Customers Bancorp Reports First Quarter 2016 Net Income up 17.6% Over Prior Year
WYOMISSING, PA -- (Marketwired) -- 04/14/16 --
- Q1 2016 Net Income of $16.4 Million Up 17.6% Over Q1 2015
- Q1 2016 Fully Diluted Earnings Per Share of $0.57 Up 16.3% Over Q1 2015
- Q1 2016 Return on Assets of 0.85%; Return on Common Equity of 12.8%
- Q1 2016 Tangible Book Value Per Share Increased 12.6% Over Q1 2015
- Strong Loan and Deposit Growth Continues
- Exceptional Asset Quality With NPLs Only 0.20% of Total Loans
- Strong Reserves for Loan Losses With Total Reserves 242% of NPLs
- BankMobile Division Continues to Show Strong Growth; Anticipating Combination With Higher One Disbursement Business in Second Quarter of 2016
Customers Bancorp, Inc. (NYSE: CUBI), the parent company of Customers Bank (collectively "Customers"), reported net income to common shareholders of $16.4 million for the first quarter of 2016 ("Q1 2016") compared to net income to common shareholders of $14.0 million for the first quarter of 2015 ("Q1 2015"), an increase of $2.5 million, or 17.6%. Fully diluted earnings per share for Q1 2016 was $0.57 compared to $0.49 fully diluted earnings per share for Q1 2015, an increase of $0.08 per share, or 16.3%. Average fully diluted shares for Q1 2016 were 28.8 million compared to average fully diluted shares of 28.3 million for Q1 2015.
"Customers is very pleased to report a strong first quarter. The first quarter of 2016 was a difficult quarter for the banking industry with share prices decreasing by more than 10% for many publicly-traded banks, and a general expectation by investors of lower profits and increasing non-performing loans for the industry," stated Jay Sidhu, Chairman and CEO of Customers. "In contrast," Mr. Sidhu continued, "Customers has selected lower credit risk business segments to which it lends and has maintained strong underwriting standards to build a loan portfolio that we believe has significantly stronger credit quality than the banking industry as a whole with non-performing loans as a percentage of total loans well below our peer group and industry average. Our first quarter of 2016 results of $0.57 earnings per share with non-performing loans of only 0.20% of total loans reflects both our conservative lending practices and continued focus on positive operating leverage and risk management. Customers is off to a strong start to 2016 and continues to expect full year operating earnings of $2.40 to $2.50 per share from our core banking operations with total assets remaining below $10 billion."
Other financial highlights for Q1 2016 compared to Q1 2015 include:
- Q1 2016 net interest income of $57.6 million increased $11.3 million, or 24.4%, from net interest income for Q1 2015 as average loan and security balances increased $1.7 billion, offset in part by a 2 basis point decrease in net interest margin to 2.88%.
- Multi-family average loan balances increased $855 million, commercial loan average balances increased $428 million and mortgage banking average balances increased $275 million.
- Net interest margin declined 2 basis points as the increased yields on the mortgage warehouse portfolio were offset by lower yields on the commercial loan portfolio and higher rates on short term borrowings used to fund the mortgage warehouse portfolio.
- Customers reported a $2.0 million provision for loan losses in Q1 2016 compared to a $3.0 million provision for loan losses in Q1 2015. The Q1 2016 provision for loan losses included provisions for loan growth net of qualitative considerations of $0.8 million and impairment measured on specific loans of $1.4 million, offset in part by increased estimated cash flows expected to be collected on purchased credit-impaired loans of $0.3 million.
- Q1 2016 non-interest income of $5.5 million decreased $0.2 million from Q1 2015 as a result of higher gains on sales of loans realized in Q1 2015. There were no sales of multi-family loans in Q1 2016.
- Non-interest expenses in Q1 2016 of $33.9 million increased $6.4 million, or 23.4%, from non-interest expenses in Q1 2015. The increases in salary and benefits, regulatory assessments and fees, professional services, technology, and occupancy expenses resulted largely from the increases in resources and services necessary to support a $9.0 billion bank. The $6.4 million increase in non-interest expense compares with an $11.3 million increase in net interest income, creating positive operating leverage.
- Customers achieved a return on average assets of 0.85% in Q1 2016 compared to 0.84% in Q1 2015, and achieved a return on average common equity of 12.85% in Q1 2016 compared to 12.48% in Q1 2015.
