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Customers Bancorp, Inc. (CUBB) SEC Filing 8-K Material Event for the period ending Wednesday, October 26, 2022

Customers Bancorp, Inc.

CIK: 1488813 Ticker: CUBB

Exhibit 99.1
customersbancorp_logoxprima.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 Third Quarter 2022

Third Quarter 2022 Results
EarningsEarnings Per ShareReturn on AssetsReturn on Common Equity
$61.4 million
$1.85
1.24%
19.33%
Net Income
Diluted Earnings Per Share
ROAA
ROCE
$82.3 million
$2.48
1.64%
25.91%
Core Earnings*
Core Earnings Per Diluted Share*
Core ROAA*
Core ROCE*
$76.4 million
$2.30
1.95%
31.01%
Core Earnings, excluding PPP*
Core Earnings Per Diluted Share, excluding PPP*
Pre-tax and Pre-provision Adjusted ROAA*Pre-tax and Pre-provision Adjusted ROCE*

Third Quarter 2022 Highlights
Q3 2022 net income available to common shareholders was $61.4 million, or $1.85 per diluted share; ROAA was 1.24% and ROCE was 19.33%.
Q3 2022 core earnings* were $82.3 million, or $2.48 per diluted share; Core ROAA* was 1.64% and Core ROCE* was 25.91%.
Q3 2022 core earnings excluding Paycheck Protection Program* ("PPP") were $76.4 million, or $2.30 per diluted share, up 134.9% over Q3 2021, and bringing year-to-date core earnings (excluding PPP)* to $5.15.
Q3 2022 adjusted pre-tax pre-provision net income* was $101.0 million; ROAA* was 1.95%, ROCE* was 31.01%.
Year-over-year loan growth (excluding loans to mortgage companies and PPP*) was $4.5 billion, or 57.3%, led by our low-risk variable rate specialty lending verticals.


*Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.
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Year-over-year deposit growth was $551.4 million, up 3.2%. Total demand deposits increased $141.0 million, or 1.4% year-over-year. Time deposits increased $1.3 billion, or 220.0%. CBIT-related deposits had a balance of $1.9 billion at September 30, 2022, down $191.7 million from June 30, 2022.
Q3 2022 net interest margin, tax equivalent* was 3.16%. Q3 2022 net interest margin, tax equivalent, excluding the impact of PPP loans* was 3.18%.
Onboarded 111 new CBIT customers in Q3 2022, bringing total customers to 301.
Total operating expenses were flat in Q3 2022 compared to Q2 2022 and down $3.8 million over Q3 2021.
Q3 2022 benefit to provision for credit losses on loans and leases of $7.8 million was largely driven by the sale of $500.0 million of consumer installment loans, offset in part by the impact of loan growth and our recognition of weaker macroeconomic forecasts.
Non-performing assets were $28.0 million, or 0.14% of total assets, at September 30, 2022 compared to $28.2 million, or 0.14% of total assets, at June 30, 2022 and $52.4 million, or 0.27% of total assets, at September 30, 2021. Allowance for credit losses on loans and leases equaled 466% of non-performing loans at September 30, 2022, compared to 558% at June 30, 2022 and 253% at September 30, 2021.
Extended one-year common stock repurchase program an additional year, resulting in approximately 2.0 million shares available to be repurchased through September 2023.
Tangible book value per share* grew year over year by $3.23, or 9.2%, despite increased AOCI losses of $157.6 million over the same time period. Tangible book value per share* has grown by 74.5% over the past 5 years.

