Customers Bancorp Reports Results for Second Quarter 2022
Customers Bancorp, Inc. (NYSE:CUBI)
Second Quarter 2022 Results
Earnings
Earnings Per Share
Return on Assets
Return on Common
Equity
$56.5 million
$1.68
1.2%
18.2%
Net Income
Diluted Earnings Per Share
ROAA
ROCE
$59.4 million
$1.77
1.2%
19.1%
Core Earnings*
Core Earnings Per Diluted Share*
Core ROAA*
Core ROCE*
$46.3 million
$1.38
2.1%
33.4%
Core Earnings, excluding PPP*
Core Earnings Per Diluted Share, excluding PPP*
Pre-tax and Pre-provision Adjusted ROAA*
Pre-tax and Pre-provision Adjusted ROCE*
Second Quarter 2022 Highlights
Q2 2022 net income available to common shareholders was $56.5 million, or $1.68 per diluted share, down 2.6% over Q2 2021. Q2 2022 adjusted pre-tax pre-provision net income* was $105.7 million, up 22% over Q2 2021. Q2 2022 core earnings* were $59.4 million, or $1.77 per diluted share, up 0.1% over Q2 2021. Q2 2022 core earnings excluding Paycheck Protection Program* ("PPP") were $46.3 million, or $1.38 per diluted share, up 32.3% over Q2 2021. Q2 2022 ROAA was 1.17% and Core ROAA* was 1.23%. Q2 2021 ROAA was 1.27% and Core ROAA* was 1.30%. Q2 2022 ROCE was 18.2% and Core ROCE* was 19.1%. Q2 2021 ROCE was 23.2% and Core ROCE* was 23.7%. Q2 2022 adjusted pre-tax pre-provision ROAA* was 2.11%. Q2 2021 adjusted pre-tax pre-provision ROAA* was 1.80%. Year-over-year loan growth (excluding PPP loans and loans to mortgage companies*) was $4.4 billion or 56.6%, led by our low-risk variable rate specialty lending verticals. Year-over-year commercial and industrial (C&I) loans and leases growth, including specialty lending, of $3.3 billion (up 145.8%), multifamily loan growth of $515.4 million (up 34.4%), and consumer loan increase of $500.8 million (up 26.2%). Q2 2022 net interest margin, tax equivalent* increased 41 basis points from Q2 2021 to 3.39%. Q2 2022 net interest margin, tax equivalent, excluding the impact of PPP loans* increased 2 basis points from Q2 2021 to 3.32%. Year-over-year deposit growth was $3.1 billion, up 22.1%. Total demand deposits increased $4.4 billion, or 64.0% year-over-year. This increase included CBIT-related deposits with a balance of $2.1 billion at June 30, 2022, up $0.3 billion from March 31, 2022. Onboarded 90 new CBIT customers in Q2 2022, bringing total customers to 190. Q2 2022 efficiency ratio was 42.14% compared to 46.59% for Q2 2021. Q2 2022 core efficiency ratio* was 41.74% compared to 44.33% in Q2 2021. Q2 2022 provision for credit losses on loans and leases of $24.2 million was largely driven by strong loan growth as asset quality remains exceptional and compares to $15.3 million in Q1 2022 and $3.3 million in Q2 2021. Non-performing assets were $28.2 million, or 0.14% of total assets, at June 30, 2022 compared to $43.9 million, or 0.23% of total assets, at March 31, 2022 and $46.9 million, or 0.24% of total assets, at June 30, 2021. Allowance for credit losses on loans and leases equaled 558% of non-performing loans at June 30, 2022, compared to 333% at March 31, 2022 and 270% at June 30, 2021. Well positioned to support growth in 2022 and 2023 and expect to meet or beat projections of core earnings (excluding PPP)* between $4.75 - $5.00 in 2022 and over $6.00 in 2023.
* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.
CEO Commentary
West Reading, PA, July 27, 2022 - “We continued to perform well in the second quarter and are extremely pleased with our results for the first half of 2022,” remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “Despite the challenging macro and geopolitical environment, we remain laser focused on executing on our strategy which has not changed. Our core earnings per share, excluding PPP* were up over 32.3% year-over-year. Core ROAA* was 1.23% and core ROCE* was 19.1%. We continue to responsibly deliver remarkable organic loan growth without sacrificing credit quality. Our core loans* increased $2.2 billion in Q2 2022, up 18.7% from Q1 2022, and well above our $500 million average quarterly target. Nearly all of this growth was in low-risk specialty lending verticals and was predominately floating rate as we manage overall asset sensitivity. Asset quality remains exceptional and credit reserves are strong. Continuing the momentum from record 2021 performance and strong results for the first half of 2022, our loan and deposit pipelines remain robust, a testament to our customer centric business model supported by best-in-class service and technology. We remain very excited and optimistic about our future,” Mr. Jay Sidhu continued.
Financial Highlights
At or Three Months Ended
Increase (Decrease)
Six Months Ended
Increase (Decrease)
(Dollars in thousands, except per share data and stock price data)
June 30,
2022
June 30,
2021
June 30,
2022
June 30,
2021
Profitability Metrics:
Net income available for common shareholders
$
56,519
$
58,042
$
(1,523)
(2.6) %
$
131,415
$
91,246
$
40,169
44.0 %
Diluted earnings per share
$
1.68
$
1.72
$
(0.04)
(2.3) %
$
3.87
$
2.74
$
1.13
41.2 %
Core earnings*
$
59,367
$
59,303
$
64
0.1 %
$
134,777
$
129,611
$
5,166
4.0 %
Core earnings per share*
$
1.77
$
1.76
$
0.01
0.6 %
$
3.97
$
3.89
$
0.08
2.1 %
Core earnings, excluding PPP*
$
46,301
$
34,991
$
11,310
32.3 %
$
96,998
$
80,220
$
16,778
20.9 %
Core earnings per share, excluding PPP*
$
1.38
$
1.04
$
0.34
32.7 %
$
2.86
$
2.41
$
0.45
18.7 %
Return on average assets ("ROAA")
1.17 %
1.27 %
(0.10)
1.39 %
1.04 %
0.35
Core ROAA*
1.23 %
1.30 %
(0.07)
1.43 %
1.45 %
(0.02)
Return on average common equity ("ROCE")
18.21 %
23.22 %
(5.01)
21.23 %
19.15 %
2.08
Core ROCE*
19.13 %
23.72 %
(4.59)
21.77 %
27.20 %
(5.43)
Adjusted pre-tax pre-provision net income*
$
105,692
$
86,467
$
19,225
22.2 %
$
218,341
$
173,236
$
45,105
26.0 %
Net interest margin, tax equivalent*
3.39 %
2.98 %
0.41
3.49 %
2.99 %
0.50
Net interest margin, tax equivalent, excluding PPP loans*
3.32 %
3.30 %
0.02
3.32 %
3.14 %
0.18
Loan yield, excluding PPP*
4.56 %
4.36 %
0.20
4.50 %
4.32 %
0.18
Cost of deposits
0.54 %
0.47 %
0.07
0.44 %
0.50 %
(0.06)
Efficiency ratio
42.14 %
46.59 %
(4.45)
40.76 %
47.64 %
(6.88)
Core efficiency ratio*
41.74 %
44.33 %
(2.59)
40.59 %
42.76 %
(2.17)
Balance Sheet Trends:
Total assets
$
20,251,996
$
19,635,108
$
616,888
3.1 %
Total assets, excluding PPP*
$
18,681,836
$
13,330,052
$
5,351,784
40.1 %
Total loans and leases
$
15,664,353
$
16,967,022
$
(1,302,669)
(7.7) %
Total loans and leases, excluding PPP*
$
14,094,193
$
10,661,966
$
3,432,227
32.2 %
Non-interest bearing demand deposits
$
4,683,030
$
2,699,869
$
1,983,161
73.5 %
Total deposits
$
16,944,719
$
13,873,939
$
3,070,780
22.1 %
Capital Metrics:
Common Equity
$
1,215,596
$
1,033,258
$
182,338
17.6 %
Tangible Common Equity*
$
1,211,967
$
1,029,405
$
182,562
17.7 %
Tangible Common Equity to Tangible Assets*
5.99 %
5.24 %
0.75
Tangible Common Equity to Tangible Assets, excluding PPP*
6.49 %
7.72 %
(1.23)
Tangible Book Value per common share*
$
37.35
$
31.82
$
5.53
17.4 %
Total risk based capital ratio (1)
12.6 %
13.3 %
(0.7)
(1) Total risk based capital ratio as of June 30, 2022 is an estimate.
* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.
Customers Bank Instant Token (CBITTM)
"Despite significant market volatility in the digital asset space during second quarter, we are very pleased with our progress to date. In Q2 2022, we onboarded 90 new CBIT-related customers to the Digital Bank, once again beating our internal target, and bringing total customers to 190. Our digital asset-related deposits stabilized in Q2 2022 and ended the quarter approximately $0.3 billion higher than Q1 2022. We continue to expect digital asset-related deposits to grow in 2022 as our pipelines remain strong, giving us an opportunity to further transform our deposits into a high quality, low-to-no cost, stable and growing deposit franchise. We believe our technology, compliance and customer service and support systems remain among the best in the country," commented Mr. Sam Sidhu, President and CEO of Customers Bank.
At June 30, 2022, $2.1 billion in core low-to-no cost demand deposits have been attracted to the Bank through this system.