- Total loans, including commercial loans held for sale, increased $1.8 billion, or 29.2%, to $7.9 billion as of March 31, 2016 compared to total loans as of March 31, 2015 of $6.1 billion. Multi-family loan balances increased $1.1 billion to $3.2 billion, commercial loans excluding lines of credit to mortgage companies increased $0.3 billion to $1.1 billion, commercial lines of credit to mortgage banking companies increased $0.3 billion to $1.9 billion, and non-owner occupied real estate loan balances increased $0.1 billion to $1.1 billion.
- Total deposits increased $1.6 billion, or 32.4%, to $6.5 billion as of March 31, 2016 compared to total deposits of $4.9 billion as of March 31, 2015. Non-interest bearing demand deposits grew $108.8 million to $779.6 million, a 16.2% increase. Money market account balances were up $928 million to $3.2 billion as of March 31, 2016 compared to March 31, 2015, a 41.7% increase, and certificates of deposit accounts increased $536 million to $2.4 billion as of March 31, 2016, a 29.3% increase. The increase in deposits, combined with increases in borrowings and capital, provides the funding necessary for growing the loan portfolio, while helping Customers manage interest rate risk.
- The Q1 2016 efficiency ratio was 53.74% compared to a 52.75% Q1 2015 efficiency ratio. Q1 2016 operating expenses includes BankMobile and Higher One disbursement business acquisition related net expenses of $1.9 million. Customers would have achieved an efficiency ratio from core banking operations of 50.7% excluding the BankMobile and Higher One disbursement acquisition related expenses.
- Pre-tax and pre-provision return on average assets reached 1.40% in Q1 2016 compared to 1.47% in Q1 2015. Pre-tax and pre-provision return on average common equity was 21.87% in Q1 2016 compared to 22.01% in Q1 2015. The small decline in pre-tax and pre-provision profitability in 2016 compared to 2015 reflects the increased costs related to the BankMobile operations and planned Higher One disbursement business acquisition.
- 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 issued $25 million of non-cumulative perpetual preferred stock paying a 6.5% dividend on January 29, 2016. The proceeds from the capital raise were used to support Customers' balance sheet growth and other general corporate purposes.
- Total Tier1 equity increased $142.9 million from March 31, 2015 to March 31, 2016, an increase in capital of 31.42% over the year.
- The tangible book value per common share continued to increase, reaching $19.08 at March 31, 2016, compared to $16.94 at March 31, 2015, an increase of 12.6% year-over-year.
Q1 2016 compared to Q4 2015:
Customers' Q1 2016 net income to common shareholders of $16.4 million decreased $0.4 million, or 2.2%, from net income to common shareholders of $16.8 million for the fourth quarter of 2015 ("Q4 2015"). The $0.4 million decrease in Q1 2016 compared to Q4 2015 net income to common shareholders resulted primarily from increases in net interest income of $4.2 million to $57.6 million, and a decrease in provisions for loan losses of $4.2 million to $2.0 million being more than offset by a $3.9 million decline in non-interest income to $5.5 million, increased operating expenses of $2.4 million to $33.9 million, and a $2.1 million increase in income tax expense to $9.5 million. Discussing these changes further:
- The $4.2 million increase in net interest income in Q1 2016 resulted from a combination of a $0.6 billion higher average loan balance in Q1 2016 as a result of loan growth, and a 5 basis point increase in net interest margin in Q1 2016 compared to Q4 2015.
- The $4.2 million decrease in provision for loan losses in Q1 2016 resulted primarily from the $3.0 million Q4 2015 provision for losses resulting from the fraud identified in July of 2015. As of December 31, 2015 the entire balance of the fraudulent loan had been charged-off while Customers continues its efforts to recover the funds.
- The $3.9 million decline in non-interest income in Q1 2016 resulted principally from Q4 2015 receipt of a $2.4 million benefit received on a bank-owned life insurance policy and a $0.9 million swap premium fee.
- The increase in operating expenses of $2.4 million in Q1 2016 compared to Q4 2015 resulted largely from operating expenses related to headcount increases and general growth of our business. In addition, Customers accrued approximately $1.2 million related to legal matters.
Other financial highlights for Q1 2016 compared to Q4 2015 include:
- Net interest margin in Q1 2016 of 2.88% increased approximately 5 basis points compared to the net interest margin for Q4 2015 of 2.83%. The net interest margin increase resulted from an increase in 8 basis points in yield on earning assets, largely due to higher yields on the mortgage warehouse portfolio due to the increase in short term rates during December 2015, offset by an increase in average borrowing costs of 3 basis points.
