Customers Bancorp Reports Results for Second Quarter 2022

Rhea-AI Summary

Customers Bancorp (NYSE:CUBI) reported Q2 2022 net income of $56.5 million ($1.68 per share), a 2.6% decline year-over-year. Core earnings rose to $59.4 million ($1.77 per share), up 0.1%. Excluding the Paycheck Protection Program (PPP), net income surged 32.3% to $46.3 million. Despite a strong loan growth of $4.4 billion (56.6% year-over-year), ROAA fell to 1.17% from 1.27%. The bank's efficiency ratio improved to 42.14%. Deposits grew by $3.1 billion (22.1%), with total demand deposits up 64%. Customers Bancorp remains optimistic for continued growth in 2022 and 2023.

Positive

• Net income available to common shareholders was $56.5 million in Q2 2022.
• Core earnings increased 32.3% year-over-year, excluding PPP.
• Year-over-year loan growth reached $4.4 billion (56.6%).
• Total deposits rose by $3.1 billion, a 22.1% increase.

Negative

• Net income decreased by 2.6% compared to Q2 2021.
• ROAA declined from 1.27% in Q2 2021 to 1.17% in Q2 2022.
• ROCE decreased from 23.2% in Q2 2021 to 18.2% in Q2 2022.

WEST READING, Pa.--(BUSINESS WIRE)-- Customers Bancorp, Inc. (NYSE:CUBI)

Second Quarter 2022 Results
Earnings		Earnings Per Share		Return on Assets		Return on Common Equity
$56.5 million		$1.68		1.2%		18.2%
Net Income		Diluted Earnings Per Share		ROAA		ROCE
$59.4 million		$1.77		1.2%		19.1%
Core Earnings*		Core Earnings Per Diluted Share*		Core ROAA*		Core ROCE*
$46.3 million		$1.38		2.1%		33.4%
Core Earnings, excluding PPP*		Core Earnings Per Diluted Share, excluding PPP*		Pre-tax and Pre-provision Adjusted ROAA*		Pre-tax and Pre-provision Adjusted ROCE*

Second Quarter 2022 Highlights

• Q2 2022 net income available to common shareholders was $56.5 million, or $1.68 per diluted share, down 2.6% over Q2 2021.

• Q2 2022 adjusted pre-tax pre-provision net income* was $105.7 million, up 22% over Q2 2021.

• Q2 2022 core earnings* were $59.4 million, or $1.77 per diluted share, up 0.1% over Q2 2021.

• Q2 2022 core earnings excluding Paycheck Protection Program* ("PPP") were $46.3 million, or $1.38 per diluted share, up 32.3% over Q2 2021.

• Q2 2022 ROAA was 1.17% and Core ROAA* was 1.23%. Q2 2021 ROAA was 1.27% and Core ROAA* was 1.30%.

• Q2 2022 ROCE was 18.2% and Core ROCE* was 19.1%. Q2 2021 ROCE was 23.2% and Core ROCE* was 23.7%.

• Q2 2022 adjusted pre-tax pre-provision ROAA* was 2.11%. Q2 2021 adjusted pre-tax pre-provision ROAA* was 1.80%.

• Year-over-year loan growth (excluding PPP loans and loans to mortgage companies*) was $4.4 billion or 56.6%, led by our low-risk variable rate specialty lending verticals.

• Year-over-year commercial and industrial (C&I) loans and leases growth, including specialty lending, of $3.3 billion (up 145.8%), multifamily loan growth of $515.4 million (up 34.4%), and consumer loan increase of $500.8 million (up 26.2%).

• Q2 2022 net interest margin, tax equivalent* increased 41 basis points from Q2 2021 to 3.39%. Q2 2022 net interest margin, tax equivalent, excluding the impact of PPP loans* increased 2 basis points from Q2 2021 to 3.32%.

• Year-over-year deposit growth was $3.1 billion, up 22.1%. Total demand deposits increased $4.4 billion, or 64.0% year-over-year. This increase included CBIT-related deposits with a balance of $2.1 billion at June 30, 2022, up $0.3 billion from March 31, 2022.

• Onboarded 90 new CBIT customers in Q2 2022, bringing total customers to 190.

• Q2 2022 efficiency ratio was 42.14% compared to 46.59% for Q2 2021. Q2 2022 core efficiency ratio* was 41.74% compared to 44.33% in Q2 2021.

• Q2 2022 provision for credit losses on loans and leases of $24.2 million was largely driven by strong loan growth as asset quality remains exceptional and compares to $15.3 million in Q1 2022 and $3.3 million in Q2 2021.

• Non-performing assets were $28.2 million, or 0.14% of total assets, at June 30, 2022 compared to $43.9 million, or 0.23% of total assets, at March 31, 2022 and $46.9 million, or 0.24% of total assets, at June 30, 2021. Allowance for credit losses on loans and leases equaled 558% of non-performing loans at June 30, 2022, compared to 333% at March 31, 2022 and 270% at June 30, 2021.

• Well positioned to support growth in 2022 and 2023 and expect to meet or beat projections of core earnings (excluding PPP)* between $4.75 - $5.00 in 2022 and over $6.00 in 2023.

* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.

CEO Commentary

West Reading, PA, July 27, 2022 - “We continued to perform well in the second quarter and are extremely pleased with our results for the first half of 2022,” remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “Despite the challenging macro and geopolitical environment, we remain laser focused on executing on our strategy which has not changed. Our core earnings per share, excluding PPP* were up over 32.3% year-over-year. Core ROAA* was 1.23% and core ROCE* was 19.1%. We continue to responsibly deliver remarkable organic loan growth without sacrificing credit quality. Our core loans* increased $2.2 billion in Q2 2022, up 18.7% from Q1 2022, and well above our $500 million average quarterly target. Nearly all of this growth was in low-risk specialty lending verticals and was predominately floating rate as we manage overall asset sensitivity. Asset quality remains exceptional and credit reserves are strong. Continuing the momentum from record 2021 performance and strong results for the first half of 2022, our loan and deposit pipelines remain robust, a testament to our customer centric business model supported by best-in-class service and technology. We remain very excited and optimistic about our future,” Mr. Jay Sidhu continued.

Financial Highlights

		At or Three Months Ended						Increase (Decrease)					Six Months Ended						Increase (Decrease)
(Dollars in thousands, except per share data and stock price data)		June 30, 2022			June 30, 2021								June 30, 2022			June 30, 2021
Profitability Metrics:
Net income available for common shareholders		$	56,519		$	58,042		$	(1,523)		(2.6) %		$	131,415		$	91,246		$	40,169	44.0 %
Diluted earnings per share		$	1.68		$	1.72		$	(0.04)		(2.3) %		$	3.87		$	2.74		$	1.13	41.2 %
Core earnings*		$	59,367		$	59,303		$	64		0.1 %		$	134,777		$	129,611		$	5,166	4.0 %
Core earnings per share*		$	1.77		$	1.76		$	0.01		0.6 %		$	3.97		$	3.89		$	0.08	2.1 %
Core earnings, excluding PPP*		$	46,301		$	34,991		$	11,310		32.3 %		$	96,998		$	80,220		$	16,778	20.9 %
Core earnings per share, excluding PPP*		$	1.38		$	1.04		$	0.34		32.7 %		$	2.86		$	2.41		$	0.45	18.7 %
Return on average assets ("ROAA")			1.17 %			1.27 %			(0.10)					1.39 %			1.04 %			0.35
Core ROAA*			1.23 %			1.30 %			(0.07)					1.43 %			1.45 %			(0.02)
Return on average common equity ("ROCE")			18.21 %			23.22 %			(5.01)					21.23 %			19.15 %			2.08
Core ROCE*			19.13 %			23.72 %			(4.59)					21.77 %			27.20 %			(5.43)
Adjusted pre-tax pre-provision net income*		$	105,692		$	86,467		$	19,225		22.2 %		$	218,341		$	173,236		$	45,105	26.0 %
Net interest margin, tax equivalent*			3.39 %			2.98 %			0.41					3.49 %			2.99 %			0.50
Net interest margin, tax equivalent, excluding PPP loans*			3.32 %			3.30 %			0.02					3.32 %			3.14 %			0.18
Loan yield, excluding PPP*			4.56 %			4.36 %			0.20					4.50 %			4.32 %			0.18
Cost of deposits			0.54 %			0.47 %			0.07					0.44 %			0.50 %			(0.06)
Efficiency ratio			42.14 %			46.59 %			(4.45)					40.76 %			47.64 %			(6.88)
Core efficiency ratio*			41.74 %			44.33 %			(2.59)					40.59 %			42.76 %			(2.17)
Balance Sheet Trends:
Total assets		$	20,251,996		$	19,635,108		$	616,888		3.1 %
Total assets, excluding PPP*		$	18,681,836		$	13,330,052		$	5,351,784		40.1 %
Total loans and leases		$	15,664,353		$	16,967,022		$	(1,302,669)		(7.7) %
Total loans and leases, excluding PPP*		$	14,094,193		$	10,661,966		$	3,432,227		32.2 %
Non-interest bearing demand deposits		$	4,683,030		$	2,699,869		$	1,983,161		73.5 %
Total deposits		$	16,944,719		$	13,873,939		$	3,070,780		22.1 %
Capital Metrics:
Common Equity		$	1,215,596		$	1,033,258		$	182,338		17.6 %
Tangible Common Equity*		$	1,211,967		$	1,029,405		$	182,562		17.7 %
Tangible Common Equity to Tangible Assets*			5.99 %			5.24 %			0.75
Tangible Common Equity to Tangible Assets, excluding PPP*			6.49 %			7.72 %			(1.23)
Tangible Book Value per common share*		$	37.35		$	31.82		$	5.53		17.4 %
Total risk based capital ratio (1)			12.6 %			13.3 %			(0.7)
(1) Total risk based capital ratio as of June 30, 2022 is an estimate.
* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.

