Customers Bancorp, Inc. (NYSE:CUBI):
Third Quarter 2024 Highlights
- Q3 2024 net income available to common shareholders was $42.9 million, or $1.31 per diluted share; ROAA was 0.88% and ROCE was 10.44%.
- Q3 2024 core earnings*1 were $43.8 million, or $1.34 per diluted share; Core ROAA* was 0.89% and Core ROCE* was 10.66%.
- CET 1 ratio of 12.5%2 at September 30, 2024, compared to 12.8% at June 30, 2024, above the 11.5% target.
- TCE / TA ratio* of 7.7% at September 30, 2024, compared to 7.7% at June 30, 2024, above the 7.5% target.
- Total loans and leases held for investment grew by $520.8 million in Q3 2024 from Q2 2024 or 16% annualized.
- Q3 2024 deposit inflows from commercial customers of $1.1 billion funded the paydown of $0.7 billion of higher-cost commercial and consumer deposits. Total deposits increased by $391.3 million in Q3 2024 from Q2 2024.
- Total estimated insured deposits were 75%3 of total deposits at September 30, 2024, with immediately available liquidity covering estimated uninsured deposits3 by approximately 183%.
- Q3 2024 net interest margin, tax equivalent (“NIM”) was 3.06%, compared to Q2 2024 NIM of 3.29% primarily due to lower discount accretion and prepayment income in Q3 2024 as well as lower average consumer installment loan balances and securities portfolio repositioning.
- Non-performing assets were $47.3 million, or 0.22% of total assets, at September 30, 2024 compared to 0.23% at June 30, 2024.
- Q3 2024 provision for credit losses on loans and leases was $17.8 million compared to $17.9 million in Q2 2024 and the allowance for credit losses on loans and leases equaled 281% of non-performing loans at September 30, 2024, compared to 280% at June 30, 2024.
- Q3 2024 book value per share and tangible book value per share* both grew by approximately $2.26, or 4.5% over Q2 2024, or 17.7% annualized, with a tangible book value per share* of $52.96 at September 30, 2024. This was driven by current quarter earnings and a decrease in AOCI losses of $25.3 million.
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* |
Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
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1 |
Excludes pre-tax severance expense of $0.7 million, unrealized losses on loans held for sale of $0.6 million, gain on investment securities of $0.4 million and derivative credit valuation adjustment of $0.2 million. |
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2 |
Regulatory capital ratios as of September 30, 2024 are estimates. |
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3 |
Uninsured deposits (estimate) of $6.1 billion to be reported on the Bank’s call report, less deposits of $1.4 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $136.5 million. |
CEO Commentary
“Customers Bancorp continued to deliver on its strategic priorities to grow our franchise value through lower-cost and granular deposit inflows and diversified loan growth while we manage our operational risks,” said Customers Bancorp Chairman and CEO Jay Sidhu. “We have strong momentum as we pursue phase two of our deposit transformation strategy – remixing existing higher-cost business unit deposits*1 and brokered deposits into core lower-cost and granular deposits. We started the year with robust pipeline within our existing businesses which has been materially enhanced by the new commercial banking teams that joined Customers in April. In the quarter, we utilized deposit growth from commercial customers of $1.1 billion to paydown $0.7 billion of higher-cost commercial and consumer client deposits. In the third quarter, these inflows were, once again, broad-based with more than 25 different channels increasing balances and 70% of channels contributing $25 million or more. Our new deposit focused commercial banking teams have opened over 3,000 new deposit accounts since joining and gathered $536 million in deposits at an interest rate of approximately 2.9% with approximately 30% being non-interest bearing. Our deposit pipelines continue to grow with an extraordinary conversion ratio. We repurchased 373,974 shares of common stock under the previously authorized share repurchase program at an average price below Tangible Book Value per share*. Even with the share repurchase and balance sheet growth, our TCE / TA ratio* remained flat. Enhanced by the addition of our new banking teams, we believe we are extremely well-positioned to continue to strengthen our deposit franchise, improve our profitability, and maintain our already strong capital ratios,” stated Jay Sidhu.
“Our Q3 2024 GAAP earnings were $42.9 million, or $1.31 per diluted share, and core earnings* were $43.8 million, or $1.34 per diluted share. At September 30, 2024, our deposit base was well diversified, with approximately 75%2 of total deposits insured. We maintain a strong liquidity position, with $8.3 billion of liquidity immediately available, which covers approximately 183% of uninsured deposits2 and our loan to deposit ratio was 78%. We continue to focus loan production where we have a holistic and primary relationship. Total loans and leases held for investment grew by $520.8 million which represent a 16% annualized growth rate, driven by strong commercial loan growth of $539.5 million. Our loan pipeline continued to build during the third quarter, and we remain confident in achieving the 10% – 15% loan growth outlook previously provided. We continue to hold strong levels of liquidity and capital to support the needs of our customers. Asset quality remains strong, and a clear differentiator for us, with our NPA ratio at just 0.22% of total assets and reserve levels are robust at 281% of total non-performing loans at the end of Q3 2024. Total net charge-offs declined by $1.7 million and the combined level of special mention and substandard commercial loans declined by $44.0 million during the quarter. Our exposure to the higher risk commercial real estate office sector is minimal, representing approximately 1% of the loan portfolio. We will remain disciplined, but opportunistic, with our balance sheet capacity to manage risk and maintain robust capital levels. Tangible Book Value per share* grew to $52.96. We are excited and optimistic about the opportunities ahead which have been enhanced by the addition of the new banking teams,” Jay Sidhu continued.
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* |
Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
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1 |
Total deposits excluding wholesale CDs and BMTX student-related deposits. |
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2 |
Uninsured deposits (estimate) of $6.1 billion to be reported on the Bank’s call report, less deposits of $1.4 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $136.5 million. |
Financial Highlights
(Dollars in thousands, except per share data) |
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At or Three Months Ended |
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Increase (Decrease) |
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September 30, 2024 |
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June 30, 2024 |
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Profitability Metrics: |
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Net income available for common shareholders |
|
$ |
42,937 |
|
|
$ |
54,300 |
|
|
$ |
(11,363 |
) |
|
(20.9 |
)% |
Diluted earnings per share |
|
$ |
1.31 |
|
|
$ |
1.66 |
|
|
$ |
(0.35 |
) |
|
(21.1 |
)% |
Core earnings* |
|
$ |
43,838 |
|
|
$ |
48,567 |
|
|
$ |
(4,729 |
) |
|
(9.7 |
)% |
Adjusted core earnings* |
|
$ |
41,381 |
|
|
$ |
48,567 |
|
|
$ |
(7,186 |
) |
|
(14.8 |
)% |
Core earnings per share* |
|
$ |
1.34 |
|
|
$ |
1.49 |
|
|
$ |
(0.15 |
) |
|
(10.1 |
)% |
Adjusted core earnings per share* |
|
$ |
1.26 |
|
|
$ |
1.49 |
|
|
$ |
(0.23 |
) |
|
(15.4 |
)% |
Return on average assets (“ROAA”) |
|
|
0.88 |
% |
|
|
1.11 |
% |
|
|
(0.23 |
) |
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Core ROAA* |
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|
0.89 |
% |
|
|
1.00 |
% |
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(0.11 |
) |
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Adjusted core ROAA* |
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|
0.85 |
% |
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|
1.00 |
% |
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(0.15 |
) |
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Return on average common equity (“ROCE”) |
|
|
10.44 |
% |
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|
13.85 |
% |
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(3.41 |
) |
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Core ROCE* |
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10.66 |
% |
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|
12.39 |
% |
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(1.73 |
) |
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Adjusted core ROCE* |
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|
10.06 |
% |
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|
12.39 |
% |
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(2.33 |
) |
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Core pre-tax pre-provision net income* |
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$ |
64,824 |
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$ |
89,220 |
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|
$ |
(24,396 |
) |
|
(27.3 |
)% |
Adjusted core pre-tax pre-provision net income* |
|
$ |
61,827 |
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|
$ |
89,220 |
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|
$ |
(27,393 |
) |
|
(30.7 |
)% |
Net interest margin, tax equivalent |
|
|
3.06 |
% |
|
|
3.29 |
% |
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|
(0.23 |
) |
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Yield on loans (Loan yield) |
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|
6.99 |
% |
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|
7.17 |
% |
|
|
(0.18 |
) |
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Cost of deposits |
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|
3.46 |
% |
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|
3.40 |
% |
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|
0.06 |
|
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Efficiency ratio |
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62.40 |
% |
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|
51.87 |
% |
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|
10.53 |
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Core efficiency ratio* |
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|
61.69 |
% |
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|
53.47 |
% |
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|
8.22 |
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Adjusted core efficiency ratio* |
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|
63.48 |
% |
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|
53.47 |
% |
|
|
10.01 |
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Non-interest expense to average total assets |
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|
1.95 |
% |
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|
1.98 |
% |
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|
(0.03 |
) |
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Core non-interest expense to average total assets* |
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|
1.94 |
% |
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|
1.93 |
% |
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|
0.01 |
|
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Adjusted core non-interest expense to average total assets* |
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|
1.99 |
% |
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|
1.93 |
% |
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|
0.06 |
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Balance Sheet Trends: |
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Total assets |
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$ |
21,456,082 |
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$ |
20,942,975 |
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$ |
513,107 |
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2.5 |
