SOURCE: Customers Bancorp, Inc.

Customers Bancorp, Inc.

July 20, 2016 16:15 ET

Customers Bancorp Reports Record Net Income for Second Quarter and First Six Months of 2016

WYOMISSING, PA--(Marketwired - July 20, 2016) -

  • Record Q2 2016 GAAP Net Income of $17.4 Million, Up 57.2% Over Q2 2015
  • Record Q2 2016 Fully Diluted Earnings Per Share ("EPS") of $0.60, Up 53.8% over Q2 2015 Fully Diluted EPS
  • Record Six Months of 2016 Net Income of $33.8 million, Up 35.1% over First Six Months of 2015 and EPS of $1.17, Up 33.0% over First Six Months 2015
  • Exceptional Asset Quality with NPLs only 0.17% of Total Loans
  • Acquisition of Higher One Holdings, Inc. Disbursements Business and Combination With Customers' BankMobile Division Completed

Customers Bancorp, Inc. (NYSE: CUBI), the parent company of Customers Bank (collectively "Customers"), reported net income to common shareholders of $17.4 million for the second quarter of 2016 ("Q2 2016") compared to net income to common shareholders of $11.0 million for the second quarter of 2015 ("Q2 2015"), an increase of $6.3 million, or 57.2%. Fully diluted earnings per share for Q2 2016 was $0.60 compared to $0.39 fully diluted earnings per share for Q2 2015, an increase of $0.21 per share, or 53.8%. Average fully diluted shares for Q2 2016 were 29.0 million compared to average fully diluted shares of 28.7 million for Q2 2015. The second quarter results included one-time costs for acquisition related expenses and a true-up to a higher effective tax rate as well as two weeks of Disbursements business results totaling approximately $2.7 million.

Customers also reported net income to common shareholders of $33.8 million for the first six months of 2016 compared to net income to common shareholders of $25.0 million for the first six months of 2015, an increase of $8.8 million, or 35.1%. Fully diluted earnings per share for the first six months of 2016 was $1.17 compared to $0.88 for the first six months of 2015, an increase of 33.0%.

"Customers is pleased to report record earnings for the second quarter and first six months of 2016. Customers' single point of contact business model delivered by highly experienced professional teams resulted in Customers continued origination of high quality loans, limiting our interest rate exposures, and controlling operating costs," stated Jay Sidhu, Chairman and CEO of Customers. "Furthermore, Customers completed its strategic acquisition of the Disbursements business from Higher One Holdings, Inc. on June 15, 2016. Combining the Disbursements business with our BankMobile business and platform gives Customers over 2.1 million BankMobile serviced customers and the potential to add as many as 500,000 new BankMobile customers annually. We believe this acquisition will lower the overall cost of deposits for Customers and provide for realizing the value of BankMobile Technologies within 12 to 18 months, making this Division of Customers Bank potentially one of the most successful digital banking platforms in the United States," Sidhu continued.

Other financial highlights for Q2 2016 compared to Q2 2015 include:

  • Q2 2016 net interest income of $63.2 million increased $16.6 million, or 35.7%, from net interest income for Q2 2015 as average loan and security balances increased $2.2 billion. Net interest margin expanded by 10 basis points to 2.83% from Q2 2015.
    • Commercial loan average balances increased $886 million, including commercial loans to mortgage banking companies, in Q2 2016 compared to Q2 2015.
    • Multi-family average loan balances increased $1.2 billion.
    • The increased yields from variable rate commercial loans and investment portfolios more than offset the slightly higher funding costs.
  • Customers reported a $0.8 million provision for loan losses in Q2 2016. The Q2 2016 provision for loan losses included provisions for loan growth and impairment measured on specific loans of $2.1 million, offset in part by increased estimated cash flows expected to be collected on purchased credit-impaired loans and a reduction in the estimated amount owed to the FDIC for previous FDIC assisted acquisitions totaling $1.3 million. The Q2 2015 provision included a provision of $6.0 million for a fraudulent loan.
  • Q2 2016 non-interest income of $8.3 million increased $1.9 million from Q2 2015 as a result of $2.2 million interchange and other fees received from the acquired Disbursements business and $0.3 million increase in warehouse fees offset in part by a decrease in gains on loan sales. There were no sales of multi-family loans in Q2 2016.
  • Non-interest expenses in Q2 2016 of $38.2 million increased $12.5 million, or 48.8%, from non-interest expenses in Q2 2015. Q2 2016 operating expenses included approximately $3.2 million of Disbursements business expenses (salaries and employee benefits of $0.7 million, professional services of $0.5 million, technology, communication and bank operations of $0.9 million, and other expenses of $1.1 million) and one-time acquisition related expenses of $0.9 million (predominately for professional services). The remaining increases in salary and employee benefits, regulatory assessments and fees, professional services, technology, and occupancy expenses resulted largely from the increases in resources and services necessary to support and operate a $9.7 billion bank.
  • Customers' Q2 2016 income tax expense of $13.0 million reflects an estimated effective tax rate of 40.1% compared to Q2 2015 tax expense of $6.4 million with an effective tax rate of 35.6%. During Q2 2016, Customers evaluated its apportionment factors and estimated that due to the increasing proportion of income producing assets domiciled in New York, particularly in New York City, that Customers' effective tax rate for full year 2016 would be approximately 38.0%. The 40.1% Q2 2016 effective rate reflects recording the higher estimated taxes for the first six months of 2016 during Q2 2016.
  • Customers achieved a return on average assets of 0.84% in Q2 2016 compared to 0.65% in Q2 2015, and achieved a return on average common equity of 13.03% in Q2 2016 compared to 9.44% in Q2 2015. Pre-tax and pre-provision return on average assets reached 1.44% in Q2 2016. Pre-tax and pre-provision return on average common equity was 23.38% in Q2 2016.
  • Total loans, including commercial loans held for sale, increased $1.9 billion, or 28.4%, to $8.4 billion as of June 30, 2016 compared to total loans as of June 30, 2015 of $6.6 billion. Multi-family loan balances increased $1.0 billion to $3.3 billion and commercial loans including lines of credit to mortgage companies increased $0.9 billion to $4.7 billion.
  • Total deposits increased $1.3 billion, or 23.3%, to $6.8 billion as of June 30, 2016 compared to total deposits of $5.5 billion as of June 30, 2015. Non-interest bearing demand deposits grew $165.2 million to $749.6 million, a 28.3% increase. Money market account balances were up $536.9 million to $3.0 billion as of June 30, 2016 compared to June 30, 2015, a 21.7% increase, and certificates of deposit accounts increased $469.3 million to $2.7 billion as of June 30, 2016, a 20.8% increase.
  • The Q2 2016 efficiency ratio was 53.47% compared to a 48.4% Q2 2015 efficiency ratio. Q2 2016 operating expenses included acquisition related expenses of $0.9 million and Disbursements business expenses of $3.2 million.
  • Capital levels continue to exceed the "well-capitalized" threshold established by regulation at the bank and exceed the applicable Basel III regulatory thresholds for the holding company and the bank.
  • Customers Bancorp issued $57.5 million of non-cumulative perpetual preferred stock paying a 6.45% dividend on April 28, 2016. The proceeds from the capital raise were largely contributed to the subsidiary bank to support Customers Bank's balance sheet growth and other general corporate purposes.
  • Total Tier 1 equity for Customers Bancorp increased $141.3 million from June 30, 2015 to June 30, 2016, an increase in capital of 27.0% over the year.
  • The tangible book value per common share continued to increase, reaching $19.35 at June 30, 2016, compared to $17.28 at June 30, 2015, an increase of 12.0% year-over-year.

Q2 2016 compared to Q1 2016:

Customers' Q2 2016 net income to common shareholders of $17.4 million increased $1.0 million, or 5.8%, from net income to common shareholders of $16.4 million for the first quarter of 2016 ("Q1 2016"). The $1.0 million increase in Q2 2016 compared to Q1 2016 net income to common shareholders resulted primarily from increases in net interest income of $5.5 million to $63.2 million, a decrease in provisions for loan losses of $1.2 million to $0.8 million, an increase in non-interest income of $2.8 million to $8.3 million partially offset by increased operating expenses of $4.3 million to $38.2 million, and a $3.5 million increase in income tax expense to $13.0 million. Discussing these changes further:

  • The $5.5 million increase in net interest income in Q2 2016 resulted from a $0.9 billion higher average loan balance in Q2 2016 as a result of loan growth.
  • The $1.2 million decrease in provision for loan losses in Q2 2016 resulted primarily from a reduction in the amount estimated to be owed to the FDIC for FDIC assisted acquisitions and increased estimated cash flows expected to be collected on purchased credit-impaired loans totaling $1.3 million.
  • The $2.8 million increase in non-interest income in Q2 2016 resulted primarily from an increase in interchange revenue and deposit fees of $2.2 million related to the Disbursements business acquisition, and a $0.5 million increase in mortgage warehouse transactional fees as the volume of loans processed increased in Q2 2016 compared to Q1 2016.
  • The increase in operating expenses of $4.3 million in Q2 2016 compared to Q1 2016 resulted largely from Disbursements business related expenses of $3.2 million.

