Net Income of $33.2 million, or $1.01 Per
Diluted Share, Record Core Earnings of $70.3 million, or $2.14 Per
Diluted Share
5th Largest PPP Lender (Round 3) in U.S. and
#1 in Peer Group ~$200 million of Expected Deferred Origination
Fees Earned In Just 2.5 Months of 2021
- Q1 2021 net income available to common shareholders was $33.2
million, or $1.01 per diluted share. Q1 2021 results were impacted
by $38 million of one-time merger-related and tax expenses
resulting from the divestiture of BankMobile Technologies, Inc.
("BMT") on January 4, 2021. These items and BMT’s historical
financial results for periods prior to the divestiture have been
reflected in the consolidated financial statements as discontinued
operations. Current and prior period core earnings exclude the
impact of discontinued operations.
- Q1 2021 core earnings (a non-GAAP measure) were $70.3 million,
or $2.14 per diluted share, up 29% over Q4 2020 and 1,282% over Q1
2020.
- Q1 2021 ROAA was 0.80% and Core ROAA (a non-GAAP measure) was
1.61%. Q4 2020 ROAA was 1.23% and Core ROAA (a non GAAP measure)
was 1.26%.
- Q1 2021 ROCE was 14.66% and Core ROCE (a non-GAAP measure) was
31.03%. Q4 2020 ROCE was 24.26% and Core ROCE (a non-GAAP measure)
was 25.06%.
- Adjusted pre-tax pre-provision net income (a non-GAAP measure)
for Q1 2021 was $86.8 million, an increase of 11% over Q4 2020 and
96% over Q1 2020. Q1 2021 adjusted pre-tax pre-provision return on
average assets (a non-GAAP measure) was 1.90% compared to 1.70% for
Q4 2020 and 1.54% for Q1 2020.
- Q1 2021 results include a net benefit to (or release from)
provision for credit losses on loans and leases of $2.9 million. At
March 31, 2021, the coverage of credit loss reserves for loans and
leases held for investment, excluding Paycheck Protection Program
("PPP") loans (a non-GAAP measure), was 1.71% compared to 1.90% at
December 31, 2020.
- Non-performing assets were 0.26% of total assets at March 31,
2021 compared to 0.39% at December 31, 2020. Allowance for credit
losses equaled 264% of non-performing loans at March 31, 2021, up
from 204% at December 31, 2020.
- Net interest income for Q1 2021 grew $9.8 million, or 8.0%,
over Q4 2020 and $51.4 million, or 63.2% over Q1 2020.
- Q1 2021 net interest margin (a non-GAAP measure) increased 22
basis points from Q4 2020 to 3.00%, mostly due to PPP loans at an
average yield of 3.41% due to the acceleration of deferred fee
recognition upon loan forgiveness. Q1 2021 net interest margin,
excluding the impact of PPP loans (a non-GAAP measure), was stable
at about 3.0%.
- Q1 2021 balance sheet restructuring, which included terminating
$850 million of cash flow hedges and selling $325 million of
investment securities is expected to contribute to net interest
margin expansion of about 15 basis points while neutral to Q1 2021
capital levels.
- Total loans and leases increased $5.8 billion, or 56.6%
year-over-year, driven by PPP loans of $5.2 billion and strong
growth in short-term commercial loans to mortgage companies of
$890.1 million. Total loans and leases, excluding PPP loans (a
non-GAAP measure), increased $668.8 million, or 6.5%
year-over-year.
- Total deposits increased $4.1 billion, or 48.2% year-over-year,
which included a $2.9 billion or 96.4% increase in demand deposits.
The total cost of deposits dropped to 0.53% in Q1 2021, a decline
of 98 basis points from 1.51% in the year-ago quarter.
- Total deferments declined to $189.1 million, or 1.7% of total
loans and leases excluding PPP loans (a non-GAAP measure) at March
31, 2021, down from $750.5 million, or 7.3% of total loans and
leases excluding PPP loans (a non-GAAP measure) at July 24,
2020.
- Q1 2021 efficiency ratio was 48.89% compared to 54.48% for Q1
2020. Q1 2021 core efficiency ratio was 41.13% compared to 52.97%
in Q1 2020 (non-GAAP measures).
- We expect to launch a private real-time, blockchain-based B2B
payments platform with integration of digital and legacy payment
rails. The platform will deliver enhanced payments functionality
for our business clients and is expected to generate additional
deposit growth in targeted niches, such as real estate, monetary
and currency exchanges and institutional investments.
Customers Bancorp, Inc. (NYSE: CUBI), the parent company of
Customers Bank (collectively "Customers" or "CUBI"), today reported
first quarter 2021 ("Q1 2021") net income to common shareholders of
$33.2 million, or $1.01 per diluted share, down from fourth quarter
2020 ("Q4 2020") net income to common shareholders of $52.8
million, or $1.65 per diluted share. Q1 2021 results included a net
loss from discontinued operations of $38.0 million, which reduced
GAAP earnings by $1.16 per diluted share. Core earnings for Q1 2021
totaled $70.3 million, or $2.14 per diluted share, up from Q4 2020
core earnings of $54.6 million, or $1.71 per diluted share
(non-GAAP measures). Net interest margin, tax equivalent ("NIM")
expanded 22 basis points during Q1 2021 to 3.00% from 2.78% in Q4
2020 (non-GAAP measures).
“We are extremely pleased with our financial results for the
first quarter and are excited that 2021 is off to a great start,”
remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “At this
time, we have close to 200,000 of loans approved by the SBA in
Round 3 of the Paycheck Protection Program ("PPP") as we continue
to support small businesses, not-for-profits, and the communities
we serve while improving the financial position of Customers Bank
at the same time. In total, we expect to generate approximately
$400 million of pre-tax revenues from our participation in this
program, placing us in the Top 5 in the U.S., all because of our
entrepreneurial style, effective risk management and
technology-based execution. We also continue to make great strides
in improving our core profitability while maintaining superior
asset quality. The restructuring of our balance sheet in Q1 2021
combined with the on-going efforts to reduce total deposit costs is
expected to drive further net interest margin expansion in future
quarters. Our tremendously successful execution on these
initiatives will result in significant capital accretion, leaving
us well positioned to support future growth and to possibly
consider adopting a common stock repurchase program or redeeming
all or a portion of our preferred stock in 2021 or 2022,” Mr. Sidhu
concluded.
Key Balance Sheet Trends
Total loans and leases increased $5.8 billion, or 56.6%, to
$16.2 billion at March 31, 2021 compared to the year-ago period.
PPP loans were $5.2 billion at March 31, 2021. Additionally, the
loan mix improved year-over-year as commercial loans to mortgage
companies increased $0.9 billion to $3.5 billion, commercial and
industrial loans and leases increased $147.2 million to $2.2
billion, consumer installment loans increased $89.9 million to $1.4
billion, commercial real estate owner occupied loans increased
$46.1 million to $590.1 million and construction loans increased
$41.4 million to $156.8 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 decreases in
multi-family loans of $409.5 million to $1.7 billion, residential
mortgages of $69.1 million to $295.7 million and commercial real
estate non-owner occupied loans of $58.0 million to $1.2 billion.
“Looking ahead, we see continued growth in core C&I loans
offsetting some of the expected decreases in loans to mortgage
companies in the second half of this year," stated Sidhu.
Total deposits increased $4.1 billion, or 48.2%, to $12.5
billion at March 31, 2021 compared to the year-ago period. Total
demand deposits increased $2.9 billion, or 96.4%, to $5.9 billion,
money market deposits increased $1.6 billion, or 55.5%, to $4.4
billion, and savings deposits increased $315.4 million, or 27.0%,
to $1.5 billion. These increases were offset, in part, by a
decrease in time deposits of $0.7 billion, or 52.4%, to $665.9
million. The total cost of deposits declined by 98 basis points to
0.53% in Q1 2021 from 1.51% in the year-ago quarter.
