Customers Bancorp Reports Record Fourth Quarter 2020 Results

Net Income of $52.8 million, or $1.65 Per Diluted Share, up 121% over Fourth Quarter 2019

Record Full Year 2020 Net Income of $118.5 million or $3.74 Per Diluted Share, up 83% over Full Year 2019

Q4 2020: ROAA of 1.23%, ROCE of 24.26%, and Adjusted PTPP ROAA of 1.63%

  • BankMobile divestiture completed on January 4, 2021. Holders of Customers Bancorp's common stock as of December 18, 2020 received an aggregate of 4.9 million shares of BM Technologies, Inc. common stock as special distribution valued at $14.87 per share at the closing date of the transaction, or having a market value of approximately $73 million.
  • Q4 2020 core earnings (a non-GAAP measure) were $52.6 million or $1.65 per diluted share, up 121% over Q4 2019.
  • Adjusted pre-tax pre-provision net income (a non-GAAP measure) for Q4 2020 was $74.9 million, an increase of 67.6% over Q4 2019. Q4 2020 adjusted pre-tax pre-provision return on average assets (a non-GAAP measure) was 1.63%.
  • Q4 2020 results include a net benefit to (or release from) provision for credit losses on loans and leases of $2.9 million. At December 31, 2020, the coverage of credit loss reserves for loans and leases held for investment, excluding Paycheck Protection Program ("PPP") loans (a non-GAAP measure), was 1.90%, up from 0.77% at December 31, 2019.
  • Non-performing assets were 0.39% of total assets at December 31, 2020 compared to 0.34% at September 30, 2020. Our allowance for credit losses equaled 204% of non-performing loans at December 31, 2020, down from 245% at September 30, 2020.
  • Total revenues in Q4 2020 were up 3.9% linked-quarter and 41.9% on a year-over-year basis. Strong revenue growth was driven by an expansion in the net interest margin (excluding the impact of PPP loans (a non-GAAP measure), and the recognition of deferred origination fees and interest income on PPP loans).
  • Net interest income for Q4 2020 grew $15.5 million or 14.4% over the prior quarter and $45.4 million or 58.4% over Q4 2019. Net interest income, excluding the impact of PPP loans (a non-GAAP measure), increased by $10.3 million or 11.7% over Q3 2020 and $20.1 million or 25.9% over Q4 2019.
  • Q4 2020 net interest margin (a non-GAAP measure) increased 28 basis points from Q3 2020 to 2.78%, mostly due to PPP loans at an average yield of 2.45%. Q4 2020 net interest margin, excluding the impact of PPP loans (a non-GAAP measure), was 3.04%, an 18 basis point increase from Q3 2020 and a 15 basis point increase from Q4 2019.
  • Total loans and leases increased $5.8 billion or 57.5% year-over-year driven by PPP loans of $4.6 billion and strong growth in short-term commercial loans to mortgage companies of $1.4 billion. Total loans and leases, excluding PPP loans, increased $1.2 billion or 12.1% year-over-year.
  • Total deposits increased $2.7 billion or 30.8% year-over-year, which included a $2.2 billion or 83.9% increase in demand deposits. The total cost of deposits dropped to 0.58% in Q4 2020, a decline of 107 basis points from 1.65% in the year-ago quarter.
  • Total deferments declined to $218.5 million or 2.0% of total loans and leases excluding PPP loans (a non-GAAP measure) at December 31, 2020, down from $750.5 million or 7.3% of total loans and leases excluding PPP loans (a non-GAAP measure) at July 24, 2020.
  • Commercial criticized loans as a percent of total loans and leases, excluding PPP loans (a non-GAAP measure), remained relatively low at 4.05% at December 31, 2020.

WEST READING, Pa.--()--Customers Bancorp, Inc. (NYSE: CUBI), the parent company of Customers Bank (collectively “Customers” or "CUBI"), today reported fourth quarter 2020 ("Q4 2020") net income to common shareholders of $52.8 million or $1.65 per diluted share, up from third quarter 2020 ("Q3 2020") net income to common shareholders of $47.1 million or $1.48 per diluted share. Core earnings for Q4 2020 totaled $52.6 million or $1.65 per diluted share, up from Q3 2020 core earnings of $38.2 million or $1.20 per diluted share (non-GAAP measures). Net interest margin, tax equivalent ("NIM") expanded 28 basis points during Q4 2020 to 2.78% from 2.50% in Q3 2020 (non-GAAP measures). NIM excluding PPP loans expanded 18 basis points to 3.04% in Q4 2020 from 2.86% in Q3 2020 (non-GAAP measures). ROAA for Q4 2020 was 1.23%, up 11 basis points from Q3 2020 ROAA of 1.12%. ROCE for Q4 2020 was 24.26%, up 121 basis points from Q3 2020 ROCE of 23.05%.

Full year 2020 ("FY 2020") net income to common shareholders was $118.5 million or $3.74 per diluted share, up from full year 2019 ("FY 2019") net income to common shareholders of $64.9 million or $2.05 per diluted share. Core earnings for FY 2020 totaled $110.6 million or $3.49 per diluted share, compared to core earnings of $72.0 million or $2.28 per diluted share for FY 2019 (non-GAAP measures). FY 2020 NIM declined 4 basis points to 2.71% from FY 2019 NIM of 2.75% (non-GAAP measures). FY 2020 NIM excluding PPP loans expanded 21 basis points to 2.96% from FY 2019 NIM of 2.75% (non-GAAP measures). ROAA for FY 2020 was 0.85%, up 11 basis points from FY 2019 ROAA of 0.74%. ROCE for FY 2020 was 14.55%, up 625 basis points from FY 2019 ROCE of 8.30%.

“In a year of extraordinary circumstances, our institution rose to the challenge of supporting our team members and their families, our communities and our clients by providing outstanding customer service and responsiveness at a time when it was needed most,” remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “In providing approximately 100,000 small businesses and nonprofits access to Paycheck Protection Program loans, we were able to help save thousands of jobs in the communities we serve and improve the financial position of Customers Bank at the same time. We generated record earnings in 2020, driven by expansion of NIM as well as PPP related income and expansion in our core net interest margin. We achieved these results while maintaining superior asset quality during the pandemic and significantly improving the quality of our funding mix. And in early January, as promised, we successfully completed the divestiture of BankMobile, and are pleased to provide a special distribution of BM Technologies, Inc. (BMTX) stock to our shareholders with current market value of about $75 million,” Mr. Sidhu concluded.

Key Balance Sheet Trends

Total loans and leases increased $5.8 billion, or 57.5%, to $15.8 billion at December 31, 2020 compared to the year-ago period. PPP loans originated directly or through fintech partnerships were $4.6 billion at December 31, 2020. Additionally, the loan mix improved year-over-year as commercial loans to mortgage companies increased $1.4 billion to $3.7 billion, commercial and industrial loans and leases increased $473.1 million to $2.3 billion, construction loans increased $23.3 million to $140.9 million, and commercial real estate owner occupied loans increased $20.4 million to $572.3 million. The commercial loans to mortgage companies trend has been a function of greater refinance activity due to sharply lower interest rates, an increase in home purchase volumes, and market share gains from other banks. These increases in loans and leases were partially offset by planned decreases in multi-family loans of $628.9 million to $1.8 billion and residential mortgages of $62.8 million to $323.3 million. “Looking ahead, we see continued growth in core C&I loans offsetting some of the expected decreases in loans to mortgage companies," stated Sidhu.

Total deposits increased $2.7 billion, or 30.8%, to $11.3 billion at December 31, 2020 compared to the year-ago period. Total demand deposits increased $2.2 billion, or 83.9%, to $4.7 billion, money market deposits increased $1.1 billion, or 32.1%, to $4.6 billion, and savings deposits increased $395.6 million, or 43.0%, to $1.3 billion. These increases were offset, in part, by a decrease in time deposits of $1.0 billion, or 60.9%, to $651.9 million. The total cost of deposits declined by 107 basis points to 0.58% in Q4 2020 from 1.65% in the year-ago quarter.

Customers' experienced moderate declines in regulatory capital ratios in 2020, driven by strong growth in commercial loans to mortgage companies of $1.4 billion. However, Customers Bancorp's tangible common equity (a non-GAAP measure) increased by $65.2 million to $885 million at December 31, 2020 from $820 million at December 31, 2019, and the tangible book value per common share (a non-GAAP measure) increased to $27.92 at December 31, 2020 from $26.17 at December 31, 2019. "This increase in tangible common equity and tangible book value per common share was achieved in spite of a decrease in retained earnings of $61 million recorded on January 1, 2020 upon the adoption of CECL," commented Mr. Sidhu. Customers remains well capitalized by all regulatory measures. At the Customers Bancorp level, the total risk based capital ratio (estimate) and tangible common equity to tangible assets ratio ("TCE ratio"), excluding PPP loans (a non-GAAP measure), were 11.9% and 6.4%, respectively, at December 31, 2020. At September 30, 2020, Customers Bancorp's total risk based capital ratio and TCE ratio, excluding PPP loans (a non-GAAP measure), were 11.3% and 5.9%, respectively. "As a consequence of PPP related income and a potential cyclical decline in residential mortgage activity, we expect our capital levels to increase sharply in 2021 and be in the 7.5% or higher range by December 31, 2021," commented Customers Bancorp CFO, Carla Leibold.

Loan Portfolio Management During the COVID-19 Crisis

Over the last decade, Customers has developed a suite of commercial and retail loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s multifamily, mortgage warehouse, and specialty finance lines of business, for example, are characterized by conservative underwriting standards and low loss rates. Because of this emphasis, the Bank’s credit quality to-date has been healthy despite a highly adverse economic environment. Maintaining strong asset quality also requires a highly active portfolio monitoring process. In addition to frequent client outreach and monitoring at the individual loan level, Customers employs a bottom-up data driven approach to analyze its commercial portfolio.