Paycheck Protection Program (PPP)
We funded, either directly or indirectly, about 256,000 PPP loans totaling $5.2 billion in 2021, bringing total PPP loans funded to approximately 358,000 and $10.3 billion. We also earned close to $350 million of deferred origination fees from the SBA through the PPP loans, which is significantly accretive to our earnings and capital levels as these loans are forgiven by the government. In Q2 2022, we recognized $15 million of these fees in earnings, bringing total fees recognized to date to $307 million, resulting in approximately $43 million remaining to be recognized throughout 2022 and 2023. "As we've stated previously, it is difficult to predict the timing of PPP forgiveness. We continue to expect most of the fees to be recognized in 2022, with approximately two-thirds of the remaining fees to be recognized in the second half of this year," commented Customers Bancorp CFO, Carla Leibold.
Key Balance Sheet Trends
Loans and Leases
The following table presents the composition of total loans and leases as of the dates indicated:
(Dollars in thousands)
June 30, 2022
% of Total
March 31, 2022
% of Total
June 30, 2021
% of Total
Commercial:
Commercial & industrial, including specialty lending
$
5,637,083
36.0
%
$
3,921,439
27.9
%
$
2,293,723
13.5
%
Multi-family
2,012,920
12.9
1,705,027
12.1
1,497,485
8.8
Loans to mortgage companies
1,975,189
12.6
1,830,121
13.0
2,922,217
17.2
Commercial real estate owner occupied
710,577
4.5
701,893
5.0
653,649
3.9
Loans receivable, PPP
1,570,160
10.0
2,195,902
15.6
6,305,056
37.2
Commercial real estate non-owner occupied
1,152,869
7.4
1,140,311
8.1
1,206,646
7.1
Construction
195,687
1.2
161,024
1.1
179,198
1.1
Total commercial loans and leases
13,254,485
84.6
11,655,717
82.8
15,057,974
88.8
Consumer:
Residential
460,228
2.9
469,426
3.3
273,493
1.6
Manufactured housing
48,570
0.3
50,669
0.4
57,904
0.3
Installment
1,901,070
12.1
1,897,706
13.5
1,577,651
9.3
Total consumer loans
2,409,868
15.4
2,417,801
17.2
1,909,048
11.2
Total loans and leases
$
15,664,353
100.0
%
$
14,073,518
100.0
%
$
16,967,022
100.0
%
C&I loans and leases, including specialty lending, increased $3.3 billion, or 145.8% year-over-year, to $5.6 billion. Practically all of the increases were in low-risk variable rate secured categories of Fund Finance and Lender Finance. Multi-family loans increased $515.4 million, or 34.4%, to $2.0 billion, consumer installment loans increased $323.4 million, or 20.5%, to $1.9 billion, residential loans increased $186.7 million, or 68.3%, to $460.2 million, commercial real estate owner occupied loans increased $56.9 million, or 8.7%, to $710.6 million and construction loans increased $16.5 million, or 9.2%, to $195.7 million. These increases in loans and leases were partially offset by a decrease in commercial real estate non-owner occupied loans of $53.8 million, or 4.5% year-over-year to $1.2 billion.
Allowance for Credit Losses on Loans and Leases
The following table presents allowance for credit losses on loans and leases information as of the dates and periods indicated:
At or Three Months Ended
Increase
(Decrease)
At or Three Months Ended
Increase
(Decrease)
(Dollars in thousands)
June 30, 2022
March 31, 2022
June 30, 2022
June 30, 2021
Allowance for credit losses on loans and leases
$
156,530
$
145,847
$
10,683
$
156,530
$
125,436
$
31,094
Provision for credit losses on loans and leases
24,164
15,269
8,895
24,164
3,291
20,873
Net charge-offs (recoveries)
13,481
7,226
6,255
13,481
6,591
6,890
Annualized net charge-offs (recoveries) to average loans and leases
0.36
%
0.21
%
0.36
%
0.16
%
Coverage of credit loss reserves for loans and leases held for investment
1.14
%
1.18
%
1.14
%
0.89
%
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP*
1.28
%
1.44
%
1.28
%
1.61
%
* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.
Provision for Credit Losses
Three Months Ended
Increase
(Decrease)
(Dollars in thousands)
June 30, 2022
March 31, 2022
Provision for credit losses on loans and leases
$
24,164
$
15,269
$
8,895
Provision (benefit) for credit losses on unfunded commitments
608
(109
)
717
Provision (benefit) for credit losses on available for sale debt securities
(317
)
728
(1,045
)
Total provision for credit losses
$
24,455
$
15,888
$
8,567
The provision for credit losses on loans and leases in Q2 2022 was $24.2 million, compared to $15.3 million in Q1 2022. The provision in Q2 2022 was primarily to support loan growth. The provision (benefit) for credit losses for available for sale investment securities in Q2 2022 was a benefit to provision of $0.3 million compared to provision expense of $0.7 million in Q1 2022.
Asset Quality
The following table presents asset quality metrics as of the dates indicated:
(Dollars in thousands)
June 30, 2022
March 31, 2022
Increase
(Decrease)
June 30, 2022
June 30, 2021
Increase
(Decrease)
Non-performing assets ("NPAs"):
Nonaccrual / non-performing loans ("NPLs")
$
28,064
$
43,778
$
(15,714
)
$
28,064
$
46,465
$
(18,401
)
Non-performing assets
28,150
43,864
(15,714
)
28,150
46,932
(18,782
)
NPLs to total loans and leases (1)
0.18
%
0.31
%
0.18
%
0.27
%
Reserves to NPLs (1)
557.76
%
333.15
%
557.76
%
269.96
%
NPAs to total assets
0.14
%
0.23
%
0.14
%
0.24
%
Loans and leases risk ratings:
Commercial loans and leases (1)
Pass
$
9,355,846
$
7,274,294
$
2,081,552
$
9,355,846
$
5,381,909
$
3,973,937
Special Mention
106,566
128,622
(22,056
)
106,566
268,130
(161,564
)
Substandard
343,175
301,141
42,034
343,175
247,595
95,580
Total commercial loans and leases
9,805,587
7,704,057
2,101,530
9,805,587
5,897,634
3,907,953
Consumer loans
Performing
2,392,852
2,399,860
(7,008
)
2,392,852
1,858,204
534,648
Non-performing
14,556
14,938
(382
)
14,556
16,304
(1,748
)
Total consumer loans
2,407,408
2,414,798
(7,390
)
2,407,408
1,874,508
532,900
Loans and leases receivable
$
12,212,995
$
10,118,855
$
2,094,140
$
12,212,995
$
7,772,142
$
4,440,853
(1) Excludes loan receivable, PPP, as PPP loans are fully guaranteed by the Small Business Administration.
Over the last decade, we have developed a suite of commercial loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s C&I, loans to mortgage companies, 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, we employ a bottom-up data driven approach to analyze the commercial portfolio. Exposure to industry segments and CRE significantly impacted by COVID-19 initially is not substantial.
Total consumer installment loans were approximately 9% of total assets at June 30, 2022 and were supported by an allowance for credit losses of $111.2 million. At June 30, 2022, our consumer installment portfolio had the following characteristics: average FICO score of 729, average debt-to-income of 17.4% and average borrower income of $102 thousand.
Non-performing loans at June 30, 2022 were 0.18% of total loans and leases, compared to 0.31% at March 31, 2022 and 0.27% at June 30, 2021.
Deposits and Borrowings
The following table presents the composition of our deposit portfolio as of the dates indicated:
(Dollars in thousands)
June 30, 2022
% of Total
March 31, 2022
% of Total
June 30, 2021
% of Total
Demand, non-interest bearing
$
4,683,030
27.6
%
$
4,594,428
28.0
%
$
2,699,869
19.5
%
Demand, interest bearing
6,644,398
39.2
5,591,468
34.1
4,206,355
30.3
Total demand deposits
11,327,428
66.8
10,185,896
62.1
6,906,224
49.8
Savings
640,062
3.8
802,395
4.9
1,431,756
10.3
Money market
4,254,205
25.1
4,981,077
30.3
4,908,809
35.4
Time deposits
723,024
4.3
446,192
2.7
627,150
4.5
Total deposits
$
16,944,719
100.0
%
$
16,415,560
100.0
%
$
13,873,939
100.0
%
Total deposits increased $3.1 billion, or 22.1%, to $16.9 billion at June 30, 2022 as compared to a year ago. Total demand deposits increased $4.4 billion, or 64.0%, to $11.3 billion. Time deposits increased $95.9 million, or 15.3%, to $723.0 million. These increases were offset, in part, by decreases in savings deposits of $791.7 million, or 55.3%, to $640.1 million and money market deposits of $654.6 million, or 13.3%, to $4.3 billion. The total cost of deposits increased by 7 basis points to 0.54% in Q2 2022 from 0.47% in the prior year.
Other borrowings remained relatively unchanged at $123.5 million at June 30, 2022 compared to the prior year due to the issuance of the Customers Bancorp 2.875% senior notes in August 2021, offset by the pay off at maturity of the Customers Bancorp 3.95% senior notes in June 2022.
Capital
The following table presents certain capital amounts and ratios as of the dates indicated:
(Dollars in thousands except per share data)
June 30, 2022
March 31, 2022
June 30, 2021
Customers Bancorp, Inc.