% |
Total cash and investment securities |
|
$ |
6,564,528 |
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|
$ |
6,523,036 |
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|
$ |
41,492 |
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|
0.6 |
% |
Total loans and leases |
|
$ |
14,053,116 |
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$ |
13,632,639 |
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|
$ |
420,477 |
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|
3.1 |
% |
Non-interest bearing demand deposits |
|
$ |
4,670,809 |
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|
$ |
4,474,862 |
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|
$ |
195,947 |
|
|
4.4 |
% |
Total deposits |
|
$ |
18,069,389 |
|
|
$ |
17,678,093 |
|
|
$ |
391,296 |
|
|
2.2 |
% |
Capital Metrics: |
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Common Equity |
|
$ |
1,663,386 |
|
|
$ |
1,609,071 |
|
|
$ |
54,315 |
|
|
3.4 |
% |
Tangible Common Equity* |
|
$ |
1,659,757 |
|
|
$ |
1,605,442 |
|
|
$ |
54,315 |
|
|
3.4 |
% |
Common Equity to Total Assets |
|
|
7.8 |
% |
|
|
7.7 |
% |
|
|
0.1 |
|
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|
Tangible Common Equity to Tangible Assets* |
|
|
7.7 |
% |
|
|
7.7 |
% |
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|
— |
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Book Value per common share |
|
$ |
53.07 |
|
|
$ |
50.81 |
|
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$ |
2.26 |
|
|
4.4 |
% |
Tangible Book Value per common share* |
|
$ |
52.96 |
|
|
$ |
50.70 |
|
|
$ |
2.26 |
|
|
4.5 |
% |
Common equity Tier 1 capital ratio (1) |
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|
12.5 |
% |
|
|
12.8 |
% |
|
|
(0.3 |
) |
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|
Total risk based capital ratio (1) |
|
|
15.4 |
% |
|
|
15.8 |
% |
|
|
(0.4 |
) |
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(1) Regulatory capital ratios as of September 30, 2024 are estimates. |
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* Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
Financial Highlights
(Dollars in thousands, except per share data) |
|
At or Three Months Ended |
|
Increase (Decrease) |
|
Nine Months Ended |
|
Increase (Decrease) |
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|
September 30, 2024 |
|
September 30, 2023 |
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|
September 30, 2024 |
|
September 30, 2023 |
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Profitability Metrics: |
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Net income available for common shareholders |
|
$ |
42,937 |
|
|
$ |
82,953 |
|
|
$ |
(40,016 |
) |
|
(48.2 |
)% |
|
$ |
143,163 |
|
|
$ |
177,225 |
|
|
$ |
(34,062 |
) |
|
(19.2 |
)% |
Diluted earnings per share |
|
$ |
1.31 |
|
|
$ |
2.58 |
|
|
$ |
(1.27 |
) |
|
(49.2 |
)% |
|
$ |
4.37 |
|
|
$ |
5.53 |
|
|
$ |
(1.16 |
) |
|
(21.0 |
)% |
Core earnings* |
|
$ |
43,838 |
|
|
$ |
83,294 |
|
|
$ |
(39,456 |
) |
|
(47.4 |
)% |
|
$ |
138,937 |
|
|
$ |
186,600 |
|
|
$ |
(47,663 |
) |
|
(25.5 |
)% |
Adjusted core earnings* |
|
$ |
41,381 |
|
|
$ |
83,294 |
|
|
$ |
(41,913 |
) |
|
(50.3 |
)% |
|
$ |
145,085 |
|
|
$ |
186,600 |
|
|
$ |
(41,515 |
) |
|
(22.2 |
)% |
Core earnings per share* |
|
$ |
1.34 |
|
|
$ |
2.59 |
|
|
$ |
(1.25 |
) |
|
(48.3 |
)% |
|
$ |
4.24 |
|
|
$ |
5.82 |
|
|
$ |
(1.58 |
) |
|
(27.1 |
)% |
Adjusted core earnings per share* |
|
$ |
1.26 |
|
|
$ |
2.59 |
|
|
$ |
(1.33 |
) |
|
(51.4 |
)% |
|
$ |
4.43 |
|
|
$ |
5.82 |
|
|
$ |
(1.39 |
) |
|
(23.9 |
)% |
Return on average assets (“ROAA”) |
|
|
0.88 |
% |
|
|
1.57 |
% |
|
|
(0.69 |
) |
|
|
|
|
0.97 |
% |
|
|
1.17 |
% |
|
|
(0.20 |
) |
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||
Core ROAA* |
|
|
0.89 |
% |
|
|
1.57 |
% |
|
|
(0.68 |
) |
|
|
|
|
0.95 |
% |
|
|
1.22 |
% |
|
|
(0.27 |
) |
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||
Adjusted core ROAA* |
|
|
0.85 |
% |
|
|
1.57 |
% |
|
|
(0.72 |
) |
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|
0.99 |
% |
|
|
1.22 |
% |
|
|
(0.23 |
) |
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||
Return on average common equity (“ROCE”) |
|
|
10.44 |
% |
|
|
23.97 |
% |
|
|
(13.53 |
) |
|
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|
|
12.10 |
% |
|
|
17.84 |
% |
|
|
(5.74 |
) |
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||
Core ROCE* |
|
|
10.66 |
% |
|
|
24.06 |
% |
|
|
(13.40 |
) |
|
|
|
|
11.74 |
% |
|
|
18.79 |
% |
|
|
(7.05 |
) |
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||
Adjusted core ROCE* |
|
|
10.06 |
% |
|
|
24.06 |
% |
|
|
(14.00 |
) |
|
|
|
|
12.26 |
% |
|
|
18.79 |
% |
|
|
(6.53 |
) |
|
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||
Core pre-tax pre-provision net income* |
|
$ |
64,824 |
|
|
$ |
128,564 |
|
|
$ |
(63,740 |
) |
|
(49.6 |
)% |
|
$ |
237,718 |
|
|
$ |
314,679 |
|
|
$ |
(76,961 |
) |
|
(24.5 |
)% |
Adjusted core pre-tax pre-provision net income* |
|
$ |
61,827 |
|
|
$ |
128,564 |
|
|
$ |
(66,737 |
) |
|
(51.9 |
)% |
|
$ |
246,035 |
|
|
$ |
314,679 |
|
|
$ |
(68,644 |
) |
|
(21.8 |
)% |
Net interest margin, tax equivalent |
|
|
3.06 |
% |
|
|
3.70 |
% |
|
|
(0.64 |
) |
|
|
|
|
3.16 |
% |
|
|
3.28 |
% |
|
|
(0.12 |
) |
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||
Yield on loans (Loan yield) |
|
|
6.99 |
% |
|
|
7.87 |
% |
|
|
(0.88 |
) |
|
|
|
|
7.07 |
% |
|
|
7.12 |
% |
|
|
(0.05 |
) |
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||
Cost of deposits |
|
|
3.46 |
% |
|
|
3.24 |
% |
|
|
0.22 |
|
|
|
|
|
3.44 |
% |
|
|
3.23 |
% |
|
|
0.21 |
|
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||
Efficiency ratio |
|
|
62.40 |
% |
|
|
41.01 |
% |
|
|
21.39 |
|
|
|
|
|
55.97 |
% |
|
|
45.62 |
% |
|
|
10.35 |
|
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|
||
Core efficiency ratio* |
|
|
61.69 |
% |
|
|
41.04 |
% |
|
|
20.65 |
|
|
|
|
|
56.29 |
% |
|
|
45.03 |
% |
|
|
11.26 |
|
|
|
||
Adjusted core efficiency ratio* |
|
|
63.48 |
% |
|
|
41.04 |
% |
|
|
22.44 |
|
|
|
|
|
54.75 |
% |
|
|
45.03 |
% |
|
|
9.72 |
|
|
|
||
Non-interest expense to average total assets |
|
|
1.95 |
% |
|
|
1.62 |
% |
|
|
0.33 |
|
|
|
|
|
1.93 |
% |
|
|
1.61 |
% |
|
|
0.32 |
|
|
|
||
Core non-interest expense to average total assets* |
|
|
1.94 |
% |
|
|
1.62 |
% |
|
|
0.32 |
|
|
|
|
|
1.91 |
% |
|
|
1.60 |
% |
|
|
0.31 |
|
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|
||
Adjusted core non-interest expense to average total assets* |
|
|
1.99 |
% |
|
|
1.62 |
% |
|
|
0.37 |
|
|
|
|
|
1.86 |
% |
|
|
1.60 |
% |
|
|
0.26 |
|
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||
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(1) Regulatory capital ratios as of September 30, 2024 are estimates. |
||||||||||||||||||||||||||||||
* Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
Financial Highlights
(Dollars in thousands, except per share data) |
|
At or Three Months Ended |
|
Increase (Decrease) |
|
|||||||||||
|
September 30, 2024 |
|
September 30, 2023 |
|
|
|||||||||||
Balance Sheet Trends: |
|
|
|
|
|
|
|
|
|
|||||||
Total assets |
|
$ |
21,456,082 |
|
|
$ |
21,857,152 |
|
|
$ |
(401,070 |
) |
|
(1.8 |
)% |
|
Total cash and investment securities |
|
$ |
6,564,528 |
|
|
$ |
7,371,551 |
|
|
$ |
(807,023 |
) |
|
(10.9 |
)% |
|
Total loans and leases |
|
$ |
14,053,116 |
|
|
$ |
13,713,482 |
|
|
$ |
339,634 |
|
|
2.5 |
% |
|
Non-interest bearing demand deposits |
|
$ |
4,670,809 |
|
|
$ |
4,758,682 |
|
|
$ |
(87,873 |
) |
|
(1.8 |
)% |
|
Total deposits |
|
$ |
18,069,389 |
|
|
$ |
18,195,364 |
|
|
$ |
(125,975 |
) |
|
(0.7 |
)% |
|
Capital Metrics: |
|
|
|
|
|
|
|
|
|
|||||||
Common Equity |
|
$ |
1,663,386 |
|
|
$ |
1,423,813 |
|
|
$ |
239,573 |
|
|
16.8 |
% |
|
Tangible Common Equity* |
|
$ |
1,659,757 |
|
|
$ |
1,420,184 |
|
|
$ |
239,573 |
|
|
16.9 |
% |
|
Common Equity to Total Assets |
|
|
7.8 |
% |
|
|
6.5 |
% |
|
|
1.3 |
|
|
|
|
|
Tangible Common Equity to Tangible Assets* |
|
|
7.7 |
% |
|
|
6.5 |
% |
|
|
1.2 |
|
|
|
|
|
Book Value per common share |
|
$ |
53.07 |
|
|
$ |
45.47 |
|
|
$ |
7.60 |
|
|
16.7 |
% |
|
Tangible Book Value per common share* |
|
$ |
52.96 |
|
|
$ |
45.36 |
|
|
$ |
7.60 |
|
|
16.8 |
% |
|
Common equity Tier 1 capital ratio (1) |
|
|
12.5 |
% |
|
|
11.3 |
% |
|
|
1.2 |
|
|
|
|
|
Total risk based capital ratio (1) |
|
|
15.4 |
% |
|
|
14.3 |
% |
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
(1) Regulatory capital ratios as of September 30, 2024 are estimates. |
||||||||||||||||
* Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
Key Balance Sheet Trends
Loans and Leases
The following table presents the composition of total loans and leases as of the dates indicated:
(Dollars in thousands) |
September 30, 2024 |
|
% of Total |
|
June 30, 2024 |
|
% of Total |
|
September 30, 2023 |
|
% of Total |
|||||||
Loans and Leases Held for Investment |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial & industrial: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Specialized lending |
$ |
5,468,507 |
|
39.7 |
% |
|
$ |
5,528,745 |
|
41.7 |
% |
|
$ |
5,422,161 |
|
40.0 |
% |
|
Other commercial & industrial (1) |
|
1,087,222 |
|
7.9 |
|
|
|
1,092,146 |
|
8.2 |
|
|
|
1,252,427 |
|
9.2 |
|
|
Mortgage finance |
|
1,367,617 |
|
9.9 |
|
|
|
1,122,812 |
|
8.5 |
|
|
|
1,042,549 |
|
7.7 |
|
|
Multifamily |
|
2,115,978 |
|
15.4 |
|
|
|
2,067,332 |
|
15.6 |
|
|
|
2,130,213 |
|
15.7 |
|
|
Commercial real estate owner occupied |
|
981,904 |
|
7.1 |
|
|
|
805,779 |
|
6.1 |
|
|
|
794,815 |
|
5.9 |
|
|
Commercial real estate non-owner occupied |
|
1,326,591 |
|
9.6 |
|
|
|
1,202,606 |
|
9.1 |
|
|
|
1,178,203 |
|
8.7 |
|
|
Construction |
|
174,509 |
|
1.3 |
|
|
|
163,409 |
|
1.2 |
|
|
|
252,588 |
|
1.8 |
|
|
Total commercial loans and leases |
|
12,522,328 |
|
90.9 |
|
|
|
11,982,829 |
|
90.4 |
|
|
|
12,072,956 |
|
89.0 |
|
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Residential |
|
500,786 |
|
3.6 |
|
|
|
481,503 |
|
3.6 |
|
|
|
483,133 |
|
3.6 |
|
|
Manufactured housing |
|
34,481 |
|
0.3 |
|
|
|
35,901 |
|
0.3 |
|
|
|
40,129 |
|
0.3 |
|
|
Installment: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Personal |
|
453,739 |
|
3.3 |
|
|
|
474,481 |
|
3.6 |
|
|
|
629,843 |
|
4.6 |
|
|
Other |
|
266,362 |
|
1.9 |
|
|
|
282,201 |
|
2.1 |
|
|
|
337,053 |
|
2.5 |
|
|
Total installment loans |
|
720,101 |
|
5.2 |
|
|
|
756,682 |
|
5.7 |
|
|
|
966,896 |
|
7.1 |
|
|
Total consumer loans |
|
1,255,368 |
|
9.1 |
|
|
|
1,274,086 |
|
9.6 |
|
|
|
1,490,158 |
|
11.0 |
|
|
Total loans and leases held for investment |
$ |
13,777,696 |
|
100.0 |
% |
|
$ |
13,256,915 |
|
100.0 |
% |
|
$ |
13,563,114 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loans Held for Sale |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Residential |
$ |
2,523 |
|
0.9 |
% |
|
$ |
2,684 |
|
0.7 |
% |
|
$ |
1,005 |
|
0.7 |
% |
|
Installment: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
Personal |
|
55,799 |
|
20.3 |
|
|
|
125,598 |
|
33.4 |
|
|
|
124,848 |
|
83.0 |
|
|
Other |
|
217,098 |
|
78.8 |
|
|
|
247,442 |
|
65.9 |
|
|
|
24,515 |
|
16.3 |
|
|
Total installment loans |
|
272,897 |
|
99.1 |
|
|
|
373,040 |
|
99.3 |
|
|
|
149,363 |
|
99.3 |
|
|
Total loans held for sale |
$ |
275,420 |
|
100.0 |
% |
|
$ |
375,724 |
|
100.0 |
% |
|
$ |
150,368 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total loans and leases portfolio |
$ |
14,053,116 |
|
|
|
$ |
13,632,639 |
|
|
|
$ |
13,713,482 |
|
|
||||
(1) Includes PPP loans of $30.5 million, $38.3 million and $137.1 million as of September 30, 2024, June 30, 2024 and September 30, 2023, respectively. |
Loans and Leases Held for Investment
Loans and leases held for investment were $13.8 billion at September 30, 2024, up $520.8 million, or 3.9%, from June 30, 2024. Mortgage finance loans increased by $244.8 million, or 21.8% quarter-over-quarter. Owner-occupied commercial real estate loans increased by $176.1 million, or 21.9% to $981.9 million. Non-owner occupied commercial real estate loans increased by $124.0 million, or 10.3% to $1.3 billion. Multifamily loans increased by $48.6 million, or 2.4% to $2.1 billion. Specialized lending decreased by $60.2 million, or 1.1% quarter-over-quarter, to $5.5 billion. Other commercial and industrial loans decreased by $4.9 million, or 0.5% quarter-over-quarter, to $1.1 billion. Consumer installment loans held for investment decreased by $36.6 million, or 4.8% quarter-over-quarter, to $720.1 million.
