Customers Bancorp Reports Results for Second Quarter 2023

By: Customers Bancorp, Inc. via Business Wire

July 27, 2023 at 16:34 PM EDT

Customers Bancorp, Inc. (NYSE:CUBI)

Second Quarter 2023 Highlights

Q2 2023 net income available to common shareholders was $44.0 million, or $1.39 per diluted share; ROAA was 0.88% and ROCE was 13.22%.
Q2 2023 core earnings* were $52.2 million, or $1.65 per diluted share; Core ROAA* was 1.03% and Core ROCE* was 15.67%.
CET 1 capital ratio of 10.3%¹ at June 30, 2023, compared to 9.6% at March 31, 2023. Significant progress toward stated goal of 11.0% - 11.5% by year-end 2023.
Q2 2023 net interest margin, tax equivalent (NIM) was 3.15%, an increase of 19 basis points over Q1 2023 NIM of 2.96%. Q1 2023 NIM (excluding PPP)* was 2.80%
Significant positive deposit mix shift in Q2 2023 as total deposits grew by $226.8 million, with an increase in non-interest bearing deposits of $1.0 billion, or 29%, over Q1 2023. The average cost of deposits decreased 21 basis points in Q2 2023 while the June 30, 2023 spot cost of deposits declined one basis point from March 31, 2023 despite an increase in market interest rates in Q2 2023.
Total estimated insured deposits were 77%² of total deposits at June 30, 2023, with immediately available liquidity covering uninsured deposits by approximately 222%.
Q2 2023 adjusted pre-tax pre-provision net income* was $96.8 million; adjusted pre-tax pre-provision ROAA* was 1.79%; and adjusted pre-tax pre-provision ROCE* was 28.01%.
Q2 2023 loans declined $1.2 billion or 7.6% over Q1 2023, with average loan yields up 13 basis points in Q2 2023, principally due to non-strategic loan sales.
Q2 2023 provision for credit losses on loans and leases of $22.4 million was largely driven by the recognition of weaker macroeconomic forecasts.
Non-performing assets were $28.4 million, or 0.13% of total assets, at June 30, 2023, down $3.9 million, or 12%, from March 31, 2023. Allowance for credit losses on loans and leases equaled 494% of non-performing loans at June 30, 2023, compared to 406% at March 31, 2023.
Q2 2023 book value per share and tangible book value per share* both grew by $1.08, or 2.6%, with increased AOCI losses of $11.9 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.
¹Regulatory capital ratios as of June 30, 2023 are estimates.
²Uninsured deposits (estimate) of $4.7 billion to be reported on the Bank's call report, less state and municipal deposits of $459.4 million collateralized by our line of credit from FHLB and from our affiliates of $92.0 million.

CEO Commentary

“We are very pleased with our second quarter results as we executed seamlessly on our strategic priorities and delivered one of our strongest quarters to date,” said Customers Bancorp Chairman and CEO Jay Sidhu. “While the industry continues to face significant headwinds from rising funding costs, negative deposit mix shifts and net interest margin compression, we successfully grew total deposits by $226.8 million in Q2 2023, even after the payoff of net brokered CDs of $660 million, with an increase in non-interest bearing deposits of $1 billion, or 29%. We expanded our net interest margin significantly over Q1 2023 despite holding even higher cash balances for prudent risk management purposes. Notably, our average cost of deposits decreased 21 basis points during the quarter as we replaced higher cost wholesale deposits with lower cost core deposits and continued to strengthen our deposit franchise. Our average loan yields increased 13 basis points as a result of the increase in interest rates and the floating rate nature of our loan portfolio. Following through on the commitments we made last quarter, we successfully exited certain non-strategic loan portfolios by selling $670 million in short-term syndicated capital call lines of credit and $556.7 million in consumer installment loans. This provided balance sheet capacity for the previously announced $631 million Venture Banking portfolio acquired from the FDIC at a 15% discount and afforded us a significant opportunity to further grow and strengthen our deposit franchise, improve our profitability, and increase our capital ratios,” stated Jay Sidhu.

“Our Q2 2023 GAAP earnings were $44.0 million, or $1.39 per diluted share. Core earnings* were $52.2 million, or $1.65 per diluted share, well above consensus estimates. At June 30, 2023, our deposit base was well diversified, with approximately 77%² of total deposits insured. We maintain a strong liquidity position, with $9.1 billion of liquidity immediately available, which covers approximately 222% of uninsured deposits and our loan to deposit ratio was about 77%. We continued to purposely moderate loan growth and took other strategic actions in the second quarter 2023 to further improve our capital ratios. At June 30, 2023, we had $3.2 billion of cash on hand, which we believe was prudent given persisting levels of uncertainty. Asset quality remains exceptional and credit reserves are extremely robust at 494% of total non-performing loans at the end of Q2 2023. The prudent risk management strategic actions that we have taken over the past several quarters have us well positioned from a capital, credit, liquidity, interest rate risk, and earnings perspective as we enter the second half of 2023. With persisting levels of uncertainty, we believe it is prudent to continue to moderate growth, or even shrink the balance sheet somewhat, and focus on further strengthening the balance sheet and improving capital ratios. We remain committed to improving our CET 1 ratio to 11.0% - 11.5% by year-end 2023 and are extremely proud of the progress that we made in just one quarter. We are confident in our ability to manage our credit, interest rate, and liquidity risks, and superbly service our clients in all operating environments. We are incredibly optimistic about our future,” 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.
¹Regulatory capital ratios as of June 30, 2023 are estimates.
²Uninsured deposits (estimate) of $4.7 billion to be reported on the Bank's call report, less state and municipal deposits of $459.4 million collateralized by our line of credit from FHLB and from our affiliates of $92.0 million.