Common Equity
$
1,215,596
$
1,239,612
$
1,033,258
Tangible Common Equity*
1,211,967
1,235,934
1,029,405
Tangible Common Equity to Tangible Assets*
5.99
%
6.45
%
5.24
%
Tangible Common Equity to Tangible Assets, excluding PPP*
6.49
%
7.29
%
7.72
%
Tangible Book Value per common share*
$
37.35
$
37.50
$
31.82
Total risk based capital ratio (1)
12.6
%
12.9
%
13.3
%
(1) Total risk-based capital ratio as of June 30, 2022 is an estimate.
* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.
Customers Bancorp's tangible common equity* increased $182.3 million to $1.2 billion at June 30, 2022 compared to a year ago, as earnings of $340.3 million more than offset a negative impact to accumulated other comprehensive income ("AOCI") from increased unrealized losses on investment securities of $130.9 million (net of taxes) and share buyback of $55.5 million. Similarly, tangible book value per common share* increased to $37.35 at June 30, 2022 from $31.82 at June 30, 2021. 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*, were 12.6% and 6.49%, respectively, at June 30, 2022. "We expect our TCE ratio to be at or above 7.5% within the next three to four quarters," stated Mr. Sam Sidhu.
At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At June 30, 2022, estimated Tier 1 capital and total risk-based capital were 11.5% and 12.9% respectively.
Key Profitability Trends
Net Interest Income
Net interest income totaled $164.9 million in Q2 2022, an increase of $0.2 million from Q1 2022, primarily due to increased net interest income earned by the core bank, including increased interest income on investment securities and core loans* of $5.1 million and $28.1 million, respectively, mostly due to higher average balances. This increase was offset in part by lower PPP interest income of $16.3 million resulting from reduced recognition of deferred fees of $14.7 million driven by lower loan forgiveness in Q2 2022 and by dividend income of $5.2 million primarily from an equity investment distribution in Q1 2022. In addition, higher expenses paid on deposits, FHLB advances and other borrowings of $12.7 million resulted mainly from higher interest rates during Q2 2022. Excluding PPP loans, average interest-earning assets increased $1.7 billion. Interest-earning asset growth was primarily driven by increases in C&I loans and leases and multi-family loans, offset in part by a decrease in interest earning deposits. Compared to Q1 2022, total loan yields decreased 13 basis points to 4.54% primarily due to higher PPP yields driven by deferred fee recognition and average balances in Q1 2022. Excluding PPP loans, the Q2 2022 total loan yield was 13 basis points higher than Q1 2022 reflecting increased interest rates and the variable rate nature of the loan portfolio.
Non-Interest Income
The following table presents details of non-interest income for the periods indicated:
Three Months Ended
Increase
(Decrease)
(Dollars in thousands)
June 30, 2022
March 31, 2022
Interchange and card revenue
$
24
$
76
$
(52
)
Deposit fees
964
940
24
Commercial lease income
6,592
5,895
697
Bank-owned life insurance
1,947
8,326
(6,379
)
Mortgage warehouse transactional fees
1,883
2,015
(132
)
Gain (loss) on sale of SBA and other loans
1,542
1,507
35
Loan fees
2,618
2,545
73
Mortgage banking income (loss)
173
481
(308
)
Gain (loss) on sale of investment securities
(3,029
)
(1,063
)
(1,966
)
Unrealized gain (loss) on investment securities
(203
)
(276
)
73
Unrealized gain (loss) on derivatives
821
964
(143
)
Other
(586
)
(212
)
(374
)
Total non-interest income
$
12,746
$
21,198
$
(8,452
)
Non-interest income totaled $12.7 million for Q2 2022, a decrease of $8.5 million compared to Q1 2022. The decrease was primarily due to $6.4 million of death benefits from bank-owned life insurance policies in Q1 2022 and higher realized losses from the sale of investment securities of $2.0 million in Q2 2022 compared to Q1 2022.
Non-Interest Expense
The following table presents details of non-interest expense for the periods indicated:
Three Months Ended
Increase
(Decrease)
(Dollars in thousands)
June 30, 2022
March 31, 2022
Salaries and employee benefits
$
25,334
$
26,607
$
(1,273
)
Technology, communication and bank operations
22,738
24,068
(1,330
)
Professional services
7,415
6,956
459
Occupancy
4,279
3,050
1,229
Commercial lease depreciation
5,552
4,942
610
FDIC assessments, non-income taxes and regulatory fees
1,619
2,383
(764
)
Loan servicing
4,341
2,371
1,970
Loan workout
179
(38
)
217
Advertising and promotion
353
315
38
Other
4,395
3,153
1,242
Total non-interest expense
$
76,205
$
73,807
$
2,398
The management of non-interest expenses remains a priority for us. However, this will not be at the expense of not making adequate investments with new technologies to support efficient and responsible growth.
Non-interest expenses totaled $76.2 million in Q2 2022, an increase of $2.4 million compared to Q1 2022. The increase was primarily attributable to $2.0 million in higher loan servicing costs for consumer loans, $0.9 million in one-time impairment charges included in occupancy primarily due to consolidation of five branches into other existing locations in Southeastern Pennsylvania, $0.7 million in higher provision for credit losses on unfunded commitments, $0.6 million in commercial lease depreciation due to growth in our leasing business and $0.5 million in professional fees primarily associated with the PPP loan forgiveness. These increases were offset in part by a $1.3 million decrease in technology, processing and deposit servicing-related expenses mostly due to lower deposit servicing and interchange maintenance fees and lower salaries and employee benefits of $1.3 million due to expense management initiatives.
Taxes
Income tax expense from continuing operations decreased by $0.4 million to $18.9 million in Q2 2022 from $19.3 million in Q1 2022 primarily due to a reduction in pre-tax income, partially offset by a decrease in excess tax benefits from restricted stock units that vested in Q1 2022. The effective tax rate from continuing operations for Q2 2022 was 24%, resulting in an effective tax rate of 22% for the six months ended June 30, 2022. Customers expects the full-year 2022 effective tax rate from continuing operations to be approximately 21% to 23%.
Outlook
“Looking ahead, we continue to project sustainable and responsible organic core growth and are very optimistic about the prospects of our company. We are focused on improving the quality of our balance sheet and deposit franchise and are not focused on growth just for the sake of growth. We continue to expect, on average, $500 million of quarterly loan growth and continued digital asset-related deposit growth by year-end 2022. Through a combination of revenue growth and prudent expense management we expect our efficiency ratio to be around 45% by early 2023. Customers Bancorp stock at the close of business on July 22, 2022 was trading at $38.02, only 1 times tangible book value* at June 30, 2022. We continue to expect to meet or beat projections of our core earnings (excluding PPP)* between $4.75 - $5.00 in 2022 and over $6.00 in 2023, two to three years ahead of our previous guidance of $6.00 by 2025/2026,” concluded Mr. Jay Sidhu.
* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.
Webcast
Date: Thursday, July 28, 2022
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 2nd Quarter Earnings Webcast.
You may submit questions in advance of the live webcast by emailing our Communications Director, David Patti at dpatti@customersbank.com; questions may also be asked during the webcast through the webcast application.
The webcast will be archived for viewing on the Customers Bank Investor Relations page and available beginning approximately two hours after the conclusion of the live event.
Institutional Background
Customers Bancorp, Inc. (NYSE:CUBI) is 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 $20.3 billion in assets at June 30, 2022. 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 (CBITTM) which allows clients to make instant payments in U.S. 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,” “project,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: the impact of the ongoing pandemic on the U.S. economy and customer behavior, the impact that changes in the economy have on the performance of our loan and lease portfolio, the market value of our investment securities, the continued success and acceptance of our blockchain payments system, the demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply, actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships, higher inflation and its impacts, and the effects of any changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2021, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.