Very Strong Growth in Tangible Common Equity and Tangible
Book Value Per Share
Customers experienced significant improvements in regulatory
capital ratios in Q1 2021 as compared to a year ago. Customers
Bancorp's tangible common equity (a non-GAAP measure) increased by
$235.0 million to $967.3 million at March 31, 2021 from $732.3
million at March 31, 2020, and the tangible book value per common
share (a non-GAAP measure) increased to $30.01 at March 31, 2021
from $23.27 at March 31, 2020, an increase of 29%. "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 12.5% and 7.1%, respectively, at March 31,
2021. At December 31, 2020, Customers Bancorp's total risk based
capital ratio and TCE ratio, excluding PPP loans (a non-GAAP
measure), were 11.9% and 6.4%, respectively. "As a consequence of
PPP related income and a potential cyclical decline in mortgage
warehouse loans, we expect our capital levels to increase sharply
by the second half of 2021 with the TCE ratio excluding PPP loans
to be about 8.5% 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 $176.1 million, or 1.6%
of total loans and leases, excluding PPP loans (a non-GAAP
measure), at March 31, 2021, down from $202.1 million, or 1.8% of
total loans and leases, excluding PPP loans, at December 31, 2020.
Of the $176.1 million in total commercial deferments, $83.1
million, or 47.2%, were principal only deferments. Customers'
commercial deferments peaked at about $1.2 billion in July
2020.
- Exposure to industry segments significantly impacted by
COVID-19 is not substantial. At March 31, 2021, Customers had $84.6
million in energy and utilities exposure (with no deferments);
$62.0 million in colleges and universities (no deferments
requested); $66.2 million in CRE retail sales exposure (mostly auto
sales; with no deferments); $30.4 million in franchise restaurants
and dining (with no deferments); and $26.9 million in entertainment
only businesses (with no deferments).
- At March 31, 2021, the hospitality portfolio was $400.6
million, or 3.6% of total loans and leases, excluding PPP loans,
with $125.9 million in deferment. Approximately 79.7% ($318.8
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 March 31, 2021, the healthcare portfolio was approximately
$385 million, comprised predominantly of skilled nursing, which has
been deemed an essential business and through a number of federal
and state actions has been provided immunity from liability for
COVID-19 related deaths. No deferments have been requested and
there are no delinquencies.
- The multi-family portfolio is highly seasoned, with a weighted
average loan to value of 62% as of quarter-end. 55% of the
portfolio was in New York City, of which 71% was in rent
controlled/regulated properties. As of March 31, 2021, $9.3 million
of the portfolio was on deferment.
- At March 31, 2021, investment CRE had a weighted average loan
to value of 64%, with approximately 53% of the portfolio housed in
the New York and Philadelphia and surrounding markets. As of March
31, 2021, $4.4 million of the portfolio was on deferment, with
minimal exposure to the office market.
Consumer installment, mortgage and home equity loan portfolios
continue to perform well
- Total consumer-related deferments declined to $13.0 million, or
0.1% of total loans and leases, excluding PPP loans (a non-GAAP
measure), at March 31, 2021, down from $16.4 million at December
31, 2020.
- The $1.4 billion consumer installment loan portfolio
outperformed industry peers with deferments dropping to 0.5% and
30+ DPD delinquency at only 0.8%. 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 Q1 2021.
- 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.
Key Profitability Trends
Net Interest Income
Net interest income totaled $132.7 million in Q1 2021, an
increase of $9.8 million from Q4 2020, primarily due to a $341.9
million net increase in average interest-earning assets. Earning
assets were driven by increases in consumer and commercial and
industrial loans, investment securities and the new round of PPP
loans, offset in part by PPP loan forgiveness from the first two
rounds, which accelerated the recognition of net deferred loan
origination fees, and decreases in commercial loans to mortgage
companies and multi-family loans. The benefit of this net growth
resulted in a 22 basis point linked-quarter increase in NIM (a
non-GAAP measure) to 3.00%. Compared to Q4 2020, total loan yields
increased 40 basis points to 4.02%. The increase is attributable to
increased originations of consumer installment loans and PPP loan
forgiveness from the first two rounds. The cost of interest-bearing
deposits in Q1 2021 decreased by 7 basis points to 0.69% due to the
on-going efforts to reduce the total cost of deposits and strategic
decisions to reallocate deposit funding to lower cost deposits.
Total borrowing costs increased by 6 basis points to 1.00%
primarily due to lower utilization of the FRB PPP Liquidity
Facility, costing 0.35%, due to PPP loan forgiveness from the first
two rounds and excess cash available to fund PPP round 3
originations.
Provision for Credit Losses
The provision for credit losses on loans and leases in Q1 2021
was a $2.9 million benefit to (or release from) the provision,
compared to a $2.9 million benefit (release) in Q4 2020. The
benefit (release) in Q1 2021 primarily resulted from a continuing
improvement in forecasts of macroeconomic conditions since Q4 2020.
The allowance for credit losses on loans and leases represented
1.7% of total loans and leases receivable, excluding PPP loans (a
non-GAAP measure) at March 31, 2021, compared to 1.9% at December
31, 2020, 2.0% at March 31, 2020, and 0.8% at December 31, 2019.
Customers' non-performing loans at March 31, 2021 were only 0.3% of
total loans and leases.
Non-Interest Income
Non-interest income totaled $18.5 million for Q1 2021, an
increase of $2.4 million compared to Q4 2020. The increase in
non-interest income primarily resulted from increases of $23.5
million in gain on sale of investment securities, $1.7 million in
unrealized gain on derivatives, $1.1 million in other non-interest
income, $0.6 million in mortgage warehouse transactional fees and
$0.4 million in commercial lease income, partially offset by a
$24.5 million increase in loss on cash flow hedge derivative
terminations and $0.4 million decrease in unrealized gains on
equity securities issued by a foreign entity.
The increase in gain on sale of investment securities primarily
resulted from the sales of approximately $325 million of investment
securities in Q1 2021, compared to sales of $10 million during Q4
2020. The increase in other non-interest income was driven by an
unrealized loss on a loan held for sale of $1.1 million related to
one commercial credit in Q4 2020. The increase in unrealized gain
on derivatives was primarily due to an increased credit valuation
adjustment of $0.9 million resulting from changes in market
interest rates and increased interest rate swap fees of $0.8
million driven by higher volumes. The increase in mortgage
warehouse transactional fees primarily resulted from a utilization
surcharge, partially offset by a decrease in volume from lower
seasonal demand. The increase in commercial lease income was driven
by continued organic growth. The increase in losses realized from
terminations of derivatives designated in cash flow hedging
relationships resulted from the restructuring of the liability side
of the balance sheet to improve overall funding mix and utilize
excess cash on the balance sheet. The decrease in unrealized gain
on equity securities resulted from a smaller improvement in fair
value of equity securities issued by a foreign entity in Q1 2021
compared to Q4 2020.
Non-Interest Expense
Non-interest expense totaled $61.9 million for Q1 2021, an
increase of $2.0 million compared to Q4 2020. The increase in
non-interest expense primarily resulted from increases of $4.0
million in technology, communication and bank operations, $0.8
million in professional services, $0.6 million in advertising and
promotion and $0.3 million in commercial lease depreciation,
partially offset by decreases of $1.6 million in salaries and
employee benefits, $1.3 million in other non-interest expense, $0.4
million in loan workout expenses and $0.3 million in merger and
acquisition related expenses.
