WEST READING, Pa.–(BUSINESS WIRE)–$CUBI #banking–Customers Bancorp, Inc. (NYSE:CUBI):
First Quarter 2024 Highlights
- Q1 2024 net income available to common shareholders was $45.9 million, or $1.40 per diluted share; ROAA was 0.94% and ROCE was 12.08%.
- Q1 2024 core earnings* were $46.5 million, or $1.42 per diluted share; Core ROAA* was 0.95% and Core ROCE* was 12.24%.
- Q1 2024 adjusted core earnings* excluding certain one-time items were $55.1 million, or $1.68 per diluted share; Adjusted Core ROAA* excluding certain one-time items was 1.11% and Adjusted Core ROCE* excluding certain one-time items was 14.50%.
- CET 1 ratio of 12.5%1 at March 31, 2024, compared to 12.2% at December 31, 2023, above the approximately 11.5% target.
- TCE / TA ratio* of 7.3% at March 31, 2024, compared to 7.0% at December 31, 2023, on track to achieve 7.5% target within one to two quarters.
- Q1 2024 net interest margin, tax equivalent (“NIM”) was 3.10%, compared to Q4 2023 NIM of 3.31%, due to higher cash balances and lower average loans during the quarter.
- Total deposits increased by $41.1 million in Q1 2024 from Q4 2023 with a significant positive mix shift. Q1 2024 business unit deposit*2 growth of $1.2 billion funded the repayment of maturing wholesale CDs of $1.2 billion.
- Non-interest bearing deposits increased by $266.4 million in Q1 2024 from Q4 2023 and represented 26% of total deposits.
- Total estimated insured deposits were 78%3 of total deposits at March 31, 2024, with immediately available liquidity covering estimated uninsured deposits3 by approximately 224%.
- Non-performing assets were $35.8 million, or 0.17% of total assets, at March 31, 2024 compared to 0.13% at December 31, 2023. Allowance for credit losses on loans and leases equaled 374% of non-performing loans at March 31, 2024, compared to 499% at December 31, 2023.
- Q1 2024 provision for credit losses on loans and leases was $16.0 million compared to $13.4 million in Q4 2023 and the coverage of credit loss reserves for loans and leases held for investment was 1.12%. The coverage of credit loss reserves for loans and leases held for investment decreased modestly from 1.13% in Q4 2023 largely driven by lower consumer installment loans held for investment.
- Q1 2024 book value per share and tangible book value per share* both grew by approximately $1.56, or 3.3% over Q4 2023, driven by strong quarterly earnings and a decrease in AOCI losses of $4.3 million over the same time period.
|
______________________________________________ |
||
|
* |
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 |
Regulatory capital ratios as of March 31, 2024 are estimates. |
|
|
2 |
Total deposits excluding wholesale CDs and BMTX student-related deposits. |
|
|
3 |
Uninsured deposits (estimate) of $5.2 billion to be reported on the Bank’s call report, less deposits of $1.1 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $124.5 million. |
|
CEO Commentary
“Following an exceptional year in 2023, we are pleased to share continued progress on the execution of our strategic priorities which we believe will grow our franchise value, our margins and net interest income in 2024 and beyond,” said Customers Bancorp Chairman and CEO Jay Sidhu. “We are excited to announce that in April we welcomed 10 new, very experienced, banking teams to Customers Bank that are commercial focused deposit generators in the New York metropolitan area and in selected markets in California and Nevada. These commercial and business banking teams are highly experienced, have worked together for decades and have longstanding and deep client relationships. We expect the addition of these teams to accelerate the continued improvement of our deposit franchise with low cost, granular, primary relationship-based deposit accounts. We look forward to delivering exceptional service to their clients with our single point of contact, high-touch, technology-enabled banking capabilities. In the quarter, we once again demonstrated the momentum of our deposit franchise transformation by growing business unit deposits*2 by $1.2 billion which funded the repayment of maturing wholesale CDs in the amount of $1.2 billion. This was our fourth consecutive quarter of approximately $1 billion of business unit deposit*2 growth. The business unit deposit*2 growth was, once again, broad-based with more than 20 different channels increasing balances and roughly half contributing $25 million or more. Non-interest bearing deposits increased by $266.4 million during the quarter and represented 26 percent of total deposits. Our net interest margin moderated in the first quarter to 3.10% driven primarily by elevated cash balances resulting from strong business unit deposit*2 growth and the timing associated with replenishing higher yielding interest-earning assets that exited in the fourth quarter as we continue to remain focused on loan growth supporting holistic relationships. Capital levels continued to build as evidenced by a 24 basis point increase in our TCE / TA ratio* and an increase in our CET 1 ratio to 12.5%1. We are confident in our ability to achieve the 7.5% TCE / TA ratio* target that we disclosed last quarter. Enhanced by the addition of our new banking teams, we believe we are extremely well-positioned to continue to strengthen our deposit franchise, improve our profitability, and maintain our already strong capital ratios,” stated Jay Sidhu.