Q2 2022 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended June 30, 2022 and the preceding four quarters:
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED
(Dollars in thousands, except per share data and stock price data)
Q2
Q1
Q4
Q3
Q2
Six Months Ended
June 30,
2022
2022
2021
2021
2021
2022
2021
GAAP Profitability Metrics:
Net income available to common shareholders
(from continuing and discontinued operations)
$
56,519
$
74,896
$
98,647
$
110,241
$
58,042
$
131,415
$
91,246
Per share amounts:
Earnings per share - basic
$
1.73
$
2.27
$
3.02
$
3.40
$
1.80
$
4.00
$
2.84
Earnings per share - diluted
$
1.68
$
2.18
$
2.87
$
3.25
$
1.72
$
3.87
$
2.74
Book value per common share (1)
$
37.46
$
37.61
$
37.32
$
35.24
$
31.94
$
37.46
$
31.94
CUBI stock price (1)
$
33.90
$
52.14
$
65.37
$
43.02
$
38.99
$
33.90
$
38.99
CUBI stock price as % of book value (1)
90
%
139
%
175
%
122
%
122
%
90
%
122
%
Average shares outstanding - basic
32,712,616
32,957,033
32,625,960
32,449,853
32,279,625
32,834,150
32,082,878
Average shares outstanding - diluted
33,579,013
34,327,065
34,320,327
33,868,553
33,741,468
33,950,973
33,294,075
Shares outstanding (1)
32,449,486
32,957,847
32,913,267
32,537,976
32,353,256
32,449,486
32,353,256
Return on average assets ("ROAA")
1.17
%
1.63
%
2.08
%
2.33
%
1.27
%
1.39
%
1.04
%
Return on average common equity ("ROCE")
18.21
%
24.26
%
33.18
%
40.82
%
23.22
%
21.23
%
19.15
%
Efficiency ratio
42.14
%
39.42
%
38.70
%
33.42
%
46.59
%
40.76
%
47.64
%
Non-GAAP Profitability Metrics (2):
Core earnings
$
59,367
$
75,410
$
101,213
$
113,876
$
59,303
$
134,777
$
129,611
Adjusted pre-tax pre-provision net income
$
105,692
$
112,649
$
130,595
$
167,215
$
86,467
$
218,341
$
173,236
Per share amounts:
Core earnings per share - diluted
$
1.77
$
2.20
$
2.95
$
3.36
$
1.76
$
3.97
$
3.89
Tangible book value per common share (1)
$
37.35
$
37.50
$
37.21
$
35.12
$
31.82
$
37.35
$
31.82
CUBI stock price as % of tangible book value (1)
91
%
139
%
176
%
122
%
123
%
91
%
123
%
Core ROAA
1.23
%
1.64
%
2.13
%
2.35
%
1.30
%
1.43
%
1.45
%
Core ROCE
19.13
%
24.43
%
34.04
%
42.16
%
23.72
%
21.77
%
27.20
%
Adjusted ROAA - pre-tax and pre-provision
2.11
%
2.39
%
2.70
%
3.36
%
1.80
%
2.25
%
1.85
%
Adjusted ROCE - pre-tax and pre-provision
33.37
%
35.89
%
43.25
%
60.81
%
33.27
%
34.62
%
34.95
%
Net interest margin, tax equivalent
3.39
%
3.60
%
4.14
%
4.59
%
2.98
%
3.49
%
2.99
%
Net interest margin, tax equivalent, excluding PPP loans
3.32
%
3.32
%
3.12
%
3.24
%
3.30
%
3.32
%
3.14
%
Core efficiency ratio
41.74
%
39.47
%
38.14
%
30.36
%
44.33
%
40.59
%
42.76
%
Asset Quality:
Net charge-offs
$
13,481
$
7,226
$
7,582
$
7,104
$
6,591
$
20,707
$
19,112
Annualized net charge-offs to average total loans and leases
0.36
%
0.21
%
0.21
%
0.17
%
0.16
%
0.29
%
0.24
%
Non-performing loans ("NPLs") to total loans and leases (1)
0.18
%
0.31
%
0.34
%
0.34
%
0.27
%
0.18
%
0.27
%
Reserves to NPLs (1)
557.76
%
333.15
%
277.72
%
252.68
%
269.96
%
557.76
%
269.96
%
Non-performing assets ("NPAs") to total assets
0.14
%
0.23
%
0.25
%
0.27
%
0.24
%
0.14
%
0.24
%
Customers Bank Capital Ratios (3):
Common equity Tier 1 capital to risk-weighted assets
11.47
%
11.60
%
11.83
%
12.77
%
12.40
%
11.47
%
12.40
%
Tier 1 capital to risk-weighted assets
11.47
%
11.60
%
11.83
%
12.77
%
12.40
%
11.47
%
12.40
%
Total capital to risk-weighted assets
12.92
%
13.03
%
13.11
%
14.16
%
13.77
%
12.92
%
13.77
%
Tier 1 capital to average assets (leverage ratio)
8.09
%
8.21
%
7.93
%
8.66
%
9.07
%
8.09
%
9.07
%
(1) Metric is a spot balance for the last day of each quarter presented.
(2) Customers' reasons for the use of these non-GAAP measures and a detailed reconciliation between the non-GAAP measures and the comparable GAAP amounts are included at the end of this document.
(3) Regulatory capital ratios are estimated for Q2 2022 and actual for the remaining periods. In accordance with regulatory capital rules, Customers elected to apply the CECL capital transition provisions which delayed the effects of CECL on regulatory capital for two years until January 1, 2022, followed by a three-year transition period. The cumulative CECL capital transition impact as of December 31, 2021 which amounted to $61.6 million will be phased in at 25% per year beginning on January 1, 2022 through December 31, 2024. As of June 30, 2022, our regulatory capital ratios reflected 75%, or $46.2 million, benefit associated with the CECL transition provisions.
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(Dollars in thousands, except per share data)
Six Months Ended
Q2
Q1
Q4
Q3
Q2
June 30,
2022
2022
2021
2021
2021
2022
2021
Interest income:
Loans and leases
$
168,941
$
157,175
$
198,000
$
233,097
$
153,608
$
326,116
$
305,725
Investment securities
25,442
20,295
15,202
8,905
8,327
45,737
16,306
Other
1,951
6,006
835
849
946
7,957
1,965
Total interest income
196,334
183,476
214,037
242,851
162,881
379,810
323,996
Interest expense:
Deposits
22,781
13,712
15,415
15,915
15,653
36,493
31,311
FHLB advances
2,316
—
51
5
963
2,316
6,155
Subordinated debt
2,689
2,689
2,688
2,689
2,689
5,378
5,378
FRB PPP liquidity facility, federal funds purchased and other borrowings
3,696
2,376
2,189
4,350
4,819
6,072
9,664
Total interest expense
31,482
18,777
20,343
22,959
24,124
50,259
52,508
Net interest income
164,852
164,699
193,694
219,892
138,757
329,551
271,488
Provision for credit losses
23,847
15,997
13,890
13,164
3,291
39,844
372
Net interest income after provision for credit losses
141,005
148,702
179,804
206,728
135,466
289,707
271,116
Non-interest income:
Interchange and card revenue
24
76
84
83
84
100
169
Deposit fees
964
940
1,026
994
891
1,904
1,754
Commercial lease income
6,592
5,895
5,378
5,213
5,311
12,487
10,516
Bank-owned life insurance
1,947
8,326
1,984
1,988
2,765
10,273
4,444
Mortgage warehouse transactional fees
1,883
2,015
2,262
3,100
3,265
3,898
7,512
Gain (loss) on sale of SBA and other loans
1,542
1,507
2,493
5,359
1,900
3,049
3,475
Loan fees
2,618
2,545
2,513
1,909
1,670
5,163
3,106
Mortgage banking income (loss)
173
481
262
425
386
654
849
Gain (loss) on sale of investment securities
(3,029
)
(1,063
)
(49
)
6,063
1,812
(4,092
)
25,378
Unrealized gain (loss) on investment securities
(203
)
(276
)
—
—
1,746
(479
)
2,720
Loss on sale of foreign subsidiaries
—
—
—
—
(2,840
)
—
(2,840
)
Unrealized gain (loss) on derivatives
821
964
586
524
(439
)
1,785
2,098
Loss on cash flow hedge derivative terminations
—
—
—
—
—
—
(24,467
)
Other
(586
)
(212
)
452
(72
)
271
(798
)
576
Total non-interest income
12,746
21,198
16,991
25,586
16,822
33,944
35,290
Non-interest expense:
Salaries and employee benefits
25,334
26,607
29,940
26,268
28,023
51,941
51,994
Technology, communication and bank operations
22,738
24,068
22,657
21,281
19,618
46,806
39,606
Professional services
7,415
6,956
7,058
6,871
6,882
14,371
12,759
Occupancy
4,279
3,050
4,336
2,704
2,482
7,329
5,103
Commercial lease depreciation
5,552
4,942
4,625
4,493
4,415
10,494
8,706
FDIC assessments, non-income taxes and regulatory fees
1,619
2,383
2,427
2,313
2,602
4,002
5,321
Loan servicing
4,341
2,371
4,361
4,265
1,700
6,712
2,137
Merger and acquisition related expenses
—
—
—
—
—
—
418
Loan workout
179
(38
)
226
198
102
141
(159
)
Advertising and promotion
353
315
344
302
313
668
874
Deposit relationship adjustment fees
—
—
—
6,216
—
—
—
Other
4,395
3,153
5,574
5,098
4,686
7,548
5,991
Total non-interest expense
76,205
73,807
81,548
80,009
70,823
150,012
132,750
Income before income tax expense
77,546
96,093
115,247
152,305
81,465
173,639
173,656
Income tax expense
18,896
19,332
12,993
36,263
20,124
38,228
37,684
Net income from continuing operations
$
58,650
$
76,761
$
102,254
$
116,042
$
61,341
$
135,411
$
135,972
(continued)
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)
Six Months Ended
Q2
Q1
Q4
Q3
Q2
June 30,
2022
2022
2021
2021
2021
2022
2021
Loss from discontinued operations before income taxes
$
—
$
—
$
—
$
—
$
—
$
—
$
(20,354
)
Income tax expense (benefit) from discontinued operations
—
—
1,585
—
—
—
17,682
Net loss from discontinued operations
—
—
(1,585
)
—
—
—
(38,036
)
Net income
58,650
76,761
100,669
116,042
61,341
135,411
97,936
Preferred stock dividends
2,131
1,865
2,022
2,981
3,299
3,996
6,690
Loss on redemption of preferred stock
—
—
—
2,820
—
—
—