The increase in technology, communication and bank operations
resulted from higher deposit servicing fees and interchange
maintenance fees paid to BM Technologies, Inc., the successor
entity of BMT that was divested on January 4, 2021, due to
increased deposit balances and debit card transactions. The
increase in professional services was primarily due to outside
professional services used to support the PPP forgiveness process
and our participation in PPP round 3. The increase in advertising
and promotion was due to lower spend and credits from advertising
agencies in 2020. The increase in commercial lease depreciation was
driven by continued organic growth. The decrease in salaries and
employee benefits was primarily due to lower incentives, sales
commissions, and stock based compensation expense, partially offset
by higher employee benefits and payroll taxes in Q1 2021. The
decrease in loan workout expenses primarily resulted from a
recovery from a commercial relationship. The decrease in merger and
acquisition related expenses primarily resulted from a decrease in
the Bank's direct costs incurred as the divestiture of BMT was
completed on January 4, 2021.
Taxes
Income tax expense from continuing operations decreased by $5.8
million to $17.6 million in Q1 2021 from $23.4 million in Q4 2020
primarily due to an increase in investment tax credits in 2021 and
the recording of net discrete tax benefits associated with the
divestiture of BMT and the recognition of a deferred tax asset
related to the outside basis difference of its foreign
subsidiaries. Customers expects the full-year 2021 effective tax
rate from continuing operations to be approximately 23% to 24%,
which is comparable to previous years.
Net Loss From Discontinued Operations
The divestiture of BMT was completed on January 4, 2021, and
BMT's historical financial results are presented as discontinued
operations. The net loss from discontinued operations of $38.0
million, net of income tax expense of $17.7 million in Q1 2021
primarily resulted from previously reported restricted stock awards
granted to certain team members of BMT and the effect of the
divestiture being treated as a taxable asset sale for tax purposes,
offset in part by a tax benefit related to the restricted stock
awards. BMT’s historical financial results for periods prior to the
divestiture have been reflected in Customers' consolidated
financial statements as discontinued operations.
Outlook
“Looking ahead, we are very optimistic about the prospects of
our company. The ongoing digital transformation of Customers
Bancorp has allowed us to be a major participant in the third round
of PPP and to incubate new lines of businesses that leverage our
fintech relationships. We expect to launch a private real-time,
blockchain-based B2B payments platform with integration of digital
and legacy payment rails. The platform will deliver enhanced
payments functionality for our business clients and is expected to
generate additional deposit growth in targeted niches, such as real
estate, monetary and currency exchanges and institutional
investments. We also expect our tangible common equity and
regulatory capital levels to achieve targeted levels within the
next 12 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 to about the $4.00 level
during 2021 and 2022 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 $1.6-$2.4 billion at December 31, 2021.
- The Total Capital Ratio is expected to be about 14.0% by
year-end 2021. The TCE ratio excluding PPP loans is expected to be
about 8.5% by year-end 2021.
- We project the NIM excluding PPP loans to expand into the
3.10%-3.30% range by Q4 2021.
- We project an effective tax rate from continuing operations for
2021 of 23.0%-24.0%.
- We expect to earn at least $5.00 in core EPS in 2021 and 2022
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.
- Restructuring of the asset and liability side of the balance
sheet that was completed in Q1 2021.
- Bringing our total cost of deposits down to around 40 basis
points by Q2 2021.
BankMobile Technologies, Inc.:
- On January 4, 2021, Customers completed the previously
announced divestiture of 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"). Following the completion of the divestiture of BMT,
BankMobile segment's serviced deposits and loans and the related
net interest income have been combined with Customers’ financial
condition and the results of operations as a single reportable
segment. BMT’s historical financial results for periods prior to
the divestiture have been reflected in Customers' consolidated
financial statements as discontinued operations. The assets and
liabilities of BMT have been presented as "Assets of discontinued
operations" and "Liabilities of discontinued operations" on the
consolidated balance sheets. BMT's operating results have been
presented as "Discontinued operations" within the consolidated
financial statements and prior period amounts have been
reclassified to conform with the current period presentation.
- 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 a special
distribution.
Webcast
Date:
Thursday, April 29, 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 1st Quarter Earnings Webcast.
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. (NYSE:CUBI) is a bank holding company
located in West Reading, Pennsylvania engaged in banking and
related businesses through its bank subsidiary, Customers Bank, a
full-service bank with $18.8 billion in assets at March 31, 2021. A
member of the Federal Reserve System with deposits insured by the
Federal Deposit Insurance Corporation, Customers Bank is an equal
opportunity lender that provides a range of banking and lending
services to small and medium-sized businesses, professionals,
individuals and families. Services and products are available
wherever permitted by law through mobile-first apps, online
portals, and a network of offices and branches.
“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, 2020, subsequently filed quarterly
reports on Form 10-Q and current reports on Form 8-K, including any
amendments thereto, that update or provide information in addition
to the information included in the Form 10-K and Form 10-Q filings,
if any. Customers Bancorp, Inc. does not undertake to update any
forward-looking statement whether written or oral, that may be made
from time to time by Customers Bancorp, Inc. or by or on behalf of
Customers Bank, except as may be required under applicable law.
Q1 2021 Overview
The following table presents a summary of key earnings and
performance metrics for the quarter ended March 31, 2021 and the
preceding four quarters:
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED
(Dollars in thousands, except per share
data and stock price data)
Q1
Q4
Q3
Q2
Q1
2021
2020
2020
2020
2020
GAAP Profitability Metrics:
Net income available to common
shareholders (from continuing and discontinued operations)
$
33,204
$
52,831
$
47,085
$
19,137
$
(515)
Per share amounts:
Earnings per share - basic
$
1.04
$
1.67
$
1.49
$
0.61
$
(0.02)
Earnings per share - diluted
$
1.01
$
1.65
$
1.48
$
0.61
$
(0.02)
Book value per common share (1)
$
30.13
$
28.37
$
26.43
$
25.08
$
23.74
CUBI stock price (1)
$
31.82
$
18.18
$
11.20
$
12.02
$
10.93
CUBI stock price as % of book value
(1)
106
%
64
%
42
%
48
%
46
%
Average shares outstanding - basic
31,883,946
31,638,447
31,517,504
31,477,591
31,391,151
Average shares outstanding - diluted
32,841,711
31,959,100
31,736,311
31,625,771
31,391,151
Shares outstanding (1)
32,238,762
31,705,088
31,555,124
31,510,287
31,470,026
Return on average assets ("ROAA")
0.80
%
1.23
%
1.12
%
0.62
%
0.11
%
Return on average common equity
("ROCE")
14.66
%
24.26
%
23.05
%
9.97
%
(0.26)
%
Efficiency ratio
48.89
%
43.56
%
46.76
%
50.73
%
54.48
%
Non-GAAP Profitability Metrics
(2):
Core earnings
$
70,308
$
54,588
$
38,439
$
21,413
$
5,087
Adjusted pre-tax pre-provision net
income
$
86,769
$
77,896
$
64,146
$
53,931
$
44,225
Per share amounts:
Core earnings per share - diluted
$
2.14
$
1.71
$
1.21
$
0.68
$
0.16
Tangible book value per common share
(1)
$
30.01
$
27.92
$
25.97
$
24.62
$
23.27
CUBI stock price as % of tangible book
value (1)
106
%
65
%
43
%
49
%
47
%
Core ROAA
1.61
%
1.26
%
0.93
%
0.68
%
0.30
%
Core ROCE
31.03
%
25.06
%
18.82
%
11.16
%
2.53
%
Adjusted ROAA - pre-tax and
pre-provision
1.90
%
1.70
%
1.43
%
1.48
%
1.54
%
Adjusted ROCE - pre-tax and
pre-provision
36.80
%
34.20
%
29.73
%
26.24
%
20.22
%
Net interest margin, tax equivalent
3.00
%
2.78
%
2.50
%
2.65
%
2.99
%
Net interest margin, tax equivalent,
excluding PPP loans
2.99
%
3.04
%
2.86
%
2.97
%
2.99
%
Core efficiency ratio
41.13
%
42.89
%
46.10
%
47.84
%
52.97
%
Asset Quality:
Net charge-offs
$
12,521
$
8,472
$
17,299
$
10,325
$
18,711
Annualized net charge-offs to average
total loans and leases
0.33
%
0.21
%
0.45
%
0.32
%
0.79
%
Non-performing loans ("NPLs") to total
loans and leases (1)
0.30
%
0.45
%
0.38
%
0.56
%
0.49
%
Reserves to NPLs (1)
264.21
%
204.48
%
244.70
%
185.36
%
296.44
%
Non-performing assets ("NPAs") to total
assets
0.26
%
0.39
%
0.34
%
0.48
%
0.53
%
Customers Bank Capital Ratios
(3):
Common equity Tier 1 capital to
risk-weighted assets
11.86
%
10.62
%
10.12
%
10.64
%
10.60
%
Tier 1 capital to risk-weighted assets
11.86
%
10.62
%
10.12
%
10.64
%
10.60
%
Total capital to risk-weighted assets
13.23
%
12.06
%
11.62
%
12.30
%
12.21
%
Tier 1 capital to average assets (leverage
ratio)
9.41
%
9.21
%
9.29
%
9.59
%
9.99
%
(1) Metric is a spot balance for the last
day of each quarter presented.