CEO Commentary
West Reading, PA, October 26, 2022 - “We delivered another solid quarter and are extremely pleased with our third quarter results despite the challenging interest rate and economic environment,” remarked Customers Bancorp Chairman and CEO, Jay Sidhu. “We remain laser focused on our responsible organic growth strategy and have taken prudent risk management strategic actions over the past several quarters to ensure we are well positioned from a capital, credit, liquidity and earnings perspective. We are also pleased to report that we have already beat our 2022 core earnings per share, excluding PPP* target of $4.75 - $5.00. Core earnings per share, excluding PPP* for third quarter 2022 were $2.30, bringing year-to-date September 2022 core earnings per share, excluding PPP* to $5.15. In addition, core ROAA* was 1.64% and core ROCE* was 25.91% for the third quarter. Q3 2022 net interest income generated by the core bank was up 2% (~10% annualized) over Q2 2022 and 38% year-over-year. Core loan growth was led by increases in low-risk variable rate specialty lending verticals of $0.5 billion, which were largely offset by a decline in loans to mortgage companies of $0.3 billion and a sale of $0.5 billion of consumer installment loans executed as part of our balance sheet optimization initiatives. Asset quality remains exceptional and credit reserves are robust. Our loan and deposit pipelines remain strong and we are very focused on maintaining our margins, moderating our growth, improving our capital ratios, and controlling our expenses. We remain very optimistic about our future,” Mr. Jay Sidhu continued.
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Financial Highlights
(Dollars in thousands, except per share data)
At or Three Months EndedIncrease (Decrease)Nine Months EndedIncrease (Decrease)
September 30, 2022September 30, 2021September 30, 2022September 30, 2021
Profitability Metrics:
Net income available for common shareholders$61,364 $110,241 $(48,877)(44.3)%$192,779 $201,487 $(8,708)(4.3)%
Diluted earnings per share$1.85 $3.25 $(1.40)(43.1)%$5.72 $6.02 $(0.30)(5.0)%
Core earnings*$82,270 $113,876 $(31,606)(27.8)%$217,047 $243,487 $(26,440)(10.9)%
Core earnings per share*$2.48 $3.36 $(0.88)(26.2)%$6.44 $7.27 $(0.83)(11.4)%
Core earnings, excluding PPP*$76,424 $32,539 $43,885 134.9 %$173,422 $112,759 $60,663 53.8 %
Core earnings per share, excluding PPP*$2.30 $0.96 $1.34 139.6 %$5.15 $3.37 $1.78 52.8 %
Return on average assets ("ROAA")1.24 %2.33 %(1.09)1.34 %1.49 %(0.15)
Core ROAA*1.64 %2.35 %(0.71)1.50 %1.76 %(0.26)
Return on average common equity ("ROCE")19.33 %40.82 %(21.49)20.58 %26.99 %(6.41)
Core ROCE*25.91 %42.16 %(16.25)23.17 %32.61 %(9.44)
Adjusted pre-tax pre-provision net income*$100,994 $167,215 $(66,221)(39.6)%$319,335 $340,451 $(21,116)(6.2)%
Net interest margin, tax equivalent*3.16 %4.59 %(1.43)3.38 %3.55 %(0.17)
Net interest margin, tax equivalent, excluding PPP loans*3.18 %3.24 %(0.06)3.27 %3.17 %0.10 
Loan yield, excluding PPP*5.15 %4.42 %0.73 4.75 %4.36 %0.39 
Cost of deposits1.48 %0.42 %1.06 0.80 %0.47 %0.33 
Efficiency ratio50.00 %33.42 %16.58 43.46 %41.07 %2.39 
Core efficiency ratio*42.57 %30.36 %12.21 41.23 %37.31 %3.92 
Balance Sheet Trends:
Total assets$20,367,621 $19,108,922 $1,258,699 6.6 %
Total assets, excluding PPP*$19,212,989 $14,151,565 $5,061,424 35.8 %
Total loans and leases$15,336,688 $15,515,537 $(178,849)(1.2)%
Total loans and leases, excluding PPP*$14,182,056 $10,558,180 $3,623,876 34.3 %
Non-interest bearing demand deposits$2,993,793 $4,954,331 $(1,960,538)(39.6)%
Total deposits$17,522,438 $16,971,025 $551,413 3.2 %
Capital Metrics:
Common Equity$1,249,137 $1,146,505 $102,632 9.0 %
Tangible Common Equity*$1,245,508 $1,142,711 $102,797 9.0 %
Tangible Common Equity to Tangible Assets*6.12 %5.98 %0.14 
Tangible Common Equity to Tangible Assets, excluding PPP*6.48 %8.08 %(1.60)
Tangible Book Value per common share*$38.35 $35.12 $3.23 9.2 %
Common equity Tier 1 capital ratio (1)
10.1 %10.4 %(0.3)
Total risk based capital ratio (1)
12.8 %13.6 %(0.8)
(1) Regulatory capital ratios as of September 30, 2022 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 is included at the end of this document.
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Customers Bank Instant Token (CBITTM)
"Despite significant market volatility that continues in the digital asset space, we are very pleased with our progress to date. In Q3 2022, we onboarded 111 new CBIT-related customers to the Digital Bank, once again beating our internal target, and bringing total customers to 301. Our digital asset-related deposits have stabilized and ended the third quarter at $1.9 billion. We continue to expect digital asset-related deposits to grow in fourth quarter 2022 as our pipelines remain strong, giving us an opportunity to further transform our deposits into a high quality, low-cost, stable and growing deposit franchise. We believe our technology, compliance and customer service and support systems remain among the best in the country," commented Mr. Sam Sidhu, President and CEO of Customers Bank.
Paycheck Protection Program (PPP)
We funded, either directly or indirectly, about 256,000 PPP loans totaling $5.2 billion in 2021, bringing total PPP loans funded to approximately 358,000 and $10.3 billion. We also earned close to $350 million of deferred origination fees from the SBA through the PPP loans, which is significantly accretive to our earnings and capital levels as these loans are forgiven by the government. In Q3 2022, we recognized $11 million of these fees in earnings, bringing total fees recognized to date to $318 million, resulting in approximately $30 million remaining to be recognized throughout 2022 and early 2023. "As we've stated previously, it is difficult to predict the timing of PPP forgiveness. We expect most of the fees to be recognized over the next two quarters," commented Customers Bancorp CFO, Carla Leibold.