Net income available to common shareholders
$
56,519
$
74,896
$
98,647
$
110,241
$
58,042
$
131,415
$
91,246
Basic earnings per common share from continuing operations
$
1.73
$
2.27
$
3.07
$
3.40
$
1.80
$
4.00
$
4.03
Basic earnings per common share
1.73
2.27
3.02
3.40
1.80
4.00
2.84
Diluted earnings per common share from continuing operations
1.68
2.18
2.92
3.25
1.72
3.87
3.88
Diluted earnings per common share
1.68
2.18
2.87
3.25
1.72
3.87
2.74
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - UNAUDITED
(Dollars in thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
ASSETS
Cash and due from banks
$
66,703
$
55,515
$
35,238
$
51,169
$
36,837
Interest earning deposits
178,475
219,085
482,794
1,000,885
393,663
Cash and cash equivalents
245,178
274,600
518,032
1,052,054
430,500
Investment securities, at fair value
3,144,882
4,169,853
3,817,150
1,866,697
1,526,792
Investment securities held to maturity
495,039
—
—
—
—
Loans held for sale
6,595
3,003
16,254
29,957
34,540
Loans receivable, mortgage warehouse, at fair value
1,874,603
1,755,758
2,284,325
2,557,624
2,855,284
Loans receivable, PPP
1,570,160
2,195,902
3,250,008
4,957,357
6,305,056
Loans and leases receivable
12,212,995
10,118,855
9,018,298
7,970,599
7,772,142
Allowance for credit losses on loans and leases
(156,530
)
(145,847
)
(137,804
)
(131,496
)
(125,436
)
Total loans and leases receivable, net of allowance for credit losses on loans and leases
15,501,228
13,924,668
14,414,827
15,354,084
16,807,046
FHLB, Federal Reserve Bank, and other restricted stock
74,626
54,553
64,584
57,184
39,895
Accrued interest receivable
98,727
94,669
92,239
93,514
90,009
Bank premises and equipment, net
6,755
8,233
8,890
9,944
10,391
Bank-owned life insurance
335,153
332,239
333,705
331,423
329,421
Goodwill and other intangibles
3,629
3,678
3,736
3,794
3,853
Other assets
340,184
298,212
305,611
310,271
362,661
Total assets
$
20,251,996
$
19,163,708
$
19,575,028
$
19,108,922
$
19,635,108
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand, non-interest bearing deposits
$
4,683,030
$
4,594,428
$
4,459,790
$
4,954,331
$
2,699,869
Interest bearing deposits
12,261,689
11,821,132
12,318,134
12,016,694
11,174,070
Total deposits
16,944,719
16,415,560
16,777,924
16,971,025
13,873,939
Federal funds purchased
770,000
700,000
75,000
—
—
FHLB advances
635,000
—
700,000
—
—
Other borrowings
123,450
223,230
223,086
223,151
124,240
Subordinated debt
181,812
181,742
181,673
181,603
181,534
FRB PPP liquidity facility
—
—
—
—
3,865,865
Accrued interest payable and other liabilities
243,625
265,770
251,128
448,844
338,801
Total liabilities
18,898,606
17,786,302
18,208,811
17,824,623
18,384,379
Preferred stock
137,794
137,794
137,794
137,794
217,471
Common stock
34,922
34,882
34,722
33,818
33,634
Additional paid in capital
545,670
542,402
542,391
525,894
519,294
Retained earnings
837,147
780,628
705,732
607,085
496,844
Accumulated other comprehensive income (loss), net
(124,881
)
(62,548
)
(4,980
)
1,488
5,266
Treasury stock, at cost
(77,262
)
(55,752
)
(49,442
)
(21,780
)
(21,780
)
Total shareholders' equity
1,353,390
1,377,406
1,366,217
1,284,299
1,250,729
Total liabilities and shareholders' equity
$
20,251,996
$
19,163,708
$
19,575,028
$
19,108,922
$
19,635,108
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED
(Dollars in thousands)
Three Months Ended
June 30, 2022
March 31, 2022
June 30, 2021
Average
Balance
Average
Yield or
Cost (%)
Average
Balance
Average
Yield or
Cost (%)
Average
Balance
Average
Yield or
Cost (%)
Assets
Interest earning deposits
$
434,950
0.85%
$
826,240
0.16%
$
646,342
0.12%
Investment securities (1)
4,104,463
2.48%
4,036,966
2.01%
1,512,644
2.20%
Loans and leases:
Commercial loans to mortgage companies
1,898,554
3.30%
1,836,647
3.09%
2,737,629
3.09%
Multi-family loans
1,845,527
3.76%
1,531,846
3.64%
1,551,370
3.88%
Commercial & industrial loans and leases (2)
5,577,830
3.87%
4,124,408
3.60%
2,878,045
3.59%
Loans receivable, PPP
1,863,429
4.43%
2,641,318
5.66%
6,133,184
2.69%
Non-owner occupied commercial real estate loans
1,307,995
3.91%
1,312,210
3.77%
1,368,695
3.86%
Residential mortgages
515,612
3.81%
416,417
3.58%
346,284
3.62%
Installment loans
1,909,551
9.23%
1,794,145
9.03%
1,467,595
9.37%
Total loans and leases (3)
14,918,498
4.54%
13,656,991
4.67%
16,482,802
3.74%
Other interest-earning assets
68,025
6.09%
52,111
NM(7)
57,208
5.32%
Total interest-earning assets
19,525,936
4.03%
18,572,308
4.00%
18,698,996
3.49%
Non-interest-earning assets
530,084
557,022
607,952
Total assets
$
20,056,020
$
19,129,330
$
19,306,948
Liabilities
Interest checking accounts
6,409,617
0.85%
5,769,372
0.54%
3,503,242
0.76%
Money market deposit accounts
4,704,767
0.64%
4,880,051
0.39%
4,859,614
0.47%
Other savings accounts
695,176
0.44%
880,113
0.36%
1,456,777
0.57%
Certificates of deposit
530,180
0.65%
450,644
0.47%
658,698
0.78%
Total interest-bearing deposits (4)
12,339,740
0.74%
11,980,180
0.46%
10,478,331
0.60%
Federal funds purchased
642,747
0.89%
88,611
0.33%
71,703
0.07%
FRB PPP liquidity facility
—
—%
—
—%
3,858,733
0.35%
Borrowings
940,068
3.10%
532,610
3.80%
460,054
4.44%
Total interest-bearing liabilities
13,922,555
0.91%
12,601,401
0.60%
14,868,821
0.65%
Non-interest-bearing deposits (4)
4,491,574
4,900,983
2,889,781
Total deposits and borrowings
18,414,129
0.69%
17,502,384
0.43%
17,758,602
0.54%
Other non-interest-bearing liabilities
259,279
237,131
328,251
Total liabilities
18,673,408
17,739,515
18,086,853
Shareholders' equity
1,382,612
1,389,815
1,220,095
Total liabilities and shareholders' equity
$
20,056,020
$
19,129,330
$
19,306,948
Interest spread
3.35%
3.57%
2.95%
Net interest margin
3.38%
3.59%
2.98%
Net interest margin tax equivalent (5)
3.39%
3.60%
2.98%
Net interest margin tax equivalent excl. PPP (6)
3.32%
3.32%
3.30%
(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 0.54%, 0.33% and 0.47% for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, 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 June 30, 2022, March 31, 2022 and June 30, 2021, 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.
(7) Not meaningful.
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED
(Dollars in thousands)
Six Months Ended
June 30, 2022
June 30, 2021
Average
Balance
Average
Yield or
Cost (%)
Average
Balance
Average
Yield or
Cost (%)
Assets
Interest earning deposits
$
629,514
0.40%
$
910,362
0.11%
Investment securities (1)
4,070,901
2.25%
1,435,529
2.27%
Loans and leases:
Commercial loans to mortgage companies
1,867,772
3.20%
2,928,802
3.09%
Multi-family loans
1,689,553
3.71%
1,619,891
3.84%
Commercial & industrial loans and leases (2)
4,855,134
3.76%
2,863,268
3.78%
Loans receivable, PPP
2,250,224
5.15%
5,382,370
3.00%
Non-owner occupied commercial real estate loans
1,310,091
3.84%
1,358,871
3.86%
Residential mortgages
466,288
3.71%
359,815
3.71%
Installment loans
1,852,167
9.13%
1,396,126
9.22%
Total loans and leases (3)
14,291,229
4.60%
15,909,143
3.88%
Other interest-earning assets
60,113
NM (7)
68,521
4.34%
Total interest-earning assets
19,051,757
4.02%
18,323,555
3.56%
Non-interest-earning assets
543,479
594,936
Total assets
$
19,595,236
$
18,918,491
Liabilities
Interest checking accounts
$
6,091,263
0.71%
$
3,099,725
0.80%
Money market deposit accounts
4,791,925
0.51%
4,648,942
0.51%
Other savings accounts
787,134
0.39%
1,435,681
0.63%
Certificates of deposit
490,632
0.57%
662,447
0.87%
Total interest-bearing deposits (4)
12,160,954
0.61%
9,846,795
0.64%
Federal funds purchased
367,210
0.82%
44,171
0.07%
FRB PPP liquidity facility
—
—%
3,899,996
0.35%
Borrowings
737,464
3.35%
805,853
3.61%
Total interest-bearing liabilities
13,265,628
0.76%
14,596,815
0.72%
Non-interest-bearing deposits (4)
4,695,148
2,855,019
Total deposits and borrowings
17,960,776
0.56%
17,451,834
0.61%
Other non-interest-bearing liabilities
248,266
288,246
Total liabilities
18,209,042
17,740,080
Shareholders' equity
1,386,194
1,178,411
Total liabilities and shareholders' equity
$
19,595,236
$
18,918,491
Interest spread
3.45%
2.96%
Net interest margin
3.48%
2.99%
Net interest margin tax equivalent (5)
3.49%
2.99%
Net interest margin tax equivalent excl. PPP (6)
3.32%
3.14%
(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 0.44% and 0.50% for the six months ended June 30, 2022 and 2021, respectively.
