WEST READING, Pa.–(BUSINESS WIRE)–$CUBI #Banking–Customers Bancorp, Inc. (NYSE:CUBI):
Second Quarter 2025 Highlights
- Q2 2025 net income available to common shareholders was $55.8 million, or $1.73 per diluted share; ROAA was 1.09% and ROCE was 12.79%.
- Q2 2025 core earnings*1 were $58.1 million, or $1.80 per diluted share; Core ROAA* was 1.10% and Core ROCE* was 13.32%.
- Total loans and leases held for investment grew by $319.0 million, or 2.1%, in Q2 2025 from Q1 2025.
- Total deposits increased by $43.1 million or 0.2% in Q2 2025 from Q1 2025.
- Q2 2025 net interest margin, tax equivalent (“NIM”) was 3.27%, compared to Q1 2025 NIM of 3.13%, an increase of 14 basis points, primarily due to higher interest income from loan growth.
- Ratio of non-performing assets to total assets was 0.27% at June 30, 2025 compared to 0.26% at March 31, 2025.
- Q2 2025 provision for credit losses was $20.8 million compared to $28.3 million in Q1 2025.
- The allowance for credit losses on loans and leases equaled 518% of non-performing loans at June 30, 2025, compared to 324% at March 31, 2025.
- CET 1 ratio of 12.0%2 at June 30, 2025, compared to 11.7% at March 31, 2025.
- TCE / TA ratio* of 7.9% at June 30, 2025, compared to 7.7% at March 31, 2025.
- Q2 2025 book value per share and tangible book value per share* both grew by approximately $1.50, or 2.7% over Q1 2025, or 11% annualized, with a tangible book value per share* of $56.24 at June 30, 2025.
- Redeemed all outstanding shares ($57.5 million) of our Series E Preferred Stock on June 16, 2025.
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* 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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1 Excludes loss on redemption of preferred stock of $1.9 million, pre-tax losses on investment securities of $1.8 million, loan program termination fees of $1.0 million and unrealized gain on loans held for sale of $0.3 million. |
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2 Regulatory capital ratios as of June 30, 2025 are estimates. |
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CEO Commentary
“We are pleased to share our second quarter results that highlight the company’s continued execution of its strategic priorities and underscore our success in growing franchise value. And importantly, with our customer-centric mindset and commitment to service provided by our extraordinary colleagues, we are here to serve our clients as the business environment continues to evolve,” said Customers Bancorp Chairman and CEO Jay Sidhu.
“In the second quarter, we demonstrated the strength of our unique business model. The impact can be seen in a 14 basis points increase in our net interest margin in Q2 2025 compared to last quarter as we continue to source loans at attractive yields and manage our interest expenses.
Deposit focused teams we have recruited since March 2023 managed $2.4 billion or 13% of total deposits. Enhanced by their efforts, we’ve increased commercial deposit accounts by approximately 60% since year end 2022, adding granular and sticky relationships while significantly lowering our cost of deposits, increasing our non-interest bearing deposits, and driving franchise value. We believe the company is extremely well-positioned to continue to strengthen our deposit franchise, improve our profitability, and maintain our already strong capital ratios,” stated Jay Sidhu.
“Our Q2 2025 GAAP earnings were $55.8 million, or $1.73 per diluted share, and core earnings* were $58.1 million, or $1.80 per diluted share. We maintain a strong liquidity position, with $8.6 billion of liquidity immediately available, which covers approximately 150% of uninsured deposits1 and our loan to deposit ratio was 81%, at June 30, 2025. Total loans and leases held for investment grew by $319.0 million driven by strong commercial loan growth of $360.7 million led by growth in our existing specialized lending verticals. Asset quality remains strong with our NPA ratio at just 0.27% of total assets and reserve levels are robust at 518% of total non-performing loans at the end of Q2 2025. Our exposure to the higher risk commercial real estate office sector is minimal, representing approximately 1% of the loan portfolio. Tangible Book Value per share* grew to $56.24 and our TCE / TA ratio* increased by 20 basis points to 7.9%. This year three new teams have joined the Bank and the recruitment pipeline remains strong. We believe that our unique strategy, the investments we have continued to make, and the exceptional talent across our organization position us strongly for continued success in 2025 and beyond,” Jay Sidhu continued.