“Our Q1 2024 GAAP earnings were $45.9 million, or $1.40 per diluted share, and core earnings* were $46.5 million, or $1.42 per diluted share. Excluding certain one-time items incurred during the quarter, our adjusted core earnings* were $55.1 million, or $1.68 per diluted share. At March 31, 2024, our deposit base was well diversified, with approximately 78%3 of total deposits insured. We maintain a strong liquidity position, with $8.9 billion of liquidity immediately available, which covers approximately 224% of uninsured deposits3 and our loan to deposit ratio was 74%. We continue to focus loan production where we have a holistic and primary relationship. Commercial loans grew by $123.0 million though gross loan balances remained relatively flat given targeted reductions in consumer installment loans in the quarter. Our loan pipeline grew meaningfully through the first quarter, and we remain confident in the 10% – 15% loan growth outlook previously provided. We have ample liquidity and capital to support the needs of our customers. At March 31, 2024, we had $3.7 billion of cash on hand, to fund strategic loan growth as well as prudent balance sheet and liquidity management. Asset quality remains strong with our NPA ratio at just 0.17% of total assets and reserve levels are robust at over 370% of total non-performing loans at the end of Q1 2024. Our exposure to the higher risk commercial real estate office sector is minimal, representing approximately 1% of the loan portfolio. Continued execution on our strategic priorities has positioned us favorably for success in 2024 from a capital, credit, liquidity, interest rate risk and earnings perspective. We will remain disciplined, but opportunistic, with our balance sheet capacity to manage risk and maintain robust capital levels. We are confident in our risk management capabilities and ability to provide excellent and differentiated service to our clients. We are excited and optimistic about the opportunities we had entering 2024, which will only be enhanced by the addition of the new banking teams,” Jay Sidhu continued.
| ______________________________________________ | ||
|
* |
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 |
Regulatory capital ratios as of March 31, 2024 are estimates. |
|
|
2 |
Total deposits excluding wholesale CDs and BMTX student-related deposits. |
|
|
3 |
Uninsured deposits (estimate) of $5.2 billion to be reported on the Bank’s call report, less deposits of $1.1 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $124.5 million. |
|
Financial Highlights
|
(Dollars in thousands, except per share data) |
|
At or Three Months Ended |
|
Increase (Decrease) |
|||||||||||
|
|
March 31, 2024 |
|
December 31, 2023 |
|
|||||||||||
|
Profitability Metrics: |
|
|
|
|
|
|
|
|
|||||||
|
Net income available for common shareholders |
|
$ |
45,926 |
|
|
$ |
58,223 |
|