Strong commercial loan portfolio with very low concentration in COVID-19 impacted industries and CRE

  • Total commercial deferments declined to $202.1 million or 1.8% of total loans and leases, excluding PPP loans (a non-GAAP measure), at December 31, 2020, down from $277 million, or 2.4% of total loans and leases, excluding PPP loans, at September 30, 2020. Of the $202.1 million in total commercial deferments, $107.4 million or 53.1% were principal only deferments. Customers' commercial deferments peaked at about $1.2 billion earlier this year.
  • Exposure to industry segments significantly impacted by COVID-19 is not substantial. At December 31, 2020, Customers had $87 million in energy and utilities exposure; $62 million in colleges and universities (no deferments requested); $72 million in CRE retail sales exposure (mostly auto sales; with no deferments); $30 million in franchise restaurants and dining (with no deferments); and $27 million in entertainment only businesses (with no deferments).
  • At year-end, the hospitality portfolio was $406 million or 3.6% of total loans and leases excluding PPP loans, with $126 million in deferment. Approximately 79% ($318 million) represents “flagged” facilities, with the majority of the non-flagged being high-end destination hotels in Cape May (NJ), Avalon (NJ), and Long Island (NY). The majority of the hotels, based on our recent assessment, have sufficient cash resources to get through the COVID-19 crisis and, for those who may need assistance, the Bank is working with them to bridge any potential cash flow gaps.
  • At December 31, 2020, the healthcare portfolio was approximately $359 million, comprised predominantly of skilled nursing, which has been deemed an essential business and through a number of federal and state actions has been provided immunity from liability for COVID-19 related deaths. No deferments have been requested and there are no delinquencies.
  • The multi-family portfolio is highly seasoned, with an average loan to value of 61% as of quarter-end. 55% of the portfolio was in New York City, of which 69% was in rent controlled/regulated properties. As of December 31, 2020, $11 million of the portfolio was on deferment.
  • At December 31, 2020, investment CRE had a loan to value of 64%, with approximately 30% of the portfolio housed in the New York, Philadelphia, and Boston metro and surrounding markets. As of December 31, 2020, $29 million of the portfolio was on deferment.

Consumer installment, mortgage and home equity loan portfolio continues to perform well

  • Total consumer-related deferments declined to $16.4 million, or 0.1% of total loans and leases, excluding PPP loans (a non-GAAP measure), at December 31, 2020, down from $25 million, or 0.2% of total loans and leases, excluding PPP loans, at September 30, 2020.
  • The $1.2 billion consumer installment loan portfolio outperformed industry peers with deferments dropping to 0.8% and 30+ DPD delinquency at only 1.1%. Strong credit quality (avg. FICO at origination: 740), low concentration in at-risk job segments, and outstanding performance of CB Direct originations have resulted in solid results through the end of Q4 2020.
  • The consumer installment portfolio has been managed to moderate growth and strengthening credit quality, by replacing run-off with CB Direct originations with strong FICO scores.

Aggressively addressing non-performing assets

  • During January 2021, Customers sold a collateral dependent loan secured by a hotel property in Massachusetts. This loan made up approximately 24% of non-performing assets as of December 31, 2020. “We expect our credit quality to improve or stay unchanged over the next few quarters,” stated Sidhu.

Key Profitability Trends

Net Interest Income

Net interest income totaled $122.9 million in Q4 2020, an increase of $15.5 million from Q3 2020, primarily due to a $480.9 million increase in average interest-earning assets. Earning assets were driven by increases in commercial loans to mortgage companies, commercial and industrial loans and leases, and investment securities. The benefit of this growth resulted in a 28 basis point linked-quarter increase in NIM (a non-GAAP measure) to 2.78%. Compared to Q3 2020, total loan yields increased 21 basis points to 3.62%. The increase is attributable to increased originations of commercial loans to mortgage companies, commercial and industrial loans and leases, and PPP loan forgiveness which accelerated the recognition of net deferred loan origination fees. This increase is partially offset by lower market interest rates due to the Federal Reserve's forecast of interest rates at zero through 2023. The cost of interest-bearing deposits in Q4 2020 decreased by 9 basis points to 0.76% due to the decline in market interest rates and strategic decisions to reallocate deposit funding to lower cost deposits. Borrowing costs decreased by 3 basis points to 0.94% primarily due to the utilization of the FRB PPP Liquidity Facility, costing 0.35%, to fund PPP loans.

Provision for Credit Losses

The provision for credit losses on loans and leases in Q4 2020, which was calculated under the CECL accounting standard effective January 1, 2020, was a $2.9 million benefit to (or release from) the provision, compared to a $13.0 million provision in Q3 2020. The decrease in Q4 2020 primarily resulted from an improvement in forecasts of macroeconomic conditions since Q3 2020. The allowance for credit losses on loans and leases represented 1.9% of total loans and leases receivable, excluding PPP loans (a non-GAAP measure) at December 31, 2020, compared to just over 2.0% at September 30, 2020, and 0.8% at December 31, 2019. Customers' non-performing loans at December 31, 2020 were only 0.45% of total loans and leases. Our Q4 2020 non-performing loans were impacted by one commercial real estate credit, which was resolved during January 2021, reducing the non performing asset ratio to 0.30% of the assets (a non-GAAP measure).

Non-Interest Income

Non-interest income totaled $23.8 million for Q4 2020, a decrease of $10.0 million compared to Q3 2020. The decrease in non-interest income primarily resulted from decreases of $11.7 million in gain on sale of investment securities, $0.7 million in mortgage banking income, $0.4 million in interchange and card revenue, and $0.7 million in other non-interest income, partially offset by increases of $1.4 million in gain on sale of SBA and other loans, a $1.1 million increase in unrealized gains on equity securities issued by a foreign entity, $0.4 million in mortgage warehouse transactional fees, and $0.3 million in commercial lease income.

The decrease in gain on sale of investment securities primarily resulted from the sale of $58.4 million of agency-guaranteed mortgage-backed securities and $70.0 million in corporate notes in Q3 2020, compared to sales of $10 million in corporate notes during Q4 2020. The decrease in mortgage banking income was mainly related to unrealized losses on derivatives. The decrease in interchange and card revenue primarily resulted from lower debit card spending volume. The decrease in other non-interest income was driven by an unrealized loss on a loan held for sale of $1.1 million during Q4 2020, partially offset by a net derivative valuation adjustment of $0.2 million due to changes in market interest rates and increased SERP income of $0.3 million. The increase in gain on sale of SBA and other loans was driven by increased sales volume. The increase in unrealized gains on equity securities issued by a foreign entity primarily resulted from an increase in the valuation of those securities. The increase in mortgage warehouse transactional fees primarily resulted from an increase in transaction volume due to continued low market interest rates. The increase in commercial lease income was driven by continued organic growth in volume.

Non-Interest Expense

Non-interest expense totaled $71.2 million for Q4 2020, an increase of $5.6 million compared to Q3 2020. The increase in non-interest expense primarily resulted from increases of $5.3 million in other non-interest expense, $1.1 million in salaries and employee benefits, $0.9 million in provision for operating losses, and $0.3 million in commercial lease depreciation, partially offset by decreases of $1.1 million in FDIC assessments, $0.7 million in loan workout expenses, and $0.4 million in occupancy expenses. The increase in other non-interest expense primarily resulted from a decrease in operating cost reimbursements from Customers' white label partnership. The increase in salaries and employee benefits was primarily due to lower stock based compensation expense in Q3 2020. The increase in provision for operating losses primarily resulted from an increase in the estimate for fraud related losses. The increase in commercial lease depreciation was driven by continued organic growth in volume. The decrease in FDIC assessments, non-income taxes and regulatory fees was a function of an increase in FDIC assessment rates due to the temporary utilization of brokered deposits to fund PPP loans in Q3 2020. The decrease in loan workout expenses primarily resulted from lower costs related to the workout of two commercial relationships in Q3 2020. The decrease in occupancy expenses primarily resulted from a decrease in rent expense as we continue to reassess our office spaces and branches.

Taxes

Income tax expense increased by $10 million to $22.2 million in Q4 2020 from $12.2 million in Q3 2020 due to higher pre-tax income and effective tax rate. The effective tax rate increased to 28.3% for Q4 2020 compared to 19.5% for Q3 2020 primarily due to a lower annual benefit from investment tax credits than what was estimated in Q3 2020. Customers expects the full-year 2021 effective tax rate to be approximately 21% to 22%.

Outlook

“Looking ahead, we are very optimistic about the prospects of our company. The ongoing digital transformation of Customers Bancorp has positioned us well to be a major participant in the second round of PPP and to incubate new lines of businesses that leverage our fintech relationships. We expect our tangible common equity and regulatory capital levels to achieve targeted levels within the next 18 months and our credit quality to remain in line with or better than peers. The financial benefits of PPP aside, we project our recurring earnings power to expand well above the $4.00 level during 2021 and remain on track to achieve $6.00 in core EPS in 2026,” concluded Mr. Sidhu.

Our updated financial guidance is as follows:

  • Loan growth, excluding PPP and mortgage warehouse balances, is expected to average in the mid-to-high single digits over the next several quarters.
  • The balance of commercial loans to mortgage companies is expected to decline to $2.8-$3.2 billion at March 31, 2021 and $1.6-$2.4 billion at December 31, 2021.
  • The Total Capital Ratio is expected to exceed 13.0% by year-end 2021. The TCE-to-TA ratio excluding PPP loans is expected to be 7.5-8.0% by year-end 2021.
  • We project the NIM excluding PPP loans to expand into the 3.10%-3.30% range by Q4 2021.
  • Impacted by the divestiture of BankMobile, we project non-interest income of $9.0-11.0 million and operating expenses of $59.0-$61.0 million in Q1 2021 (excluding BankMobile related severance expense).
  • We project an effective tax rate for 2021 of 21.0%-22.0%, down from 24.7% in 2020.
  • Our earnings trend is likely to be volatile over the next several quarters owing to our participation in PPP. We expect to earn at least $4.00 in core EPS in 2021, at least $4.50 in core EPS in 2023, and remain on track to earn $6.00 in core EPS in 2026. Our core EPS guidance includes the net interest income expected to be earned on the PPP loans.

2021 NIM expansion is expected to be achieved by:

  • Remixing the loan portfolio away from commercial loans to mortgage companies toward other C&I categories and consumer loans.
  • Bringing our cost of deposits to around 40 basis points during 2021.

BankMobile Technologies, Inc.:

  • On January 4, 2021, Customers completed the previously announced divestiture of BankMobile Technologies Inc. (“BMT”), the technology arm of the BankMobile segment, to Megalith Financial Acquisition Corp., a Delaware corporation ("Megalith"). In connection with the closing of the divestiture, Megalith changed its name to “BM Technologies, Inc.” ("BMTX"). Beginning in first quarter of 2021, BMT’s historical financial results for periods prior to the divestiture will be reflected in Customers consolidated financial statements as discontinued operations.
  • All Customers Bancorp shareholders on record on December 18, 2020 received approximately $73 million in value of BMTX stock at closing date of the transaction in the form of special distribution.

Status Report on Main Strategic Priorities Articulated at Last Analysts Day

Goal #1: Top Quartile Profitability with 1.25% Core ROAA in 2-3 years.

 

Result: Achieved 1.22% in Core ROAA (a non-GAAP measure) in Q4 2020.

 

Goal #2: Achieve NIM expansion to 2.75% or greater by Q4 2019, with full year 2019 NIM above 2.70%, through an expected shift in asset and funding mix.

 

Result: Achieved NIM of 2.78% in Q4 2020. NIM, excluding PPP loans (a non-GAAP measure), was 3.04% in Q4 2020.