Key Balance Sheet Trends
Loans and Leases
The following table presents the composition of total loans and leases as of the dates indicated:
(Dollars in thousands)September 30, 2022% of TotalJune 30, 2022% of TotalSeptember 30, 2021% of Total
Commercial:
Specialty lending$5,103,974 33.3 %$4,599,640 29.4 %$1,736,966 11.2 %
Other commercial & industrial1,064,332 7.0 1,037,443 6.6 867,401 5.6 
Multi-family2,267,376 14.8 2,012,920 12.9 1,387,166 8.9 
Loans to mortgage companies1,708,587 11.1 1,975,189 12.6 2,626,483 16.9 
Commercial real estate owner occupied726,670 4.7 710,577 4.5 656,044 4.2 
Loans receivable, PPP1,154,632 7.5 1,570,160 10.0 4,957,357 32.0 
Commercial real estate non-owner occupied1,263,211 8.2 1,152,869 7.4 1,144,643 7.4 
Construction136,133 0.9 195,687 1.2 198,607 1.3 
Total commercial loans and leases13,424,915 87.5 13,254,485 84.6 13,574,667 87.5 
Consumer:
Residential466,888 3.0 460,228 2.9 260,820 1.7 
Manufactured housing46,990 0.3 48,570 0.3 55,635 0.3 
Personal1,079,267 7.0 1,641,748 10.5 1,342,650 8.7 
Other318,628 2.2 259,322 1.7 281,765 1.8 
Total consumer loans1,911,773 12.5 2,409,868 15.4 1,940,870 12.5 
Total loans and leases$15,336,688 100.0 %$15,664,353 100.0 %$15,515,537 100.0 %
C&I loans and leases, including specialty lending, increased $3.6 billion, or 136.8% year-over-year, to $6.2 billion. Practically all of the increases in outstanding balances were in the low-risk variable rate secured categories of Fund Finance and Lender Finance. Multi-family loans increased $880.2 million, or 63.5%, to $2.3 billion, residential loans increased $206.1 million, or 79.0%, to $466.9 million, commercial real estate non-owner occupied loans increased $118.6 million, or 10.4% year-over-year to $1.3 billion and commercial real estate owner occupied loans increased $70.6 million, or 10.8%, to $726.7 million. These increases in loans and leases were partially offset by a decrease in total consumer installment loans of $226.5 million, or 13.9%, to $1.4 billion primarily due to the sale of a $500.0 million of consumer installment loans and a decrease in construction loans of $62.5 million, or 31.5%, to $136.1 million.
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Allowance for Credit Losses on Loans and Leases
The following table presents allowance for credit losses on loans and leases (information as of the dates and periods indicated):
At or Three Months EndedIncrease (Decrease)At or Three Months EndedIncrease (Decrease)
(Dollars in thousands)September 30, 2022June 30, 2022September 30, 2022September 30, 2021
Allowance for credit losses on loans and leases$130,197 $156,530 $(26,333)$130,197 $131,496 $(1,299)
Provision (benefit) for credit losses on loans and leases(7,836)24,164 (32,000)(7,836)13,164 (21,000)
Net charge-offs (recoveries)18,498 13,481 5,017 18,498 7,104 11,394 
Annualized net charge-offs (recoveries) to average loans and leases0.47 %0.36 %0.47 %0.17 %
Coverage of credit loss reserves for loans and leases held for investment0.95 %1.14 %0.95 %1.02 %
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP*1.03 %1.28 %1.03 %1.65 %
*Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.
The increase in net charge-offs in Q3 2022 compared to Q2 2022 was primarily due to a partial charge-off of $7.0 million for one performing commercial real estate collateral dependent loan that we felt prudent in exiting at this time. Our consumer net charge-offs were flat in Q3 2022 compared to Q2 2022.
Provision (Benefit) for Credit Losses
Three Months EndedIncrease (Decrease)
(Dollars in thousands)September 30, 2022June 30, 2022
Provision (benefit) for credit losses on loans and leases$(7,836)$24,164 $(32,000)
Provision (benefit) for credit losses on unfunded commitments254 608 (354)
Provision (benefit) for credit losses on available for sale debt securities(158)(317)159 
Total provision (benefit) for credit losses$(7,740)$24,455 $(32,195)
The benefit to provision for credit losses on loans and leases in Q3 2022 was $7.8 million, compared to provision expense of $24.2 million in Q2 2022. The benefit to provision in Q3 2022 was primarily due to the sale of $500.0 million of unsecured consumer installment loans in connection with the Company's balance sheet optimization initiatives, partially offset by loan growth and our recognition of weaker macroeconomic forecasts. This sale transaction resulted in approximately $36.8 million of release in allowance for credit losses, which is included in core earnings*. The benefit to provision for credit losses on available for sale investment securities in Q3 2022 was $0.2 million compared to $0.3 million in Q2 2022.
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Asset Quality
The following table presents asset quality metrics as of the dates indicated:
(Dollars in thousands)September 30, 2022June 30, 2022Increase (Decrease)September 30, 2022September 30, 2021Increase (Decrease)
Non-performing assets ("NPAs"):
Nonaccrual / non-performing loans ("NPLs")$27,919 $28,064 $(145)$27,919 $52,041 $(24,122)
Non-performing assets27,965 28,150 (185)27,965 52,377 (24,412)
NPLs to total loans and leases (1)
0.18 %0.18 %0.18 %0.34 %
Reserves to NPLs (1)
466.34 %557.76 %466.34 %252.68 %
NPAs to total assets0.14 %0.14 %0.14 %0.27 %
Loans and leases risk ratings:
Commercial loans and leases (1)
Pass$10,262,647 $9,355,846 $906,801 $10,262,647 $5,586,462 $4,676,185 
Special Mention104,560 106,566 (2,006)104,560 195,663 (91,103)