(2) Non-GAAP measures exclude net loss
from discontinued operations, unrealized gains (losses) on loans
HFS, investment securities gains and losses, loss on cash flow
hedge derivative terminations, severance expense, merger and
acquisition-related expenses, losses realized from the sale of
non-QM residential mortgage loans, loss upon acquisition of
interest-only GNMA securities, legal reserves, credit valuation
adjustments on derivatives, risk participation agreement
mark-to-market adjustments, 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 Q1 2021 and actual for the remaining periods. In
accordance with regulatory capital rules, Customers elected an
option to delay the estimated impact of CECL on its regulatory
capital over a five-year transition period ending January 1, 2025.
As a result, capital ratios and amounts as of Q1 2021 exclude the
impact of the increased allowance for credit losses on loans and
leases and unfunded loan commitments attributed to the adoption of
CECL and 25% of the quarterly provision for credit losses for
subsequent quarters through Q4 2021.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS -
UNAUDITED
(Dollars in thousands, except per share
data)
Q1
Q4
Q3
Q2
Q1
2021
2020
2020
2020
2020
Interest income:
Loans and leases
$
152,117
$
145,414
$
132,107
$
118,447
$
116,080
Investment securities
7,979
6,777
6,297
6,155
4,977
Other
1,019
902
1,246
616
4,286
Total interest income
161,115
153,093
139,650
125,218
125,343
Interest expense:
Deposits
15,658
16,107
18,347
23,238
34,353
FHLB advances
5,192
5,749
5,762
4,736
5,390
Subordinated debt
2,689
2,688
2,689
2,689
2,689
FRB PPP liquidity facility, federal funds
purchased and other borrowings
4,845
5,603
5,413
2,573
1,590
Total interest expense
28,384
30,147
32,211
33,236
44,022
Net interest income
132,731
122,946
107,439
91,982
81,321
Provision (benefit) for credit losses on
loans and leases
(2,919)
(2,913)
12,955
20,946
31,786
Net interest income after provision
(benefit) for credit losses on loans and leases
135,650
125,859
94,484
71,036
49,535
Non-interest income:
Interchange and card revenue
85
91
92
193
270
Deposit fees
863
823
650
502
551
Commercial lease income
5,205
4,853
4,510
4,508
4,268
Bank-owned life insurance
1,679
1,744
1,746
1,757
1,762
Mortgage warehouse transactional fees
4,247
3,681
3,320
2,582
1,952
Gain (loss) on sale of SBA and other
loans
1,575
1,689
286
23
11
Mortgage banking income (loss)
463
346
1,013
38
296
Gain (loss) on sale of investment
securities
23,566
44
11,707
4,353
3,974
Unrealized gain (loss) on investment
securities
974
1,387
238
1,200
(1,378)
Unrealized gain (loss) on derivatives
2,537
804
549
(4,158)
(1,146)
Loss on cash flow hedge derivative
terminations
(24,467)
—
—
—
—
Other
1,741
621
753
713
600
Total non-interest income
18,468
16,083
24,864
11,711
11,160
Non-interest expense:
Salaries and employee benefits
23,971
25,600
24,752
23,192
20,523
Technology, communication and bank
operations
19,988
16,021
13,005
11,103
10,539
Professional services
6,289
5,449
4,421
2,974
3,544
Occupancy
2,621
2,742
3,368
2,639
2,613
Commercial lease depreciation
4,291
3,982
3,663
3,643
3,427
FDIC assessments, non-income taxes and
regulatory fees
2,719
2,642
3,784
2,368
2,867
Merger and acquisition related
expenses
418
709
658
—
—
Loan workout
(261)
123
846
1,808
366
Advertising and promotion
561
—
—
372
1,424
Other
1,330
2,665
1,788
1,692
3,664
Total non-interest expense
61,927
59,933
56,285
49,791
48,967
Income before income tax expense
92,191
82,009
63,063
32,956
11,728
Income tax expense
17,560
23,447
12,016
7,980
3,274
Net income from continuing
operations
74,631
58,562
51,047
24,976
8,454
Loss from discontinued operations before
income taxes
(20,354)
(3,539)
(347)
(3,190)
(6,722)
Income tax expense (benefit) from
discontinued operations
17,682
(1,222)
185
(932)
(1,368)
Net loss from discontinued operations
(38,036)
(2,317)
(532)
(2,258)
(5,354)
Net income
36,595
56,245
50,515
22,718
3,100
Preferred stock dividends
3,391
3,414
3,430
3,581
3,615
Net income available to common
shareholders
$
33,204
$
52,831
$
47,085
$
19,137
$
(515)
Basic earnings per common share from
continuing operations
$
2.23
$
1.74
$
1.51
$
0.68
$
0.15
Basic earnings per common share
$
1.04
$
1.67
$
1.49
$
0.61
$
(0.02)
Diluted earnings per common share from
continuing operations
$
2.17
$
1.73
$
1.50
$
0.68
$
0.15
Diluted earnings per common share
$
1.01
$
1.65
$
1.48
$
0.61
$
(0.02)
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEET -
UNAUDITED
(Dollars in thousands)
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
ASSETS
Cash and due from banks
$
3,123
$
78,090
$
5,822
$
44,577
$
18,842
Interest earning deposits
512,241
615,264
325,594
1,022,753
237,390
Cash and cash equivalents
515,364
693,354
331,416
1,067,330
256,232
Investment securities, at fair value
1,441,904
1,210,285
1,133,831
681,382
712,657
Loans held for sale
46,106
79,086
26,689
464,164
450,157
Loans receivable, mortgage warehouse, at
fair value
3,407,622
3,616,432
3,913,593
2,793,164
2,518,012
Loans receivable, PPP
5,178,089
4,561,365
4,964,105
4,760,427
—
Loans and leases receivable
7,536,489
7,575,368
7,700,892
7,272,447
7,353,262
Allowance for credit losses on loans and
leases
(128,736)
(144,176)
(155,561)
(159,905)
(149,283)
Total loans and leases receivable, net of
allowance for credit losses on loans and leases
15,993,464
15,608,989
16,423,029
14,666,133
9,721,991
FHLB, Federal Reserve Bank, and other
restricted stock
69,420
71,368
70,387
91,023
87,140
Accrued interest receivable
83,186
80,412
65,668
49,911
40,570
Bank premises and equipment, net
10,943
11,225
11,308
7,879
8,314
Bank-owned life insurance
281,923
280,067
277,826
275,842
273,576