 

Goal #3: BankMobile growth and maturity was expected with profitability achieved by year end 2019.

 

Result: BankMobile was profitable, and BMT was divested on January 4, 2021 resulting in the special distribution of approximately 4.9 million shares of BMTX common stock to Customers Bancorp shareholders.

 

Goal #4: Efficiency improvement.

 

Result: Customers' efficiency ratio was 48.98% in Q4 2020, down from 50.71% in Q3 2020 and 56.98% in Q4 2019.

 

Goal #5: Growth in core deposits.

 

Result: Demand Deposit Accounts ("DDAs") grew 84% year-over-year.

 

Goal #6: Maintain strong credit quality and superior risk management.

 

Result: Non-performing loans ("NPLs") were only 0.45% of total loans and leases at December 31, 2020. NPLs decreased by $17 million in January 2021. We remain very focused on a strong Risk Management culture throughout our company.

 

Webcast

Date: Thursday, January 28, 2021

Time: 9:00 AM EDT

The live audio webcast, presentation slides, and earnings press release will be made available at https://www.customersbank.com/investor-relations/ and at the Customers Bancorp 4th Quarter Earnings Webcast.

The fourth quarter 2020 earnings press release will be issued after the market close on Wednesday, January 27, 2021.

You may submit questions in advance of the live webcast by emailing Customers' Communications & Marketing 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 Bancorp Investor Relations page and available beginning approximately two hours after the conclusion of the live event.

Institutional Background

Customers Bancorp, Inc. is a bank holding company located in West Reading, Pennsylvania engaged in banking and related businesses through its bank subsidiary, Customers Bank. Customers Bank is a community-based, full-service bank with assets of approximately $18.4 billion at December 31, 2020. 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 services to small and medium-sized businesses, professionals, individuals and families through offices in Pennsylvania, Illinois, New York, Rhode Island, Massachusetts, New Hampshire and New Jersey. Committed to fostering customer loyalty, Customers Bank uses a High Tech/High Touch strategy that includes use of industry-leading technology to provide customers better access to their money, as well as Concierge Banking® by appointment at customers’ homes or offices 12 hours a day, seven days a week. Customers Bank offers a continually expanding portfolio of loans to small businesses, multi-family projects, mortgage companies and consumers.

Customers Bancorp, Inc.'s voting common shares are listed on the New York Stock Exchange under the symbol CUBI. Additional information about Customers Bancorp, Inc. can be found on the Company’s website, 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,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: the adverse impact on the U.S. economy, including the markets in which we operate, of the coronavirus outbreak, and the impact of a slowing U.S. economy and increased unemployment on the performance of our loan and lease portfolio, the market value of our investment securities, the demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that effect market interest rates and the money supply; actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships; and the effects of changes in accounting standards or policies, including Accounting Standards Update ("ASU") 2016-13, Financial Instruments—Credit Losses ("CECL"). 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, 2019, 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.

Q4 2020 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended December 31, 2020 and the preceding four quarters:

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

EARNINGS SUMMARY - UNAUDITED

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data and stock price data)

Q4

Q3

Q2

Q1

Q4

Year Ended
December 31,

2020

2020

2020

2020

2019

2020

2019

 

 

 

 

 

 

 

 

GAAP Profitability Metrics:

 

 

 

 

 

 

 

Net income available to common shareholders

$

52,831

 

$

47,085

 

$

19,137

 

$

(515

)

$

23,911

 

$

118,537

 

$

64,868

 

Per share amounts:

 

 

 

 

 

 

 

Earnings per share - basic

$

1.67

 

$

1.49

 

$

0.61

 

$

(0.02

)

$

0.76

 

$

3.76

 

$

2.08

 

Earnings per share - diluted

$

1.65

 

$

1.48

 

$

0.61

 

$

(0.02

)

$

0.75

 

$

3.74

 

$

2.05

 

Book value per common share (1)

$

28.37

 

$

26.43

 

$

25.08

 

$

23.74

 

$

26.66

 

$

28.37

 

$

26.66

 

CUBI stock price (1)

$

18.18

 

$

11.20

 

$

12.02

 

$

10.93

 

$

23.81

 

$

18.18

 

$

23.81

 

CUBI stock price as % of book value (1)

64

%

42

%

48

%

46

%

89

%

64

%

89

%

Average shares outstanding - basic

31,638,447

 

31,517,504

 

31,477,591

 

31,391,151

 

31,306,813

 

31,506,699

 

31,183,841

 

Average shares outstanding - diluted

31,959,100

 

31,736,311

 

31,625,771

 

31,391,151

 

31,876,341

 

31,727,784

 

31,646,216

 

Shares outstanding (1)

31,705,088

 

31,555,124

 

31,510,287

 

31,470,026

 

31,336,791

 

31,705,088

 

31,336,791

 

Return on average assets ("ROAA")

1.23

%

1.12

%

0.62

%

0.11

%

0.97

%

0.85

%

0.74

%

Return on average common equity ("ROCE")

24.26

%

23.05

%

9.97

%

(0.26

)%

11.58

%

14.55

%

8.30

%

Efficiency ratio

48.98

%

50.71

%

58.44

%

66.03

%

56.98

%

55.11

%

65.15

%

Non-GAAP Profitability Metrics (2):

 

 

 

 

 

 

 

Core earnings

$

52,648

 

$

38,210

 

$

19,174

 

$

603

 

$

23,843

 

$

110,634

 

$

72,013

 

Adjusted pre-tax pre-provision net income

$

74,883

 

$

64,176

 

$

50,766

 

$

38,595

 

$

44,676

 

$

228,420

 

$

135,558

 

Per share amounts:

 

 

 

 

 

 

 

Core earnings per share - diluted

$

1.65

 

$

1.20

 

$

0.61

 

$

0.02

 

$

0.75

 

$

3.49

 

$

2.28

 

Tangible book value per common share (1)

$

27.92

 

$

25.97

 

$

24.62

 

$

23.27

 

$

26.17

 

$

27.92

 

$

26.17

 

CUBI stock price as % of tangible book value (1)

65

%

43

%

49

%

47

%

91

%

65

%

91

%

Core ROAA

1.22

%

0.93

%

0.62

%

0.15

%

0.97

%

0.80

%

0.81

%

Core ROCE

24.17

%

18.71

%

9.99

%

0.30

%

11.55

%

13.58

%

9.21

%

Adjusted ROAA - pre-tax and pre-provision

1.63

%

1.43

%

1.39

%

1.34

%

1.57

%

1.46

%

1.27

%

Adjusted ROCE - pre-tax and pre-provision

32.82

%

29.74

%

24.59

%

17.41

%

19.89

%

26.31

%

15.49

%

Net interest margin, tax equivalent

2.78

%

2.50

%

2.65

%

2.99

%

2.89

%

2.71

%

2.75

%

Net interest margin, tax equivalent, excluding PPP loans

3.04

%

2.86

%

2.97

%

2.99

%

2.89

%

2.96

%

2.75

%

Core efficiency ratio

47.97

%

49.81

%

55.39

%

63.33

%

56.76

%

53.40

%

62.78

%

Asset Quality:

 

 

 

 

 

 

 

Net charge-offs

$

8,472

 

$

17,299

 

$

10,325

 

$

18,711

 

$

4,362

 

$

54,807

 

$

7,820

 

Annualized net charge-offs to average total loans and leases

0.21

%

0.45

%

0.32

%

0.79

%

0.18

%

0.41

%

0.08

%

Non-performing loans ("NPLs") to total loans and leases (1)

0.45

%

0.38

%

0.56

%

0.49

%

0.21

%

0.45

%

0.21

%

Reserves to NPLs (1)

204.48

%

244.70

%

185.36

%

296.44

%

264.67

%

204.48

%

264.67

%

Non-performing assets ("NPAs") to total assets

0.39

%

0.34

%

0.48

%

0.53

%

0.19

%

0.39

%

0.19

%

Customers Bank Capital Ratios (3):

 

 

 

 

 

 

 

Common equity Tier 1 capital to risk-weighted assets

10.61

%

10.12

%

10.64

%

10.60

%

11.32

%

10.61

%

11.32

%

Tier 1 capital to risk-weighted assets

10.61

%

10.12

%

10.64

%

10.60

%

11.32

%

10.61

%

11.32

%

Total capital to risk-weighted assets

12.06

%

11.62

%

12.30

%

12.21

%

12.93

%

12.06

%

12.93

%

Tier 1 capital to average assets (leverage ratio)

9.21

%

9.29

%

9.59

%

9.99

%

10.38

%

9.21

%

10.38

%

(1) Metric is a spot balance for the last day of each quarter presented.

(2) Non-GAAP measures exclude unrealized gains (losses) on loans HFS, investment securities gains and losses, severance expense, merger and acquisition-related expenses, losses realized from the sale of non-QM residential mortgage loans, loss upon acquisition of interest-only GNMA securities, legal reserves, credit valuation adjustments on derivatives, risk participation agreement mark-to-market adjustments, and goodwill and intangible assets. These notable items are not included in Customers' disclosures of core earnings and other core profitability metrics. Please note that not each of the aforementioned adjustments affected the reported amount in each of the periods presented. Customers' reasons for the use of these non-GAAP measures and a detailed reconciliation between the non-GAAP measures and the comparable GAAP amounts are included at the end of this document.