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* 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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1 Uninsured deposits (estimate) of $7.4 billion to be reported on the Bank’s call report, less deposits of $1.6 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $116.0 million. |
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Financial Highlights
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At or Three Months Ended |
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(Dollars in thousands, except per share data) |
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June 30, 2025 |
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March 31, 2025 |
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Increase (Decrease) |
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Profitability Metrics: |
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Net income available for common shareholders |
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$ |
55,846 |
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$ |
9,523 |
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$ |
46,323 |
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486.4 |
% |
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Diluted earnings per share |
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$ |
1.73 |
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$ |
0.29 |
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$ |
1.44 |
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496.6 |
% |
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Core earnings* |
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$ |
58,147 |
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$ |
50,002 |
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$ |
8,145 |
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16.3 |
% |
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Adjusted core earnings* |
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$ |
58,147 |
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$ |
50,002 |
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$ |
8,145 |
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16.3 |
% |
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Core earnings per share* |
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$ |
1.80 |
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$ |
1.54 |
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$ |
0.26 |
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16.9 |
% |
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Adjusted core earnings per share* |
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$ |
1.80 |
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$ |
1.54 |
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$ |
0.26 |
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16.9 |
% |
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Return on average assets (“ROAA”) |
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1.09 |
% |
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0.23 |
% |
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0.86 |
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Core ROAA* |
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1.10 |
% |
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0.97 |
% |
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0.13 |
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Adjusted core ROAA* |
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1.10 |
% |
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0.97 |
% |
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0.13 |
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Return on average common equity (“ROCE”) |
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12.79 |
% |
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2.23 |
% |
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10.56 |
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Core ROCE* |
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13.32 |
% |
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11.72 |
% |
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1.60 |
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Adjusted core ROCE* |
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13.32 |
% |
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11.72 |
% |
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1.60 |
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Net interest margin, tax equivalent |
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3.27 |
% |
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3.13 |
% |
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0.14 |
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Yield on loans (Loan yield) |
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6.61 |
% |
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6.57 |
% |
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0.04 |
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Cost of deposits |
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2.85 |
% |
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2.82 |
% |
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0.03 |
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Efficiency ratio |
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51.23 |
% |
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52.94 |
% |
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(1.71 |
) |
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Core efficiency ratio* |
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51.56 |
% |
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52.69 |
% |
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(1.13 |
) |
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Adjusted core efficiency ratio* |
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51.56 |
% |