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the six months ended June 30, 2022 and 2021, 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 six months ended June 30, 2022 and 2021, 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.
(7) Not meaningful.
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED
(Dollars in thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
Commercial:
Commercial & industrial, including specialty lending
$
5,637,083
$
3,921,439
$
3,346,670
$
2,604,367
$
2,293,723
Multi-family
2,012,920
1,705,027
1,486,308
1,387,166
1,497,485
Loans to mortgage companies
1,975,189
1,830,121
2,362,438
2,626,483
2,922,217
Commercial real estate owner occupied
710,577
701,893
654,922
656,044
653,649
Loans receivable, PPP
1,570,160
2,195,902
3,250,008
4,957,357
6,305,056
Commercial real estate non-owner occupied
1,152,869
1,140,311
1,121,238
1,144,643
1,206,646
Construction
195,687
161,024
198,981
198,607
179,198
Total commercial loans and leases
13,254,485
11,655,717
12,420,565
13,574,667
15,057,974
Consumer:
Residential
460,228
469,426
350,984
260,820
273,493
Manufactured housing
48,570
50,669
52,861
55,635
57,904
Installment
1,901,070
1,897,706
1,744,475
1,624,415
1,577,651
Total consumer loans
2,409,868
2,417,801
2,148,320
1,940,870
1,909,048
Total loans and leases
$
15,664,353
$
14,073,518
$
14,568,885
$
15,515,537
$
16,967,022
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION - UNAUDITED
(Dollars in thousands)
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
Demand, non-interest bearing
$
4,683,030
$
4,594,428
$
4,459,790
$
4,954,331
$
2,699,869
Demand, interest bearing
6,644,398
5,591,468
6,488,406
5,023,081
4,206,355
Total demand deposits
11,327,428
10,185,896
10,948,196
9,977,412
6,906,224
Savings
640,062
802,395
973,317
1,310,343
1,431,756
Money market
4,254,205
4,981,077
4,349,073
5,090,121
4,908,809
Time deposits
723,024
446,192
507,338
593,149
627,150
Total deposits
$
16,944,719
$
16,415,560
$
16,777,924
$
16,971,025
$
13,873,939
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY - UNAUDITED
(Dollars in thousands)
As of June 30, 2022
As of March 31, 2022
As of June 30, 2021
Total loans
Non
accrual
/NPLs
Allowance
for credit
losses
Total NPLs
to total
loans
Total
reserves to
total NPLs
Total loans
Non
accrual
/NPLs
Allowance
for credit
losses
Total NPLs
to total
loans
Total
reserves to
total NPLs
Total loans
Non
accrual
/NPLs
Allowance
for credit
losses
Total NPLs
to total
loans
Total
reserves to
total NPLs
Loan type
Commercial & industrial, including specialty lending (1)
$
5,737,670
$
4,061
$
11,081
0.07 %
272.86 %
$
3,995,802
$
5,490
$
10,765
0.14 %
196.08 %
$
2,360,656
$
6,717
$
8,127
0.28 %
120.99 %
Multi-family
2,008,784
1,153
9,765
0.06 %
846.92 %
1,705,027
17,869
7,437
1.05 %
41.62 %
1,497,485
21,595
5,028
1.44 %
23.28 %
Commercial real estate owner occupied
710,577
2,913
4,745
0.41 %
162.89 %
701,893
2,191
3,841
0.31 %
175.31 %
653,649
2,688
4,464
0.41 %
166.07 %
Commercial real estate non-owner occupied
1,152,869
—
8,880
— %
— %
1,140,311
1,302
5,955
0.11 %
457.37 %
1,206,646
—
7,374
— %
— %
Construction
195,687
—
1,179
— %
— %
161,024
—
939
— %
— %
179,198
—
2,643
— %
— %
Total commercial loans and leases receivable
9,805,587
8,127
35,650
0.08 %
438.66 %
7,704,057
26,852
28,937
0.35 %
107.76 %
5,897,634
31,000
27,636
0.53 %
89.15 %
Residential
457,768
6,258
5,578
1.37 %
89.13 %
466,423
8,124
4,685
1.74 %
57.67 %
266,911
8,991
2,299
3.37 %
25.57 %
Manufactured housing
48,570
3,071
4,080
6.32 %
132.86 %
50,669
3,430
4,342
6.77 %
126.59 %
57,904
3,239
4,372
5.59 %
134.98 %
Installment
1,901,070
5,965
111,222
0.31 %
1864.58 %
1,897,706
4,865
107,883
0.26 %
2217.53 %
1,549,693
2,728
91,129
0.18 %
3340.51 %
Total consumer loans receivable
2,407,408
15,294
120,880
0.64 %
790.38 %
2,414,798
16,419
116,910
0.68 %
712.04 %
1,874,508
14,958
97,800
0.80 %
653.83 %
Loans and leases receivable (1)
12,212,995
23,421
156,530
0.19 %
668.33 %
10,118,855
43,271
145,847
0.43 %
337.05 %
7,772,142
45,958
125,436
0.59 %
272.94 %
Loans receivable, PPP
1,570,160
—
—
— %
— %
2,195,902
—
—
— %
— %
6,305,056
—
—
— %
— %
Loans receivable, mortgage warehouse, at fair value
1,874,603
—
—
— %
— %
1,755,758
—
—
— %
— %
2,855,284
—
—
— %
— %
Total loans held for sale
6,595
4,643
—
70.40 %
— %
3,003
507
—
16.88 %
— %
34,540
507
—
1.47 %
— %
Total portfolio
$
15,664,353
$
28,064
$
156,530
0.18 %
557.76 %
$
14,073,518
$
43,778
$
145,847
0.31 %
333.15 %
$
16,967,022
$
46,465
$
125,436
0.27 %
269.96 %
(1)
Excluding loans receivable, PPP from total loans and leases receivable is a non-GAAP measure. Management believes the use of these non-GAAP measures provides additional clarity when assessing Customers' financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. Please refer to the reconciliation schedules that follow this table.
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED
(Dollars in thousands)
Q2
Q1
Q4
Q3
Q2
Six Months Ended
June 30,
2022
2022
2021
2021
2021
2022
2021
Loan type
Multi-family
$
1,990
$
(337)
$
—
$
—
$
—
$
1,653
$
1,132
Commercial & industrial
(416)
(59)
240
116
(283)
(475)
92
Commercial real estate owner occupied
(42)
(7)
66
50
(1)
(49)
133
Commercial real estate non-owner occupied
159
(8)
(14)
943
(59)
151
(69)
Construction
(103)
(113)
(3)
(3)
(114)
(216)
(119)
Residential
(39)
(2)
(6)
54
(12)
(41)
28
Installment
11,932
7,752
7,299
5,944
7,060
19,684
17,915
Total net charge-offs (recoveries) from loans held for investment
$
13,481
$
7,226
$
7,582
$
7,104
$
6,591
$
20,707
$
19,112
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED
We believe that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. The non-GAAP measures presented are not necessarily comparable to non-GAAP measures that may be presented by other financial institutions. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP.
The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document.