Financial Highlights

(Dollars in thousands, except per share data)	At or Three Months Ended						Increase (Decrease)
(Dollars in thousands, except per share data)	June 30, 2023			March 31, 2023			Increase (Decrease)
Profitability Metrics:
Net income available for common shareholders	$	44,007		$	50,265		$	(6,258	)	(12.5	)%
Diluted earnings per share	$	1.39		$	1.55		$	(0.16	)	(10.3	)%
Core earnings*	$	52,163		$	51,143		$	1,020		2.0	%
Core earnings per share*	$	1.65		$	1.58		$	0.07		4.4	%
Core earnings, excluding PPP*	$	54,231		$	41,537		$	12,694		30.6	%
Core earnings per share, excluding PPP*	$	1.72		$	1.28		$	0.44		34.4	%
Return on average assets ("ROAA")		0.88	%		1.03	%		(0.15	)
Core ROAA*		1.03	%		1.05	%		(0.02	)
Core ROAA, excluding PPP*		1.07	%		0.87	%		0.20
Return on average common equity ("ROCE")		13.22	%		16.00	%		(2.78	)
Core ROCE*		15.67	%		16.28	%		(0.61	)
Adjusted pre-tax pre-provision net income*	$	96,833		$	89,282		$	7,551		8.5	%
Adjusted pre-tax pre-provision net income ROAA, excluding PPP*		1.83	%		1.53	%		0.30
Net interest margin, tax equivalent		3.15	%		2.96	%		0.19
Net interest margin, tax equivalent, excluding PPP*		3.20	%		2.80	%		0.40
Loan yield		6.83	%		6.70	%		0.13
Loan yield, excluding PPP*		6.89	%		6.46	%		0.43
Cost of deposits		3.11	%		3.32	%		(0.21	)
Efficiency ratio		49.25	%		47.71	%		1.54
Core efficiency ratio*		47.84	%		47.09	%		0.75
Balance Sheet Trends:
Total assets	$	22,028,565		$	21,751,614		$	276,951		1.3	%
Total loans and leases	$	13,910,907		$	15,063,034		$	(1,152,127	)	(7.6	)%
Total loans and leases, excluding PPP*	$	13,722,144		$	14,816,776		$	(1,094,632	)	(7.4	)%
Non-interest bearing demand deposits	$	4,490,198		$	3,487,517		$	1,002,681		28.8	%
Total deposits	$	17,950,431		$	17,723,617		$	226,814		1.3	%
Capital Metrics:
Common Equity	$	1,318,858		$	1,283,226		$	35,632		2.8	%
Tangible Common Equity*	$	1,315,229		$	1,279,597		$	35,632		2.8	%
Common Equity to Total Assets		6.0	%		5.9	%		0.1
Tangible Common Equity to Tangible Assets*		6.0	%		5.9	%		0.1
Tangible Common Equity to Tangible Assets, excluding PPP*		6.0	%		6.0	%		0.0
Book Value per common share	$	42.16		$	41.08		$	1.08		2.6	%
Tangible Book Value per common share*	$	42.04		$	40.96		$	1.08		2.6	%
Common equity Tier 1 capital ratio ⁽¹⁾		10.3	%		9.6	%		0.7
Total risk based capital ratio ⁽¹⁾		13.1	%		12.3	%		0.8

(1) Regulatory capital ratios as of June 30, 2023 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)					Six Months Ended						Increase (Decrease)
(Dollars in thousands, except per share data)	June 30, 2023			June 30, 2022			Increase (Decrease)					June 30, 2023			June 30, 2022			Increase (Decrease)
Profitability Metrics:
Net income available for common shareholders	$	44,007		$	56,519		$	(12,512	)	(22.1	)%	$	94,272		$	131,415		$	(37,143	)	(28.3	)%
Diluted earnings per share	$	1.39		$	1.68		$	(0.29	)	(17.3	)%	$	2.95		$	3.87		$	(0.92	)	(23.8	)%
Core earnings*	$	52,163		$	59,367		$	(7,204	)	(12.1	)%	$	103,306		$	134,777		$	(31,471	)	(23.4	)%
Core earnings per share*	$	1.65		$	1.77		$	(0.12	)	(6.8	)%	$	3.22		$	3.97		$	(0.75	)	(18.9	)%
Core earnings, excluding PPP*	$	54,231		$	46,301		$	7,930		17.1	%	$	95,768		$	96,998		$	(1,230	)	(1.3	)%
Core earnings per share, excluding PPP*	$	1.72		$	1.38		$	0.34		24.6	%	$	2.99		$	2.86		$	0.13		4.5	%
Return on average assets ("ROAA")		0.88	%		1.17	%		(0.29	)				0.96	%		1.39	%		(0.43	)
Core ROAA*		1.03	%		1.23	%		(0.20	)				1.04	%		1.43	%		(0.39	)
Core ROAA, excluding PPP*		1.07	%		1.04	%		0.03					0.97	%		1.04	%		(0.07	)
Return on average common equity ("ROCE")		13.22	%		18.21	%		(4.99	)				14.57	%		21.23	%		(6.66	)
Core ROCE*		15.67	%		19.13	%		(3.46	)				15.97	%		21.77	%		(5.80	)
Adjusted pre-tax pre-provision net income*	$	96,833		$	105,692		$	(8,859	)	(8.4	)%	$	186,115		$	218,341		$	(32,226	)	(14.8	)%
Adjusted pre-tax pre-provision net income ROAA, excluding PPP*		1.83	%		1.85	%		(0.02	)				1.69	%		1.86	%		(0.17	)
Net interest margin, tax equivalent		3.15	%		3.39	%		(0.24	)				3.06	%		3.49	%		(0.43	)
Net interest margin, tax equivalent, excluding PPP*		3.20	%		3.32	%		(0.12	)				3.01	%		3.32	%		(0.31	)
Loan yield		6.83	%		4.54	%		2.29					6.77	%		4.60	%		2.17
Loan yield, excluding PPP*		6.89	%		4.56	%		2.33					6.67	%		4.50	%		2.17
Cost of deposits		3.11	%		0.54	%		2.57					3.22	%		0.44	%		2.78
Efficiency ratio		49.25	%		42.14	%		7.11					48.51	%		40.76	%		7.75
Core efficiency ratio*		47.84	%		41.74	%		6.10					47.49	%		40.59	%		6.90
Balance Sheet Trends:
Total assets	$	22,028,565		$	20,251,996		$	1,776,569		8.8	%
Total loans and leases	$	13,910,907		$	15,664,353		$	(1,753,446	)	(11.2	)%
Total loans and leases, excluding PPP*	$	13,722,144		$	14,094,193		$	(372,049	)	(2.6	)%
Non-interest bearing demand deposits	$	4,490,198		$	4,683,030		$	(192,832	)	(4.1	)%
Total deposits	$	17,950,431		$	16,944,719		$	1,005,712		5.9	%
Capital Metrics:
Common Equity	$	1,318,858		$	1,215,596		$	103,262		8.5	%
Tangible Common Equity*	$	1,315,229		$	1,211,967		$	103,262		8.5	%
Common Equity to Total Assets		6.0	%		6.0	%		0.0
Tangible Common Equity to Tangible Assets*		6.0	%		6.0	%		0.0
Tangible Common Equity to Tangible Assets, excluding PPP*		6.0	%		6.5	%		(0.5	)
Book Value per common share	$	42.16		$	37.46		$	4.70		12.5	%
Tangible Book Value per common share*	$	42.04		$	37.35		$	4.69		12.6	%
Common equity Tier 1 capital ratio ⁽¹⁾		10.3	%		9.7	%		0.6
Total risk based capital ratio ⁽¹⁾		13.1	%		12.6	%		0.5

(1) Regulatory capital ratios as of June 30, 2023 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)	June 30, 2023		% of Total		March 31, 2023		% of Total		June 30, 2022		% of Total
Loans and Leases Held for Investment
Commercial:
Commercial & industrial:
Specialty lending	$	5,534,832	40.0	%	$	5,519,176	37.7	%	$	4,599,640	29.4	%
Other commercial & industrial		1,052,145	7.6			1,168,161	8.0			1,037,444	6.7
Multifamily		2,151,734	15.6			2,195,211	15.0			2,008,784	12.8
Loans to mortgage companies		1,108,598	8.0			1,374,894	9.4			1,975,189	12.6
Commercial real estate owner occupied		842,042	6.1			895,314	6.1			710,577	4.5
Loans receivable, PPP		188,763	1.4			246,258	1.7			1,570,160	10.0
Commercial real estate non-owner occupied		1,211,091	8.8			1,245,248	8.5			1,152,869	7.4
Construction		212,214	1.5			188,123	1.3			195,687	1.2
Total commercial loans and leases		12,301,419	89.0			12,832,385	87.7			13,250,350	84.6
Consumer:
Residential		487,199	3.5			494,815	3.4			457,768	3.0
Manufactured housing		41,664	0.3			43,272	0.3			48,570	0.3
Installment:
Personal		752,470	5.4			849,420	5.8			1,613,628	10.3
Other		250,047	1.8			419,085	2.8			287,442	1.8
Total installment loans		1,002,517	7.2			1,268,505	8.6			1,901,070	12.1
Total consumer loans		1,531,380	11.0			1,806,592	12.3			2,407,408	15.4
Total loans and leases held for investment	$	13,832,799	100.0	%	$	14,638,977	100.0	%	$	15,657,758	100.0	%