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52.69 |
% |
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(1.13 |
) |
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Balance Sheet Trends: |
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Total assets |
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$ |
22,550,800 |
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$ |
22,423,044 |
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$ |
127,756 |
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0.6 |
% |
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Total cash and investment securities |
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$ |
6,234,043 |
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$ |
6,424,406 |
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$ |
(190,363 |
) |
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(3.0 |
)% |
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Total loans and leases |
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$ |
15,412,400 |
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$ |
15,097,968 |
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$ |
314,432 |
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2.1 |
% |
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Non-interest bearing demand deposits |
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$ |
5,481,065 |
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$ |
5,552,605 |
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$ |
(71,540 |
) |
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(1.3 |
)% |
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Total deposits |
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$ |
18,976,018 |
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$ |
18,932,925 |
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$ |
43,093 |
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0.2 |
% |
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Capital Metrics: |
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Common Equity to Total Assets |
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7.9 |
% |
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7.7 |
% |
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0.2 |
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Tangible Common Equity to Tangible Assets* |
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7.9 |
% |
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7.7 |
% |
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0.2 |
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Book Value per common share |
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$ |
56.36 |
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$ |
54.85 |
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$ |
1.51 |
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2.8 |
% |
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Tangible Book Value per common share* |
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$ |
56.24 |
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$ |
54.74 |
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$ |
1.50 |
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2.7 |
% |
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Common equity Tier 1 capital ratio (1) |
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12.0 |
% |
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11.7 |
% |
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0.3 |
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Total risk based capital ratio (1) |
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14.5 |
% |
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14.6 |
% |
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(0.1 |
) |
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(1) Regulatory capital ratios as of June 30, 2025 are estimates. |
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* 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
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At or Three Months Ended |
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Six Months Ended |
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(Dollars in thousands, except per share data) |
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June 30, 2025 |
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June 30, 2024 |
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Increase (Decrease) |
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June 30, 2025 |
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June 30, 2024 |
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Increase (Decrease) |
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Profitability Metrics: |
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Net income available for common shareholders |
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$ |
55,846 |
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$ |
54,300 |
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$ |
1,546 |
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|
2.8 |
% |
|
$ |
65,369 |
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$ |
100,226 |
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$ |
(34,857 |
) |
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(34.8 |
)% |
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Diluted earnings per share |
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$ |
1.73 |
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$ |
1.66 |
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|
$ |
0.07 |
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4.2 |
% |
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$ |
2.02 |
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$ |
3.06 |
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$ |
(1.04 |
) |
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(34.0 |
)% |
|
Core earnings* |
|
$ |
58,147 |
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|