Customers Bank Instant Token (CBIT^TM)

"Despite significant market volatility in the digital asset space during second quarter, we are very pleased with our progress to date. In Q2 2022, we onboarded 90 new CBIT-related customers to the Digital Bank, once again beating our internal target, and bringing total customers to 190. Our digital asset-related deposits stabilized in Q2 2022 and ended the quarter approximately $0.3 billion higher than Q1 2022. We continue to expect digital asset-related deposits to grow in 2022 as our pipelines remain strong, giving us an opportunity to further transform our deposits into a high quality, low-to-no cost, stable and growing deposit franchise. We believe our technology, compliance and customer service and support systems remain among the best in the country," commented Mr. Sam Sidhu, President and CEO of Customers Bank.

At June 30, 2022, $2.1 billion in core low-to-no cost demand deposits have been attracted to the Bank through this system.

Paycheck Protection Program (PPP)

We funded, either directly or indirectly, about 256,000 PPP loans totaling $5.2 billion in 2021, bringing total PPP loans funded to approximately 358,000 and $10.3 billion. We also earned close to $350 million of deferred origination fees from the SBA through the PPP loans, which is significantly accretive to our earnings and capital levels as these loans are forgiven by the government. In Q2 2022, we recognized $15 million of these fees in earnings, bringing total fees recognized to date to $307 million, resulting in approximately $43 million remaining to be recognized throughout 2022 and 2023. "As we've stated previously, it is difficult to predict the timing of PPP forgiveness. We continue to expect most of the fees to be recognized in 2022, with approximately two-thirds of the remaining fees to be recognized in the second half of this year," commented Customers Bancorp CFO, Carla Leibold.

Key Balance Sheet Trends

Loans and Leases

The following table presents the composition of total loans and leases as of the dates indicated:

(Dollars in thousands)			June 30, 2022			% of Total			March 31, 2022			% of Total			June 30, 2021			% of Total
Commercial:
Commercial & industrial, including specialty lending			$	5,637,083		36.0	%		$	3,921,439		27.9	%		$	2,293,723		13.5	%
Multi-family				2,012,920		12.9				1,705,027		12.1				1,497,485		8.8
Loans to mortgage companies				1,975,189		12.6				1,830,121		13.0				2,922,217		17.2
Commercial real estate owner occupied				710,577		4.5				701,893		5.0				653,649		3.9
Loans receivable, PPP				1,570,160		10.0				2,195,902		15.6				6,305,056		37.2
Commercial real estate non-owner occupied				1,152,869		7.4				1,140,311		8.1				1,206,646		7.1
Construction				195,687		1.2				161,024		1.1				179,198		1.1
Total commercial loans and leases				13,254,485		84.6				11,655,717		82.8				15,057,974		88.8
Consumer:
Residential				460,228		2.9				469,426		3.3				273,493		1.6
Manufactured housing				48,570		0.3				50,669		0.4				57,904		0.3
Installment				1,901,070		12.1				1,897,706		13.5				1,577,651		9.3
Total consumer loans				2,409,868		15.4				2,417,801		17.2				1,909,048		11.2
Total loans and leases			$	15,664,353		100.0	%		$	14,073,518		100.0	%		$	16,967,022		100.0	%

C&I loans and leases, including specialty lending, increased $3.3 billion, or 145.8% year-over-year, to $5.6 billion. Practically all of the increases were in low-risk variable rate secured categories of Fund Finance and Lender Finance. Multi-family loans increased $515.4 million, or 34.4%, to $2.0 billion, consumer installment loans increased $323.4 million, or 20.5%, to $1.9 billion, residential loans increased $186.7 million, or 68.3%, to $460.2 million, commercial real estate owner occupied loans increased $56.9 million, or 8.7%, to $710.6 million and construction loans increased $16.5 million, or 9.2%, to $195.7 million. These increases in loans and leases were partially offset by a decrease in commercial real estate non-owner occupied loans of $53.8 million, or 4.5% year-over-year to $1.2 billion.

Allowance for Credit Losses on Loans and Leases

The following table presents allowance for credit losses on loans and leases information as of the dates and periods indicated:

	At or Three Months Ended								Increase (Decrease)			At or Three Months Ended								Increase (Decrease)
(Dollars in thousands)	June 30, 2022				March 31, 2022							June 30, 2022				June 30, 2021
Allowance for credit losses on loans and leases	$	156,530			$	145,847			$	10,683		$	156,530			$	125,436			$	31,094
Provision for credit losses on loans and leases		24,164				15,269				8,895			24,164				3,291				20,873
Net charge-offs (recoveries)		13,481				7,226				6,255			13,481				6,591				6,890
Annualized net charge-offs (recoveries) to average loans and leases		0.36	%			0.21	%						0.36	%			0.16	%
Coverage of credit loss reserves for loans and leases held for investment		1.14	%			1.18	%						1.14	%			0.89	%
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP*		1.28	%			1.44	%						1.28	%			1.61	%
* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.

Provision for Credit Losses

		Three Months Ended								Increase (Decrease)
(Dollars in thousands)		June 30, 2022				March 31, 2022
Provision for credit losses on loans and leases		$	24,164			$	15,269			$	8,895
Provision (benefit) for credit losses on unfunded commitments			608				(109	)			717
Provision (benefit) for credit losses on available for sale debt securities			(317	)			728				(1,045	)
Total provision for credit losses		$	24,455			$	15,888			$	8,567

The provision for credit losses on loans and leases in Q2 2022 was $24.2 million, compared to $15.3 million in Q1 2022. The provision in Q2 2022 was primarily to support loan growth. The provision (benefit) for credit losses for available for sale investment securities in Q2 2022 was a benefit to provision of $0.3 million compared to provision expense of $0.7 million in Q1 2022.

Asset Quality

The following table presents asset quality metrics as of the dates indicated:

(Dollars in thousands)	June 30, 2022				March 31, 2022				Increase (Decrease)				June 30, 2022				June 30, 2021				Increase (Decrease)
Non-performing assets ("NPAs"):
Nonaccrual / non-performing loans ("NPLs")	$	28,064			$	43,778			$	(15,714	)		$	28,064			$	46,465			$	(18,401	)
Non-performing assets		28,150				43,864				(15,714	)			28,150				46,932				(18,782	)
NPLs to total loans and leases (1)		0.18	%			0.31	%							0.18	%			0.27	%
Reserves to NPLs (1)		557.76	%			333.15	%							557.76	%			269.96	%
NPAs to total assets		0.14	%			0.23	%							0.14	%			0.24	%
Loans and leases risk ratings:
Commercial loans and leases (1)
Pass	$	9,355,846			$	7,274,294			$	2,081,552			$	9,355,846			$	5,381,909			$	3,973,937
Special Mention		106,566				128,622				(22,056	)			106,566				268,130				(161,564	)
Substandard		343,175				301,141				42,034				343,175				247,595				95,580
Total commercial loans and leases		9,805,587				7,704,057				2,101,530				9,805,587				5,897,634				3,907,953
Consumer loans
Performing		2,392,852				2,399,860				(7,008	)			2,392,852				1,858,204				534,648
Non-performing		14,556				14,938				(382	)			14,556				16,304				(1,748	)
Total consumer loans		2,407,408				2,414,798				(7,390	)			2,407,408				1,874,508				532,900
Loans and leases receivable	$	12,212,995			$	10,118,855			$	2,094,140			$	12,212,995			$	7,772,142			$	4,440,853

⁽¹⁾ Excludes loan receivable, PPP, as PPP loans are fully guaranteed by the Small Business Administration.

Over the last decade, we have developed a suite of commercial loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s C&I, loans to mortgage companies, specialty finance lines of business, and multi-family loans for example, are characterized by conservative underwriting standards and low loss rates. Because of this emphasis, the Bank’s credit quality to date has been healthy despite a highly adverse economic environment. Maintaining strong asset quality also requires a highly active portfolio monitoring process. In addition to frequent client outreach and monitoring at the individual loan level, we employ a bottom-up data driven approach to analyze the commercial portfolio. Exposure to industry segments and CRE significantly impacted by COVID-19 initially is not substantial.

Total consumer installment loans were approximately 9% of total assets at June 30, 2022 and were supported by an allowance for credit losses of $111.2 million. At June 30, 2022, our consumer installment portfolio had the following characteristics: average FICO score of 729, average debt-to-income of 17.4% and average borrower income of $102 thousand.

Non-performing loans at June 30, 2022 were 0.18% of total loans and leases, compared to 0.31% at March 31, 2022 and 0.27% at June 30, 2021.

Deposits and Borrowings

The following table presents the composition of our deposit portfolio as of the dates indicated:

(Dollars in thousands)			June 30, 2022			% of Total			March 31, 2022			% of Total			June 30, 2021			% of Total
Demand, non-interest bearing			$	4,683,030		27.6	%		$	4,594,428		28.0	%		$	2,699,869		19.5	%
Demand, interest bearing				6,644,398		39.2				5,591,468		34.1				4,206,355		30.3
Total demand deposits				11,327,428		66.8				10,185,896		62.1				6,906,224		49.8
Savings				640,062		3.8				802,395		4.9				1,431,756		10.3
Money market				4,254,205		25.1				4,981,077		30.3				4,908,809		35.4
Time deposits				723,024		4.3				446,192		2.7				627,150		4.5
Total deposits			$	16,944,719		100.0	%		$	16,415,560		100.0	%		$	13,873,939		100.0	%

Total deposits increased $3.1 billion, or 22.1%, to $16.9 billion at June 30, 2022 as compared to a year ago. Total demand deposits increased $4.4 billion, or 64.0%, to $11.3 billion. Time deposits increased $95.9 million, or 15.3%, to $723.0 million. These increases were offset, in part, by decreases in savings deposits of $791.7 million, or 55.3%, to $640.1 million and money market deposits of $654.6 million, or 13.3%, to $4.3 billion. The total cost of deposits increased by 7 basis points to 0.54% in Q2 2022 from 0.47% in the prior year.