|
$ |
(12,297 |
) |
|
(21.1 |
)% |
|
Diluted earnings per share |
|
$ |
1.40 |
|
|
$ |
1.79 |
|
|
$ |
(0.39 |
) |
|
(21.8 |
)% |
|
Core earnings* |
|
$ |
46,532 |
|
|
$ |
61,633 |
|
|
$ |
(15,101 |
) |
|
(24.5 |
)% |
|
Adjusted core earnings* |
|
$ |
55,137 |
|
|
$ |
61,633 |
|
|
$ |
(6,496 |
) |
|
(10.5 |
)% |
|
Core earnings per share* |
|
$ |
1.42 |
|
|
$ |
1.90 |
|
|
$ |
(0.48 |
) |
|
(25.3 |
)% |
|
Adjusted core earnings per share* |
|
$ |
1.68 |
|
|
$ |
1.90 |
|
|
$ |
(0.22 |
) |
|
(11.6 |
)% |
|
Return on average assets (“ROAA”) |
|
|
0.94 |
% |
|
|
1.16 |
% |
|
|
(0.22 |
) |
|
|
|
|
Core ROAA* |
|
|
0.95 |
% |
|
|
1.22 |
% |
|
|
(0.27 |
) |
|
|
|
|
Adjusted core ROAA* |
|
|
1.11 |
% |
|
|
1.22 |
% |
|
|
(0.11 |
) |
|
|
|
|
Return on average common equity (“ROCE”) |
|
|
12.08 |
% |
|
|
15.93 |
% |
|
|
(3.85 |
) |
|
|
|
|
Core ROCE* |
|
|
12.24 |
% |
|
|
16.87 |
% |
|
|
(4.63 |
) |
|
|
|
|
Adjusted core ROCE* |
|
|
14.50 |
% |
|
|
16.87 |
% |
|
|
(2.37 |
) |
|
|
|
|
Core pre-tax pre-provision net income* |
|
$ |
83,674 |
|
|
$ |
101,884 |
|
|
$ |
(18,210 |
) |
|
(17.9 |
)% |
|
Adjusted core pre-tax pre-provision net income* |
|
$ |
94,988 |
|
|
$ |
101,884 |
|
|
$ |
(6,896 |
) |
|
(6.8 |
)% |
|
Net interest margin, tax equivalent |
|
|
3.10 |
% |
|
|
3.31 |
% |
|
|
(0.21 |
) |
|
|
|
|
Yield on loans (Loan yield) |
|
|
7.05 |
% |
|
|
7.30 |
% |
|
|
(0.25 |
) |
|
|
|
|
Cost of deposits |
|
|
3.45 |
% |
|
|
3.39 |
% |
|
|
0.06 |
|
|
|
|
|
Efficiency ratio |
|
|
54.58 |
% |
|
|
49.08 |
% |
|
|
5.50 |
|
|
|
|
|
Core efficiency ratio* |
|
|
54.24 |
% |
|
|
46.70 |
% |
|
|
7.54 |
|
|
|
|
|
Adjusted core efficiency ratio* |
|
|
48.02 |
% |
|
|
46.70 |
% |
|
|
1.32 |
|
|
|
|
|
Non-interest expense to average total assets |
|
|
1.87 |
% |
|
|
1.75 |
% |
|
|
0.12 |
|
|
|
|
|
Core non-interest expense to average total assets* |
|
|
1.86 |
% |
|
|
1.67 |
% |
|
|
0.19 |
|
|
|
|
|
Adjusted core non-interest expense to average total assets* |
|
|
1.65 |
% |
|
|
1.67 |
% |
|
|
(0.02 |
) |
|
|
|
|
Balance Sheet Trends: |
|
|
|
|
|
|
|
|
|||||||
|
Total assets |
|
$ |
21,347,367 |
|
|
$ |
21,316,265 |
|
|
$ |
31,102 |
|
|
0.1 |
% |
|
Total cash and investment securities |
|
$ |
7,338,025 |
|
|
$ |
7,355,156 |
|
|
$ |
(17,131 |
) |
|
(0.2 |
)% |
|
Total loans and leases |
|
$ |
13,256,871 |
|
|
$ |
13,202,084 |
|
|
$ |
54,787 |
|
|
0.4 |
% |
|
Non-interest bearing demand deposits |
|
$ |
4,688,880 |
|
|
$ |
4,422,494 |
|
|
$ |
266,386 |
|
|
6.0 |
% |
|
Total deposits |
|
$ |
17,961,383 |
|
|
$ |
17,920,236 |
|
|
$ |
41,147 |
|
|
0.2 |
% |
|
Capital Metrics: |
|
|
|
|
|
|
|
|
|||||||
|
Common Equity |
|
$ |
1,553,823 |
|
|
$ |
1,500,600 |
|
|
$ |
53,223 |
|
|
3.5 |
% |
|
Tangible Common Equity* |
|
$ |
1,550,194 |
|
|
$ |
1,496,971 |
|
|
$ |
53,223 |
|
|
3.6 |
% |
|
Common Equity to Total Assets |
|
|
7.3 |
% |
|
|
7.0 |
% |
|
|
0.3 |
|
|
|
|
|
