | — | $ | 1,132 | $ | — | |||||||||||||||||||||||||||
| Commercial & industrial | 116 | (283) | 375 | 155 | (55) | 208 | (16) | ||||||||||||||||||||||||||||||||||
| Commercial real estate owner occupied | 50 | (1) | 134 | 12 | 44 | 183 | 39 | ||||||||||||||||||||||||||||||||||
| Commercial real estate non-owner occupied | 943 | (59) | (10) | (35) | 8,923 | 874 | 24,521 | ||||||||||||||||||||||||||||||||||
| Construction | (3) | (114) | (5) | (6) | (6) | (122) | (122) | ||||||||||||||||||||||||||||||||||
| Residential | 54 | (12) | 40 | 46 | (17) | 82 | (72) | ||||||||||||||||||||||||||||||||||
| Installment | 5,944 | 7,060 | 10,855 | 8,300 | 8,410 | 23,859 | 21,985 | ||||||||||||||||||||||||||||||||||
| Total net charge-offs (recoveries) from loans held for investment | $ | 7,104 | $ | 6,591 | $ | 12,521 | $ | 8,472 | $ | 17,299 | $ | 26,216 | $ | 46,335 | |||||||||||||||||||||||||||
15
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED | |||||||||||||||||||||||||||||
Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in Customers' industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. The non-GAAP measures presented are not necessarily comparable to non-GAAP measures that may be presented by other financial institutions. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP.
The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document.
| Core Earnings - Customers Bancorp | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | USD | Per share | USD | Per share | USD | Per share | USD | Per share | USD | Per share | USD | Per share | USD | Per share | ||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP net income to common shareholders | $ | 110,241 | $ | 3.25 | $ | 58,042 | $ | 1.72 | $ | 33,204 | $ | 1.01 | $ | 52,831 | $ | 1.65 | $ | 47,085 | $ | 1.48 | $ | 201,487 | $ | 6.02 | $ | 65,706 | $ | 2.07 | ||||||||||||||||||||||||||||||||||
| Reconciling items (after tax): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | — | — | 38,036 | 1.16 | 2,317 | 0.07 | 532 | 0.02 | 38,036 | 1.14 | 8,145 | 0.26 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Severance expense | — | — | 1,517 | 0.04 | — | — | — | — | — | — | 1,517 | 0.05 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Merger and acquisition related expenses | — | — | — | — | 320 | 0.01 | 508 | 0.02 | 530 | 0.02 | 320 | 0.01 | 530 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Legal reserves | 897 | 0.03 | — | — | — | — | — | — | 258 | 0.01 | 897 | 0.03 | 258 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | (4,591) | (0.14) | (2,694) | (0.08) | (18,773) | (0.57) | (1,419) | (0.04) | (9,662) | (0.30) | (26,058) | (0.78) | (15,993) | (0.51) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | — | 2,150 | 0.06 | — | — | — | — | — | — | 2,150 | 0.06 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | — | — | 18,716 | 0.57 | — | — | — | — | 18,716 | 0.56 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | (198) | (0.01) | 288 | 0.01 | (1,195) | (0.04) | (448) | (0.01) | (304) | (0.01) | (1,105) | (0.03) | 6,259 | 0.20 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Risk participation agreement mark-to-market adjustment | — | — | — | — | — | — | — | — | — | — | — | — | (1,080) | (0.03) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | 4,707 | 0.14 | — | — | — | — | — | — | — | — | 4,707 | 0.14 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Loss on redemption of preferred stock | 2,820 | 0.08 | — | — | — | — | — | — | — | — | 2,820 | 0.08 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized losses on loans held for sale | — | — | — | — | — | — | 799 | 0.03 | — | — | — | — | 1,114 | 0.04 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Core earnings | $ | 113,876 | $ | 3.36 | $ | 59,303 | $ | 1.76 | $ | 70,308 | $ | 2.14 | $ | 54,588 | $ | 1.71 | $ | 38,439 | $ | 1.21 | $ | 243,487 | $ | 7.27 | $ | 64,939 | $ | 2.05 | ||||||||||||||||||||||||||||||||||
16
| 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 | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| GAAP net income | $ | 116,042 | $ | 61,341 | $ | 36,595 | $ | 56,245 | $ | 50,515 | $ | 213,978 | $ | 76,332 | |||||||||||||||||||||||||||
| Reconciling items (after tax): | |||||||||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | 38,036 | 2,317 | 532 | 38,036 | 8,145 | ||||||||||||||||||||||||||||||||||
| Severance expense | — | 1,517 | — | — | — | 1,517 | — | ||||||||||||||||||||||||||||||||||
Merger and acquisition related expenses | — | — | 320 | 508 | 530 | 320 | 530 | ||||||||||||||||||||||||||||||||||
| Legal reserves | 897 | — | — | — | 258 | 897 | 258 | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | (4,591) | (2,694) | (18,773) | (1,419) | (9,662) | (26,058) | (15,993) | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | 2,150 | — | — | — | 2,150 | — | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | 18,716 | — | — | 18,716 | — | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | (198) | 288 | (1,195) | (448) | (304) | (1,105) | 6,259 | ||||||||||||||||||||||||||||||||||
| Risk participation agreement mark-to-market adjustment | — | — | — | — | — | — | (1,080) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | 4,707 | — | — | — | — | 4,707 | — | ||||||||||||||||||||||||||||||||||
| Unrealized losses on loans held for sale | — | — | — | 799 | — | — | 1,114 | ||||||||||||||||||||||||||||||||||
Core net income | $ | 116,857 | $ | 62,602 | $ | 73,699 | $ | 58,002 | $ | 41,869 | $ | 253,158 | $ | 75,565 | |||||||||||||||||||||||||||
Average total assets | $ | 19,739,340 | $ | 19,306,948 | $ | 18,525,721 | $ | 18,250,719 | $ | 17,865,574 | $ | 19,195,114 | $ | 14,716,390 | |||||||||||||||||||||||||||
| Core return on average assets | 2.35 | % | 1.30 | % | 1.61 | % | 1.26 | % | 0.93 | % | 1.76 | % | 0.69 | % | |||||||||||||||||||||||||||
| Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| GAAP net income | $ | 116,042 | $ | 61,341 | $ | 36,595 | $ | 56,245 | $ | 50,515 | $ | 213,978 | $ | 76,332 | |||||||||||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||||||||||||||
Income tax expense | 36,263 | 20,124 | 17,560 | 23,447 | 12,016 | 73,947 | 23,270 | ||||||||||||||||||||||||||||||||||
Provision (benefit) for credit losses on loans and leases | 13,164 | 3,291 | (2,919) | (2,913) | 12,955 | 13,536 | 65,688 | ||||||||||||||||||||||||||||||||||
| Provision (benefit) for credit losses on unfunded commitments | 669 | 45 | (1,286) | (968) | (527) | (572) | (132) | ||||||||||||||||||||||||||||||||||
| Severance expense | — | 2,004 | — | — | — | 2,004 | — | ||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | 38,036 | 2,317 | 532 | 38,036 | 8,145 | ||||||||||||||||||||||||||||||||||
Merger and acquisition related expenses | — | — | 418 | 709 | 658 | 418 | 658 | ||||||||||||||||||||||||||||||||||
| Legal reserves | 1,185 | — | — | — | 320 | 1,185 | 320 | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | (6,063) | (3,558) | (24,540) | (1,431) | (11,945) | (34,161) | (20,095) | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | 2,840 | — | — | — | 2,840 | — | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | 24,467 | — | — | 24,467 | — | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | (261) | 380 | (1,562) | (625) | (378) | (1,443) | 8,073 | ||||||||||||||||||||||||||||||||||
| Risk participation agreement mark-to-market adjustment | — | — | — | — | — | — | (1,407) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | 6,216 | — | — | — | — | 6,216 | — | ||||||||||||||||||||||||||||||||||
| Unrealized losses on loans held for sale | — | — | — | 1,115 | — | — | 1,450 | ||||||||||||||||||||||||||||||||||
Adjusted net income - pre-tax pre-provision | $ | 167,215 | $ | 86,467 | $ | 86,769 | $ | 77,896 | $ | 64,146 | $ | 340,451 | $ | 162,302 | |||||||||||||||||||||||||||
