EX-99.1 2 q123pressrelease.htm EX-99.1 Document

Exhibit 99.1
customersbancorp_logoxprim.jpg
Customers Bancorp, Inc. (NYSE:CUBI)
701 Reading Avenue
West Reading, PA 19611

Contact:
David W. Patti, Communications Director 610-451-9452
Customers Bancorp Reports Results for First Quarter 2023
First Quarter 2023 Highlights
•Q1 2023 net income available to common shareholders was $50.3 million, or $1.55 per diluted share; ROAA was 1.03% and ROCE was 16.00%.
•Q1 2023 core earnings* were $51.1 million, or $1.58 per diluted share; Core ROAA* was 1.05% and Core ROCE* was 16.28%.
•Q1 2023 core earnings excluding Paycheck Protection Program* ("PPP") were $41.5 million, or $1.28 per diluted share.
•Q1 2023 adjusted pre-tax pre-provision net income* was $89.3 million; adjusted pre-tax pre-provision ROAA* was 1.72%; and adjusted pre-tax pre-provision ROCE* was 27.33%.
•PPP loans decreased $751.9 million over Q4 2022, with less than $250 million outstanding at March 31, 2023.
•Q1 2023 core loans* were flat over Q4 2022, with loan yields (excluding PPP)* up 60 basis points in Q1 2023.
•Q1 2023 non-interest bearing deposits grew by $1.6 billion, or 85%, over Q4 2022, leading to a March 31, 2023 spot cost of deposits decline of 14 basis points.
•Total insured deposits were 81%1 of total deposits at March 31, 2023, with immediately available liquidity covering uninsured deposits by 272%.
•Q1 2023 net interest margin, tax equivalent was 2.96%. Q1 2023 net interest margin, tax equivalent, excluding the impact of PPP loans* was 2.80%. High levels of cash negatively impacted net interest margin by about 6 basis points2 in Q1 2023.
•Q1 2023 provision for credit losses on loans and leases of $18.0 million was largely driven by the recognition of weaker macroeconomic forecasts.
•Non-performing assets were $32.3 million, or 0.15% of total assets, at March 31, 2023, relatively unchanged from December 31, 2022. Allowance for credit losses on loans and leases equaled 406% of non-performing loans at March 31, 2023, compared to 426% at December 31, 2022.
•Q1 2023 book value per share and tangible book value per share* grew by $2.00 and $1.99, or 5.1%, respectively, with decreased AOCI losses of $6.8 million over the same time period.
•Repurchased 1,379,883 common shares for $39.8 million in Q1 2023, approximately at 70% of tangible book value per share* at March 31, 2023, leaving 497,509 common shares available for repurchase under the existing authorization.
•All capital ratios remained stable in Q1 2023. Goal to bring CET 1 ratio to 11.0% - 11.5% by year-end 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 are included at the end of this document.
1 Uninsured deposits of $3.9 billion less state and municipal deposits of $393.9 million collateralized by our line of credit from FHLB and from our affiliates of $54.9 million.
2 Assuming cash balance of $0.5 billion.
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CEO Commentary
West Reading, PA, April 27, 2023 - “The first quarter brought unexpected turmoil in the banking industry and I would like to commend our leadership team and all our team members for their remarkable performance navigating these challenges,” said Customers Bancorp Chairman and CEO, Jay Sidhu. “Our first quarter performance is a testament to the strength of our risk management practices and our steadfast focus on strong core banking fundamentals which we refer to as critical success factors. Our Q1 2023 GAAP earnings were $50.3 million, or $1.55 per diluted share. Core earnings* were $51.1 million, or $1.58 per diluted share, and core earnings excluding PPP* were $41.5 million, or $1.28 per diluted share, well above consensus estimates. Importantly, our non-interest bearing deposits grew by $1.6 billion, an impressive 85% increase from year-end balances. This growth came from opening new operating accounts during the quarter, facilitated by our technology and service offerings, coupled with our decision not to pay up for volatile deposits. We also acquired several new relationships from failed banks. At March 31, 2023, our deposit base was well diversified, with approximately 81% of total deposits insured. We maintain a strong liquidity position, with $9.4 billion of liquidity immediately available, which covers approximately 272% of uninsured deposits and our loan to deposit ratio stayed at about 80%," stated Jay Sidhu.
"In 2022, we took proactive measures to moderate loan growth, focusing on floating rate, low-to-no credit risk verticals, to grow and diversify our low-to-no-cost deposit franchise, to prudently manage the duration and return in our securities portfolio, and to maintain strong liquidity. We continued to purposely moderate loan growth in the first quarter 2023 to further improve our capital ratios. At March 31, 2023, we had slightly over $2.0 billion of cash on hand, which negatively impacted net interest margin by roughly 6 basis points, but we believe was prudent given persisting levels of uncertainty. Asset quality remains exceptional and credit reserves are extremely robust at 406% of total non-performing loans at the end of Q1 2023. The prudent risk management strategic actions that we have taken over the past several quarters have us well positioned from a capital, credit, liquidity, interest rate risk, and earnings perspective as we continue through a highly uncertain 2023. With the looming recession, we believe it is prudent to moderate growth, or even shrink the balance sheet somewhat, and focus on further strengthening the balance sheet and improving capital ratios. We are committed to improving our CET 1 ratio to 11.0% - 11.5% by year-end 2023 by retained earnings and balance sheet optimization. We are confident in our ability to manage our credit, interest rate, and liquidity risks, and superbly service our clients in all operating environments. We remain very optimistic about our future,” Jay Sidhu continued.