Substandard329,878 343,175 (13,297)329,878 260,271 69,607 
Total commercial loans and leases10,697,085 9,805,587 891,498 10,697,085 6,042,396 4,654,689 
Consumer loans
Performing1,893,977 2,392,852 (498,875)1,893,977 1,912,393 (18,416)
Non-performing16,680 14,556 2,124 16,680 15,810 870 
Total consumer loans1,910,657 2,407,408 (496,751)1,910,657 1,928,203 (17,546)
Loans and leases receivable$12,607,742 $12,212,995 $394,747 $12,607,742 $7,970,599 $4,637,143 
(1)    Excludes loan receivable, PPP, as PPP loans are fully guaranteed by the Small Business Administration.
Over the last decade, we have developed a suite of commercial loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s C&I, loans to mortgage companies, corporate and specialty lending lines of business, and multi-family loans for example, are characterized by conservative underwriting standards and low loss rates. Because of this emphasis, the Bank’s credit quality to date has been incredibly healthy despite a highly adverse economic environment. Maintaining strong asset quality also requires a highly active portfolio monitoring process. In addition to frequent client outreach and monitoring at the individual loan level, we employ a bottom-up data driven approach to analyze the commercial portfolio. Exposure to industry segments and CRE significantly impacted by COVID-19 initially is not substantial.
Total consumer installment loans were approximately 6.9% of total assets at September 30, 2022 and 9.9% of core loans* were supported by an allowance for credit losses of $71.7 million. At September 30, 2022, our consumer installment portfolio had the following characteristics: average original FICO score of 736, average debt-to-income of 17.9% and average borrower income of $106 thousand.
Non-performing loans at September 30, 2022 were essentially flat at 0.18% of total loans and leases, compared to 0.18% at June 30, 2022 and 0.34% at September 30, 2021.
Deposits
The following table presents the composition of our deposit portfolio as of the dates indicated:
(Dollars in thousands)September 30, 2022% of TotalJune 30, 2022% of TotalSeptember 30, 2021% of Total
Demand, non-interest bearing$2,993,793 17.1 %$4,683,030 27.6 %$4,954,331 29.2 %
Demand, interest bearing7,124,663 40.7 6,644,398 39.2 5,023,081 29.6 
Total demand deposits10,118,456 57.8 11,327,428 66.8 9,977,412 58.8 
Savings592,002 3.4 640,062 3.8 1,310,343 7.7 
Money market4,913,967 28.0 4,254,205 25.1 5,090,121 30.0 
Time deposits1,898,013 10.8 723,024 4.3 593,149 3.5 
Total deposits$17,522,438 100.0 %$16,944,719 100.0 %$16,971,025 100.0 %
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Total deposits increased $551.4 million, or 3.2%, to $17.5 billion at September 30, 2022 as compared to a year ago. Time deposits increased $1.3 billion, or 220.0%, to $1.9 billion and total demand deposits increased $141.0 million, or 1.4%, to $10.1 billion. These increases were offset partially by decreases in savings deposits of $718.3 million, or 54.8%, to $592.0 million and money market deposits of $176.2 million, or 3.5%, to $4.9 billion. The total cost of deposits increased by 106 basis points to 1.48% in Q3 2022 from 0.42% in the prior year primarily due to higher market interest rates and a shift in deposit mix.
Capital
The following table presents certain capital amounts and ratios as of the dates indicated:
(Dollars in thousands except per share data)September 30, 2022June 30, 2022September 30, 2021
Customers Bancorp, Inc.
Common Equity$1,249,137 $1,215,596 $1,146,505 
Tangible Common Equity*1,245,508 1,211,967 1,142,711 
Tangible Common Equity to Tangible Assets*6.12 %5.99 %5.98 %
Tangible Common Equity to Tangible Assets, excluding PPP*6.48 %6.49 %8.08 %
Tangible Book Value per common share*$38.35 $37.35 $35.12 
Common equity Tier 1 capital ratio (1)
10.1 %9.7 %10.4 %
Total risk based capital ratio (1)
12.8 %12.6 %13.6 %
(1) Regulatory capital ratios as of September 30, 2022 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 is included at the end of this document.
Customers Bancorp's tangible common equity* increased $102.8 million to $1.2 billion at September 30, 2022 compared to a year ago, as earnings of $291.4 million more than offset a negative impact to accumulated other comprehensive income ("AOCI") from increased unrealized losses on investment securities of $157.6 million (net of taxes). Similarly, tangible book value per common share* increased to $38.35 at September 30, 2022 from $35.12 at September 30, 2021. Customers remains well capitalized by all regulatory measures.
At the Customers Bancorp level, the total risk based capital ratio (estimate) and tangible common equity to tangible assets ratio ("TCE ratio"), excluding PPP loans*, were 12.8% and 6.48%, respectively, at September 30, 2022. "We expect our TCE ratio to be about 7.5% over the next 3 - 4 quarters, supported by growth in retained earnings and prudent balance sheet management," stated Mr. Sam Sidhu.
At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At September 30, 2022, estimated Tier 1 capital and total risk-based capital were 11.7% and 13.0%, respectively.
Key Profitability Trends
Net Interest Income