Goodwill and other intangibles
3,911
3,969
4,028
4,086
4,145
Other assets
371,439
338,438
354,010
512,209
384,379
Assets of discontinued operations
—
62,055
80,535
83,159
79,638
Total assets
$
18,817,660
$
18,439,248
$
18,778,727
$
17,903,118
$
12,018,799
LIABILITIES AND SHAREHOLDERS'
EQUITY
Demand, non-interest bearing deposits
$
2,687,628
$
2,356,998
$
2,327,017
$
1,879,789
$
1,435,151
Interest bearing deposits
9,784,812
8,952,931
8,512,060
9,086,086
6,978,492
Total deposits
12,472,440
11,309,929
10,839,077
10,965,875
8,413,643
FRB advances
—
—
—
—
175,000
Federal funds purchased
365,000
250,000
680,000
—
705,000
FHLB advances
850,000
850,000
850,000
850,000
1,260,000
Other borrowings
124,138
124,037
123,935
123,833
123,732
Subordinated debt
181,464
181,394
181,324
181,255
181,185
FRB PPP liquidity facility
3,284,156
4,415,016
4,811,009
4,419,967
—
Accrued interest payable and other
liabilities
351,741
152,082
185,927
296,192
143,126
Liabilities of discontinued operations
—
39,704
55,964
58,149
52,477
Total liabilities
17,628,939
17,322,162
17,727,236
16,895,271
11,054,163
Preferred stock
217,471
217,471
217,471
217,471
217,471
Common stock
33,519
32,986
32,836
32,791
32,751
Additional paid in capital
515,318
455,592
452,965
450,665
446,840
Retained earnings
438,802
438,581
385,750
338,665
319,529
Accumulated other comprehensive income
(loss)
5,391
(5,764)
(15,751)
(9,965)
(30,175)
Treasury stock, at cost
(21,780)
(21,780)
(21,780)
(21,780)
(21,780)
Total shareholders' equity
1,188,721
1,117,086
1,051,491
1,007,847
964,636
Total liabilities & shareholders'
equity
$
18,817,660
$
18,439,248
$
18,778,727
$
17,903,118
$
12,018,799
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST
MARGIN - UNAUDITED
(Dollars in thousands)
Three Months Ended
March 31, 2021
December 31, 2020
March 31, 2020
Average Balance
Average Yield or Cost
(%)
Average Balance
Average Yield or Cost
(%)
Average Balance
Average Yield or Cost
(%)
Assets
Interest earning deposits
$
1,177,315
0.10%
$
413,381
0.12%
$
772,249
1.49%
Investment securities (1)
1,357,558
2.35%
1,120,491
2.42%
566,287
3.52%
Loans and leases:
Commercial loans to mortgage companies
3,122,098
3.09%
3,518,371
3.06%
1,841,659
3.82%
Multi-family loans
1,689,174
3.80%
1,871,956
3.70%
2,213,858
4.06%
Commercial and industrial loans and leases
(2)
2,848,328
3.97%
2,801,172
3.96%
2,460,811
4.70%
Loans receivable, PPP
4,623,213
3.41%
4,782,606
2.45%
—
—%
Non-owner occupied commercial real estate
loans
1,348,938
3.85%
1,358,541
3.80%
1,335,459
4.35%
Residential mortgages
373,497
3.78%
400,771
3.80%
445,953
3.97%
Installment loans
1,323,863
9.04%
1,253,679
8.50%
1,259,051
9.14%
Total loans and leases (3)
15,329,111
4.02%
15,987,096
3.62%
9,556,791
4.89%
Other interest-earning assets
79,960
3.64%
81,031
3.80%
81,404
7.04%
Total interest-earning assets
17,943,944
3.64%
17,601,999
3.46%
10,976,731
4.59%
Non-interest-earning assets
581,777
573,400
513,705
Assets of discontinued operations
—
75,320
82,970
Total assets
$
18,525,721
$
18,250,719
$
11,573,406
Liabilities
Interest checking accounts
$
2,691,723
0.84%
$
2,240,959
0.86%
$
1,294,098
1.43%
Money market deposit accounts
4,435,930
0.55%
4,166,635
0.60%
3,635,554
1.79%
Other savings accounts
1,414,350
0.69%
1,205,592
0.74%
1,141,406
2.05%
Certificates of deposit
666,239
0.97%
833,689
1.30%
1,524,770
2.04%
Total interest-bearing deposits (4)
9,208,242
0.69%
8,446,875
0.76%
7,595,828
1.82%
FRB PPP liquidity facility
3,941,718
0.35%
4,684,756
0.35%
—
—%
Borrowings
1,171,826
3.23%
1,276,212
3.09%
1,229,399
3.16%
Total interest-bearing
liabilities
14,321,786
0.80%
14,407,843
0.83%
8,825,227
2.01%
Non-interest-bearing deposits (4)
2,819,871
2,543,529
1,573,371
Total deposits and borrowings
17,141,657
0.67%
16,951,372
0.71%
10,398,598
1.70%
Other non-interest-bearing liabilities
247,798
162,723
96,874
Liabilities of discontinued operations
—
52,742
52,579
Total liabilities
17,389,455
17,166,837
10,548,051
Shareholders' equity
1,136,266
1,083,882
1,025,355
Total liabilities and shareholders'
equity
$
18,525,721
$
18,250,719
$
11,573,406
Interest spread
2.97%
2.75%
2.89%
Net interest margin
3.00%
2.78%
2.98%
Net interest margin tax equivalent
(5)
3.00%
2.78%
2.99%
Net interest margin tax equivalent
excl. PPP (6)
2.99%
3.04%
2.99%
(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 0.53%, 0.58% and
1.51% for the three months ended March 31, 2021, December 31, 2020
and March 31, 2020, respectively.
(5) Non-GAAP tax-equivalent basis, using
an estimated marginal tax rate of 26% for the three months ended
March 31, 2021, December 31, 2020 and March 31, 2020, presented to
approximate interest income as a taxable asset. Management uses
non-GAAP measures to present historical periods comparable to the
current period presentation. In addition, management believes the
use of these non-GAAP measures provides additional clarity when
assessing Customers’ financial results. These disclosures should
not be viewed as substitutes for results determined to be in
accordance with U.S. GAAP, nor are they necessarily comparable to
non-GAAP performance measures that may be presented by other
entities.
(6) Non-GAAP tax-equivalent basis, as
described in note (5) for the three months ended March 31, 2021,
December 31, 2020 and March 31, 2020, excluding net interest income
from PPP loans and related borrowings, along with the related PPP
loan balances and PPP fees receivable from interest-earning assets.
Management uses non-GAAP measures to present historical periods
comparable to the current period presentation. In addition,
management believes the use of these non-GAAP measures provides
additional clarity when assessing Customers’ financial results.