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Financial Highlights
(Dollars in thousands, except per share data)
At or Three Months EndedIncrease (Decrease)
March 31, 2023December 31, 2022
Profitability Metrics:
Net income available for common shareholders$50,265 $25,623 $24,642 96.2 %
Diluted earnings per share$1.55 $0.77 $0.78 101.3 %
Core earnings*$51,143 $39,368 $11,775 29.9 %
Core earnings per share*$1.58 $1.19 $0.39 32.8 %
Core earnings, excluding PPP*$41,537 $45,324 $(3,787)(8.4)%
Core earnings per share, excluding PPP*$1.28 $1.37 $(0.09)(6.6)%
Return on average assets ("ROAA")1.03 %0.55 %0.48 
Core ROAA*1.05 %0.81 %0.24 
Core ROAA, excluding PPP*0.87 %0.93 %(0.06)
Return on average common equity ("ROCE")16.00 %8.05 %7.95 
Core ROCE*16.28 %12.36 %3.92 
Adjusted pre-tax pre-provision net income*$89,282 $81,377 $7,905 9.7 %
Adjusted pre-tax pre-provision net income ROAA, excluding PPP*1.53 %1.67 %(0.14)
Net interest margin, tax equivalent2.96 %2.67 %0.29 
Net interest margin, tax equivalent, excluding PPP*2.80 %2.87 %(0.07)
Loan yield6.70 %5.64 %1.06 
Loan yield, excluding PPP*6.46 %5.86 %0.60 
Cost of deposits3.32 %2.73 %0.59 
Efficiency ratio47.71 %49.20 %(1.49)
Core efficiency ratio*47.09 %49.12 %(2.03)
Balance Sheet Trends:
Total assets$21,751,614 $20,896,112 $855,502 4.1 %
Total loans and leases$15,063,034 $15,794,671 $(731,637)(4.6)%
Total loans and leases, excluding PPP*$14,816,776 $14,796,518 $20,258 0.1 %
Non-interest bearing demand deposits$3,487,517 $1,885,045 $1,602,472 85.0 %
Total deposits$17,723,617 $18,156,953 $(433,336)(2.4)%
Capital Metrics:
Common Equity$1,283,226 $1,265,167 $18,059 1.4 %
Tangible Common Equity*$1,279,597 $1,261,538 $18,059 1.4 %
Common Equity to Total Assets5.9 %6.1 %(0.2)
Tangible Common Equity to Tangible Assets*5.9 %6.0 %(0.1)
Tangible Common Equity to Tangible Assets, excluding PPP*6.0 %6.3 %(0.3)
Book Value per common share$41.08 $39.08 $2.00 5.1 %
Tangible Book Value per common share*$40.96 $38.97 $1.99 5.1 %
Common equity Tier 1 capital ratio (1)
9.6 %9.6 %— 
Total risk based capital ratio (1)
12.3 %12.2 %0.1 
(1) Regulatory capital ratios as of March 31, 2023 are estimates.
*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 are included at the end of this document.
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Financial Highlights
(Dollars in thousands, except per share data)
At or Three Months EndedIncrease (Decrease)
March 31, 2023March 31, 2022
Profitability Metrics:
Net income available for common shareholders$50,265 $74,896 $(24,631)(32.9)%
Diluted earnings per share$1.55 $2.18 $(0.63)(28.9)%
Core earnings*$51,143 $75,410 $(24,267)(32.2)%
Core earnings per share*$1.58 $2.20 $(0.62)(28.2)%
Core earnings, excluding PPP*$41,537 $50,697 $(9,160)(18.1)%
Core earnings per share, excluding PPP*$1.28 $1.48 $(0.20)(13.5)%
Return on average assets ("ROAA")1.03 %1.63 %(0.60)
Core ROAA*1.05 %1.64 %(0.59)
Core ROAA, excluding PPP*0.87 %1.11 %(0.24)
Return on average common equity ("ROCE")16.00 %24.26 %(8.26)
Core ROCE*16.28 %24.43 %(8.15)
Adjusted pre-tax pre-provision net income*$89,282 $112,649 $(23,367)(20.7)%
Adjusted pre-tax pre-provision net income ROAA, excluding PPP*1.53 %1.86 %(0.33)
Net interest margin, tax equivalent2.96 %3.60 %(0.64)
Net interest margin, tax equivalent, excluding PPP*2.80 %3.32 %(0.52)
Loan yield6.70 %4.67 %2.03 
Loan yield, excluding PPP*6.46 %4.43 %2.03 
Cost of deposits3.32 %0.33 %2.99 
Efficiency ratio47.71 %39.42 %8.29 
Core efficiency ratio*47.09 %39.47 %7.62 
Balance Sheet Trends:
Total assets$21,751,614 $19,163,708 $2,587,906 13.5 %
Total loans and leases$15,063,034 $14,073,518 $989,516 7.0 %
Total loans and leases, excluding PPP*$14,816,776 $11,877,616 $2,939,160 24.7 %
Non-interest bearing demand deposits$3,487,517 $4,594,428 $(1,106,911)(24.1)%
Total deposits$17,723,617 $16,415,560 $1,308,057 8.0 %
Capital Metrics:
Common Equity$1,283,226 $1,239,612 $43,614 3.5 %
Tangible Common Equity*$1,279,597 $1,235,934 $43,663 3.5 %
Common Equity to Total Assets5.9 %6.5 %(0.6)
Tangible Common Equity to Tangible Assets*5.9 %6.5 %(0.6)
Tangible Common Equity to Tangible Assets, excluding PPP*6.0 %7.3 %(1.3)
Book Value per common share$41.08 $37.61 $3.47 9.2 %
Tangible Book Value per common share*$40.96 $37.50 $3.46 9.2 %
Common equity Tier 1 capital ratio (1)
9.6 %9.9 %(0.3)
Total risk based capital ratio (1)
12.3 %12.9 %(0.6)
(1) Regulatory capital ratios as of March 31, 2023 are estimates.
*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 are included at the end of this document.
Paycheck Protection Program (PPP)
We funded, either directly or indirectly, about 358,000 loans totaling $10.3 billion. Through the program, we earned close to $350 million of deferred origination fees from the SBA, which was significantly accretive to our earnings and capital levels as these loans were forgiven or guaranteed by the government. In Q1 2023, we recognized $22 million of these fees in earnings, leaving only $3 million to be recognized in future periods. "In Q1 2023, $752 million of PPP loans were repaid, leaving less than $250 million on our balance sheet at March 31, 2023. As we near completion of this program, we are extremely proud of our success in the PPP program and the role we played in supporting small businesses across the country. This program has been a tremendous benefit to our franchise, going forward we will no longer report certain financial metrics excluding PPP," commented Customers Bancorp CFO, Carla Leibold.
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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)March 31, 2023% of TotalDecember 31, 2022% of TotalMarch 31, 2022% of Total
Loans and Leases Held for Investment
Commercial:
Commercial & industrial:
Specialty lending$5,519,176 37.7 %$5,412,887 35.0 %$2,973,544 21.1 %
Other commercial & industrial1,168,161 8.0 1,135,336 7.3 947,895 6.8 
Multifamily2,195,211 15.0 2,213,019 14.3 1,705,027 12.1 
Loans to mortgage companies1,374,894 9.4 1,447,919 9.4 1,830,121 13.0 
Commercial real estate owner occupied895,314 6.1 885,339 5.7 701,893 5.0 
Loans receivable, PPP246,258 1.7 998,153 6.5 2,195,902 15.6 
Commercial real estate non-owner occupied1,245,248 8.5 1,290,730 8.4 1,140,311 8.1 
Construction188,123 1.3 162,009 1.0 161,024 1.1 
Total commercial loans and leases12,832,385 87.7 13,545,392 87.6 11,655,717 82.8 
Consumer:
Residential494,815 3.4 497,952 3.2 466,423 3.3 
Manufactured housing43,272 0.3 45,076 0.3 50,669 0.4 
Installment:
Personal849,420 5.8 964,641 6.2 1,584,011 11.3 
Other419,085 2.8 413,298 2.7 313,695 2.2 
Total installment loans1,268,505 8.6 1,377,939 8.9 1,897,706 13.5 
Total consumer loans1,806,592 12.3 1,920,967 12.4 2,414,798 17.2 
Total loans and leases held for investment$14,638,977 100.0 %$15,466,359 100.0 %$14,070,515 100.0 %
Loans Held for Sale
Commercial:
Multifamily$4,051 1.0 %$4,079 1.2 %$— — %
Commercial real estate non-owner occupied16,000 3.7 — — — — 
Total commercial loans and leases20,051 4.7 4,079 1.2 — — 
Consumer:
Residential821 0.2 829 0.2 3,003 100.0 
Installment:
Personal307,336 72.5 133,801 40.8 — — 
Other95,849 22.6 189,603 57.8 — — 
Total installment loans403,185 95.1 323,404 98.6 — — 
Total consumer loans404,006 95.3 324,233 98.8 3,003 100.0 
Total loans held for sale$424,057 100.0 %$328,312 100.0 %$3,003 100.0 %
Total loans and leases portfolio$15,063,034 $15,794,671 $14,073,518 
Loans and Leases Held for Investment
Loans and leases held for investment were $14.6 billion at March 31, 2023, down $827.4 million, or 5.3%, from December 31, 2022. Excluding PPP loans, core loans and leases held for investment* decreased $75.5 million to $14.4 billion at March 31, 2023.
Consumer installment loans held for investment decreased $109.4 million, or 7.9% quarter-over-quarter, to $1.3 billion and commercial real estate non-owner occupied loans decreased $45.5 million, or 3.5% quarter-over-quarter, to $1.2 billion as we continue to reduce risk by remixing our held-for-investment loan and lease portfolio. Loans to mortgage companies decreased $73.0 million, or 5.0% quarter-over-quarter. These decreases were offset in part by increases in commercial and industrial ("C&I") loans and leases of $139.1 million, or 2.1% quarter-over-quarter, to $6.7 billion, led by our variable rate low-to-no credit risk specialty lending verticals.
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Loans Held for Sale
Loans held for sale increased $95.7 million quarter-over-quarter, and $421.1 million year-over-year, to $424.1 million at March 31, 2023 primarily due to increased consumer installment loans as we continue to build out our Banking-as-a-Service/Marketplace Lending (BaaS/MPL) strategy in 2023.
Allowance for Credit Losses on Loans and Leases
The following table presents the allowance for credit losses on loans and leases as of the dates and for the periods presented:
At or Three Months EndedIncrease (Decrease)At or Three Months EndedIncrease (Decrease)
(Dollars in thousands)March 31, 2023December 31, 2022March 31, 2023March 31, 2022
Allowance for credit losses on loans and leases$130,281 $130,924 $(643)$130,281 $145,847 $(15,566)
Provision for credit losses on loans and leases$18,008 $27,891 $(9,883)$18,008 $15,269 $2,739 
Net charge-offs from loans held for investment$18,651 $27,164 $(8,513)$18,651 $7,226 $11,425 
Annualized net charge-offs to average loans and leases0.49 %0.70 %0.49 %0.21 %
Coverage of credit loss reserves for loans and leases held for investment0.97 %0.93 %0.97 %1.18 %
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP*0.99 %1.00 %0.99 %1.44 %
*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 are included at the end of this document.
The decrease in net charge-offs in Q1 2023 compared to Q4 2022 was primarily due to one-time charge-offs of $11.0 million for certain loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and ultimately deemed uncollectible in Q4 2022.
The increase in net charge-offs in Q1 2023 compared to Q1 2022 was primarily due to an increase in consumer installment net charge-offs in Q1 2023 compared to Q1 2022.
Provision for Credit Losses
Three Months EndedIncrease (Decrease)Three Months EndedIncrease (Decrease)
(Dollars in thousands)March 31, 2023December 31, 2022March 31, 2023March 31, 2022
Provision for credit losses on loans and leases$18,008 $27,891 $(9,883)$18,008 $15,269 $2,739 
Provision for credit losses on available for sale debt securities1,595 325 1,270 1,595 728 867 
Provision for credit losses19,603 28,216 (8,613)19,603 15,997 3,606 
Provision (benefit) for credit losses on unfunded commitments280 153 127 280 (109)389 
Total provision for credit losses$19,883 $28,369 $(8,486)$19,883 $15,888 $3,995 
The provision for credit losses on loans and leases in Q1 2023 was $18.0 million, compared to $27.9 million in Q4 2022. The provision in Q1 2023 was primarily due to our recognition of weaker macroeconomic forecasts, as compared to provision in Q4 2022, which was primarily due to one-time charge-offs of $11.0 million for certain loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and ultimately deemed uncollectible, as well as loan growth and our recognition of weaker macroeconomic forecasts. The provision for credit losses on available for sale investment securities in Q1 2023 was $1.6 million compared to provision of $0.3 million in Q4 2022.
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The provision for credit losses on loans and leases in Q1 2023 was $18.0 million, compared to $15.3 million in Q1 2022. The provision in Q1 2023 was primarily due to our recognition of weaker macroeconomic forecasts, as compared to provision in Q1 2022, which was primarily due to loan growth. The provision for credit losses on available for sale investment securities in Q1 2023 was $1.6 million compared to $0.7 million in Q1 2022.
Asset Quality
The following table presents asset quality metrics as of the dates indicated:
(Dollars in thousands)March 31, 2023December 31, 2022Increase (Decrease)March 31, 2023March 31, 2022Increase (Decrease)
Non-performing assets ("NPAs"):
Nonaccrual / non-performing loans ("NPLs")$32,124 $30,737 $1,387 $32,124 $43,778 $(11,654)
Non-performing assets$32,260 $30,783 $1,477 $32,260 $43,864 $(11,604)
NPLs to total loans and leases
0.21 %0.19 %0.21 %0.31 %
Reserves to NPLs
405.56 %425.95 %405.56 %333.15 %
NPAs to total assets0.15 %0.15 %0.15 %0.23 %
Loans and leases (1) risk ratings:
Commercial loans and leases (2)
Pass$10,928,620 $10,793,980 $134,640 $10,928,620 $7,274,294 $3,654,326 
Special Mention136,986 138,829 (1,843)136,986 128,622 8,364 
Substandard273,154 291,118 (17,964)273,154 301,141 (27,987)
Total commercial loans and leases11,338,760 11,223,927 114,833 11,338,760 7,704,057 3,634,703 
Consumer loans
Performing1,787,123 1,899,376 (112,253)1,787,123 2,399,860 (612,737)
Non-performing19,469 21,591 (2,122)19,469 14,938 4,531 
Total consumer loans1,806,592 1,920,967 (114,375)1,806,592 2,414,798 (608,206)
Loans and leases receivable (1)
$13,145,352 $13,144,894 $458 $13,145,352 $10,118,855 $3,026,497 
(1)    Risk ratings are assigned to loans and leases held for investment, and excludes loans held for sale and loans receivable, mortgage warehouse, at fair value.
(2)    Excludes loan receivable, PPP, as eligible 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, corporate and specialty lending lines of business, and multifamily 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 incredibly healthy despite an 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.
Total consumer installment loans held for investment at March 31, 2023 were less than 6% of total assets, less than 9% of total loans and leases held for investment, and were supported by an allowance for credit losses of $62.1 million. At March 31, 2023, our consumer installment portfolio had the following characteristics: average original FICO score of 737, average debt-to-income of 20% and average borrower income of $106 thousand.
Non-performing loans at March 31, 2023 were essentially flat at 0.21% of total loans and leases, compared to 0.19% at December 31, 2022, and decreased from 0.31% at March 31, 2022.
Investment Securities
Our investment securities portfolio, including debt securities available for sale ("AFS") and held to maturity ("HTM") provides periodic cash flows through regular maturities and amortization, can be used as collateral to secure additional funding, and is an important component of our liquidity position.
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The following table presents the composition of our investment securities portfolio as of the dates indicated:
(Dollars in thousands)March 31, 2023December 31, 2022March 31, 2022
Debt securities, available for sale$2,900,259 $2,961,015 $4,144,029 
Equity securities26,710 26,485 25,824 
Investment securities, at fair value2,926,969 2,987,500 4,169,853 
Debt securities, held to maturity870,294 840,259 — 
Total investment securities portfolio$3,797,263 $3,827,759 $4,169,853 
Critically important to performance during the recent banking crisis are the characteristics of a bank’s securities portfolio. While there may be virtually no credit risk in some of these portfolios, holding longer term and lower yielding securities is creating challenges for many banks. Our securities portfolio is highly liquid, short in duration, and high in yield. Our AFS debt securities portfolio has a spot yield of 4.91%, an effective duration of approximately 1.5 years, and approximately 47% are variable rate. Additionally, 62% of our AFS securities portfolio was AAA rated at March 31, 2023.
Our HTM debt securities portfolio represents only 4.0% of our total assets at March 31, 2023, and has a spot yield of 3.77% and an effective duration of approximately 4.0 years. Additionally, approximately 51% of our HTM securities are AAA rated and 37% are credit enhanced asset backed securities with no current expectation of credit losses.
Deposits
The following table presents the composition of our deposit portfolio as of the dates indicated:
(Dollars in thousands)March 31, 2023% of TotalDecember 31, 2022% of TotalMarch 31, 2022% of Total
Demand, non-interest bearing$3,487,517 19.7 %$1,885,045 10.4 %$4,594,428 28.0 %
Demand, interest bearing5,791,302 32.7 8,476,027 46.7 5,591,468 34.1 
Total demand deposits9,278,819 52.4 10,361,072 57.1 10,185,896 62.1 
Savings924,359 5.2 811,798 4.5 802,395 4.9 
Money market2,019,633 11.4 2,734,217 15.1 4,981,077 30.3 
Time deposits5,500,806 31.0 4,249,866 23.3 446,192 2.7 
Total deposits$17,723,617 100.0 %$18,156,953 100.0 %$16,415,560 100.0 %
Total deposits decreased $433.3 million, or 2.4%, to $17.7 billion at March 31, 2023 as compared to the prior quarter. Importantly, non-interest bearing demand deposits increased $1.6 billion, or 85.0%, to $3.5 billion. Time deposits increased $1.3 billion, or 29.4%, to $5.5 billion and savings deposits increased $112.6 million, or 13.9%, to $924.4 million. These increases were offset by decreases in interest bearing demand deposits of $2.7 billion, or 31.7%, to $5.8 billion and money market deposits of $714.6 million, or 26.1%, to $2.0 billion. The total average cost of deposits increased by 59 basis points to 3.32% in Q1 2023 from 2.73% in the prior quarter primarily due to higher market interest rates and a shift in deposit mix. Total estimated uninsured deposits was $3.5 billion1, or 19% of total deposits (inclusive of accrued interest) at March 31, 2023. We are also highly focused on total deposits with contractual term to manage our liquidity profile and the funding of loans and securities.
Total deposits increased $1.3 billion, or 8.0%, to $17.7 billion at March 31, 2023 as compared to a year ago. Time deposits increased $5.1 billion to $5.5 billion. Interest bearing demand deposits increased $199.8 million, or 3.6%, to $5.8 billion. Savings deposits increased $122.0 million, or 15.2%, to $924.4 million. These increases were offset in part by decreases in money market deposits of $3.0 billion, or 59.5%, to $2.0 billion and non-interest bearing demand deposits of $1.1 billion, or 24.1%, to $3.5 billion. The total average cost of deposits increased by 299 basis points to 3.32% in Q1 2023 from 0.33% in the prior year primarily due to higher market interest rates and a shift in deposit mix.
1 Uninsured deposits of $3.9 billion less state and municipal deposits of $393.9 million collateralized by our line of credit from FHLB and from our affiliates of $54.9 million.
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Borrowings
The following table presents the composition of our borrowings as of the dates indicated:
(Dollars in thousands)March 31, 2023December 31, 2022March 31, 2022
Federal funds purchased$— $— $700,000 
FHLB advances2,052,143 800,000 — 
Senior notes123,645 123,580 223,230 
Subordinated debt182,021 181,952 181,742 
Total borrowings$2,357,809 $1,105,532 $1,104,972 