Net interest income totaled $159.0 million in Q3 2022, a decrease of $5.8 million from Q2 2022, primarily due to lower PPP interest income of $5.9 million resulting from reduced recognition of deferred fees of $4.8 million driven by lower loan forgiveness in Q3 2022. This decrease was offset in part by increased net interest income earned by the core bank of $3.5 million, up 2% (~10% annualized) over Q2 2022, including increased interest income on investment securities and core loans* of $5.1 million and $37.4 million, respectively, mostly due to higher average balances. In addition, higher expenses paid on deposits, fed funds, FHLB advances and other borrowings of $45.4 million resulted mainly from a shift in deposit mix and higher interest rates during Q3 2022. Excluding PPP loans, average interest-earning assets increased $1.0 billion. Interest-earning asset growth was primarily driven by increases in C&I loans and leases, mostly in specialty lending, and some lower-yielding multi-family loans that didn't close until Q3 2022. Compared to Q2 2022, total loan yields increased 54 basis points to 5.08% primarily due to higher interest rates on variable rate loans in specialty lending. Excluding PPP loans, the Q3 2022 total loan yield was 59 basis points higher than Q2 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)
(Dollars in thousands)September 30, 2022June 30, 2022
Interchange and card revenue$72 $24 $48 
Deposit fees989 964 25 
Commercial lease income7,097 6,592 505 
Bank-owned life insurance 3,449 1,947 1,502 
Mortgage warehouse transactional fees1,545 1,883 (338)
Gain (loss) on sale of SBA and other loans106 1,542 (1,436)
Loss on sale of consumer installment loans (23,465)— (23,465)
Loan fees3,008 2,618 390 
Mortgage banking income (loss)125 173 (48)
Gain (loss) on sale of investment securities(2,135)(3,029)894 
Unrealized gain (loss) on investment securities(259)(203)(56)
Unrealized gain (loss) on derivatives563 821 (258)
Other(112)(586)474 
Total non-interest income$(9,017)$12,746 $(21,763)
Non-interest income totaled $(9.0) million for Q3 2022, a decrease of $21.8 million compared to Q2 2022. The decrease was primarily due to $23.5 million of loss realized from the sale of $500 million of consumer installment loans as part of our balance sheet optimization initiatives, which included the write-off of deferred origination costs and other transaction-related expenses, and lower gains realized on sales of SBA loans in Q3 2022 compared to Q2 2022, partially offset by higher bank-owned life insurance income primarily due to death benefits, lower realized losses from the sale of investment securities and higher commercial lease income and loan fees from continued growth.
Non-Interest Expense
The following table presents details of non-interest expense for the periods indicated:
Three Months EndedIncrease (Decrease)
(Dollars in thousands)September 30, 2022June 30, 2022
Salaries and employee benefits$31,230 $25,334 $5,896 
Technology, communication and bank operations19,588 22,738 (3,150)
Professional services6,269 7,415 (1,146)
Occupancy2,605 4,279 (1,674)
Commercial lease depreciation5,966 5,552 414 
FDIC assessments, non-income taxes and regulatory fees2,528 1,619 909 
Loan servicing3,851 4,341 (490)
Loan workout217 179 38 
Advertising and promotion762 353 409 
Other3,182 4,395 (1,213)
Total non-interest expense$76,198 $76,205 $(7)
The management of non-interest expenses remains a priority for us. However, this will not be at the expense of not making adequate investments with new technologies to support efficient and responsible growth.
Non-interest expenses totaled $76.2 million in Q3 2022, relatively unchanged from Q2 2022 and $3.8 million lower than Q3 2021. The offsetting items this quarter included a $3.2 million decrease in technology, processing and deposit servicing-related expenses mostly due to lower deposit servicing fees paid to BM Technologies, $1.7 million decrease in occupancy mostly due to $0.9 million of impairment charges for consolidation of five branches into other existing locations in Southeastern Pennsylvania recorded in Q2 2022 and $1.1 million decrease in professional fees primarily associated with the PPP loan forgiveness. These decreases were offset in part by higher salaries and employee benefits of $5.9 million primarily due to higher average headcount, incentives and $1.4 million in one-time severance expenses.
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Taxes
Income tax expense from continuing operations decreased by $1.0 million to $17.9 million in Q3 2022 from $18.9 million in Q2 2022 primarily due to higher investment tax credits and death benefits on bank owned life insurance policies. The effective tax rate from continuing operations for Q3 2022 and for the nine months ended September 30, 2022 was 22%. Customers expects the full-year 2022 effective tax rate from continuing operations to be approximately 21% to 23%.
Outlook
“Looking ahead, we envision moderate sustainable and responsible organic core growth, maintenance of our margins, improved capital ratios, and higher profitability and are very optimistic about the prospects of our company. We are focused on improving the quality of our balance sheet and deposit franchise and are not focused on growth just for the sake of growth. With about $500 million of loan growth expected in our low-risk specialty lending verticals in fourth quarter 2022, we will have mostly completed our portfolio remix into lower credit risk variable rate loans. As such, we believe that our margin will likely trough in 2022 and we expect margin expansion in 2023 or through the projected rate-hike cycle. Through a combination of revenue growth and prudent expense management, we expect our efficiency ratio to be in the low to mid 40's by early 2023. Customers Bancorp stock at the close of business on October 21, 2022 was trading at $31.17, only 0.8 times tangible book value* at September 30, 2022. Even after selling $500 million of higher yielding consumer installment loans, we continue to expect over $6.00 of core earnings in 2023, two to three years ahead of our previous guidance of $6.00 by 2025/2026,” concluded Mr. Jay Sidhu.

