$ |
48,567 |
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|
$ |
9,580 |
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|
19.7 |
% |
|
$ |
108,149 |
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|
$ |
95,099 |
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|
$ |
13,050 |
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|
13.7 |
% |
|
Adjusted core earnings* |
|
$ |
58,147 |
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|
$ |
48,567 |
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|
$ |
9,580 |
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|
19.7 |
% |
|
$ |
108,149 |
|
|
$ |
103,704 |
|
|
$ |
4,445 |
|
|
4.3 |
% |
|
Core earnings per share* |
|
$ |
1.80 |
|
|
$ |
1.49 |
|
|
$ |
0.31 |
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|
20.8 |
% |
|
$ |
3.33 |
|
|
$ |
2.90 |
|
|
$ |
0.43 |
|
|
14.8 |
% |
|
Adjusted core earnings per share* |
|
$ |
1.80 |
|
|
$ |
1.49 |
|
|
$ |
0.31 |
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|
20.8 |
% |
|
$ |
3.33 |
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|
$ |
3.16 |
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$ |
0.17 |
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|
5.4 |
% |
|
Return on average assets (“ROAA”) |
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|
1.09 |
% |
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|
1.11 |
% |
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|
(0.02 |
) |
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|
0.67 |
% |
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|
1.02 |
% |
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|
(0.35 |
) |
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|
Core ROAA* |
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|
1.10 |
% |
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|
1.00 |
% |
|
|
0.10 |
|
|
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|
1.04 |
% |
|
|
0.98 |
% |
|
|
0.06 |
|
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|
Adjusted core ROAA* |
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|
1.10 |
% |
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|
1.00 |
% |
|
|
0.10 |
|
|
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|
1.04 |
% |
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|
1.06 |
% |
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|
(0.02 |
) |
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|
Return on average common equity (“ROCE”) |
|
|
12.79 |
% |
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|
13.85 |
% |
|
|
(1.06 |
) |
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|
7.57 |
% |
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|
12.98 |
% |
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(5.41 |
) |
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Core ROCE* |
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|
13.32 |
% |
|
|
12.39 |
% |
|
|
0.93 |
|
|
|
|
|
12.53 |
% |
|
|
12.32 |
% |
|
|
0.21 |
|
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|
Adjusted core ROCE* |
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|
13.32 |
% |
|
|
12.39 |
% |
|
|
0.93 |
|
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|
12.53 |
% |
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|
13.43 |
% |
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|
(0.90 |
) |
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Net interest margin, tax equivalent |
|
|
3.27 |
% |
|
|
3.29 |
% |
|
|
(0.02 |
) |
|
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|
|
3.20 |
% |
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|
3.20 |
% |
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|
— |
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Yield on loans (Loan yield) |
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|
6.61 |
% |
|
|
7.17 |
% |
|
|
(0.56 |
) |
|
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|
6.59 |
% |
|
|
7.11 |
% |
|
|
(0.52 |
) |
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Cost of deposits |
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|
2.85 |
% |
|
|
3.40 |
% |
|
|
(0.55 |
) |
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|
2.84 |
% |
|
|
3.43 |
% |
|
|
(0.59 |
) |
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Efficiency ratio |
|
|
51.23 |
% |
|
|
51.87 |
% |
|
|
(0.64 |
) |
|
|
|
|
52.06 |
% |
|
|
53.16 |
% |
|
|
(1.10 |
) |
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|
Core efficiency ratio* |
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|
51.56 |
% |
|
|
53.47 |
% |
|
|
(1.91 |
) |
|
|
|
|
52.11 |
% |
|
|
53.85 |
% |
|
|
(1.74 |
) |
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|
Adjusted core efficiency ratio* |
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|
51.56 |
% |
|
|
53.47 |
% |
|
|
(1.91 |
) |
|
|
|
|
52.11 |
% |
|
|
50.79 |
% |
|
|
1.32 |
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Balance Sheet Trends: |
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Total assets |
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$ |
22,550,800 |
|
|
$ |
20,942,975 |
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|
$ |
1,607,825 |
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|
7.7 |
% |
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Total cash and investment securities |
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$ |
6,234,043 |
|
|
$ |
6,523,036 |
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|
$ |
(288,993 |
) |
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(4.4 |
)% |
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|
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Total loans and leases |
|
$ |
15,412,400 |
|
|
$ |
13,632,639 |
|
|
$ |
1,779,761 |
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|
13.1 |
% |
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|
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|
Non-interest bearing demand |
|
$ |
5,481,065 |
|
|
$ |
4,474,862 |
|
|
$ |
1,006,203 |
|
|
22.5 |
% |
|