Loans and leases held for investment of $13.8 billion at September 30, 2024 were up $214.6 million, or 1.6%, year-over-year. Mortgage finance loans increased by $325.1 million, or 31.2% year-over-year due to higher mortgage activity from lower interest rates. Owner-occupied commercial real estate loans increased by $187.1 million. Non-owner occupied commercial real estate loans increased by $148.4 million. Specialized lending increased by $46.3 million. Consumer installment loans decreased by $246.8 million, or 25.5% year-over-year due to the continued build out of the held-for-sale strategy and de-risking of the held-for-investment loan portfolio. Other commercial and industrial loans decreased by $165.2 million, which included decreases in PPP loans primarily from guarantee payments. Construction loans decreased by $78.1 million.
Loans Held for Sale
Loans held for sale decreased $100.3 million quarter-over-quarter, and were $275.4 million at September 30, 2024 including the sale of consumer installment loans that were classified as held for sale with a carrying value of $200.8 million in Q3 2024. As part of these sales, Customers recognized a loss on sale of $0.3 million, which is presented within net gain (loss) on sale of loans and leases in the consolidated statement of income in Q3 2024.
Allowance for Credit Losses on Loans and Leases
The following table presents the allowance for credit losses on loans and leases as of the dates and for the periods presented:
|
At or Three Months Ended |
|
Increase (Decrease) |
|
At or Three Months Ended |
|
Increase (Decrease) |
|||||||||||||||||
(Dollars in thousands) |
September 30, 2024 |
|
June 30, 2024 |
|
|
September 30, 2024 |
|
September 30, 2023 |
|
|||||||||||||||
Allowance for credit losses on loans and leases |
$ |
133,158 |
|
|
$ |
132,436 |
|
|
$ |
722 |
|
|
$ |
133,158 |
|
|
$ |
139,213 |
|
|
$ |
(6,055 |
) |
|
Provision (benefit) for credit losses on loans and leases |
$ |
17,766 |
|
|
$ |
17,851 |
|
|
$ |
(85 |
) |
|
$ |
17,766 |
|
|
$ |
17,055 |
|
|
$ |
711 |
|
|
Net charge-offs from loans held for investment |
$ |
17,044 |
|
|
$ |
18,711 |
|
|
$ |
(1,667 |
) |
|
$ |
17,044 |
|
|
$ |
17,498 |
|
|
$ |
(454 |
) |
|
Annualized net charge-offs to average loans and leases |
|
0.50 |
% |
|
|
0.56 |
% |
|
|
|
|
0.50 |
% |
|
|
0.50 |
% |
|
|
|||||
Coverage of credit loss reserves for loans and leases held for investment |
|
1.06 |
% |
|
|
1.08 |
% |
|
|
|
|
1.06 |
% |
|
|
1.10 |
% |
|
|
Net charge-offs decreased modestly with $17.0 million in Q3 2024, compared to $18.7 million in Q2 2024 and $17.5 million in Q3 2023.
Provision (benefit) for Credit Losses
|
Three Months Ended |
|
Increase (Decrease) |
|
Three Months Ended |
|
Increase (Decrease) |
|||||||||||||||
(Dollars in thousands) |
September 30, 2024 |
|
June 30, 2024 |
|
|
September 30, 2024 |
|
September 30, 2023 |
|
|||||||||||||
Provision (benefit) for credit losses on loans and leases |
$ |
17,766 |
|
|
$ |
17,851 |
|
$ |
(85 |
) |
|
$ |
17,766 |
|
|
$ |
17,055 |
|
$ |
711 |
|
|
Provision (benefit) for credit losses on available for sale debt securities |
|
(700 |
) |
|
|
270 |
|
|
(970 |
) |
|
|
(700 |
) |
|
|
801 |
|
|
(1,501 |
) |
|
Provision for credit losses |
|
17,066 |
|
|
|
18,121 |
|
|
(1,055 |
) |
|
|
17,066 |
|
|
|
17,856 |
|
|
(790 |
) |
|
Provision (benefit) for credit losses on unfunded commitments |
|
642 |
|
|
|
1,594 |
|
|
(952 |
) |
|
|
642 |
|
|
|
48 |
|
|
594 |
|
|
Total provision for credit losses |
$ |
17,708 |
|
|
$ |
19,715 |
|
$ |
(2,007 |
) |
|
$ |
17,708 |
|
|
$ |
17,904 |
|
$ |
(196 |
) |
The provision for credit losses on loans and leases in Q3 2024 was $17.8 million, compared to $17.9 million in Q2 2024. The lower provision in Q3 2024 was primarily due to slight improvements in macroeconomic forecasts.
The provision for credit losses on available for sale investment securities in Q3 2024 was a benefit to provision of $0.7 million, compared to provision of $0.3 million in Q2 2024.
The provision for credit losses on loans and leases in Q3 2024 was $17.8 million, compared to $17.1 million in Q3 2023. The higher provision in Q3 2024 compared to the year ago period was primarily due to higher balances in commercial and industrial loan balances held for investment, partially offset by lower balances in consumer installment loans held for investment.
The provision for credit losses on available for sale investment securities in Q3 2024 was a benefit to provision of $0.7 million compared to provision of $0.8 million in Q3 2023.
Asset Quality
The following table presents asset quality metrics as of the dates indicated:
(Dollars in thousands) |
September 30, 2024 |
|
June 30, 2024 |
|
Increase (Decrease) |
|
September 30, 2024 |
|
September 30, 2023 |
|
Increase (Decrease) |
|||||||||||||
Non-performing assets (“NPAs”): |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Nonaccrual / non-performing loans (“NPLs”) |
$ |
47,326 |
|
|
$ |
47,380 |
|
|
$ |
(54 |
) |
|
$ |
47,326 |
|
|
$ |
29,867 |
|
|
$ |
17,459 |
|
|
Non-performing assets |
$ |
47,326 |
|
|
$ |
47,444 |
|
|
$ |
(118 |
) |
|
$ |
47,326 |
|
|
$ |
29,970 |
|
|
$ |
17,356 |
|
|
NPLs to total loans and leases |
|
0.34 |
% |
|
|
0.35 |
% |
|
|
|
|
0.34 |
% |
|
|
0.22 |
% |
|
|
|||||
Reserves to NPLs |
|
281.36 |
% |
|
|
279.52 |
% |
|
|
|
|
281.36 |
% |
|
|
466.11 |
% |
|
|
|||||
NPAs to total assets |
|
0.22 |
% |
|
|
0.23 |
% |
|
|
|
|
0.22 |
% |
|
|
0.14 |
% |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loans and leases (1) risk ratings: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Commercial loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Pass |
$ |
10,844,500 |
|
|
$ |
10,500,922 |
|
|
$ |
343,578 |
|
|
$ |
10,844,500 |
|
|
$ |
10,503,731 |
|
|
$ |
340,769 |
|
|
Special Mention |
|
178,026 |
|
|
|
170,014 |
|
|
|
8,012 |
|
|
|
178,026 |
|
|
|
189,329 |
|
|
|
(11,303 |
) |
|
Substandard |
|
218,921 |
|
|
|
270,898 |
|
|
|
(51,977 |
) |
|
|
218,921 |
|
|
|
280,267 |
|
|
|
(61,346 |
) |
|
Total commercial loans and leases |
|
11,241,447 |
|
|
|
10,941,834 |
|
|
|
299,613 |
|
|
|
11,241,447 |
|
|
|
10,973,327 |
|
|
|
268,120 |
|
|
Consumer loans |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Performing |
|
1,240,581 |
|
|
|
1,256,816 |
|
|
|
(16,235 |
) |
|
|
1,240,581 |
|
|
|
1,473,493 |
|
|
|
(232,912 |
) |
|
Non-performing |
|
14,787 |
|
|
|
17,270 |
|
|
|
(2,483 |
) |
|
|
14,787 |
|
|
|
16,665 |
|
|
|
(1,878 |
) |
|
Total consumer loans |
|
1,255,368 |
|
|
|
1,274,086 |
|
|
|
(18,718 |
) |
|
|
1,255,368 |
|
|
|
1,490,158 |
|
|
|
(234,790 |
) |
|
Loans and leases receivable (1) |
$ |
12,496,815 |
|
|
$ |
12,215,920 |
|
|
$ |
280,895 |
|
|
$ |
12,496,815 |
|
|
$ |
12,463,485 |
|
|
$ |
33,330 |
||
(1) Risk ratings are assigned to loans and leases held for investment, and excludes loans held for sale, loans receivable, mortgage finance, at fair value and eligible PPP loans that are fully guaranteed by the Small Business Administration. |
Over the last decade, the Bank has developed a suite of commercial loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s commercial and industrial (“C&I”), mortgage finance, corporate and specialized lending lines of business, and multifamily loans for example, are characterized by conservative underwriting standards and historically low loss rates. Because of this emphasis, the Bank’s credit quality to date has been incredibly healthy despite an adverse economic environment. Maintaining strong asset quality also requires a highly active portfolio monitoring process. In addition to frequent client outreach and monitoring at the individual loan level, management employs a bottom-up data driven approach to analyze the commercial portfolio.