Average total assets | $ | 19,739,340 | $ | 19,306,948 | $ | 18,525,721 | $ | 18,250,719 | $ | 17,865,574 | $ | 19,195,114 | $ | 14,716,390 | |||||||||||||||||||||||||||
| Adjusted ROAA - pre-tax pre-provision | 3.36 | % | 1.80 | % | 1.90 | % | 1.70 | % | 1.43 | % | 2.37 | % | 1.47 | % | |||||||||||||||||||||||||||
17
| 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 | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| GAAP net income to common shareholders | $ | 110,241 | $ | 58,042 | $ | 33,204 | $ | 52,831 | $ | 47,085 | $ | 201,487 | $ | 65,706 | |||||||||||||||||||||||||||
| Reconciling items (after tax): | |||||||||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | 38,036 | 2,317 | 532 | 38,036 | 8,145 | ||||||||||||||||||||||||||||||||||
| Severance expense | — | 1,517 | — | — | — | 1,517 | — | ||||||||||||||||||||||||||||||||||
Merger and acquisition related expenses | — | — | 320 | 508 | 530 | 320 | 530 | ||||||||||||||||||||||||||||||||||
| Legal reserves | 897 | — | — | — | 258 | 897 | 258 | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | (4,591) | (2,694) | (18,773) | (1,419) | (9,662) | (26,058) | (15,993) | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | 2,150 | — | — | — | 2,150 | — | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | 18,716 | — | — | 18,716 | — | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | (198) | 288 | (1,195) | (448) | (304) | (1,105) | 6,259 | ||||||||||||||||||||||||||||||||||
| Risk participation agreement mark-to-market adjustment | — | — | — | — | — | — | (1,080) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | 4,707 | — | — | — | — | 4,707 | — | ||||||||||||||||||||||||||||||||||
| Loss on redemption of preferred stock | 2,820 | — | — | — | — | 2,820 | — | ||||||||||||||||||||||||||||||||||
| Unrealized losses on loans held for sale | — | — | — | 799 | — | — | 1,114 | ||||||||||||||||||||||||||||||||||
Core earnings | $ | 113,876 | $ | 59,303 | $ | 70,308 | $ | 54,588 | $ | 38,439 | $ | 243,487 | $ | 64,939 | |||||||||||||||||||||||||||
| Average total common shareholders' equity | $ | 1,071,566 | $ | 1,002,624 | $ | 918,795 | $ | 866,411 | $ | 812,577 | $ | 998,221 | $ | 797,430 | |||||||||||||||||||||||||||
| Core return on average common equity | 42.16 | % | 23.72 | % | 31.03 | % | 25.06 | % | 18.82 | % | 32.61 | % | 10.88 | % | |||||||||||||||||||||||||||
| Adjusted ROCE - Pre-Tax Pre-Provision - Customers Bancorp | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| GAAP net income to common shareholders | $ | 110,241 | $ | 58,042 | $ | 33,204 | $ | 52,831 | $ | 47,085 | $ | 201,487 | $ | 65,706 | |||||||||||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||||||||||||||
Income tax expense | 36,263 | 20,124 | 17,560 | 23,447 | 12,016 | 73,947 | 23,270 | ||||||||||||||||||||||||||||||||||
Provision (benefit) for credit losses on loan and leases | 13,164 | 3,291 | (2,919) | (2,913) | 12,955 | 13,536 | 65,688 | ||||||||||||||||||||||||||||||||||
| Provision (benefit) for credit losses on unfunded commitments | 669 | 45 | (1,286) | (968) | (527) | (572) | (132) | ||||||||||||||||||||||||||||||||||
| Net loss from discontinued operations | — | — | 38,036 | 2,317 | 532 | 38,036 | 8,145 | ||||||||||||||||||||||||||||||||||
| Severance expense | — | 2,004 | — | — | — | 2,004 | — | ||||||||||||||||||||||||||||||||||
Merger and acquisition related expenses | — | — | 418 | 709 | 658 | 418 | 658 | ||||||||||||||||||||||||||||||||||
| Legal reserves | 1,185 | — | — | — | 320 | 1,185 | 320 | ||||||||||||||||||||||||||||||||||
| (Gains) losses on investment securities | (6,063) | (3,558) | (24,540) | (1,431) | (11,945) | (34,161) | (20,095) | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | 2,840 | — | — | — | 2,840 | — | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | 24,467 | — | — | 24,467 | — | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | (261) | 380 | (1,562) | (625) | (378) | (1,443) | 8,073 | ||||||||||||||||||||||||||||||||||
| Risk participation agreement mark-to-market adjustment | — | — | — | — | — | — | (1,407) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | 6,216 | — | — | — | — | 6,216 | — | ||||||||||||||||||||||||||||||||||
| Loss on redemption of preferred stock | 2,820 | — | — | — | — | 2,820 | — | ||||||||||||||||||||||||||||||||||
| Unrealized losses on loans held for sale | — | — | — | 1,115 | — | — | 1,450 | ||||||||||||||||||||||||||||||||||
Pre-tax pre-provision adjusted net income available to common shareholders | $ | 164,234 | $ | 83,168 | $ | 83,378 | $ | 74,482 | $ | 60,716 | $ | 330,780 | $ | 151,676 | |||||||||||||||||||||||||||
Average total common shareholders' equity | $ | 1,071,566 | $ | 1,002,624 | $ | 918,795 | $ | 866,411 | $ | 812,577 | $ | 998,221 | $ | 797,430 | |||||||||||||||||||||||||||
| Adjusted ROCE - pre-tax pre-provision | 60.81 | % | 33.27 | % | 36.80 | % | 34.20 | % | 29.73 | % | 44.30 | % | 25.41 | % | |||||||||||||||||||||||||||
18
| 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 - Customers Bancorp | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| GAAP net interest income | $ | 219,892 | $ | 138,757 | $ | 132,731 | $ | 122,946 | $ | 107,439 | $ | 491,380 | $ | 280,742 | |||||||||||||||||||||||||||
| Tax-equivalent adjustment | 290 | 289 | 292 | 219 | 225 | 871 | 655 | ||||||||||||||||||||||||||||||||||
| Net interest income tax equivalent | $ | 220,182 | $ | 139,046 | $ | 133,023 | $ | 123,165 | $ | 107,664 | $ | 492,251 | $ | 281,397 | |||||||||||||||||||||||||||
| Average total interest earning assets | $ | 19,033,826 | $ | 18,698,996 | $ | 17,943,944 | $ | 17,601,999 | $ | 17,121,145 | $ | 18,562,912 | $ | 14,037,262 | |||||||||||||||||||||||||||
| Net interest margin, tax equivalent | 4.59 | % | 2.98 | % | 3.00 | % | 2.78 | % | 2.50 | % | 3.55 | % | 2.68 | % | |||||||||||||||||||||||||||
| Net Interest Margin, Tax Equivalent, Excluding PPP - Customers Bancorp | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| GAAP net interest income | $ | 219,892 | $ | 138,757 | $ | 132,731 | $ | 122,946 | $ | 107,439 | $ | 491,380 | $ | 280,742 | |||||||||||||||||||||||||||
| PPP net interest income | (112,005) | (35,785) | (34,842) | (25,257) | (20,018) | (182,632) | (29,326) | ||||||||||||||||||||||||||||||||||
| Tax-equivalent adjustment | 290 | 289 | 292 | 219 | 225 | 871 | 655 | ||||||||||||||||||||||||||||||||||
| Net interest income, tax equivalent, excluding PPP | $ | 108,177 | $ | 103,261 | $ | 98,181 | $ | 97,908 | $ | 87,646 | $ | 309,619 | $ | 252,071 | |||||||||||||||||||||||||||
| GAAP average total interest earning assets | $ | 19,033,826 | $ | 18,698,996 | $ | 17,943,944 | $ | 17,601,999 | $ | 17,121,145 | $ | 18,562,912 | $ | 14,037,262 | |||||||||||||||||||||||||||
| Average PPP loans | (5,778,367) | (6,133,184) | (4,623,213) | (4,782,606) | (4,909,197) | (5,515,819) | (2,563,299) | ||||||||||||||||||||||||||||||||||
| Adjusted average total interest earning assets | $ | 13,255,459 | $ | 12,565,812 | $ | 13,320,731 | $ | 12,819,393 | $ | 12,211,948 | $ | 13,047,093 | $ | 11,473,963 | |||||||||||||||||||||||||||
| Net interest margin, tax equivalent, excluding PPP | 3.24 | % | 3.30 | % | 2.99 | % | 3.04 | % | 2.86 | % | 3.17 | % | 2.93 | % | |||||||||||||||||||||||||||
| Core Efficiency Ratio - Customers Bancorp | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| GAAP net interest income | $ | 219,892 | $ | 138,757 | $ | 132,731 | $ | 122,946 | $ | 107,439 | $ | 491,380 | $ | 280,742 | |||||||||||||||||||||||||||
| GAAP non-interest income | $ | 25,586 | $ | 16,822 | $ | 18,468 | $ | 16,083 | $ | 24,864 | $ | 60,876 | $ | 47,736 | |||||||||||||||||||||||||||
| (Gains) losses on investment securities | (6,063) | (3,558) | (24,540) | (1,431) | (11,945) | (34,161) | (20,095) | ||||||||||||||||||||||||||||||||||