Total borrowings increased $1.3 billion, or 113.3%, to $2.4 billion at March 31, 2023 as compared to both the prior quarter and the year-ago quarter. This increase primarily resulted from increased FHLB borrowings to ensure ample cash on hand given the heightened liquidity risk in the banking system, particularly among regional banks in early March 2023. As of March 31, 2023, Customers' borrowing capacity with the FRB and FHLB was approximately $9.8 billion, of which $2.1 billion of available capacity was utilized in borrowings and $397.2 million was utilized to collateralize state and municipal deposits.
Capital
The following table presents certain capital amounts and ratios as of the dates indicated:
(Dollars in thousands except per share data)March 31, 2023December 31, 2022March 31, 2022
Customers Bancorp, Inc.
Common Equity$1,283,226 $1,265,167 $1,239,612 
Tangible Common Equity*$1,279,597 $1,261,538 $1,235,934 
Common Equity to Total Assets5.9 %6.1 %6.5 %
Tangible Common Equity to Tangible Assets*5.9 %6.0 %6.5 %
Tangible Common Equity to Tangible Assets, excluding PPP*6.0 %6.3 %7.3 %
Book Value per common share$41.08 $39.08 $37.61 
Tangible Book Value per common share*$40.96 $38.97 $37.50 
Common equity Tier 1 capital ratio (1)
9.6 %9.6 %9.9 %
Total risk based capital ratio (1)
12.3 %12.2 %12.9 %
(1) Regulatory capital ratios as of March 31, 2023 are estimates.
*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 are included at the end of this document.
Customers Bancorp's common equity increased $18.1 million to $1.3 billion, and tangible common equity* increased $18.1 million to $1.3 billion, at March 31, 2023 compared to the prior quarter, respectively, primarily due to earnings of $50.3 million, and reduced unrealized losses on investment securities of $6.8 million (net of taxes) deferred in accumulated other comprehensive income ("AOCI"). These increases were offset in part by $39.8 million of common share repurchases during Q1 2023. Similarly, book value per common share increased to $41.08 from $39.08, and tangible book value per common share* increased to $40.96 from $38.97, at March 31, 2023 and December 31, 2022, respectively.
Customers Bancorp's common equity increased $43.6 million to $1.3 billion, and tangible common equity* increased $43.7 million to $1.3 billion, at March 31, 2023 compared to a year ago, respectively, as earnings of $193.8 million more than offset a negative impact to AOCI from increased unrealized losses on investment securities of $93.7 million (net of taxes). Similarly, book value per common share increased to $41.08 from $37.61, and tangible book value per common share* increased to $40.96 from $37.50, at March 31, 2023 and March 31, 2022, respectively.
At the Customers Bancorp level, the total risk based capital ratio (estimate), common equity to total assets ratio and tangible common equity to tangible assets ratio ("TCE ratio"), excluding PPP loans*, were 12.3%, 5.9% and 6.0%, respectively, at March 31, 2023.
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At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At March 31, 2023, estimated Tier 1 capital and total risk-based capital were 11.3% and 12.6%, respectively.
Even though Customers remains well capitalized by all regulatory measures, its goal is to increase its CET 1 ratio at year-end 2023 to be between 11.0% - 11.5%, up about 150 basis points over current levels. "It is prudent to moderate or even shrink our balance sheet in this uncertain environment and have strong capital ratios," stated Jay Sidhu.
Key Profitability Trends
Net Interest Income
Net interest income totaled $149.9 million in Q1 2023, an increase of $14.8 million from Q4 2022, primarily due to higher PPP net interest income of $16.9 million resulting from increased recognition of deferred fees of $18.0 million mainly driven by higher loan forgiveness and guarantee payments by the SBA in Q1 2023. Net interest income earned by the core bank* decreased $2.1 million over Q4 2022, reflecting a shift in funding mix and two less days in Q1 2023. The increase in interest income on investment securities and core loans* of $4.4 million and $20.9 million, respectively, mostly due to higher interest rates on investment securities and variable loans in our commercial loan verticals, were offset by higher expenses paid on deposits and other borrowings of $30.5 million from a shift in funding mix and higher interest rates during Q1 2023. Excluding PPP loans, average interest-earning assets increased $480.3 million. Interest-earning asset growth was primarily driven by increases in interest earning deposits, specialty lending and consumer installment loans held for sale, partially offset by decreases in commercial loans to mortgage companies due to lower mortgage activity from rising interest rates. Compared to Q4 2022, total loan yields increased 106 basis points to 6.70% primarily due to higher interest rates on variable rate loans in commercial loans. Excluding PPP loans, the Q1 2023 total loan yield* was 60 basis points higher than Q4 2022 reflecting increased interest rates and the variable rate nature of the loan portfolio.
Net interest income totaled $149.9 million in Q1 2023, a decrease of $14.8 million from Q1 2022, primarily due to lower PPP net interest income of $20.5 million resulting from reduced recognition of deferred fees of $8.1 million driven by lower loan forgiveness in Q1 2023 and increased funding costs of $7.2 million, reflecting increases in funding rates. This decrease was offset in part by increased net interest income earned by the core bank* of $5.7 million, up 4.4% over Q1 2022, including increased interest income on investment securities and core loans* of $27.0 million and $112.1 million, respectively, mostly due to higher average balances and interest rates on variable loans in specialty lending. In addition, higher expenses paid on deposits and other borrowings of $146.3 million resulted mainly from a shift in funding mix and higher interest rates during Q1 2023. Excluding PPP loans, average interest-earning assets increased $3.7 billion. Interest-earning asset growth was primarily driven by increases in C&I loans and leases, mostly in the variable rate low-to-no credit risk specialty lending verticals and multifamily loans, offset in part by decreases in commercial loans to mortgage companies due to lower mortgage activity from rising interest rates. Total consumer installment loans decreased in Q1 2023 as compared to Q1 2022, as installment loans held for investment decreased primarily for risk management purposes. Compared to Q1 2022, total loan yields increased 203 basis points to 6.70% primarily due to higher interest rates on variable rate loans in specialty lending, partially offset by lower PPP yields driven by lower deferred fee recognition. Excluding PPP loans, the Q1 2023 total loan yield* was 203 basis points higher than Q1 2022 reflecting increased interest rates and the variable rate nature of the loan portfolio.
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Non-Interest Income
The following table presents details of non-interest income for the periods indicated:
Three Months EndedIncrease (Decrease)Three Months EndedIncrease (Decrease)
(Dollars in thousands)March 31, 2023December 31, 2022March 31, 2023March 31, 2022
Commercial lease income$9,326 $8,135 $1,191 $9,326 $5,895 $3,431 
Loan fees3,990 4,017 (27)3,990 2,545 1,445 
Bank-owned life insurance 2,647 1,975 672 2,647 8,326 (5,679)
Mortgage warehouse transactional fees1,074 1,295 (221)1,074 2,015 (941)
Gain (loss) on sale of SBA and other loans— — — — 1,507 (1,507)
Net gain (loss) on sale of investment securities— (16,937)16,937 — (1,063)1,063 
Legal settlement gain— 7,519 (7,519)— — — 
Other1,084 1,341 (257)1,084 1,973 (889)
Total non-interest income$18,121 $7,345 $10,776 $18,121 $21,198 $(3,077)
Non-interest income totaled $18.1 million for Q1 2023, an increase of $10.8 million compared to Q4 2022. The increase was primarily due to losses realized from the sale of investment securities of $16.9 million to rebalance the investment portfolio with higher interest-earning securities in Q4 2022, higher commercial lease income of $1.2 million from continued growth and death benefits paid by insurance carriers under the bank-owned life insurance policies of $0.7 million. These increases were partially offset by a $7.5 million gain from a court-approved settlement with a third party PPP service provider in Q4 2022.
Non-interest income totaled $18.1 million for Q1 2023, a decrease of $3.1 million compared to Q1 2022. The decrease was primarily due to lower death benefits paid by insurance carriers under the bank-owned life insurance policies of $5.7 million, reduced mortgage warehouse transactional fees from lower housing activity due to rising interest rates of $0.9 million, and reduced gains realized from sales of SBA loans of $1.5 million as there were no such sales in Q1 2023. These decreases were offset partially by increases in commercial lease income of $3.4 million and loan fees of $1.4 million resulting from continued growth and reduced losses on securities sales of $1.1 million as there were no such sales in Q1 2023.
Non-Interest Expense
The following table presents details of non-interest expense for the periods indicated:
Three Months EndedIncrease (Decrease)Three Months EndedIncrease (Decrease)
(Dollars in thousands)March 31, 2023December 31, 2022March 31, 2023March 31, 2022
Salaries and employee benefits$32,345 $29,194 $3,151 $32,345 $26,607 $5,738 
Technology, communication and bank operations16,589 18,604 (2,015)16,589 24,068 (7,479)
Commercial lease depreciation7,875 6,518 1,357 7,875 4,942 2,933 
Professional services7,596 6,825 771 7,596 6,956 640 
Loan servicing4,661 4,460 201 4,661 2,371 2,290 
Occupancy2,760 3,672 (912)2,760 3,050 (290)
FDIC assessments, non-income taxes and regulatory fees2,728 2,339 389 2,728 2,383 345 
Advertising and promotion1,049 1,111 (62)1,049 315 734 
Other4,530 5,696 (1,166)4,530 3,115 1,415 
Total non-interest expense$80,133 $78,419 $1,714 $80,133 $73,807 $6,326 
The management of non-interest expenses remains a priority for us. However, this will not deter us from making investments in new technologies to support efficient and responsible growth in the future.
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Non-interest expenses totaled $80.1 million in Q1 2023, an increase of $1.7 million compared to Q4 2022. The increase was primarily attributable to increased salaries and employee benefits of $3.2 million driven by higher payroll taxes, benefits and severance accruals and higher commercial lease depreciation of $1.4 million resulting from continued growth in our equipment finance business. These increases were offset in part by decreases of $2.0 million in deposit servicing-related expenses resulting from lower servicing fees and the discontinuation of interchange maintenance fees paid to BM Technologies offset in part by higher software-related expenses and reduced other expenses of $1.2 million primarily due to lower loan workout expenses.
Non-interest expenses totaled $80.1 million in Q1 2023, an increase of $6.3 million compared to Q1 2022. The increase was primarily attributable to increases of $5.7 million in salaries and employee benefits due to higher headcount, annual merit increases, severance accruals and SERP expenses, $2.9 million in commercial lease depreciation from continued growth, $2.3 million in loan servicing for portfolios serviced by third parties, $0.7 million in advertising and promotion mostly due to higher spending on media and advertising agencies for our deposit products and $1.4 million in other expenses mostly due to higher provision for credit losses on unfunded lending commitments and operating losses. These increases were offset in part by a decrease of $7.5 million in deposit servicing-related expenses mostly due to lower servicing fees and the discontinuation of interchange maintenance fees paid to BM Technologies, offset by higher software licenses, fees paid for software as a service and other technology-related expenses.
Taxes
Income tax expense increased by $7.4 million to $14.6 million in Q1 2023 from $7.1 million in Q4 2022 primarily due to higher pre-tax income.
Income tax expense decreased by $4.8 million to $14.6 million in Q1 2023 from $19.3 million in Q1 2022 primarily due to lower pre-tax income and increased income tax credits.
The effective tax rate for Q1 2023 was 21%. Customers expects the full-year 2023 effective tax rate to be approximately 22% to 24%.
Outlook
“Looking ahead, we will continue to moderate growth, or even reduce the size of the balance sheet, as we optimize the balance sheet and materially improve our capital ratios, maximize our efficiency ratio with prudent expense management, and continue to improve deposits and liquidity. We expect 2023 core loans to be essentially flat to down. Deposits are expected to remain relatively flat with a focus on improving our funding profile and reducing high cost deposits. We believe our net interest margin has troughed with expansion opportunities throughout the remainder of 2023. We expect net interest margin, excluding PPP* to increase throughout 2023 by about 20 basis points to 3.00% or higher. 2023 Core EPS (excluding PPP)* is still expected to be about $6.00 with a return on common equity of over 15%. Core non-interest expense* is expected to increase between 5% - 7% in 2023 and we are targeting a CET 1 ratio of approximately 11% - 11.5% by year-end 2023. We are focused on improving the quality of our balance sheet and deposit franchise, improving capital and liquidity, maintaining superior credit quality, expanding our net interest margin, and achieving our tangible book value guidance in excess of $45 by year-end 2023,” concluded 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 are included at the end of this document.
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Webcast
Date:            Friday, April 28, 2023        
Time:            9:00 AM EDT
The live audio webcast, presentation slides, and earnings press release will be made available at https://www.customersbank.com/investor-relations/ and at the Customers Bancorp 1st Quarter Earnings Webcast.
You may submit questions in advance of the live webcast by emailing 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 one of the nation’s top-performing banking companies with over $20 billion in assets, making it one of the 100 largest bank holding companies in the US. Through its primary subsidiary, Customers Bank, commercial and consumer clients benefit from a full suite of technology-enabled tailored product experience delivered by best-in-class customer service. A pioneer in Banking-as-a-Service and digital banking products, Customers Bank is one of the very few banks that provides a blockchain-based 24/7/365 digital payment solution. In addition to traditional lines such as C&I lending, commercial real estate lending, and multifamily lending, Customers Bank also provides a number of national corporate banking services to Specialty Lending clients. Major accolades include:
•#34 out of the 100 largest publicly traded banks in 2023 per Forbes;
•#64 on Fortune Magazine’s 2022 list of the 100 fastest growing companies in America;
•#6 in top-performing banks with assets between $10 billion and $50 billion in 2021 per American Banker; and
•#3 top-performing bank with over $10 billion in assets at year-end 2021 per S&P Global S&P Global Market Intelligence.
A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender. Learn more: 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,” “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
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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, 2022, 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.
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Q1 2023 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended March 31, 2023 and the preceding four quarters:
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED
(Dollars in thousands, except per share data and stock price data)
Q1Q4Q3Q2Q1
20232022202220222022
GAAP Profitability Metrics:
Net income available to common shareholders
$50,265 $25,623 $61,364 $56,519 $74,896 
Per share amounts:
Earnings per share - basic
$1.58 $0.79 $1.89 $1.73 $2.27 
Earnings per share - diluted$1.55 $0.77 $1.85 $1.68 $2.18 
Book value per common share (1)
$41.08 $39.08 $38.46 $37.46 $37.61 
CUBI stock price (1)
$18.52 $28.34 $29.48 $33.90 $52.14 
CUBI stock price as % of book value (1)
45 %73 %77 %90 %139 %
Average shares outstanding - basic31,819,203 32,413,459 32,455,814 32,712,616 32,957,033 
Average shares outstanding - diluted32,345,017 33,075,422 33,226,607 33,579,013 34,327,065 
Shares outstanding (1)
31,239,750 32,373,697 32,475,502 32,449,486 32,957,847 
Return on average assets ("ROAA")1.03 %0.55 %1.24 %1.17 %1.63 %
Return on average common equity ("ROCE")16.00 %8.05 %19.33 %18.21 %24.26 %
Net interest margin, tax equivalent 2.96 %2.67 %3.16 %3.39 %3.60 %
Efficiency ratio47.71 %49.20 %50.00 %42.14 %39.42 %
Non-GAAP Profitability Metrics (2):
Core earnings$51,143 $39,368 $82,270 $59,367 $75,410 
Adjusted pre-tax pre-provision net income$89,282 $81,377 $100,994 $105,692 $112,649 
Per share amounts:
Core earnings per share - diluted$1.58 $1.19 $2.48 $1.77 $2.20 
Tangible book value per common share (1)
$40.96 $38.97 $38.35 $37.35 $37.50 
CUBI stock price as % of tangible book value (1)
45 %73 %77 %91 %139 %
Core ROAA1.05 %0.81 %1.64 %1.23 %1.64 %
Core ROCE16.28 %12.36 %25.91 %19.13 %24.43 %
Adjusted ROAA - pre-tax and pre-provision1.72 %1.56 %1.95 %2.11 %2.39 %
Adjusted ROCE - pre-tax and pre-provision27.33 %24.59 %31.01 %33.37 %35.89 %
Net interest margin, tax equivalent, excluding PPP loans2.80 %2.87 %3.18 %3.32 %3.32 %
Core efficiency ratio47.09 %49.12 %42.57 %41.74 %39.47 %
Asset Quality:
Net charge-offs $18,651 $27,164 $18,497 $13,481 $7,226 
Annualized net charge-offs to average total loans and leases0.49 %0.70 %0.47 %0.36 %0.21 %
Non-performing loans ("NPLs") to total loans and leases (1)
0.21 %0.19 %0.18 %0.18 %0.31 %
Reserves to NPLs (1)
405.56 %425.95 %466.34 %557.76 %333.15 %
Non-performing assets ("NPAs") to total assets0.15 %0.15 %0.14 %0.14 %0.23 %
Customers Bank Capital Ratios (3):
Common equity Tier 1 capital to risk-weighted assets11.3 %11.21 %11.42 %11.46 %11.60 %
Tier 1 capital to risk-weighted assets 11.3 %11.21 %11.42 %11.46 %11.60 %
Total capital to risk-weighted assets 12.6 %12.40 %12.65 %12.91 %13.03 %
Tier 1 capital to average assets (leverage ratio) 8.1 %8.15 %8.10 %8.09 %8.21 %
(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 Q1 2023 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 March 31, 2023, our regulatory capital ratios reflected 50%, or $30.8 million, benefit associated with the CECL transition provisions.