Total consumer installment loans held for investment at September 30, 2024 were less than 4% of total assets and approximately 5% of total loans and leases held for investment, and were supported by an allowance for credit losses of $50.1 million. At September 30, 2024, the consumer installment portfolio had the following characteristics: average original FICO score of 746, average debt-to-income of 20% and average borrower income of $101 thousand.
Non-performing loans at September 30, 2024 decreased to 0.34% of total loans and leases, compared to 0.35% at June 30, 2024 and increased, compared to 0.22% at September 30, 2023.
Investment Securities
The investment securities portfolio, including debt securities classified as available for sale (“AFS”) and held to maturity (“HTM”) provides periodic cash flows through regular maturities and amortization, can be used as collateral to secure additional funding, and is an important component of the Bank’s liquidity position.
The following table presents the composition of the investment securities portfolio as of the dates indicated:
(Dollars in thousands) |
September 30, 2024 |
|
June 30, 2024 |
|
September 30, 2023 |
||||
Debt securities, available for sale |
$ |
2,377,733 |
|
$ |
2,477,758 |
|
$ |
2,746,729 |
|
Equity securities |
|
34,336 |
|
|
33,892 |
|
|
26,478 |
|
Investment securities, at fair value |
|
2,412,069 |
|
|
2,511,650 |
|
|
2,773,207 |
|
Debt securities, held to maturity |
|
1,064,437 |
|
|
962,799 |
|
|
1,178,370 |
|
Total investment securities portfolio |
$ |
3,476,506 |
|
$ |
3,474,449 |
|
$ |
3,951,577 |
Customers’ securities portfolio is highly liquid, short in duration, and high in yield. At September 30, 2024, the AFS debt securities portfolio had a spot yield of 5.23%, an effective duration of approximately 2.0 years, and approximately 30% are variable rate. Additionally, 63% of the AFS securities portfolio was AAA rated at September 30, 2024.
At September 30, 2024, the HTM debt securities portfolio represented only 5.0% of total assets at September 30, 2024, had a spot yield of 4.31% and an effective duration of approximately 3.5 years. Additionally, at September 30, 2024, approximately 43% of the HTM securities were AAA rated and 51% were credit enhanced asset backed securities with no current expectation of credit losses.
As a part of the sales of consumer installment loans that were classified as held for sale, Customers provided financing to the purchaser for a portion of the sale price in the form of $160.0 million of asset-backed securities, collateralized by the sold loans, which mostly accounted for the increase in HTM debt securities at September 30, 2024 as compared to the prior quarter.
Deposits
The following table presents the composition of our deposit portfolio as of the dates indicated:
(Dollars in thousands) |
September 30, 2024 |
|
% of Total |
|
June 30, 2024 |
|
% of Total |
|
September 30, 2023 |
|
% of Total |
|||||||
Demand, non-interest bearing |
$ |
4,670,809 |
|
25.9 |
% |
|
$ |
4,474,862 |
|
25.3 |
% |
|
$ |
4,758,682 |
|
26.2 |
% |
|
Demand, interest bearing |
|
5,606,500 |
|
31.0 |
|
|
|
5,894,056 |
|
33.4 |
|
|
|
5,824,410 |
|
32.0 |
|
|
Total demand deposits |
|
10,277,309 |
|
56.9 |
|
|
|
10,368,918 |
|
58.7 |
|
|
|
10,583,092 |
|
58.2 |
|
|
Savings |
|
1,399,968 |
|
7.7 |
|
|
|
1,573,661 |
|
8.9 |
|
|
|
1,118,353 |
|
6.1 |
|
|
Money market |
|
3,961,028 |
|
21.9 |
|
|
|
3,539,815 |
|
20.0 |
|
|
|
2,499,593 |
|
13.7 |
|
|
Time deposits |
|
2,431,084 |
|
13.5 |
|
|
|
2,195,699 |
|
12.4 |
|
|
|
3,994,326 |
|
22.0 |
|
|
Total deposits |
$ |
18,069,389 |
|
100.0 |
% |
|
$ |
17,678,093 |
|
100.0 |
% |
|
$ |
18,195,364 |
|
100.0 |
% |
Total deposits increased $391.3 million, or 2.2%, to $18.1 billion at September 30, 2024 as compared to the prior quarter. Non-interest bearing demand deposits increased $195.9 million, or 4.4%, to $4.7 billion. Money market deposits increased $421.2 million, or 11.9%, to $4.0 billion and time deposits increased $235.4 million, or 10.7%, to $2.4 billion. These increases were offset by decreases in interest bearing demand deposits of $287.6 million, or 4.9%, to $5.6 billion and savings deposits of $173.7 million, or 11.0%, to $1.4 billion. The total average cost of deposits increased by 6 basis points to 3.46% in Q3 2024 from 3.40% in the prior quarter. Total estimated uninsured deposits were $4.5 billion1, or 25% of total deposits (inclusive of accrued interest) at September 30, 2024. Customers is also highly focused on total deposits with contractual term to manage its liquidity profile and the funding of loans and securities.
“Our deposit costs increased in the quarter attributable to strong deposit growth in the interest bearing category. We’re extremely excited about the success we’re having in bringing new clients to the bank and the long-term franchise value it will drive outweighing any short-term impacts. With the remix efforts underway and in a declining rate environment we expect to have flexibility lowering interest bearing deposit costs going forward including as these newer relationships season,” stated Jay Sidhu.
Total deposits decreased $126.0 million, or 0.7%, to $18.1 billion at September 30, 2024 as compared to a year ago. Time deposits decreased $1.6 billion, or 39.1% to $2.4 billion, interest bearing demand deposits decreased $217.9 million, or 3.7%, to $5.6 billion and non-interest bearing demand deposits decreased $87.9 million, or 1.8%, to $4.7 billion. These decreases were offset by increases in money market deposits of $1.5 billion, or 58.5%, to $4.0 billion and savings deposits of $281.6 million, or 25.2%, to $1.4 billion. The total average cost of deposits increased by 22 basis points to 3.46% in Q3 2024 from 3.24% in the prior year primarily due to higher market interest rates.
Borrowings
The following table presents the composition of our borrowings as of the dates indicated:
(Dollars in thousands) |
September 30, 2024 |
|
June 30, 2024 |
|
September 30, 2023 |
||||
FHLB advances |
$ |
1,117,229 |
|
$ |
1,018,349 |
|
$ |
1,529,839 |
|
Senior notes |
|
99,033 |
|
|
123,970 |
|
|
123,775 |
|
Subordinated debt |
|
182,439 |
|
|
182,370 |
|
|
182,161 |
|
Total borrowings |
$ |
1,398,701 |
|
$ |
1,324,689 |
|
$ |
1,835,775 |
Total borrowings increased $74.0 million, or 5.6%, to $1.4 billion at September 30, 2024 as compared to the prior quarter. This increase primarily resulted from an increase of $80.0 million in FHLB advances, partially offset by repayment of $25.0 million in senior notes upon maturity. As of September 30, 2024, Customers’ immediately available borrowing capacity with the FRB and FHLB was approximately $7.7 billion, of which $1.1 billion of available capacity was utilized in borrowings and $1.5 billion was utilized to collateralize deposits.
Total borrowings decreased $437.1 million, or 23.8%, to $1.4 billion at September 30, 2024 as compared to a year ago. This decrease primarily resulted from net repayments of $435.0 million in FHLB advances and $25.0 million in senior notes upon maturity.
|
|
|
|
|
||
1 |
Uninsured deposits (estimate) of $6.1 billion to be reported on the Bank’s call report, less deposits of $1.4 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $136.5 million. |
Capital
The following table presents certain capital amounts and ratios as of the dates indicated:
(Dollars in thousands except per share data) |
September 30, 2024 |
|
June 30, 2024 |
|
September 30, 2023 |
|||||||
Customers Bancorp, Inc. |
|
|
|
|
|
|||||||
Common Equity |
$ |
1,663,386 |
|
|
$ |
1,609,071 |
|
|
$ |
1,423,813 |
|
|
Tangible Common Equity* |
$ |
1,659,757 |
|
|
$ |
1,605,442 |
|
|
$ |
1,420,184 |
|
|
Common Equity to Total Assets |
|
7.8 |
% |
|
|
7.7 |
% |
|
|
6.5 |
% |
|
Tangible Common Equity to Tangible Assets* |
|
7.7 |
% |
|
|
7.7 |
% |
|
|
6.5 |
% |
|
Book Value per common share |
$ |
53.07 |
|
|
$ |
50.81 |
|
|
$ |
45.47 |
|
|
Tangible Book Value per common share* |
$ |
52.96 |
|
|
$ |
50.70 |
|
|
$ |
45.36 |
|
|
Common equity Tier 1 (“CET 1”) capital ratio (1) |
|
12.5 |
% |
|
|
12.8 |
% |
|
|
11.3 |
% |
|
Total risk based capital ratio (1) |
|
15.4 |
% |
|
|
15.8 |
% |
|
|
14.3 |
% |
|
|
|
|
|
|
|
|||||||
(1) Regulatory capital ratios as of September 30, 2024 are estimates. |
||||||||||||
* Non-GAAP measure. Customers’ reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
Customers Bancorp’s common equity increased $54.3 million to $1.7 billion, and tangible common equity* increased $54.3 million to $1.7 billion, at September 30, 2024 compared to the prior quarter, respectively, primarily from earnings of $42.9 million and decreased unrealized losses on investment securities of $25.3 million (net of taxes) deferred in accumulated other comprehensive income (“AOCI”). These increases were offset in part by $18.2 million of common share repurchases in Q3 2024. Similarly, book value per common share increased to $53.07 from $50.81, and tangible book value per common share* increased to $52.96 from $50.70, at September 30, 2024 and June 30, 2024, respectively.
Customers Bancorp’s common equity increased $239.6 million to $1.7 billion, and tangible common equity* increased $239.6 million to $1.7 billion, at September 30, 2024 compared to a year ago, respectively, primarily from earnings of $201.4 million and decreased unrealized losses on investment securities in AOCI of $43.7 million (net of taxes), offset in part by $18.2 million of common share repurchases. Similarly, book value per common share increased to $53.07 from $45.47, and tangible book value per common share* increased to $52.96 from $45.36, at September 30, 2024 and September 30, 2023, respectively.