*Non-GAAP measure. Customers' reasons for the use of the non-GAAP measure and a detailed reconciliation between the non-GAAP measure and the comparable GAAP amount is included at the end of this document.
9


Webcast
Date:            Thursday, October 27, 2022        
Time:            9:00 AM EDT
The live audio webcast, presentation slides, and earnings press release will be made available at https://www.customersbank.com/investor-relations/ and at the Customers Bancorp 3rd 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 multi-family lending, Customers Bank also provides a number of national corporate banking services for Lender Finance, Fund Finance, Financial Institutions, Technology and Venture, and Healthcare clients. Major accolades include:
#3 top-performing bank with over $10 billion in assets at year-end 2021 per S&P Global S&P Global Market Intelligence,
#6 in top-performing banks with assets between $10 billion and 50 billion in 2021 per American Banker, and
#21 out of the 100 largest publicly traded banks in 2022 per Forbes.
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 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
10


such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2021, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.
11


Q3 2022 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended September 30, 2022 and the preceding four quarters:
CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED
(Dollars in thousands, except per share data and stock price data)
Q3Q2Q1Q4Q3Nine Months Ended September 30,
2022202220222021202120222021
GAAP Profitability Metrics:
Net income available to common shareholders
(from continuing and discontinued operations)
$61,364 $56,519 $74,896 $98,647 $110,241 $192,779 $201,487 
Per share amounts:
Earnings per share - basic
$1.89 $1.73 $2.27 $3.02 $3.40 $5.89 $6.26 
Earnings per share - diluted$1.85 $1.68 $2.18 $2.87 $3.25 $5.72 $6.02 
Book value per common share (1)
$38.46 $37.46 $37.61 $37.32 $35.24 $38.46 $35.24 
CUBI stock price (1)
$29.48 $33.90 $52.14 $65.37 $43.02 $29.48 $43.02 
CUBI stock price as % of book value (1)
77 %90 %139 %175 %122 %77 %122 %
Average shares outstanding - basic32,455,814 32,712,616 32,957,033 32,625,960 32,449,853 32,706,652 32,206,547 
Average shares outstanding - diluted33,226,607 33,579,013 34,327,065 34,320,327 33,868,553 33,706,864 33,487,672 
Shares outstanding (1)
32,475,502 32,449,486 32,957,847 32,913,267 32,537,976 32,475,502 32,537,976 
Return on average assets ("ROAA")1.24 %1.17 %1.63 %2.08 %2.33 %1.34 %1.49 %
Return on average common equity ("ROCE")19.33 %18.21 %24.26 %33.18 %40.82 %20.58 %26.99 %
Efficiency ratio50.00 %42.14 %39.42 %38.70 %33.42 %43.46 %41.07 %
Non-GAAP Profitability Metrics (2):
Core earnings$82,270 $59,367 $75,410 $101,213 $113,876 $217,047 $243,487 
Adjusted pre-tax pre-provision net income$100,994 $105,692 $112,649 $130,595 $167,215 $319,335 $340,451 
Per share amounts:
Core earnings per share - diluted$2.48 $1.77 $2.20 $2.95 $3.36 $6.44 $7.27 
Tangible book value per common share (1)
$38.35 $37.35 $37.50 $37.21 $35.12 $38.35 $35.12 
CUBI stock price as % of tangible book value (1)
77 %91 %139 %176 %122 %77 %122 %
Core ROAA1.64 %1.23 %1.64 %2.13 %2.35 %1.50 %1.76 %
Core ROCE25.91 %19.13 %24.43 %34.04 %42.16 %23.17 %32.61 %
Adjusted ROAA - pre-tax and pre-provision1.95 %2.11 %2.39 %2.70 %3.36 %2.14 %2.37 %
Adjusted ROCE - pre-tax and pre-provision31.01 %33.37 %35.89 %43.25 %60.81 %33.40 %44.30 %
Net interest margin, tax equivalent 3.16 %3.39 %3.60 %4.14 %4.59 %3.38 %3.55 %
Net interest margin, tax equivalent, excluding PPP loans3.18 %3.32 %3.32 %3.12 %3.24 %3.27 %3.17 %
Core efficiency ratio42.57 %41.74 %39.47 %38.14 %30.36 %41.23 %37.31 %
Asset Quality:
Net charge-offs $18,498 $13,481 $7,226 $7,582 $7,104 $39,205 $26,216 
Annualized net charge-offs to average total loans and leases0.47 %0.36 %0.21 %0.21 %0.17 %0.36 %0.22 %
Non-performing loans ("NPLs") to total loans and leases (1)
0.18 %0.18 %0.31 %0.34 %0.34 %0.18 %0.34 %
Reserves to NPLs (1)
466.34 %557.76 %333.15 %277.72 %252.68 %466.34 %252.68 %
Non-performing assets ("NPAs") to total assets0.14 %0.14 %0.23 %0.25 %0.27 %0.14 %0.27 %
Customers Bank Capital Ratios (3):
Common equity Tier 1 capital to risk-weighted assets11.73 %11.46 %11.60 %11.83 %12.77 %11.73 %12.77 %
Tier 1 capital to risk-weighted assets 11.73 %11.46 %11.60 %11.83 %12.77 %11.73 %12.77 %
Total capital to risk-weighted assets 12.98 %12.91 %13.03 %13.11 %14.16 %12.98 %14.16 %
Tier 1 capital to average assets (leverage ratio) 8.10 %8.09 %8.21 %7.93 %8.66 %8.10 %8.66 %
(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 Q3 2022 and actual for the remaining periods. In accordance with regulatory capital rules, Customers elected to apply the CECL capital transition provisions which delayed the effects of CECL on regulatory capital for two years until January 1, 2022, followed by a three-year transition period. The cumulative CECL capital transition impact as of December 31, 2021 which amounted to $61.6 million will be phased in at 25% per year beginning on January 1, 2022 through December 31, 2024. As of September 30, 2022, our regulatory capital ratios reflected 75%, or $46.2 million, benefit associated with the CECL transition provisions.

12


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(Dollars in thousands, except per share data)Nine Months Ended
Q3Q2Q1Q4Q3September 30,
2022202220222021202120222021
Interest income:
Loans and leases$200,457 $168,941 $157,175 $198,000 $233,097 $526,573 $538,822 
Investment securities30,546 25,442 20,295 15,202 8,905 76,283 25,211 
Other4,913 1,951 6,006 835 849 12,870 2,814 
Total interest income235,916 196,334 183,476 214,037 242,851 615,726 566,847 
Interest expense:
Deposits65,380 22,781 13,712 15,415 15,915 101,873 47,226 
FHLB advances4,684 2,316 — 51 7,000 6,160 
Subordinated debt2,689 2,689 2,689 2,688 2,689 8,067 8,067 
FRB PPP liquidity facility, federal funds purchased and other borrowings4,131 3,696 2,376 2,189 4,350 10,203 14,014 
Total interest expense76,884 31,482 18,777 20,343 22,959 127,143 75,467 
Net interest income159,032 164,852 164,699 193,694 219,892 488,583 491,380 
Provision (benefit) for credit losses(7,994)23,847 15,997 13,890 13,164 31,850 13,536 
Net interest income after provision (benefit) for credit losses167,026 141,005 148,702 179,804 206,728 456,733 477,844 
Non-interest income:
Interchange and card revenue72 24 76 84 83 172 252 
Deposit fees989 964 940 1,026 994 2,893 2,748 
Commercial lease income7,097 6,592 5,895 5,378 5,213 19,584 15,729 
Bank-owned life insurance 3,449 1,947 8,326 1,984 1,988 13,722 6,432 
Mortgage warehouse transactional fees1,545 1,883 2,015 2,262 3,100 5,443 10,612 
Gain (loss) on sale of SBA and other loans106 1,542 1,507 2,493 5,359 3,155 8,834 
Loss on sale of consumer installment loans (23,465)— — — — (23,465)— 
Loan fees3,008 2,618 2,545 2,513 1,909 8,171 5,015 
Mortgage banking income (loss)125 173 481 262 425 779 1,274 
Gain (loss) on sale of investment securities(2,135)(3,029)(1,063)(49)6,063 (6,227)31,441 
Unrealized gain (loss) on investment securities(259)(203)(276)— — (738)2,720 
Loss on sale of foreign subsidiaries— — — — — — (2,840)
Unrealized gain (loss) on derivatives563 821 964 586 524 2,348 2,622 
Loss on cash flow hedge derivative terminations— — — — — — (24,467)
Other(112)(586)(212)452 (72)(910)504 
Total non-interest income(9,017)12,746 21,198 16,991 25,586 24,927 60,876 
Non-interest expense:
Salaries and employee benefits31,230 25,334 26,607 29,940 26,268 83,171 78,262 
Technology, communication and bank operations19,588 22,738 24,068 22,657 21,281 66,394 60,887 
Professional services6,269 7,415 6,956 7,058 6,871 20,640 19,630 
Occupancy2,605 4,279 3,050 4,336 2,704 9,934 7,807 
Commercial lease depreciation5,966 5,552 4,942 4,625 4,493 16,460 13,199 
FDIC assessments, non-income taxes and regulatory fees2,528 1,619 2,383 2,427 2,313 6,530 7,634 
Loan servicing3,851 4,341 2,371 4,361 4,265 10,563 6,402 
Merger and acquisition related expenses— — — — — — 418 
Loan workout217 179 (38)226 198 358 39 
Advertising and promotion762 353 315 344 302 1,430 1,176 
Deposit relationship adjustment fees— — — — 6,216 — 6,216 
Other3,182 4,395 3,153 5,574 5,098 10,730 11,089 
Total non-interest expense76,198 76,205 73,807 81,548 80,009 226,210 212,759 
Income before income tax expense81,811 77,546 96,093 115,247 152,305 255,450 325,961 
Income tax expense17,899 18,896 19,332 12,993 36,263 56,127 73,947 
Net income from continuing operations$63,912 $58,650 $76,761 $102,254 $116,042 $199,323 $252,014 
(continued)
13