The following table presents a summary of key earnings and performance metrics for the quarter ended June 30, 2016 and the preceding four quarters, respectively:

 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES        
EARNINGS SUMMARY - UNAUDITED          
           
(Dollars in thousands, except per-share data)          
   Q2  Q1  Q4  Q3  Q2
   2016  2016  2015  2015  2015
                
Net income available to common shareholders  $17,368  $16,413  $16,780  $14,309  $11,049
Basic earnings per common share ("EPS")  $0.64  $0.61  $0.62  $0.53  $0.41
Diluted EPS  $0.60  $0.57  $0.58  $0.50  $0.39
Average common shares outstanding - basic   27,080,676   26,945,062   26,886,694   26,872,787   26,839,799
Average common shares outstanding - diluted   28,971,040   28,783,101   28,912,644   28,741,129   28,680,664
Shares outstanding period end   27,286,833   27,037,005   26,901,801   26,882,383   26,871,745
                     
Return on average assets   0.84%   0.85%   0.91%   0.82%   0.65%
Return on average common equity   13.03%   12.85%   13.46%   11.83%   9.44%
Return on average assets - pre-tax and pre-provision (1)   1.44%   1.40%   1.60%   1.39%   1.54%
Return on average common equity - pre-tax and pre-provision (2)   23.38%   21.87%   24.35%   20.53%   22.87%
Net interest margin, tax equivalent   2.83%   2.88%   2.83%   2.79%   2.73%
Efficiency ratio   53.47%   53.74%   50.11%   54.00%   48.40%
Non-performing loans (NPLs) to total loans (including held-for-sale loans)   0.17%   0.20%   0.15%   0.27%   0.16%
Reserves to non-performing loans   268.98%   242.10%   341.71%   197.01%   369.90%
Net charge-offs (recoveries)  $1,060  $(455)  $4,322  $5,657  $999
                     
Tier 1 equity to average tangible assets   7.17%   7.15%   7.16%   7.27%   7.36%
Tangible common equity to average tangible assets (3)   5.71%   6.17%   6.37%   6.49%   6.54%
Tangible book value per common share (period end) (4)  $19.35  $19.08  $18.39  $17.81  $17.28
Period end stock price  $25.13  $23.63  $27.22  $25.70  $26.89
(1)Calculated as net income, plus provision for loan losses and income tax expense divided by average total assets.
(2)Calculated as net income available to common shareholders, plus provision for loan losses and income tax expense divided by average common equity.
(3)Calculated as total equity less preferred stock and goodwill and other intangibles divided by total average assets less average goodwill and other intangibles.
(4)Calculated as total equity less preferred stock and goodwill and other intangibles divided by common shares outstanding at period end.
  

Capital

Customers recognizes the importance of not only being well capitalized in the current environment but to have adequate capital buffers to absorb any unexpected shocks. "Our capital ratios continue to be stretched as of June 30, 2016 due to the continued high usage of lines of credit by our mortgage banking customers (mortgage warehouse) and reflect the refinance boom triggered by the flat yield curve resulting in abnormally low 10-year yields. We are committed to controlling our asset growth over the next 12 months to two years and staying below $10 billion in assets. Over this time, we expect to demonstrate our business model's ability to gain new student demand deposit accounts and become the bank of choice for graduating students. Limiting our growth and possible future gains from our strategic alternatives for BankMobile should be significantly accretive to our capital ratios," stated Mr. Sidhu.

BankMobile

The BankMobile division took a significant step during Q2 2016 with Customers Bank's acquisition of the Higher One Holdings, Inc. Disbursements business, and BankMobile's combination with the acquired business. Together the new BankMobile division services over 2.1 million deposit accounts, and is perhaps the largest provider of mobile banking services in the United States by number of customers. The combined businesses also have the potential to add about 500,000 new student accounts annually. "We are very focused on continuing to build out BankMobile's technology software platform, introducing the Vibe and Bold deposit accounts, integrating the Disbursements business with the BankMobile business, developing and beginning to execute plans to continue to attract about 500,000 or more new millennial customers to its customer base each year and improve their engagement as a banking customer so they stay a BankMobile customer for life. The acquisition of the Disbursements business provides us with a great opportunity, marking an inflection point in BankMobile's development. We are committed to making BankMobile the primary bank for all our student customers and moving with them as they evolve to young professionals," stated Mr. Sidhu. "We are also focused on attracting more deposit customers with the Vibe and Bold accounts, arguably among the best customer offerings and the best priced banking services available in the U.S. We believe that 2016 and 2017 will be very exciting years as we build BankMobile as a profitable business and create value for Customers Bancorp, Inc. shareholders," Mr. Sidhu continued.