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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(Dollars in thousands, except per share data)
Q1Q4Q3Q2Q1
20232022202220222022
Interest income:
Loans and leases$244,212 $217,471 $200,438 $168,920 $157,120 
Investment securities47,316 42,953 30,546 25,442 20,295 
Loans held for sale11,701 1,269 19 21 55 
Interest earning deposits10,395 6,754 2,949 919 330 
Other1,321 1,200 1,964 1,032 5,676 
Total interest income314,945 269,647 235,916 196,334 183,476 
Interest expense:
Deposits143,930 124,366 65,380 22,781 13,712 
FHLB advances10,370 4,464 4,684 2,316 — 
FRB advances6,286 — — — — 
Subordinated debt2,689 2,688 2,689 2,689 2,689 
Other borrowings1,771 2,992 4,131 3,696 2,376 
Total interest expense165,046 134,510 76,884 31,482 18,777 
Net interest income149,899 135,137 159,032 164,852 164,699 
Provision (benefit) for credit losses19,603 28,216 (7,994)23,847 15,997 
Net interest income after provision (benefit) for credit losses130,296 106,921 167,026 141,005 148,702 
Non-interest income:
Commercial lease income9,326 8,135 7,097 6,592 5,895 
Loan fees3,990 4,017 3,008 2,618 2,545 
Bank-owned life insurance 2,647 1,975 3,449 1,947 8,326 
Mortgage warehouse transactional fees1,074 1,295 1,545 1,883 2,015 
Gain (loss) on sale of SBA and other loans— — 106 1,542 1,507 
Gain (loss) on sale of consumer installment loans — — (23,465)— — 
Net gain (loss) on sale of investment securities— (16,937)(2,135)(3,029)(1,063)
Legal settlement gain— 7,519 — — — 
Other1,084 1,341 1,378 1,193 1,973 
Total non-interest income18,121 7,345 (9,017)12,746 21,198 
Non-interest expense:
Salaries and employee benefits32,345 29,194 31,230 25,334 26,607 
Technology, communication and bank operations16,589 18,604 19,588 22,738 24,068 
Commercial lease depreciation7,875 6,518 5,966 5,552 4,942 
Professional services7,596 6,825 6,269 7,415 6,956 
Loan servicing4,661 4,460 3,851 4,341 2,371 
Occupancy2,760 3,672 2,605 4,279 3,050 
FDIC assessments, non-income taxes and regulatory fees2,728 2,339 2,528 1,619 2,383 
Advertising and promotion1,049 1,111 762 353 315 
Other4,530 5,696 3,399 4,574 3,115 
Total non-interest expense80,133 78,419 76,198 76,205 73,807 
Income before income tax expense68,284 35,847 81,811 77,546 96,093 
Income tax expense14,563 7,136 17,899 18,896 19,332 
Net income53,721 28,711 63,912 58,650 76,761 
Preferred stock dividends3,456 3,088 2,548 2,131 1,865 
Net income available to common shareholders$50,265 $25,623 $61,364 $56,519 $74,896 
Basic earnings per common share$1.58 $0.79 $1.89 $1.73 $2.27 
Diluted earnings per common share 1.55 0.77 1.85 1.68 2.18 
16