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Total deposits |
|
$ |
18,976,018 |
|
|
$ |
17,678,093 |
|
|
$ |
1,297,925 |
|
|
7.3 |
% |
|
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Capital Metrics: |
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Common Equity to Total Assets |
|
|
7.9 |
% |
|
|
7.7 |
% |
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
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|
Tangible Common Equity to Tangible Assets* |
|
|
7.9 |
% |
|
|
7.7 |
% |
|
|
0.2 |
|
|
|
|
|
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|
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|
Book Value per common share |
|
$ |
56.36 |
|
|
$ |
50.81 |
|
|
$ |
5.55 |
|
|
10.9 |
% |
|
|
|
|
|
|
|
|
|||||||
|
Tangible Book Value per common share* |
|
$ |
56.24 |
|
|
$ |
50.70 |
|
|
$ |
5.54 |
|
|
10.9 |
% |
|
|
|
|
|
|
|
|
|||||||
|
Common equity Tier 1 capital ratio (1) |
|
|
12.0 |
% |
|
|
12.8 |
% |
|
|
(0.8 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total risk based capital ratio (1) |
|
|
14.5 |
% |
|
|
15.8 |
% |
|
|
(1.3 |
) |
|
|
|
|
|
|
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|
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|
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|
|
|
||||||||||||||
|
(1) Regulatory capital ratios as of June 30, 2025 are estimates. |
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|
* 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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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) |
June 30, 2025 |
|
% of Total |
|
March 31, 2025 |
|
% of Total |
|
June 30, 2024 |
|
% of Total |
|||||||
|
Loans and Leases Held for Investment |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Commercial: |
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|
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|
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|
|||||||
|
Commercial & industrial: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Specialized lending |
$ |
6,454,661 |
|
42.0 |
% |
|
$ |
6,070,093 |
|
40.3 |
% |
|
$ |
5,528,745 |
|
41.7 |
% |
|
|
Other commercial & industrial |
|
1,037,684 |
|
6.8 |
|
|
|
1,062,933 |
|
7.0 |
|
|
|
1,092,146 |
|
8.2 |
|
|
|
Mortgage finance |
|
1,625,764 |
|
10.6 |
|
|
|
1,477,896 |
|
9.8 |
|
|
|
1,122,812 |
|
8.5 |
|
|
|
Multifamily |
|
2,247,282 |
|
14.6 |
|
|
|
2,322,123 |
|
15.4 |
|
|
|
2,067,332 |
|
15.6 |
|
|
|
Commercial real estate owner occupied |
|
1,065,006 |
|
6.9 |
|
|
|
1,139,126 |
|
7.6 |
|
|
|
805,779 |
|
6.1 |
|
|
|
Commercial real estate non-owner occupied |
|
1,497,385 |
|
9.7 |
|
|
|
1,438,906 |
|
9.6 |
|
|
|
1,202,606 |
|
9.1 |
|
|
|
Construction |
|
98,626 |
|
0.6 |
|
|
|
154,647 |
|
1.0 |
|
|
|
163,409 |
|
1.2 |
|
|
|
Total commercial loans and leases |
|
14,026,408 |
|
91.2 |
|
|
|
13,665,724 |
|
90.7 |
|
|
|
11,982,829 |
|
90.4 |
|
|
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Residential |
|
520,570 |
|
3.4 |
|
|
|
496,772 |
|
3.3 |
|
|
|
481,503 |
|
3.6 |
|
|
|
Manufactured housing |
|
30,287 |
|
0.2 |
|
|
|
31,775 |
|
0.2 |
|
|
|
35,901 |
|
0.3 |
|
|
|
Installment: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Personal |
|
457,728 |
|
3.0 |
|
|
|
493,276 |
|
3.3 |
|
|
|
474,481 |
|
3.6 |
|
|
|
Other |
|
344,444 |
|
2.2 |
|
|
|
372,892 |
|
2.5 |
|
|
|
282,201 |
|
2.1 |
|
|
|
Total installment loans |
|
802,172 |
|
5.2 |
|
|
|
866,168 |
|
5.8 |
|
|
|
756,682 |
|
5.7 |
|
|
|
Total consumer loans |
|
1,353,029 |
|
8.8 |
|
|
|
1,394,715 |
|
9.3 |
|
|
|
1,274,086 |
|
9.6 |
|
|
|
Total loans and leases held for investment |
$ |
15,379,437 |
|
100.0 |
% |
|
$ |
15,060,439 |
|
100.0 |
% |
|
$ |
13,256,915 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Loans Held for Sale |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Residential |
$ |
5,180 |
|
15.7 |
% |
|
$ |
1,465 |
|
3.9 |
% |
|
$ |
2,684 |
|
0.7 |
% |
|
|
Installment: |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Personal |
|
27,682 |
|
84.0 |
|
|
|
36,000 |
|
95.9 |
|
|
|
125,598 |
|
33.4 |
|
|
|
Other |
|
101 |
|
0.3 |
|
|
|
64 |
|
0.2 |
|
|
|
247,442 |
|
65.9 |
|
|
|
Total installment loans |
|
27,783 |
|
84.3 |
|
|
|
36,064 |
|
96.1 |
|
|
|
373,040 |
|
99.3 |
|
|
|
Total loans held for sale |
$ |
32,963 |
|
100.0 |
% |
|
$ |
37,529 |
|
100.0 |
% |
|
$ |
375,724 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Total loans and leases portfolio |
$ |
15,412,400 |
|
|
|
$ |
15,097,968 |
|
|
|
$ |
13,632,639 |
|
|
||||
Loans and Leases Held for Investment
Loans and leases held for investment were $15.4 billion at June 30, 2025, up $319 million, or 2%, from March 31, 2025. Specialized lending increased by $385 million, or 6% quarter-over-quarter, to $6.5 billion. Mortgage finance loans increased by $148 million, or 10% to $1.6 billion. Non-owner occupied commercial real estate loans increased by $58 million, or 4% to $1.5 billion. These increases were partially offset by decreases in multifamily loans of $75 million, or 3% to $2.2 billion, owner-occupied commercial real estate loans of $74 million, or 7% to $1.1 billion, consumer installment loans of $64 million, or 7% to $802 million and construction loans of $56 million, or 36% to $99 million.
Loans and leases held for investment of $15.4 billion at June 30, 2025 were up $2.1 billion, or 16%, year-over-year. Specialized lending increased by $926 million, or 17% year-over-year. Mortgage finance loans increased by $503 million. Non-owner occupied commercial real estate loans increased by $295 million. Owner-occupied commercial real estate loans increased by $259 million. Multifamily loans increased by $180 million. Consumer installment loans increased $45 million, inclusive of the transfer from loans held for sale in Q1 2025. These increases were partially offset by decreases in construction loans of $65 million and other commercial and industrial loans of $54 million.
Loans Held for Sale
Loans held for sale decreased $5 million quarter-over-quarter, and were $33 million at June 30, 2025.