Managing Commercial Real Estate Concentration Risks and Providing High Net Worth Families Loans for Their Multi-Family Holdings

Customers' loans collateralized by multi-family properties were approximately 39.6% of Customers' total loan portfolio. Recognizing the risks that accompany certain elements of commercial real estate ("CRE") lending, Customers has as part of its core strategies studiously sought to limit its risks. Customers' total real estate construction and development exposure, arguably the riskiest area of CRE, was under $100 million as of June 30, 2016.

Our CRE exposures are focused principally on loans to high net worth families collateralized by multi-family properties that are of modest size and subject to what Customers believes are conservative underwriting standards. As of June 30, 2016, Customers had no non-performing multi-family loans. Customers believes it has a strong risk management process to manage the portfolio risks prospectively and that this portfolio will perform well even under a stressed scenario. Following are some unique characteristics of Customers' multi-family loan portfolio:

  • Principally concentrated in New York City and principally to high net worth families;
  • Average loan size is between $5 million - $7 million;
  • Annual debt service coverage ratio is 140%;
  • Median loan-to-value is 70%;
  • All loans are individually stressed with an increase of 1% and 2% to the cap rate and an increase of 1.5% and 3% in interest rates;
  • All properties are inspected prior to a loan being granted and monitored thereafter on an annual basis by dedicated portfolio managers;
  • Customers to date has never experienced more than a 30 day delinquency on any of the multi-family loans that it has originated; and
  • Credit approval process is independent of customer sales and portfolio management process.

Asset Quality and Interest Rate Risk

Risk management is a critical component of how Customers creates long-term shareholder value. Two of the most important risks of banking to be understood and managed in an uncertain economy are asset quality and interest rate risk.

Customers believes that asset quality risks must be diligently addressed during good economic times with prudent underwriting standards so that when the economy deteriorates the bank's capital is sufficient to absorb all losses without threatening its ability to operate and serve its community and other constituents. "Customers adopted prudent underwriting standards in 2009 when the current management team assumed responsibility for the Bank and has not compromised those standards in the last six years," stated Mr. Sidhu. "Customers' non-performing loans at June 30, 2016 were only 0.17% of total loans, compared to our peer group non-performing loans of approximately 0.95% of total loans, and industry average non-performing loans of about 1.60% of total loans. Our expectation is superior asset quality performance in good times and in difficult years. We have no direct exposure to oil and gas or business investments in fracking," said Mr. Sidhu.

Interest rate risk is another critical element for banks to manage. An unexpected shift in interest rates can have a devastating effect on a bank's profitability for multiple years. Banks can position their assets and liabilities to speculate on future interest rate changes with the hope of gaining earnings by guessing the next movement in interest rates. "Customers' objective is to manage the estimated effect of future interest rate changes, up or down, to a neutral effect on net interest income, so not speculating on whether interest rates go up or down," said Mr. Sidhu. "This allows our team members to focus on generating earnings from the business of banking, aggregating deposits and making loans to customers in the communities we serve," concluded Mr. Sidhu.

Diversified Loan Portfolio

Customers is a Business Bank that principally focuses on four lending activities; commercial and industrial loans to privately held businesses, multi-family loans principally to high net worth families, selected commercial real estate loans, and commercial loans and banking services to privately held mortgage companies. Commercial and industrial loans, including owner-occupied commercial real estate loans, and commercial loans to mortgage companies, were approximately $3.5 billion at June 30, 2016. Multi-family loans, or loans to high net worth families, were approximately $3.3 billion at June 30, 2016. Non-owner occupied commercial real estate loans were approximately $1.1 billion at June 30, 2016. Consumer and residential mortgage loans make up only about 5% of the loan portfolio.

Conference Call

Date: Wednesday, July 20, 2016
Time: 5:00 PM ET
US Dial-in: 888-542-1138
International Dial-in: 719-457-1510
Participant Code: 723210

Please dial in at least 10 minutes before the start of the call to ensure timely participation. Slides accompanying the presentation will be available on the Company's website at http://customersbank.com/investor relations.php prior to the call. A playback of the call will be available beginning July 20, 2016 at 8:00 pm ET until 8:00 pm on August 19, 2016. To listen, call within the United States (888) 203-1112 or (719) 457-0820 when calling internationally. Please use the replay pin number 4890143.