Core Earnings - Customers Bancorp
Six Months Ended
June 30,
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
2022
2021
(Dollars in thousands except per share data)
USD
Per
share
USD
Per
share
USD
Per
share
USD
Per
share
USD
Per
share
USD
Per
share
USD
Per
share
GAAP net income to common shareholders
$
56,519
$
1.68
$
74,896
$
2.18
$
98,647
$
2.87
$
110,241
$
3.25
$
58,042
$
1.72
$
131,415
$
3.87
$
91,246
$
2.74
Reconciling items (after tax):
Net loss from discontinued operations
—
—
—
—
1,585
0.05
—
—
—
—
—
—
38,036
1.14
Severance expense
—
—
—
—
—
—
—
—
1,517
0.04
—
—
1,517
0.05
Impairments on fixed assets and leases
705
0.02
220
0.01
1,118
0.03
—
—
—
—
925
0.03
—
—
Merger and acquisition related expenses
—
—
—
—
—
—
—
—
—
—
—
—
320
0.01
Legal reserves
—
—
—
—
—
—
897
0.03
—
—
—
—
—
—
(Gains) losses on investment securities
2,494
0.07
1,030
0.03
43
0.00
(4,591)
(0.14)
(2,694)
(0.08)
3,524
0.10
(21,467)
(0.64)
Loss on sale of foreign subsidiaries
—
—
—
—
—
—
—
—
2,150
0.06
—
—
2,150
0.06
Loss on cash flow hedge derivative terminations
—
—
—
—
—
—
—
—
—
—
—
—
18,716
0.56
Derivative credit valuation adjustment
(351)
(0.01)
(736)
(0.02)
(180)
(0.01)
(198)
(0.01)
288
0.01
(1,087)
(0.03)
(907)
(0.03)
Deposit relationship adjustment fees
—
—
—
—
—
—
4,707
0.14
—
—
—
—
—
—
Loss on redemption of preferred stock
—
—
—
—
—
—
2,820
0.08
—
—
—
—
—
—
Core earnings
$
59,367
$
1.77
$
75,410
$
2.20
$
101,213
$
2.95
$
113,876
$
3.36
$
59,303
$
1.76
$
134,777
$
3.97
$
129,611
$
3.89
Core Earnings, excluding PPP - Customers Bancorp
Six Months Ended
June 30,
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
2022
2021
(Dollars in thousands except per share data)
USD
Per
share
USD
Per
share
USD
Per
share
USD
Per
share
USD
Per
share
USD
Per
share
USD
Per
share
GAAP net income to common shareholders
$
56,519
$
1.68
$
74,896
$
2.18
$
98,647
$
2.87
$
110,241
$
3.25
$
58,042
$
1.72
$
131,415
$
3.87
$
91,246
$
2.74
Less: PPP net income (after tax)
13,066
0.39
24,713
0.72
64,323
1.87
81,337
2.40
24,312
0.72
37,779
1.11
49,391
1.48
GAAP net income to common shareholders, excluding PPP
43,453
1.29
50,183
1.46
34,324
1.00
28,904
0.85
33,730
1.00
93,636
2.76
41,855
1.26
Reconciling items (after tax):
Net loss from discontinued operations
—
—
—
—
1,585
0.05
—
—
—
—
—
—
38,036
1.14
Severance expense
—
—
—
—
—
—
—
—
1,517
0.04
—
—
1,517
0.05
Impairments on fixed assets and leases
705
0.02
220
0.01
1,118
0.03
—
—
—
—
925
0.03
—
—
Merger and acquisition related expenses
—
—
—
—
—
—
—
—
—
—
—
—
320
0.01
Legal reserves
—
—
—
—
—
—
897
0.03
—
—
—
—
—
—
(Gains) losses on investment securities
2,494
0.07
1,030
0.03
43
0.00
(4,591)
(0.14)
(2,694)
(0.08)
3,524
0.10
(21,467)
(0.64)
Loss on sale of foreign subsidiaries
—
—
—
—
—
—
—
—
2,150
0.06
—
—
2,150
0.06
Loss on cash flow hedge derivative terminations
—
—
—
—
—
—
—
—
—
—
—
—
18,716
0.56
Derivative credit valuation adjustment
(351)
(0.01)
(736)
(0.02)
(180)
(0.01)
(198)
(0.01)
288
0.01
(1,087)
(0.03)
(907)
(0.03)
Deposit relationship adjustment fees
—
—
—
—
—
—
4,707
0.14
—
—
—
—
—
—
Loss on redemption of preferred stock
—
—
—
—
—
—
2,820
0.08
—
—
—
—
—
—
Core earnings, excluding PPP
$
46,301
$
1.38
$
50,697
$
1.48
$
36,890
$
1.07
$
32,539
$
0.96
$
34,991
$
1.04
$
96,998
$
2.86
$
80,220
$
2.41
Core Return on Average Assets - Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
2022
2021
GAAP net income
$
58,650
$
76,761
$
100,669
$
116,042
$
61,341
$
135,411
$
97,936
Reconciling items (after tax):
Net loss from discontinued operations
—
—
1,585
—
—
—
38,036
Severance expense
—
—
—
—
1,517
—
1,517
Impairments on fixed assets and leases
705
220
1,118
—
—
925
—
Merger and acquisition related expenses
—
—
—
—
—
—
320
Legal reserves
—
—
—
897
—
—
—
(Gains) losses on investment securities
2,494
1,030
43
(4,591)
(2,694)
3,524
(21,467)
Loss on sale of foreign subsidiaries
—
—
—
—
2,150
—
2,150
Loss on cash flow hedge derivative terminations
—
—
—
—
—
—
18,716
Derivative credit valuation adjustment
(351)
(736)
(180)
(198)
288
(1,087)
(907)
Deposit relationship adjustment fees
—
—
—
4,707
—
—
—
Core net income
$
61,498
$
77,275
$
103,235
$
116,857
$
62,602
$
138,773
$
136,301
Average total assets
$
20,056,020
$
19,129,330
$
19,214,241
$
19,739,340
$
19,306,948
$
19,595,236
$
18,918,491
Core return on average assets
1.23 %
1.64 %
2.13 %
2.35 %
1.30 %
1.43 %
1.45 %
Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
2022
2021
GAAP net income
$
58,650
$
76,761
$
100,669
$
116,042
$
61,341
$
135,411
$
97,936
Reconciling items:
Income tax expense
18,896
19,332
12,993
36,263
20,124
38,228
37,684
Provision (benefit) for credit losses
23,847
15,997
13,890
13,164
3,291
39,844
372
Provision (benefit) for credit losses on unfunded commitments
608
(109)
352
669
45
499
(1,241)
Severance expense
—
—
—
—
2,004
—
2,004
Net loss from discontinued operations
—
—
1,585
—
—
—
38,036
Impairments on fixed assets and leases
914
286
1,260
—
—
1,200
—
Merger and acquisition related expenses
—
—
—
—
—
—
418
Legal reserves
—
—
—
1,185
—
—
—
(Gains) losses on investment securities
3,232
1,339
49
(6,063)
(3,558)
4,571
(28,098)
Loss on sale of foreign subsidiaries
—
—
—
—
2,840
—
2,840
Loss on cash flow hedge derivative terminations
—
—
—
—
—
—
24,467
Derivative credit valuation adjustment
(455)
(957)
(203)
(261)
380
(1,412)
(1,182)
Deposit relationship adjustment fees
—
—
—
6,216
—
—
—
Adjusted net income - pre-tax pre-provision
$
105,692
$
112,649
$
130,595
$
167,215
$
86,467
$
218,341
$
173,236
Average total assets
$
20,056,020
$
19,129,330
$
19,214,241
$
19,739,340
$
19,306,948
$
19,595,236
$
18,918,491
Adjusted ROAA - pre-tax pre-provision
2.11 %
2.39 %
2.70 %
3.36 %
1.80 %
2.25 %
1.85 %
Core Return on Average Common Equity - Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
2022
2021
GAAP net income to common shareholders
$
56,519
$
74,896
$
98,647
$
110,241
$
58,042
$
131,415
$
91,246
Reconciling items (after tax):
Net loss from discontinued operations
—
—
1,585
—
—
—
38,036
Severance expense
—
—
—
—
1,517
—
1,517
Impairments on fixed assets and leases
705
220
1,118
—
—
925
—
Merger and acquisition related expenses
—
—
—
—
—
—
320
Legal reserves
—
—
—
897
—
—
—
(Gains) losses on investment securities
2,494
1,030
43
(4,591)
(2,694)
3,524
(21,467)
Loss on sale of foreign subsidiaries
—
—
—
—
2,150
—
2,150
Loss on cash flow hedge derivative terminations
—
—
—
—
—
—
18,716
Derivative credit valuation adjustment
(351)
(736)
(180)
(198)
288
(1,087)
(907)
Deposit relationship adjustment fees
—
—
—
4,707
—
—
—
Loss on redemption of preferred stock
—
—
—
2,820
—
—
—
Core earnings
$
59,367
$
75,410
$
101,213
$
113,876
$
59,303
$
134,777
$
129,611
Average total common shareholders' equity
$
1,244,819
$
1,252,022
$
1,179,478
$
1,071,566
$
1,002,624
$
1,248,400
$
960,940
Core return on average common equity
19.13 %
24.43 %
34.04 %
42.16 %
23.72 %
21.77 %
27.20 %
Adjusted ROCE - Pre-Tax Pre-Provision - Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
2022
2021
GAAP net income to common shareholders
$
56,519
$
74,896
$
98,647
$
110,241
$
58,042
$
131,415
$
91,246
Reconciling items:
Income tax expense
18,896
19,332
12,993
36,263
20,124
38,228
37,684
Provision (benefit) for credit losses
23,847
15,997
13,890
13,164
3,291
39,844
372
Provision (benefit) for credit losses on unfunded commitments
608
(109)
352
669
45
499
(1,241)
Net loss from discontinued operations
—
—
1,585
—
—
—
38,036
Severance expense
—
—
—
—
2,004
—
2,004
Impairments on fixed assets and leases
914
286
1,260
—
—
1,200
—
Merger and acquisition related expenses
—
—
—
—
—
—
418
Legal reserves
—
—
—
1,185
—
—
—
(Gains) losses on investment securities
3,232
1,339
49
(6,063)
(3,558)
4,571
(28,098)
Loss on sale of foreign subsidiaries
—
—
—
—
2,840
—
2,840
Loss on cash flow hedge derivative terminations
—
—
—
—
—
—
24,467
Derivative credit valuation adjustment
(455)
(957)
(203)
(261)
380
(1,412)
(1,182)
Deposit relationship adjustment fees
—
—
—
6,216
—
—
—
Loss on redemption of preferred stock
—
—
—
2,820
—
—
—
Pre-tax pre-provision adjusted net income available to common shareholders
$
103,561
$
110,784
$
128,573
$
164,234
$
83,168
$
214,345
$
166,546
Average total common shareholders' equity
$
1,244,819
$
1,252,022
$
1,179,478
$
1,071,566
$