- Customers did not sell any multi-family loans during Q1 2016. Multi-family loan sales of approximately $45.4 million, with a gain of $0.5 million, were closed in Q4 2015.
The following table presents a summary of key earnings and performance metrics for the quarter ended March 31, 2016 and the preceding four quarters, respectively:
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------------
EARNINGS SUMMARY - UNAUDITED
----------------------------------------------------------------------------
(Dollars in
thousands,
except per-
share data)
Q1 Q4 Q3 Q2 Q1
2016 2015 2015 2015 2015
------------------------------------------------------------
Net income
available to
common
shareholders $ 16,413 $ 16,780 $ 14,309 $ 11,049 $ 13,952
Basic earnings
per common
share ("EPS") $ 0.61 $ 0.62 $ 0.53 $ 0.41 $ 0.52
Diluted EPS $ 0.57 $ 0.58 $ 0.50 $ 0.39 $ 0.49
Average common
shares
outstanding -
basic 26,945,062 26,886,694 26,872,787 26,839,799 26,777,389
Average common
shares
outstanding -
diluted 28,783,101 28,912,644 28,741,129 28,680,664 28,337,803
Shares
outstanding
period end 27,037,005 26,901,801 26,882,383 26,871,745 26,824,039
Return on
average assets 0.85% 0.91% 0.82% 0.65% 0.84%
Return on
average common
equity 12.85% 13.46% 11.83% 9.44% 12.48%
Return on
average assets
- pre-tax and
pre-provision
(1) 1.40% 1.60% 1.39% 1.54% 1.47%
Return on
average common
equity - pre-
tax and pre-
provision (2) 21.87% 24.35% 20.53% 22.87% 22.01%
Net interest
margin, tax
equivalent 2.88% 2.83% 2.79% 2.73% 2.90%
Efficiency ratio 53.74% 50.11% 54.00% 48.40% 52.75%
Non-performing
loans (NPLs) to
total loans
(including
held-for-sale
loans) 0.20% 0.15% 0.27% 0.16% 0.19%
Reserves to non-
performing
loans 242.10% 341.71% 197.01% 369.90% 293.61%
Net charge-offs
(recoveries) $ (455)$ 4,322 $ 5,657 $ 999 $ 1,001
Tier 1 equity to
average
tangible assets 7.15% 7.16% 7.27% 7.36% 6.72%
Tangible common
equity to
average
tangible assets
(3) 6.17% 6.37% 6.49% 6.54% 6.71%
Tangible book
value per
common share
(period end)
(4) $ 19.08 $ 18.39 $ 17.81 $ 17.28 $ 16.94
Period end stock
price $ 23.63 $ 27.22 $ 25.70 $ 26.89 $ 24.36
(1) Calculated as net income available to common shareholders, plus
provision for loan loss and income tax expense divided by average total
assets.
(2) Calculated as net income available to common shareholders, plus
provision for loan loss 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 tangible capital ratios came under pressure at March 31 this quarter due to a surge in the usage of lines of credit to mortgage companies (mortgage warehouse) on March 31 by about $300 million. We will control our asset growth over the next 18 months to two years by 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 growth of customer accounts and customer engagement continued at BankMobile. As previously announced, BankMobile now has more than 100,000 checking account customers, and will have approximately 2.1 million customers at the end of the second quarter of 2016, principally millennials, after completing our acquisition of Higher One's disbursement business. "We are very focused on continuing to build out BankMobile's technology software platform, integrating the Higher One disbursement 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 at graduation. This is a huge opportunity for us, 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. "On April 4, the Higher One shareholders approved the sale to Customers and once the acquisition has been completed, our software and disbursement business to over 750 colleges and universities across America is expected to be a growth business. We have plans to increase our market share in providing software solutions to up to 1,000 campuses in the U.S. within three years," Mr. Sidhu continued.
Providing High Net Worth Families Loans for Their Multi-Family Holdings
Multi-family lending generally to high net worth families in New York City has been a growth business for Customers. Customers believes its portfolio is of strong credit quality and will perform well even under a stressed scenario. Here 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 $4 million - $6 million;
- Annual debt service coverage ratio is 138%;
- 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.