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 |
|
|
|
At or Three Months Ended |
|
|
|||||||||||||||||
|
(Dollars in thousands) |
June 30, 2025 |
|
March 31, 2025 |
|
Increase (Decrease) |
|
June 30, 2025 |
|
June 30, 2024 |
|
Increase (Decrease) |
|||||||||||||
|
Allowance for credit losses on loans and leases |
$ |
147,418 |
|
|
$ |
141,076 |
|
|
$ |
6,342 |
|
|
$ |
147,418 |
|
|
$ |
132,436 |
|
|
$ |
14,982 |
|
|
|
Provision (benefit) for credit losses on loans and leases |
$ |
18,457 |
|
|
$ |
21,445 |
|
|
$ |
(2,988 |
) |
|
$ |
18,457 |
|
|
$ |
17,851 |
|
|
$ |
606 |
|
|
|
Net charge-offs from loans held for investment |
$ |
13,115 |
|
|
$ |
17,144 |
|
|
$ |
(4,029 |
) |
|
$ |
13,115 |
|
|
$ |
18,711 |
|
|
$ |
(5,596 |
) |
|
|
Annualized net charge-offs to average loans and leases |
|
0.35 |
% |
|
|
0.48 |
% |
|
|
|
|
0.35 |
% |
|
|
0.56 |
% |
|
|
|||||
|
Coverage of credit loss reserves for loans and leases held for investment |
|
1.07 |
% |
|
|
1.04 |
% |
|
|
|
|
1.07 |
% |
|
|
1.08 |
% |
|
|
|||||
Net charge-offs decreased with $13.1 million in Q2 2025, compared to $17.1 million in Q1 2025, and $18.7 million in Q2 2024.
Provision (benefit) for Credit Losses
|
|
Three Months Ended |
|
|
|
Three Months Ended |
|
|
||||||||||||
|
(Dollars in thousands) |
June 30, 2025 |
|
March 31, 2025 |
|
Increase (Decrease) |
|
June 30, 2025 |
|
June 30, 2024 |
|
Increase (Decrease) |
||||||||
|
Provision (benefit) for credit losses on loans and leases |
$ |
18,457 |
|
$ |
21,445 |
|
$ |
(2,988 |
) |
|
$ |
18,457 |
|
$ |
17,851 |
|
$ |
606 |
|
|
Provision (benefit) for credit losses on available for sale debt securities |
|
2,324 |
|
|
6,852 |
|
|
(4,528 |
) |
|
|
2,324 |
|
|
270 |
|
|
2,054 |
|
|
Provision for credit losses |
|
20,781 |
|
|
28,297 |
|
|
(7,516 |
) |
|
|
20,781 |
|
|
18,121 |
|
|
2,660 |
|
|
Provision (benefit) for credit losses on unfunded commitments |
|
1,594 |
|
|
1,208 |
|
|
386 |
|
|
|
1,594 |
|
|
1,594 |
|
|
— |
|
|
Total provision for credit losses |
$ |
22,375 |
|
$ |
29,505 |
|
$ |
(7,130 |
) |
|
$ |
22,375 |
|
$ |
19,715 |
|
$ |
2,660 |
|
The provision for credit losses on loans and leases in Q2 2025 was $18.5 million, compared to $21.4 million in Q1 2025. The lower provision in Q2 2025 was primarily due to lower balances in the consumer installment loan portfolio, partially offset by slight deterioration in macroeconomic forecasts and an increase in commercial loan balances held for investment.
The provision for credit losses on available for sale investment securities in Q2 2025 was $2.3 million, compared to $6.9 million in Q1 2025.
The provision for credit losses on loans and leases in Q2 2025 was $18.5 million, compared to $17.9 million in Q2 2024. The higher provision in Q2 2025 compared to the year ago period was primarily due to slight deterioration in macroeconomic forecasts and an increase in loan balances held for investment.
The provision for credit losses on available for sale investment securities in Q2 2025 was $2.3 million compared to $0.3 million in Q2 2024.