1,002,624
$
1,248,400
$
960,940
Adjusted ROCE - pre-tax pre-provision
33.37 %
35.89 %
43.25 %
60.81 %
33.27 %
34.62 %
34.95 %
Net Interest Margin, Tax Equivalent - Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
2022
2021
GAAP net interest income
$
164,852
$
164,699
$
193,694
$
219,892
$
138,757
$
329,551
$
271,488
Tax-equivalent adjustment
270
239
276
290
289
509
581
Net interest income tax equivalent
$
165,122
$
164,938
$
193,970
$
220,182
$
139,046
$
330,060
$
272,069
Average total interest earning assets
$
19,525,936
$
18,572,308
$
18,576,433
$
19,033,826
$
18,698,996
$
19,051,757
$
18,323,555
Net interest margin, tax equivalent
3.39 %
3.60 %
4.14 %
4.59 %
2.98 %
3.49 %
2.99 %
Net Interest Margin, Tax Equivalent, excluding PPP - Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
2022
2021
GAAP net interest income
$
164,852
$
164,699
$
193,694
$
219,892
$
138,757
$
329,551
$
271,488
PPP net interest income
(18,946)
(34,615)
(78,647)
(112,005)
(35,785)
(53,561)
(70,627)
Tax-equivalent adjustment
270
239
276
290
289
509
581
Net interest income, tax equivalent, excluding PPP
$
146,176
$
130,323
$
115,323
$
108,177
$
103,261
$
276,499
$
201,442
GAAP average total interest earning assets
$
19,525,936
$
18,572,308
$
18,576,433
$
19,033,826
$
18,698,996
$
19,051,757
$
18,323,555
Average PPP loans
(1,863,429)
(2,641,318)
(3,898,607)
(5,778,367)
(6,133,184)
(2,250,224)
(5,382,370)
Adjusted average total interest earning assets
$
17,662,507
$
15,930,990
$
14,677,826
$
13,255,459
$
12,565,812
$
16,801,533
$
12,941,185
Net interest margin, tax equivalent, excluding PPP
3.32 %
3.32 %
3.12 %
3.24 %
3.30 %
3.32 %
3.14 %
Loan Yield, excluding PPP
Six Months Ended
June 30,
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
2022
2021
Interest income on loans and leases
$
168,941
$
157,175
$
198,000
$
233,097
$
153,608
$
326,116
$
305,725
PPP interest income
(20,572)
(36,894)
(82,086)
(117,102)
(41,137)
(57,466)
(79,969)
Interest income on core loans (Loans and leases, excluding PPP)
$
148,369
$
120,281
$
115,914
$
115,995
$
112,471
$
268,650
$
225,756
Average loans and leases
14,918,498
13,656,991
14,335,370
16,192,744
16,482,802
14,291,229
15,909,143
Average PPP loans
(1,863,429)
(2,641,318)
(3,898,607)
(5,778,367)
(6,133,184)
(2,250,224)
(5,382,370)
Adjusted average total interest earning assets
13,055,069
11,015,673
10,436,763
10,414,377
10,349,618
12,041,005
10,526,773
Loan yield, excluding PPP
4.56 %
4.43 %
4.41 %
4.42 %
4.36 %
4.50 %
4.32 %
Core Efficiency Ratio - Customers Bancorp
Six Months Ended
June 30,
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
2022
2021
GAAP net interest income
$
164,852
$
164,699
$
193,694
$
219,892
$
138,757
$
329,551
$
271,488
GAAP non-interest income
$
12,746
$
21,198
$
16,991
$
25,586
$
16,822
$
33,944
$
35,290
(Gains) losses on investment securities
3,232
1,339
49
(6,063)
(3,558)
4,571
(28,098)
Derivative credit valuation adjustment
(455)
(957)
(203)
(261)
380
(1,412)
(1,182)
Loss on cash flow hedge derivative terminations
—
—
—
—
—
—
24,467
Loss on sale of foreign subsidiaries
—
—
—
—
2,840
—
2,840
Core non-interest income
15,523
21,580
16,837
19,262
16,484
37,103
33,317
Core revenue
$
180,375
$
186,279
$
210,531
$
239,154
$
155,241
$
366,654
$
304,805
GAAP non-interest expense
$
76,205
$
73,807
$
81,548
$
80,009
$
70,823
$
150,012
$
132,750
Severance expense
—
—
—
—
(2,004)
—
(2,004)
Impairments on fixed assets and leases
(914)
(286)
(1,260)
—
—
(1,200)
—
Legal reserves
—
—
—
(1,185)
—
—
—
Merger and acquisition related expenses
—
—
—
—
—
—
(418)
Deposit relationship adjustment fees
—
—
—
(6,216)
—
—
—
Core non-interest expense
$
75,291
$
73,521
$
80,288
$
72,608
$
68,819
$
148,812
$
130,328
Core efficiency ratio (1)
41.74 %
39.47 %
38.14 %
30.36 %
44.33 %
40.59 %
42.76 %
(1) Core efficiency ratio calculated as core non-interest expense divided by core revenue.
Tangible Common Equity to Tangible Assets - Customers Bancorp
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
GAAP total shareholders' equity
$
1,353,390
$
1,377,406
$
1,366,217
$
1,284,299
$
1,250,729
Reconciling items:
Preferred stock
(137,794)
(137,794)
(137,794)
(137,794)
(217,471)
Goodwill and other intangibles
(3,629)
(3,678)
(3,736)
(3,794)
(3,853)
Tangible common equity
$
1,211,967
$
1,235,934
$
1,224,687
$
1,142,711
$
1,029,405
GAAP total assets
$
20,251,996
$
19,163,708
$
19,575,028
$
19,108,922
$
19,635,108
Reconciling items:
Goodwill and other intangibles
(3,629)
(3,678)
(3,736)
(3,794)
(3,853)
Tangible assets
$
20,248,367
$
19,160,030
$
19,571,292
$
19,105,128
$
19,631,255
Tangible common equity to tangible assets
5.99 %
6.45 %
6.26 %
5.98 %
5.24 %
Tangible Common Equity to Tangible Assets, excluding PPP - Customers Bancorp
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
GAAP total shareholders' equity
$
1,353,390
$
1,377,406
$
1,366,217
$
1,284,299
$
1,250,729
Reconciling items:
Preferred stock
(137,794)
(137,794)
(137,794)
(137,794)
(217,471)
Goodwill and other intangibles
(3,629)
(3,678)
(3,736)
(3,794)
(3,853)
Tangible common equity
$
1,211,967
$
1,235,934
$
1,224,687
$
1,142,711
$
1,029,405
GAAP total assets
$
20,251,996
$
19,163,708
$
19,575,028
$
19,108,922
$
19,635,108
Loans receivable, PPP
(1,570,160)
(2,195,902)
(3,250,008)
(4,957,357)
(6,305,056)
Total assets, excluding PPP
$
18,681,836
$
16,967,806
$
16,325,020
$
14,151,565
$
13,330,052
Reconciling items:
Goodwill and other intangibles
(3,629)
(3,678)
(3,736)
(3,794)
(3,853)
Tangible assets, excluding PPP
$
18,678,207
$
16,964,128
$
16,321,284
$
14,147,771
$
13,326,199
Tangible common equity to tangible assets, excluding PPP
6.49 %
7.29 %
7.50 %
8.08 %
7.72 %
Tangible Book Value per Common Share - Customers Bancorp
(Dollars in thousands except share and per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
GAAP total shareholders' equity
$
1,353,390
$
1,377,406
$
1,366,217
$
1,284,299
$
1,250,729
Reconciling Items:
Preferred stock
(137,794)
(137,794)
(137,794)
(137,794)
(217,471)
Goodwill and other intangibles
(3,629)
(3,678)
(3,736)
(3,794)
(3,853)
Tangible common equity
$
1,211,967
$
1,235,934
$
1,224,687
$
1,142,711
$
1,029,405
Common shares outstanding
32,449,486
32,957,847
32,913,267
32,537,976
32,353,256
Tangible book value per common share
$
37.35
$
37.50
$
37.21
$
35.12
$
31.82
Core Loans (Total Loans and Leases, excluding PPP)
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Total loans and leases
$
15,664,353
$
14,073,518
$
14,568,885
$
15,515,537
$
16,967,022
Loans receivable, PPP
(1,570,160)
(2,195,902)
(3,250,008)
(4,957,357)
(6,305,056)
Core Loans (Loans and leases, excluding PPP)
$
14,094,193
$
11,877,616
$
11,318,877
$
10,558,180
$
10,661,966
Total loans and leases, excluding mortgage banking lending and PPP
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Total loans and leases
$
15,664,353
$
14,073,518
$
14,568,885
$
15,515,537
$
16,967,022
Loans to mortgage companies
(1,975,189)
(1,830,121)
(2,362,438)
(2,626,483)
(2,922,217)
Loans receivable, PPP
(1,570,160)
(2,195,902)
(3,250,008)
(4,957,357)
(6,305,056)
Total loans and leases, excluding mortgage banking lending and PPP
$
12,119,004
$
10,047,495
$
8,956,439
$
7,931,697
$
7,739,749
Total Assets, excluding PPP
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Total assets
$
20,251,996
$
19,163,708
$
19,575,028
$
19,108,922
$
19,635,108
Loans receivable, PPP
(1,570,160)
(2,195,902)
(3,250,008)
(4,957,357)
(6,305,056)
Total assets, excluding PPP
$
18,681,836
$
16,967,806
$
16,325,020
$
14,151,565
$
13,330,052
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP
(Dollars in thousands except per share data)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Loans and leases receivable
$
13,783,155
$
12,314,757
$
12,268,306
$
12,927,956
$
14,077,198
Loans receivable, PPP
(1,570,160)
(2,195,902)
(3,250,008)
(4,957,357)
(6,305,056)
Loans and leases held for investment, excluding PPP
$
12,212,995
$
10,118,855
$
9,018,298
$
7,970,599
$
7,772,142
Allowance for credit losses on loans and leases
$
156,530
$
145,847
$
137,804
$
131,496
$
125,436
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP
1.28 %
1.44 %
1.53 %
1.65 %
1.61 %
View source version on businesswire.com: https://www.businesswire.com/news/home/20220726006164/en/