Other borrowings remained relatively unchanged at $123.5 million at June 30, 2022 compared to the prior year due to the issuance of the Customers Bancorp 2.875% senior notes in August 2021, offset by the pay off at maturity of the Customers Bancorp 3.95% senior notes in June 2022.

Capital

The following table presents certain capital amounts and ratios as of the dates indicated:

(Dollars in thousands except per share data)			June 30, 2022				March 31, 2022				June 30, 2021
Customers Bancorp, Inc.
Common Equity			$	1,215,596			$	1,239,612			$	1,033,258
Tangible Common Equity*				1,211,967				1,235,934				1,029,405
Tangible Common Equity to Tangible Assets*				5.99	%			6.45	%			5.24	%
Tangible Common Equity to Tangible Assets, excluding PPP*				6.49	%			7.29	%			7.72	%
Tangible Book Value per common share*			$	37.35			$	37.50			$	31.82
Total risk based capital ratio (1)				12.6	%			12.9	%			13.3	%

(1) Total risk-based capital ratio as of June 30, 2022 is an estimate.

* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.

Customers Bancorp's tangible common equity* increased $182.3 million to $1.2 billion at June 30, 2022 compared to a year ago, as earnings of $340.3 million more than offset a negative impact to accumulated other comprehensive income ("AOCI") from increased unrealized losses on investment securities of $130.9 million (net of taxes) and share buyback of $55.5 million. Similarly, tangible book value per common share* increased to $37.35 at June 30, 2022 from $31.82 at June 30, 2021. Customers remains well capitalized by all regulatory measures.

At the Customers Bancorp level, the total risk based capital ratio (estimate) and tangible common equity to tangible assets ratio ("TCE ratio"), excluding PPP loans*, were 12.6% and 6.49%, respectively, at June 30, 2022. "We expect our TCE ratio to be at or above 7.5% within the next three to four quarters," stated Mr. Sam Sidhu.

At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At June 30, 2022, estimated Tier 1 capital and total risk-based capital were 11.5% and 12.9% respectively.

Key Profitability Trends

Net Interest Income

Net interest income totaled $164.9 million in Q2 2022, an increase of $0.2 million from Q1 2022, primarily due to increased net interest income earned by the core bank, including increased interest income on investment securities and core loans* of $5.1 million and $28.1 million, respectively, mostly due to higher average balances. This increase was offset in part by lower PPP interest income of $16.3 million resulting from reduced recognition of deferred fees of $14.7 million driven by lower loan forgiveness in Q2 2022 and by dividend income of $5.2 million primarily from an equity investment distribution in Q1 2022. In addition, higher expenses paid on deposits, FHLB advances and other borrowings of $12.7 million resulted mainly from higher interest rates during Q2 2022. Excluding PPP loans, average interest-earning assets increased $1.7 billion. Interest-earning asset growth was primarily driven by increases in C&I loans and leases and multi-family loans, offset in part by a decrease in interest earning deposits. Compared to Q1 2022, total loan yields decreased 13 basis points to 4.54% primarily due to higher PPP yields driven by deferred fee recognition and average balances in Q1 2022. Excluding PPP loans, the Q2 2022 total loan yield was 13 basis points higher than Q1 2022 reflecting increased interest rates and the variable rate nature of the loan portfolio.

Non-Interest Income

The following table presents details of non-interest income for the periods indicated:

	Three Months Ended								Increase (Decrease)
(Dollars in thousands)	June 30, 2022				March 31, 2022
Interchange and card revenue	$	24			$	76			$	(52	)
Deposit fees		964				940				24
Commercial lease income		6,592				5,895				697
Bank-owned life insurance		1,947				8,326				(6,379	)
Mortgage warehouse transactional fees		1,883				2,015				(132	)
Gain (loss) on sale of SBA and other loans		1,542				1,507				35
Loan fees		2,618				2,545				73
Mortgage banking income (loss)		173				481				(308	)
Gain (loss) on sale of investment securities		(3,029	)			(1,063	)			(1,966	)
Unrealized gain (loss) on investment securities		(203	)			(276	)			73
Unrealized gain (loss) on derivatives		821				964				(143	)
Other		(586	)			(212	)			(374	)
Total non-interest income	$	12,746			$	21,198			$	(8,452	)

Non-interest income totaled $12.7 million for Q2 2022, a decrease of $8.5 million compared to Q1 2022. The decrease was primarily due to $6.4 million of death benefits from bank-owned life insurance policies in Q1 2022 and higher realized losses from the sale of investment securities of $2.0 million in Q2 2022 compared to Q1 2022.

Non-Interest Expense

The following table presents details of non-interest expense for the periods indicated:

	Three Months Ended							Increase (Decrease)
(Dollars in thousands)	June 30, 2022			March 31, 2022
Salaries and employee benefits	$	25,334		$	26,607			$	(1,273	)
Technology, communication and bank operations		22,738			24,068				(1,330	)
Professional services		7,415			6,956				459
Occupancy		4,279			3,050				1,229
Commercial lease depreciation		5,552			4,942				610
FDIC assessments, non-income taxes and regulatory fees		1,619			2,383				(764	)
Loan servicing		4,341			2,371				1,970
Loan workout		179			(38	)			217
Advertising and promotion		353			315				38
Other		4,395			3,153				1,242
Total non-interest expense	$	76,205		$	73,807			$	2,398

The management of non-interest expenses remains a priority for us. However, this will not be at the expense of not making adequate investments with new technologies to support efficient and responsible growth.

Non-interest expenses totaled $76.2 million in Q2 2022, an increase of $2.4 million compared to Q1 2022. The increase was primarily attributable to $2.0 million in higher loan servicing costs for consumer loans, $0.9 million in one-time impairment charges included in occupancy primarily due to consolidation of five branches into other existing locations in Southeastern Pennsylvania, $0.7 million in higher provision for credit losses on unfunded commitments, $0.6 million in commercial lease depreciation due to growth in our leasing business and $0.5 million in professional fees primarily associated with the PPP loan forgiveness. These increases were offset in part by a $1.3 million decrease in technology, processing and deposit servicing-related expenses mostly due to lower deposit servicing and interchange maintenance fees and lower salaries and employee benefits of $1.3 million due to expense management initiatives.

Taxes

Income tax expense from continuing operations decreased by $0.4 million to $18.9 million in Q2 2022 from $19.3 million in Q1 2022 primarily due to a reduction in pre-tax income, partially offset by a decrease in excess tax benefits from restricted stock units that vested in Q1 2022. The effective tax rate from continuing operations for Q2 2022 was 24%, resulting in an effective tax rate of 22% for the six months ended June 30, 2022. Customers expects the full-year 2022 effective tax rate from continuing operations to be approximately 21% to 23%.

Outlook

“Looking ahead, we continue to project sustainable and responsible organic core growth and are very optimistic about the prospects of our company. We are focused on improving the quality of our balance sheet and deposit franchise and are not focused on growth just for the sake of growth. We continue to expect, on average, $500 million of quarterly loan growth and continued digital asset-related deposit growth by year-end 2022. Through a combination of revenue growth and prudent expense management we expect our efficiency ratio to be around 45% by early 2023. Customers Bancorp stock at the close of business on July 22, 2022 was trading at $38.02, only 1 times tangible book value* at June 30, 2022. We continue to expect to meet or beat projections of our core earnings (excluding PPP)^* between $4.75 - $5.00 in 2022 and over $6.00 in 2023, two to three years ahead of our previous guidance of $6.00 by 2025/2026,” concluded Mr. Jay Sidhu.

* Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.

Webcast

Date: Thursday, July 28, 2022
Time: 9:00 AM EDT

The live audio webcast, presentation slides, and earnings press release will be made available at https://www.customersbank.com/investor-relations/ and at the Customers Bancorp 2nd Quarter Earnings Webcast.

You may submit questions in advance of the live webcast by emailing our Communications Director, David Patti at dpatti@customersbank.com; questions may also be asked during the webcast through the webcast application.

The webcast will be archived for viewing on the Customers Bank Investor Relations page and available beginning approximately two hours after the conclusion of the live event.

Institutional Background

Customers Bancorp, Inc. (NYSE:CUBI) is a bank holding company located in West Reading, Pennsylvania engaged in banking and related businesses through its bank subsidiary, Customers Bank, a full-service bank with $20.3 billion in assets at June 30, 2022. A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender that provides a range of banking and lending services to small and medium-sized businesses, professionals, individuals and families. Services and products are available wherever permitted by law through mobile-first apps, online portals, and a network of offices and branches. Customers Bank provides blockchain-based digital payments via the Customers Bank Instant Token (CBIT^TM) which allows clients to make instant payments in U.S. dollars, 24 hours a day, 7 days a week, 365 days a year.

“Safe Harbor” Statement

In addition to historical information, this press release may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “project,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: the impact of the ongoing pandemic on the U.S. economy and customer behavior, the impact that changes in the economy have on the performance of our loan and lease portfolio, the market value of our investment securities, the continued success and acceptance of our blockchain payments system, the demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply, actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships, higher inflation and its impacts, and the effects of any changes in accounting standards or policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2021, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.