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - UNAUDITED
(Dollars in thousands)
March 31,December 31,September 30,June 30,March 31,
20232022202220222022
ASSETS
Cash and due from banks$77,251 $58,025 $41,520 $66,703 $55,515 
Interest earning deposits1,969,434 397,781 362,945 178,475 219,085 
Cash and cash equivalents2,046,685 455,806 404,465 245,178 274,600 
Investment securities, at fair value2,926,969 2,987,500 2,943,694 3,144,882 4,169,853 
Investment securities held to maturity870,294 840,259 886,294 495,039 — 
Loans held for sale424,057 328,312 5,224 6,595 3,003 
Loans receivable, mortgage warehouse, at fair value1,247,367 1,323,312 1,569,090 1,874,603 1,755,758 
Loans receivable, PPP246,258 998,153 1,154,632 1,570,160 2,195,902 
Loans and leases receivable13,145,352 13,144,894 12,607,742 12,212,995 10,118,855 
Allowance for credit losses on loans and leases(130,281)(130,924)(130,197)(156,530)(145,847)
Total loans and leases receivable, net of allowance for credit losses on loans and leases14,508,696 15,335,435 15,201,267 15,501,228 13,924,668 
FHLB, Federal Reserve Bank, and other restricted stock124,733 74,196 64,112 74,626 54,553 
Accrued interest receivable123,754 123,374 107,621 98,727 94,669 
Bank premises and equipment, net8,581 9,025 6,610 6,755 8,233 
Bank-owned life insurance339,607 338,441 336,130 335,153 332,239 
Goodwill and other intangibles3,629 3,629 3,629 3,629 3,678 
Other assets374,609 400,135 408,575 340,184 298,212 
Total assets$21,751,614 $20,896,112 $20,367,621 $20,251,996 $19,163,708 
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand, non-interest bearing deposits$3,487,517 $1,885,045 $2,993,793 $4,683,030 $4,594,428 
Interest bearing deposits14,236,100 16,271,908 14,528,645 12,261,689 11,821,132 
Total deposits17,723,617 18,156,953 17,522,438 16,944,719 16,415,560 
Federal funds purchased— — 365,000 770,000 700,000 
FHLB advances2,052,143 800,000 500,000 635,000 — 
Other borrowings123,645 123,580 123,515 123,450 223,230 
Subordinated debt182,021 181,952 181,882 181,812 181,742 
Accrued interest payable and other liabilities249,168 230,666 287,855 243,625 265,770 
Total liabilities20,330,594 19,493,151 18,980,690 18,898,606 17,786,302 
Preferred stock137,794 137,794 137,794 137,794 137,794 
Common stock35,258 35,012 34,948 34,922 34,882 
Additional paid in capital552,255 551,721 549,066 545,670 542,402 
Retained earnings974,399 924,134 898,511 837,147 780,628 
Accumulated other comprehensive income (loss), net(156,276)(163,096)(156,126)(124,881)(62,548)
Treasury stock, at cost(122,410)(82,604)(77,262)(77,262)(55,752)
Total shareholders' equity1,421,020 1,402,961 1,386,931 1,353,390 1,377,406 
Total liabilities and shareholders' equity$21,751,614 $20,896,112 $20,367,621 $20,251,996 $19,163,708 