Institutional Background

Customers Bancorp, Inc. is a bank holding company located in Wyomissing, Pennsylvania engaged in banking and related business through its bank subsidiary, Customers Bank. Customers Bank is a community-based, full-service bank with assets of approximately $9.7 billion that was named one of Forbes magazine's 2016 100 Best Banks in America (there are over 6,200 banks in the United States). A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender that provides a range of banking services to small and medium-sized businesses, professionals, individuals and families through offices in Pennsylvania, New York, Rhode Island, New Hampshire, Massachusetts, and New Jersey. Committed to fostering customer loyalty, Customers Bank uses a High Tech/High Touch strategy that includes use of industry-leading technology to provide customers better access to their money, as well as Concierge Banking® by appointment at customers' homes or offices 12 hours a day, seven days a week. Customers Bank offers a continually expanding portfolio of loans to small businesses, multi-family projects, mortgage companies and consumers. BankMobile is a division of Customers Bank, offering state of the art high tech digital banking services with high level of personal customer service.

Customers Bancorp, Inc. voting common shares are listed on the New York Stock Exchange under the symbol CUBI. Additional information about Customers Bancorp, Inc. can be found on the Company's website, www.customersbank.com.

"Safe Harbor" Statement

In addition to historical information, this press release may contain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.'s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words "may," "could," "should," "pro forma," "looking forward," "would," "believe," "expect," "anticipate," "estimate," "intend," "plan," or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.'s control). Numerous competitive, economic, regulatory, legal and technological 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. In addition, important factors relating to the acquisition of the Disbursements business and the combination of Customers' BankMobile business with the acquired business also could cause Customers Bancorp's actual results to differ from those in the forward-looking statements. 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, 2015 and subsequently filed quarterly reports on Form 10-Q. 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.

 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED - UNAUDITED
(Dollars in thousands, except per share data)         
   Q2  Q1  Q2
   2016  2016  2015
Interest income:         
 Loans receivable, including fees  $59,013  $54,472  $42,801  
 Loans held for sale   17,429   14,106   13,522  
 Investment securities   3,638   3,709   2,253  
 Other   1,241   1,111   1,107  
  Total interest income   81,321   73,398   59,683  
               
Interest expense:              
 Deposits   11,142   10,212   8,145  
 Other borrowings   1,620   1,606   1,496  
 FHLB advances   3,716   2,268   1,799  
 Subordinated debt   1,685   1,685   1,685  
  Total interest expense   18,163   15,771   13,125  
   Net interest income   63,158   57,627   46,558  
 Provision for loan losses   786   1,980   9,335  
   Net interest income after provision for loan losses   62,372   55,647   37,223  
               
Non-interest income:              
 Mortgage warehouse transactional fees   3,074   2,548   2,799  
 Interchange and card revenue   1,890   369   132  
 Bank-owned life insurance   1,120   1,123   1,169  
 Deposit fees   787   255   247  
 Gain on sale of loans   285   644   827  
 Mortgage loans and banking income   285   165   287  
 Gain (loss) on sale of investment securities   -   26   (69 )
 Other   816   364   1,001  
  Total non-interest income   8,257   5,494   6,393  
               
Non-interest expense:              
 Salaries and employee benefits   18,107   17,263   14,448  
 FDIC assessments, taxes, and regulatory fees   4,435   4,030   995  
 Technology, communication and bank operations   3,854   2,643   2,838  
 Professional services   3,636   2,572   2,792  
 Occupancy   2,473   2,325   2,199  
 Acquisition related expenses   874   176   -  
 Loan workout expense (income)   487   418   (13 )
 Advertising and promotion   334   253   429  
 Other real estate owned expense (income)   183   287   (580 )
 Other   3,800   3,938   2,552  
  Total non-interest expense   38,183   33,905   25,660  
 Income before tax expense   32,446   27,236   17,956  
 Income tax expense   13,016   9,537   6,400  
   Net income   19,430   17,699   11,556  
   Preferred stock dividends   2,062   1,286   507  
   Net income available to common shareholders  $17,368  $16,413  $11,049  
               
 Basic earnings per common share  $0.64  $0.61  $0.41  
 Diluted earnings per common share  $0.60  $0.57  $0.39  
            
 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED - UNAUDITED
(Dollars in thousands, except per share data)      
   June 30,  June 30,
   2016  2015
Interest income:      
 Loans receivable, including fees  $113,485  $85,894  
 Loans held for sale   31,535   24,422  
 Investment securities   7,347   4,616  
 Other   2,352   3,469  
  Total interest income   154,719   118,401  
           
