Customers Bancorp reports Q3 results

Customers Bancorp Inc. has reported quarterly net income of $61.4 million, or $1.85 per diluted share for the third quarter that ended Sept. 30, a decrease of 44.3% from the same period last year.

The West Reading-based bank released its second quarter earnings statement after the close of trading on Wednesday.

Core earnings were $82.3 million or $2.48 per diluted share, a decrease of 27.8% from the third quarter 2021.

By comparison, quarterly core earnings excluding Paycheck Protection Program (PPP) were $76.4 million for the quarter, or $2.30 per diluted share, an increase of 135.9% over the year.

“We delivered another solid quarter and are extremely pleased with our third quarter results despite the challenging interest rate and economic environment,” Jay Sidhu, Customers Bancorp chairman and CEO, said during an investors conference call Thursday morning. “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.”

Jay Sidhu, Customers Bancorp chairman and CEO. (PHOTO COURTESY CUSTOMERS BANCORP)

Sidhu said Customers’ year-to-date September 2022 core earnings per share, excluding PPP is $5.15, which exceeds the company’s 2022 core earnings per share, excluding PPP target of $4.75 to $5.00 per share.

Year-over-year loan growth (excluding loans to mortgage companies and PPP) was $4.5 billion, or 57.3%, led by low-risk variable rate specialty lending verticals, the company said.

Customers reported that total loans and leases excluding PPP loans of $14.2 billion was a decrease of $179 million, or 1.2% when compared to the same period a year ago.

Paycheck Protection Program loans were $5 billion in the quarter, relatively unchanged from the same period a year ago. Those results were driven by $4.7 billion in originations and purchases from the latest round of PPP loans, offset by $4.7 billion in forgiveness, repayments and associated net deferred fees from the new round and earlier rounds.

“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,” Customers Bancorp CFO Carla Leibold said in a statement.

Total deposits increased $551.4 million, or 3.2%, to $17.5 billion for the third quarter of 2022 compared to a year ago. Increases in time deposits and total demand deposits were offset partially by decreases in savings deposits and money market deposits, according to the company.

In terms of Customers Bank’s Instant Token platform, Sam Sidhu, president and CEO, said “Despite significant market volatility that continues in the digital asset space, we are very pleased with our progress to date.”

Sam Sidhu, president and CEO of Customers Bank (COURTESY OF CUSTOMERS BANK)Sam Sidhu, president and CEO of Customers Bank (COURTESY OF CUSTOMERS BANK)

Customers fully launched Customers Bank Instant Token on the TassatPay payments platform in January, following a soft-launch in the fourth quarter of 2021. In the third quarter a total of 111 new CBOT-related customers signed on to the digital bank, bringing the total number of customers to 301.

“Our digital asset-related deposits have stabilized and ended the third quarter at $1.9 billion,” Sam Sidhu said. “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.”

Looking ahead, Jay Sidhu said the company expects “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,” he added.

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