Q2 2022 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended June 30, 2022 and the preceding four quarters:

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED
(Dollars in thousands, except per share data and stock price data)	Q2			Q1			Q4			Q3			Q2			Six Months Ended June 30,
		2022			2022			2021			2021			2021			2022			2021
GAAP Profitability Metrics:
Net income available to common shareholders (from continuing and discontinued operations)	$	56,519		$	74,896		$	98,647		$	110,241		$	58,042		$	131,415		$	91,246
Per share amounts:
Earnings per share - basic	$	1.73		$	2.27		$	3.02		$	3.40		$	1.80		$	4.00		$	2.84
Earnings per share - diluted	$	1.68		$	2.18		$	2.87		$	3.25		$	1.72		$	3.87		$	2.74
Book value per common share (1)	$	37.46		$	37.61		$	37.32		$	35.24		$	31.94		$	37.46		$	31.94
CUBI stock price (1)	$	33.90		$	52.14		$	65.37		$	43.02		$	38.99		$	33.90		$	38.99
CUBI stock price as % of book value (1)		90	%		139	%		175	%		122	%		122	%		90	%		122	%
Average shares outstanding - basic		32,712,616			32,957,033			32,625,960			32,449,853			32,279,625			32,834,150			32,082,878
Average shares outstanding - diluted		33,579,013			34,327,065			34,320,327			33,868,553			33,741,468			33,950,973			33,294,075
Shares outstanding (1)		32,449,486			32,957,847			32,913,267			32,537,976			32,353,256			32,449,486			32,353,256
Return on average assets ("ROAA")		1.17	%		1.63	%		2.08	%		2.33	%		1.27	%		1.39	%		1.04	%
Return on average common equity ("ROCE")		18.21	%		24.26	%		33.18	%		40.82	%		23.22	%		21.23	%		19.15	%
Efficiency ratio		42.14	%		39.42	%		38.70	%		33.42	%		46.59	%		40.76	%		47.64	%
Non-GAAP Profitability Metrics (2):
Core earnings	$	59,367		$	75,410		$	101,213		$	113,876		$	59,303		$	134,777		$	129,611
Adjusted pre-tax pre-provision net income	$	105,692		$	112,649		$	130,595		$	167,215		$	86,467		$	218,341		$	173,236
Per share amounts:
Core earnings per share - diluted	$	1.77		$	2.20		$	2.95		$	3.36		$	1.76		$	3.97		$	3.89
Tangible book value per common share (1)	$	37.35		$	37.50		$	37.21		$	35.12		$	31.82		$	37.35		$	31.82
CUBI stock price as % of tangible book value (1)		91	%		139	%		176	%		122	%		123	%		91	%		123	%
Core ROAA		1.23	%		1.64	%		2.13	%		2.35	%		1.30	%		1.43	%		1.45	%
Core ROCE		19.13	%		24.43	%		34.04	%		42.16	%		23.72	%		21.77	%		27.20	%
Adjusted ROAA - pre-tax and pre-provision		2.11	%		2.39	%		2.70	%		3.36	%		1.80	%		2.25	%		1.85	%
Adjusted ROCE - pre-tax and pre-provision		33.37	%		35.89	%		43.25	%		60.81	%		33.27	%		34.62	%		34.95	%
Net interest margin, tax equivalent		3.39	%		3.60	%		4.14	%		4.59	%		2.98	%		3.49	%		2.99	%
Net interest margin, tax equivalent, excluding PPP loans		3.32	%		3.32	%		3.12	%		3.24	%		3.30	%		3.32	%		3.14	%
Core efficiency ratio		41.74	%		39.47	%		38.14	%		30.36	%		44.33	%		40.59	%		42.76	%
Asset Quality:
Net charge-offs	$	13,481		$	7,226		$	7,582		$	7,104		$	6,591		$	20,707		$	19,112
Annualized net charge-offs to average total loans and leases		0.36	%		0.21	%		0.21	%		0.17	%		0.16	%		0.29	%		0.24	%
Non-performing loans ("NPLs") to total loans and leases (1)		0.18	%		0.31	%		0.34	%		0.34	%		0.27	%		0.18	%		0.27	%
Reserves to NPLs (1)		557.76	%		333.15	%		277.72	%		252.68	%		269.96	%		557.76	%		269.96	%
Non-performing assets ("NPAs") to total assets		0.14	%		0.23	%		0.25	%		0.27	%		0.24	%		0.14	%		0.24	%
Customers Bank Capital Ratios (3):
Common equity Tier 1 capital to risk-weighted assets		11.47	%		11.60	%		11.83	%		12.77	%		12.40	%		11.47	%		12.40	%
Tier 1 capital to risk-weighted assets		11.47	%		11.60	%		11.83	%		12.77	%		12.40	%		11.47	%		12.40	%
Total capital to risk-weighted assets		12.92	%		13.03	%		13.11	%		14.16	%		13.77	%		12.92	%		13.77	%
Tier 1 capital to average assets (leverage ratio)		8.09	%		8.21	%		7.93	%		8.66	%		9.07	%		8.09	%		9.07	%

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

(2) Customers' reasons for the use of these non-GAAP measures and a detailed reconciliation between the non-GAAP measures and the comparable GAAP amounts are included at the end of this document.

(3) Regulatory capital ratios are estimated for Q2 2022 and actual for the remaining periods. In accordance with regulatory capital rules, Customers elected to apply the CECL capital transition provisions which delayed the effects of CECL on regulatory capital for two years until January 1, 2022, followed by a three-year transition period. The cumulative CECL capital transition impact as of December 31, 2021 which amounted to $61.6 million will be phased in at 25% per year beginning on January 1, 2022 through December 31, 2024. As of June 30, 2022, our regulatory capital ratios reflected 75%, or $46.2 million, benefit associated with the CECL transition provisions.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(Dollars in thousands, except per share data)																					Six Months Ended
	Q2				Q1				Q4				Q3				Q2				June 30,
		2022				2022				2021				2021				2021				2022				2021
Interest income:
Loans and leases	$	168,941			$	157,175			$	198,000			$	233,097			$	153,608			$	326,116			$	305,725
Investment securities		25,442				20,295				15,202				8,905				8,327				45,737				16,306
Other		1,951				6,006				835				849				946				7,957				1,965
Total interest income		196,334				183,476				214,037				242,851				162,881				379,810				323,996
Interest expense:
Deposits		22,781				13,712				15,415				15,915				15,653				36,493				31,311
FHLB advances		2,316				—				51				5				963				2,316				6,155
Subordinated debt		2,689				2,689				2,688				2,689				2,689				5,378				5,378
FRB PPP liquidity facility, federal funds purchased and other borrowings		3,696				2,376				2,189				4,350				4,819				6,072				9,664
Total interest expense		31,482				18,777				20,343				22,959				24,124				50,259				52,508
Net interest income		164,852				164,699				193,694				219,892				138,757				329,551				271,488
Provision for credit losses		23,847				15,997				13,890				13,164				3,291				39,844				372
Net interest income after provision for credit losses		141,005				148,702				179,804				206,728				135,466				289,707				271,116
Non-interest income:
Interchange and card revenue		24				76				84				83				84				100				169
Deposit fees		964				940				1,026				994				891				1,904				1,754
Commercial lease income		6,592				5,895				5,378				5,213				5,311				12,487				10,516
Bank-owned life insurance		1,947				8,326				1,984				1,988				2,765				10,273				4,444
Mortgage warehouse transactional fees		1,883				2,015				2,262				3,100				3,265				3,898				7,512
Gain (loss) on sale of SBA and other loans		1,542				1,507				2,493				5,359				1,900				3,049				3,475
Loan fees		2,618				2,545				2,513				1,909				1,670				5,163				3,106
Mortgage banking income (loss)		173				481				262				425				386				654				849
Gain (loss) on sale of investment securities		(3,029	)			(1,063	)			(49	)			6,063				1,812				(4,092	)			25,378
Unrealized gain (loss) on investment securities		(203	)			(276	)			—				—				1,746				(479	)			2,720
Loss on sale of foreign subsidiaries		—				—				—				—				(2,840	)			—				(2,840	)
Unrealized gain (loss) on derivatives		821				964				586				524				(439	)			1,785				2,098
Loss on cash flow hedge derivative terminations		—				—				—				—				—				—				(24,467	)
Other		(586	)			(212	)			452				(72	)			271				(798	)			576
Total non-interest income		12,746				21,198				16,991				25,586				16,822				33,944				35,290
Non-interest expense:
Salaries and employee benefits		25,334				26,607				29,940				26,268				28,023				51,941				51,994
Technology, communication and bank operations		22,738				24,068				22,657				21,281				19,618				46,806				39,606
Professional services		7,415				6,956				7,058				6,871				6,882				14,371				12,759
Occupancy		4,279				3,050				4,336				2,704				2,482				7,329				5,103
Commercial lease depreciation		5,552				4,942				4,625				4,493				4,415				10,494				8,706
FDIC assessments, non-income taxes and regulatory fees		1,619				2,383				2,427				2,313				2,602				4,002				5,321
Loan servicing		4,341				2,371				4,361				4,265				1,700				6,712				2,137
Merger and acquisition related expenses		—				—				—				—				—				—				418
Loan workout		179				(38	)			226				198				102				141				(159	)
Advertising and promotion		353				315				344				302				313				668				874
Deposit relationship adjustment fees		—				—				—				6,216				—				—				—
Other		4,395				3,153				5,574				5,098				4,686				7,548				5,991
Total non-interest expense		76,205				73,807				81,548				80,009				70,823				150,012				132,750
Income before income tax expense		77,546				96,093				115,247				152,305				81,465				173,639				173,656
Income tax expense		18,896				19,332				12,993				36,263				20,124				38,228				37,684
Net income from continuing operations	$	58,650			$	76,761			$	102,254			$	116,042			$	61,341			$	135,411			$	135,972
									(continued)
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)																					Six Months Ended
	Q2				Q1				Q4				Q3				Q2				June 30,
		2022				2022				2021				2021				2021				2022				2021
Loss from discontinued operations before income taxes	$	—			$	—			$	—			$	—			$	—			$	—			$	(20,354	)
Income tax expense (benefit) from discontinued operations		—				—				1,585				—				—				—				17,682
Net loss from discontinued operations		—				—				(1,585	)			—				—				—				(38,036	)
Net income		58,650				76,761				100,669				116,042				61,341				135,411				97,936
Preferred stock dividends		2,131				1,865				2,022				2,981				3,299				3,996				6,690
Loss on redemption of preferred stock		—				—				—				2,820				—				—				—
Net income available to common shareholders	$	56,519			$	74,896			$	98,647			$	110,241			$	58,042			$	131,415			$	91,246
Basic earnings per common share from continuing operations	$	1.73			$	2.27			$	3.07			$	3.40			$	1.80			$	4.00			$	4.03
Basic earnings per common share		1.73				2.27				3.02				3.40				1.80				4.00				2.84
Diluted earnings per common share from continuing operations		1.68				2.18				2.92				3.25				1.72				3.87				3.88
Diluted earnings per common share		1.68				2.18				2.87				3.25				1.72				3.87				2.74