| Derivative credit valuation adjustment | (261) | 380 | (1,562) | (625) | (378) | (1,443) | 8,073 | ||||||||||||||||||||||||||||||||||
| Risk participation agreement mark-to-market adjustment | — | — | — | — | — | — | (1,407) | ||||||||||||||||||||||||||||||||||
| Unrealized losses on loans held for sale | — | — | — | 1,115 | — | — | 1,450 | ||||||||||||||||||||||||||||||||||
| Loss on cash flow hedge derivative terminations | — | — | 24,467 | — | — | 24,467 | — | ||||||||||||||||||||||||||||||||||
| Loss on sale of foreign subsidiaries | — | 2,840 | — | — | — | 2,840 | — | ||||||||||||||||||||||||||||||||||
| Core non-interest income | 19,262 | 16,484 | 16,833 | 15,142 | 12,541 | 52,579 | 35,757 | ||||||||||||||||||||||||||||||||||
| Core revenue | $ | 239,154 | $ | 155,241 | $ | 149,564 | $ | 138,088 | $ | 119,980 | $ | 543,959 | $ | 316,499 | |||||||||||||||||||||||||||
| GAAP non-interest expense | $ | 80,009 | $ | 70,823 | $ | 61,927 | $ | 59,933 | $ | 56,285 | $ | 212,759 | $ | 155,043 | |||||||||||||||||||||||||||
| Severance expense | — | (2,004) | — | — | — | (2,004) | — | ||||||||||||||||||||||||||||||||||
| Legal reserves | (1,185) | — | — | — | (320) | (1,185) | (320) | ||||||||||||||||||||||||||||||||||
| Merger and acquisition related expenses | — | — | (418) | (709) | (658) | (418) | (658) | ||||||||||||||||||||||||||||||||||
| Deposit relationship adjustment fees | (6,216) | — | — | — | — | (6,216) | — | ||||||||||||||||||||||||||||||||||
| Core non-interest expense | $ | 72,608 | $ | 68,819 | $ | 61,509 | $ | 59,224 | $ | 55,307 | $ | 202,936 | $ | 154,065 | |||||||||||||||||||||||||||
Core efficiency ratio (1) | 30.36 | % | 44.33 | % | 41.13 | % | 42.89 | % | 46.10 | % | 37.31 | % | 48.68 | % | |||||||||||||||||||||||||||
(1) Core efficiency ratio calculated as core non-interest expense divided by core revenue.
19
| 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) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | ||||||||||||||||||||||||
| GAAP total shareholders' equity | $ | 1,284,299 | $ | 1,250,729 | $ | 1,188,721 | $ | 1,117,086 | $ | 1,051,491 | |||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||
| Preferred stock | (137,794) | (217,471) | (217,471) | (217,471) | (217,471) | ||||||||||||||||||||||||
Goodwill and other intangibles (1) | (3,794) | (3,853) | (3,911) | (14,298) | (14,437) | ||||||||||||||||||||||||
| Tangible common equity | $ | 1,142,711 | $ | 1,029,405 | $ | 967,339 | $ | 885,317 | $ | 819,583 | |||||||||||||||||||
| GAAP total assets | $ | 19,108,922 | $ | 19,635,108 | $ | 18,817,660 | $ | 18,439,248 | $ | 18,778,727 | |||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||
Goodwill and other intangibles (1) | (3,794) | (3,853) | (3,911) | (14,298) | (14,437) | ||||||||||||||||||||||||
| Tangible assets | $ | 19,105,128 | $ | 19,631,255 | $ | 18,813,749 | $ | 18,424,950 | $ | 18,764,290 | |||||||||||||||||||
| Tangible common equity to tangible assets | 5.98 | % | 5.24 | % | 5.14 | % | 4.80 | % | 4.37 | % | |||||||||||||||||||
(1) Includes goodwill and other intangibles reported in assets of discontinued operations.
| Tangible Book Value per Common Share - Customers Bancorp | |||||||||||||||||||||||||||||
| (dollars in thousands except share and per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | ||||||||||||||||||||||||
| GAAP total shareholders' equity | $ | 1,284,299 | $ | 1,250,729 | $ | 1,188,721 | $ | 1,117,086 | $ | 1,051,491 | |||||||||||||||||||
| Reconciling Items: | |||||||||||||||||||||||||||||
| Preferred stock | (137,794) | (217,471) | (217,471) | (217,471) | (217,471) | ||||||||||||||||||||||||
Goodwill and other intangibles (1) | (3,794) | (3,853) | (3,911) | (14,298) | (14,437) | ||||||||||||||||||||||||
| Tangible common equity | $ | 1,142,711 | $ | 1,029,405 | $ | 967,339 | $ | 885,317 | $ | 819,583 | |||||||||||||||||||
| Common shares outstanding | 32,537,976 | 32,353,256 | 32,238,762 | 31,705,088 | 31,555,124 | ||||||||||||||||||||||||
| Tangible book value per common share | $ | 35.12 | $ | 31.82 | $ | 30.01 | $ | 27.92 | $ | 25.97 | |||||||||||||||||||
(1) Includes goodwill and other intangibles reported in assets of discontinued operations.
| Total Loans and Leases, excluding PPP | |||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | ||||||||||||||||||||||||
| Total loans and leases | $ | 15,515,537 | $ | 16,967,022 | $ | 16,168,306 | $ | 15,832,251 | $ | 16,605,279 | |||||||||||||||||||
| Loans receivable, PPP | (4,957,357) | (6,305,056) | (5,178,089) | (4,561,365) | (4,964,105) | ||||||||||||||||||||||||
| Loans and leases, excluding PPP | $ | 10,558,180 | $ | 10,661,966 | $ | 10,990,217 | $ | 11,270,886 | $ | 11,641,174 | |||||||||||||||||||
| Total Assets, excluding PPP | |||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | ||||||||||||||||||||||||
| Total assets | $ | 19,108,922 | $ | 19,635,108 | $ | 18,817,660 | $ | 18,439,248 | $ | 18,778,727 | |||||||||||||||||||
| Loans receivable, PPP | (4,957,357) | (6,305,056) | (5,178,089) | (4,561,365) | (4,964,105) | ||||||||||||||||||||||||
| Total assets, excluding PPP | $ | 14,151,565 | $ | 13,330,052 | $ | 13,639,571 | $ | 13,877,883 | $ | 13,814,622 | |||||||||||||||||||
20
| CUSTOMERS BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) | |||||||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
| Coverage of credit loss reserves for loans and leases held for investment, excluding PPP | |||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | ||||||||||||||||||||||||
| Loans and leases receivable | $ | 12,927,956 | $ | 14,077,198 | $ | 12,714,578 | $ | 12,136,733 | $ | 12,664,997 | |||||||||||||||||||
| Loans receivable, PPP | (4,957,357) | (6,305,056) | (5,178,089) | (4,561,365) | (4,964,105) | ||||||||||||||||||||||||
| Loans and leases held for investment, excluding PPP | $ | 7,970,599 | $ | 7,772,142 | $ | 7,536,489 | $ | 7,575,368 | $ | 7,700,892 | |||||||||||||||||||
| Allowance for credit losses on loans and leases | $ | 131,496 | $ | 125,436 | $ | 128,736 | $ | 144,176 | $ | 155,561 | |||||||||||||||||||
| Coverage of credit loss reserves for loans and leases held for investment, excluding PPP | 1.65 | % | 1.61 | % | 1.71 | % | 1.90 | % | 2.02 | % | |||||||||||||||||||
| Tangible Common Equity to Tangible Assets, excluding PPP - Customers Bancorp | |||||||||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | ||||||||||||||||||||||||
| GAAP total shareholders' equity | $ | 1,284,299 | $ | 1,250,729 | $ | 1,188,721 | $ | 1,117,086 | $ | 1,051,491 | |||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||
| Preferred stock | (137,794) | (217,471) | (217,471) | (217,471) | (217,471) | ||||||||||||||||||||||||
Goodwill and other intangibles (1) | (3,794) | (3,853) | (3,911) | (14,298) | (14,437) | ||||||||||||||||||||||||
| Tangible common equity | $ | 1,142,711 | $ | 1,029,405 | $ | 967,339 | $ | 885,317 | $ | 819,583 | |||||||||||||||||||
| GAAP total assets | $ | 19,108,922 | $ | 19,635,108 | $ | 18,817,660 | $ | 18,439,248 | $ | 18,778,727 | |||||||||||||||||||
| Loans receivable, PPP | (4,957,357) | (6,305,056) | (5,178,089) | (4,561,365) | (4,964,105) | ||||||||||||||||||||||||
| Total assets, excluding PPP | $ | 14,151,565 | $ | 13,330,052 | $ | 13,639,571 | $ | 13,877,883 | $ | 13,814,622 | |||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||||||||
Goodwill and other intangibles (1) | (3,794) | (3,853) | (3,911) | (14,298) | (14,437) | ||||||||||||||||||||||||
| Tangible assets | $ | 14,147,771 | $ | 13,326,199 | $ | 13,635,660 | $ | 13,863,585 | $ | 13,800,185 | |||||||||||||||||||
| Tangible common equity to tangible assets | 8.08 | % | 7.72 | % | 7.09 | % | 6.39 | % | 5.94 | % | |||||||||||||||||||
(1) Includes goodwill and other intangibles reported in assets of discontinued operations.