Loans Held for Sale
Commercial:
Multifamily	$	—	—	%	$	4,051	1.0	%	$	4,136	62.7	%
Commercial real estate non-owner occupied		—	—			16,000	3.7			—	—
Total commercial loans and leases		—	—			20,051	4.7			4,136	62.7
Consumer:
Residential		1,234	1.6			821	0.2			2,459	37.3
Installment:
Personal		76,874	98.4			307,336	72.5			—	—
Other		—	—			95,849	22.6			—	—
Total installment loans		76,874	98.4			403,185	95.1			—	—
Total consumer loans		78,108	100.0			404,006	95.3			2,459	37.3
Total loans held for sale	$	78,108	100.0	%	$	424,057	100.0	%	$	6,595	100.0	%

Total loans and leases portfolio	$	13,910,907			$	15,063,034			$	15,664,353

Loans and Leases Held for Investment

Loans and leases held for investment were $13.8 billion at June 30, 2023, down $806.2 million, or 5.5%, from March 31, 2023, consistent with our stated goal of purposely moderating loan growth and exiting non-strategic relationships. Loans held for investment decreased in every category, except for relatively small increases in construction loans and specialty lending activities within commercial and industrial ("C&I") loans quarter-over-quarter.

On June 15, 2023, Customers acquired $631.0 million of a Venture Banking loan portfolio at a discount from the FDIC. Customers has also recruited team members that originated these loans to service the venture-backed growth industry from seed-stage through late-stage. The newly recruited team gives clients access to the capital to grow from innovation to maturity and leverage a customized, best-in-class tech platform to support their growth. The team has long-standing relationships with these clients offering them premier end-to-end financial services meeting their needs. The addition of these team members creates venture banking client coverage in Austin, the Bay Area, Boston, Southern California, Chicago, Denver, Raleigh/Durham, and Washington, D.C. The technology and life sciences portfolio has been combined with Customers’ existing technology and venture capital banking vertical. The portfolio of capital call loans to venture capital firms has been combined with Customers' existing direct capital call lines vertical within fund finance. This acquisition was accomplished from exiting and selling all non strategic short-term syndicated capital call lines of credit and payoffs and sales of other loans, and contributed to the moderate growth in specialty lending verticals of $15.7 million, or 0.3% quarter-over-quarter. Other C&I loans decreased $116.0 million, or 9.9% quarter-over-quarter, to $1.1 billion. Loans to mortgage companies decreased $266.3 million, or 19.4% quarter-over-quarter due to lower mortgage activity. Consumer installment loans held for investment decreased $266.0 million, or 21.0% quarter-over-quarter, to $1.0 billion as we continue to execute on our held-for-sale strategy and de-risk the held-for-investment loan portfolio in 2023.

Loans and leases held for investment of $13.8 billion at June 30, 2023 was down $1.8 billion, or 11.7%, year-over-year, largely driven by reduced balances in PPP loans of $1.4 billion, consumer installment loans of $898.6 million, and loans to mortgage companies of $866.6 million, offset in part by net growth in the lower risk variable rate specialty lending verticals of $935.2 million.

Loans Held for Sale

Loans held for sale decreased $345.9 million quarter-over-quarter, and were only $78.1 million at June 30, 2023 as we continue to build out our held-for-sale strategy in 2023. On June 30, 2023, Customers sold consumer installment loans that were classified as held for sale with a carrying value of $556.7 million, inclusive of $154.0 million of other installment loans transferred from held for investment to held for sale during Q2 2023, accrued interest and unamortized deferred loan origination costs. As part of these sales, Customers recognized a net loss on sale of $1.0 million, which is presented within "Gain (loss) on sale of SBA and other loans" in the consolidated statement of income.

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)	June 30, 2023			March 31, 2023			Increase (Decrease)			June 30, 2023			June 30, 2022			Increase (Decrease)
Allowance for credit losses on loans and leases	$	139,656		$	130,281		$	9,375		$	139,656		$	156,530		$	(16,874	)
Provision for credit losses on loans and leases	$	22,363		$	18,008		$	4,355		$	22,363		$	24,164		$	(1,801	)
Net charge-offs from loans held for investment	$	15,564		$	18,651		$	(3,087	)	$	15,564		$	13,481		$	2,083
Annualized net charge-offs to average loans and leases		0.42	%		0.49	%					0.42	%		0.36	%
Coverage of credit loss reserves for loans and leases held for investment		1.09	%		0.97	%					1.09	%		1.14	%
Coverage of credit loss reserves for loans and leases held for investment, excluding PPP*		1.11	%		0.99	%					1.11	%		1.28	%

* 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.

The decrease in net charge-offs in Q2 2023 compared to Q1 2023 was primarily due to a charge-off of a non-owner occupied commercial real estate loan in Q1 2023 and a decrease in consumer installment net charge-offs in Q2 2023 compared to Q1 2023. The net charge-offs of $15.6 million in Q2 2023 excludes $6.2 million of charge-offs for certain PCD loans acquired from FDIC applied against $8.7 million of allowance for credit losses on PCD loans recognized upon acquisition of the loan portfolio on June 15, 2023.

The increase in net charge-offs in Q2 2023 compared to Q2 2022, excluding the charge-offs for certain PCD loans acquired from FDIC, was primarily due to an increase in consumer installment net charge-offs in Q2 2023 compared to Q2 2022.

Provision for Credit Losses

	Three Months Ended					Increase (Decrease)			Three Months Ended						Increase (Decrease)
(Dollars in thousands)	June 30, 2023			March 31, 2023		Increase (Decrease)			June 30, 2023			June 30, 2022			Increase (Decrease)
Provision for credit losses on loans and leases	$	22,363		$	18,008	$	4,355		$	22,363		$	24,164		$	(1,801	)
Provision (benefit) for credit losses on available for sale debt securities		1,266			1,595		(329	)		1,266			(317	)		1,583
Provision for credit losses		23,629			19,603		4,026			23,629			23,847			(218	)
Provision (benefit) for credit losses on unfunded commitments		(304	)		280		(584	)		(304	)		608			(912	)
Total provision for credit losses	$	23,325		$	19,883	$	3,442		$	23,325		$	24,455		$	(1,130	)

The provision for credit losses on loans and leases in Q2 2023 was $22.4 million, compared to $18.0 million in Q1 2023. The provision in Q2 2023 was primarily due to our recognition of weaker macroeconomic forecasts, partially offset by lower consumer installment loans, as compared to provision in Q1 2023. The provision for credit losses on available for sale investment securities in Q2 2023 was $1.3 million compared to provision of $1.6 million in Q1 2023.