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - UNAUDITED
(Dollars in thousands)
	June 30,				March 31,				December 31,				September 30,				June 30,
		2022				2022				2021				2021				2021
ASSETS
Cash and due from banks	$	66,703			$	55,515			$	35,238			$	51,169			$	36,837
Interest earning deposits		178,475				219,085				482,794				1,000,885				393,663
Cash and cash equivalents		245,178				274,600				518,032				1,052,054				430,500
Investment securities, at fair value		3,144,882				4,169,853				3,817,150				1,866,697				1,526,792
Investment securities held to maturity		495,039				—				—				—				—
Loans held for sale		6,595				3,003				16,254				29,957				34,540
Loans receivable, mortgage warehouse, at fair value		1,874,603				1,755,758				2,284,325				2,557,624				2,855,284
Loans receivable, PPP		1,570,160				2,195,902				3,250,008				4,957,357				6,305,056
Loans and leases receivable		12,212,995				10,118,855				9,018,298				7,970,599				7,772,142
Allowance for credit losses on loans and leases		(156,530	)			(145,847	)			(137,804	)			(131,496	)			(125,436	)
Total loans and leases receivable, net of allowance for credit losses on loans and leases		15,501,228				13,924,668				14,414,827				15,354,084				16,807,046
FHLB, Federal Reserve Bank, and other restricted stock		74,626				54,553				64,584				57,184				39,895
Accrued interest receivable		98,727				94,669				92,239				93,514				90,009
Bank premises and equipment, net		6,755				8,233				8,890				9,944				10,391
Bank-owned life insurance		335,153				332,239				333,705				331,423				329,421
Goodwill and other intangibles		3,629				3,678				3,736				3,794				3,853
Other assets		340,184				298,212				305,611				310,271				362,661
Total assets	$	20,251,996			$	19,163,708			$	19,575,028			$	19,108,922			$	19,635,108
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand, non-interest bearing deposits	$	4,683,030			$	4,594,428			$	4,459,790			$	4,954,331			$	2,699,869
Interest bearing deposits		12,261,689				11,821,132				12,318,134				12,016,694				11,174,070
Total deposits		16,944,719				16,415,560				16,777,924				16,971,025				13,873,939
Federal funds purchased		770,000				700,000				75,000				—				—
FHLB advances		635,000				—				700,000				—				—
Other borrowings		123,450				223,230				223,086				223,151				124,240
Subordinated debt		181,812				181,742				181,673				181,603				181,534
FRB PPP liquidity facility		—				—				—				—				3,865,865
Accrued interest payable and other liabilities		243,625				265,770				251,128				448,844				338,801
Total liabilities		18,898,606				17,786,302				18,208,811				17,824,623				18,384,379
Preferred stock		137,794				137,794				137,794				137,794				217,471
Common stock		34,922				34,882				34,722				33,818				33,634
Additional paid in capital		545,670				542,402				542,391				525,894				519,294
Retained earnings		837,147				780,628				705,732				607,085				496,844
Accumulated other comprehensive income (loss), net		(124,881	)			(62,548	)			(4,980	)			1,488				5,266
Treasury stock, at cost		(77,262	)			(55,752	)			(49,442	)			(21,780	)			(21,780	)
Total shareholders' equity		1,353,390				1,377,406				1,366,217				1,284,299				1,250,729
Total liabilities and shareholders' equity	$	20,251,996			$	19,163,708			$	19,575,028			$	19,108,922			$	19,635,108

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED
(Dollars in thousands)
	Three Months Ended
	June 30, 2022				March 31, 2022				June 30, 2021
	Average Balance		Average Yield or Cost (%)		Average Balance		Average Yield or Cost (%)		Average Balance		Average Yield or Cost (%)
Assets
Interest earning deposits	$	434,950	0.85%		$	826,240	0.16%		$	646,342	0.12%
Investment securities (1)		4,104,463	2.48%			4,036,966	2.01%			1,512,644	2.20%
Loans and leases:
Commercial loans to mortgage companies		1,898,554	3.30%			1,836,647	3.09%			2,737,629	3.09%
Multi-family loans		1,845,527	3.76%			1,531,846	3.64%			1,551,370	3.88%
Commercial & industrial loans and leases (2)		5,577,830	3.87%			4,124,408	3.60%			2,878,045	3.59%
Loans receivable, PPP		1,863,429	4.43%			2,641,318	5.66%			6,133,184	2.69%
Non-owner occupied commercial real estate loans		1,307,995	3.91%			1,312,210	3.77%			1,368,695	3.86%
Residential mortgages		515,612	3.81%			416,417	3.58%			346,284	3.62%
Installment loans		1,909,551	9.23%			1,794,145	9.03%			1,467,595	9.37%
Total loans and leases (3)		14,918,498	4.54%			13,656,991	4.67%			16,482,802	3.74%
Other interest-earning assets		68,025	6.09%			52,111	NM(7)			57,208	5.32%
Total interest-earning assets		19,525,936	4.03%			18,572,308	4.00%			18,698,996	3.49%
Non-interest-earning assets		530,084				557,022				607,952
Total assets	$	20,056,020			$	19,129,330			$	19,306,948
Liabilities
Interest checking accounts		6,409,617	0.85%			5,769,372	0.54%			3,503,242	0.76%
Money market deposit accounts		4,704,767	0.64%			4,880,051	0.39%			4,859,614	0.47%
Other savings accounts		695,176	0.44%			880,113	0.36%			1,456,777	0.57%
Certificates of deposit		530,180	0.65%			450,644	0.47%			658,698	0.78%
Total interest-bearing deposits (4)		12,339,740	0.74%			11,980,180	0.46%			10,478,331	0.60%
Federal funds purchased		642,747	0.89%			88,611	0.33%			71,703	0.07%
FRB PPP liquidity facility		—	—%			—	—%			3,858,733	0.35%
Borrowings		940,068	3.10%			532,610	3.80%			460,054	4.44%
Total interest-bearing liabilities		13,922,555	0.91%			12,601,401	0.60%			14,868,821	0.65%
Non-interest-bearing deposits (4)		4,491,574				4,900,983				2,889,781
Total deposits and borrowings		18,414,129	0.69%			17,502,384	0.43%			17,758,602	0.54%
Other non-interest-bearing liabilities		259,279				237,131				328,251
Total liabilities		18,673,408				17,739,515				18,086,853
Shareholders' equity		1,382,612				1,389,815				1,220,095
Total liabilities and shareholders' equity	$	20,056,020			$	19,129,330			$	19,306,948
Interest spread			3.35%				3.57%				2.95%
Net interest margin			3.38%				3.59%				2.98%
Net interest margin tax equivalent (5)			3.39%				3.60%				2.98%
Net interest margin tax equivalent excl. PPP (6)			3.32%				3.32%				3.30%

(1) For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.

(2) Includes owner occupied commercial real estate loans.

(3) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees.

(4) Total costs of deposits (including interest bearing and non-interest bearing) were 0.54%, 0.33% and 0.47% for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

(6) Non-GAAP tax-equivalent basis, as described in note (5) for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

(7) Not meaningful.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED
(Dollars in thousands)
	Six Months Ended
	June 30, 2022				June 30, 2021
	Average Balance		Average Yield or Cost (%)		Average Balance		Average Yield or Cost (%)
Assets
Interest earning deposits	$	629,514	0.40%		$	910,362	0.11%
Investment securities (1)		4,070,901	2.25%			1,435,529	2.27%
Loans and leases:
Commercial loans to mortgage companies		1,867,772	3.20%			2,928,802	3.09%
Multi-family loans		1,689,553	3.71%			1,619,891	3.84%
Commercial & industrial loans and leases (2)		4,855,134	3.76%			2,863,268	3.78%
Loans receivable, PPP		2,250,224	5.15%			5,382,370	3.00%
Non-owner occupied commercial real estate loans		1,310,091	3.84%			1,358,871	3.86%
Residential mortgages		466,288	3.71%			359,815	3.71%
Installment loans		1,852,167	9.13%			1,396,126	9.22%
Total loans and leases (3)		14,291,229	4.60%			15,909,143	3.88%
Other interest-earning assets		60,113	NM (7)			68,521	4.34%
Total interest-earning assets		19,051,757	4.02%			18,323,555	3.56%
Non-interest-earning assets		543,479				594,936
Total assets	$	19,595,236			$	18,918,491
Liabilities
Interest checking accounts	$	6,091,263	0.71%		$	3,099,725	0.80%
Money market deposit accounts		4,791,925	0.51%			4,648,942	0.51%
Other savings accounts		787,134	0.39%			1,435,681	0.63%
Certificates of deposit		490,632	0.57%			662,447	0.87%
Total interest-bearing deposits (4)		12,160,954	0.61%			9,846,795	0.64%
Federal funds purchased		367,210	0.82%			44,171	0.07%
FRB PPP liquidity facility		—	—%			3,899,996	0.35%
Borrowings		737,464	3.35%			805,853	3.61%
Total interest-bearing liabilities		13,265,628	0.76%			14,596,815	0.72%
Non-interest-bearing deposits (4)		4,695,148				2,855,019
Total deposits and borrowings		17,960,776	0.56%			17,451,834	0.61%
Other non-interest-bearing liabilities		248,266				288,246
Total liabilities		18,209,042				17,740,080
Shareholders' equity		1,386,194				1,178,411
Total liabilities and shareholders' equity	$	19,595,236			$	18,918,491
Interest spread			3.45%				2.96%
Net interest margin			3.48%				2.99%
Net interest margin tax equivalent (5)			3.49%				2.99%
Net interest margin tax equivalent excl. PPP (6)			3.32%				3.14%

(1) For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.

(2) Includes owner occupied commercial real estate loans.

(3) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees.