| Deferments to total loans and leases, excluding PPP | |||||||||||||||||||||||
| (dollars in thousands except per share data) | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | |||||||||||||||||||
| Total loans and leases | $ | 15,515,537 | $ | 16,967,022 | $ | 16,168,306 | $ | 15,832,251 | |||||||||||||||
| Loans receivable, PPP | (4,957,357) | (6,305,056) | (5,178,089) | (4,561,365) | |||||||||||||||||||
| Total loans and leases, excluding PPP | $ | 10,558,180 | $ | 10,661,966 | $ | 10,990,217 | $ | 11,270,886 | |||||||||||||||
| Commercial deferments | $ | 73,400 | $ | 89,800 | $ | 176,100 | $ | 202,100 | |||||||||||||||
| Consumer deferments | 6,708 | 8,400 | 13,000 | 16,400 | |||||||||||||||||||
| Total deferments | $ | 80,108 | $ | 98,200 | $ | 189,100 | $ | 218,500 | |||||||||||||||
| Commercial deferments to total loans and leases, excluding PPP | 0.7 | % | 0.8 | % | 1.6 | % | 1.8 | % | |||||||||||||||
| Consumer deferments to total loans and leases, excluding PPP | 0.1 | 0.1 | 0.1 | 0.1 | |||||||||||||||||||
| Total deferments to total loans and leases, excluding PPP | 0.8 | % | 0.9 | % | 1.7 | % | 1.9 | % | |||||||||||||||
21
Investor Presentation Q3 2021 NYSE: CUBI High Tech Forward-Thinking Bank Supported by High Touch
2 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,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: the adverse impact on the U.S. economy, including the markets in which we operate, of the coronavirus outbreak, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan and lease portfolio, the market value of our investment securities, the demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that 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; 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, 2020, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law. 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 Customers Bancorp Snapshot Customers Bancorp NYSE: CUBI Headquarters West Reading, PA Offices1 37 FTE Employees 623 Market Capitalization2 As of 10/20/21 $1.5B Total Assets $19.1B Tangible Book Value3 $35.12 Data as of 9/30/2021, unless otherwise noted. (1) Offices includes branches, executive offices, Private Banking Offices and Loan Production Offices. (2) Calculated based on shares outstanding of 32.5M. (3) Non-GAAP Measure, refer to Appendix for reconciliation. Lines of Business Community Banking Specialty Banking Digital Banking • C&I • Multi-Family • CRE • SMB Lending • SBA • Residential Mortgage • Warehouse Lending • Lender Finance • Fund Finance • Real Estate Specialty Finance • Healthcare Lending • Equipment Finance • Technology and Venture Capital Banking • Financial Institutions Group Consumer • Checking & Savings • Personal Installment • Student Loan Refinancing • Medical/Dental • Credit Card Commercial • Real Time Payments • Digital Asset Banking • SMB Bundle • Credit Card New Line of Business or Geography in 2021
4 3Q 2021 Highlights: Exceptional Profitability & Growth 1) Non-GAAP Measure, refer to Appendix for reconciliation. Core EPS (ex. PPP) is $0.96. 2) Excluding PPP. 3Q 2021 Performance (vs. 3Q 2020) Profitability Balance Sheet Credit & Capital 3.24% vs. 2.86% in 3Q 2020 NIM1,2 $14.2B +2.5% Core Assets1,2 0.27% -7 bps NPA Ratio 2.35% vs. 0.93% in 3Q 2020 Core ROAA1 $10.6B -9.3% Total Loans and Leases1,2 1.65% -37 bps Reserve Coverage1,2 3.36% vs. 1.43% in 3Q 2020 Adjusted PTPP ROAA1 $17.0B +56.6% Total Deposits 8.1% +214 bps TCE/TA (ex. PPP)1,2 Core EPS1 $3.36 Core Earnings1 $113.9M Core ROCE1 42.16%
5 Strategic Priorities Commercial Consumer Digital Geographic Expansion • New teams covering the Carolinas, bringing total geographic expansion to 4 YTD 2021 • Active recruitment of additional teams underway Specialty Lending Expansion • New teams onboarded to establish verticals of Technology and Venture Capital Banking and Financial Institutions Group • Active recruitment of additional teams underway Continued Growth of Existing Verticals • Strong demand: community banking C&I, lender finance, fund finance, real estate specialty finance and equipment finance • Seek to grow market share in MWH • Active recruitment of additional teams underway SBA Growth • Digital small balance 7(a) pilot launched in 3Q21 • $4.3M YTD 2021 in SBA gain on sale revenue • Expect to achieve $6.0M in 2021 Multifamily • Program underway to grow portfolio to ~15% of total loans Direct Originations • Crossed over $1B in direct Customers Bank personal loans • Over 130k active profitable customers Consumer Gain on Sale Revenue • Generated $4.5M YTD 2021 and achieved 2021 goal Fintech Banking • Seek to become partner bank with existing MPL partners in 2022 • Potential to add several million dollars in annual fee income • Initiative is executed by our embedded fintech team New Products • Enhanced credit card launch in 1H 2022 • Evaluating additional products to be launched in 2022 Customers Bank Instant Token (“CBIT”) • 24/7/365 payment solution • $1.5B in non interest bearing deposits onboarded in 3Q21 New Vertical Expansion • New vertical of Digital Asset Banking created through the recruitment of a team Digital SMB • Digital SMB bundle pilot launches 1H 2022 with term loan and revolver • Cross sell underway on 315k unique PPP customers • In discussion with several asset generating fintech partners Rebranding and Website Relaunch • On track for implementation by year end
6 $4.3 $11.9 $17.0 $26.7 $25.8 $101.6 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 2Q '20 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21 Origination Fees Paycheck Protection Program: Loans and Fees 1) As of 9/30/2021 Includes all PPP loans facilitated by Customers Bank (originated and purchased). 2) As measured in terms of # of loans Fee Income Recognized1 $ in millions • #2 PPP Bank Lender in the country using technology platform2 • Purchased $529M in PPP loans from a large global fintech adding to deferred origination fee totals • Currently have 189,604 PPP loans remaining to be forgiven • Processed 73,886 loans for $1.1B through SBA direct forgiveness platform • ~$346 million of origination fee revenue from the PPP Program • Recognized $187 million origination fee revenue since inception (as of September 30, 2021) • Forgiveness rate remains above 99.5% of loans processed $4.8 $5.0 $4.6 $3.2 $2.2 $1.5 $1.9 $4.1 $3.5 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 2Q '20 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21 PPP Loans - R1 & 2 PPP Loans - R3 PPP Loan Balances1 $ in billions
7 Customers Bank Instant Token (CBIT) Timeline1 1) In partnership with TassatPay. Full Launch Fully functional API connected platform Open to all CUBI commercial banking customers Beta Launch Fully functional platform Select enterprise grade customers in the crypto ecosystem. Jul-Sep Sep Oct Submit completed onboarding documents CUBI KYC Review Begin transacting on platform Product Testing and Client Curation Platform integration & E2E product testing Implemented KYC processes for qualifying customers Hand-select clients to join Platform CUBI Customer CUBI Bring more partners Scale number and size of transactions Build API integration, if applicable Nov/Dec Begin using API and automate workflows New client onboarding: ~ 48 hours Digital Asset Customers Began banking Digital Asset Customers $1.5B zero-cost deposits in Q3 Jan-Jun Opportunity Analysis Formulated use cases and built economic opportunity model Conducted due-diligence on prospective vendors Built risk mitigants and controls where needed