(3) Regulatory capital ratios are estimated for Q4 2020 and actual for the remaining periods. In accordance with regulatory capital rules, Customers elected an option to delay the estimated impact of CECL on its regulatory capital over a five-year transition period ending January 1, 2025. As a result, capital ratios and amounts as of Q4 2020 exclude the impact of the increased allowance for credit losses on loans and leases and unfunded loan commitments attributed to the adoption of CECL and 25% of the quarterly provision for credit losses for subsequent quarters through Q4 2021.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

Q4

 

Q3

 

Q2

 

Q1

 

Q4

 

December 31,

 

2020

 

2020

 

2020

 

2020

 

2019

 

2020

 

2019

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and leases

$

145,414

 

 

$

132,107

 

 

$

118,447

 

 

$

116,080

 

 

$

116,365

 

 

$

512,048

 

 

$

431,491

 

Investment securities

6,777

 

 

6,297

 

 

6,155

 

 

4,977

 

 

5,125

 

 

24,206

 

 

23,713

 

Other

902

 

 

1,246

 

 

616

 

 

4,286

 

 

2,505

 

 

7,050

 

 

8,535

 

Total interest income

153,093

 

 

139,650

 

 

125,218

 

 

125,343

 

 

123,995

 

 

543,304

 

 

463,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

16,107

 

 

18,347

 

 

23,238

 

 

34,353

 

 

35,992

 

 

92,045

 

 

141,464

 

FHLB advances

5,749

 

 

5,762

 

 

4,736

 

 

5,390

 

 

6,056

 

 

21,637

 

 

26,519

 

Subordinated debt

2,688

 

 

2,689

 

 

2,689

 

 

2,689

 

 

1,930

 

 

10,755

 

 

6,983

 

Federal funds purchased and other borrowings

5,603

 

 

5,413

 

 

2,573

 

 

1,590

 

 

2,424

 

 

15,179

 

 

11,463

 

Total interest expense

30,147

 

 

32,211

 

 

33,236

 

 

44,022

 

 

46,402

 

 

139,616

 

 

186,429

 

Net interest income

122,946

 

 

107,439

 

 

91,982

 

 

81,321

 

 

77,593

 

 

403,688

 

 

277,310

 

Provision for credit losses on loans and leases

(2,913

)

 

12,955

 

 

20,946

 

 

31,786

 

 

9,689

 

 

62,774

 

 

24,227

 

Net interest income after provision for credit losses on loans and leases

125,859

 

 

94,484

 

 

71,036

 

 

49,535

 

 

67,904

 

 

340,914

 

 

253,083

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interchange and card revenue

3,671

 

 

4,081

 

 

6,478

 

 

6,809

 

 

6,506

 

 

21,039

 

 

28,941

 

Deposit fees

3,615

 

 

3,439

 

 

3,321

 

 

3,460

 

 

3,616

 

 

13,835

 

 

12,815

 

Commercial lease income

4,853

 

 

4,510

 

 

4,508

 

 

4,268

 

 

3,839

 

 

18,139

 

 

12,051

 

Bank-owned life insurance

1,744

 

 

1,746

 

 

1,757

 

 

1,762

 

 

1,795

 

 

7,009

 

 

7,272

 

Mortgage warehouse transactional fees

3,681

 

 

3,320

 

 

2,582

 

 

1,952

 

 

1,983

 

 

11,535

 

 

7,128

 

Gain (loss) on sale of SBA and other loans

1,689

 

 

286

 

 

23

 

 

11

 

 

2,770

 

 

2,009

 

 

2,770

 

Mortgage banking income (loss)

346

 

 

1,013

 

 

38

 

 

296

 

 

(635

)

 

1,693

 

 

66

 

Loss upon acquisition of interest-only GNMA securities

 

 

 

 

 

 

 

 

 

 

 

 

(7,476

)

Gain (loss) on sale of investment securities

44

 

 

11,707

 

 

4,353

 

 

3,974

 

 

 

 

20,078

 

 

1,001

 

Unrealized gain (loss) on investment securities

1,387

 

 

238

 

 

1,200

 

 

(1,378

)

 

310

 

 

1,447

 

 

1,299

 

Other

2,745

 

 

3,453

 

 

(2,024

)

 

776

 

 

5,629

 

 

4,950

 

 

15,071

 

Total non-interest income

23,775

 

 

33,793

 

 

22,236

 

 

21,930

 

 

25,813

 

 

101,734

 

 

80,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

33,726

 

 

32,676

 

 

31,296

 

 

28,310

 

 

27,697

 

 

126,008

 

 

107,632

 

Technology, communication and bank operations

13,290

 

 

13,215

 

 

13,310

 

 

13,050

 

 

10,370

 

 

52,865

 

 

43,481

 

Professional services

7,490

 

 

7,253

 

 

4,552

 

 

7,670

 

 

6,470

 

 

26,965

 

 

25,109

 

Occupancy

3,188

 

 

3,632

 

 

3,025

 

 

3,032

 

 

3,470

 

 

12,877

 

 

13,098

 

Commercial lease depreciation

3,982

 

 

3,663

 

 

3,643

 

 

3,427

 

 

2,840

 

 

14,715

 

 

9,473

 

FDIC assessments, non-income taxes and regulatory fees

2,642

 

 

3,784

 

 

2,368

 

 

2,867

 

 

2,492

 

 

11,661

 

 

5,861

 

Provision for operating losses

2,115

 

 

1,186

 

 

1,068

 

 

912

 

 

1,415

 

 

5,281

 

 

9,638

 

Advertising and promotion

 

 

 

 

582

 

 

1,641

 

 

899

 

 

2,223

 

 

4,044

 

Merger and acquisition related expenses

996

 

 

1,035

 

 

25

 

 

50

 

 

100

 

 

2,106

 

 

100

 

Loan workout

123

 

 

846

 

 

1,808

 

 

366

 

 

230

 

 

3,143

 

 

1,687

 

Other real estate owned

52

 

 

7

 

 

12

 

 

8

 

 

247

 

 

79

 

 

398

 

Other

3,560

 

 

(1,736

)

 

1,817

 

 

5,126

 

 

2,510

 

 

8,767

 

 

11,380

 

Total non-interest expense

71,164

 

 

65,561

 

 

63,506

 

 

66,459

 

 

58,740

 

 

266,690

 

 

231,901

 

Income before income tax expense

78,470

 

 

62,716

 

 

29,766

 

 

5,006

 

 

34,977

 

 

175,958

 

 

102,120

 

Income tax expense

22,225

 

 

12,201

 

 

7,048

 

 

1,906

 

 

7,451

 

 

43,380

 

 

22,793

 

Net income

56,245

 

 

50,515

 

 

22,718

 

 

3,100

 

 

27,526

 

 

132,578

 

 

79,327

 

Preferred stock dividends

3,414

 

 

3,430

 

 

3,581

 

 

3,615

 

 

3,615

 

 

14,041

 

 

14,459

 

Net income available to common shareholders

$

52,831

 

 

$

47,085

 

 

$

19,137

 

 

$

(515

)

 

$

23,911

 

 

$

118,537

 

 

$

64,868

 

Basic earnings per common share

$

1.67

 

 

$

1.49

 

 

$

0.61

 

 

$

(0.02

)

 

$

0.76

 

 

$

3.76

 

 

$

2.08

 

Diluted earnings per common share

$

1.65

 

 

$

1.48

 

 

$

0.61

 

 

$

(0.02

)

 

$

0.75

 

 

$

3.74

 

 

$

2.05

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET - UNAUDITED

(Dollars in thousands)

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

2020

 

2020

 

2020

 

2020

 

2019

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

78,090

 

 

$

5,822

 

 

$

44,577

 

 

$

18,842

 

 

$

33,095

 

Interest earning deposits

615,264

 

 

325,594

 

 

1,022,753

 

 

237,390

 

 

179,410

 

Cash and cash equivalents

693,354

 

 

331,416

 

 

1,067,330

 

 

256,232

 

 

212,505

 

Investment securities, at fair value

1,210,285

 

 

1,133,831

 

 

681,382

 

 

712,657

 

 

595,876

 

Loans held for sale

79,086

 

 

26,689

 

 

464,164

 

 

450,157

 

 

486,328

 

Loans receivable, mortgage warehouse, at fair value

3,616,432

 

 

3,913,593

 

 

2,793,164

 

 

2,518,012

 

 

2,245,758

 

Loans receivable, PPP

4,561,365

 

 

4,964,105

 

 

4,760,427

 

 

 

 

 

Loans and leases receivable

7,575,368

 

 

7,700,892

 

 

7,272,447

 

 

7,353,262

 

 

7,318,988

 

Allowance for credit losses on loans and leases

(144,176

)

 

(155,561

)

 

(159,905

)

 

(149,283

)

 

(56,379

)

Total loans and leases receivable, net of allowance for credit losses on loans and leases

15,608,989

 

 

16,423,029

 

 

14,666,133

 

 

9,721,991

 

 

9,508,367

 

FHLB, Federal Reserve Bank, and other restricted stock

71,368

 

 

70,387

 

 

91,023

 

 

87,140

 

 

84,214

 

Accrued interest receivable

80,412

 

 

65,668

 

 

49,911

 

 

40,570

 

 

38,072

 

Bank premises and equipment, net

11,626

 

 

11,744

 

 

8,380

 

 

8,890

 

 

9,389

 

Bank-owned life insurance

280,067

 

 

277,826

 

 

275,842

 

 

273,576

 

 

272,546

 

Other real estate owned

57

 

 

131

 

 

131

 

 

131

 

 

173

 

Goodwill and other intangibles

14,298

 

 

14,437

 

 

14,575

 

 

14,870

 

 

15,195

 

Other assets

389,706

 

 

423,569

 

 

584,247

 

 

452,585

 

 

298,052

 

Total assets

$

18,439,248

 

 

$

18,778,727

 

 

$

17,903,118

 

 

$

12,018,799

 

 

$

11,520,717

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing deposits

$

2,356,998

 

 

$

2,327,017

 

 

$

1,879,789

 

 

$

1,435,151

 

 

$

1,343,391

 

Interest bearing deposits

8,952,931

 

 

8,512,060

 

 

9,086,086

 

 

6,978,492

 

 

7,305,545

 

Total deposits

11,309,929

 

 

10,839,077

 

 

10,965,875

 

 

8,413,643

 

 

8,648,936

 

FRB advances

 

 

 

 

 

 

175,000

 

 

 

Federal funds purchased

250,000

 

 

680,000

 

 

 

 

705,000

 

 

538,000

 

FHLB advances

850,000

 

 

850,000

 

 

850,000

 

 

1,260,000

 

 

850,000

 

Other borrowings

124,037

 

 

123,935

 

 

123,833

 

 

123,732

 

 

123,630

 

Subordinated debt

181,394

 

 

181,324

 

 

181,255

 

 

181,185

 

 

181,115

 

FRB PPP liquidity facility

4,415,016

 

 

4,811,009

 

 

4,419,967

 

 

 

 

 

Accrued interest payable and other liabilities

191,786

 

 

241,891

 

 

354,341

 

 

195,603

 

 

126,241

 

Total liabilities

17,322,162

 

 

17,727,236

 

 

16,895,271

 

 

11,054,163

 

 

10,467,922

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

217,471

 

 

217,471

 

 

217,471

 

 

217,471

 

 

217,471

 

Common stock

32,986

 

 

32,836

 

 

32,791

 

 

32,751

 

 

32,617

 

Additional paid in capital

455,592

 

 

452,965

 

 

450,665

 

 

446,840

 

 

444,218

 

Retained earnings

438,581

 

 

385,750

 

 

338,665

 

 

319,529

 

 

381,519

 

Accumulated other comprehensive loss

(5,764

)

 

(15,751

)

 

(9,965

)

 

(30,175

)

 

(1,250

)

Treasury stock, at cost

(21,780

)

 

(21,780

)

 

(21,780

)

 

(21,780

)

 

(21,780

)

Total shareholders' equity

1,117,086

 

 

1,051,491

 

 

1,007,847

 

 

964,636

 