Interest expense:          
 Deposits   21,356   15,671  
 Other borrowings   3,225   2,984  
 FHLB advances   5,984   3,488  
 Subordinated debt   3,370   3,370  
  Total interest expense   33,935   25,513  
   Net interest income   120,784   92,888  
 Provision for loan losses   2,766   12,299  
   Net interest income after provision for loan losses   118,018   80,589  
           
Non-interest income:          
 Mortgage warehouse transactional fees   5,622   5,072  
 Interchange and card revenue   2,259   262  
 Bank-owned life insurance   2,243   2,230  
 Deposit fees   1,042   426  
 Gain on sale of loans   929   2,058  
 Mortgage loans and banking income   450   438  
 Gain (loss) on sale of investment securities   26   (69 )
 Other   1,180   1,709  
  Total non-interest income   13,751   12,126  
           
Non-interest expense:          
 Salaries and employee benefits   35,370   28,400  
 FDIC assessments, taxes, and regulatory fees   8,465   4,273  
 Technology, communication and bank operations   6,496   5,369  
 Professional services   6,207   4,705  
 Occupancy   4,798   4,300  
 Acquisition related expenses   1,050   -  
 Loan workout   905   256  
 Advertising and promotion   587   776  
 Other real estate owned   470   304  
 Other   7,739   4,742  
  Total non-interest expense   72,087   53,125  
 Income before tax expense   59,682   39,590  
 Income tax expense   22,553   14,082  
   Net income   37,129   25,508  
   Preferred stock dividends   3,348   507  
   Net income available to common shareholders  $33,781  $25,001  
           
 Basic earnings per common share  $1.25  $0.93  
 Diluted earnings per common share  $1.17  $0.88  
        
    
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES   
CONSOLIDATED BALANCE SHEET - UNAUDITED   
(Dollars in thousands)   
   June 30,  December 31,  June 30,
   2016  2015  2015
ASSETS         
Cash and due from banks  $46,767   $53,550   $44,064  
Interest-earning deposits   256,029    211,043    347,525  
 Cash and cash equivalents   302,796    264,593    391,589  
Investment securities available for sale, at fair value   547,935    560,253    373,953  
Loans held for sale   2,301,821    1,797,064    2,030,348  
Loans receivable   6,114,576    5,453,479    4,524,825  
Allowance for loan losses   (38,097 )  (35,647 )  (37,491 )
 Total loans receivable, net of allowance for loan losses   6,076,479    5,417,832    4,487,334  
FHLB, Federal Reserve Bank, and other restricted stock   111,418    90,841    78,148  
Accrued interest receivable   22,402    19,939    15,958  
Bank premises and equipment, net   12,457    11,531    11,453  
Bank-owned life insurance   159,486    157,211    155,940  
Other real estate owned   5,066    5,057    13,319  
Goodwill and other intangibles   17,197    3,651    3,658  
Other assets   127,568    70,233    52,454  
  Total assets  $9,684,625   $8,398,205   $7,614,154  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Demand, non-interest bearing deposits  $749,564   $653,679   $584,380  
Interest-bearing deposits   6,001,695    5,255,822    4,892,777  
 Total deposits   6,751,259    5,909,501    5,477,157  
Federal funds purchased   61,000    70,000    -  
FHLB advances   1,906,900    1,625,300    1,388,000  
Other borrowings   86,790    86,457    86,125  
Subordinated debt   108,734    108,685    108,636  
Accrued interest payable and other liabilities   89,380    44,360    30,735  
  Total liabilities   9,004,063    7,844,303    7,090,653  
                 
Preferred stock   135,270    55,569    55,569  
Common stock   27,817    27,432    27,402  
Additional paid in capital   367,843    362,607    359,455  
Retained earnings   158,292    124,511    93,422  
Accumulated other comprehensive loss   (427 )  (7,984 )  (4,114 )
Treasury stock, at cost   (8,233 )  (8,233 )  (8,233 )
  Total shareholders' equity   680,562    553,902    523,501  
   Total liabilities & shareholders' equity  $9,684,625   $8,398,205   $7,614,154  
             
 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED)
(Dollars in thousands)
   Three months ended
   June 30,  March 31,  June 30,
   2016  2016  2015
   Average Balance  Average yield or cost (%)  Average Balance  Average yield or cost (%)  Average Balance  Average yield or cost (%)
 Assets                  
Interest earning deposits  $213,509  0.51%  $184,368  0.53%  $290,241  0.26%
Investment securities   550,130  2.65%   562,459  2.64%   384,324  2.34%
Loans held for sale   2,056,929  3.41%   1,563,399  3.63%   1,692,622  3.20%
Loans receivable   6,050,895  3.92%   5,679,383  3.86%   4,404,304  3.90%
Other interest-earning assets   102,599  3.79%   80,135  4.34%   77,822  4.75%
Total interest earning assets   8,974,062  3.64%   8,069,744  3.66%   6,849,313  3.49%
Non-interest earning assets   285,138      294,489      257,275   
  Total assets  $9,259,200     $8,364,233     $7,106,588   
                      