8 1) Excludes PPP loan balances, Non-GAAP Measure, refer to Appendix for reconciliation. 2) CAGR calculated based on 2.75 years. 3) Includes owner occupied CRE Loan Growth $ in Billions 3Q 2021 Loan Mix1 Highly Diversified Portfolio with Core C&I and Consumer Installment Loan Growth YoY of 23% - Strong and Growing Pipeline • Strong core C&I3 growth of $516 million or 19% over 3Q20 • Strong consumer installment growth of $391 million or 32% over 3Q20 • Targeting total consumer loans of 15-20% of loan portfolio • Pipelines remain strong; on track to hit 2021 growth targets Balance Sheet: Loan Growth & Mix $1.9 $2.4 $2.9 $3.3 $1.2 $1.3 $1.4 $1.3$0.7 $1.6 $1.6 $1.9 $1.5 $2.3 $3.7 $2.6 $3.3 $2.4 $1.8 $1.4 $4.6 $5.0 $8.5 $10.1 $15.8 $15.5 2018 2019 2020 3Q '21 Core C&I Investment CRE Consumer Loans Mortgage Warehouse Multi-Family PPP Loans CAGR(excl. PPP) = 8.0% (1)(2) 31% 13% 18% 25% 13% Core C&I Investment CRE Consumer Loans Mortgage Warehouse Multi-Family 3 3
9 Balance Sheet: Deposit Growth & Mix 1) CAGR calculated based on 2.75 years. Deposit Growth $ in Billions 3Q 2021 Deposit Mix Significant Deposit Growth and Funding Mix Improvement Achieved • Total deposit growth of $6.1B (57%) YoY, which included $5.3B (115%) increase in demand deposits over 3Q20 • YTD 2021 deposit growth of $5.7B, which included $1.5B driven by customers joining Real-Time Payments platform • CD’s declined $379 million (39%) YoY, making up only 3% of total deposits at 9/30/2021 • Average cost of deposits dropped to 0.42% for 3Q21 from 0.67% in the year-ago quarter • Spot cost of deposits as of September 30, 2021 of 0.32% • Expect cost of deposits to be below 30 basis points at December 31, 2021 29% 30% 30% 8% 3% Noninterest Bearing DDAs Interest Bearing DDAs Money Market Accounts Savings Accounts Certificates of Deposit (CD's) $1.1 $1.3 $2.4 $5.0 $0.8 $1.2 $2.4 $5.0 $3.1 $3.5 $4.6 $5.1 $0.4 $0.9 $1.3 $1.3 $1.7 $1.7 $0.7 $0.6 $7.1 $8.6 $11.3 $17.0 2018 2019 2020 3Q '21 Noninterest Bearing DDAs Interest Bearing DDAs Money Market Accounts Savings Accounts Certificates of Deposit (CD's) CAGR = 37% (1) Total DDA 59% of Deposits
10 Significant Improvement Achieved Due to Maintaining Loan Yields While Reducing Funding Costs • Net interest income (excl. PPP)1 was $107.8M and increased 23% over 3Q20 • Net interest margin (excl. PPP)1 was 3.24% − Overall loan yields increased by 33 basis points over 3Q20 due to efforts to improve the loan mix while maintaining credit quality during the pandemic rate environment − Total deposit cost declined by 25 basis points over 3Q20 as a result of on-going efforts to reduce deposit rates • Significant excess cash balances as a result of strong deposit growth negatively impacted NIM by ~16 basis points Income Statement: Growth in Net Interest Income & Margin 1) Excludes PPP loan balances, Non-GAAP Measure, refer to Appendix for reconciliation. 2) Total Deposit Cost includes non-interest bearing deposits. 3) Ex PPP Net Interest Income $ in Millions Loan Yield & Deposit Cost Net Interest Margin1,3 4.1% 4.1% 4.3% 4.4% 4.4% 0.7% 0.6% 0.5% 0.5% 0.4% 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21 Loan Yield (Excl. PPP) Total Deposit Cost 21,3 $87.5 $97.7 $98.0 $102.9 $107.8 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21 2.9% 3.2%3.3% 3.0%3.0%
11 Credit: Credit Quality and Reserves Remain Strong Nonperforming Loans $ in millions NPA as a % Total Assets Highlights • Credit quality remains excellent as evidenced by NPAs/Total Assets of only 0.27% at 9/30/21 • Bolstered by the adoption of CECL on January 1, 2020, the coverage ratio, excluding PPP loans1, was 1.65% at 9/30/21 • Due to the Bank’s history of focusing on lower credit risk businesses, we expect near-term credit outlook to remain stable Net Charge Offs $ in millions 0.34% 0.38% 0.26% 0.24% 0.27% 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 NPAs / Assets $63.6 $70.5 $48.7 $46.5 $52.0 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 Non Performing Loans $8.9 $0.1 $1.6 -$0.5 $1.1 $8.4 $8.3 $10.9 $7.0 $6.0 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 Commercial NCO's Consumer NCO's 1) Non-GAAP Measure, refer to Appendix for reconciliation.
12 Capital: Risk Based Capital & Leverage • TRB capital ratio increased 240 basis points over 3Q20, driven by PPP revenue and core bank earnings • TCE/TA excl. PPP increased 36% compared to 3Q20, driven by PPP revenue and core bank earnings 1) Excludes PPP loan balances, Non-GAAP Measure, refer to Appendix for reconciliation. 2) The Total Capital Ratio is estimated pending final Call Report. 11.3% 11.9% 12.4% 13.3% 13.4% 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21E Total Risk Based Capital2 5.9% 6.4% 7.1% 7.7% 8.1% 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21 TCE/TA excl. PPP1
13 Tangible Book Value 1) Non-GAAP Measure, refer to Appendix for reconciliation. 2) As of October 20, 2021 35.2% YoY Growth Tangible Book Value Per Share1 TBV/Share1 $35.12 Stock Price2 $47.20 Value Proposition Trading at 134% of TBV Highlights • Significant potential upside based on peer trading levels $25.97 $27.92 $30.01 $31.82 $35.12 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21E TBV/Share ProForma TBV/Share with Total PPP Revenue 1 $40.00
14 Key Accomplishments Financial Performance Technology Driven Performance Capital Earnings • Record quarterly earnings in excess of $110 million, higher than any annual performance in the company’s history Deposit Franchise • Reduced cost of deposits from 0.67% to 0.42% YoY • Excluding CBIT related deposits, YTD growth was still 37% Stock Performance • Best performing publicly traded bank stock: 160% appreciation in 2021 as of October 20th • Attractively valued at ~10x core earnings and ~134% of tangible book value CBIT • $1.5B in zero cost deposits already attracted • Poised for significant additional growth opportunities over coming quarters PPP2 • #2 bank in country by number of loans in 2021 • ~347,000 loans and ~$10B throughout the program Gain on Sale Businesses • Technology led loan sales in consumer and SBA groups totaled ~$202M resulting in $8.8M gain on sale YTD 2021 Capital Ratio • Improved TCE/TA (ex. PPP)1 capital ratios from 5.9% to 8.1% YoY Preferred Redemption • Completed redemption of $82.5 million in preferred stock adding ~$0.13 of annual run-rate EPS Common Stock Share Repurchase • Implemented program to repurchase up to 10% of the company’s outstanding shares • As of October 20, 2021 executed on 167,000 shares at an average price of $43.00 1) Excludes PPP, Non-GAAP Measure, refer to Appendix for reconciliation. 2) As of 9/30/2021 Includes all PPP loans facilitated by Customers Bank (originated and purchased).