(4) Total costs of deposits (including interest bearing and non-interest bearing) were 0.44% and 0.50% for the six months ended June 30, 2022 and 2021, respectively.

(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the six months ended June 30, 2022 and 2021, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

(6) Non-GAAP tax-equivalent basis as described in note (5), for the six months ended June 30, 2022 and 2021, excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.

(7) Not meaningful.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED
(Dollars in thousands)
	June 30,			March 31,			December 31,			September 30,			June 30,
		2022			2022			2021			2021			2021
Commercial:
Commercial & industrial, including specialty lending	$	5,637,083		$	3,921,439		$	3,346,670		$	2,604,367		$	2,293,723
Multi-family		2,012,920			1,705,027			1,486,308			1,387,166			1,497,485
Loans to mortgage companies		1,975,189			1,830,121			2,362,438			2,626,483			2,922,217
Commercial real estate owner occupied		710,577			701,893			654,922			656,044			653,649
Loans receivable, PPP		1,570,160			2,195,902			3,250,008			4,957,357			6,305,056
Commercial real estate non-owner occupied		1,152,869			1,140,311			1,121,238			1,144,643			1,206,646
Construction		195,687			161,024			198,981			198,607			179,198
Total commercial loans and leases		13,254,485			11,655,717			12,420,565			13,574,667			15,057,974
Consumer:
Residential		460,228			469,426			350,984			260,820			273,493
Manufactured housing		48,570			50,669			52,861			55,635			57,904
Installment		1,901,070			1,897,706			1,744,475			1,624,415			1,577,651
Total consumer loans		2,409,868			2,417,801			2,148,320			1,940,870			1,909,048
Total loans and leases	$	15,664,353		$	14,073,518		$	14,568,885		$	15,515,537		$	16,967,022

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION - UNAUDITED
(Dollars in thousands)
			June 30,			March 31,			December 31,			September 30,			June 30,
				2022			2022			2021			2021			2021
Demand, non-interest bearing			$	4,683,030		$	4,594,428		$	4,459,790		$	4,954,331		$	2,699,869
Demand, interest bearing				6,644,398			5,591,468			6,488,406			5,023,081			4,206,355
Total demand deposits				11,327,428			10,185,896			10,948,196			9,977,412			6,906,224
Savings				640,062			802,395			973,317			1,310,343			1,431,756
Money market				4,254,205			4,981,077			4,349,073			5,090,121			4,908,809
Time deposits				723,024			446,192			507,338			593,149			627,150
Total deposits			$	16,944,719		$	16,415,560		$	16,777,924		$	16,971,025		$	13,873,939

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY - UNAUDITED
(Dollars in thousands)	As of June 30, 2022								As of March 31, 2022								As of June 30, 2021
	Total loans		Non accrual /NPLs		Allowance for credit losses		Total NPLs to total loans	Total reserves to total NPLs	Total loans		Non accrual /NPLs		Allowance for credit losses		Total NPLs to total loans	Total reserves to total NPLs	Total loans		Non accrual /NPLs		Allowance for credit losses		Total NPLs to total loans	Total reserves to total NPLs
Loan type
Commercial & industrial, including specialty lending (1)	$	5,737,670	$	4,061	$	11,081	0.07 %	272.86 %	$	3,995,802	$	5,490	$	10,765	0.14 %	196.08 %	$	2,360,656	$	6,717	$	8,127	0.28 %	120.99 %
Multi-family		2,008,784		1,153		9,765	0.06 %	846.92 %		1,705,027		17,869		7,437	1.05 %	41.62 %		1,497,485		21,595		5,028	1.44 %	23.28 %
Commercial real estate owner occupied		710,577		2,913		4,745	0.41 %	162.89 %		701,893		2,191		3,841	0.31 %	175.31 %		653,649		2,688		4,464	0.41 %	166.07 %
Commercial real estate non-owner occupied		1,152,869		—		8,880	— %	— %		1,140,311		1,302		5,955	0.11 %	457.37 %		1,206,646		—		7,374	— %	— %
Construction		195,687		—		1,179	— %	— %		161,024		—		939	— %	— %		179,198		—		2,643	— %	— %
Total commercial loans and leases receivable		9,805,587		8,127		35,650	0.08 %	438.66 %		7,704,057		26,852		28,937	0.35 %	107.76 %		5,897,634		31,000		27,636	0.53 %	89.15 %
Residential		457,768		6,258		5,578	1.37 %	89.13 %		466,423		8,124		4,685	1.74 %	57.67 %		266,911		8,991		2,299	3.37 %	25.57 %
Manufactured housing		48,570		3,071		4,080	6.32 %	132.86 %		50,669		3,430		4,342	6.77 %	126.59 %		57,904		3,239		4,372	5.59 %	134.98 %
Installment		1,901,070		5,965		111,222	0.31 %	1864.58 %		1,897,706		4,865		107,883	0.26 %	2217.53 %		1,549,693		2,728		91,129	0.18 %	3340.51 %
Total consumer loans receivable		2,407,408		15,294		120,880	0.64 %	790.38 %		2,414,798		16,419		116,910	0.68 %	712.04 %		1,874,508		14,958		97,800	0.80 %	653.83 %
Loans and leases receivable (1)		12,212,995		23,421		156,530	0.19 %	668.33 %		10,118,855		43,271		145,847	0.43 %	337.05 %		7,772,142		45,958		125,436	0.59 %	272.94 %
Loans receivable, PPP		1,570,160		—		—	— %	— %		2,195,902		—		—	— %	— %		6,305,056		—		—	— %	— %
Loans receivable, mortgage warehouse, at fair value		1,874,603		—		—	— %	— %		1,755,758		—		—	— %	— %		2,855,284		—		—	— %	— %
Total loans held for sale		6,595		4,643		—	70.40 %	— %		3,003		507		—	16.88 %	— %		34,540		507		—	1.47 %	— %
Total portfolio	$	15,664,353	$	28,064	$	156,530	0.18 %	557.76 %	$	14,073,518	$	43,778	$	145,847	0.31 %	333.15 %	$	16,967,022	$	46,465	$	125,436	0.27 %	269.96 %

(1)		Excluding loans receivable, PPP from total loans and leases receivable is a non-GAAP measure. Management believes the use of these non-GAAP measures provides additional clarity when assessing Customers' financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. Please refer to the reconciliation schedules that follow this table.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED
(Dollars in thousands)
			Q2			Q1			Q4			Q3			Q2			Six Months Ended June 30,
			2022			2022			2021			2021			2021			2022			2021
Loan type
Multi-family			$	1,990		$	(337)		$	—		$	—		$	—		$	1,653		$	1,132
Commercial & industrial				(416)			(59)			240			116			(283)			(475)			92
Commercial real estate owner occupied				(42)			(7)			66			50			(1)			(49)			133
Commercial real estate non-owner occupied				159			(8)			(14)			943			(59)			151			(69)
Construction				(103)			(113)			(3)			(3)			(114)			(216)			(119)
Residential				(39)			(2)			(6)			54			(12)			(41)			28
Installment				11,932			7,752			7,299			5,944			7,060			19,684			17,915
Total net charge-offs (recoveries) from loans held for investment			$	13,481		$	7,226		$	7,582		$	7,104		$	6,591		$	20,707		$	19,112

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED

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

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

Core Earnings - Customers Bancorp																										Six Months Ended June 30,
	Q2 2022					Q1 2022					Q4 2021					Q3 2021					Q2 2021					2022					2021
(Dollars in thousands except per share data)	USD		Per share			USD		Per share			USD		Per share			USD		Per share			USD		Per share			USD		Per share			USD		Per share
GAAP net income to common shareholders	$	56,519	$	1.68		$	74,896	$	2.18		$	98,647	$	2.87		$	110,241	$	3.25		$	58,042	$	1.72		$	131,415	$	3.87		$	91,246	$	2.74
Reconciling items (after tax):
Net loss from discontinued operations		—		—			—		—			1,585		0.05			—		—			—		—			—		—			38,036		1.14
Severance expense		—		—			—		—			—		—			—		—			1,517		0.04			—		—			1,517		0.05
Impairments on fixed assets and leases		705		0.02			220		0.01			1,118		0.03			—		—			—		—			925		0.03			—		—
Merger and acquisition related expenses		—		—			—		—			—		—			—		—			—		—			—		—			320		0.01
Legal reserves		—		—			—		—			—		—			897		0.03			—		—			—		—			—		—
(Gains) losses on investment securities		2,494		0.07			1,030		0.03			43		0.00			(4,591)		(0.14)			(2,694)		(0.08)			3,524		0.10			(21,467)		(0.64)
Loss on sale of foreign subsidiaries		—		—			—		—			—		—			—		—			2,150		0.06			—		—			2,150		0.06
Loss on cash flow hedge derivative terminations		—		—			—		—			—		—			—		—			—		—			—		—			18,716		0.56
Derivative credit valuation adjustment		(351)		(0.01)			(736)		(0.02)			(180)		(0.01)			(198)		(0.01)			288		0.01			(1,087)		(0.03)			(907)		(0.03)
Deposit relationship adjustment fees		—		—			—		—			—		—			4,707		0.14			—		—			—		—			—		—
Loss on redemption of preferred stock		—		—			—		—			—		—			2,820		0.08			—		—			—		—			—		—
Core earnings	$	59,367	$	1.77		$	75,410	$	2.20		$	101,213	$	2.95		$	113,876	$	3.36		$	59,303	$	1.76		$	134,777	$	3.97		$	129,611	$	3.89