Tangible Common Equity to Tangible Assets* |
|
|
7.3 |
% |
|
|
7.0 |
% |
|
|
0.3 |
|
|
|
|
|
Book Value per common share |
|
$ |
49.29 |
|
|
$ |
47.73 |
|
|
$ |
1.56 |
|
|
3.3 |
% |
|
Tangible Book Value per common share* |
|
$ |
49.18 |
|
|
$ |
47.61 |
|
|
$ |
1.57 |
|
|
3.3 |
% |
|
Common equity Tier 1 capital ratio (1) |
|
|
12.5 |
% |
|
|
12.2 |
% |
|
|
0.3 |
|
|
|
|
|
Total risk based capital ratio (1) |
|
|
15.6 |
% |
|
|
15.3 |
% |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
(1) Regulatory capital ratios as of March 31, 2024 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. |
|||||||||||||||
Financial Highlights
|
(Dollars in thousands, except per share data) |
|
At or Three Months Ended |
|
Increase (Decrease) |
|||||||||||
|
|
March 31, 2024 |
|
March 31, 2023 |
|
|||||||||||
|
Profitability Metrics: |
|
|
|
|
|
|
|
|
|||||||
|
Net income available for common shareholders |
|
$ |
45,926 |
|
|
$ |
50,265 |
|
|
$ |
(4,339 |
) |
|
(8.6 |
)% |
|
Diluted earnings per share |
|
$ |
1.40 |
|
|
$ |
1.55 |
|
|
$ |
(0.15 |
) |
|
(9.7 |
)% |
|
Core earnings* |
|
$ |
46,532 |
|
|
$ |
51,143 |
|
|
$ |
(4,611 |
) |
|
(9.0 |
)% |
|
Adjusted core earnings* |
|
$ |
55,137 |
|
|
$ |
51,143 |
|
|
$ |
3,994 |
|
|
7.8 |
% |
|
Core earnings per share* |
|
$ |
1.42 |
|
|
$ |
1.58 |
|
|
$ |
(0.16 |
) |
|
(10.1 |
)% |
|
Adjusted core earnings per share* |
|
$ |
1.68 |
|
|
$ |
1.58 |
|
|
$ |
0.10 |
|
|
6.3 |
% |
|
Return on average assets (“ROAA”) |
|
|
0.94 |
% |
|
|
1.03 |
% |
|
|
(0.09 |
) |
|
|
|
|
Core ROAA* |
|
|
0.95 |
% |
|
|
1.05 |
% |
|
|
(0.10 |
) |
|
|
|
|
Adjusted core ROAA* |
|
|
1.11 |
% |
|
|
1.05 |
% |
|
|
0.06 |
|
|
|
|
|
Return on average common equity (“ROCE”) |
|
|
12.08 |
% |
|
|
16.00 |
% |
|
|
(3.92 |
) |
|
|
|
|
Core ROCE* |
|
|
12.24 |
% |
|
|
16.28 |
% |
|
|
(4.04 |
) |
|
|
|
|
Adjusted core ROCE* |
|
|
14.50 |
% |
|
|
16.28 |
% |
|
|
(1.78 |
) |
|
|
|
|
Core pre-tax pre-provision net income* |
|
$ |
83,674 |
|
|
$ |
89,282 |
|
|
$ |
(5,608 |
) |
|
(6.3 |
)% |
|
Adjusted core pre-tax pre-provision net income* |
|
$ |
94,988 |
|
|
$ |
89,282 |
|
|
$ |
5,706 |
|
|
6.4 |
% |
|
Net interest margin, tax equivalent |
|
|
3.10 |
% |
|
|
2.96 |
% |
|
|
0.14 |
|
|
|
|
|
Yield on loans (Loan yield) |
|
|
7.05 |
% |
|
|
6.70 |
% |
|
|
0.35 |
|
|
|
|
|
Cost of deposits |
|
|
3.45 |
% |
|
|
3.32 |
% |
|
|
0.13 |
|
|
|
|
|
Efficiency ratio |
|
|
54.58 |
% |
|
|
47.71 |
% |
|
|
6.87 |
|
|
|
|
|
Core efficiency ratio* |
|
|
54.24 |
% |
|
|
47.09 |
% |
|
|
7.15 |
|
|
|
|
|
Adjusted core efficiency ratio* |
|
|
48.02 |
% |
|
|
47.09 |
% |
|
|
0.93 |
|
|
|
|
|
Non-interest expense to average total assets |
|
|
1.87 |
% |
|
|
1.54 |
% |
|
|
0.33 |
|
|
|
|
|
Core non-interest expense to average total assets* |
|
|
1.86 |
% |
|
|
1.53 |
% |
|
|
0.33 |
|
|
|
|
|
Adjusted core non-interest expense to average total assets* |
|
|
1.65 |
% |
|
|