The provision for credit losses on loans and leases in Q2 2023 was $22.4 million, compared to $24.2 million in Q2 2022. The provision in Q2 2023 was primarily due to our recognition of weaker macroeconomic forecasts, partially offset by lower consumer installment loans, as compared to provision in Q2 2022, which was primarily to support loan growth. The provision for credit losses on available for sale investment securities in Q2 2023 was $1.3 million compared to a benefit to provision of $0.3 million in Q2 2022.

Asset Quality

The following table presents asset quality metrics as of the dates indicated:

(Dollars in thousands)	June 30, 2023			March 31, 2023			Increase (Decrease)			June 30, 2023			June 30, 2022			Increase (Decrease)
Non-performing assets ("NPAs"):
Nonaccrual / non-performing loans ("NPLs")	$	28,244		$	32,124		$	(3,880	)	$	28,244		$	28,064		$	180
Non-performing assets	$	28,380		$	32,260		$	(3,880	)	$	28,380		$	28,150		$	230
NPLs to total loans and leases		0.20	%		0.21	%					0.20	%		0.18	%
Reserves to NPLs		494.46	%		405.56	%					494.46	%		557.76	%
NPAs to total assets		0.13	%		0.15	%					0.13	%		0.14	%

Loans and leases ⁽¹⁾ risk ratings:
Commercial loans and leases ⁽²⁾
Pass	$	10,667,619		$	10,928,620		$	(261,001	)	$	10,667,619		$	9,355,846		$	1,311,773
Special Mention ⁽³⁾		166,468			136,986			29,482			166,468			106,566			59,902
Substandard ⁽³⁾		272,301			273,154			(853	)		272,301			343,175			(70,874	)
Total commercial loans and leases		11,106,388			11,338,760			(232,372	)		11,106,388			9,805,587			1,300,801
Consumer loans
Performing		1,508,208			1,787,123			(278,915	)		1,508,208			2,392,852			(884,644	)
Non-performing		23,172			19,469			3,703			23,172			14,556			8,616
Total consumer loans		1,531,380			1,806,592			(275,212	)		1,531,380			2,407,408			(876,028	)
Loans and leases receivable ⁽¹⁾	$	12,637,768		$	13,145,352		$	(507,584	)	$	12,637,768		$	12,212,995		$	424,773

(1)	Risk ratings are assigned to loans and leases held for investment, and excludes loans held for sale and loans receivable, mortgage warehouse, at fair value.
(2)	Excludes loan receivable, PPP, as eligible PPP loans are fully guaranteed by the Small Business Administration.
(3)	Includes $24.3 million of C&I loans rated Special Mention and $2.1 million rated Substandard at June 30, 2023 that were acquired from the FDIC on June 15, 2023.

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 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, we employ a bottom-up data driven approach to analyze the commercial portfolio.

Total consumer installment loans held for investment at June 30, 2023 were less than 5% of total assets and approximately 7% of total loans and leases held for investment, and were supported by an allowance for credit losses of $57.6 million. At June 30, 2023, our consumer installment portfolio had the following characteristics: average original FICO score of 733, average debt-to-income of 19% and average borrower income of $105 thousand.

Non-performing loans at June 30, 2023 were essentially flat at 0.20% of total loans and leases, compared to 0.21% at March 31, 2023 and 0.18% at June 30, 2022.

Investment Securities

Our investment securities portfolio, including debt securities 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 our liquidity position.

The following table presents the composition of our investment securities portfolio as of the dates indicated:

(Dollars in thousands)	June 30, 2023		March 31, 2023		June 30, 2022
Debt securities, available for sale	$	2,797,940	$	2,900,259	$	3,120,111
Equity securities		26,698		26,710		24,771
Investment securities, at fair value		2,824,638		2,926,969		3,144,882
Debt securities, held to maturity		1,258,560		870,294		495,039
Total investment securities portfolio	$	4,083,198	$	3,797,263	$	3,639,921

Critically important to performance during the recent banking crisis are the characteristics of a bank’s securities portfolio. While there may be virtually no credit risk in some of these portfolios, holding longer term and lower yielding securities is creating challenges for many banks. Our securities portfolio is highly liquid, short in duration, and high in yield. At June 30, 2023, our AFS debt securities portfolio had a spot yield of 5.38%, an effective duration of approximately 1.5 years, and approximately 47% are variable rate. Additionally, 62% of our AFS securities portfolio was AAA rated at June 30, 2023.

At June 30, 2023, our HTM debt securities portfolio represented only 5.7% of our total assets at June 30, 2023, had a spot yield of 4.41% and an effective duration of approximately 3.0 years. Additionally, at June 30, 2023, approximately 36% of our HTM securities were AAA rated and 57% were credit enhanced asset backed securities with no current expectation of credit losses.

As a part of the sales of consumer installment loans that were classified as held for sale, Customers provided some financing to the purchaser for a portion of the sale price in the form of $436.8 million of asset-backed securities, collateralized by the sold loans, which accounted for the increase in HTM debt securities at June 30, 2023 as compared to the prior quarter.

Deposits

The following table presents the composition of our deposit portfolio as of the dates indicated:

(Dollars in thousands)	June 30, 2023		% of Total		March 31, 2023		% of Total		June 30, 2022		% of Total
Demand, non-interest bearing	$	4,490,198	25.0	%	$	3,487,517	19.7	%	$	4,683,030	27.6	%
Demand, interest bearing		5,551,037	30.9			5,791,302	32.7			6,644,398	39.2
Total demand deposits		10,041,235	55.9			9,278,819	52.4			11,327,428	66.8
Savings		1,048,229	5.8			924,359	5.2			640,062	3.8
Money market		2,004,264	11.2			2,019,633	11.4			4,254,205	25.1
Time deposits		4,856,703	27.1			5,500,806	31.0			723,024	4.3
Total deposits	$	17,950,431	100.0	%	$	17,723,617	100.0	%	$	16,944,719	100.0	%

Total deposits increased $226.8 million, or 1.3%, to $18.0 billion at June 30, 2023 as compared to the prior quarter. Importantly, non-interest bearing demand deposits increased $1.0 billion, or 28.8%, to $4.5 billion. Savings deposits increased $123.9 million, or 13.4%, to $1.0 billion. These increases were offset by decreases in time deposits of $644.1 million, or 11.7%, to $4.9 billion, interest bearing demand deposits of $240.3 million, or 4.1%, to $5.6 billion and money market deposits of $15.4 million, or 0.8%, to $2.0 billion. The total average cost of deposits decreased by 21 basis points to 3.11% in Q2 2023 from 3.32% in the prior quarter primarily due to a shift in deposit mix. Total estimated uninsured deposits was $4.1 billion¹, or 23% of total deposits (inclusive of accrued interest) at June 30, 2023. We are also highly focused on total deposits with contractual term to manage our liquidity profile and the funding of loans and securities.

Total deposits increased $1.0 billion, or 5.9%, to $18.0 billion at June 30, 2023 as compared to a year ago. Time deposits increased $4.1 billion to $4.9 billion. Savings deposits increased $408.2 million, or 63.8%, to $1.0 billion. These increases were offset in part by decreases in money market deposits of $2.2 billion, or 52.9%, to $2.0 billion, interest bearing demand deposits of $1.1 billion, or 16.5%, to $5.6 billion and non-interest bearing demand deposits of $192.8 million, or 4.1%, to $4.5 billion. The total average cost of deposits increased by 257 basis points to 3.11% in Q2 2023 from 0.54% in the prior year primarily due to higher market interest rates and a shift in deposit mix.