15 Contacts Leadership Jay Sidhu Chairman & CEO of Customers Bancorp, Inc and Executive Chairman of Customers Bank Sam Sidhu President of Customers Bancorp, Inc and President & CEO of Customers Bank Carla Leibold CFO of Customers Bancorp, Inc and Customers Bank Andrew Bowman EVP & Chief Credit Officer Analysts B. Riley Financial - Steve Moss D.A. Davidson Company - Russell Gunther Hovde Group - Will Curtiss Jefferies LLC - Casey Haire Keefe, Bruyette & Woods - Michael Perito Maxim Group - Michael Diana Piper Sandler Companies - Frank Schiraldi Wedbush - Peter Winter
Appendix 16
17 Environmental, Social & Governance (ESG) considerations are integrated across our business units and incorporated into the policies and principles that govern how our company operates. We continuously seek to address some of the practical challenges in balancing short- and long-term business trade-offs in order to ensure that our stakeholders and shareholders prosper together. Customers Bank’s approach to ESG management includes promoting sound corporate governance, risk management and controls, investing in our Team Members and cultivating a diverse and inclusive work environment, strengthening the communities in which our Team Members live and work, and operating our business in a way that demonstrates Customers’ dedication to environmental sustainability. Environmental, Social & Governance Report Our Communities Use of investment and philanthropic capital to expand access to economic opportunity in the communities where we do business has been core to Customers since its founding more than 10 years ago. Our Team Members Customers Bank is committed to developing high performing Team Members and fostering a richly diverse and inclusive workplace culture. Our Environment Customers Bank provides financing solutions that generate positive environmental and social impacts and actively manages the environmental impacts of the company’s branches and office locations. Our Risk Culture Customers Bank’s tone at the top and risk culture underpins our ability to function with integrity and accountability and to systematically and independently review risks and opportunities while building sustainable value for the company. Our Corporate Governance & Ethics Supported by unwavering management commitment and an engaged Board, Customers Bank is continually focused on enhancing the structures, processes and controls in place that support and promote accountability, transparency and ethical behavior.
18 2020 ESG Milestones 1) As of 07/19/2021 Includes all PPP loans facilitated by Customers Bank (originated and purchased) Just days after the death of George Floyd, the bank held a company- wide virtual “Family Meeting” to provide an outlet of support to our Team Members. Executive leaders addressed over 600 Team Members who were then invited to share their stories, feelings and concerns. Customers Bank was one of the nation’s leading lenders in the Paycheck Protection Program (PPP). From passage of the CARES act on March 27, 2020 to date, the Bank funded approximately 347 thousand loans totaling $10 billion1. These loans helped save hundreds of thousands of jobs. Customers Bank joined the Federal Home Loan Bank of Pittsburgh in making 120 First Front Door home loans worth more than $12 million, providing affordable housing to families across the market. In total, Customers Bank invested more than $2.6 Million in 2020 through CRA investments, charitable donations, and community sponsorships. Customers Bank was the winner of the highly coveted 2020 Best Example of Making an Impact on Business Award presented by Everbridge, an organization focused on lifesaving efforts through its global Critical Event Management (CEM) platform. The bank stood out for its commitment to life safety, operational resilience and business continuity due to its efforts to communicate with Team Members, clients and the community during the onset of the pandemic. Customers Bank contributed nearly $400,000 to help feed those most in need during the pandemic. In addition to combating food insecurity, Customers Bank contributed an additional $250,000 to other pandemic- related programs including supplying PPE for hospitals and educational opportunities for inner-city children. Customers has become an active lender for several land-based wind projects, providing $126 Million in financing.
19 Credit: Loan and Lease Deferments Principal % of Principal % of ($'s in millions) Deferred Portfolio (2) Deferred Portfolio (2) C&I and Investment CRE: Commercial & Industrial $0.0 0.0% $0.0 0.0% SBA $3.4 3.5% $0.0 0.0% Investment CRE & Multi-Family $4.4 0.2% $0.0 0.0% Hotels $59.2 14.8% $59.2 14.9% Equipment Finance: Motor Coach $21.7 61.4% $13.1 37.8% Transportation $1.1 1.0% $1.1 1.0% Franchise $0.0 0.0% $0.0 0.0% Equipment Finance - Other $0.0 0.0% ($0.0) 0.0% Mortgage Warehouse: Mortgage Warehouse $0.0 0.0% $0.0 0.0% Consumer: Consumer Installment $4.9 0.3% $4.2 0.3% Residential Mortgage $3.4 1.2% $2.3 0.9% Manufactured Housing $0.1 0.2% $0.2 0.4% Total Deferred $98.2 0.9% $80.1 0.8% 6/30/21 9/30/21 (1) (1) The 9/30/2021 figures are all actual deferrals with none pending. (2) "% of Portfolio" ratio excludes PPP loans.
20 Credit: Allowance for Credit Losses for Loans and Leases (1) Utilized Moody’s September 2021 Baseline forecast with qualitative adjustments for 3Q 2021 provision. (2) Excludes Mortgage Warehouse loans reported at fair value, loans held for sale and PPP Loans. ($ in thousands) Amortized Cost Allowance for Credit Losses Lifetime Loss Rate Annualized Net Charge Off Ratio Loans and Leases Receivable: Commercial Multi-Family $1,369,876 $4,397 0.32% 0.00% Commercial & Industrial $2,673,226 $10,860 0.41% 0.02% Commercial Real Estate Owner Occupied $656,044 $3,617 0.55% 0.03% Commercial Real Estate Non-Owner Occupied $1,144,643 $7,375 0.64% 0.33% Construction $198,607 $886 0.45% -0.01% Total Commercial Loans and Leases Receivable $6,042,396 $27,135 0.45% 0.07% Consumer Consumer Installment $1,624,415 $98,039 6.04% 1.46% Residential Mortgage $248,153 $1,912 0.77% 0.09% Manufactured Housing $55,635 $4,410 7.93% 0.00% Total Consumer Loans Receivable $1,928,203 $104,361 5.41% 1.24% Total Loans and Leases HFI 2 $7,970,599 $131,496 1.65% 0.36% CECL Method 1 September 30, 2021
21 Liquidity Liquidity Sources ($000's) 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 YOY Change Cash and Cash Equivalents $325,594 $615,264 $512,241 $393,663 $1,000,885 $675,291 FHLB Available Borrowing Capacity $929,508 $684,936 $713,673 $1,466,067 $2,031,551 $1,102,043 FRB Available Borrowing Capacity $215,000 $220,000 $180,000 $197,000 $186,000 ($29,000) Investments (MV) US Gov't & Agency $40,008 $20,034 $20,053 $20,114 $0 ($40,008) MBS &CMO $333,845 $361,850 $590,485 $661,823 $871,191 $537,346 Municipals $18,260 $18,291 $18,527 $8,554 $8,655 ($9,605) Corporates $363,872 $396,744 $257,924 $350,420 $440,892 $77,020 ABS $375,381 $409,512 $550,087 $485,881 $540,959 $165,578 Other AFS $2,466 $3,853 $4,827 $0 $5,000 $2,534 Less: Pledged Securities ($20,053) ($18,849) ($17,589) ($15,988) ($12,440) $7,613 Net Unpledged Securities $1,113,778 $1,191,436 $1,424,314 $1,510,804 $1,854,257 $740,478 $2,583,881 $2,711,636 $2,830,229 $3,567,534 $5,072,693 $2,488,812
22 22.2% 10.2% 18.5% 26.6% 22.5% Geography West Southwest Midwest Southeast Northeast 97.7% 1.5% 0.3% 0.6% Profession Non COVID-19 Impacted Segments Non-Professional Retail & Restaurants Transportation, Travel and Entertainment 7.9% 78.3% 8.9% 4.9% Purpose Home Improvement Personal Loan Specialty Student Loan 29.1% 42.1% 28.8% Borrower Income <$49,999 $50K -$99,999 >$100K 17.4% 27.4% 21.4% 11.3% 4.4% 0.5% 17.5% Debt to Income Ratio 0-9.99% 10 – 19.99% 20 – 29.99% 30 – 39.99% 40 – 49.99% > 50% Unknown 29.7% 50.9% 19.4% FICO Score 750+ 700-749 660-699 Consumer Installment Loans Well Diversified Insignificant exposure to stressed professions $91K Avg Income 740 Avg FICO Portfolio average DTI is 20.8% (1) FICO score at time of origination. Note: Data as of September 30, 2021. (1)
23 Consumer Installment Loans Performance Note: Customers Bancorp’s impairment percentages are considered 1 day+ delinquent or in forbearance. Industry chart is from DV01 Insights COVID-19 Performance Report dated September 30, 2021. Continued Outperformance • At industry peak for consumer forbearance, CB overall remained less than half the industry average • Further, CB Direct was approximately 70% below industry average 0.9% 4.46% 0.0% 4.0% 8.0% 12.0% 16.0% 01 /3 1/ 19 02 /2 8/ 19 03 /3 1/ 19 04 /3 0/ 19 05 /3 1/ 19 06 /3 0/ 19 07 /3 1/ 19 08 /3 1/ 19 09 /3 0/ 19 10 /3 1/ 19 11 /3 0/ 19 12 /3 1/ 19 01 /3 1/ 20 02 /2 9/ 20 03 /3 1/ 20 04 /3 0/ 20 05 /3 1/ 20 06 /3 0/ 20 07 /3 1/ 20 08 /3 1/ 20 09 /3 0/ 20 10 /3 1/ 20 11 /3 0/ 20 12 /3 1/ 20 01 /3 1/ 21 02 /2 8/ 21 03 /3 1/ 21 04 /3 0/ 21 05 /3 1/ 21 06 /3 0/ 21 07 /3 1/ 21 08 /3 1/ 21 09 /3 0/ 21 CUBI Industry
24 Detailed Financial Ratios
25 Reconciliation of Non-GAAP Measures - Unaudited Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in Customers' industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. The non-GAAP measures presented are not necessarily comparable to non- GAAP measures that may be presented by other financial institutions. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP. The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document.