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED (CONTINUED)
(Dollars in thousands, except per share data)Nine Months Ended
Q3Q2Q1Q4Q3September 30,
2022202220222021202120222021
Loss from discontinued operations before income taxes$— $— $— $— $— $— $(20,354)
Income tax expense (benefit) from discontinued operations— — — 1,585 — — 17,682 
Net loss from discontinued operations— — — (1,585)— — (38,036)
Net income63,912 58,650 76,761 100,669 116,042 199,323 213,978 
Preferred stock dividends2,548 2,131 1,865 2,022 2,981 6,544 9,671 
Loss on redemption of preferred stock— — — — 2,820 — 2,820 
Net income available to common shareholders$61,364 $56,519 $74,896 $98,647 $110,241 $192,779 $201,487 
Basic earnings per common share from continuing operations$1.89 $1.73 $2.27 $3.07 $3.40 $5.89 $7.44 
Basic earnings per common share1.89 1.73 2.27 3.02 3.40 5.89 6.26 
Diluted earnings per common share from continuing operations1.85 1.68 2.18 2.92 3.25 5.72 7.15 
Diluted earnings per common share 1.85 1.68 2.18 2.87 3.25 5.72 6.02 
14


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - UNAUDITED
(Dollars in thousands)
September 30,June 30,March 31,December 31,September 30,
20222022202220212021
ASSETS
Cash and due from banks$41,520 $66,703 $55,515 $35,238 $51,169 
Interest earning deposits362,945 178,475 219,085 482,794 1,000,885 
Cash and cash equivalents404,465 245,178 274,600 518,032 1,052,054 
Investment securities, at fair value2,943,694 3,144,882 4,169,853 3,817,150 1,866,697 
Investment securities held to maturity886,294 495,039 — — — 
Loans held for sale5,224 6,595 3,003 16,254 29,957 
Loans receivable, mortgage warehouse, at fair value1,569,090 1,874,603 1,755,758 2,284,325 2,557,624 
Loans receivable, PPP1,154,632 1,570,160 2,195,902 3,250,008 4,957,357 
Loans and leases receivable12,607,742 12,212,995 10,118,855 9,018,298 7,970,599 
Allowance for credit losses on loans and leases(130,197)(156,530)(145,847)(137,804)(131,496)
Total loans and leases receivable, net of allowance for credit losses on loans and leases15,201,267 15,501,228 13,924,668 14,414,827 15,354,084 
FHLB, Federal Reserve Bank, and other restricted stock64,112 74,626 54,553 64,584 57,184 
Accrued interest receivable107,621 98,727 94,669 92,239 93,514 
Bank premises and equipment, net6,610 6,755 8,233 8,890 9,944 
Bank-owned life insurance336,130 335,153 332,239 333,705 331,423 
Goodwill and other intangibles3,629 3,629 3,678 3,736 3,794 
Other assets408,575 340,184 298,212 305,611 310,271 
Total assets$20,367,621 $20,251,996 $19,163,708 $19,575,028 $19,108,922 
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand, non-interest bearing deposits$2,993,793 $4,683,030 $4,594,428 $4,459,790 $4,954,331 
Interest bearing deposits14,528,645 12,261,689 11,821,132 12,318,134 12,016,694 
Total deposits17,522,438 16,944,719 16,415,560 16,777,924 16,971,025 
Federal funds purchased365,000 770,000 700,000 75,000 — 
FHLB advances500,000 635,000 — 700,000 — 
Other borrowings123,515 123,450 223,230 223,086 223,151 
Subordinated debt181,882 181,812 181,742 181,673 181,603 
Accrued interest payable and other liabilities287,855 243,625 265,770 251,128 448,844 
Total liabilities18,980,690 18,898,606 17,786,302 18,208,811 17,824,623 
Preferred stock137,794 137,794 137,794 137,794 137,794 
Common stock34,948 34,922 34,882 34,722 33,818 
Additional paid in capital549,066 545,670 542,402 542,391 525,894 
Retained earnings898,511 837,147 780,628 705,732 607,085 
Accumulated other comprehensive income (loss), net(156,126)(124,881)(62,548)(4,980)1,488 
Treasury stock, at cost(77,262)(77,262)(55,752)(49,442)(21,780)
Total shareholders' equity1,386,931 1,353,390 1,377,406 1,366,217 1,284,299 
Total liabilities and shareholders' equity$20,367,621 $20,251,996 $19,163,708 $19,575,028 $19,108,922 