Core Earnings, excluding PPP - Customers Bancorp																										Six Months Ended June 30,
	Q2 2022					Q1 2022					Q4 2021					Q3 2021					Q2 2021					2022					2021
(Dollars in thousands except per share data)	USD		Per share			USD		Per share			USD		Per share			USD		Per share			USD		Per share			USD		Per share			USD		Per share
GAAP net income to common shareholders	$	56,519	$	1.68		$	74,896	$	2.18		$	98,647	$	2.87		$	110,241	$	3.25		$	58,042	$	1.72		$	131,415	$	3.87		$	91,246	$	2.74
Less: PPP net income (after tax)		13,066		0.39			24,713		0.72			64,323		1.87			81,337		2.40			24,312		0.72			37,779		1.11			49,391		1.48
GAAP net income to common shareholders, excluding PPP		43,453		1.29			50,183		1.46			34,324		1.00			28,904		0.85			33,730		1.00			93,636		2.76			41,855		1.26
Reconciling items (after tax):
Net loss from discontinued operations		—		—			—		—			1,585		0.05			—		—			—		—			—		—			38,036		1.14
Severance expense		—		—			—		—			—		—			—		—			1,517		0.04			—		—			1,517		0.05
Impairments on fixed assets and leases		705		0.02			220		0.01			1,118		0.03			—		—			—		—			925		0.03			—		—
Merger and acquisition related expenses		—		—			—		—			—		—			—		—			—		—			—		—			320		0.01
Legal reserves		—		—			—		—			—		—			897		0.03			—		—			—		—			—		—
(Gains) losses on investment securities		2,494		0.07			1,030		0.03			43		0.00			(4,591)		(0.14)			(2,694)		(0.08)			3,524		0.10			(21,467)		(0.64)
Loss on sale of foreign subsidiaries		—		—			—		—			—		—			—		—			2,150		0.06			—		—			2,150		0.06
Loss on cash flow hedge derivative terminations		—		—			—		—			—		—			—		—			—		—			—		—			18,716		0.56
Derivative credit valuation adjustment		(351)		(0.01)			(736)		(0.02)			(180)		(0.01)			(198)		(0.01)			288		0.01			(1,087)		(0.03)			(907)		(0.03)
Deposit relationship adjustment fees		—		—			—		—			—		—			4,707		0.14			—		—			—		—			—		—
Loss on redemption of preferred stock		—		—			—		—			—		—			2,820		0.08			—		—			—		—			—		—
Core earnings, excluding PPP	$	46,301	$	1.38		$	50,697	$	1.48		$	36,890	$	1.07		$	32,539	$	0.96		$	34,991	$	1.04		$	96,998	$	2.86		$	80,220	$	2.41

Core Return on Average Assets - Customers Bancorp																Six Months Ended June 30,
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021				2022			2021
GAAP net income	$	58,650		$	76,761		$	100,669		$	116,042		$	61,341		$	135,411		$	97,936
Reconciling items (after tax):
Net loss from discontinued operations		—			—			1,585			—			—			—			38,036
Severance expense		—			—			—			—			1,517			—			1,517
Impairments on fixed assets and leases		705			220			1,118			—			—			925			—
Merger and acquisition related expenses		—			—			—			—			—			—			320
Legal reserves		—			—			—			897			—			—			—
(Gains) losses on investment securities		2,494			1,030			43			(4,591)			(2,694)			3,524			(21,467)
Loss on sale of foreign subsidiaries		—			—			—			—			2,150			—			2,150
Loss on cash flow hedge derivative terminations		—			—			—			—			—			—			18,716
Derivative credit valuation adjustment		(351)			(736)			(180)			(198)			288			(1,087)			(907)
Deposit relationship adjustment fees		—			—			—			4,707			—			—			—
Core net income	$	61,498		$	77,275		$	103,235		$	116,857		$	62,602		$	138,773		$	136,301
Average total assets	$	20,056,020		$	19,129,330		$	19,214,241		$	19,739,340		$	19,306,948		$	19,595,236		$	18,918,491
Core return on average assets		1.23 %			1.64 %			2.13 %			2.35 %			1.30 %			1.43 %			1.45 %

Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp																Six Months Ended June 30,
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021				2022			2021
GAAP net income	$	58,650		$	76,761		$	100,669		$	116,042		$	61,341		$	135,411		$	97,936
Reconciling items:
Income tax expense		18,896			19,332			12,993			36,263			20,124			38,228			37,684
Provision (benefit) for credit losses		23,847			15,997			13,890			13,164			3,291			39,844			372
Provision (benefit) for credit losses on unfunded commitments		608			(109)			352			669			45			499			(1,241)
Severance expense		—			—			—			—			2,004			—			2,004
Net loss from discontinued operations		—			—			1,585			—			—			—			38,036
Impairments on fixed assets and leases		914			286			1,260			—			—			1,200			—
Merger and acquisition related expenses		—			—			—			—			—			—			418
Legal reserves		—			—			—			1,185			—			—			—
(Gains) losses on investment securities		3,232			1,339			49			(6,063)			(3,558)			4,571			(28,098)
Loss on sale of foreign subsidiaries		—			—			—			—			2,840			—			2,840
Loss on cash flow hedge derivative terminations		—			—			—			—			—			—			24,467
Derivative credit valuation adjustment		(455)			(957)			(203)			(261)			380			(1,412)			(1,182)
Deposit relationship adjustment fees		—			—			—			6,216			—			—			—
Adjusted net income - pre-tax pre-provision	$	105,692		$	112,649		$	130,595		$	167,215		$	86,467		$	218,341		$	173,236
Average total assets	$	20,056,020		$	19,129,330		$	19,214,241		$	19,739,340		$	19,306,948		$	19,595,236		$	18,918,491
Adjusted ROAA - pre-tax pre-provision		2.11 %			2.39 %			2.70 %			3.36 %			1.80 %			2.25 %			1.85 %

Core Return on Average Common Equity - Customers Bancorp																Six Months Ended June 30,
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021				2022			2021
GAAP net income to common shareholders	$	56,519		$	74,896		$	98,647		$	110,241		$	58,042		$	131,415		$	91,246
Reconciling items (after tax):
Net loss from discontinued operations		—			—			1,585			—			—			—			38,036
Severance expense		—			—			—			—			1,517			—			1,517
Impairments on fixed assets and leases		705			220			1,118			—			—			925			—
Merger and acquisition related expenses		—			—			—			—			—			—			320
Legal reserves		—			—			—			897			—			—			—
(Gains) losses on investment securities		2,494			1,030			43			(4,591)			(2,694)			3,524			(21,467)
Loss on sale of foreign subsidiaries		—			—			—			—			2,150			—			2,150
Loss on cash flow hedge derivative terminations		—			—			—			—			—			—			18,716
Derivative credit valuation adjustment		(351)			(736)			(180)			(198)			288			(1,087)			(907)
Deposit relationship adjustment fees		—			—			—			4,707			—			—			—
Loss on redemption of preferred stock		—			—			—			2,820			—			—			—
Core earnings	$	59,367		$	75,410		$	101,213		$	113,876		$	59,303		$	134,777		$	129,611
Average total common shareholders' equity	$	1,244,819		$	1,252,022		$	1,179,478		$	1,071,566		$	1,002,624		$	1,248,400		$	960,940
Core return on average common equity		19.13 %			24.43 %			34.04 %			42.16 %			23.72 %			21.77 %			27.20 %

Adjusted ROCE - Pre-Tax Pre-Provision - Customers Bancorp																Six Months Ended June 30,
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021				2022			2021
GAAP net income to common shareholders	$	56,519		$	74,896		$	98,647		$	110,241		$	58,042		$	131,415		$	91,246
Reconciling items:
Income tax expense		18,896			19,332			12,993			36,263			20,124			38,228			37,684
Provision (benefit) for credit losses		23,847			15,997			13,890			13,164			3,291			39,844			372
Provision (benefit) for credit losses on unfunded commitments		608			(109)			352			669			45			499			(1,241)
Net loss from discontinued operations		—			—			1,585			—			—			—			38,036
Severance expense		—			—			—			—			2,004			—			2,004
Impairments on fixed assets and leases		914			286			1,260			—			—			1,200			—
Merger and acquisition related expenses		—			—			—			—			—			—			418
Legal reserves		—			—			—			1,185			—			—			—
(Gains) losses on investment securities		3,232			1,339			49			(6,063)			(3,558)			4,571			(28,098)
Loss on sale of foreign subsidiaries		—			—			—			—			2,840			—			2,840
Loss on cash flow hedge derivative terminations		—			—			—			—			—			—			24,467
Derivative credit valuation adjustment		(455)			(957)			(203)			(261)			380			(1,412)			(1,182)
Deposit relationship adjustment fees		—			—			—			6,216			—			—			—
Loss on redemption of preferred stock		—			—			—			2,820			—			—			—
Pre-tax pre-provision adjusted net income available to common shareholders	$	103,561		$	110,784		$	128,573		$	164,234		$	83,168		$	214,345		$	166,546
Average total common shareholders' equity	$	1,244,819		$	1,252,022		$	1,179,478		$	1,071,566		$	1,002,624		$	1,248,400		$	960,940
Adjusted ROCE - pre-tax pre-provision		33.37 %			35.89 %			43.25 %			60.81 %			33.27 %			34.62 %			34.95 %

Net Interest Margin, Tax Equivalent - Customers Bancorp																Six Months Ended June 30,
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021				2022			2021
GAAP net interest income	$	164,852		$	164,699		$	193,694		$	219,892		$	138,757		$	329,551		$	271,488
Tax-equivalent adjustment		270			239			276			290			289			509			581
Net interest income tax equivalent	$	165,122		$	164,938		$	193,970		$	220,182		$	139,046		$	330,060		$	272,069
Average total interest earning assets	$	19,525,936		$	18,572,308		$	18,576,433		$	19,033,826		$	18,698,996		$	19,051,757		$	18,323,555
Net interest margin, tax equivalent		3.39 %			3.60 %			4.14 %			4.59 %			2.98 %			3.49 %			2.99 %