These disclosures should not be viewed as substitutes for results
determined to be in accordance with U.S. GAAP, nor are they
necessarily comparable to non-GAAP performance measures that may be
presented by other entities.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
PERIOD END LOAN AND LEASE COMPOSITION -
UNAUDITED
(Dollars in thousands)
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Commercial:
Multi-family
$
1,659,529
$
1,761,301
$
1,950,300
$
2,023,571
$
2,069,077
Loans to mortgage companies
3,463,490
3,657,350
3,947,828
2,832,112
2,573,397
Commercial & industrial
2,164,784
2,304,206
2,186,480
2,060,494
2,017,567
Commercial real estate owner occupied
590,093
572,338
557,595
544,772
543,945
Loans receivable, PPP
5,178,089
4,561,365
4,964,105
4,760,427
—
Commercial real estate non-owner
occupied
1,194,832
1,213,815
1,233,882
1,262,373
1,252,826
Construction
156,837
140,905
122,963
128,834
115,448
Total commercial loans and leases
14,407,654
14,211,280
14,963,153
13,612,583
8,572,260
Consumer:
Residential
295,654
323,322
343,775
352,941
364,760
Manufactured housing
59,977
62,243
64,638
66,865
69,240
Installment
1,405,021
1,235,406
1,233,713
1,257,813
1,315,171
Total consumer loans
1,760,652
1,620,971
1,642,126
1,677,619
1,749,171
Total loans and leases
$
16,168,306
$
15,832,251
$
16,605,279
$
15,290,202
$
10,321,431
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION -
UNAUDITED
(Dollars in thousands)
March 31,
December 31,
September 30,
June 30,
March 31,
2021
2020
2020
2020
2020
Demand, non-interest bearing
$
2,687,628
$
2,356,998
$
2,327,017
$
1,879,789
$
1,435,151
Demand, interest bearing
3,228,941
2,384,691
2,308,627
2,666,209
1,577,034
Total demand deposits
5,916,569
4,741,689
4,635,644
4,545,998
3,012,185
Savings
1,483,482
1,314,817
1,173,641
1,144,788
1,168,121
Money market
4,406,508
4,601,492
4,057,366
3,404,709
2,833,990
Time deposits
665,881
651,931
972,426
1,870,380
1,399,347
Total deposits
$
12,472,440
$
11,309,929
$
10,839,077
$
10,965,875
$
8,413,643
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
ASSET QUALITY - UNAUDITED
(Dollars in thousands)
As of March 31, 2021
As of December 31,
2020
As of March 31, 2020
Total loans
Non accrual /NPLs
Allowance for credit
losses
Total NPLs to total
loans
Total reserves to total
NPLs
Total loans
Non accrual /NPLs
Allowance for credit
losses
Total NPLs to total
loans
Total reserves to total
NPLs
Total loans
Non accrual /NPLs
Allowance for credit
losses
Total NPLs to total
loans
Total reserves to total
NPLs
Loan
type
Multi-family
$
1,640,278
$
20,530
$
8,026
1.25
%
39.09
%
$
1,761,301
$
21,728
$
12,620
1.23
%
58.08
%
$
1,621,633
$
4,020
$
8,750
0.25
%
217.66
%
Commercial & industrial(1)
2,220,652
7,544
7,503
0.34
%
99.46
%
2,289,441
8,453
12,239
0.37
%
144.79
%
2,072,952
9,993
18,806
0.48
%
188.19
%
Commercial real estate owner occupied
590,093
3,242
5,935
0.55
%
183.07
%
572,338
3,411
9,512
0.60
%
278.86
%
543,945
2,411
8,527
0.44
%
353.67
%
Commercial real estate non-owner
occupied
1,194,832
2,356
11,621
0.20
%
493.25
%
1,196,564
2,356
19,452
0.20
%
825.64
%
1,252,826
21,479
18,530
1.71
%
86.27
%
Construction
156,837
—
4,103
—
%
—
%
140,905
—
5,871
—
%
—
%
115,448
—
1,934
—
%
—
%
Total commercial loans and leases
receivable
5,802,692
33,672
37,188
0.58
%
110.44
%
5,960,549
35,948
59,694
0.60
%
166.06
%
5,606,804
37,903
56,547
0.68
%
149.19
%
Residential
293,805
9,353
3,209
3.18
%
34.31
%
317,170
9,911
3,977
3.12
%
40.13
%
362,047
6,054
4,180
1.67
%
69.05
%
Manufactured housing
59,977
2,871
4,799
4.79
%
167.15
%
62,243
2,969
5,189
4.77
%
174.77
%
69,240
2,558
4,987
3.69
%
194.96
%
Installment
1,380,015
2,185
83,540
0.16
%
3823.34
%
1,235,406
3,211
75,316
0.26
%
2345.56
%
1,315,171
2,519
83,569
0.19
%
3317.55
%
Total consumer loans receivable
1,733,797
14,409
91,548
0.83
%
635.35
%
1,614,819
16,091
84,482
1.00
%
525.03
%
1,746,458
11,131
92,736
0.64
%
833.13
%
Loans and leases receivable(1)
7,536,489
48,081
128,736
0.64
%
267.75
%
7,575,368
52,039
144,176
0.69
%
277.05
%
7,353,262
49,034
149,283
0.67
%
304.45
%
Loans receivable, PPP
5,178,089
—
—
—
%
—
%
4,561,365
—
—
—
%
—
%
—
—
—
—
%
—
%
Loans receivable, mortgage warehouse,
at fair value
3,407,622
—
—
—
%
—
%
3,616,432
—
—
—
%
—
%
2,518,012
—
—
—
%
—
%
Total loans held for sale
46,106
643
—
1.39
%
—
%
79,086
18,469
—
23.35
%
—
%
450,157
1,325
—
0.29
%
—
%
Total portfolio
$
16,168,306
$
48,724
$
128,736
0.30
%
264.21
%
$
15,832,251
$
70,508
$
144,176
0.45
%
204.48
%
$
10,321,431
$
50,359
$
149,283
0.49
%
296.44
%
(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)
Q1
Q4
Q3
Q2
Q1
2021
2020
2020
2020
2020
Loan
type
Multi-family
$
1,132
$
—
$
—
$
—
$
—
Commercial & industrial
375
155
(55
)
(4
)
43
Commercial real estate owner occupied
134
12
44
(2
)
(3
)
Commercial real estate non-owner
occupied
(10
)
(35
)
8,923
2,801
12,797
Construction
(5
)
(6
)
(6
)
(113
)
(3
)
Residential
40
46
(17
)
(26
)
(29
)
Installment
10,855
8,300
8,410
7,669
5,906
Total net charge-offs (recoveries) from
loans held for investment
$
12,521
$
8,472
$
17,299
$
10,325
$
18,711
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES - UNAUDITED
Customers believes that the non-GAAP
measurements disclosed within this document are useful for
investors, regulators, management and others to evaluate our core
results of operations and financial condition relative to other
financial institutions. These non-GAAP financial measures are
frequently used by securities analysts, investors, and other
interested parties in the evaluation of companies in Customers'
industry. These non-GAAP financial measures exclude from
corresponding GAAP measures the impact of certain elements that we
do not believe are representative of our ongoing financial results,
which we believe enhance an overall understanding of our
performance and increases comparability of our period to period
results. Investors should consider our performance and financial
condition as reported under GAAP and all other relevant information
when assessing our performance or financial condition. The non-GAAP
measures presented are not necessarily comparable to non-GAAP
measures that may be presented by other financial institutions.
Although non-GAAP financial measures are frequently used in the
evaluation of a company, they have limitations as analytical tools
and should not be considered in isolation or as a substitute for
analysis of our results of operations or financial condition as
reported under GAAP.
The following tables present
reconciliations of GAAP to non-GAAP measures disclosed within this
document.