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 and has not compromised those standards in the last six years," stated Mr. Sidhu. "Customers' non-performing loans at March 31, 2016 were only 0.20% of total loans, compared to our peer group non-performing loans of approximately 1.05% of total loans, and industry average non-performing loans of about 2.00% 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 or the yield curve shifts," 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 non-owner-occupied commercial real estate loans, were approximately $1.1 billion each at March 31, 2016. Multi-family loans or loans to high net worth families and mortgage warehouse loans, also considered commercial loans, were approximately $3.2 billion and $2.0 billion, respectively, at March 31, 2016. Consumer and residential mortgage loans make up only about 5% of the loan portfolio.
Conference Call
Date: Thursday, April 14, 2016
Time: 5:00 PM ET
US Dial-in: (888) 554-1419
International Dial-in: (719) 457-2650
Participant Code: 426555
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 April 14, 2016 at 8:00 pm ET until 8:00 pm on May 14, 2016. To listen, call within the United States (888) 203-1112 or (719) 457-0820 when calling internationally. Please use the replay pin number 1026264.
Investor Day
Customers plans to host an investor day event on June 3, 2016 in New York to discuss Customers Bancorp, Inc.'s performance and plans for the next few years, and the strategic alternatives for BankMobile.
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 $9.0 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 previously disclosed proposed acquisition of the disbursements business of Higher One and Customer Bancorp's previously announced plans to combine its 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. 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)
Q1 Q4 Q1
2016 2015 2015
----------- ----------- -----------
Interest income:
Loans receivable, including fees $ 54,472 $ 50,095 $ 43,093
Loans held for sale 14,106 13,125 10,900
Investment securities 3,709 3,506 2,363
Other 1,111 987 2,362
----------- ----------- -----------
Total interest income 73,398 67,713 58,718
Interest expense:
Deposits 10,212 9,289 7,526
Other borrowings 1,606 1,573 1,488
FHLB advances 2,268 1,698 1,689
Subordinated debt 1,685 1,685 1,685
----------- ----------- -----------
Total interest expense 15,771 14,245 12,388
----------- ----------- -----------
Net interest income 57,627 53,468 46,330
Provision for loan losses 1,980 6,173 2,964
----------- ----------- -----------
Net interest income after provision
for loan losses 55,647 47,295 43,366
Non-interest income:
Mortgage warehouse transactional fees 2,548 2,530 2,273
Bank-owned life insurance 1,123 3,599 1,061
Gain on sale of loans 644 859 1,231
Deposit fees 255 253 179
Mortgage loans and banking income
(expense) 165 135 151
Gain (loss) on sale of investment
securities 26 - -
Other 733 2,044 838
----------- ----------- -----------
Total non-interest income 5,494 9,420 5,733
Non-interest expense:
Salaries and employee benefits 17,332 15,396 13,952
FDIC assessments, taxes, and regulatory
fees 4,030 3,233 3,278
Professional services 2,657 3,664 1,913
Technology, communication and bank
operations 2,643 2,805 2,531
Occupancy 2,325 2,199 2,101
Loan workout 418 586 269
Other real estate owned 287 491 884
Advertising and promotion 256 368 347
Other 3,957 2,772 2,190
----------- ----------- -----------
Total non-interest expense 33,905 31,514 27,465
----------- ----------- -----------
Income before tax expense 27,236 25,201 21,634
Income tax expense 9,537 7,415 7,682
----------- ----------- -----------
Net income 17,699 17,786 13,952
Preferred stock dividend 1,286 1,006 -
----------- ----------- -----------
Net income available to common
shareholders $ 16,413 $ 16,780 $ 13,952
=========== =========== ===========
Basic earnings per common share $ 0.61 $ 0.62 $ 0.52
Diluted earnings per common share $ 0.57 $ 0.58 $ 0.49
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET - UNAUDITED
----------------------------------------------------------------------------
(Dollars in thousands)
March 31, December 31, March 31,
2016 2015 2015
------------ ------------ ------------
ASSETS