Net Interest Margin, Tax Equivalent, excluding PPP - Customers Bancorp																Six Months Ended June 30,
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021				2022			2021
GAAP net interest income	$	164,852		$	164,699		$	193,694		$	219,892		$	138,757		$	329,551		$	271,488
PPP net interest income		(18,946)			(34,615)			(78,647)			(112,005)			(35,785)			(53,561)			(70,627)
Tax-equivalent adjustment		270			239			276			290			289			509			581
Net interest income, tax equivalent, excluding PPP	$	146,176		$	130,323		$	115,323		$	108,177		$	103,261		$	276,499		$	201,442
GAAP average total interest earning assets	$	19,525,936		$	18,572,308		$	18,576,433		$	19,033,826		$	18,698,996		$	19,051,757		$	18,323,555
Average PPP loans		(1,863,429)			(2,641,318)			(3,898,607)			(5,778,367)			(6,133,184)			(2,250,224)			(5,382,370)
Adjusted average total interest earning assets	$	17,662,507		$	15,930,990		$	14,677,826		$	13,255,459		$	12,565,812		$	16,801,533		$	12,941,185
Net interest margin, tax equivalent, excluding PPP		3.32 %			3.32 %			3.12 %			3.24 %			3.30 %			3.32 %			3.14 %

Loan Yield, excluding PPP																Six Months Ended June 30,
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021				2022			2021
Interest income on loans and leases	$	168,941		$	157,175		$	198,000		$	233,097		$	153,608		$	326,116		$	305,725
PPP interest income		(20,572)			(36,894)			(82,086)			(117,102)			(41,137)			(57,466)			(79,969)
Interest income on core loans (Loans and leases, excluding PPP)	$	148,369		$	120,281		$	115,914		$	115,995		$	112,471		$	268,650		$	225,756
Average loans and leases		14,918,498			13,656,991			14,335,370			16,192,744			16,482,802			14,291,229			15,909,143
Average PPP loans		(1,863,429)			(2,641,318)			(3,898,607)			(5,778,367)			(6,133,184)			(2,250,224)			(5,382,370)
Adjusted average total interest earning assets		13,055,069			11,015,673			10,436,763			10,414,377			10,349,618			12,041,005			10,526,773
Loan yield, excluding PPP		4.56 %			4.43 %			4.41 %			4.42 %			4.36 %			4.50 %			4.32 %

Core Efficiency Ratio - Customers Bancorp																Six Months Ended June 30,
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021				2022			2021
GAAP net interest income	$	164,852		$	164,699		$	193,694		$	219,892		$	138,757		$	329,551		$	271,488
GAAP non-interest income	$	12,746		$	21,198		$	16,991		$	25,586		$	16,822		$	33,944		$	35,290
(Gains) losses on investment securities		3,232			1,339			49			(6,063)			(3,558)			4,571			(28,098)
Derivative credit valuation adjustment		(455)			(957)			(203)			(261)			380			(1,412)			(1,182)
Loss on cash flow hedge derivative terminations		—			—			—			—			—			—			24,467
Loss on sale of foreign subsidiaries		—			—			—			—			2,840			—			2,840
Core non-interest income		15,523			21,580			16,837			19,262			16,484			37,103			33,317
Core revenue	$	180,375		$	186,279		$	210,531		$	239,154		$	155,241		$	366,654		$	304,805
GAAP non-interest expense	$	76,205		$	73,807		$	81,548		$	80,009		$	70,823		$	150,012		$	132,750
Severance expense		—			—			—			—			(2,004)			—			(2,004)
Impairments on fixed assets and leases		(914)			(286)			(1,260)			—			—			(1,200)			—
Legal reserves		—			—			—			(1,185)			—			—			—
Merger and acquisition related expenses		—			—			—			—			—			—			(418)
Deposit relationship adjustment fees		—			—			—			(6,216)			—			—			—
Core non-interest expense	$	75,291		$	73,521		$	80,288		$	72,608		$	68,819		$	148,812		$	130,328
Core efficiency ratio (1)		41.74 %			39.47 %			38.14 %			30.36 %			44.33 %			40.59 %			42.76 %

⁽¹⁾ Core efficiency ratio calculated as core non-interest expense divided by core revenue.

Tangible Common Equity to Tangible Assets - Customers Bancorp
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021
GAAP total shareholders' equity	$	1,353,390		$	1,377,406		$	1,366,217		$	1,284,299		$	1,250,729
Reconciling items:
Preferred stock		(137,794)			(137,794)			(137,794)			(137,794)			(217,471)
Goodwill and other intangibles		(3,629)			(3,678)			(3,736)			(3,794)			(3,853)
Tangible common equity	$	1,211,967		$	1,235,934		$	1,224,687		$	1,142,711		$	1,029,405
GAAP total assets	$	20,251,996		$	19,163,708		$	19,575,028		$	19,108,922		$	19,635,108
Reconciling items:
Goodwill and other intangibles		(3,629)			(3,678)			(3,736)			(3,794)			(3,853)
Tangible assets	$	20,248,367		$	19,160,030		$	19,571,292		$	19,105,128		$	19,631,255
Tangible common equity to tangible assets		5.99 %			6.45 %			6.26 %			5.98 %			5.24 %

Tangible Common Equity to Tangible Assets, excluding PPP - Customers Bancorp
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021
GAAP total shareholders' equity	$	1,353,390		$	1,377,406		$	1,366,217		$	1,284,299		$	1,250,729
Reconciling items:
Preferred stock		(137,794)			(137,794)			(137,794)			(137,794)			(217,471)
Goodwill and other intangibles		(3,629)			(3,678)			(3,736)			(3,794)			(3,853)
Tangible common equity	$	1,211,967		$	1,235,934		$	1,224,687		$	1,142,711		$	1,029,405
GAAP total assets	$	20,251,996		$	19,163,708		$	19,575,028		$	19,108,922		$	19,635,108
Loans receivable, PPP		(1,570,160)			(2,195,902)			(3,250,008)			(4,957,357)			(6,305,056)
Total assets, excluding PPP	$	18,681,836		$	16,967,806		$	16,325,020		$	14,151,565		$	13,330,052
Reconciling items:
Goodwill and other intangibles		(3,629)			(3,678)			(3,736)			(3,794)			(3,853)
Tangible assets, excluding PPP	$	18,678,207		$	16,964,128		$	16,321,284		$	14,147,771		$	13,326,199
Tangible common equity to tangible assets, excluding PPP		6.49 %			7.29 %			7.50 %			8.08 %			7.72 %

Tangible Book Value per Common Share - Customers Bancorp
(Dollars in thousands except share and per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021
GAAP total shareholders' equity	$	1,353,390		$	1,377,406		$	1,366,217		$	1,284,299		$	1,250,729
Reconciling Items:
Preferred stock		(137,794)			(137,794)			(137,794)			(137,794)			(217,471)
Goodwill and other intangibles		(3,629)			(3,678)			(3,736)			(3,794)			(3,853)
Tangible common equity	$	1,211,967		$	1,235,934		$	1,224,687		$	1,142,711		$	1,029,405
Common shares outstanding		32,449,486			32,957,847			32,913,267			32,537,976			32,353,256
Tangible book value per common share	$	37.35		$	37.50		$	37.21		$	35.12		$	31.82

Core Loans (Total Loans and Leases, excluding PPP)
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021
Total loans and leases	$	15,664,353		$	14,073,518		$	14,568,885		$	15,515,537		$	16,967,022
Loans receivable, PPP		(1,570,160)			(2,195,902)			(3,250,008)			(4,957,357)			(6,305,056)
Core Loans (Loans and leases, excluding PPP)	$	14,094,193		$	11,877,616		$	11,318,877		$	10,558,180		$	10,661,966

Total loans and leases, excluding mortgage banking lending and PPP
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021
Total loans and leases	$	15,664,353		$	14,073,518		$	14,568,885		$	15,515,537		$	16,967,022
Loans to mortgage companies		(1,975,189)			(1,830,121)			(2,362,438)			(2,626,483)			(2,922,217)
Loans receivable, PPP		(1,570,160)			(2,195,902)			(3,250,008)			(4,957,357)			(6,305,056)
Total loans and leases, excluding mortgage banking lending and PPP	$	12,119,004		$	10,047,495		$	8,956,439		$	7,931,697		$	7,739,749

Total Assets, excluding PPP
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021
Total assets	$	20,251,996		$	19,163,708		$	19,575,028		$	19,108,922		$	19,635,108
Loans receivable, PPP		(1,570,160)			(2,195,902)			(3,250,008)			(4,957,357)			(6,305,056)
Total assets, excluding PPP	$	18,681,836		$	16,967,806		$	16,325,020		$	14,151,565		$	13,330,052

Coverage of credit loss reserves for loans and leases held for investment, excluding PPP
(Dollars in thousands except per share data)	Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021
Loans and leases receivable	$	13,783,155		$	12,314,757		$	12,268,306		$	12,927,956		$	14,077,198
Loans receivable, PPP		(1,570,160)			(2,195,902)			(3,250,008)			(4,957,357)			(6,305,056)
Loans and leases held for investment, excluding PPP	$	12,212,995		$	10,118,855		$	9,018,298		$	7,970,599		$	7,772,142
Allowance for credit losses on loans and leases	$	156,530		$	145,847		$	137,804		$	131,496		$	125,436
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP		1.28 %			1.44 %			1.53 %			1.65 %			1.61 %

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220726006164/en/

David W. Patti, Communications Director 610-451-9452

Source: Customers Bancorp, Inc.

FAQ

What are Customers Bancorp's Q2 2022 earnings results?

Customers Bancorp reported net income of $56.5 million, or $1.68 per diluted share, in Q2 2022.

How did Customers Bancorp perform in terms of loan growth?

Customers Bancorp achieved a year-over-year loan growth of $4.4 billion, representing a 56.6% increase.

What is Customers Bancorp's outlook for core earnings in 2022?

Customers Bancorp expects to meet or exceed core earnings projections of $4.75 - $5.00 for 2022.

What was the efficiency ratio for Customers Bancorp in Q2 2022?

The efficiency ratio for Customers Bancorp improved to 42.14% in Q2 2022.

What recent changes occurred in Customers Bancorp's total deposits?

Total deposits increased by $3.1 billion, or 22.1%, to reach $16.9 billion in Q2 2022.