At the Customers Bancorp level, the CET 1 ratio (estimate), total risk based capital ratio (estimate), common equity to total assets ratio and tangible common equity to tangible assets ratio* (“TCE / TA ratio”) were 12.5%, 15.4%, 7.8%, and 7.7%, respectively, at September 30, 2024.
At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At September 30, 2024, Tier 1 capital (estimate) and total risk based capital (estimate) were 13.6% and 15.1%, respectively.
Key Profitability Trends
Net Interest Income
Net interest income totaled $158.5 million in Q3 2024, a decrease of $9.1 million from Q2 2024. This decrease was due to lower interest income of $1.9 million primarily due to lower interest income from loans in specialized lending, lower consumer installment loans and higher interest expense of $7.2 million due to higher costs of deposits and other borrowings.
“Net interest income and net interest margin declined in the quarter impacted by higher discount accretion and prepayment income that were benefits in Q2 2024 and did not repeat at the same levels in Q3 2024, as well as initiatives that were proactive risk management strategies including the $200.8 million consumer installment loan sale in Q3 2024 resulting in lower average balances and the well-timed securities portfolio repositioning completed in Q2 2024. These factors accounted for over 80% of the decline in reported net interest margin. Robust loan growth and accretive deposit remix remain as positive drivers that we expect to help increase net interest income and net interest margin in 2025,” stated Customers Bancorp President Sam Sidhu. “These positive drivers are bolstered by the recent team additions. Our new commercial deposit-focused banking teams have substantial momentum and it is clear we have the bankers, products and balance sheet strength to deliver for our new and existing clients. We continue to believe the overwhelming majority of client prospects will become Customers Bank clients in the near future,” stated Sam Sidhu.
Net interest income totaled $158.5 million in Q3 2024, a decrease of $41.2 million from Q3 2023. This decrease was due to lower interest income in specialized lending primarily due to approximately $27.0 million of interest income attributable to outsized discount accretion recognized on the acquired loan portfolio in Q3 2023.
Non-Interest Income
The following table presents details of non-interest income for the periods indicated:
|
Three Months Ended |
|
Increase (Decrease) |
|
Three Months Ended |
|
Increase (Decrease) |
|||||||||||||||||
(Dollars in thousands) |
September 30, 2024 |
|
June 30, 2024 |
|
|
September 30, 2024 |
|
September 30, 2023 |
|
|||||||||||||||
Commercial lease income |
$ |
10,093 |
|
|
$ |
10,282 |
|
|
$ |
(189 |
) |
|
$ |
10,093 |
|
|
$ |
8,901 |
|
|
$ |
1,192 |
|
|
Loan fees |
|
8,011 |
|
|
|
5,233 |
|
|
|
2,778 |
|
|
|
8,011 |
|
|
|
6,029 |
|
|
|
1,982 |
|
|
Bank-owned life insurance |
|
2,049 |
|
|
|
2,007 |
|
|
|
42 |
|
|
|
2,049 |
|
|
|
1,973 |
|
|
|
76 |
|
|
Mortgage finance transactional fees |
|
1,087 |
|
|
|
1,058 |
|
|
|
29 |
|
|
|
1,087 |
|
|
|
1,018 |
|
|
|
69 |
|
|
Net gain (loss) on sale of loans and leases |
|
(14,548 |
) |
|
|
(238 |
) |
|
|
(14,310 |
) |
|
|
(14,548 |
) |
|
|
(348 |
) |
|
|
(14,200 |
) |
|
Net gain (loss) on sale of investment securities |
|
— |
|
|
|
(719 |
) |
|
|
719 |
|
|
|
— |
|
|
|
(429 |
) |
|
|
429 |
|
|
Unrealized gain on equity method investments |
|
— |
|
|
|
11,041 |
|
|
|
(11,041 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other |
|
1,865 |
|
|
|
2,373 |
|
|
|
(508 |
) |
|
|
1,865 |
|
|
|
631 |
|
|
|
1,234 |
|
|
Total non-interest income |
$ |
8,557 |
|
|
$ |
31,037 |
|
|
$ |
(22,480 |
) |
|
$ |
8,557 |
|
|
$ |
17,775 |
|
|
$ |
(9,218 |
) |
Reported non-interest income totaled $8.6 million for Q3 2024, a decrease of $22.5 million compared to Q2 2024. The decrease was primarily due to $11.0 million of unrealized gain on equity method investments purchased at a discount in Q2 2024 and $14.3 million of loss on leases of commercial clean vehicles that were accounted for as sales-type leases and included within net gain (loss) on sale of loans and leases. These commercial clean vehicle leases generated the same amount of investment tax credits that were included as a benefit to income tax expense in Q3 2024. These decreases were partially offset by an increase of $2.8 million in loan fees primarily resulting from increased unused line of credit fees.
Non-interest income totaled $8.6 million for Q3 2024, a decrease of $9.2 million compared to Q3 2023. As stated above, the decrease was primarily due to $14.3 million of loss on leases of commercial clean vehicles that were accounted for as sales-type leases and included within net gain (loss) on sale of loans and leases. These commercial clean vehicle leases generated the same amount of investment tax credits that were included as a corresponding benefit to income tax expense in Q3 2024. This decrease was partially offset by increases in commercial lease income of $1.2 million and loan fees of $2.0 million primarily resulting from increased unused line of credit fees.
Non-Interest Expense
The following table presents details of non-interest expense for the periods indicated:
|
Three Months Ended |
|
Increase (Decrease) |
|
Three Months Ended |
|
Increase (Decrease) |
|||||||||||||
(Dollars in thousands) |
September 30, 2024 |
|
June 30, 2024 |
|
|
September 30, 2024 |
|
September 30, 2023 |
|
|||||||||||
Salaries and employee benefits |
$ |
47,717 |
|
$ |
44,947 |
|
$ |
2,770 |
|
|
$ |
47,717 |
|
$ |
33,845 |
|
$ |
13,872 |
|
|
Technology, communication and bank operations |
|
13,588 |
|
|
16,227 |
|
|
(2,639 |
) |
|
|
13,588 |
|
|
15,667 |
|
|
(2,079 |
) |
|
Commercial lease depreciation |
|
7,811 |
|
|
7,829 |
|
|
(18 |
) |
|
|
7,811 |
|
|
7,338 |
|
|
473 |
|
|
Professional services |
|
9,048 |
|
|
6,104 |
|
|
2,944 |
|
|
|
9,048 |
|
|
8,569 |
|
|
479 |
|
|
Loan servicing |
|
3,778 |
|
|
3,516 |
|
|
262 |
|
|
|
3,778 |
|
|
3,858 |
|
|
(80 |
) |
|
Occupancy |
|
2,987 |
|
|
3,120 |
|
|
(133 |
) |
|
|
2,987 |
|
|
2,471 |
|
|
516 |
|
|
FDIC assessments, non-income taxes and regulatory fees |
|
7,902 |
|
|
10,236 |
|
|
(2,334 |
) |
|
|
7,902 |
|
|
8,551 |
|
|
(649 |
) |
|
Advertising and promotion |
|
908 |
|
|
1,254 |
|
|
(346 |
) |
|
|
908 |
|
|
650 |
|
|
258 |
|
|
Legal settlement expense |
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
4,096 |
|
|
(4,096 |
) |
|
Other |
|
10,279 |
|
|
10,219 |
|
|
60 |
|
|
|
10,279 |
|
|
4,421 |
|
|
5,858 |
|
|
Total non-interest expense |
$ |
104,018 |
|
$ |
103,452 |
|
$ |
566 |
|
|
$ |
104,018 |
|
$ |
89,466 |
|
$ |
14,552 |
|
Non-interest expenses totaled $104.0 million in Q3 2024, an increase of $0.6 million compared to Q2 2024. The increase was primarily attributable to increases of $2.8 million in salaries and employee benefits driven by higher headcount including the full quarter impact of Q2 2024 hires, annual merit increases, incentives partially offset by lower severance and $2.9 million in professional fees, partially offset by lower non-income taxes, software expenditures and processing fees.
“In the quarter we incurred professional services expense of approximately $3.0 million as we made investments to enhance our risk management infrastructure. We expect to spend an additional $3.0-$5.0 million in each of the next two quarters as we seek to build a best-in-class risk management function which we believe can be a competitive advantage for the bank in the future,” stated Sam Sidhu.
Non-interest expenses totaled $104.0 million in Q3 2024, an increase of $14.6 million compared to Q3 2023. The increase was primarily attributable to increases of $13.9 million in salaries and employee benefits primarily due to higher headcount including the addition of new banking teams in Q2 2024, annual merit increases, incentives and severance, fees paid to a fintech company related to consumer installment loans originated and held for sale as a part of the Bank’s held for sale strategy, and provision for operating losses. These increases were partially offset by $4.1 million of expenses from a settlement with a third party PPP service provider in Q3 2023 and a decrease in deposit servicing fees.
Taxes
Income tax expense decreased by $19.8 million to a benefit of $0.7 million in Q3 2024 from a provision of $19.0 million in Q2 2024 primarily due to lower pre-tax income and higher estimated income tax credits for 2024, including $14.3 million of investment tax credits generated from commercial clean vehicles in Q3 2024. These investment tax credits from commercial clean vehicle leases were the same amount as the loss on leases of commercial clean vehicles included within net gain (loss) on sale of loans and leases.
Income tax expense decreased by $24.2 million to a benefit of $0.7 million in Q3 2024 from a provision of $23.5 million in Q3 2023 primarily due to lower pre-tax income and an increase in estimated income tax credits for 2024, including $14.3 million of investment tax credits generated from commercial clean vehicles in Q3 2024. These investment tax credits from commercial clean vehicle leases were the same amount as the loss on leases of commercial clean vehicles included within net gain (loss) on sale of loans and leases. The effective tax rate for Q3 2024 was (1.6)%.
Outlook
“Looking forward, our strategy remains unchanged. We are focused on strengthening our deposit franchise, improving our profitability and maintaining our strong capital ratios. Our deposit pipelines are expected to continue to improve the quality and mix of deposits, reducing higher cost business unit deposits*1 with lower cost deposits where we have a holistic and primary relationship. The addition of the new banking teams is accelerating and enhancing these efforts which were already well underway. We see attractive opportunities to execute franchise-enhancing loan growth and our pipeline continues to be strong. We remain confident in our ability to deliver 10% - 15% loan growth for the full year. While the interest earning asset repositioning and the hedging we executed impacts our short term margin and will be a headwind in 2024, they will positively impact profitability and earnings in 2025. We expect net interest margin in Q4 2024 to be roughly flattish with Q3 2024. The management of non-interest expenses remains a priority for us. We expect the investments made in recruiting the new commercial banking teams will produce significant benefits by increasing our net interest income and net interest margin as well as improving the overall quality of our deposit franchise. We believe the investments we are making to enhance our risk management infrastructure will pay dividends over the long-term. We previously noted an $8.0-$10.0 million quarterly investment in the new commercial banking teams in 2024 and now about $3.0-$5.0 million of quarterly professional service expense in enhancing our risk management infrastructure for a few quarters. Looking forward we expect the new teams to breakeven in Q1 2025 and payoff throughout 2025 as well as a sunsetting of the additional professional services costs. We would also note that we had an $11.0 million unrealized gain on equity method investments purchased at a discount in Q2 2024 which helped offset some of these investment related expenses. While our efficiency ratio will be elevated in the near term as we make these investments in our future, we remain fundamentally focused on positive operating leverage and working to enable the organization to operate at a mid-40’s efficiency ratio over the medium-term. We are adjusting our guidance on effective tax rate to 18% - 20% primarily as a result of higher estimated investment tax credits in 2024. We remain committed to maintaining CET 1 ratio and TCE / TA ratio* targets of 11.5% and 7.5%, respectively in 2024. We are highly focused on preserving superior credit quality, managing interest rate risk, maintaining robust liquidity, operating with higher capital ratios and generating positive operating leverage,” concluded Sam Sidhu.
|
|
|
|
|
||
* |
Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount are included at the end of this document. |
|||||
1 |
Total deposits excluding wholesale CDs and BMTX student-related deposits. |
Webcast
Date: |
Friday, November 1, 2024 |
|||||||||
Time: |
9:00 AM EDT |
The live audio webcast, presentation slides, and earnings press release will be made available at https://www.customersbank.com and at the Customers Bancorp 3rd Quarter Earnings Webcast.