Cash and due from banks $ 63,849 $ 53,550 $ 68,216
Interest-earning deposits 198,789 211,043 265,607
------------ ------------ ------------
Cash and cash equivalents 262,638 264,593 333,823
Investment securities available for
sale, at fair value 556,165 560,253 396,194
Loans held for sale 1,969,280 1,797,064 1,758,084
Loans receivable 5,907,315 5,453,479 4,337,851
Allowance for loan losses (37,605) (35,647) (33,566)
------------ ------------ ------------
Total loans receivable, net of
allowance for loan losses 5,869,710 5,417,832 4,304,285
FHLB, Federal Reserve Bank, and other
restricted stock 92,269 90,841 81,798
Accrued interest receivable 21,206 19,939 15,702
FDIC loss sharing receivable - - 3,427
Bank premises and equipment, net 12,444 11,531 11,061
Bank-owned life insurance 158,339 157,211 154,821
Other real estate owned 5,106 5,057 13,127
Goodwill and other intangibles 3,648 3,651 3,661
Other assets 88,077 70,233 53,562
------------ ------------ ------------
Total assets $ 9,038,882 $ 8,398,205 $ 7,129,545
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand, non-interest bearing $ 779,568 $ 653,679 $ 670,771
Interest-bearing deposits 5,699,047 5,255,822 4,222,550
------------ ------------ ------------
Total deposits 6,478,615 5,909,501 4,893,321
Federal funds purchased 80,000 70,000 -
FHLB advances 1,633,700 1,625,300 1,545,000
Other borrowings 86,624 86,457 85,958
Subordinated debt 108,709 108,685 108,612
Accrued interest payable and other
liabilities 51,985 44,360 38,703
------------ ------------ ------------
Total liabilities 8,439,633 7,844,303 6,671,594
Preferred stock 79,677 55,569 -
Common stock 27,567 27,432 27,356
Additional paid in capital 364,647 362,607 357,523
Retained earnings 140,924 124,511 82,373
Accumulated other comprehensive loss (5,333) (7,984) (1,047)
Treasury stock, at cost (8,233) (8,233) (8,254)
------------ ------------ ------------
Total shareholders' equity 599,249 553,902 457,951
------------ ------------ ------------
Total liabilities &
shareholders' equity $ 9,038,882 $ 8,398,205 $ 7,129,545
============ ============ ============
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED)
----------------------------------------------------------------------------
(Dollars in thousands)
Three months ended
--------------------------------------------------------
March 31, December 31, March 31,
2016 2015 2015
------------------ ------------------ ------------------
Average Average Average
Average yield or Average yield or Average yield or
Balance cost (%) Balance cost (%) Balance cost (%)
------------------ ------------------ ------------------
Assets
Interest earning
deposits $ 184,368 0.53% $ 199,142 0.32% $ 283,613 0.25%
Investment
securities 562,459 2.64% 541,541 2.59% 406,600 2.32%
Loans held for sale 1,563,399 3.63% 1,572,068 3.31% 1,367,301 3.23%
Loans receivable 5,679,383 3.86% 5,120,113 3.88% 4,361,664 4.00%
Other interest-
earning assets 80,135 4.34% 70,689 4.68% 75,068 11.80%
---------- ---------- ----------
Total interest
earning assets 8,069,744 3.66% 7,503,553 3.58% 6,494,246 3.66%
Non-interest earning
assets 294,489 268,168 281,321
---------- ---------- ----------
Total assets $8,364,233 $7,771,721 $6,775,567
========== ========== ==========
Liabilities
Total interest
bearing deposits
(1) $5,476,146 0.75% $5,170,461 0.71% $4,121,262 0.74%
Borrowings 1,480,828 1.51% 1,292,625 1.52% 1,467,535 1.33%
---------- ---------- ----------
Total interest
bearing liabilities 6,956,974 0.91% 6,463,086 0.87% 5,588,797 0.90%
Non-interest bearing
deposits (1) 777,573 714,988 708,901
---------- ---------- ----------
Total deposits &
borrowings 7,734,547 0.82% 7,178,074 0.79% 6,297,698 0.80%
Other non-interest
bearing liabilities 43,677 43,358 24,542
---------- ---------- ----------
Total
liabilities 7,778,224 7,221,432 6,322,240
Shareholders'
equity 586,009 550,289 453,327
---------- ---------- ----------
Total
liabilities and
shareholders'
equity $8,364,233 $7,771,721 $6,775,567
========== ========== ==========
Net interest margin 2.87% 2.83% 2.89%
Net interest margin
tax equivalent 2.88% 2.83% 2.90%
(1) Total costs of deposits (including interest bearing and non-interest
bearing) were 0.66%, 0.63% and 0.63% for the three months ended March 31,
2016, December 31, 2015 and March 31, 2015, respectively.