Core Earnings - Customers Bancorp
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
(dollars in thousands except per share
data)
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
GAAP net income to common shareholders
$
33,204
$
1.01
$
52,831
$
1.65
$
47,085
$
1.48
$
19,137
$
0.61
$
(515)
$
(0.02)
Reconciling items (after tax):
Net loss from discontinued operations
38,036
1.16
2,317
0.07
532
0.02
2,258
0.07
5,354
0.17
Merger and acquisition related
expenses
320
0.01
508
0.02
530
0.02
—
—
—
—
Legal reserves
—
—
—
—
258
0.01
—
—
—
—
(Gains) losses on investment
securities
(18,773)
(0.57)
(1,419)
(0.04)
(9,662)
(0.30)
(4,543)
(0.14)
(1,788)
(0.06)
Loss on cash flow hedge derivative
terminations
18,716
0.57
—
—
—
—
—
—
—
—
Derivative credit valuation adjustment
(1,195)
(0.04)
(448)
(0.01)
(304)
(0.01)
4,527
0.14
2,036
0.06
Risk participation agreement
mark-to-market adjustment
—
—
—
—
—
—
(1,080)
(0.03)
—
—
Unrealized losses on loans held for
sale
—
—
799
0.03
—
—
1,114
0.04
—
—
Core earnings
$
70,308
$
2.14
$
54,588
$
1.71
$
38,439
$
1.21
$
21,413
$
0.68
$
5,087
$
0.16
Core Return on Average Assets -
Customers Bancorp
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
GAAP net income
$
36,595
$
56,245
$
50,515
$
22,718
$
3,100
Reconciling items (after tax):
Net loss from discontinued operations
38,036
2,317
532
2,258
5,354
Merger and acquisition related
expenses
320
508
530
—
—
Legal reserves
—
—
258
—
—
(Gains) losses on investment
securities
(18,773)
(1,419)
(9,662)
(4,543)
(1,788)
Loss on cash flow hedge derivative
terminations
18,716
—
—
—
—
Derivative credit valuation adjustment
(1,195)
(448)
(304)
4,527
2,036
Risk participation agreement
mark-to-market adjustment
—
—
—
(1,080)
—
Unrealized losses on loans held for
sale
—
799
—
1,114
—
Core net income
$
73,699
$
58,002
$
41,869
$
24,994
$
8,702
Average total assets
$
18,525,721
$
18,250,719
$
17,865,574
$
14,675,584
$
11,573,406
Core return on average assets
1.61
%
1.26
%
0.93
%
0.68
%
0.30
%
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES RECONCILIATION
OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share
data)
Adjusted Net Income and Adjusted ROAA -
Pre-Tax Pre-Provision - Customers Bancorp
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
GAAP net income
$
36,595
$
56,245
$
50,515
$
22,718
$
3,100
Reconciling items:
Income tax expense
17,560
23,447
12,016
7,980
3,274
Provision (benefit) for credit losses on
loans and leases
(2,919)
(2,913)
12,955
20,946
31,786
Provision (benefit) for credit losses on
unfunded commitments
(1,286)
(968)
(527)
(356)
751
Net loss from discontinued operations
38,036
2,317
532
2,258
5,354
Merger and acquisition related
expenses
418
709
658
—
—
Legal reserves
—
—
320
—
—
(Gains) losses on investment
securities
(24,540)
(1,431)
(11,945)
(5,553)
(2,596)
Loss on cash flow hedge derivative
terminations
24,467
—
—
—
—
Derivative credit valuation adjustment
(1,562)
(625)
(378)
5,895
2,556
Risk participation agreement
mark-to-market adjustment
—
—
—
(1,407)
—
Unrealized losses on loans held for
sale
—
1,115
—
1,450
—
Adjusted net income - pre-tax
pre-provision
$
86,769
$
77,896
$
64,146
$
53,931
$
44,225
Average total assets
$
18,525,721
$
18,250,719
$
17,865,574
$
14,675,584
$
11,573,406
Adjusted ROAA - pre-tax pre-provision
1.90
%
1.70
%
1.43
%
1.48
%
1.54
%
Core Return on Average Common Equity -
Customers Bancorp
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
GAAP net income to common shareholders
$
33,204
$
52,831
$
47,085
$
19,137
$
(515)
Reconciling items (after tax):
Net loss from discontinued operations
38,036
2,317
532
2,258
5,354
Merger and acquisition related
expenses
320
508
530
—
—
Legal reserves
—
—
258
—
—
(Gains) losses on investment
securities
(18,773)
(1,419)
(9,662)
(4,543)
(1,788)
Loss on cash flow hedge derivative
terminations
18,716
—
—
—
—
Derivative credit valuation adjustment
(1,195)
(448)
(304)
4,527
2,036
Risk participation agreement
mark-to-market adjustment
—
—
—
(1,080)
—
Unrealized losses on loans held for
sale
—
799
—
1,114
—
Core earnings
$
70,308
$
54,588
$
38,439
$
21,413
$
5,087
Average total common shareholders'
equity
$
918,795
$
866,411
$
812,577
$
771,663
$
807,884
Core return on average common equity
31.03
%
25.06
%
18.82
%
11.16
%
2.53
%
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share
data)
Adjusted ROCE - Pre-Tax Pre-Provision -
Customers Bancorp
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
GAAP net income to common shareholders
$
33,204
$
52,831
$
47,085
$
19,137
$
(515)
Reconciling items:
Income tax expense
17,560
23,447
12,016
7,980
3,274
Provision (benefit) for credit losses on
loan and leases
(2,919)
(2,913)
12,955
20,946
31,786
Provision (benefit) for credit losses on
unfunded commitments
(1,286)
(968)
(527)
(356)
751
Net loss from discontinued operations
38,036
2,317
532
2,258
5,354
Merger and acquisition related
expenses
418
709
658
—
—
Legal reserves
—
—
320
—
—
(Gains) losses on investment
securities
(24,540)
(1,431)
(11,945)
(5,553)
(2,596)
Loss on cash flow hedge derivative
terminations
24,467
—
—
—
—
Derivative credit valuation adjustment
(1,562)
(625)
(378)
5,895
2,556
Risk participation agreement
mark-to-market adjustment
—
—
—
(1,407)
—
Unrealized losses on loans held for
sale
—
1,115
—
1,450
—
Pre-tax pre-provision adjusted net income
available to common shareholders
$
83,378
$
74,482
$
60,716
$
50,350
$
40,610
Average total common shareholders'
equity
$
918,795
$
866,411
$
812,577
$
771,663
$
807,884
Adjusted ROCE - pre-tax pre-provision
36.80
%
34.20
%
29.73
%
26.24
%
20.22
%
Net Interest Margin, Tax Equivalent -
Customers Bancorp
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
GAAP net interest income
$
132,731
$
122,946
$
107,439
$
91,982
$
81,321
Tax-equivalent adjustment
292
219
225
225
205
Net interest income tax equivalent
$
133,023
$
123,165
$
107,664
$
92,207
$
81,526
Average total interest earning assets
$
17,943,944
$
17,601,999
$
17,121,145
$
13,980,021
$
10,976,731
Net interest margin, tax equivalent
3.00
%
2.78
%
2.50
%
2.65
%
2.99
%
Net Interest Margin, Tax Equivalent,
Excluding PPP - Customers Bancorp
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
GAAP net interest income
$
132,731
$
122,946
$
107,439
$
91,982
$
81,321
PPP net interest income
(34,842)
(25,257)
(20,018)
(9,308)
—
Tax-equivalent adjustment
292
219
225
225
205
Net interest income, tax equivalent,
excluding PPP
$
98,181
$
97,908
$
87,646
$
82,899
$
81,526
GAAP average total interest earning
assets
$
17,943,944
$
17,601,999
$
17,121,145
$
13,980,021
$
10,976,731
Average PPP loans
(4,623,213)
(4,782,606)
(4,909,197)
(2,754,920)
—
Adjusted average total interest earning
assets
$
13,320,731
$
12,819,393
$
12,211,948
$
11,225,101
$
10,976,731
Net interest margin, tax equivalent,
excluding PPP
2.99
%
3.04
%
2.86
%
2.97
%
2.99
%
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share
data)
Core Efficiency Ratio - Customers
Bancorp
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
GAAP net interest income
$
132,731
$
122,946
$
107,439
$
91,982
$
81,321
GAAP non-interest income
$
18,468
$
16,083
$
24,864
$
11,711
$
11,160
(Gains) losses on investment
securities
(24,540)
(1,431)
(11,945)
(5,553)
(2,596)
Derivative credit valuation adjustment
(1,562)
(625)
(378)
5,895
2,556
Risk participation agreement
mark-to-market adjustment
—
—
—
(1,407)
—
Unrealized losses on loans held for
sale
—
1,115
—
1,450
—
Loss on cash flow hedge derivative
terminations
24,467
—
—
—
—
Core non-interest income
16,833
15,142
12,541
12,096
11,120
Core revenue
$
149,564
$
138,088
$
119,980
$
104,078
$
92,441
GAAP non-interest expense
$
61,927
$
59,933
$
56,285
$
49,791
$
48,967
Legal reserves
—
—
(320)
—
—
Merger and acquisition related
expenses
(418)
(709)
(658)
—
—
Core non-interest expense
$
61,509
$
59,224
$
55,307
$
49,791
$
48,967
Core efficiency ratio (1)
41.13
%
42.89
%
46.10
%
47.84
%
52.97
%
(1) Core efficiency ratio calculated as
core non-interest expense divided by core revenue.