 

1,052,795

 

Total liabilities & shareholders' equity

$

18,439,248

 

 

$

18,778,727

 

 

$

17,903,118

 

 

$

12,018,799

 

 

$

11,520,717

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

December 31, 2020

 

September 30, 2020

 

December 31, 2019

 

Average
Balance

Average
Yield or
Cost (%)

 

Average
Balance

Average
Yield or
Cost (%)

 

Average
Balance

Average
Yield or
Cost (%)

Assets

 

 

 

 

 

 

 

 

Interest earning deposits

$

413,381

 

0.12%

 

$

686,928

 

0.12%

 

$

150,382

 

2.21%

Investment securities (1)

1,120,491

 

2.42%

 

950,723

 

2.65%

 

584,955

 

3.50%

Loans and leases:

 

 

 

 

 

 

 

 

Commercial loans to mortgage companies

3,518,371

 

3.06%

 

2,847,169

 

2.90%

 

2,158,626

 

4.16%

Multi-family loans

1,871,956

 

3.70%

 

1,989,074

 

3.72%

 

2,654,919

 

3.96%

Commercial and industrial loans and leases (2)

2,801,172

 

3.96%

 

2,599,806

 

3.82%

 

2,318,313

 

4.79%

Loans receivable, PPP

4,782,606

 

2.45%

 

4,909,197

 

1.97%

 

 

—%

Non-owner occupied commercial real estate loans

1,358,541

 

3.80%

 

1,388,306

 

3.70%

 

1,325,630

 

4.55%

Residential mortgages

400,771

 

3.80%

 

414,781

 

3.97%

 

631,370

 

4.05%

Installment loans

1,253,679

 

8.50%

 

1,255,505

 

8.37%

 

765,765

 

9.11%

Total loans and leases (3)

15,987,096

 

3.62%

 

15,403,838

 

3.41%

 

9,854,623

 

4.68%

Other interest-earning assets

81,031

 

3.80%

 

79,656

 

5.23%

 

86,770

 

7.63%

Total interest-earning assets

17,601,999

 

3.46%

 

17,121,145

 

3.25%

 

10,676,730

 

4.61%

Non-interest-earning assets

648,720

 

 

 

744,429

 

 

 

580,477

 

 

Total assets

$

18,250,719

 

 

 

$

17,865,574

 

 

 

$

11,257,207

 

 

Liabilities

 

 

 

 

 

 

 

 

Interest checking accounts

$

2,240,959

 

0.86%

 

$

2,370,709

 

0.78%

 

$

1,152,349

 

1.65%

Money market deposit accounts

4,166,635

 

0.60%

 

3,786,032

 

0.65%

 

3,190,543

 

2.01%

Other savings accounts

1,205,592

 

0.74%

 

1,125,273

 

1.06%

 

722,487

 

2.09%

Certificates of deposit

833,689

 

1.30%

 

1,344,134

 

1.35%

 

2,012,497

 

2.21%

Total interest-bearing deposits (4)

8,446,875

 

0.76%

 

8,626,148

 

0.85%

 

7,077,876

 

2.02%

FRB PPP liquidity facility

4,684,756

 

0.35%

 

4,479,036

 

0.35%

 

 

—%

Borrowings

1,276,212

 

3.09%

 

1,236,127

 

3.19%

 

1,424,550

 

2.91%

Total interest-bearing liabilities

14,407,843

 

0.83%

 

14,341,311

 

0.89%

 

8,502,426

 

2.17%

Non-interest-bearing deposits (4)

2,543,529

 

 

 

2,194,689

 

 

 

1,580,050

 

 

Total deposits and borrowings

16,951,372

 

0.71%

 

16,536,000

 

0.78%

 

10,082,476

 

1.83%

Other non-interest-bearing liabilities

215,465

 

 

 

299,526

 

 

 

138,242

 

 

Total liabilities

17,166,837

 

 

 

16,835,526

 

 

 

10,220,718

 

 

Shareholders' equity

1,083,882

 

 

 

1,030,048

 

 

 

1,036,489

 

 

Total liabilities and shareholders' equity

$

18,250,719

 

 

 

$

17,865,574

 

 

 

$

11,257,207

 

 

Interest spread

 

2.75%

 

 

2.47%

 

 

2.78%

Net interest margin

 

2.78%

 

 

2.50%

 

 

2.89%

Net interest margin tax equivalent (5)

 

2.78%

 

 

2.50%

 

 

2.89%

Net interest margin tax equivalent excl. PPP (6)

 

3.04%

 

 

2.86%

 

 

2.89%

(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 0.58%, 0.67% and 1.65% for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, 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 December 31, 2020, September 30, 2020 and December 31, 2019, 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.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

Twelve Months Ended

 

December 31, 2020

 

December 31, 2019

 

Average
Balance

Average
Yield or
Cost (%)

 

Average
Balance

Average
Yield or
Cost (%)

Assets

 

 

 

 

 

Interest earning deposits

$

564,218

 

0.59%

 

$

103,833

 

2.68%

Investment securities (1)

836,815

 

2.89%

 

653,694

 

3.63%

Loans and leases:

 

 

 

 

 

Commercial loans to mortgage companies

2,668,642

 

3.11%

 

1,799,489

 

4.58%

Multi-family loans

2,020,640

 

3.85%

 

2,982,185

 

3.87%

Commercial and industrial loans and leases (2)

2,581,119

 

4.12%

 

2,111,181

 

5.08%

Loans receivable, PPP

3,121,157

 

2.10%

 

 

—%

Non-owner occupied commercial real estate loans

1,368,684

 

3.91%

 

1,243,236

 

4.53%

Residential mortgages

422,696

 

3.82%

 

694,889

 

4.15%

Installment loans

1,264,255

 

8.68%

 

445,166

 

9.28%

Total loans and leases (3)

13,447,193

 

3.81%

 

9,276,146

 

4.65%

Other interest-earning assets

85,091

 

4.41%

 

90,035

 

6.39%

Total interest-earning assets

14,933,317

 

3.64%

 

10,123,708

 

4.58%

Non-interest-earning assets

671,484

 

 

 

543,962

 

 

Total assets

$

15,604,801

 

 

 

$

10,667,670

 

 

Liabilities

 

 

 

 

 

Interest checking accounts

$

2,098,138

 

0.89%

 

$

955,630

 

1.82%

Money market deposit accounts

3,657,422

 

0.96%

 

3,151,328

 

2.18%

Other savings accounts

1,162,472

 

1.44%

 

538,375

 

2.12%

Certificates of deposit

1,357,688

 

1.58%

 

1,943,361

 

2.26%

Total interest-bearing deposits (4)

8,275,720

 

1.11%

 

6,588,694

 

2.15%

FRB PPP liquidity facility

2,537,744

 

0.35%

 

 

—%

Borrowings

1,504,760

 

2.57%

 

1,523,171

 

2.95%

Total interest-bearing liabilities

12,318,224

 

1.13%

 

8,111,865

 

2.30%

Non-interest-bearing deposits (4)

2,052,376

 

 

 

1,430,149

 

 

Total deposits and borrowings

14,370,600

 

0.97%

 

9,542,014

 

1.95%

Other non-interest-bearing liabilities

201,961

 

 

 

126,325

 

 

Total liabilities

14,572,561

 

 

 

9,668,339

 

 

Shareholders' equity

1,032,240

 

 

 

999,331

 

 

Total liabilities and shareholders' equity

$

15,604,801

 

 

 

$

10,667,670

 

 

Interest spread

 

2.67%

 

 

2.63%

Net interest margin

 

2.70%

 

 

2.74%

Net interest margin tax equivalent (5)

 

2.71%

 

 

2.75%

Net interest margin tax equivalent (6)

 

2.96%

 

 

2.75%

(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 0.89% and 1.76% for the twelve months ended December 31, 2020 and December 31, 2019, respectively.

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the years ended December 31, 2020 and 2019, 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 noted (5), for the years ended December 31, 2020 and 2019, 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.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

SEGMENT REPORTING - UNAUDITED

(Dollars in thousands, except per share amounts)

The following tables present Customers' business segment results for the three and twelve months ended December 31, 2020 and 2019:

 

Three Months Ended December 31, 2020

 

Three Months Ended December 31, 2019

 

Customers
Bank Business
Banking

 

BankMobile

 

Consolidated

 

Customers
Bank Business
Banking

 

BankMobile

 

Consolidated

Interest income (1)

$

138,209

 

 

$

14,884

 

 

$

153,093

 

 

$

112,212

 

 

$

11,783

 

 

$

123,995

 

Interest expense

29,230

 

 

917

 

 

30,147

 

 

46,111

 

 

291

 

 

46,402

 

Net interest income

108,979

 

 

13,967

 

 

122,946

 

 

66,101

 

 

11,492

 

 

77,593

 

Provision for credit losses on loans and leases

(3,912

)

 

999

 

 

(2,913

)

 

6,846

 

 

2,843

 

 

9,689

 

Non-interest income

13,413

 

 

10,362

 

 

23,775

 

 

14,964

 

 

10,849

 

 

25,813

 

Non-interest expense

50,098

 

 

21,066

 

 

71,164

 

 

41,494

 

 

17,246

 

 

58,740

 

Income (loss) before income tax expense (benefit)

76,206

 

 

2,264

 

 

78,470

 

 

32,725

 

 

2,252

 

 

34,977

 

Income tax expense (benefit)

21,600

 

 

625

 

 

22,225

 

 

6,892

 

 

559

 

 

7,451

 

Net income (loss)

54,606

 

 

1,639

 

 

56,245

 

 

25,833

 

 

1,693

 

 

27,526

 

Preferred stock dividends

3,414

 

 

 

 

3,414

 

 

3,615

 

 

 

 

3,615

 

Net income (loss) available to common shareholders

$

51,192

 

 

$

1,639

 

 

$

52,831

 

 

$

22,218

 

 

$

1,693

 

 

$

23,911

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share

$

1.62

 

 

$

0.05

 

 

$

1.67

 

 

$

0.71

 

 

$

0.05

 

 

$

0.76

 

Diluted earnings (loss) per common share

$

1.60

 

 

$

0.05

 

 

$

1.65

 

 

$

0.70

 

 

$

0.05

 

 

$

0.75

 

(1) Amounts reported include funds transfer pricing of $3.9 million and $0.7 million for the three months ended December 31, 2020 and 2019, respectively, credited to BankMobile for the value provided to the Customers Bank Business Banking segment for the use of excess low/no cost deposits.