Asset Quality
The following table presents asset quality metrics as of the dates indicated:
|
(Dollars in thousands) |
June 30, 2025 |
|
March 31, 2025 |
|
Increase (Decrease) |
|
June 30, 2025 |
|
June 30, 2024 |
|
Increase (Decrease) |
|||||||||||||
|
Non-performing assets (“NPAs”): |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Nonaccrual / non-performing loans (“NPLs”) |
$ |
28,443 |
|
|
$ |
43,513 |
|
|
$ |
(15,070 |
) |
|
$ |
28,443 |
|
|
$ |
47,380 |
|
|
$ |
(18,937 |
) |
|
|
Non-performing assets |
$ |
60,778 |
|
|
$ |
57,960 |
|
|
$ |
2,818 |
|
|
$ |
60,778 |
|
|
$ |
47,444 |
|
|
$ |
13,334 |
|
|
|
NPLs to total loans and leases |
|
0.18 |
% |
|
|
0.29 |
% |
|
|
|
|
0.18 |
% |
|
|
0.35 |
% |
|
|
|||||
|
Reserves to NPLs |
|
518.29 |
% |
|
|
324.22 |
% |
|
|
|
|
518.29 |
% |
|
|
279.52 |
% |
|
|
|||||
|
NPAs to total assets |
|
0.27 |
% |
|
|
0.26 |
% |
|
|
|
|
0.27 |
% |
|
|
0.23 |
% |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Loans and leases (1) risk ratings: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Commercial loans and leases |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Pass |
$ |
12,047,656 |
|
|
$ |
11,815,403 |
|
|
$ |
232,253 |
|
|
$ |
12,047,656 |
|
|
$ |
10,500,922 |
|
|
$ |
1,546,734 |
|
|
|
Special Mention |
|
174,587 |
|
|
|
189,155 |
|
|
|
(14,568 |
) |
|
|
174,587 |
|
|
|
170,014 |
|
|
|
4,573 |
|
|
|
Substandard |
|
256,849 |
|
|
|
276,018 |
|
|
|
(19,169 |
) |
|
|
256,849 |
|
|
|
270,898 |
|
|
|
(14,049 |
) |
|
|
Total commercial loans and leases |
|
12,479,092 |
|
|
|
12,280,576 |
|
|
|
198,516 |
|
|
|
12,479,092 |
|
|
|
10,941,834 |
|
|
|
1,537,258 |
|
|
|
Consumer loans |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Performing |
|
1,209,377 |
|
|
|
1,242,753 |
|
|
|
(33,376 |
) |
|
|
1,209,377 |
|
|
|
1,256,816 |
|
|
|
(47,439 |
) |
|
|
Non-performing |
|
20,298 |
|
|
|
13,803 |
|
|
|
6,495 |
|
|
|
20,298 |
|
|
|
17,270 |
|
|
|
3,028 |
|
|
|
Total consumer loans |
|
1,229,675 |
|
|
|
1,256,556 |
|
|
|
(26,881 |
) |
|
|
1,229,675 |
|
|
|
1,274,086 |
|
|
|
(44,411 |
) |
|
|
Loans and leases receivable (1) |
$ |
13,708,767 |
|
|
$ |
13,537,132 |
|
|
$ |
171,635 |
|
|
$ |
13,708,767 |
|
|
$ |
12,215,920 |
|
|
$ |
1,492,847 |
|
|
|
(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, loans receivable, installment, 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 an important common denominator: a 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 historically low loss rates. Because of this emphasis, the Bank’s credit quality to date has been strong despite a challenging economic and interest rate 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 June 30, 2025 were less than 4% of total assets and approximately 5% of total loans and leases held for investment, and were supported by an allowance for credit losses of $44.9 million. At June 30, 2025, the consumer installment portfolio had the following characteristics: average original FICO score of 739, average debt-to-income of 20% and average borrower income of $106 thousand.
Non-performing loans at June 30, 2025 decreased to 0.18% of total loans and leases, compared to 0.29% at March 31, 2025 and 0.35% at June 30, 2024.
Investment Securities
The investment securities portfolio, including debt securities classified as 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 the Bank’s liquidity position.