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------------
PERIOD END LOAN COMPOSITION (UNAUDITED)
----------------------------------------------------------------------------
(Dollars in thousands) March 31, December 31, March 31,
2016 2015 2015
------------- --------------- -------------
Commercial:
Multi-Family $ 3,237,855 $ 2,948,696 $ 2,134,933
Mortgage warehouse 1,988,657 1,797,753 1,717,739
Commercial & Industrial (1) 1,112,290 1,068,597 814,867
Commercial Real Estate- Non-
Owner Occupied 1,052,162 956,255 943,317
Construction 103,061 87,240 66,405
------------- --------------- -------------
Total commercial loans 7,494,025 6,858,541 5,677,261
Consumer:
Residential 268,075 274,470 292,203
Manufactured housing 110,830 113,490 121,622
Other consumer 3,474 3,708 4,101
------------- --------------- -------------
Total consumer loans 382,379 391,668 417,926
Deferred costs and
unamortized premiums, net 191 334 748
------------- --------------- -------------
Total loans $ 7,876,595 $ 7,250,543 $ 6,095,935
============= =============== =============
(1) Commercial & industrial loans, including owner occupied commercial real
estate.
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------------
PERIOD END DEPOSIT COMPOSITION (UNAUDITED)
----------------------------------------------------------------------------
(Dollars in thousands) March 31, December 31, March 31,
2016 2015 2015
------------- --------------- -------------
Demand, non-interest bearing $ 779,568 $ 653,679 $ 670,771
Demand, interest bearing 133,539 127,215 127,047
Savings 41,309 41,600 36,123
Money market 3,153,870 2,739,411 2,225,516
Time deposits 2,370,329 2,347,596 1,833,864
------------- --------------- -------------
Total deposits $ 6,478,615 $ 5,909,501 $ 4,893,321
============= =============== =============
----------------------------------------------------------------------------
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------------
ASSET QUALITY (UNAUDITED)
----------------------------------------------------------------------------
As of March 31, 2016
-------------------------------------------------------
Total
Non Total Reserves
Total Accrual Credit NPLs/Total to Total
Loan Type Loans /NPLs Reserves Loans NPLs
----------------------------------------------------------------------------
Originated Loans
Multi-Family $3,204,625 $ - $ 12,135 -% -%
Commercial &
Industrial (1) 1,044,325 6,838 10,058 0.65% 147.09%
Commercial Real
Estate- Non-Owner
Occupied 1,003,667 271 4,073 0.03% 1,502.95%
Residential 115,532 32 2,082 0.03% 6,506.25%
Construction 102,827 - 1,264 -% -%
Other consumer 600 - 7 -% -%
----------------------------------------------------------------------------
Total Originated
Loans 5,471,576 7,141 29,619 0.13 % 414.77 %
----------------------------------------------------------------------------
Loans Acquired
Bank Acquisitions 202,080 6,616 7,518 3.27% 113.63%
Loan Purchases 233,468 2,357 1,875 1.01% 79.55%
----------------------------------------------------------------------------
Total Acquired Loans 435,548 8,973 9,393 2.06 % 104.68 %
----------------------------------------------------------------------------
Deferred Origination
Fees/Unamortized
Premium/Discounts 191 - - -% -%
----------------------------------------------------------------------------
Total Loans Held for
Investment 5,907,315 16,114 39,012 0.27 % 242.10 %
----------------------------------------------------------------------------
Total Loans Held for
Sale 1,969,280 - - -% -%
----------------------------------------------------------------------------
Total Portfolio $7,876,595 $ 16,114 $ 39,012 0.20 % 242.10 %
----------------------------------------------------------------------------
(1) Commercial & industrial loans, including owner occupied commercial real
estate.