 

Twelve Months Ended December 31, 2020

 

Twelve Months Ended December 31, 2019

 

Customers
Bank Business
Banking

 

BankMobile

 

Consolidated

 

Customers
Bank Business
Banking

 

BankMobile

 

Consolidated

Interest income (1)

$

490,028

 

 

$

53,276

 

 

$

543,304

 

 

$

422,094

 

 

$

41,645

 

 

$

463,739

 

Interest expense

137,480

 

 

2,136

 

 

139,616

 

 

185,513

 

 

916

 

 

186,429

 

Net interest income

352,548

 

 

51,140

 

 

403,688

 

 

236,581

 

 

40,729

 

 

277,310

 

Provision for credit losses on loans and leases

51,708

 

 

11,066

 

 

62,774

 

 

10,091

 

 

14,136

 

 

24,227

 

Non-interest income

57,834

 

 

43,900

 

 

101,734

 

 

35,268

 

 

45,670

 

 

80,938

 

Non-interest expense

187,153

 

 

79,537

 

 

266,690

 

 

153,333

 

 

78,568

 

 

231,901

 

Income (loss) before income tax expense (benefit)

171,521

 

 

4,437

 

 

175,958

 

 

108,425

 

 

(6,305

)

 

102,120

 

Income tax expense (benefit)

42,307

 

 

1,073

 

 

43,380

 

 

24,215

 

 

(1,422

)

 

22,793

 

Net income (loss)

129,214

 

 

3,364

 

 

132,578

 

 

84,210

 

 

(4,883

)

 

79,327

 

Preferred stock dividends

14,041

 

 

 

 

14,041

 

 

14,459

 

 

 

 

14,459

 

Net income (loss) available to common shareholders

$

115,173

 

 

$

3,364

 

 

$

118,537

 

 

$

69,751

 

 

$

(4,883

)

 

$

64,868

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share

$

3.65

 

 

$

0.11

 

 

$

3.76

 

 

$

2.24

 

 

$

(0.16

)

 

$

2.08

 

Diluted earnings (loss) per common share

$

3.63

 

 

$

0.11

 

 

$

3.74

 

 

$

2.20

 

 

$

(0.15

)

 

$

2.05

 

As of December 31, 2020 and 2019

 

 

 

 

 

 

 

 

 

 

Goodwill and other intangibles

$

3,629

 

 

$

10,669

 

 

$

14,298

 

 

$

3,629

 

 

$

11,566

 

 

$

15,195

 

Total assets (2)

$

17,821,665

 

 

$

617,583

 

 

$

18,439,248

 

 

$

10,990,550

 

 

$

530,167

 

 

$

11,520,717

 

Total deposits

$

10,350,028

 

 

$

959,901

 

 

$

11,309,929

 

 

$

8,247,836

 

 

$

401,100

 

 

$

8,648,936

 

Total non-deposit liabilities (2)

$

5,982,010

 

 

$

30,223

 

 

$

6,012,233

 

 

$

1,789,329

 

 

$

29,657

 

 

$

1,818,986

 

(1) Amounts reported include funds transfer pricing of $9.3 million and $8.8 million for the twelve months ended December 31, 2020 and 2019, respectively, credited to BankMobile for the value provided to the Customers Bank Business Banking segment for the use of excess low/no cost deposits.

(2) Amounts reported exclude inter-segment receivables and payables.

The following tables present Customers' business segment results for the quarter ended December 31, 2020, the preceding four quarters, and the twelve months ended December 31, 2020 and 2019, respectively:

Customers Bank Business Banking:

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31,

 

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

2020

 

2019

Interest income (1)

 

$

138,209

 

 

$

126,648

 

 

$

112,455

 

 

$

112,717

 

 

$

112,212

 

 

$

490,028

 

 

$

422,094

 

Interest expense

 

29,230

 

 

31,718

 

 

32,856

 

 

43,678

 

 

46,111

 

 

137,480

 

 

185,513

 

Net interest income

 

108,979

 

 

94,930

 

 

79,599

 

 

69,039

 

 

66,101

 

 

352,548

 

 

236,581

 

Provision for credit losses on loans and leases

 

(3,912

)

 

8,699

 

 

19,623

 

 

27,298

 

 

6,846

 

 

51,708

 

 

10,091

 

Non-interest income

 

13,413

 

 

21,603

 

 

11,683

 

 

11,136

 

 

14,964

 

 

57,834

 

 

35,268

 

Non-interest expense

 

50,098

 

 

48,926

 

 

44,270

 

 

43,860

 

 

41,494

 

 

187,153

 

 

153,333

 

Income (loss) before income tax expense (benefit)

 

76,206

 

 

58,908

 

 

27,389

 

 

9,017

 

 

32,725

 

 

171,521

 

 

108,425

 

Income tax expense (benefit)

 

21,600

 

 

11,374

 

 

6,611

 

 

2,722

 

 

6,892

 

 

42,307

 

 

24,215

 

Net income (loss)

 

54,606

 

 

47,534

 

 

20,778

 

 

6,295

 

 

25,833

 

 

129,214

 

 

84,210

 

Preferred stock dividends

 

3,414

 

 

3,430

 

 

3,581

 

 

3,615

 

 

3,615

 

 

14,041

 

 

14,459

 

Net income (loss) available to common shareholders

 

$

51,192

 

 

$

44,104

 

 

$

17,197

 

 

$

2,680

 

 

$

22,218

 

 

$

115,173

 

 

$

69,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share

 

$

1.62

 

 

$

1.40

 

 

$

0.55

 

 

$

0.09

 

 

$

0.71

 

 

$

3.65

 

 

$

2.24

 

Diluted earnings (loss) per common share

 

$

1.60

 

 

$

1.39

 

 

$

0.54

 

 

$

0.09

 

 

$

0.70

 

 

$

3.63

 

 

$

2.20

 

(1) Amounts reported include funds transfer pricing of $3.9 million, $2.2 million, $1.6 million, $1.4 million and $0.7 million for the three months ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, respectively. Amounts reported also include funds transfer pricing of $9.3 million and $8.8 million for the twelve months ended December 31, 2020 and 2019, respectively. These amounts are credited to BankMobile for the value provided to the Customers Bank Business Banking segment for the use of excess low/no cost deposits.

BankMobile:

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31,

 

 

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

2020

 

2019

Interest income (2)

 

$

14,884

 

 

$

13,002

 

 

$

12,763

 

 

$

12,626

 

 

$

11,783

 

 

$

53,276

 

 

$

41,645

 

Interest expense

 

917

 

 

493

 

 

380

 

 

344

 

 

291

 

 

2,136

 

 

916

 

Net interest income

 

13,967

 

 

12,509

 

 

12,383

 

 

12,282

 

 

11,492

 

 

51,140

 

 

40,729

 

Provision for credit losses on loans and leases

 

999

 

 

4,256

 

 

1,323

 

 

4,488

 

 

2,843

 

 

11,066

 

 

14,136

 

Non-interest income

 

10,362

 

 

12,190

 

 

10,553

 

 

10,794

 

 

10,849

 

 

43,900

 

 

45,670

 

Non-interest expense

 

21,066

 

 

16,635

 

 

19,236

 

 

22,599

 

 

17,246

 

 

79,537

 

 

78,568

 

Income (loss) before income tax expense (benefit)

 

2,264

 

 

3,808

 

 

2,377

 

 

(4,011

)

 

2,252

 

 

4,437

 

 

(6,305

)

Income tax expense (benefit)

 

625

 

 

827

 

 

437

 

 

(816

)

 

559

 

 

1,073

 

 

(1,422

)

Net income (loss) available to common shareholders

 

$

1,639

 

 

$

2,981

 

 

$

1,940

 

 

$

(3,195

)

 

$

1,693

 

 

$

3,364

 

 

$

(4,883

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share

 

$

0.05

 

 

$

0.09

 

 

$

0.06

 

 

$

(0.10

)

 

$

0.05

 

 

$

0.11

 

 

$

(0.16

)

Diluted income (loss) per common share

 

$

0.05

 

 

$

0.09

 

 

$

0.06

 

 

$

(0.10

)

 

$

0.05

 

 

$

0.11

 

 

$

(0.15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit balances (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disbursements business deposits

 

$

404,601

 

 

$

644,658

 

 

$

500,072

 

 

$

502,711

 

 

$

319,263

 

 

 

 

 

White label deposits

 

555,300

 

 

299,091

 

 

162,691

 

 

107,054

 

 

81,837

 

 

 

 

 

Total deposits

 

$

959,901

 

 

$

943,749

 

 

$

662,763

 

 

$

609,765

 

 

$

401,100

 

 

 

 

 

(2) Amounts reported include funds transfer pricing of $3.9 million, $2.2 million, $1.6 million, $1.4 million and $0.7 million for the three months ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, respectively. Amounts reported also include funds transfer pricing of $9.3 million and $8.8 million for the twelve months ended December 31, 2020 and 2019, respectively. These amounts are credited to BankMobile for the value provided to the Customers Bank Business Banking segment for the use of excess low/no cost deposits.

(3) As of December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

2020

 

2020

 

2020

 

2020

 

2019

Commercial:

 

 

 

 

 

 

 

 

 

Multi-family

$

1,761,301

 

 

$

1,950,300

 

 

$

2,023,571

 

 

$

2,069,077

 

 

$

2,390,204

 

Mortgage warehouse

3,657,350

 

 

3,947,828

 

 

2,832,112

 

 

2,573,397

 

 

2,305,784

 

Commercial & industrial

2,304,206

 

 

2,186,480

 

 

2,060,494

 

 

2,017,567

 

 

1,831,126

 

Commercial real estate owner occupied

572,338

 

 

557,595

 

 

544,772

 

 

543,945

 

 

551,948

 

Loans receivable, PPP

4,561,365

 

 

4,964,105

 

 

4,760,427

 

 

 

 

 

Commercial real estate non-owner occupied

1,213,815

 

 

1,233,882

 

 

1,262,373

 

 

1,252,826

 

 

1,222,772

 

Construction

140,905

 

 

122,963

 

 

128,834

 

 

115,448

 

 

117,617

 

Total commercial loans and leases

14,211,280

 

 

14,963,153

 

 

13,612,583

 

 

8,572,260

 

 

8,419,451

 

Consumer:

 

 

 

 

 

 

 

 

 

Residential

323,322

 

 

343,775

 

 

352,941

 

 

364,760

 

 

386,089

 

Manufactured housing

62,243

 

 

64,638

 

 

66,865

 

 

69,240

 

 

71,359

 

Installment

1,235,406

 

 

1,233,713

 

 

1,257,813

 

 

1,315,171

 

 

1,174,175

 

Total consumer loans

1,620,971

 

 

1,642,126

 

 

1,677,619

 

 

1,749,171

 

 

1,631,623

 

Total loans and leases

$

15,832,251

 

 

$

16,605,279

 

 

$

15,290,202

 

 

$

10,321,431

 

 