17

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED
(Dollars in thousands)
Three Months Ended
March 31, 2023December 31, 2022March 31, 2022
Average BalanceInterest Income or Expense
Average Yield or Cost (%)
Average BalanceInterest Income or ExpenseAverage Yield or Cost (%)Average BalanceInterest Income or ExpenseAverage Yield or Cost (%)
Assets
Interest earning deposits $914,149 $10,395 4.61%$693,563 $6,754 3.86%$826,240 $329 0.16%
Investment securities (1)
4,031,247 47,316 4.69%4,061,555 42,953 4.23%4,036,966 20,295 2.01%
Loans and leases:
Commercial & industrial:
Specialty lending loans and leases (2)
5,694,168 103,688 7.38%5,529,567 90,885 6.52%2,730,990 23,391 3.47%
Other commercial & industrial loans (2)
1,705,205 25,570 6.08%1,670,000 22,796 5.42%1,393,418 13,268 3.86%
Commercial loans to mortgage companies1,262,139 17,412 5.59%1,376,760 17,701 5.10%1,836,647 14,006 3.09%
Multifamily loans2,206,600 20,470 3.76%2,235,885 22,481 3.99%1,531,846 13,766 3.64%
Loans receivable, PPP889,235 23,551 10.74%1,065,919 7,249 2.70%2,641,318 36,894 5.66%
Non-owner occupied commercial real estate loans1,449,722 20,199 5.65%1,430,420 18,536 5.14%1,312,210 12,207 3.77%
Residential mortgages542,909 5,598 4.18%524,344 5,462 4.13%416,417 3,680 3.58%
Installment loans1,727,995 39,425 9.25%1,555,108 33,630 8.58%1,794,145 39,963 9.03%
Total loans and leases (3)
15,477,973 255,913 6.70%15,388,003 218,740 5.64%13,656,991 157,175 4.67%
Other interest-earning assets91,308 1,321 5.87%67,907 1,200 7.01%52,111 5,677 
NM(6)
Total interest-earning assets20,514,677 314,945 6.21%20,211,028 269,647 5.30%18,572,308 183,476 4.00%
Non-interest-earning assets538,243 506,334 557,022 
Total assets $21,052,920 $20,717,362 $19,129,330 
Liabilities
Interest checking accounts$7,494,379 $70,485 3.81%$8,536,962 $70,041 3.26%$5,769,372 $7,730 0.54%
Money market deposit accounts2,470,004 20,783 3.41%3,094,206 21,220 2.72%4,880,051 4,674 0.39%
Other savings accounts822,312 6,286 3.10%669,466 3,368 2.00%880,113 784 0.36%
Certificates of deposit4,504,333 46,376 4.18%3,259,801 29,737 3.62%450,644 524 0.47%
Total interest-bearing deposits (4)
15,291,028 143,930 3.82%15,560,435 124,366 3.17%11,980,180 13,712 0.46%
Federal funds purchased15,333 188 4.97%151,467 1,437 3.76%88,611 73 0.33%
Borrowings1,788,116 20,928 4.75%819,032 8,707 4.22%532,610 4,992 3.80%
Total interest-bearing liabilities17,094,477 165,046 3.91%16,530,934 134,510 3.23%12,601,401 18,777 0.60%
Non-interest-bearing deposits (4)
2,299,295 2,514,316 4,900,983 
Total deposits and borrowings19,393,772 3.45%19,045,250 2.80%17,502,384 0.43%
Other non-interest-bearing liabilities247,575 271,129 237,131 
Total liabilities 19,641,347 19,316,379 17,739,515 
Shareholders' equity1,411,573 1,400,983 1,389,815 
Total liabilities and shareholders' equity$21,052,920 $20,717,362 $19,129,330 
Net interest income149,899 135,137 164,699 
Tax-equivalent adjustment375 342 239 
Net interest earnings$150,274 $135,479 $164,938 
Interest spread2.76%2.50%3.57%
Net interest margin2.95%2.66%3.59%
Net interest margin tax equivalent2.96%2.67%3.60%
Net interest margin tax equivalent excl. PPP (5)
2.80%2.87%3.32%
(continued)
18

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED)
(Dollars in thousands)
(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 3.32%, 2.73% and 0.33% for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, presented to approximate interest income as a taxable asset and 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.
(6) Not meaningful.
19

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED
(Dollars in thousands)
March 31,December 31,September 30,June 30,March 31,
20232022202220222022
Loans and leases held for investment
Commercial:
Commercial & industrial:
Specialty lending$5,519,176 $5,412,887 $5,103,974 $4,599,640 $2,973,544 
Other commercial & industrial1,168,161 1,135,336 1,064,332 1,037,444 947,895 
Multifamily2,195,211 2,213,019 2,263,268 2,008,784 1,705,027 
Loans to mortgage companies1,374,894 1,447,919 1,708,587 1,975,189 1,830,121 
Commercial real estate owner occupied895,314 885,339 726,670 710,577 701,893 
Loans receivable, PPP246,258 998,153 1,154,632 1,570,160 2,195,902 
Commercial real estate non-owner occupied1,245,248 1,290,730 1,263,211 1,152,869 1,140,311 
Construction188,123 162,009 136,133 195,687 161,024 
Total commercial loans and leases12,832,385 13,545,392 13,420,807 13,250,350 11,655,717 
Consumer:
Residential494,815 497,952 465,772 457,768 466,423 
Manufactured housing43,272 45,076 46,990 48,570 50,669 
Installment:
Personal849,420 964,641 1,056,432 1,613,628 1,584,011 
Other419,085 413,298 341,463 287,442 313,695 
Total installment loans1,268,505 1,377,939 1,397,895 1,901,070 1,897,706 
Total consumer loans1,806,592 1,920,967 1,910,657 2,407,408 2,414,798 
Total loans and leases held for investment$14,638,977 $15,466,359 $15,331,464 $15,657,758 $14,070,515 
Loans held for sale
Commercial:
Multifamily$4,051 $4,079 $4,108 $4,136 $— 
Commercial real estate non-owner occupied16,000 — — — — 
Total commercial loans and leases20,051 4,079 4,108 4,136 — 
Consumer:
Residential821 829 1,116 2,459 3,003 
Installment:
Personal307,336 133,801 — — — 
Other95,849 189,603 — — — 
Total installment loans403,185 323,404 — — — 
Total consumer loans404,006 324,233 1,116 2,459 3,003 
Total loans held for sale$424,057 $328,312 $5,224 $6,595 $3,003 
Total loans and leases portfolio$15,063,034 $15,794,671 $15,336,688 $15,664,353 $14,073,518 

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION - UNAUDITED
(Dollars in thousands)
March 31,December 31,September 30,June 30,March 31,
20232022202220222022
Demand, non-interest bearing$3,487,517 $1,885,045 $2,993,793 $4,683,030 $4,594,428 
Demand, interest bearing5,791,302 8,476,027 7,124,663 6,644,398 5,591,468 
Total demand deposits9,278,819 10,361,072 10,118,456 11,327,428 10,185,896 
Savings924,359 811,798 592,002 640,062 802,395 
Money market2,019,633 2,734,217 4,913,967 4,254,205 4,981,077 
Time deposits5,500,806 4,249,866 1,898,013 723,024 446,192 
Total deposits$17,723,617 $18,156,953 $17,522,438 $16,944,719 $16,415,560 