1.53 |
% |
|
|
0.12 |
|
|
|
|
|
Balance Sheet Trends: |
|
|
|
|
|
|
|
|
|||||||
|
Total assets |
|
$ |
21,347,367 |
|
|
$ |
21,751,614 |
|
|
$ |
(404,247 |
) |
|
(1.9 |
)% |
|
Total cash and investment securities |
|
$ |
7,338,025 |
|
|
$ |
5,843,948 |
|
|
$ |
1,494,077 |
|
|
25.6 |
% |
|
Total loans and leases |
|
$ |
13,256,871 |
|
|
$ |
15,063,034 |
|
|
$ |
(1,806,163 |
) |
|
(12.0 |
)% |
|
Non-interest bearing demand deposits |
|
$ |
4,688,880 |
|
|
$ |
3,487,517 |
|
|
$ |
1,201,363 |
|
|
34.4 |
% |
|
Total deposits |
|
$ |
17,961,383 |
|
|
$ |
17,723,617 |
|
|
$ |
237,766 |
|
|
1.3 |
% |
|
Capital Metrics: |
|
|
|
|
|
|
|
|
|||||||
|
Common Equity |
|
$ |
1,553,823 |
|
|
$ |
1,283,226 |
|
|
$ |
270,597 |
|
|
21.1 |
% |
|
Tangible Common Equity* |
|
$ |
1,550,194 |
|
|
$ |
1,279,597 |
|
|
$ |
270,597 |
|
|
21.1 |
% |
|
Common Equity to Total Assets |
|
|
7.3 |
% |
|
|
5.9 |
% |
|
|
1.4 |
|
|
|
|
|
Tangible Common Equity to Tangible Assets* |
|
|
7.3 |
% |
|
|
5.9 |
% |
|
|
1.4 |
|
|
|
|
|
Book Value per common share |
|
$ |
49.29 |
|
|
$ |
41.08 |
|
|
$ |
8.21 |
|
|
20.0 |
% |
|
Tangible Book Value per common share* |
|
$ |
49.18 |
|
|
$ |
40.96 |
|
|
$ |
8.22 |
|
|
20.1 |
% |
|
Common equity Tier 1 capital ratio (1) |
|
|
12.5 |
% |
|
|
9.6 |
% |
|
|
2.9 |
|
|
|
|
|
Total risk based capital ratio (1) |
|
|
15.6 |
% |
|
|
12.3 |
% |
|
|
3.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
(1) Regulatory capital ratios as of March 31, 2024 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. |
|||||||||||||||
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, 2024 |
|
% of Total |
|
December 31, 2023 |
|
% of Total |
|
March 31, 2023 |
|
% of Total |
||||||
|
Loans and Leases Held for Investment |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Commercial & industrial: |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Specialized lending |
$ |
5,104,405 |
|
39.6 |
% |
|
$ |
5,006,693 |
|
38.9 |
% |
|
$ |
5,519,176 |
|
37.7 |
% |
|
Other commercial & industrial (1) |
|
1,113,517 |
|
8.6 |
|
|
|
1,162,317 |
|
9.0 |
|
|
|
1,414,419 |
|
9.7 |
|
|
Mortgage finance |
|
1,071,146 |
|
8.3 |
|
|
|
1,014,742 |
|
7.9 |
|
|
|
1,374,894 |
|
9.4 |
|
|
Multifamily |
|
2,123,675 |
|
16.5 |
|
|
|
2,138,622 |
|
16.6 |
|
|
|
2,195,211 |
|
15.0 |
|
|
Commercial real estate owner occupied |
|
806,278 |
|
6.3 |
|
|
|
797,319 |
|
6.2 |
|
|
|
895,314 |
|
6.1 |
|
|
Commercial real estate non-owner occupied |
|
1,182,084 |
|
9.2 |
|
|
|
1,177,650 |
|
9.2 |
|
|
|
1,245,248 |
|
8.5 |
|
|
Construction |
|
185,601 |
|
1.3 |
|
|
|
166,393 |
|
1.3 |
|
|
|
188,123 |
|
1.3 |
|
|
Total commercial loans and leases |
|
11,586,706 |
|
89.8 |
|
|
|
11,463,736 |
|
89.1 |
|
|
|
12,832,385 |
|
87.7 |
|
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Residential |
|
482,537 |
|
3.8 |
|
|
|
484,435 |
|
3.8 |
|
|
|
494,815 |
|
3.4 |
|
|
Manufactured housing |