$

10,051,074

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

PERIOD END DEPOSIT COMPOSITION - UNAUDITED

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

2020

 

2020

 

2020

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

Demand, non-interest bearing

$

2,356,998

 

 

$

2,327,017

 

 

$

1,879,789

 

 

$

1,435,151

 

 

$

1,343,391

 

Demand, interest bearing

2,384,691

 

 

2,308,627

 

 

2,666,209

 

 

1,577,034

 

 

1,235,292

 

Total demand deposits

4,741,689

 

 

4,635,644

 

 

4,545,998

 

 

3,012,185

 

 

2,578,683

 

Savings

1,314,817

 

 

1,173,641

 

 

1,144,788

 

 

1,168,121

 

 

919,214

 

Money market

4,601,492

 

 

4,057,366

 

 

3,404,709

 

 

2,833,990

 

 

3,482,505

 

Time deposits

651,931

 

 

972,426

 

 

1,870,380

 

 

1,399,347

 

 

1,668,534

 

Total deposits

$

11,309,929

 

 

$

10,839,077

 

 

$

10,965,875

 

 

$

8,413,643

 

 

$

8,648,936

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY - UNAUDITED

(Dollars in thousands)

As of December 31, 2020

As of September 30, 2020

As of December 31, 2019

 

Total loans

Non
accrual
/NPLs

Allowance
for credit
losses

Total NPLs
to total
loans

Total
reserves to
total NPLs

Total loans

Non
accrual
/NPLs

Allowance
for credit
losses

Total NPLs
to total
loans

Total
reserves to
total NPLs

Total loans

Non
accrual
/NPLs

Allowance
for credit
losses

Total NPLs
to total
loans

Total
reserves to
total NPLs

 

Loan type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

$

1,761,301

 

$

21,728

 

$

12,620

 

1.23

%

58.08

%

$

1,950,300

 

$

11,710

 

$

15,026

 

0.60

%

128.32

%

$

1,907,331

 

$

4,117

 

$

6,157

 

0.22

%

149.55

%

Commercial & industrial(1)

2,289,441

 

8,453

 

12,239

 

0.37

%

144.79

%

2,220,715

 

9,633

 

12,926

 

0.43

%

134.18

%

1,891,152

 

4,531

 

16,010

 

0.24

%

353.34

%

Commercial real estate owner occupied

572,338

 

3,411

 

9,512

 

0.60

%

278.86

%

557,595

 

3,599

 

9,552

 

0.65

%

265.41

%

551,948

 

1,963

 

1,781

 

0.36

%

90.73

%

Commercial real estate non-owner occupied

1,196,564

 

2,356

 

19,452

 

0.20

%

825.64

%

1,215,516

 

2,408

 

20,200

 

0.20

%

838.87

%

1,222,772

 

76

 

6,243

 

0.01

%

8214.47

%

Construction

140,905

 

 

5,871

 

%

%

122,963

 

 

6,423

 

%

%

117,617

 

 

1,262

 

%

%

Total commercial loans and leases receivable

5,960,549

 

35,948

 

59,694

 

0.60

%

166.06

%

6,067,089

 

27,350

 

64,127

 

0.45

%

234.47

%

5,690,820

 

10,687

 

31,453

 

0.19

%

294.31

%

Residential

317,170

 

9,911

 

3,977

 

3.12

%

40.13

%

335,452

 

10,634

 

4,649

 

3.17

%

43.72

%

382,634

 

6,128

 

3,218

 

1.60

%

52.51

%

Manufactured housing

62,243

 

2,969

 

5,189

 

4.77

%

174.77

%

64,638

 

2,778

 

5,625

 

4.30

%

202.48

%

71,359

 

1,655

 

1,178

 

2.32

%

71.18

%

Installment

1,235,406

 

3,211

 

75,316

 

0.26

%

2345.56

%

1,233,713

 

3,118

 

81,160

 

0.25

%

2602.95

%

1,174,175

 

1,551

 

20,648

 

0.13

%

1331.27

%

Total consumer loans receivable

1,614,819

 

16,091

 

84,482

 

1.00

%

525.03

%

1,633,803

 

16,530

 

91,434

 

1.01

%

553.14

%

1,628,168

 

9,334

 

25,044

 

0.57

%

268.31

%

Loans and leases receivable(1)

7,575,368

 

52,039

 

144,176

 

0.69

%

277.05

%

7,700,892

 

43,880

 

155,561

 

0.57

%

354.51

%

7,318,988

 

20,021

 

56,497

 

0.27

%

282.19

%

Loans receivable, PPP

4,561,365

 

 

 

%

%

4,964,105

 

 

 

%

%

 

 

 

%

%

Loans receivable, mortgage warehouse, at fair value

3,616,432

 

 

 

%

%

3,913,593

 

 

 

 

 

2,245,758

 

 

 

 

 

Total loans held for sale

79,086

 

18,469

 

 

23.35

%

%

26,689

 

19,691

 

 

73.78

%

%

486,328

 

1,325

 

 

0.27

%

%

Total portfolio

$

15,832,251

 

$

70,508

 

$

144,176

 

0.45

%

204.48

%

$

16,605,279

 

$

63,571

 

$

155,561

 

0.38

%

244.70

%

$

10,051,074

 

$

21,346

 

$

56,497

 

0.21

%

264.67

%

(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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4

 

Q3

 

Q2

 

Q1

 

Q4

 

Twelve Months Ended
December 31,

 

2020

 

2020

 

2020

 

2020

 

2019

 

2020

 

2019

Loan type

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-family

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

534

 

Commercial & industrial

155

 

 

(55

)

 

(4

)

 

43

 

 

(224

)

 

139

 

 

(518

)

Commercial real estate owner occupied

12

 

 

44

 

 

(2

)

 

(3

)

 

(1

)

 

51

 

 

(117

)

Commercial real estate non-owner occupied

(35

)

 

8,923

 

 

2,801

 

 

12,797

 

 

 

 

24,486

 

 

 

Construction

(6

)

 

(6

)

 

(113

)

 

(3

)

 

(8

)

 

(128

)

 

(136

)

Residential

46

 

 

(17

)

 

(26

)

 

(29

)

 

181

 

 

(26

)

 

270

 

Installment

8,300

 

 

8,410

 

 

7,669

 

 

5,906

 

 

4,414

 

 

30,285

 

 

7,787

 

Total net charge-offs (recoveries) from loans held for investment

$

8,472

 

 

$

17,299

 

 

$

10,325

 

 

$

18,711

 

 

$

4,362

 

 

$

54,807

 

 

$

7,820

 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED

 

Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in Customers' industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP.

 

The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document.

 

Core Earnings - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31,

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

2020

 

2019

(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

$

52,831

 

 

$

1.65

 

 

$

47,085

 

 

$

1.48

 

 

$

19,137

 

 

$

0.61

 

 

$

(515

)

 

$

(0.02

)

 

$

23,911

 

 

$

0.75

 

 

$

118,537

 

 

$

3.74

 

 

$

64,868

 

 

$

2.05

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance expense

171

 

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

171

 

 

0.01

 

 

373

 

 

0.01

 

Loss upon acquisition of interest-only GNMA securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,682

 

 

0.18

 

Merger and acquisition related expenses

714

 

 

0.02

 

 

833

 

 

0.03

 

 

19

 

 

 

 

40

 

 

 

 

76

 

 

 

 

1,606

 

 

0.05

 

 

76

 

 

 

Legal reserves

 

 

 

 

258

 

 

0.01

 

 

 

 

 

 

830

 

 

0.03

 

 

 

 

 

 

1,088

 

 

0.03

 

 

1,520

 

 

0.05

 

(Gains) losses on investment securities

(1,419

)

 

(0.04

)

 

(9,662

)

 

(0.30

)

 

(4,543

)

 

(0.14

)

 

(1,788

)

 

(0.06

)

 

(310

)

 

(0.01

)

 

(17,412

)

 

(0.55

)

 

(1,912

)

 

(0.06

)

Derivative credit valuation adjustment

(448

)

 

(0.01

)

 

(304

)

 

(0.01

)

 

4,527

 

 

0.14

 

 

2,036

 

 

0.06

 

 

(429

)

 

(0.01

)

 

5,811

 

 

0.18

 

 

811

 

 

0.03

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

 

 

 

 

(1,080

)

 

(0.03

)

 

 

 

 

 

 

 

 

 

(1,080

)

 

(0.03

)

 

 

 

 

Losses on sale of non-QM residential mortgage loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

595

 

 

0.02

 

 

 

 

 

 

595

 

 

0.02

 

Unrealized losses on loans held for sale

799

 

 

0.03

 

 

 

 

 

 

1,114

 

 

0.04

 

 

 

 

 

 

 

 

 

 

1,913

 

 

0.06

 

 

 

 

 

Core earnings

$

52,648

 

 

$

1.65

 

 

$

38,210

 

 

$

1.20

 

 

$

19,174

 

 

$

0.61

 

 

$

603

 

 

$

0.02

 

 

$

23,843

 

 

$

0.75

 

 

$

110,634

 

 

$

3.49

 

 

$

72,013

 

 

$

2.28

 

(Dollars in thousands, except per share data)

 

Core Return on Average Assets - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

December 31,

(dollars in thousands except per share data)

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

2020

 

2019

GAAP net income

$

56,245

 

 

$

50,515

 

 

$

22,718

 

 

$

3,100

 

 

$

27,526

 

 

$

132,578

 

 

$

79,327

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance expense

171

 

 

 

 

 

 

 

 

 

 

171

 

 

373

 

Loss upon acquisition of interest-only GNMA securities

 

 

 

 

 

 

 

 

 

 

 

 

5,682

 

Merger and acquisition related expenses

714

 

 

833

 

 

19

 

 

40

 

 

76

 

 

1,606

 

 

76

 

Legal reserves

 

 

258

 

 

 

 

830

 

 

 

 

1,088

 

 

1,520

 

(Gains) losses on investment securities

(1,419)

 

 

(9,662)

 

 

(4,543)

 

 

(1,788)

 

 

(310)

 

 

(17,412)

 

 

(1,912)

 

Derivative credit valuation adjustment

(448)

 

 

(304)

 

 

4,527

 

 

2,036

 

 

(429)

 

 

5,811

 

 

811

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

(1,080)

 

 

 

 

 

 

(1,080)

 

 

 

Losses on sale of non-QM residential mortgage loans

 

 

 

 

 

 

 

 

595

 

 

 

 

595

 

Unrealized losses on loans held for sale

799

 

 

 

 

1,114

 

 

 

 

 

 

1,913

 

 

 

Core net income

$

56,062

 

 

$

41,640

 

 

$

22,755

 

 

$

4,218

 

 

$

27,458

 

 

$

124,675

 

 

$

86,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

18,250,719

 

 

