Customers Bancorp reports first quarter earnings

Customers Bancorp Inc. has reported net income of $74.9 million, or $2.18 per diluted share, for the first quarter of fiscal year 2022. That is a 126% increase over the same period last year.

Quarterly core earnings were $75.2 million, or $2.19 per diluted share, up 7% over the same period last year.

The West Reading-based bank released its earnings statement after the close of trading Wednesday, April 27.

“We are extremely pleased with our first quarter results and are excited that 2022 is off to a great start,” Customers Bancorp Chairman and CEO Jay Sidhu said in a statement. “In a quarter impacted by geopolitical conflict, rising interest rates, yield curve inversion, inflationary pressures, and the ongoing effects of the pandemic, we continue to responsibly deliver remarkable organic loan growth.”

Jay Sidhu, chairman and CEO of Customers Bank

Sidhu added that Customers’ core loans increased $559 million in the first quarter, up 5% over the fourth quarter of 2021, and was above our $500 million average quarterly target, despite lower balances in loans to mortgage companies of $532 million.

“Continuing the momentum from record 2021 performance and strong first quarter results, our loan and deposit pipelines remain at record highs, as the 2021 market expansion and new verticals continue to perform as or better than expected, a testament to our customer centric business model supported by best-in-class service and technology,” he added.

In 2021, Customers funded about 256,000 Paycheck Protection Program loans totaling $5.2 billion, bringing total PPP loans funded to approximately 358,000 and $10.3 billion. The bank earned close to $350 million of deferred origination fees from the SBA through the PPP loans. In the first quarter of 2022, Customers recognized $30 million of those fees in earnings, bringing total fees recognized to date to $292 million. The remaining $58 million is expected to be recognized throughout 2022 and 2023.

“As we’ve stated previously, it is difficult to predict the timing of PPP forgiveness,” Carla Leibold, Customers Bancorp CFO, said in a statement. “After a slow start, forgiveness levels picked up late in the quarter, resulting in higher deferred fee recognition in Q1 2022 than expected.”

In addition, Customers fully launched Customers Bank Instant Token (CBIT) on the TassatPay payments platform in January, following a soft-launch in the fourth quarter of 2021. Seventy-four new CBIT-related customers signed on to the Digital Bank, beating an internal target of at least 25 new customers, Sam Sidhu, president and CEO of Customers Bank, said in a statement.

Sam Sidhu, president and CEO of Customers Bank

“We expect digital asset-related deposits to grow significantly in 2022 as our pipelines remain strong, giving us an opportunity to further transform our deposits into a high quality, low-to-no cost, stable and growing deposit franchise. We believe our technology, compliance and customer service and support systems are among the best in the country,” he added.

As of March 31, $1.8 billion in core low- to no-cost demand deposits were received, increasing to approximately $2.3 billion as of April 15.

Other highlights for the quarter included:

Total deposits increased $3.9 billion, or 32% year-over-year, which included a $4.3 billion, or 72%, increase in demand deposits.

Commercial and industrial loan growth was $574.8 million, up 17%; multifamily loan growth was $218.7 million, up 15%, and consumer loan growth of $269.5 million, up 13% over the fourth quarter of 2021.

Net interest margin was 3.60% for the quarter. Net interest margin, excluding the impact of PPP loans was 3.32%.

“Looking ahead, we continue to project sustainable and responsible organic core growth and are very optimistic about the prospects of our company,” Jay Sidhu said. “We are focused on improving the quality of our balance sheet and deposit franchise and are not focused on growth just for the sake of growth. We continue to expect, on average, $500 million of quarterly loan growth and significant digital asset-related deposit growth by year-end 2022.”

 

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