The following table presents the composition of the investment securities portfolio as of the dates indicated:
|
(Dollars in thousands) |
June 30, 2025 |
|
March 31, 2025 |
|
June 30, 2024 |
||||
|
Debt securities, available for sale |
$ |
1,846,566 |
|
$ |
2,024,437 |
|
$ |
2,477,758 |
|
|
Equity securities |
|
30,840 |
|
|
33,118 |
|
|
33,892 |
|
|
Investment securities, at fair value |
|
1,877,406 |
|
|
2,057,555 |
|
|
2,511,650 |
|
|
Debt securities, held to maturity |
|
853,126 |
|
|
938,161 |
|
|
962,799 |
|
|
Total investment securities portfolio |
$ |
2,730,532 |
|
$ |
2,995,716 |
|
$ |
3,474,449 |
|
At June 30, 2025, the AFS debt securities portfolio had a spot yield of 5.78%, an effective duration of approximately 3.0 years, and approximately 23% are variable rate. Additionally, 64% of the AFS securities portfolio was AAA rated at June 30, 2025.
At June 30, 2025, the HTM debt securities portfolio represented only 3.8% of total assets at June 30, 2025, had a spot yield of 3.79% and an effective duration of approximately 4.2 years. Additionally, at June 30, 2025, approximately 54% of the HTM securities were AAA rated and $0.3 billion were 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) |
June 30, 2025 |
|
% of Total |
|
March 31, 2025 |
|
% of Total |
|
June 30, 2024 |
|
% of Total |
|||||||
|
Demand, non-interest bearing |
$ |
5,481,065 |
|
28.9 |
% |
|
$ |
5,552,605 |
|
29.3 |
% |
|
$ |
4,474,862 |
|
25.3 |
% |
|
|
Demand, interest bearing |
|
4,912,839 |
|
25.9 |
|
|
|
5,137,961 |
|
27.2 |
|
|
|
5,894,056 |
|
33.4 |
|
|
|
Total demand deposits |
|
10,393,904 |
|
54.8 |
|
|
|
10,690,566 |
|
56.5 |
|
|
|
10,368,918 |
|
58.7 |
|
|
|
Savings |
|
1,375,072 |
|
7.2 |
|
|
|
1,327,854 |
|
7.0 |
|
|
|
1,573,661 |
|
8.9 |
|
|
|
Money market |
|
4,206,516 |
|
22.2 |
|
|
|
4,057,458 |
|
21.4 |
|
|
|
3,539,815 |
|
20.0 |
|
|
|
Time deposits |
|
3,000,526 |
|
15.8 |
|
|
|
2,857,047 |
|
15.1 |
|
|
|
2,195,699 |
|
12.4 |
|
|
|
Total deposits |
$ |
18,976,018 |
|
100.0 |
% |
|
$ |
18,932,925 |
|
100.0 |
% |
|
$ |
17,678,093 |
|
100.0 |
% |
|
Total deposits increased $43 million to $19.0 billion at June 30, 2025 as compared to the prior quarter. Money market deposits increased $149 million, or 4%, to $4.2 billion, time deposits increased $143 million, or 5%, to $3.0 billion and savings deposits increased $47 million, or 4%, to $1.4 billion. These increases were offset by decreases in interest bearing demand deposits of $225 million, or 4%, to $4.9 billion, which included the reduction of approximately $187 million of deposits serviced by BM Technologies, Inc. primarily from the transfer of deposits to a new partner bank during the quarter, and non-interest bearing demand deposits of $72 million, or 1%, to $5.5 billion. The total average cost of deposits increased by 3 basis points to 2.85% in Q2 2025 from 2.82% in the prior quarter. Total estimated uninsured deposits were $5.7 billion1, or 30% of total deposits (inclusive of accrued interest) at June 30, 2025 with immediately available liquidity covering approximately 150% of these deposits.
“The planned reduction in deposits serviced by BM Technologies, Inc had an approximately 3 basis point impact on total average cost of deposits and an approximately 6 basis point impact on total interest bearing cost of deposits in the quarter. Adjusting for this impact, total average deposit costs would have been flat and interest bearing deposit costs would have declined by 5 basis points in the quarter from the continued progress on our deposit remix efforts,” stated Customers Bancorp President Sam Sidhu.
|
|
|
|
|
|
|
1 Uninsured deposits (estimate) of $7.4 billion to be reported on the Bank’s call report, less deposits of $1.6 billion collateralized by standby letters of credit from the FHLB and from our affiliates of $116 million. |
||||
Contacts
Jordan Baucum, Head of Corporate Communications 951-608-8314