$

17,865,574

 

 

$

14,675,584

 

 

$

11,573,406

 

 

$

11,257,207

 

 

$

15,604,801

 

 

$

10,667,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core return on average assets

1.22

%

 

0.93

%

 

0.62

%

 

0.15

%

 

0.97

%

 

0.80

%

 

0.81

%

(Dollars in thousands, except per share data)

 

Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

December 31,

(dollars in thousands except per share data)

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

2020

 

2019

GAAP net income

$

56,245

 

 

$

50,515

 

 

$

22,718

 

 

$

3,100

 

 

$

27,526

 

 

$

132,578

 

 

$

79,327

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

22,225

 

 

12,201

 

 

7,048

 

 

1,906

 

 

7,451

 

 

43,380

 

 

22,793

 

Provision for credit losses on loans and leases

(2,913

)

 

12,955

 

 

20,946

 

 

31,786

 

 

9,689

 

 

62,774

 

 

24,227

 

Provision for credit losses on unfunded commitments

(968

)

 

(527

)

 

(356

)

 

751

 

 

3

 

 

(1,100

)

 

(403

)

Severance expense

239

 

 

 

 

 

 

 

 

 

 

239

 

 

490

 

Loss upon acquisition of interest-only GNMA securities

 

 

 

 

 

 

 

 

 

 

 

 

7,476

 

Merger and acquisition related expenses

996

 

 

1,035

 

 

25

 

 

50

 

 

100

 

 

2,106

 

 

100

 

Legal reserves

 

 

320

 

 

 

 

1,042

 

 

 

 

1,362

 

 

2,000

 

(Gains) losses on investment securities

(1,431

)

 

(11,945

)

 

(5,553

)

 

(2,596

)

 

(310

)

 

(21,525

)

 

(2,300

)

Derivative credit valuation adjustment

(625

)

 

(378

)

 

5,895

 

 

2,556

 

 

(565

)

 

7,448

 

 

1,066

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

(1,407

)

 

 

 

 

 

(1,407

)

 

 

Losses on sale of non-QM residential mortgage loans

 

 

 

 

 

 

 

 

782

 

 

 

 

782

 

Unrealized losses on loans held for sale

1,115

 

 

 

 

1,450

 

 

 

 

 

 

2,565

 

 

 

Adjusted net income - pre-tax pre-provision

$

74,883

 

 

$

64,176

 

 

$

50,766

 

 

$

38,595

 

 

$

44,676

 

 

$

228,420

 

 

$

135,558

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

$

18,250,719

 

 

$

17,865,574

 

 

$

14,675,584

 

 

$

11,573,406

 

 

$

11,257,207

 

 

$

15,604,801

 

 

$

10,667,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted ROAA - pre-tax pre-provision

1.63

%

 

1.43

%

 

1.39

%

 

1.34

%

 

1.57

%

 

1.46

%

 

1.27

%

Core Return on Average Common Equity - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31,

(dollars in thousands except per share data)

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

2020

 

2019

GAAP net income to common shareholders

$

52,831

 

 

$

47,085

 

 

$

19,137

 

 

$

(515

)

 

$

23,911

 

 

$

118,537

 

 

$

64,868

 

Reconciling items (after tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance expense

171

 

 

 

 

 

 

 

 

 

 

171

 

 

373

 

Loss upon acquisition of interest-only GNMA securities

 

 

 

 

 

 

 

 

 

 

 

 

5,682

 

Merger and acquisition related expenses

714

 

 

833

 

 

19

 

 

40

 

 

76

 

 

1,606

 

 

76

 

Legal reserves

 

 

258

 

 

 

 

830

 

 

 

 

1,088

 

 

1,520

 

(Gains) losses on investment securities

(1,419

)

 

(9,662

)

 

(4,543

)

 

(1,788

)

 

(310

)

 

(17,412

)

 

(1,912

)

Derivative credit valuation adjustment

(448

)

 

(304

)

 

4,527

 

 

2,036

 

 

(429

)

 

5,811

 

 

811

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

(1,080

)

 

 

 

 

 

(1,080

)

 

 

Losses on sale of non-QM residential mortgage loans

 

 

 

 

 

 

 

 

595

 

 

 

 

595

 

Unrealized losses on loans held for sale

799

 

 

 

 

1,114

 

 

 

 

 

 

1,913

 

 

 

Core earnings

$

52,648

 

 

$

38,210

 

 

$

19,174

 

 

$

603

 

 

$

23,843

 

 

$

110,634

 

 

$

72,013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total common shareholders' equity

$

866,411

 

 

$

812,577

 

 

$

771,663

 

 

$

807,884

 

 

$

819,018

 

 

$

814,769

 

 

$

781,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core return on average common equity

24.17

%

 

18.71

%

 

9.99

%

 

0.30

%

 

11.55

%

 

13.58

%

 

9.21

%

(Dollars in thousands, except per share data)

Adjusted ROCE - Pre-Tax Pre-Provision - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31,

(dollars in thousands except per share data)

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

2020

 

2019

GAAP net income to common shareholders

$

52,831

 

 

$

47,085

 

 

$

19,137

 

 

$

(515)

 

 

$

23,911

 

 

$

118,537

 

 

$

64,868

 

Reconciling items:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

22,225

 

 

12,201

 

 

7,048

 

 

1,906

 

 

7,451

 

 

43,380

 

 

22,793

 

Provision for credit losses on loan and leases

(2,913)

 

 

12,955

 

 

20,946

 

 

31,786

 

 

9,689

 

 

62,774

 

 

24,227

 

Provision for credit losses on unfunded commitments

(968)

 

 

(527)

 

 

(356)

 

 

751

 

 

3

 

 

(1,100)

 

 

(403)

 

Severance expense

239

 

 

 

 

 

 

 

 

 

 

239

 

 

490

 

Loss upon acquisition of interest-only GNMA securities

 

 

 

 

 

 

 

 

 

 

 

 

7,476

 

Merger and acquisition related expenses

996

 

 

1,035

 

 

25

 

 

50

 

 

100

 

 

2,106

 

 

100

 

Legal reserves

 

 

320

 

 

 

 

1,042

 

 

 

 

1,362

 

 

2,000

 

(Gains) losses on investment securities

(1,431)

 

 

(11,945)

 

 

(5,553)

 

 

(2,596)

 

 

(310)

 

 

(21,525)

 

 

(2,300)

 

Derivative credit valuation adjustment

(625)

 

 

(378)

 

 

5,895

 

 

2,556

 

 

(565)

 

 

7,448

 

 

1,066

 

Risk participation agreement mark-to-market adjustment

 

 

 

 

(1,407)

 

 

 

 

 

 

(1,407)

 

 

 

Losses on sale of non-QM residential mortgage loans

 

 

 

 

 

 

 

 

782

 

 

 

 

782

 

Unrealized losses on loans held for sale

1,115

 

 

 

 

1,450

 

 

 

 

 

 

2,565

 

 

 

Pre-tax pre-provision adjusted net income available to common shareholders

$

71,469

 

 

$

60,746

 

 

$

47,185

 

 

$

34,980

 

 

$

41,061

 

 

$

214,379

 

 

$

121,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total common shareholders' equity

$

866,411

 

 

$

812,577

 

 

$

771,663

 

 

$

807,884

 

 

$

819,018

 

 

$

814,769

 

 

$

781,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted ROCE - pre-tax pre-provision

32.82

%

 

29.74

%

 

24.59

%

 

17.41

%

 

19.89

%

 

26.31

%

 

15.49

%

Net Interest Margin, Tax Equivalent - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31,

(dollars in thousands except per share data)

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

2020

 

2019

GAAP net interest income

$

122,946

 

 

$

107,439

 

 

$

91,982

 

 

$

81,321

 

 

$

77,593

 

 

$

403,688

 

 

$

277,310

 

Tax-equivalent adjustment

219

 

 

225

 

 

225

 

 

205

 

 

187

 

 

874

 

 

735

 

Net interest income tax equivalent

$

123,165

 

 

$

107,664

 

 

$

92,207

 

 

$

81,526

 

 

$

77,780

 

 

$

404,562

 

 

$

278,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total interest earning assets

$

17,601,999

 

 

$

17,121,145

 

 

$

13,980,021

 

 

$

10,976,731

 

 

$

10,676,730

 

 

$

14,933,317

 

 

$

10,123,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin, tax equivalent

2.78

%

 

2.50

%

 

2.65

%

 

2.99

%

 

2.89

%

 

2.71

%

 

2.75

%

Net Interest Margin, Tax Equivalent, Excluding PPP - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31,

(dollars in thousands except per share data)

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

2020

 

2019

GAAP net interest income

$

122,946

 

 

$

107,439

 

 

$

91,982

 

 

$

81,321

 

 

$

77,593

 

 

$

403,688

 

 

$

277,310

 

PPP net interest income

(25,257

)

 

(20,018

)

 

(9,308

)

 

 

 

 

 

(54,583

)

 

 

Tax-equivalent adjustment

219

 

 

225

 

 

225

 

 

205

 

 

187

 

 

874

 

 

735

 

Net interest income, tax equivalent, excluding PPP

$

97,908

 

 

$

87,646

 

 

$

82,899

 

 

$

81,526

 

 

$

77,780

 

 

$

349,979

 

 

$

278,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP average total interest earning assets

$

17,601,999

 

 

$

17,121,145

 

 

$

13,980,021

 

 

$

10,976,731

 

 

$

10,676,730

 

 

$

14,933,317

 

 

$

10,123,708

 

Average PPP loans

(4,782,606

)

 

(4,909,197

)

 

(2,754,920

)

 

 

 

 

 

(3,121,157

)

 

 

Adjusted average total interest earning assets

$

12,819,393

 

 

$

12,211,948

 

 

$

11,225,101

 

 

$

10,976,731

 

 

$

10,676,730

 

 

$

11,812,160

 

 

$

10,123,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin, tax equivalent, excluding PPP

3.04

%

 

2.86

%

 

2.97

%

 

2.99

%

 

2.89

%

 

2.96

%

 

2.75

%

(Dollars in thousands, except per share data)

Core Efficiency Ratio - Customers Bancorp

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31,

(dollars in thousands except per share data)

Q4 2020

 

Q3 2020

 

Q2 2020

 

Q1 2020

 

Q4 2019

 

2020

 

2019

GAAP net interest income

$

122,946

 

 

$

107,439

 

 

$

91,982

 

 

$

81,321

 

 

$

77,593

 

 

$

403,688

 

 

$

277,310

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP non-interest income

$

23,775

 

 

$

33,793

 

 

$

22,236

 

 

$

21,930

 

 

$

25,813

 

 

$

101,734

 

 

$

80,938

 

Loss upon acquisition of interest-only GNMA securities