__________________________________

¹ Uninsured deposits (estimate) of $4.7 billion to be reported on the Bank's call report, less state and municipal deposits of $459.4 million collateralized by our line of credit from FHLB and from our affiliates of $92.0 million.

Borrowings

The following table presents the composition of our borrowings as of the dates indicated:

(Dollars in thousands)	June 30, 2023		March 31, 2023		June 30, 2022
Federal funds purchased	$	—	$	—	$	770,000
FHLB advances		2,046,142		2,052,143		635,000
Senior notes		123,710		123,645		123,450
Subordinated debt		182,091		182,021		181,812
Total borrowings	$	2,351,943	$	2,357,809	$	1,710,262

Total borrowings were $2.4 billion at June 30, 2023, relatively unchanged from the prior quarter. As of June 30, 2023, Customers' borrowing capacity with the FRB and FHLB was approximately $8.6 billion, of which $2.1 billion of available capacity was utilized in borrowings and $600.5 million was utilized to collateralize state and municipal deposits.

Total borrowings increased $641.7 million, or 37.5%, to $2.4 billion at June 30, 2023 as compared to a year ago. This increase primarily resulted from an increase in FHLB advances to ensure ample cash on hand given the heightened liquidity risk in the banking system, particularly among regional banks since early March 2023, net of repayments of federal funds purchased.

Capital

The following table presents certain capital amounts and ratios as of the dates indicated:

(Dollars in thousands except per share data)	June 30, 2023			March 31, 2023			June 30, 2022
Customers Bancorp, Inc.
Common Equity	$	1,318,858		$	1,283,226		$	1,215,596
Tangible Common Equity*	$	1,315,229		$	1,279,597		$	1,211,967
Common Equity to Total Assets		6.0	%		5.9	%		6.0	%
Tangible Common Equity to Tangible Assets*		6.0	%		5.9	%		6.0	%
Tangible Common Equity to Tangible Assets, excluding PPP*		6.0	%		6.0	%		6.5	%
Book Value per common share	$	42.16		$	41.08		$	37.46
Tangible Book Value per common share*	$	42.04		$	40.96		$	37.35
Common equity Tier 1 (CET 1) capital ratio ⁽¹⁾		10.3	%		9.6	%		9.7	%
Total risk based capital ratio ⁽¹⁾		13.1	%		12.3	%		12.6	%

(1) Regulatory capital ratios as of June 30, 2023 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.

Customers Bancorp's common equity increased $35.6 million to $1.3 billion, and tangible common equity* increased $35.6 million to $1.3 billion, at June 30, 2023 compared to the prior quarter, respectively, as earnings of $44.0 million more than offset a negative impact of increased unrealized losses on investment securities of $11.9 million (net of taxes) deferred in accumulated other comprehensive income ("AOCI"). Similarly, book value per common share increased to $42.16 from $41.08, and tangible book value per common share* increased to $42.04 from $40.96, at June 30, 2023 and March 31, 2023, respectively.

Customers Bancorp's common equity increased $103.3 million to $1.3 billion, and tangible common equity* increased $103.3 million to $1.3 billion, at June 30, 2023 compared to a year ago, respectively, as earnings of $181.3 million more than offset a negative impact to AOCI from increased unrealized losses on investment securities of $43.3 million (net of taxes) and $45.1 million of common share repurchases. Similarly, book value per common share increased to $42.16 from $37.46, and tangible book value per common share* increased to $42.04 from $37.35, at June 30, 2023 and June 30, 2022, respectively.

At the Customers Bancorp level, the CET 1 capital ratio (estimate), total risk based capital ratio (estimate), common equity to total assets ratio and tangible common equity to tangible assets ratio ("TCE ratio") were 10.3%, 13.1%, 6.0%, and 6.0%, respectively, at June 30, 2023.

At the Customers Bank level, capital levels remained strong and well above regulatory minimums. At June 30, 2023, estimated Tier 1 capital (estimate) and total risk-based capital (estimate) were 11.9% and 13.3%, respectively.

Even though Customers remains well capitalized by all regulatory measures, its goal is to increase its CET 1 ratio at year-end 2023 to be between 11.0% - 11.5%. "It is prudent to continue to moderate or even shrink our balance sheet in this uncertain environment and have strong capital ratios," stated Jay Sidhu.

Key Profitability Trends

Net Interest Income

Net interest income totaled $165.3 million in Q2 2023, an increase of $15.4 million from Q1 2023, primarily due to higher interest income from interest earning deposits of $17.2 million maintained in response to heightened liquidity risk in the banking system, particularly among regional banks since early March 2023, variable rate lower credit risk specialty lending of $18.1 million, and commercial loans to mortgage companies of $2.2 million, reflecting higher average balances and market interest rates. These increases were partially offset by lower interest income on consumer installment loans of $2.3 million reflecting the impact of the sales transactions that occurred late in Q2 2023 and reduced PPP interest income of $21.9 million resulting primarily from reduced recognition of deferred fees as the PPP program was substantially completed in Q1 2023. In addition, interest expense on deposits and other borrowings decreased by $0.2 million in Q2 2023 largely resulting from the positive shift in deposit mix towards no to lower-interest bearing deposits despite higher interest rates during Q2 2023, mostly offset by increased borrowing costs reflecting a full quarter impact of FHLB advances drawn in Q1 2023.

Net interest income totaled $165.3 million in Q2 2023, an increase of $0.4 million from Q2 2022. This increase was due to higher interest income of $133.8 million resulting from increased average balance of interest earning assets of $1.5 billion and higher market interest rates on variable rate loans and investments, offset in part by higher interest expenses on deposits and other borrowings of $133.4 million primarily resulting from higher average balances of interest bearing deposits and other borrowings and increased market rates. Interest-earning asset growth was primarily driven by increases in C&I loans and leases, mostly in the variable rate lower credit risk specialty lending verticals and multifamily loans, offset in part by decreases in commercial loans to mortgage companies due to lower mortgage activity from rising interest rates, PPP loans as the PPP program was substantially completed in Q1 2023 and consumer installment loans. Total consumer installment loans decreased in Q2 2023 as compared to Q2 2022, as installment loans held for investment decreased primarily for risk management purposes and implementation of our held-for-sale strategy.

Non-Interest Income

The following table presents details of non-interest income for the periods indicated:

	Three Months Ended					Increase (Decrease)			Three Months Ended						Increase (Decrease)
(Dollars in thousands)	June 30, 2023			March 31, 2023		Increase (Decrease)			June 30, 2023			June 30, 2022			Increase (Decrease)
Commercial lease income	$	8,917		$	9,326	$	(409	)	$	8,917		$	6,592		$	2,325
Loan fees		4,271			3,990		281			4,271			2,618			1,653
Bank-owned life insurance		4,997			2,647		2,350			4,997			1,947			3,050
Mortgage warehouse transactional fees		1,376			1,074		302			1,376			1,883			(507	)
Gain (loss) on sale of SBA and other loans		(761	)		—		(761	)		(761	)		1,542			(2,303	)
Loss on sale of capital call lines of credit		(5,037	)		—		(5,037	)		(5,037	)		—			(5,037	)
Net gain (loss) on sale of investment securities		—			—		—			—			(3,029	)		3,029
Other		2,234			1,084		1,150			2,234			1,193			1,041
Total non-interest income	$	15,997		$	18,121	$	(2,124	)	$	15,997		$	12,746		$	3,251

Non-interest income totaled $16.0 million for Q2 2023, a decrease of $2.1 million compared to Q1 2023. The decrease was primarily due to a loss of $5.0 million realized from the sale of non-strategic short-term syndicated capital call lines of credit within our Specialty Lending vertical that the Bank exited completely and $0.8 million of net loss on sales of SBA loans and consumer installment loans that were classified as held for sale. These decreases were offset in part by increases in death benefits paid by insurance carriers under the bank-owned life insurance policies of $2.4 million and other income of $1.2 million mostly related to income from CRA-qualified investments in small business investment companies and tax interest and penalties refunds.