 Liabilities                     
Total interest bearing deposits (1)  $5,773,445  0.78%  $5,476,146  0.75%  $4,399,164  0.74%
Borrowings   2,014,452  1.40%   1,480,828  1.51%   1,507,870  1.32%
Total interest bearing liabilities   7,787,897  0.94%   6,956,974  0.91%   5,907,034  0.89%
Non-interest bearing deposits (1)   759,373      777,573      669,411   
Total deposits & borrowings   8,547,270  0.85%   7,734,547  0.82%   6,576,445  0.80%
Other non-interest bearing liabilities   56,870      43,677      33,586   
  Total liabilities   8,604,140      7,778,224      6,610,031   
 Shareholders' equity   655,060      586,009      496,557   
  Total liabilities and shareholders' equity  $9,259,200     $8,364,233     $7,106,588   
                      
Net interest margin      2.83%      2.87%      2.73%
Net interest margin tax equivalent      2.83%      2.88%      2.73%
(1)Total costs of deposits (including interest bearing and non-interest bearing) were 0.68%, 0.66% and 0.65% for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively.
  
 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED)
(Dollars in thousands)
   Six months ended
   June 30,  June 30,
   2016  2015
   Average Balance  Average yield or cost (%)  Average Balance  Average yield or cost (%)
 Assets            
Interest earning deposits  $198,938  0.52%  $286,945  0.25%
Investment securities   556,295  2.64%   395,401  2.33%
Loans held for sale   1,810,164  3.50%   1,530,938  3.22%
Loans receivable   5,865,139  3.89%   4,383,102  3.95%
Other interest-earning assets   91,367  4.03%   76,453  8.19%
Total interest earning assets   8,521,903  3.65%   6,672,839  3.58%
Non-interest earning assets   289,814      269,231   
  Total assets  $8,811,717     $6,942,070   
               
 Liabilities              
Total interest bearing deposits (1)  $5,624,797  0.76%  $4,260,980  0.74%
Borrowings   1,747,640  1.45%   1,487,892  1.33%
Total interest-bearing liabilities   7,372,437  0.93%   5,748,872  0.89%
Non-interest-bearing deposits (1)   768,473      689,047   
Total deposits & borrowings   8,140,910  0.84%   6,437,919  0.80%
Other non-interest bearing liabilities   50,273      29,089   
  Total liabilities   8,191,183      6,467,008   
 Shareholders' equity   620,534      475,062   
  Total liabilities and shareholders' equity  $8,811,717     $6,942,070   
               
Net interest margin      2.85%      2.81%
Net interest margin tax equivalent      2.85%      2.81%
(1)Total costs of deposits (including interest bearing and non-interest bearing) were 0.67% and 0.64% for the six months ended June 30, 2016 and 2015, respectively.
  
 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END LOAN COMPOSITION (UNAUDITED)
          
(Dollars in thousands)  June 30,  December 31,  June 30,
   2016  2015  2015
          
Commercial:         
 Multi-Family  $3,336,083  $2,948,696  $2,319,263
 Mortgage warehouse   2,321,418   1,797,753   1,994,709
 Commercial & Industrial (1)   1,143,149   1,068,597   870,577
 Commercial Real Estate- Non-Owner Occupied   1,139,711   956,255   895,780
 Construction   99,615   87,240   68,742
  Total commercial loans   8,039,976   6,858,541   6,149,071
             
Consumer:            
 Residential   264,968   274,470   281,424
 Manufactured housing   107,874   113,490   119,786
 Other consumer   3,277   3,708   3,962
  Total consumer loans   376,119   391,668   405,172
  Deferred costs and unamortized premiums, net   302   334   930
   Total loans  $8,416,397  $7,250,543  $6,555,173
             
(1) Commercial & industrial loans, including owner occupied commercial real estate.         
 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION (UNAUDITED)
(Dollars in thousands)  June 30,  December 31,  June 30,
   2016  2015  2015
             
   Demand, non-interest bearing  $749,564  $653,679  $584,380
   Demand, interest bearing   226,442   127,215   123,944
   Savings   36,382   41,600   36,137
   Money market   3,008,114   2,739,411   2,471,233
   Time deposits   2,730,757   2,347,596   2,261,463
   Total deposits  $6,751,259  $5,909,501  $5,477,157
             