You may submit questions in advance of the live webcast by emailing our Head of Corporate Communications, Jordan Baucum at jbaucum@customersbank.com.
The webcast will be archived for viewing on the Customers Bank Investor Relations page and available beginning approximately two hours after the conclusion of the live event.
Institutional Background
Customers Bancorp, Inc. (NYSE:CUBI) is one of the nation’s top-performing banking companies with over $21 billion in assets making it one of the 80 largest bank holding companies in the U.S. Customers Bank’s commercial and consumer clients benefit from a full suite of technology-enabled tailored product experiences delivered by best-in-class customer service distinguished by a Single Point of Contact approach. In addition to traditional lines such as C&I lending, commercial real estate lending and multifamily lending, Customers Bank also provides a number of national corporate banking services to specialized lending clients. Major accolades include:
- No. 1 on American Banker 2024 list of top-performing banks with $10B to $50B in assets
- No. 29 out of the 100 largest publicly traded banks in 2024 Forbes Best Banks list
- No. 52 on Investor’s Business Daily 100 Best Stocks for 2023
A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender. Learn more: www.customersbank.com.
“Safe Harbor” Statement
In addition to historical information, this press release may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “project,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: a continuation of the recent turmoil in the banking industry, responsive measures taken by us and regulatory authorities to mitigate and manage related risks, regulatory actions taken that address related issues and the costs and obligations associated therewith, such as the FDIC special assessments; the potential for negative consequences resulting from regulatory violations, investigations and examinations, including potential supervisory actions, the assessment of fines and penalties, the imposition of sanctions, the need to undertake remedial actions and possible damage to our reputation; effects of competition on deposit rates and growth, loan rates and growth and net interest margin; failure to identify and adequately and promptly address cybersecurity risks, including data breaches and cyberattacks; public health crises and pandemics and their effects on the economic and business environments in which we operate; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and military conflicts, including the war between Russia and Ukraine and escalating conflict in the Middle East, which could impact economic conditions in the United States; 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 demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply; actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships; higher inflation and its impacts; and the effects of any changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2023, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.
Q3 2024 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended September 30, 2024 and the preceding four quarters:
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||||||||||||||||
EARNINGS SUMMARY - UNAUDITED |
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
(Dollars in thousands, except per share data and stock price data) |
Q3 |
|
Q2 |
|
Q1 |
|
Q4 |
|
Q3 |
|
Nine Months Ended September 30, |
|||||||||||||||||
2024 |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
2024 |
|
2023 |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
GAAP Profitability Metrics: |
||||||||||||||||||||||||||||
Net income available to common shareholders |
$ |
42,937 |
|
|
$ |
54,300 |
|
|
$ |
45,926 |
|
|
$ |
58,223 |
|
|
$ |
82,953 |
|
|
$ |
143,163 |
|
|
$ |
177,225 |
|
|
Per share amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Earnings per share - basic |
$ |
1.36 |
|
|
$ |
1.72 |
|
|
$ |
1.46 |
|
|
$ |
1.86 |
|
|
$ |
2.65 |
|
|
$ |
4.54 |
|
|
$ |
5.63 |
|
|
Earnings per share - diluted |
$ |
1.31 |
|
|
$ |
1.66 |
|
|
$ |
1.40 |
|
|
$ |
1.79 |
|
|
$ |
2.58 |
|
|
$ |
4.37 |
|
|
$ |
5.53 |
|
|
Book value per common share (1) |
$ |
53.07 |
|
|
$ |
50.81 |
|
|
$ |
49.29 |
|
|
$ |
47.73 |
|
|
$ |
45.47 |
|
|
$ |
53.07 |
|
|
$ |
45.47 |
|
|
CUBI stock price (1) |
$ |
46.45 |
|
|
$ |
47.98 |
|
|
$ |
53.06 |
|
|
$ |
57.62 |
|
|
$ |
34.45 |
|
|
$ |
46.45 |
|
|
$ |
34.45 |
|
|
CUBI stock price as % of book value (1) |
|
88 |
% |
|
|
94 |
% |
|
|
108 |
% |
|
|
121 |
% |
|
|
76 |
% |
|
|
88 |
% |
|
|
76 |
% |
|
Average shares outstanding - basic |
|
31,567,797 |
|
|
|
31,649,715 |
|
|
|
31,473,424 |
|
|
|
31,385,043 |
|
|
|
31,290,581 |
|
|
|
31,563,660 |
|
|
|
31,452,700 |
|
|
Average shares outstanding - diluted |
|
32,766,488 |
|
|
|
32,699,149 |
|
|
|
32,854,534 |
|
|
|
32,521,787 |
|
|
|
32,175,084 |
|
|
|
32,773,365 |
|
|
|
32,036,459 |
|
|
Shares outstanding (1) |
|
31,342,107 |
|
|
|
31,667,655 |
|
|
|
31,521,931 |
|
|
|
31,440,906 |
|
|
|
31,311,254 |
|
|
|
31,342,107 |
|
|
|
31,311,254 |
|
|
Return on average assets (“ROAA”) |
|
0.88 |
% |
|
|
1.11 |
% |
|
|
0.94 |
% |
|
|
1.16 |
% |
|
|
1.57 |
% |
|
|
0.97 |
% |
|
|
1.17 |
% |
|
Return on average common equity (“ROCE”) |
|
10.44 |
% |
|
|
13.85 |
% |
|
|
12.08 |
% |
|
|
15.93 |
% |
|
|
23.97 |
% |
|
|
12.10 |
% |
|
|
17.84 |
% |
|
Net interest margin, tax equivalent |
|
3.06 |
% |
|
|
3.29 |
% |
|
|
3.10 |
% |
|
|
3.31 |
% |
|
|
3.70 |
% |
|
|
3.16 |
% |
|
|
3.28 |
% |
|
Efficiency ratio |
|
62.40 |
% |
|
|
51.87 |
% |
|
|
54.58 |
% |
|
|
49.08 |
% |
|
|
41.01 |
% |
|
|
55.97 |
% |
|
|
45.62 |
% |
|
Non-GAAP Profitability Metrics (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Core earnings |
$ |
43,838 |
|
|
$ |
48,567 |
|
|
$ |
46,532 |
|
|
$ |
61,633 |
|
|
$ |
83,294 |
|
|
$ |
138,937 |
|
|
$ |
186,600 |
|
|
Core pre-tax pre-provision net income |
$ |
64,824 |
|
|
$ |
89,220 |
|
|
$ |
83,674 |
|
|
$ |
101,884 |
|
|
$ |
128,564 |
|
|
$ |
237,718 |
|
|
$ |
314,679 |
|
|
Per share amounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Core earnings per share - diluted |
$ |
1.34 |
|
|
$ |
1.49 |
|
|
$ |
1.42 |
|
|
$ |
1.90 |
|
|
$ |
2.59 |
|
|
$ |
4.24 |
|
|
$ |
5.82 |
|
|
Tangible book value per common share (1) |
$ |
52.96 |
|
|
$ |
50.70 |
|
|
$ |
49.18 |
|
|
$ |
47.61 |
|
|
$ |
45.36 |
|
|
$ |
52.96 |
|
|
$ |
45.36 |
|
|
CUBI stock price as % of tangible book value (1) |
|
88 |
% |
|
|
95 |
% |
|
|
108 |
% |
|
|
121 |
% |
|
|
76 |
% |
|
|
88 |
% |
|
|
76 |
% |
|
Core ROAA |
|
0.89 |
% |
|
|
1.00 |
% |
|
|
0.95 |
% |
|
|
1.22 |
% |
|
|
1.57 |
% |
|
|
0.95 |
% |
|
|
1.22 |
% |
|
Core ROCE |
|
10.66 |
% |
|
|
12.39 |
% |
|
|
12.24 |
% |
|
|
16.87 |
% |
|
|
24.06 |
% |
|
|
11.74 |
% |
|
|
18.79 |
% |
|
Core pre-tax pre-provision ROAA |
|
1.21 |
% |
|
|
1.71 |
% |
|
|
1.58 |
% |
|
|
1.90 |
% |
|
|
2.32 |
% |
|
|
1.50 |
% |
|
|
1.95 |
% |
|
Core pre-tax pre-provision ROCE |
|
14.84 |
% |
|
|
21.79 |
% |
|
|
21.01 |
% |
|
|
26.82 |
% |
|
|
36.04 |
% |
|
|
19.12 |
% |
|
|
30.59 |
% |
|
Core efficiency ratio |
|
61.69 |
% |
|
|
53.47 |
% |
|
|
54.24 |
% |
|
|
46.70 |
% |
|
|
41.04 |
% |
|
|
56.29 |
% |
|
|
45.03 |
% |
|
Asset Quality: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net charge-offs |
$ |
17,044 |
|
|
$ |
18,711 |
|
|
$ |
17,968 |
|
|
$ |
17,322 |
|
|
$ |
17,498 |
|
|
$ |
53,723 |
|
|
$ |
51,713 |
|
|
Annualized net charge-offs to average total loans and leases |
|
0.50 |
% |
|
|
0.56 |
% |
|
|
0.55 |
% |
|
|
0.51 |
% |
|
|
0.50 |
% |
|
|
0.54 |
% |
|
|
0.47 |
% |
|
Non-performing loans (“NPLs”) to total loans and leases (1) |
|
0.34 |
% |
|
|
0.35 |
% |
|
|
0.27 |
% |
|
|
0.21 |
% |
|
|
0.22 |
% |
|
|
0.34 |
% |
|
|
0.22 |
% |
|