|
37,382 |
|
0.3 |
|
|
|
38,670 |
|
0.3 |
|
|
|
43,272 |
|
0.3 |
|
|
Installment: |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Personal |
|
492,892 |
|
3.8 |
|
|
|
555,533 |
|
4.3 |
|
|
|
849,420 |
|
5.8 |
|
|
Other |
|
299,714 |
|
2.3 |
|
|
|
319,393 |
|
2.5 |
|
|
|
419,085 |
|
2.8 |
|
|
Total installment loans |
|
792,606 |
|
6.1 |
|
|
|
874,926 |
|
6.8 |
|
|
|
1,268,505 |
|
8.6 |
|
|
Total consumer loans |
|
1,312,525 |
|
10.2 |
|
|
|
1,398,031 |
|
10.9 |
|
|
|
1,806,592 |
|
12.3 |
|
|
Total loans and leases held for investment |
$ |
12,899,231 |
|
100.0 |
% |
|
$ |
12,861,767 |
|
100.0 |
% |
|
$ |
14,638,977 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Loans Held for Sale |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Multifamily |
$ |
— |
|
— |
% |
|
$ |
— |
|
— |
% |
|
$ |
4,051 |
|
1.0 |
% |
|
Commercial real estate non-owner occupied |
|
— |
|
— |
|
|
|
— |
|
— |
|
|
|
16,000 |
|
3.7 |
|
|
Total commercial loans and leases |
|
— |
|
— |
|
|
|
— |
|
— |
|
|
|
20,051 |
|
4.7 |
|
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Residential |
|
870 |
|
0.2 |
|
|
|
1,215 |
|
0.3 |
|
|
|
821 |
|
0.2 |
|
|
Installment: |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Personal |
|
137,755 |
|
38.5 |
|
|
|
151,040 |
|
44.4 |
|
|
|
307,336 |
|
72.5 |
|
|
Other |
|
219,015 |
|
61.3 |
|
|
|
188,062 |
|
55.3 |
|
|
|
95,849 |
|
22.6 |
|
|
Total installment loans |
|
356,770 |
|
99.8 |
|
|
|
339,102 |
|
99.7 |
|
|
|
403,185 |
|
95.1 |
|
|
Total consumer loans |
|
357,640 |
|
100.0 |
|
|
|
340,317 |
|
100.0 |
|
|
|
404,006 |
|
95.3 |
|
|
Total loans held for sale |
$ |
357,640 |
|
100.0 |
% |
|
$ |
340,317 |
|
100.0 |
% |
|
$ |
424,057 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Total loans and leases portfolio |
$ |
13,256,871 |
|
|
|
$ |
13,202,084 |
|
|
|
$ |
15,063,034 |
|
|
|||
|
(1) Includes PPP loans of $52.0 million, $74.7 million and $246.3 million as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively. |
|||||||||||||||||
Loans and Leases Held for Investment
Loans and leases held for investment were $12.9 billion at March 31, 2024, up $37.5 million, or 0.3%, from December 31, 2023. Specialized lending increased $97.7 million, or 2.0% quarter-over-quarter, to $5.1 billion. Mortgage finance loans increased $56.4 million, or 5.6% quarter-over-quarter due to higher mortgage activity. Construction loans increased $19.2 million, or 11.5% quarter-over-quarter, to $185.6 million. Consumer installment loans held for investment decreased $82.3 million, or 9.4% quarter-over-quarter, to $792.6 million due to the continued build out of the held-for-sale strategy and de-risking of the held-for-investment loan portfolio. Other commercial and industrial loans decreased $48.8 million, or 4.2% quarter-over-quarter, to $1.1 billion, which included a decrease in PPP loans primarily from guarantee payments.