26 Reconciliation of Non-GAAP Measures – Unaudited (Cont.) ($ in thousands, not including per share amounts) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income to common shareholders $ 110,241 $ 3.25 $ 58,042 $ 1.72 $ 33,204 $ 1.01 $ 52,831 $ 1.65 $ 47,085 $ 1.48 Reconciling items (after tax): Net loss from discontinued operations - - - - 38,036 1.16 2,317 0.07 532 0.02 Severance expense - - 1,517 0.04 - - - - - - Merger and acquisition related expenses - - - - 320 0.01 508 0.02 530 0.02 Legal reserves 897 0.03 - - - - - - 258 0.01 (Gains) losses on investment securities (4,591) (0.14) (2,694) (0.08) (18,773) (0.57) (1,419) (0.04) (9,662) (0.30) (Gain) losses on sale of foreign subsidiaries - - 2,150 0.06 - - - - - - Loss on cash flow hedge derivative terminations - - - - 18,716 0.57 - - - - Derivative credit valuation adjustment (198) (0.01) 288 0.01 (1,195) (0.04) (448) (0.01) (304) (0.01) Risk participation agreement mark-to-market adjustment - - - - - - - - - - Deposit reltionship adjustment fees 4,707 0.14 - - - - - - - - Loss on redemption of preferred stock 2,820 0.08 - - - - - - - - Unrealized losses on loans held for sale - - - - - - 799 0.03 - - Core earnings $ 113,876 $ 3.36 $ 59,303 $ 1.76 $ 70,308 $ 2.14 $ 54,588 $ 1.71 $ 38,439 $ 1.21 Core Earnings - Customers Bancorp Core Earnings, Excluding PPP - Customers Bancorp ($ in thousands, not including per share amounts) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income to common shareholders, excluding PPP $ 28,904 $ 0.85 $ 33,730 $ 1.00 $ 8,125 $ 0.25 $ 33,683 $ 1.05 $ 31,942 $ 1.01 Reconciling items (after tax): Net loss from discontinued operations - - - - 38,036 1.16 2,317 0.07 532 0.02 Severance expense - - 1,517 0.04 - - - - - - Merger and acquisition related expenses - - - - 320 0.01 508 0.02 530 0.02 Legal reserves 897 0.03 - - - - - - 258 0.01 (Gains) losses on investment securities (4,591) (0.14) (2,694) (0.08) (18,773) (0.57) (1,419) (0.04) (9,662) (0.30) (Gain) losses on sale of foreign subsidiaries - - 2,150 0.06 - - - - - - Loss on cash flow hedge derivative terminations - - - - 18,716 0.57 - - - - Derivative credit valuation adjustment (198) (0.01) 288 0.01 (1,195) (0.04) (448) (0.01) (304) (0.01) Risk participation agreement mark-to-market adjustment - - - - - - - - - - Deposit reltionship adjustment fees 4,707 0.14 - - - - - - - - Loss on redemption of preferred stock 2,820 0.08 - - - - - - - - Unrealized losses on loans held for sale - - - - - - 799 0.03 - - Core earnings, excluding PPP $ 32,539 $ 0.96 $ 34,991 $ 1.04 $ 45,229 $ 1.38 $ 35,440 $ 1.10 $ 23,296 $ 0.72
27 Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Core Return on Average Asset - Customers Bancorp ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP net income $ 116,042 $ 61,341 $ 36,595 $ 56,245 $ 50,515 Reconciling items (after tax): Net loss from discontinued operations - - 38,036 2,317 532 Severance expense - 1,517 - - - Merger and acquisition related expenses - - 320 508 530 Legal reserves 897 - - - 258 (Gains) losses on investment securities (4,591) (2,694) (18,773) (1,419) (9,662) Loss on sale of foreign subsidiaries - 2,150 - - - Loss on cash flow hedge derivative terminations - - 18,716 - - Derivative credit valuation adjustment (198) 288 (1,195) (448) (304) Risk participation agreement mark-to-market adjustment - - - - - Deposit relationship adjustment fees 4,707 - - - - Unrealized losses on loans held for sale - - - 799 - Core net income $ 116,857 $ 62,602 $ 73,699 $ 58,002 $ 41,869 Average total assets $ 19,739,340 $ 19,306,948 $ 18,525,721 $ 18,250,719 $ 17,865,574 Core return on average assets 2.35% 1.30% 1.61% 1.26% 0.93% Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP net income $ 116,042 $ 61,341 $ 36,595 $ 56,245 $ 50,515 Reconciling items (after tax): Income tax expense 36,263 20,124 17,560 23,447 12,016 Provision (benefit) for credit losses on loans and leases 13,164 3,291 (2,919) (2,913) 12,955 Provision (benefit) for credit losses on unfunded commitments 669 45 (1,286) (968) (527) Severance expense - 2,004 - - - Net loss from discontinued operations - - 38,036 2,317 532 Merger and acquisition related expenses - - 418 709 658 Legal reserves 1,185 - - - 320 (Gains) losses on investment securities (6,063) (3,558) (24,540) (1,431) (11,945) (Gain) losses on sale of foreign subsidiaries - 2,840 - - - (Gains) losses on hedge deriative terminations - - 24,467 - - Derivative credit valuation adjustment (261) 380 (1,562) (625) (378) Risk participation agreement mark-to-market adjustment - - - - - Deposit relationship adjustment fees 6,216 - - - - Unrealized losses on loans held for sale - - - 1,115 - Adjusted net income - pre-tax pre-provision $ 167,215 $ 86,467 $ 86,769 $ 77,896 $ 64,146 Average total assets $ 19,739,340 $ 19,306,948 $ 18,525,721 $ 18,250,719 $ 17,865,574 Adjusted ROAA - pre-tax pre-provision 3.36% 1.80% 1.90% 1.70% 1.43%
28 Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Core Return on Average Common Equity ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP net income to common shareholders $ 110,241 $ 58,042 $ 33,204 $ 52,831 $ 47,085 Reconciling items (after tax): Net loss from discontinued operations - - 38,036 2,317 532 Severance expense - 1,517 - - - Merger and acquisition related expenses - - 320 508 530 Legal reserves 897 - - - 258 (Gains) losses on investment securities (4,591) (2,694) (18,773) (1,419) (9,662) Loss on sale of foreign subsidiaries - 2,150 - - - Loss on cash flow hedge derivative terminations - - 18,716 - - Derivative credit valuation adjustment (198) 288 (1,195) (448) (304) Risk participation agreement mark-to-market adjustment - - - - - Deposit relationship adjustment fees 4,707 - - - - Loss on redemption of preferred stock 2,820 - - - - Unrealized losses on loans held for sale - - - 799 - Core earnings $ 113,876 $ 59,303 $ 70,308 $ 54,588 $ 38,439 Average total common shareholders' equity $ 1,071,566 $ 1,002,624 $ 918,795 $ 866,411 $ 812,577 Core return on average common equity 42.16% 23.72% 31.03% 25.06% 18.82%