Reserves to NPLs (1) |
|
281.36 |
% |
|
|
279.52 |
% |
|
|
373.86 |
% |
|
|
499.12 |
% |
|
|
466.11 |
% |
|
|
281.36 |
% |
|
|
466.11 |
% |
|
Non-performing assets (“NPAs”) to total assets |
|
0.22 |
% |
|
|
0.23 |
% |
|
|
0.17 |
% |
|
|
0.13 |
% |
|
|
0.14 |
% |
|
|
0.22 |
% |
|
|
0.14 |
% |
|
Customers Bank Capital Ratios (3): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Common equity Tier 1 capital to risk-weighted assets |
|
13.6 |
% |
|
|
14.17 |
% |
|
|
14.16 |
% |
|
|
13.77 |
% |
|
|
12.97 |
% |
|
|
13.6 |
% |
|
|
12.97 |
% |
|
Tier 1 capital to risk-weighted assets |
|
13.6 |
% |
|
|
14.17 |
% |
|
|
14.16 |
% |
|
|
13.77 |
% |
|
|
12.97 |
% |
|
|
13.6 |
% |
|
|
12.97 |
% |
|
Total capital to risk-weighted assets |
|
15.1 |
% |
|
|
15.64 |
% |
|
|
15.82 |
% |
|
|
15.28 |
% |
|
|
14.45 |
% |
|
|
15.1 |
% |
|
|
14.45 |
% |
|
Tier 1 capital to average assets (leverage ratio) |
|
9.1 |
% |
|
|
9.16 |
% |
|
|
8.82 |
% |
|
|
8.71 |
% |
|
|
8.25 |
% |
|
|
9.1 |
% |
|
|
8.25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(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 Q3 2024 and actual for the remaining periods. In accordance with regulatory capital rules, Customers elected to apply the CECL capital transition provisions which delayed the effects of CECL on regulatory capital for two years until January 1, 2022, followed by a three-year transition period. The cumulative CECL capital transition impact as of December 31, 2021 which amounted to $61.6 million will be phased in at 25% per year beginning on January 1, 2022 through December 31, 2024. As of September 30, 2024, our regulatory capital ratios reflected 25%, or $15.4 million, benefit associated with the CECL transition provisions. |
||||||||||||||||||||||||||||
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED |
||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|||||||||||||||||
|
Q3 |
|
Q2 |
|
Q1 |
|
Q4 |
|
Q3 |
|
September 30, |
|||||||||||||||||
|
2024 |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
2024 |
|
2023 |
|||||||||||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Loans and leases |
$ |
228,659 |
|
|
$ |
224,265 |
|
|
$ |
217,999 |
|
|
$ |
239,453 |
|
|
$ |
271,107 |
|
|
$ |
670,923 |
|
|
$ |
757,064 |
|
|
Investment securities |
|
46,265 |
|
|
|
47,586 |
|
|
|
46,802 |
|
|
|
51,074 |
|
|
|
54,243 |
|
|
|
140,653 |
|
|
|
149,585 |
|
|
Interest earning deposits |
|
44,372 |
|
|
|
45,506 |
|
|
|
52,817 |
|
|
|
44,104 |
|
|
|
43,800 |
|
|
|
142,695 |
|
|
|
81,819 |
|
|
Loans held for sale |
|
10,907 |
|
|
|
13,671 |
|
|
|
12,048 |
|
|
|
8,707 |
|
|
|
4,664 |
|
|
|
36,626 |
|
|
|
27,514 |
|
|
Other |
|
1,910 |
|
|
|
3,010 |
|
|
|
2,111 |
|
|
|
2,577 |
|
|
|
2,526 |
|
|
|
7,031 |
|
|
|
5,463 |
|
|
Total interest income |
|
332,113 |
|
|
|
334,038 |
|
|
|
331,777 |
|
|
|
345,915 |
|
|
|
376,340 |
|
|
|
997,928 |
|
|
|
1,021,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Deposits |
|
155,829 |
|
|
|
148,784 |
|
|
|
153,725 |
|
|
|
150,307 |
|
|
|
145,825 |
|
|
|
458,338 |
|
|
|
426,130 |
|
|
FHLB advances |
|
12,590 |
|
|
|
13,437 |
|
|
|
13,485 |
|
|
|
18,868 |
|
|
|
26,485 |
|
|
|
39,512 |
|
|
|
61,140 |
|
|
FRB advances |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,286 |
|
|
Subordinated debt |
|
3,537 |
|
|
|
2,734 |
|
|
|
2,689 |
|
|
|
2,688 |
|
|
|
2,689 |
|
|
|
8,960 |
|
|
|
8,067 |
|
|
Other borrowings |
|
1,612 |
|
|
|
1,430 |
|
|
|
1,493 |
|
|
|
1,546 |
|
|
|
1,568 |
|
|
|
4,535 |
|
|
|
4,879 |
|
|
Total interest expense |
|
173,568 |
|
|
|
166,385 |
|
|
|
171,392 |
|
|
|
173,409 |
|
|
|
176,567 |
|
|
|
511,345 |
|
|
|
506,502 |
|
|
Net interest income |
|
158,545 |
|
|
|
167,653 |
|
|
|
160,385 |
|
|
|
172,506 |
|
|
|
199,773 |
|
|
|
486,583 |
|
|
|
514,943 |
|
|
Provision for credit losses |
|
17,066 |
|
|
|
18,121 |
|
|
|
17,070 |
|
|
|
13,523 |
|
|
|
17,856 |
|
|
|
52,257 |
|
|
|
61,088 |
|
|
Net interest income after provision for credit losses |
|
141,479 |
|
|
|
149,532 |
|
|
|
143,315 |
|
|
|
158,983 |
|
|
|
181,917 |
|
|
|
434,326 |
|
|
|
453,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Non-interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial lease income |
|
10,093 |
|
|
|
10,282 |
|
|
|
9,683 |
|
|
|
9,035 |
|
|
|
8,901 |
|
|
|
30,058 |
|
|
|
27,144 |
|
|
Loan fees |
|
8,011 |
|
|
|
5,233 |
|
|
|
5,280 |
|
|
|
5,926 |
|
|
|
6,029 |
|
|
|
18,524 |
|
|
|
14,290 |
|
|
Bank-owned life insurance |
|
2,049 |
|
|
|
2,007 |
|
|
|
3,261 |
|
|
|
2,160 |
|
|
|
1,973 |
|
|
|
7,317 |
|
|
|
9,617 |
|
|
Mortgage finance transactional fees |
|
1,087 |
|
|
|
1,058 |
|
|
|
946 |
|
|
|
927 |
|
|
|
1,018 |
|
|
|
3,091 |
|
|
|
3,468 |
|
|
Net gain (loss) on sale of loans and leases |
|
(14,548 |
) |
|
|
(238 |
) |
|
|
10 |
|
|
|
(91 |
) |
|
|
(348 |
) |
|
|
(14,776 |
) |
|
|
(1,109 |
) |
|
Loss on sale of capital call lines of credit |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,037 |
) |
|
Net gain (loss) on sale of investment securities |
|
— |
|
|
|
(719 |
) |
|
|
(30 |
) |
|
|
(145 |
) |
|
|
(429 |
) |
|
|
(749 |
) |
|
|
(429 |
) |
|
Unrealized gain on equity method investments |
|
— |
|
|
|
11,041 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,041 |
|
|
|
— |
|
|
Other |
|
1,865 |
|
|
|
2,373 |
|
|
|
2,081 |
|
|
|
860 |
|
|
|
631 |
|
|
|
6,319 |
|
|
|
3,949 |
|
|
Total non-interest income |
|
8,557 |
|
|
|
31,037 |
|
|
|
21,231 |
|
|
|
18,672 |
|
|
|
17,775 |
|
|
|
60,825 |
|
|
|
51,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Non-interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Salaries and employee benefits |
|
47,717 |
|
|
|
44,947 |
|
|
|
36,025 |
|
|
|
33,965 |
|
|
|
33,845 |
|
|
|
128,689 |
|
|
|
99,310 |
|
|
Technology, communication and bank operations |
|
13,588 |
|
|
|
16,227 |
|
|
|
21,904 |
|
|
|
16,887 |
|
|
|
15,667 |
|
|
|
51,719 |
|
|
|
48,663 |
|
|
Commercial lease depreciation |
|
7,811 |
|
|
|
7,829 |
|
|
|
7,970 |
|
|
|
7,357 |
|
|
|
7,338 |
|
|
|
23,610 |
|
|
|
22,541 |
|
|
Professional services |
|
9,048 |
|
|
|
6,104 |
|
|
|
6,353 |
|
|
|
9,820 |
|
|
|
8,569 |
|
|
|
21,505 |
|
|
|
25,357 |
|
|
Loan servicing |
|
3,778 |
|
|
|
3,516 |
|
|
|
4,031 |
|
|
|
3,779 |
|
|
|
3,858 |
|
|
|
11,325 |
|
|
|
13,296 |
|
|
Occupancy |
|
2,987 |
|
|
|
3,120 |
|
|
|
2,347 |
|
|
|
2,320 |
|
|
|
2,471 |
|
|
|
8,454 |
|
|
|
7,750 |
|
|
FDIC assessments, non-income taxes and regulatory fees |
|
7,902 |
|
|
|
10,236 |
|
|
|
13,469 |
|
|
|
13,977 |
|
|
|
8,551 |
|
|
|
31,607 |
|
|
|
21,059 |
|
|
Advertising and promotion |
|
908 |
|
|
|
1,254 |
|
|
|
682 |
|
|
|
850 |
|
|
|
650 |
|
|
|
2,844 |
|
|
|
2,245 |
|
|
Legal settlement expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,096 |
|
|
|
— |
|
|
|
4,096 |
|
|
Other |
|
10,279 |
|
|
|
10,219 |
|
|
|
6,388 |
|
|
|
4,812 |
|
|
|
4,421 |
|
|
|
26,886 |
|
|
|
14,579 |
|
|
Total non-interest expense |
|
104,018 |
|
|
|
103,452 |
|
|
|
99,169 |
|
|
|
93,767 |
|
|
|
89,466 |
|
|
|
306,639 |
|
|
|
258,896 |
|
|
Income before income tax expense (benefit) |
|
46,018 |
|
|
|
77,117 |
|
|
|
65,377 |
|
|
|
83,888 |
|
|
|
110,226 |
|
|
|
188,512 |
|
|
|
246,852 |
|
|
Income tax expense (benefit) |
|
(725 |
) |
|
|
19,032 |
|
|
|
15,651 |
|
|
|
21,796 |
|
|
|
23,470 |
|
|
|
33,958 |
|
|
|
58,801 |
|
|
Net income |
|
46,743 |
|
|
|
58,085 |
|
|
|
49,726 |
|
|
|
62,092 |
|
|
|
86,756 |
|
|
|
154,554 |
|
|
|
188,051 |
|
|
Preferred stock dividends |
|
3,806 |
|
|
|
3,785 |
|
|
|
3,800 |
|
|
|
3,869 |
|
|
|
3,803 |
|
|
|
11,391 |
|
|
|
10,826 |
|
|
Net income available to common shareholders |
$ |
42,937 |
|
|
$ |
54,300 |
|
|
$ |
45,926 |
|
|
$ |
58,223 |
|
|
$ |
82,953 |
|
|
$ |
143,163 |
|
|
$ |
177,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Basic earnings per common share |
$ |
1.36 |
|