Non-interest income totaled $16.0 million for Q2 2023, an increase of $3.3 million compared to Q2 2022. The increase was primarily due to lower loss on securities sales of $3.0 million as there were no such sales in Q2 2023, and increases in death benefits paid by insurance carriers under the bank-owned life insurance policies of $3.1 million, commercial lease income of $2.3 million, loan fees of $1.7 million resulting from growth and other income of $1.0 million. These increases were offset partially by a $5.0 million loss realized from the sale of non-strategic short-term syndicated capital call lines of credit that the Bank exited completely and a decrease in net gain on sale of SBA and other loans of $2.3 million due to lower gains on sales of SBA loans and losses on sales of consumer installment loans that were classified as held for sale.

Non-Interest Expense

The following table presents details of non-interest expense for the periods indicated:

	Three Months Ended				Increase (Decrease)			Three Months Ended				Increase (Decrease)
(Dollars in thousands)	June 30, 2023		March 31, 2023		Increase (Decrease)			June 30, 2023		June 30, 2022		Increase (Decrease)
Salaries and employee benefits	$	33,120	$	32,345	$	775		$	33,120	$	25,334	$	7,786
Technology, communication and bank operations		16,407		16,589		(182	)		16,407		22,738		(6,331	)
Commercial lease depreciation		7,328		7,875		(547	)		7,328		5,552		1,776
Professional services		9,192		7,596		1,596			9,192		7,415		1,777
Loan servicing		4,777		4,661		116			4,777		4,341		436
Occupancy		2,519		2,760		(241	)		2,519		4,279		(1,760	)
FDIC assessments, non-income taxes and regulatory fees		9,780		2,728		7,052			9,780		1,619		8,161
Advertising and promotion		546		1,049		(503	)		546		353		193
Other		5,628		4,530		1,098			5,628		4,574		1,054
Total non-interest expense	$	89,297	$	80,133	$	9,164		$	89,297	$	76,205	$	13,092

The management of non-interest expenses remains a priority for us. However, this will not deter us from making investments in new technologies to support efficient and responsible growth in the future.

Non-interest expenses totaled $89.3 million in Q2 2023, an increase of $9.2 million compared to Q1 2023. The increase was primarily attributable to higher FDIC assessments, non-income taxes and regulatory fees of $7.1 million resulting from higher FDIC assessment rates, higher professional fees of $1.6 million to enhance our technology, compliance and risk management capabilities, other expenses of $1.1 million primarily due to higher provision for operating losses and increased salaries and employee benefits of $0.8 million driven by higher incentives and stock based awards offset by lower benefits and severance.

Non-interest expenses totaled $89.3 million in Q2 2023, an increase of $13.1 million compared to Q2 2022. The increase was primarily attributable to increases of $8.2 million of FDIC assessments, non-income taxes and regulatory fees resulting from higher FDIC assessment rates, $7.8 million in salaries and employee benefits due to higher headcount, annual merit increases, incentives and SERP expenses, $1.8 million in professional fees mostly for transaction related legal fees, $1.8 million in commercial lease depreciation from growth and $1.1 million in other expenses primarily due to higher provision for operating losses. These increases were offset in part by decreases of $6.3 million in deposit servicing-related expenses mostly due to lower servicing fees and the discontinuation of interchange maintenance fees paid to BM Technologies offset by higher fees paid for software as a service and $1.8 million in occupancy mostly due to impairments associated with consolidation of branch locations in Q2 2022.

Taxes

Income tax expense increased by $6.2 million to $20.8 million in Q2 2023 from $14.6 million in Q1 2023 primarily due to tax expense of $4.1 million recognized in Q2 2023 on surrendered bank-owned life insurance policies.

Income tax expense increased by $1.9 million to $20.8 million in Q2 2023 from $18.9 million in Q2 2022 primarily due to tax expense on surrendered bank-owned life insurance policies, offset in part by lower pre-tax income and increased income tax credits.

The effective tax rate for Q2 2023 was 30%, primarily due to tax on surrendered bank-owned life insurance policies. Excluding the tax on surrendered bank-owned life insurance policies, the effective tax rate for Q2 2023 was 24%. Customers expects the full-year 2023 effective tax rate to be approximately 22% to 24%.

Outlook

“Looking ahead, we will continue to moderate growth, or even reduce the size of the balance sheet, as we optimize the balance sheet and materially improve our capital ratios, maintain positive operating leverage with prudent expense management, and continue to improve deposits and liquidity. We expect 2023 core loans to be essentially flat to down. Deposits are expected to remain relatively flat with a focus on improving our funding profile and reducing high cost deposits. We expect full year 2023 net interest margin, excluding PPP* to be at the upper end of the previously guided range of 2.85% - 3.05%. 2023 Core EPS (excluding PPP)* is still expected to be about $6.00 with a core return on common equity* of over 15%. Core non-interest expense* is now expected to increase about 15% in 2023 as a result of higher FDIC assessments and the newly recruited Venture Banking team. We are still targeting a CET 1 ratio of approximately 11.0% - 11.5% by year-end 2023, following up on the 70 basis point increase we achieved during Q2 2023. We are focused on improving the quality of our balance sheet and deposit franchise, improving capital and liquidity, maintaining superior credit quality, expanding our net interest margin, and achieving our tangible book value guidance in excess of $45 by year-end 2023,” concluded Customers Bancorp President Sam 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 are included at the end of this document.

Webcast

Date:		Friday, July 28, 2023
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 2nd 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 $22 billion in assets, making it the 81 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 experiences delivered by best-in-class customer service. In addition to traditional lines such as C&I lending, commercial real estate lending, and multifamily lending, Customers Bank also provides a number of national corporate banking services to Specialty Lending clients. Major accolades include:

#5 in top-performing banks with assets between $10 billion and $50 billion in 2022 per American Banker;
#34 out of the 100 largest publicly traded banks in 2023 per Forbes; and
#64 on Fortune Magazine’s 2022 list of the 100 fastest growing companies in America.

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: a continuation of the recent turmoil in the banking industry, responsive measures taken by us and regulatory authorities to mitigate and manage related risks, regulatory actions taken that address related issues and the costs and obligations associated therewith, the impact of COVID-19 and its variants 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 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, 2022, 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.