Loans and leases held for investment of $12.9 billion at March 31, 2024 was down $1.7 billion, or 11.9%, year-over-year, largely driven by reduced balances in consumer installment loans of $475.9 million, or 37.5% year-over-year, specialized lending of $414.8 million, mortgage finance loans of $303.7 million and other commercial and industrial loans of $300.9 million, which included a decrease in PPP loans primarily from guarantee payments.
Loans Held for Sale
Loans held for sale increased $17.3 million quarter-over-quarter, and were $357.6 million at March 31, 2024 due to the continued build out of the held-for-sale strategy in 2024.
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 Ended |
|
Increase (Decrease) |
|
At or Three Months Ended |
|
Increase (Decrease) |
||||||||||||||||
|
(Dollars in thousands) |
March 31, 2024 |
|
December 31, 2023 |
|
|
March 31, 2024 |
|
March 31, 2023 |
|
||||||||||||||
|
Allowance for credit losses on loans and leases |
$ |
133,296 |
|
|
$ |
135,311 |
|
|
$ |
(2,015 |
) |
|
$ |
133,296 |
|
|
$ |
130,281 |
|
|
$ |
3,015 |
|
|
Provision (benefit) for credit losses on loans and leases |
$ |
15,953 |
|
|
$ |
13,420 |
|
|
$ |
2,533 |
|
|
$ |
15,953 |
|
|
$ |
18,008 |
|
|
$ |
(2,055 |
) |
|
Net charge-offs from loans held for investment |
$ |
17,968 |
|
|
$ |
17,322 |
|
|
$ |
646 |
|
|
$ |
17,968 |
|
|
$ |
18,651 |
|
|
$ |
(683 |
) |
|
Annualized net charge-offs to average loans and leases |
|
0.55 |
% |
|
|
0.51 |
% |
|
|
|
|
0.55 |
% |
|
|
0.49 |
% |
|
|
||||
|
Coverage of credit loss reserves for loans and leases held for investment |
|
1.12 |
% |
|
|
1.13 |
% |
|
|
|
|
1.12 |
% |
|
|
0.97 |
% |
|
|
||||
Net charge-offs were relatively stable with $18.0 million in Q1 2024, compared to $17.3 million in Q4 2023 and $18.7 million in Q1 2023.
Provision (benefit) for Credit Losses
|
|
Three Months Ended |
|
Increase (Decrease) |
|
Three Months Ended |
|
Increase (Decrease) |
||||||||||||
|
(Dollars in thousands) |
March 31, 2024 |
|
December 31, 2023 |
|
|
March 31, 2024 |
|
March 31, 2023 |
|
||||||||||
|
Provision (benefit) for credit losses on loans and leases |
$ |
15,953 |
|
$ |
13,420 |
|
|
$ |
2,533 |
|
$ |
15,953 |
|
$ |
18,008 |
|
$ |
(2,055 |
) |
|
Provision (benefit) for credit losses on available for sale debt securities |
|
1,117 |
|
|
103 |
|
|
|
1,014 |
|
|
1,117 |
|
|
1,595 |
|
|
(478 |
) |
|
Provision for credit losses |
|
17,070 |
|
|
13,523 |
|
|
|
3,547 |
|
|
17,070 |
|
|
19,603 |
|
|
(2,533 |
) |
|
Provision (benefit) for credit losses on unfunded commitments |
|
430 |
|
|
(136 |
) |
|
|
566 |
|
|
430 |
|
|
280 |
|
|
150 |
|
|
Total provision for credit losses |
$ |
17,500 |
|
$ |
13,387 |
|
|
$ |
4,113 |
|
$ |
17,500 |
|
$ |
19,883 |
|
$ |
(2,383 |
) |
The provision for credit losses on loans and leases in Q1 2024 was $16.0 million, compared to $13.4 million in Q4 2023. The higher provision in Q1 2024 was primarily due to increased uncertainty and slightly weaker macroeconomic forecasts, partially offset by lower balances in consumer installment loans held for investment.
The provision for credit losses on available for sale investment securities in Q1 2024 was $1.1 million, compared to provision of $0.1 million in Q4 2023.
The provision for credit losses on loans and leases in Q1 2024 was $16.0 million, compared to $18.0 million in Q1 2023. The lower provision in Q1 2024 compared to the year ago period was primarily due to lower balances in loans held for investment.
The provision for credit losses on available for sale investment securities in Q1 2024 was $1.1 million compared to provision of $1.6 million in Q1 2023.