20


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY - UNAUDITED
(Dollars in thousands)As of March 31, 2023As of December 31, 2022As of March 31, 2022
Total loansNon accrual /NPLsAllowance for credit lossesTotal NPLs to total loansTotal reserves to total NPLsTotal loansNon accrual /NPLsAllowance for credit lossesTotal NPLs to total loansTotal reserves to total NPLsTotal loansNon accrual /NPLsAllowance for credit lossesTotal NPLs to total loansTotal reserves to total NPLs
Loan type
Commercial & industrial, including specialty lending (1)
$6,814,864 $3,886 $20,050 0.06 %515.95 %$6,672,830 $1,761 $17,582 0.03 %998.41 %$3,995,802 $5,490 $10,765 0.14 %196.08 %
Multifamily2,195,211 881 15,084 0.04 %1712.15 %2,213,019 1,143 14,541 0.05 %1272.18 %1,705,027 17,869 7,437 1.05 %41.62 %
Commercial real estate owner occupied895,314 3,621 8,472 0.40 %233.97 %885,339 2,768 6,454 0.31 %233.16 %701,893 2,191 3,841 0.31 %175.31 %
Commercial real estate non-owner occupied1,245,248 — 11,032 — %— %1,290,730 — 11,219 — %— %1,140,311 1,302 5,955 0.11 %457.37 %
Construction188,123 — 2,336 — %— %162,009 — 1,913 — %— %161,024 — 939 — %— %
Total commercial loans and leases receivable11,338,760 8,388 56,974 0.07 %679.23 %11,223,927 5,672 51,709 0.05 %911.65 %7,704,057 26,852 28,937 0.35 %107.76 %
Residential494,815 6,473 6,853 1.31 %105.87 %497,952 6,922 6,094 1.39 %88.04 %466,423 8,124 4,685 1.74 %57.67 %
Manufactured housing43,272 2,568 4,339 5.93 %168.96 %45,076 2,410 4,430 5.35 %183.82 %50,669 3,430 4,342 6.77 %126.59 %
Installment1,268,505 8,720 62,115 0.69 %712.33 %1,377,939 9,527 68,691 0.69 %721.01 %1,897,706 4,865 107,883 0.26 %2217.53 %
Total consumer loans receivable1,806,592 17,761 73,307 0.98 %412.74 %1,920,967 18,859 79,215 0.98 %420.04 %2,414,798 16,419 116,910 0.68 %712.04 %
Loans and leases receivable (1)
13,145,352 26,149 130,281 0.20 %498.23 %13,144,894 24,531 130,924 0.19 %533.71 %10,118,855 43,271 145,847 0.43 %337.05 %
Loans receivable, PPP246,258 — — — %— %998,153 — — — %— %2,195,902 — — — %— %
Loans receivable, mortgage warehouse, at fair value1,247,367 — — — %— %1,323,312 — — — %— %1,755,758 — — — %— %
Total loans held for sale424,057 5,975 — 1.41 %— %328,312 6,206 — 1.89 %— %3,003 507 — 16.88 %— %
Total portfolio$15,063,034 $32,124 $130,281 0.21 %405.56 %$15,794,671 $30,737 $130,924 0.19 %425.95 %$14,073,518 $43,778 $145,847 0.31 %333.15 %
(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.
21


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED
(Dollars in thousands)
Q1Q4Q3Q2Q1
20232022202220222022
Loan type
Commercial & industrial, including specialty lending (1)
$(71)$12,960 $2,581 $(416)$(59)
Multifamily— — — 1,990 (337)
Commercial real estate owner occupied— (2)— (42)(7)
Commercial real estate non-owner occupied4,234 972 4,831 159 (8)
Construction(116)(10)(10)(103)(113)
Residential(2)7 (13)(39)(2)
Installment14,606 13,237 11,108 11,932 7,752 
Total net charge-offs (recoveries) from loans held for investment$18,651 $27,164 $18,497 $13,481 $7,226 
(1)    Includes $11.0 million of one-time charge-offs from certain loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and were deemed uncollectible during the three months ended December 31, 2022.
22


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
Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
(Dollars in thousands except per share data)
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
GAAP net income to common shareholders$50,265 $1.55 $25,623 $0.77 $61,364 $1.85 $56,519 $1.68 $74,896 $2.18 
Reconciling items (after tax):
Severance expense637 0.02 — — 1,058 0.03 — — — — 
Impairments on fixed assets and leases86 0.00 — — 126 0.00705 0.02 220 0.01 
Loss on sale of consumer installment loans— — — — 18,221 0.55 — — — — 
(Gains) losses on investment securities(49)0.00 13,543 0.41 1,859 0.062,494 0.07 1,030 0.03
Derivative credit valuation adjustment204 0.01 202 0.01 (358)(0.01)(351)(0.01)(736)(0.02)
Core earnings$51,143 $1.58 $39,368 $1.19 $82,270 $2.48 $59,367 $1.77 $75,410 $2.20 


Core Earnings, excluding PPP - Customers Bancorp
Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
(Dollars in thousands except per share data)
USD
Per share
USD
Per share
USD
Per share
USD
Per share
USD
Per share
GAAP net income to common shareholders$50,265 $1.55 $25,623 $0.77 $61,364 $1.85 $56,519 $1.68 $74,896 $2.18 
Less: PPP net income (loss) (after tax)9,606 0.30 (5,956)(0.18)5,846 0.18 13,066 0.39 24,713 0.72 
Net income to common shareholders, excluding PPP40,659 1.26 31,579 0.95 55,518 1.67 43,453 1.29 50,183 1.46 
Reconciling items (after tax):
Severance expense637 0.02 — — 1,058 0.03 — — — — 
Impairments on fixed assets and leases86 0.00 — — 126 0.00705 0.02 220 0.01 
Loss on sale of consumer installment loans— — — — 18,221 0.55 — — — — 
(Gains) losses on investment securities(49)0.00 13,543 0.411,859 0.062,494 0.07 1,030 0.03
Derivative credit valuation adjustment204 0.01 202 0.01 (358)(0.01)(351)(0.01)(736)(0.02)
Core earnings, excluding PPP$41,537 $1.28 $45,324 $1.37 $76,424 $2.30 $46,301 $1.38 $50,697 $1.48 




23


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)
Core Return on Average Assets - Customers Bancorp
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP net income$53,721 $28,711 $63,912 $58,650 $76,761 
Reconciling items (after tax):
Severance expense637 — 1,058 — — 
Impairments on fixed assets and leases86 — 126 705 220 
Loss on sale of consumer installment loans— — 18,221 — — 
(Gains) losses on investment securities(49)13,543 1,859 2,494 1,030 
Derivative credit valuation adjustment204 202 (358)(351)(736)
Core net income
$54,599 $42,456 $84,818 $61,498 $77,275 
Average total assets
$21,052,920 $20,717,362 $20,514,366 $20,056,020 $19,129,330 
Core return on average assets1.05 %0.81 %1.64 %1.23 %1.64 %

Core Return on Average Assets, excluding PPP - Customers Bancorp
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP net income$53,721 $28,711 $63,912 $58,650 $76,761 
Less: PPP net income (loss) (after tax)9,606 (5,956)5,846 13,066 24,713 
Net income, excluding PPP44,115 34,667 58,066 45,584 52,048 
Reconciling items (after tax):
Severance expense637 — 1,058 — — 
Impairments on fixed assets and leases86 — 126 705 220 
Loss on sale of consumer installment loans— — 18,221 — — 
(Gains) losses on investment securities(49)13,543 1,859 2,494 1,030 
Derivative credit valuation adjustment204 202 (358)(351)(736)
Core net income, excluding PPP
$44,993 $48,412 $78,972 $48,432 $52,562 
Average total assets
$21,052,920 $20,717,362 $20,514,366 $20,056,020 $19,129,330 
Core return on average assets, excluding PPP0.87 %0.93 %1.53 %0.97 %1.11 %










24


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)
Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP net income$53,721 $28,711 $63,912 $58,650 $76,761 
Reconciling items:
Income tax expense
14,563 7,136 17,899 18,896 19,332 
Provision (benefit) for credit losses
19,603 28,216 (7,994)23,847 15,997 
Provision (benefit) for credit losses on unfunded commitments280 153 254 608 (109)
Severance expense809 — 1,363 — — 
Impairments on fixed assets and leases109 — 162 914 286 
Loss on sale of consumer installment loans— — 23,465 — — 
(Gains) losses on investment securities(62)16,909 2,394 3,232 1,339 
Derivative credit valuation adjustment259 252 (461)(455)(957)
Adjusted net income - pre-tax pre-provision
$89,282 $81,377 $100,994 $105,692 $112,649 
Average total assets
$21,052,920 $20,717,362 $20,514,366 $20,056,020 $19,129,330 
Adjusted ROAA - pre-tax pre-provision1.72 %1.56 %1.95 %2.11 %2.39 %
Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision, excluding PPP - Customers Bancorp
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP net income$53,721 $28,711 $63,912 $58,650 $76,761 
Less: PPP net income (loss) (after tax)9,606 (5,956)5,846 13,066 24,713 
Net income, excluding PPP44,115 34,667 58,066 45,584 52,048 
Reconciling items:
Income tax expense
14,563 7,136 17,899 18,896 19,332 
Provision (benefit) for credit losses
19,603 28,216 (7,994)23,847 15,997 
Provision (benefit) for credit losses on unfunded commitments280 153 254 608 (109)
Severance expense809 — 1,363 — — 
Impairments on fixed assets and leases109 — 162 914 286 
Loss on sale of consumer installment loans— — 23,465 — — 
(Gains) losses on investment securities(62)16,909 2,394 3,232 1,339 
Derivative credit valuation adjustment259 252 (461)(455)(957)
Adjusted net income - pre-tax pre-provision, excluding PPP
$79,676 $87,333 $95,148 $92,626 $87,936 
Average total assets
$21,052,920 $20,717,362 $20,514,366 $20,056,020 $19,129,330 
Adjusted ROAA - pre-tax pre-provision, excluding PPP1.53 %1.67 %1.84 %1.85 %1.86 %