29 Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Tangible Equity ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP - Total shareholders' equity 1,284,299$ 1,250,729$ 1,188,721$ 1,117,086$ 1,051,491$ Reconciling items: Goodwill and other intangibles (1) (3,794) (3,853) (3,911) (14,298) (14,437) Tangible equity 1,280,505$ 1,246,876$ 1,184,810$ 1,102,788$ 1,037,054$ (1) Includes goodwill and other intangibles reported in assets of discontinued operations Tangible Book Value per Common Share - Customers Bancorp ($ in thousands, except per share data) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP -Total shareholders' equity 1,284,299$ 1,250,729$ 1,188,721$ 1,117,086$ 1,051,491$ Reconciling items: Preferred stock (137,794) (217,471) (217,471) (217,471) (217,471) Goodwill and other intangibles (1) (3,794) (3,853) (3,911) (14,298) (14,437) Tangible common equity 1,142,711$ 1,029,405$ 967,339$ 885,317$ 819,583$ Common shares outstanding 32,537,976 32,353,256 32,238,762 31,705,088 31,555,124 Tangible book value per common share 35.12$ 31.82$ 30.01$ 27.92$ 25.97$
30 Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Tangible Common Equity to Tangible Assets - Customers Bancorp ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP - Total shareholders' equity 1,284,299$ 1,250,729$ 1,188,721$ 1,117,086$ 1,051,491$ Reconciling items: Preferred stock (137,794) (217,471) (217,471) (217,471) (217,471) Goodwill and other intangibles (1) (3,794) (3,853) (3,911) (14,298) (14,437) Tangible common equity 1,142,711$ 1,029,405$ 967,339$ 885,317$ 819,583$ GAAP - Total assets 19,108,922$ 19,635,108$ 18,817,660$ 18,439,248$ 18,778,727$ Reconciling items: Goodwill and other intangibles (1) (3,794) (3,853) (3,911) (14,298) (14,437) Tangible assets 19,105,128$ 19,631,255$ 18,813,749$ 18,424,950$ 18,764,290$ Tangible common equity to tangible assets 5.98% 5.24% 5.14% 4.80% 4.37% Tangible Common Equity to Tangible Assets, Excluding PPP - Customers Bancorp ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP - Total shareholders' equity 1,284,299$ 1,250,729$ 1,188,721$ 1,117,086$ 1,051,491$ Reconciling items: Preferred stock (137,794) (217,471) (217,471) (217,471) (217,471) Goodwill and other intangibles (1) (3,794) (3,853) (3,911) (14,298) (14,437) Tangible common equity 1,142,711$ 1,029,405$ 967,339$ 885,317$ 819,583$ GAAP - Total assets 19,108,922$ 19,635,108$ 18,817,660$ 18,439,248$ 18,778,727$ Reconciling items: Goodwill and other intangibles (1) (3,794) (3,853) (3,911) (14,298) (14,437) PPP loans (4,957,357) (6,305,056) (5,178,089) (4,561,365) (4,964,105) Tangible assets 14,147,771$ 13,326,199$ 13,635,660$ 13,863,585$ 13,800,185$ Tangible common equity to tangible assets 8.08% 7.72% 7.09% 6.39% 5.94%
31 Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Core Assets ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP - Total assets 19,108,922$ 19,635,108$ 18,817,660$ 18,439,248$ 18,778,727$ Reconciling items: Loans receivable, PPP (4,957,357) (6,305,056) (5,178,089) (4,561,365) (4,964,105) Goodwill and other intangibles (1) (3,794) (3,853) (3,911) (14,298) (14,437) Core assets 14,147,771$ 13,326,199$ 13,635,660$ 13,863,585$ 13,800,185$ (1) Includes goodwill and other intangibles reported in assets of discontinued operations Total loans and leases, excluding PPP ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Total loans and leases 15,515,537$ 16,967,022$ 16,168,306$ 15,832,251$ 16,605,279$ PPP loans (4,957,357) (6,305,056) (5,178,089) (4,561,365) (4,964,105) Loans and leases, excluding PPP 10,558,180$ 10,661,966$ 10,990,217$ 11,270,886$ 11,641,174$ Coverage of credit loss reserves for loans and leases held for investment, excluding PPP ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Loans and leases receivable 12,927,956$ 14,077,198$ 12,714,578$ 12,136,733$ 12,664,997$ Loans receivable, PPP (4,957,357) (6,305,056) (5,178,089) (4,561,365) (4,964,105) Loans and leases held for investment, excluding PPP 7,970,599$ 7,772,142$ 7,536,489$ 7,575,368$ 7,700,892$ Allowance for credit losses on loans and leases 131,496$ 125,436$ 128,736$ 144,176$ 155,561$ Coverage of credit loss reserves for loans and leases held for investment, excluding PPP 1.65% 1.61% 1.71% 1.90% 2.02%
32 Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Net Interest Margin, Tax Equivalent, Excluding PPP - Customers Bancorp ($ in thousands, except per share data) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP net interest income 219,892$ 138,757$ 132,731$ $ 122,946 $ 107,439 PPP net interest income (112,005) (35,785) (34,842) (25,257) (20,018) Tax-equivalent adjustment 290 289 292 219 225 Net interest income, tax equivalent, excluding PPP 108,177$ 103,261$ 98,181$ 97,908$ 87,646$ GAAP average total interest earning assets 19,033,826$ 18,698,996$ 17,943,944$ 17,601,999$ 17,121,145$ Average PPP loans (5,778,367) (6,133,184) (4,623,213) (4,782,606) (4,909,197) Adjusted average total interest earning assets 13,255,459$ 12,565,812$ 13,320,731$ 12,819,393$ 12,211,948$ Net interest margin, tax equivalent, excluding PPP 3.24% 3.30% 2.99% 3.04% 2.86% Loan Yield, excluding PPP ($ in thousands, except per share data) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Total interest on loans and leases 233,097$ 153,608$ $ 152,117 $ 145,414 $ 132,107 Interest on PPP loans (117,103) (41,137) (38,832) (29,465) (24,337) Interest on loans and leases, excluding PPP 115,994$ 112,471$ 113,285$ 115,949$ 107,770$ Average loans and leases 16,192,744$ 16,482,802$ 15,329,111$ 15,987,095$ 15,403,838$ Average PPP loans (5,778,367) (6,133,184) (4,623,213) (4,782,606) (4,909,197) Adjusted average total interest earning assets 10,414,377$ 10,349,618$ 10,705,898$ 11,204,489$ 10,494,641$ Loan yield, excluding PPP 4.42% 4.36% 4.29% 4.12% 4.09%
33 Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Deferments to Total loans and leases, excluding PPP ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Total loans and leases 15,515,537$ 16,967,022$ 16,168,306$ 15,832,251$ PPP loans (4,957,357) (6,305,056) (5,178,089) (4,561,365) Loans and leases, excluding PPP 10,558,180$ 10,661,966$ 10,990,217$ 11,270,886$ Commercial deferments 73,400$ 89,800$ 176,100$ 202,100$ Consumer deferments 6,708 8,400 13,000 16,400 Total deferments 80,108$ 98,200$ 189,100$ 218,500$ Commercial deferments to total loans and leases, excluding PPP 0.7% 0.8% 1.6% 1.8% Consumer deferments to total loans and leases, excluding PPP 0.1% 0.1% 0.1% 0.1% Total deferments to total loans and leases, excluding PPP 0.8% 0.9% 1.7% 1.9%