Asset Quality
The following table presents asset quality metrics as of the dates indicated:
|
(Dollars in thousands) |
March 31, 2024 |
|
December 31, 2023 |
|
Increase (Decrease) |
|
March 31, 2024 |
|
March 31, 2023 |
|
Increase (Decrease) |
||||||||||||
|
Non-performing assets (“NPAs”): |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Nonaccrual / non-performing loans (“NPLs”) |
$ |
35,654 |
|
|
$ |
27,110 |
|
|
$ |
8,544 |
|
|
$ |
35,654 |
|
|
$ |
32,124 |
|
|
$ |
3,530 |
|
|
Non-performing assets |
$ |
35,753 |
|
|
$ |
27,209 |
|
|
$ |
8,544 |
|
|
$ |
35,753 |
|
|
$ |
32,260 |
|
|
$ |
3,493 |
|
|
NPLs to total loans and leases |
|
0.27 |
% |
|
|
0.21 |
% |
|
|
|
|
0.27 |
% |
|
|
0.21 |
% |
|
|
||||
|
Reserves to NPLs |
|
373.86 |
% |
|
|
499.12 |
% |
|
|
|
|
373.86 |
% |
|
|
405.56 |
% |
|
|
||||
|
NPAs to total assets |
|
0.17 |
% |
|
|
0.13 |
% |
|
|
|
|
0.17 |
% |
|
|
0.15 |
% |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Loans and leases (1) risk ratings: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Commercial loans and leases |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Pass |
$ |
10,095,611 |
|
|
$ |
9,955,243 |
|
|
$ |
140,368 |
|
|
$ |
10,095,611 |
|
|
$ |
10,928,620 |
|
|
$ |
(833,009 |
) |
|
Special Mention |
|
194,365 |
|
|
|
196,182 |
|
|
|
(1,817 |
) |
|
|
194,365 |
|
|
|
136,986 |
|
|
|
57,379 |
|
|
Substandard |
|
282,163 |
|
|
|
339,664 |
|
|
|
(57,501 |
) |
|
|
282,163 |
|
|
|
273,154 |
|
|
|
9,009 |
|
|
Total commercial loans and leases |
|
10,572,139 |
|
|
|
10,491,089 |
|
|
|
81,050 |
|
|
|
10,572,139 |
|
|
|
11,338,760 |
|
|
|
(766,621 |
) |
|
Consumer loans |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Performing |
|
1,293,457 |
|
|
|
1,379,603 |
|
|
|
(86,146 |
) |
|
|
1,293,457 |
|
|
|
1,787,123 |
|
|
|
(493,666 |
) |
|
Non-performing |
|
19,068 |
|
|
|
18,428 |
|
|
|
640 |
|
|
|
19,068 |
|
|
|
19,469 |
|
|
|
(401 |
) |
|
Total consumer loans |
|
1,312,525 |
|
|
|
1,398,031 |
|
|
|
(85,506 |
) |
|
|
1,312,525 |
|
|
|
1,806,592 |
|
|
|
(494,067 |
) |
|
Loans and leases receivable (1) |
$ |
11,884,664 |
|
|
$ |
11,889,120 |
|
|
$ |
(4,456 |
) |
|
$ |
11,884,664 |
|
|
$ |
13,145,352 |
|
|
$ |
(1,260,688 |
) |
|
(1) Risk ratings are assigned to loans and leases held for investment, and excludes loans held for sale, loans receivable, mortgage finance, at fair value and eligible PPP loans that are fully guaranteed by the Small Business Administration. |
|||||||||||||||||||||||
Over the last decade, the Bank has developed a suite of commercial loan products with one particularly important common denominator: relatively low credit risk assumption. The Bank’s commercial and industrial (“C&I”), mortgage finance, corporate and specialized 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, management employs a bottom-up data driven approach to analyze the commercial portfolio.
Total consumer installment loans held for investment at March 31, 2024 were less than 4% of total assets and approximately 6% of total loans and leases held for investment, and were supported by an allowance for credit losses of $50.7 million. At March 31, 2024, the consumer installment portfolio had the following characteristics: average original FICO score of 737, average debt-to-income of 20% and average borrower income of $107 thousand.
Contacts
David W. Patti, Communications Director 610-451-9452