|
$ |
1.72 |
|
|
$ |
1.46 |
|
|
$ |
1.86 |
|
|
$ |
2.65 |
|
|
$ |
4.54 |
|
|
$ |
5.63 |
|
|
Diluted earnings per common share |
|
1.31 |
|
|
|
1.66 |
|
|
|
1.40 |
|
|
|
1.79 |
|
|
|
2.58 |
|
|
|
4.37 |
|
|
|
5.53 |
|
|
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||||||||
CONSOLIDATED BALANCE SHEET - UNAUDITED |
||||||||||||||||||||
(Dollars in thousands) |
||||||||||||||||||||
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|||||||||||
|
2024 |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|||||||||||
Cash and due from banks |
$ |
39,429 |
|
|
$ |
45,045 |
|
|
$ |
51,974 |
|
|
$ |
45,210 |
|
|
$ |
68,288 |
|
|
Interest earning deposits |
|
3,048,593 |
|
|
|
3,003,542 |
|
|
|
3,649,146 |
|
|
|
3,801,136 |
|
|
|
3,351,686 |
|
|
Cash and cash equivalents |
|
3,088,022 |
|
|
|
3,048,587 |
|
|
|
3,701,120 |
|
|
|
3,846,346 |
|
|
|
3,419,974 |
|
|
Investment securities, at fair value |
|
2,412,069 |
|
|
|
2,511,650 |
|
|
|
2,604,868 |
|
|
|
2,405,640 |
|
|
|
2,773,207 |
|
|
Investment securities held to maturity |
|
1,064,437 |
|
|
|
962,799 |
|
|
|
1,032,037 |
|
|
|
1,103,170 |
|
|
|
1,178,370 |
|
|
Loans held for sale |
|
275,420 |
|
|
|
375,724 |
|
|
|
357,640 |
|
|
|
340,317 |
|
|
|
150,368 |
|
|
Loans and leases receivable |
|
12,527,283 |
|
|
|
12,254,204 |
|
|
|
11,936,621 |
|
|
|
11,963,855 |
|
|
|
12,600,548 |
|
|
Loans receivable, mortgage finance, at fair value |
|
1,250,413 |
|
|
|
1,002,711 |
|
|
|
962,610 |
|
|
|
897,912 |
|
|
|
962,566 |
|
|
Allowance for credit losses on loans and leases |
|
(133,158 |
) |
|
|
(132,436 |
) |
|
|
(133,296 |
) |
|
|
(135,311 |
) |
|
|
(139,213 |
) |
|
Total loans and leases receivable, net of allowance for credit losses on loans and leases |
|
13,644,538 |
|
|
|
13,124,479 |
|
|
|
12,765,935 |
|
|
|
12,726,456 |
|
|
|
13,423,901 |
|
|
FHLB, Federal Reserve Bank, and other restricted stock |
|
95,035 |
|
|
|
92,276 |
|
|
|
100,067 |
|
|
|
109,548 |
|
|
|
126,098 |
|
|
Accrued interest receivable |
|
115,588 |
|
|
|
112,788 |
|
|
|
120,123 |
|
|
|
114,766 |
|
|
|
123,984 |
|
|
Bank premises and equipment, net |
|
6,730 |
|
|
|
7,019 |
|
|
|
7,253 |
|
|
|
7,371 |
|
|
|
7,789 |
|
|
Bank-owned life insurance |
|
295,531 |
|
|
|
293,108 |
|
|
|
293,400 |
|
|
|
292,193 |
|
|
|
291,670 |
|
|
Goodwill and other intangibles |
|
3,629 |
|
|
|
3,629 |
|
|
|
3,629 |
|
|
|
3,629 |
|
|
|
3,629 |
|
|
Other assets |
|
455,083 |
|
|
|
410,916 |
|
|
|
361,295 |
|
|
|
366,829 |
|
|
|
358,162 |
|
|
Total assets |
$ |
21,456,082 |
|
|
$ |
20,942,975 |
|
|
$ |
21,347,367 |
|
|
$ |
21,316,265 |
|
|
$ |
21,857,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|||||||||||
Demand, non-interest bearing deposits |
$ |
4,670,809 |
|
|
$ |
4,474,862 |
|
|
$ |
4,688,880 |
|
|
$ |
4,422,494 |
|
|
$ |
4,758,682 |
|
|
Interest bearing deposits |
|
13,398,580 |
|
|
|
13,203,231 |
|
|
|
13,272,503 |
|
|
|
13,497,742 |
|
|
|
13,436,682 |
|
|
Total deposits |
|
18,069,389 |
|
|
|
17,678,093 |
|
|
|
17,961,383 |
|
|
|
17,920,236 |
|
|
|
18,195,364 |
|
|
FHLB advances |
|
1,117,229 |
|
|
|
1,018,349 |
|
|
|
1,195,088 |
|
|
|
1,203,207 |
|
|
|
1,529,839 |
|
|
Other borrowings |
|
99,033 |
|
|
|
123,970 |
|
|
|
123,905 |
|
|
|
123,840 |
|
|
|
123,775 |
|
|
Subordinated debt |
|
182,439 |
|
|
|
182,370 |
|
|
|
182,300 |
|
|
|
182,230 |
|
|
|
182,161 |
|
|
Accrued interest payable and other liabilities |
|
186,812 |
|
|
|
193,328 |
|
|
|
193,074 |
|
|
|
248,358 |
|
|
|
264,406 |
|
|
Total liabilities |
|
19,654,902 |
|
|
|
19,196,110 |
|
|
|
19,655,750 |
|
|
|
19,677,871 |
|
|
|
20,295,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Preferred stock |
|
137,794 |
|
|
|
137,794 |
|
|
|
137,794 |
|
|
|
137,794 |
|
|
|
137,794 |
|
|
Common stock |
|
35,734 |
|
|
|
35,686 |
|
|
|
35,540 |
|
|
|
35,459 |
|
|
|
35,330 |
|
|
Additional paid in capital |
|
571,609 |
|
|
|
567,345 |
|
|
|
567,490 |
|
|
|
564,538 |
|
|
|
559,346 |
|
|
Retained earnings |
|
1,302,745 |
|
|
|
1,259,808 |
|
|
|
1,205,508 |
|
|
|
1,159,582 |
|
|
|
1,101,359 |
|
|
Accumulated other comprehensive income (loss), net |
|
(106,082 |
) |
|
|
(131,358 |
) |
|
|
(132,305 |
) |
|
|
(136,569 |
) |
|
|
(149,812 |
) |
|
Treasury stock, at cost |
|
(140,620 |
) |
|
|
(122,410 |
) |
|
|
(122,410 |
) |
|
|
(122,410 |
) |
|
|
(122,410 |
) |
|
Total shareholders’ equity |
|
1,801,180 |
|
|
|
1,746,865 |
|
|
|
1,691,617 |
|
|
|
1,638,394 |
|
|
|
1,561,607 |
|
|
Total liabilities and shareholders’ equity |
$ |
21,456,082 |
|
|
$ |
20,942,975 |
|
|
$ |
21,347,367 |
|
|
$ |
21,316,265 |
|
|
$ |
21,857,152 |
|
|
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |
||||||||||||||||||||||||
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED |
||||||||||||||||||||||||
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Three Months Ended |
|||||||||||||||||||||||
|
September 30, 2024 |
|
June 30, 2024 |
|
September 30, 2023 |
|||||||||||||||||||
|
Average Balance |
|
Interest Income or Expense |
|
Average Yield or Cost (%) |
|
Average Balance |
|
Interest Income or Expense |
|
Average Yield or Cost (%) |
|
Average Balance |
|
Interest Income or Expense |
|
Average Yield or Cost (%) |
|||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest earning deposits |
$ |
3,224,940 |
|
$ |
44,372 |
|
5.47% |
|
$ |
3,325,771 |
|
$ |
45,506 |
|
5.50% |
|
$ |
3,211,753 |
|
$ |
43,800 |
|
5.41% |
|
Investment securities (1) |
|
3,706,974 |
|
|
46,265 |
|
4.97% |
|
|
3,732,565 |
|
|
47,586 |
|
5.13% |
|
|
4,240,116 |
|
|
54,243 |
|
5.12% |
|
Loans and leases: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial & industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Specialized lending loans and leases (2) |
|
5,805,389 |
|
|
124,667 |
|
8.54% |
|
|
5,446,882 |
|
|
120,977 |
|
8.93% |
|
|
5,717,252 |
|
|
157,671 |
|
10.94% |
|
Other commercial & industrial loans (2)(3) |
|
1,533,057 |
|
|
24,654 |
|
6.40% |
|
|
1,540,191 |
|
|
25,119 |
|
6.56% |
|
|
1,779,778 |
|
|
28,616 |
|
6.38% |
|
Mortgage finance loans |
|
1,267,656 |
|
|
17,723 |
|
5.56% |
|
|
1,151,407 |
|
|
15,087 |
|
5.27% |
|
|
1,159,698 |
|
|
16,916 |
|
5.79% |
|
Multifamily loans |
|
2,071,340 |
|
|
21,147 |
|
4.06% |
|
|
2,108,835 |
|
|
21,461 |
|
4.09% |
|
|
2,141,384 |
|
|
21,292 |
|
3.94% |
|
Non-owner occupied commercial real estate loans |
|
1,411,533 |
|
|
21,065 |
|
5.94% |
|
|
1,396,771 |
|
|
20,470 |
|
5.89% |
|
|
1,425,831 |
|
|
21,208 |
|
5.90% |
|
Residential mortgages |
|
525,285 |
|
|
6,082 |
|
4.61% |
|
|
520,791 |
|
|
5,955 |
|
4.60% |
|
|
528,022 |
|
|
5,965 |
|
4.48% |
|
Installment loans |
|
1,029,812 |
|
|
24,228 |
|
9.36% |
|
|
1,186,486 |
|
|
28,867 |
|
9.79% |
|
|
1,147,069 |
|
|
24,103 |
|
8.34% |
|
Total loans and leases (4) |
|
13,644,072 |
|
|
239,566 |
|
6.99% |
|
|
13,351,363 |
|
|
237,936 |
|
7.17% |
|
|
13,899,034 |
|
|
275,771 |
|
7.87% |
|
Other interest-earning assets |
|
118,914 |
|
|
1,910 |
|
6.39% |
|
|
110,585 |
|
|
3,010 |
|
10.95% |
|
|
134,416 |
|
|
2,526 |
|
7.45% |
|
Total interest-earning assets |
|
20,694,900 |
|
|
332,113 |
|
6.39% |
|
|
20,520,284 |
|
|
334,038 |
|
6.54% |
|
|
21,485,319 |
|
|
376,340 |
|
6.96% |
|
Non-interest-earning assets |
|
535,504 |
|
|
|
|
|
|
464,919 |
|
|
|
|
|
|
492,691 |
|
|
|
|
||||
Total assets |
$ |
21,230,404 |
|
|
|
|
|
$ |
20,985,203 |
|
|
|
|
|
$ |
21,978,010 |
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest checking accounts |
$ |
5,787,026 |
|
$ |
65,554 |
|
4.51% |
|
$ |
5,719,698 |
|
$ |
64,047 |
|
4.50% |
|
$ |
5,758,215 |
|
$ |
58,637 |
|
4.04% |
|
Money market deposit accounts |
|
3,676,994 |
|
|
42,128 |
|
4.56% |
|
|
3,346,718 |
|
|
38,167 |
|
4.59% |
|
|
2,181,184 |
|
|
22,983 |
|
4.18% |
|
Other savings accounts |
|
1,563,970 |
|
|
18,426 |
|
4.69% |
|
|
1,810,375 |
|
|