Tangible Common Equity to Tangible
Assets - Customers Bancorp
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
GAAP total shareholders' equity
$
1,188,721
$
1,117,086
$
1,051,491
$
1,007,847
$
964,636
Reconciling items:
Preferred stock
(217,471)
(217,471)
(217,471)
(217,471)
(217,471)
Goodwill and other intangibles (1)
(3,911)
(14,298)
(14,437)
(14,575)
(14,870)
Tangible common equity
$
967,339
$
885,317
$
819,583
$
775,801
$
732,295
GAAP total assets
$
18,817,660
$
18,439,248
$
18,778,727
$
17,903,118
$
12,018,799
Reconciling items:
Goodwill and other intangibles (1)
(3,911)
(14,298)
(14,437)
(14,575)
(14,870)
Tangible assets
$
18,813,749
$
18,424,950
$
18,764,290
$
17,888,543
$
12,003,929
Tangible common equity to tangible
assets
5.14
%
4.80
%
4.37
%
4.34
%
6.10
%
(1) Includes goodwill and other
intangibles reported in assets of discontinued operations.
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share
data)
Tangible Book Value per Common Share -
Customers Bancorp
(dollars in thousands except share and per
share data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
GAAP total shareholders' equity
$
1,188,721
$
1,117,086
$
1,051,491
$
1,007,847
$
964,636
Reconciling Items:
Preferred stock
(217,471)
(217,471)
(217,471)
(217,471)
(217,471)
Goodwill and other intangibles (1)
(3,911)
(14,298)
(14,437)
(14,575)
(14,870)
Tangible common equity
$
967,339
$
885,317
$
819,583
$
775,801
$
732,295
Common shares outstanding
32,238,762
31,705,088
31,555,124
31,510,287
31,470,026
Tangible book value per common share
$
30.01
$
27.92
$
25.97
$
24.62
$
23.27
(1) Includes goodwill and other
intangibles reported in assets of discontinued operations.
Total Loans and Leases, excluding
PPP
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Total loans and leases
$
16,168,306
$
15,832,251
$
16,605,279
$
15,290,202
$
10,321,431
Loans receivable, PPP
(5,178,089)
(4,561,365)
(4,964,105)
(4,760,427)
—
Loans and leases, excluding PPP
$
10,990,217
$
11,270,886
$
11,641,174
$
10,529,775
$
10,321,431
Total Assets, excluding PPP
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Total assets
$
18,817,660
$
18,439,248
$
18,778,727
$
17,903,118
$
12,018,799
Loans receivable, PPP
(5,178,089)
(4,561,365)
(4,964,105)
(4,760,427)
—
Total assets, excluding PPP
$
13,639,571
$
13,877,883
$
13,814,622
$
13,142,691
$
12,018,799
Coverage of credit loss reserves for
loans and leases held for investment, excluding PPP
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Loans and leases receivable
$
12,714,578
$
12,136,733
$
12,664,997
$
12,032,874
$
7,353,262
Loans receivable, PPP
(5,178,089)
(4,561,365)
(4,964,105)
(4,760,427)
—
Loans and leases held for investment,
excluding PPP
$
7,536,489
$
7,575,368
$
7,700,892
$
7,272,447
$
7,353,262
Allowance for credit losses on loans and
leases
$
128,736
$
144,176
$
155,561
$
159,905
$
149,283
Coverage of credit loss reserves for loans
and leases held for investment, excluding PPP
1.71
%
1.90
%
2.02
%
2.20
%
2.03
%
CUSTOMERS BANCORP, INC. AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share
data)
Tangible Common Equity to Tangible
Assets, excluding PPP - Customers Bancorp
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
GAAP total shareholders' equity
$
1,188,721
$
1,117,086
$
1,051,491
$
1,007,847
$
964,636
Reconciling items:
Preferred stock
(217,471)
(217,471)
(217,471)
(217,471)
(217,471)
Goodwill and other intangibles (1)
(3,911)
(14,298)
(14,437)
(14,575)
(14,870)
Tangible common equity
$
967,339
$
885,317
$
819,583
$
775,801
$
732,295
GAAP total assets
$
18,817,660
$
18,439,248
$
18,778,727
$
17,903,118
$
12,018,799
Loans receivable, PPP
(5,178,089)
(4,561,365)
(4,964,105)
(4,760,427)
—
Total assets, excluding PPP
$
13,639,571
$
13,877,883
$
13,814,622
$
13,142,691
$
12,018,799
Reconciling items:
Goodwill and other intangibles (1)
(3,911)
(14,298)
(14,437)
(14,575)
(14,870)
Tangible assets
$
13,635,660
$
13,863,585
$
13,800,185
$
13,128,116
$
12,003,929
Tangible common equity to tangible
assets
7.09
%
6.39
%
5.94
%
5.91
%
6.10
%
(1) Includes goodwill and other
intangibles reported in assets of discontinued operations.
Deferments to total loans and leases,
excluding PPP
(dollars in thousands except per share
data)
Q1 2021
Q4 2020
Total loans and leases
$
16,168,306
$
15,832,251
Loans receivable, PPP
(5,178,089)
(4,561,365)
Total loans and leases, excluding PPP
$
10,990,217
$
11,270,886
Commercial deferments
$
176,100
$
202,100
Consumer deferments
13,000
16,400
Total deferments
$
189,100
$
218,500
Commercial deferments to total loans and
leases, excluding PPP
1.6
%
1.8
%
Consumer deferments to total loans and
leases, excluding PPP
0.1
0.1
Total deferments to total loans and
leases, excluding PPP
1.7
%
1.9
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428006162/en/
Jay Sidhu, Chairman & CEO 610-935-8693 Richard Ehst,
President & COO 610-917-3263 Carla Leibold, CFO
484-923-8802 Sam Sidhu, Head of Corporate Development
212-843-2485
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