 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY - UNAUDITED
(Dollars in thousands)  As of June 30, 2016  As of December 31, 2015  As of June 30, 2015
 
Loan Type
 
 
Total Loans  Non Accrual /NPLs  Total Credit Reserves  NPLs / Total Loans  Total Reserves to Total NPLs  Total Loans  Non Accrual /NPLs  Total Credit Reserves  NPLs / Total Loans  Total Reserves to Total NPLs  Total Loans  Non Accrual /NPLs  Total Credit Reserves  NPLs / Total Loans  Total Reserves to Total NPLs
Originated Loans                                             
Multi-Family  $3,303,077  $-  $12,368  - % - % $2,903,814  $-  $12,016  - % - % $2,232,273  $-  $8,734  - % - %
Commercial & Industrial (1)   1,082,109   6,605   10,999  0.61 % 166.53 %  990,621   2,760   8,864  0.28 % 321.16 %  792,701   1,173   13,476  0.15 % 1,148.85 %
Commercial Real Estate- Non-Owner Occupied   1,092,851   -   4,390  - % - %  906,544   788   3,706  0.09 % 470.30 %  840,922   271   3,335  0.03 % 1,230.63 %
Residential   119,489   32   2,240  0.03 % 7,000.00 %  113,858   32   1,992  0.03 % 6,225.00 %  105,332   9   1,722  0.01 % 19,133.33 %
Construction   99,381   -   1,209  - % - %  87,006   -   1,074  - % - %  68,073   -   844  - % - %
Other consumer   545   -   8  - % - %  712   -   9  - % - %  890   -   16  - % - %
Total Originated Loans   5,697,452   6,637   31,214  0.12 % 470.30 %  5,002,555   3,580   27,661  0.07 % 772.65 %  4,040,191   1,453   28,127  0.04 % 1,935.79 %
Loans Acquired                                                             
Bank Acquisitions   192,173   6,172   6,445  3.21 % 104.42 %  206,971   4,743   7,492  2.29 % 157.96 %  184,326   6,439   9,049  3.49 % 140.53 %
Loan Purchases   224,649   1,818   1,684  0.81 % 92.63 %  243,619   2,448   1,653  1.00 % 67.52 %  299,378   2,664   1,871  0.89 % 70.23 %
Total Acquired Loans   416,822   7,990   8,129  1.92 % 101.74 %  450,590   7,191   9,145  1.60 % 127.17 %  483,704   9,103   10,920  1.88 % 119.96 %
Deferred costs and unamortized premiums, net   302   -   -  - % - %  334   -   -  - % - %  930   -   -  - % - %
Total Loans Held for Investment   6,114,576   14,627   39,343  0.24 % 268.98 %  5,453,479   10,771   36,806  0.20 % 341.71 %  4,524,825   10,556   39,047  0.23 % 369.90 %
Total Loans Held for Sale   2,301,821   -   -  - % - %  1,797,064   -   -  - % - %  2,030,348   -   -  - % - %
Total Portfolio  $8,416,397  $14,627  $39,343  0.17 % 268.98 % $7,250,543  $10,771  $36,806  0.15 % 341.71 % $6,555,173  $10,556  $39,047  0.16 % 369.90 %
(1)Commercial & industrial loans, including owner occupied commercial real estate.
  
 
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED
          
   For the Quarter Ended
   Q2  Q1  Q2
(Dollars in thousands)  2016  2016  2015
Originated Loans         
Multi-Family  $-  $-   $-  
Commercial & Industrial (1)   41   -    634  
Commercial Real Estate- Non-Owner Occupied   -   -    -  
Residential   -   -    -  
Construction   -   -    -  
Other consumer   145   3    -  
Total Originated Loans   186   3    634  
Loans Acquired               
Bank Acquisitions   874   (458 )  369  
Loan Purchases   -   -    (4 )
Total Acquired Loans   874   (458 )  365  
Deferred costs and unamortized premiums, net   -   -    -  
Total Loans Held for Investment   1,060   (455 )  999  
Total Loans Held for Sale   -   -    -  
Total Portfolio  $1,060  $(455 ) $999  
 (1)Commercial & industrial loans, including owner occupied commercial real estate.
  

Contact Information

  • Jay Sidhu
    Chairman & CEO
    610-935-8693


    Richard Ehst
    President & COO
    610-917-3263


    Investor Contact:

    Robert Wahlman
    CFO
    610-743-8074