Q2 2023 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended June 30, 2023 and the preceding four quarters:

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED

(Dollars in thousands, except per share data and stock price data)	Q2			Q1			Q4			Q3			Q2			Six Months Ended June 30,
	2023			2023			2022			2022			2022			2023			2022

GAAP Profitability Metrics:
Net income available to common shareholders	$	44,007		$	50,265		$	25,623		$	61,364		$	56,519		$	94,272		$	131,415
Per share amounts:
Earnings per share - basic	$	1.41		$	1.58		$	0.79		$	1.89		$	1.73		$	2.99		$	4.00
Earnings per share - diluted	$	1.39		$	1.55		$	0.77		$	1.85		$	1.68		$	2.95		$	3.87
Book value per common share ⁽¹⁾	$	42.16		$	41.08		$	39.08		$	38.46		$	37.46		$	42.16		$	37.46
CUBI stock price ⁽¹⁾	$	30.26		$	18.52		$	28.34		$	29.48		$	33.90		$	30.26		$	33.90
CUBI stock price as % of book value ⁽¹⁾		72	%		45	%		73	%		77	%		90	%		72	%		90	%
Average shares outstanding - basic		31,254,125			31,819,203			32,413,459			32,455,814			32,712,616			31,535,103			32,834,150
Average shares outstanding - diluted		31,591,142			32,345,017			33,075,422			33,226,607			33,579,013			31,965,997			33,950,973
Shares outstanding ⁽¹⁾		31,282,318			31,239,750			32,373,697			32,475,502			32,449,486			31,282,318			32,449,486
Return on average assets ("ROAA")		0.88	%		1.03	%		0.55	%		1.24	%		1.17	%		0.96	%		1.39	%
Return on average common equity ("ROCE")		13.22	%		16.00	%		8.05	%		19.33	%		18.21	%		14.57	%		21.23	%
Net interest margin, tax equivalent		3.15	%		2.96	%		2.67	%		3.16	%		3.39	%		3.06	%		3.49	%
Efficiency ratio		49.25	%		47.71	%		49.20	%		50.00	%		42.14	%		48.51	%		40.76	%
Non-GAAP Profitability Metrics ⁽²⁾:
Core earnings	$	52,163		$	51,143		$	39,368		$	82,270		$	59,367		$	103,306		$	134,777
Adjusted pre-tax pre-provision net income	$	96,833		$	89,282		$	81,377		$	100,994		$	105,692		$	186,115		$	218,341
Per share amounts:
Core earnings per share - diluted	$	1.65		$	1.58		$	1.19		$	2.48		$	1.77		$	3.22		$	3.97
Tangible book value per common share ⁽¹⁾	$	42.04		$	40.96		$	38.97		$	38.35		$	37.35		$	42.04		$	37.35
CUBI stock price as % of tangible book value ⁽¹⁾		72	%		45	%		73	%		77	%		91	%		72	%		91	%
Core ROAA		1.03	%		1.05	%		0.81	%		1.64	%		1.23	%		1.04	%		1.43	%
Core ROCE		15.67	%		16.28	%		12.36	%		25.91	%		19.13	%		15.97	%		21.77	%
Adjusted ROAA - pre-tax and pre-provision		1.79	%		1.72	%		1.56	%		1.95	%		2.11	%		1.76	%		2.25	%
Adjusted ROCE - pre-tax and pre-provision		28.01	%		27.33	%		24.59	%		31.01	%		33.37	%		27.68	%		34.62	%
Net interest margin, tax equivalent, excluding PPP loans		3.20	%		2.80	%		2.87	%		3.18	%		3.32	%		3.01	%		3.32	%
Core efficiency ratio		47.84	%		47.09	%		49.12	%		42.57	%		41.74	%		47.49	%		40.59	%
Asset Quality:
Net charge-offs	$	15,564		$	18,651		$	27,164		$	18,497		$	13,481		$	34,215		$	20,707
Annualized net charge-offs to average total loans and leases		0.42	%		0.49	%		0.70	%		0.47	%		0.36	%		0.46	%		0.29	%
Non-performing loans ("NPLs") to total loans and leases⁽¹⁾		0.20	%		0.21	%		0.19	%		0.18	%		0.18	%		0.20	%		0.18	%
Reserves to NPLs ⁽¹⁾		494.46	%		405.56	%		425.95	%		466.34	%		557.76	%		494.46	%		557.76	%
Non-performing assets ("NPAs") to total assets		0.13	%		0.15	%		0.15	%		0.14	%		0.14	%		0.13	%		0.14	%
Customers Bank Capital Ratios ⁽³⁾:
Common equity Tier 1 capital to risk-weighted assets		11.9	%		11.31	%		11.21	%		11.42	%		11.46	%		11.9	%		11.46	%
Tier 1 capital to risk-weighted assets		11.9	%		11.31	%		11.21	%		11.42	%		11.46	%		11.9	%		11.46	%
Total capital to risk-weighted assets		13.3	%		12.64	%		12.40	%		12.65	%		12.91	%		13.3	%		12.91	%
Tier 1 capital to average assets (leverage ratio)		8.0	%		8.09	%		8.15	%		8.10	%		8.09	%		8.0	%		8.09	%

(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 Q2 2023 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 June 30, 2023, our regulatory capital ratios reflected 50%, or $30.8 million, benefit associated with the CECL transition provisions.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(Dollars in thousands, except per share data)															Six Months Ended
	Q2			Q1		Q4			Q3			Q2			June 30,
	2023			2023		2022			2022			2022			2023			2022
Interest income:
Loans and leases	$	241,745		$	244,212	$	217,471		$	200,438		$	168,920		$	485,957		$	326,040
Investment securities		48,026			47,316		42,953			30,546			25,442			95,342			45,737
Loans held for sale		11,149			11,701		1,269			19			21			22,850			76
Interest earning deposits		27,624			10,395		6,754			2,949			919			38,019			1,248
Other		1,616			1,321		1,200			1,964			1,032			2,937			6,709
Total interest income		330,160			314,945		269,647			235,916			196,334			645,105			379,810

Interest expense:
Deposits		136,375			143,930		124,366			65,380			22,781			280,305			36,493
FHLB advances		24,285			10,370		4,464			4,684			2,316			34,655			2,316
FRB advances		—			6,286		—			—			—			6,286			—
Subordinated debt		2,689			2,689		2,688			2,689			2,689			5,378			5,378
Other borrowings		1,540			1,771		2,992			4,131			3,696			3,311			6,072
Total interest expense		164,889			165,046		134,510			76,884			31,482			329,935			50,259
Net interest income		165,271			149,899		135,137			159,032			164,852			315,170			329,551
Provision (benefit) for credit losses		23,629			19,603		28,216			(7,994	)		23,847			43,232			39,844
Net interest income after provision (benefit) for credit losses		141,642			130,296		106,921			167,026			141,005			271,938			289,707

Non-interest income:
Commercial lease income		8,917			9,326		8,135			7,097			6,592			18,243			12,487
Loan fees		4,271			3,990		4,017			3,008			2,618			8,261			5,163
Bank-owned life insurance		4,997			2,647		1,975			3,449			1,947			7,644			10,273
Mortgage warehouse transactional fees		1,376			1,074		1,295			1,545			1,883			2,450			3,898
Gain (loss) on sale of SBA and other loans		(761	)		—		—			106			1,542			(761	)		3,049
Loss on sale of capital call lines of credit		(5,037	)		—		—			—			—			(5,037	)		—
Loss on sale of consumer installment loans		—			—		—			(23,465	)		—			—			—
Net gain (loss) on sale of investment securities		—			—		(16,937	)		(2,135	)		(3,029	)		—			(4,092	)
Legal settlement gain		—			—		7,519			—			—			—			—
Other		2,234			1,084		1,341			1,378			1,193			3,318			3,166
Total non-interest income		15,997			18,121		7,345			(9,017	)		12,746			34,118			33,944