----------------------------------------------------------------------------
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------------
ASSET QUALITY (UNAUDITED)
----------------------------------------------------------------------------
As of December 31, 2015
-------------------------------------------------------
Total
Non Total Reserves
Total Accrual Credit NPLs/Total to Total
Loan Type Loans /NPLs Reserves Loans NPLs
----------------------------------------------------------------------------
Originated Loans
Multi-Family $2,903,814 $ - $ 12,016 -% -%
Commercial &
Industrial (1) 990,621 2,760 8,864 0.28% 321.16%
Commercial Real
Estate- Non-Owner
Occupied 906,544 788 3,706 0.09% 470.30%
Residential 113,858 32 1,992 0.03% 6,225.00%
Construction 87,006 - 1,074 -% -%
Other consumer 712 - 9 -% -%
----------------------------------------------------------------------------
Total Originated
Loans 5,002,555 3,580 27,661 0.07 % 772.65 %
----------------------------------------------------------------------------
Loans Acquired
Bank Acquisitions 206,971 4,743 7,492 2.29% 157.96%
Loan Purchases 243,619 2,448 1,653 1.00% 67.52%
----------------------------------------------------------------------------
Total Acquired Loans 450,590 7,191 9,145 1.60 % 127.17 %
----------------------------------------------------------------------------
Deferred Origination
Fees/Unamortized
Premium/Discounts 334 - - -% -%
----------------------------------------------------------------------------
Total Loans Held for
Investment 5,453,479 10,771 36,806 0.20 % 341.71 %
----------------------------------------------------------------------------
Total Loans Held for
Sale 1,797,064 - - -% -%
----------------------------------------------------------------------------
Total Portfolio $7,250,543 $ 10,771 $ 36,806 0.15 % 341.71 %
----------------------------------------------------------------------------
(1) Commercial & industrial loans, including owner occupied commercial real
estate.
--------------------------------------------------------------------------
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------
ASSET QUALITY (UNAUDITED)
--------------------------------------------------------------------------
As of March 31, 2015
-----------------------------------------------------
Total
Non Total Reserves
Total Accrual Credit NPLs/Tot to Total
Loan Type Loans /NPLs Reserves al Loans NPLs
--------------------------------------------------------------------------
Originated Loans
Multi-Family $2,049,029 $ - $ 8,196 -% -%
Commercial &
Industrial (1) 761,193 1,852 6,025 0.24% 325.32%
Commercial Real
Estate- Non-Owner
Occupied 851,355 901 7,821 0.11% 868.04%
Residential 157,109 160 1,393 0.10% 870.63%
Construction 62,343 - 468 -% -%
Other consumer 942 - 6 -% -%
--------------------------------------------------------------------------
Total Originated
Loans 3,881,971 2,913 23,909 0.08 % 820.77 %
--------------------------------------------------------------------------
Loans Acquired
Bank Acquisitions 137,552 7,835 9,163 5.70% 116.95%
Loan Purchases 317,580 1,047 1,559 0.33% 148.90%
--------------------------------------------------------------------------
Total Acquired Loans 455,132 8,882 10,722 1.95 % 120.72 %
--------------------------------------------------------------------------
Deferred Origination
Fees/Unamortized
Premium/Discounts 748 - - -% -%
--------------------------------------------------------------------------
Total Loans Held for
Investment 4,337,851 11,795 34,631 0.27 % 293.61 %
--------------------------------------------------------------------------
Total Loans Held for
Sale 1,758,084 - - -% -%
--------------------------------------------------------------------------
Total Portfolio $6,095,935 $ 11,795 $ 34,631 0.19 % 293.61 %
--------------------------------------------------------------------------
(1) Commercial & industrial loans, including owner occupied commercial
real estate.
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
----------------------------------------------------------------------------
NET CHARGE-OFFS (UNAUDITED)
----------------------------------------------------------------------------
For the Quarter Ended
Q1 Q4 Q1
(Dollars in thousands) 2016 2015 2015
------------ ------------ ------------
Originated Loans
Multi-Family $ - $ - $ -
Commercial & Industrial (1) - 4,558 5
Commercial Real Estate- Non-Owner
Occupied - - -
Residential - - -
Construction - - -
Other consumer 3 - (2)
------------ ------------ ------------
Total Originated Loans 3 4,558 3
Loans Acquired
Bank Acquisitions (458) (215) 989
Loan Purchases - (21) 9
------------ ------------ ------------
Total Acquired Loans (458) (236) 998
Deferred Origination Fees/Unamortized
Premium/Discounts - - -
------------ ------------ ------------
Total Loans Held for Investment (455) 4,322 1,001
Total Loans Held for Sale - - -
------------ ------------ ------------
Total Portfolio $ (455) $ 4,322 $ 1,001
============ ============ ============
(1) Commercial & industrial loans, including owner occupied commercial real
estate.
Jay SidhuChairman & CEO610-935-8693Richard EhstPresident & COO610-917-3263Investor Contact:Robert WahlmanCFO610-743-8074
Source: Customers Bancorp, Inc.