25


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)

Core Return on Average Common Equity - Customers Bancorp
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP net income to common shareholders$50,265 $25,623 $61,364 $56,519 $74,896 
Reconciling items (after tax):
Severance expense637 — 1,058 — — 
Impairments on fixed assets and leases86 — 126 705 220 
Loss on sale of consumer installment loans— — 18,221 — — 
(Gains) losses on investment securities(49)13,543 1,859 2,494 1,030 
Derivative credit valuation adjustment204 202 (358)(351)(736)
Core earnings$51,143 $39,368 $82,270 $59,367 $75,410 
Average total common shareholders' equity $1,273,780 $1,263,190 $1,259,711 $1,244,819 $1,252,022 
Core return on average common equity16.28 %12.36 %25.91 %19.13 %24.43 %


Adjusted ROCE - Pre-Tax Pre-Provision - Customers Bancorp
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP net income to common shareholders$50,265 $25,623 $61,364 $56,519 $74,896 
Reconciling items:
Income tax expense
14,563 7,136 17,899 18,896 19,332 
Provision (benefit) for credit losses
19,603 28,216 (7,994)23,847 15,997 
Provision (benefit) for credit losses on unfunded commitments280 153 254 608 (109)
Severance expense809 — 1,363 — — 
Impairments on fixed assets and leases109 — 162 914 286 
Loss on sale of consumer installment loans— — 23,465 — — 
(Gains) losses on investment securities(62)16,909 2,394 3,232 1,339 
Derivative credit valuation adjustment259 252 (461)(455)(957)
Pre-tax pre-provision adjusted net income available to common shareholders$85,826 $78,289 $98,446 $103,561 $110,784 
Average total common shareholders' equity$1,273,780 $1,263,190 $1,259,711 $1,244,819 $1,252,022 
Adjusted ROCE - pre-tax pre-provision27.33 %24.59 %31.01 %33.37 %35.89 %







26


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)
Net Interest Margin, Tax Equivalent, excluding PPP - Customers Bancorp
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP net interest income$149,899 $135,137 $159,032 $164,852 $164,699 
PPP net interest (income) expense(14,106)2,791 (9,632)(18,946)(34,615)
Tax-equivalent adjustment375 342 334 270 239 
Net interest income, tax equivalent, excluding PPP$136,168 $138,270 $149,734 $146,176 $130,323 
GAAP average total interest earning assets$20,514,677 $20,211,028 $20,021,455 $19,525,936 $18,572,308 
Average PPP loans(889,235)(1,065,919)(1,349,403)(1,863,429)(2,641,318)
Adjusted average total interest earning assets, excluding PPP$19,625,442 $19,145,109 $18,672,052 $17,662,507 $15,930,990 
Net interest margin, tax equivalent, excluding PPP2.80 %2.87 %3.18 %3.32 %3.32 %

Loan Yield, excluding PPP
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
Interest income on loans and leases$255,913 $218,740 $200,457 $168,941 $157,175 
PPP interest income(23,551)(7,249)(14,666)(20,572)(36,894)
Interest income on core loans (Loans and leases, excluding PPP)$232,362 $211,491 $185,791 $148,369 $120,281 
Average total loans and leases$15,477,973 $15,388,003 $15,653,983 $14,918,498 $13,656,991 
Average PPP loans(889,235)(1,065,919)(1,349,403)(1,863,429)(2,641,318)
Adjusted average total loans and leases$14,588,738 $14,322,084 $14,304,580 $13,055,069 $11,015,673 
Loan yield, excluding PPP6.46 %5.86 %5.15 %4.56 %4.43 %

Core Efficiency Ratio - Customers Bancorp
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP net interest income$149,899 $135,137 $159,032 $164,852 $164,699 
GAAP non-interest income$18,121 $7,345 $(9,017)$12,746 $21,198 
Loss on sale of consumer installment loans— — 23,465 — — 
(Gains) losses on investment securities(62)16,909 2,394 3,232 1,339 
Derivative credit valuation adjustment259 252 (461)(455)(957)
Core non-interest income18,318 24,506 16,381 15,523 21,580 
Core revenue$168,217 $159,643 $175,413 $180,375 $186,279 
GAAP non-interest expense$80,133 $78,419 $76,198 $76,205 $73,807 
Severance expense(809)— (1,363)— — 
Impairments on fixed assets and leases(109)— (162)(914)(286)
Core non-interest expense$79,215 $78,419 $74,673 $75,291 $73,521 
Core efficiency ratio (1)
47.09 %49.12 %42.57 %41.74 %39.47 %
(1) Core efficiency ratio calculated as core non-interest expense divided by core revenue.
27


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)
Tangible Common Equity to Tangible Assets - Customers Bancorp
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP total shareholders' equity$1,421,020 $1,402,961 $1,386,931 $1,353,390 $1,377,406 
Reconciling items:
   Preferred stock(137,794)(137,794)(137,794)(137,794)(137,794)
   Goodwill and other intangibles(3,629)(3,629)(3,629)(3,629)(3,678)
Tangible common equity$1,279,597 $1,261,538 $1,245,508 $1,211,967 $1,235,934 
GAAP total assets$21,751,614 $20,896,112 $20,367,621 $20,251,996 $19,163,708 
Reconciling items:
Goodwill and other intangibles(3,629)(3,629)(3,629)(3,629)(3,678)
Tangible assets$21,747,985 $20,892,483 $20,363,992 $20,248,367 $19,160,030 
Tangible common equity to tangible assets5.9 %6.0 %6.1 %6.0 %6.5 %

Tangible Common Equity to Tangible Assets, excluding PPP - Customers Bancorp
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP total shareholders' equity$1,421,020 $1,402,961 $1,386,931 $1,353,390 $1,377,406 
Reconciling items:
   Preferred stock(137,794)(137,794)(137,794)(137,794)(137,794)
   Goodwill and other intangibles(3,629)(3,629)(3,629)(3,629)(3,678)
Tangible common equity$1,279,597 $1,261,538 $1,245,508 $1,211,967 $1,235,934 
GAAP total assets$21,751,614 $20,896,112 $20,367,621 $20,251,996 $19,163,708 
Loans receivable, PPP(246,258)(998,153)(1,154,632)(1,570,160)(2,195,902)
Total assets, excluding PPP$21,505,356 $19,897,959 $19,212,989 $18,681,836 $16,967,806 
Reconciling items:
Goodwill and other intangibles(3,629)(3,629)(3,629)(3,629)(3,678)
Tangible assets, excluding PPP$21,501,727 $19,894,330 $19,209,360 $18,678,207 $16,964,128 
Tangible common equity to tangible assets, excluding PPP6.0 %6.3 %6.5 %6.5 %7.3 %

Tangible Book Value per Common Share - Customers Bancorp
(Dollars in thousands except share and per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
GAAP total shareholders' equity$1,421,020 $1,402,961 $1,386,931 $1,353,390 $1,377,406 
Reconciling Items:
   Preferred stock(137,794)(137,794)(137,794)(137,794)(137,794)
   Goodwill and other intangibles(3,629)(3,629)(3,629)(3,629)(3,678)
Tangible common equity$1,279,597 $1,261,538 $1,245,508 $1,211,967 $1,235,934 
Common shares outstanding31,239,750 32,373,697 32,475,502 32,449,486 32,957,847 
Tangible book value per common share$40.96 $38.97 $38.35 $37.35 $37.50 

Core Loans (Total Loans and Leases, excluding PPP)
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
Total loans and leases$15,063,034 $15,794,671 $15,336,688 $15,664,353 $14,073,518 
Loans receivable, PPP(246,258)(998,153)(1,154,632)(1,570,160)(2,195,902)
Core Loans (Total loans and leases, excluding PPP)$14,816,776 $14,796,518 $14,182,056 $14,094,193 $11,877,616 
28


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)
Core Loans Held for Investment
(Total Loans and Leases Held for Investment, excluding PPP)
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
Total loans and leases, held for investment$14,638,977 $15,466,359 $15,331,464 $15,657,758 $14,070,515 
Loans receivable, PPP(246,258)(998,153)(1,154,632)(1,570,160)(2,195,902)
Core Loans Held for Investment
(Total loans and leases held for investment, excluding PPP)		$14,392,719 $14,468,206 $14,176,832 $14,087,598 $11,874,613 

Total Assets, excluding PPP
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
Total assets$21,751,614 $20,896,112 $20,367,621 $20,251,996 $19,163,708 
Loans receivable, PPP(246,258)(998,153)(1,154,632)(1,570,160)(2,195,902)
Total assets, excluding PPP$21,505,356 $19,897,959 $19,212,989 $18,681,836 $16,967,806 

Coverage of credit loss reserves for loans and leases held for investment, excluding PPP
(Dollars in thousands except per share data)Q1 2023Q4 2022Q3 2022Q2 2022Q1 2022
Loans and leases receivable$13,391,610 $14,143,047 $13,762,374 $13,783,155 $12,314,757 
Loans receivable, PPP(246,258)(998,153)(1,154,632)(1,570,160)(2,195,902)
Loans and leases held for investment, excluding PPP$13,145,352 $13,144,894 $12,607,742 $12,212,995 $10,118,855 
Allowance for credit losses on loans and leases$130,281 $130,924 $130,197 $156,530 $145,847 
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP0.99 %1.00 %1.03 %1.28 %1.44 %



29