15


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED
(Dollars in thousands)
Three Months Ended
September 30, 2022June 30, 2022September 30, 2021
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 $528,001 $2,949 2.22%$434,950 $919 0.85%$1,279,983 $490 0.15%
Investment securities (1)
3,770,922 30,546 3.24%4,104,463 25,442 2.48%1,511,319 8,905 2.36%
Loans and leases:
Commercial & industrial:
Specialty lending loans and leases (2)
5,064,730 64,753 5.07%4,068,175 39,160 3.86%1,732,323 16,393 3.75%
Other commercial & industrial loans (2)
1,585,136 18,794 4.70%1,509,655 14,706 3.91%1,292,297 12,259 3.76%
Commercial loans to mortgage companies1,623,624 17,092 4.18%1,898,554 15,615 3.30%2,658,020 21,065 3.14%
Multi-family loans2,206,953 20,427 3.67%1,845,527 17,313 3.76%1,443,846 13,259 3.64%
Loans receivable, PPP1,349,403 14,666 4.31%1,863,429 20,572 4.43%5,778,367 117,102 8.04%
Non-owner occupied commercial real estate loans1,372,244 15,595 4.51%1,307,995 12,749 3.91%1,346,629 12,656 3.73%
Residential mortgages513,694 5,008 3.87%515,612 4,898 3.81%325,851 2,874 3.50%
Installment loans1,938,199 44,122 9.03%1,909,551 43,928 9.23%1,615,411 37,489 9.21%
Total loans and leases (3)
15,653,983 200,457 5.08%14,918,498 168,941 4.54%16,192,744 233,097 5.71%
Other interest-earning assets68,549 1,964 11.37%68,025 1,032 6.09%49,780 359 2.86%
Total interest-earning assets20,021,455 235,916 4.68%19,525,936 196,334 4.03%19,033,826 242,851 5.06%
Non-interest-earning assets492,911 530,084 705,514 
Total assets $20,514,366 $20,056,020 $19,739,340 
Liabilities
Interest checking accounts6,669,787 33,685 2.00%6,409,617 13,644 0.85%4,537,421 7,677 0.67%
Money market deposit accounts5,789,991 24,348 1.67%4,704,767 7,523 0.64%5,131,433 5,569 0.43%
Other savings accounts625,908 1,818 1.15%695,176 758 0.44%1,376,077 1,750 0.50%
Certificates of deposit1,141,970 5,529 1.92%530,180 856 0.65%614,404 919 0.59%
Total interest-bearing deposits (4)
14,227,656 65,380 1.82%12,339,740 22,781 0.74%11,659,335 15,915 0.54%
Federal funds purchased513,011 2,871 2.22%642,747 1,429 0.89%— — —%
FRB PPP liquidity facility— — —%— — —%2,788,897 2,460 0.35%
Borrowings874,497 8,633 3.92%940,068 7,272 3.10%371,077 4,584 4.90%
Total interest-bearing liabilities15,615,164 76,884 1.95%13,922,555 31,482 0.91%14,819,309 22,959 0.62%
Non-interest-bearing deposits (4)
3,245,963 4,491,574 3,335,198 
Total deposits and borrowings18,861,127 1.62%18,414,129 0.69%18,154,507 0.50%
Other non-interest-bearing liabilities255,735 259,279 310,519 
Total liabilities 19,116,862 18,673,408 18,465,026 
Shareholders' equity1,397,504 1,382,612 1,274,314 
Total liabilities and shareholders' equity$20,514,366 $20,056,020 $19,739,340 
Net interest income159,032 164,852 219,892 
Tax-equivalent adjustment (5)
334 270 290 
Net interest earnings$159,366 $165,122 $220,182 
Interest spread3.06%3.35%4.56%
Net interest margin3.16%3.38%4.58%
Net interest margin tax equivalent (5)
3.16%3.39%4.59%
Net interest margin tax equivalent excl. PPP (6)
3.18%3.32%3.24%
(continued)
16


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 1.48%, 0.54% and 0.42% for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.
(6) Non-GAAP tax-equivalent basis, as described in note (5) for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.
17


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED)
(Dollars in thousands)
Nine Months Ended
September 30, 2022September 30, 2021
Average Balance
Interest Income or ExpenseAverage Yield or Cost (%)Average BalanceInterest Income or ExpenseAverage Yield or Cost (%)
Assets
Interest earning deposits $595,305 $4,197 0.94%$1,034,923 $980 0.13%
Investment securities (1)
3,969,809 76,283 2.56%1,461,070 25,211 2.30%
Loans and leases:
Commercial & industrial:
Specialty lending loans and leases (2)
3,963,180 127,304 4.29%1,560,615 43,658 3.74%
Other commercial & industrial loans (2)
1,496,772 46,768 4.18%1,357,028 38,631 3.81%
Commercial loans to mortgage companies1,785,495 46,713 3.50%2,837,549 65,925 3.11%
Multi-family loans1,863,915 51,506 3.69%1,560,565 44,120 3.78%
Loans receivable, PPP1,946,651 72,132 4.95%5,515,819 197,071 4.78%
Non-owner occupied commercial real estate loans1,331,037 40,551 4.07%1,354,745 38,637 3.81%
Residential mortgages482,263 13,586