Non-interest expense:
Salaries and employee benefits		33,120			32,345		29,194			31,230			25,334			65,465			51,941
Technology, communication and bank operations		16,407			16,589		18,604			19,588			22,738			32,996			46,806
Commercial lease depreciation		7,328			7,875		6,518			5,966			5,552			15,203			10,494
Professional services		9,192			7,596		6,825			6,269			7,415			16,788			14,371
Loan servicing		4,777			4,661		4,460			3,851			4,341			9,438			6,712
Occupancy		2,519			2,760		3,672			2,605			4,279		��	5,279			7,329
FDIC assessments, non-income taxes and regulatory fees		9,780			2,728		2,339			2,528			1,619			12,508			4,002
Advertising and promotion		546			1,049		1,111			762			353			1,595			668
Other		5,628			4,530		5,696			3,399			4,574			10,158			7,689
Total non-interest expense		89,297			80,133		78,419			76,198			76,205			169,430			150,012
Income before income tax expense		68,342			68,284		35,847			81,811			77,546			136,626			173,639
Income tax expense		20,768			14,563		7,136			17,899			18,896			35,331			38,228
Net income		47,574			53,721		28,711			63,912			58,650			101,295			135,411
Preferred stock dividends		3,567			3,456		3,088			2,548			2,131			7,023			3,996
Net income available to common shareholders	$	44,007		$	50,265	$	25,623		$	61,364		$	56,519		$	94,272		$	131,415

Basic earnings per common share	$	1.41		$	1.58	$	0.79		$	1.89		$	1.73		$	2.99		$	4.00
Diluted earnings per common share		1.39			1.55		0.77			1.85			1.68			2.95			3.87

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - UNAUDITED
(Dollars in thousands)
	June 30,			March 31,			December 31,			September 30,			June 30,
	2023			2023			2022			2022			2022
ASSETS
Cash and due from banks	$	54,127		$	77,251		$	58,025		$	41,520		$	66,703
Interest earning deposits		3,101,097			1,969,434			397,781			362,945			178,475
Cash and cash equivalents		3,155,224			2,046,685			455,806			404,465			245,178
Investment securities, at fair value		2,824,638			2,926,969			2,987,500			2,943,694			3,144,882
Investment securities held to maturity		1,258,560			870,294			840,259			886,294			495,039
Loans held for sale		78,108			424,057			328,312			5,224			6,595
Loans receivable, mortgage warehouse, at fair value		1,006,268			1,247,367			1,323,312			1,569,090			1,874,603
Loans receivable, PPP		188,763			246,258			998,153			1,154,632			1,570,160
Loans and leases receivable		12,637,768			13,145,352			13,144,894			12,607,742			12,212,995
Allowance for credit losses on loans and leases		(139,656	)		(130,281	)		(130,924	)		(130,197	)		(156,530	)
Total loans and leases receivable, net of allowance for credit losses on loans and leases		13,693,143			14,508,696			15,335,435			15,201,267			15,501,228
FHLB, Federal Reserve Bank, and other restricted stock		126,240			124,733			74,196			64,112			74,626
Accrued interest receivable		119,501			123,754			123,374			107,621			98,727
Bank premises and equipment, net		8,031			8,581			9,025			6,610			6,755
Bank-owned life insurance		290,322			339,607			338,441			336,130			335,153
Goodwill and other intangibles		3,629			3,629			3,629			3,629			3,629
Other assets		471,169			374,609			400,135			408,575			340,184
Total assets	$	22,028,565		$	21,751,614		$	20,896,112		$	20,367,621		$	20,251,996

LIABILITIES AND SHAREHOLDERS' EQUITY
Demand, non-interest bearing deposits	$	4,490,198		$	3,487,517		$	1,885,045		$	2,993,793		$	4,683,030
Interest bearing deposits		13,460,233			14,236,100			16,271,908			14,528,645			12,261,689
Total deposits		17,950,431			17,723,617			18,156,953			17,522,438			16,944,719
Federal funds purchased		—			—			—			365,000			770,000
FHLB advances		2,046,142			2,052,143			800,000			500,000			635,000
Other borrowings		123,710			123,645			123,580			123,515			123,450
Subordinated debt		182,091			182,021			181,952			181,882			181,812
Accrued interest payable and other liabilities		269,539			249,168			230,666			287,855			243,625
Total liabilities		20,571,913			20,330,594			19,493,151			18,980,690			18,898,606

Preferred stock		137,794			137,794			137,794			137,794			137,794
Common stock		35,301			35,258			35,012			34,948			34,922
Additional paid in capital		555,737			552,255			551,721			549,066			545,670
Retained earnings		1,018,406			974,399			924,134			898,511			837,147
Accumulated other comprehensive income (loss), net		(168,176	)		(156,276	)		(163,096	)		(156,126	)		(124,881	)
Treasury stock, at cost		(122,410	)		(122,410	)		(82,604	)		(77,262	)		(77,262	)
Total shareholders' equity		1,456,652			1,421,020			1,402,961			1,386,931			1,353,390
Total liabilities and shareholders' equity	$	22,028,565		$	21,751,614		$	20,896,112		$	20,367,621		$	20,251,996

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED
(Dollars in thousands)
	Three Months Ended
	June 30, 2023						March 31, 2023						June 30, 2022
	Average Balance		Interest Income or Expense		Average Yield or Cost (%)		Average Balance		Interest Income or Expense		Average Yield or Cost (%)		Average Balance		Interest Income or Expense		Average Yield or Cost (%)
Assets
Interest earning deposits	$	2,150,154	$	27,624	5.15	%	$	914,149	$	10,395	4.61	%	$	434,950	$	919	0.85	%
Investment securities ⁽¹⁾		3,949,732		48,026	4.86	%		4,031,247		47,316	4.69	%		4,104,463		25,442	2.48	%
Loans and leases:
Commercial & industrial:
Specialty lending loans and leases ⁽²⁾		5,832,485		121,779	8.37	%		5,694,168		103,688	7.38	%		4,068,175		39,160	3.86	%
Other commercial & industrial loans ⁽²⁾		1,672,668		26,028	6.24	%		1,705,205		25,570	6.08	%		1,509,655		14,706	3.91	%
Commercial loans to mortgage companies		1,300,496		19,606	6.05	%		1,262,139		17,412	5.59	%		1,898,554		15,615	3.30	%
Multifamily loans		2,181,617		21,095	3.88	%		2,206,600		20,470	3.76	%		1,845,527		17,313	3.76	%
Loans receivable, PPP		207,127		1,633	3.16	%		889,235		23,551	10.74	%		1,863,429		20,572	4.43	%
Non-owner occupied commercial real estate loans		1,428,086		19,877	5.58	%		1,449,722		20,199	5.65	%		1,307,995		12,749	3.91	%
Residential mortgages		535,739		5,735	4.28	%		542,909		5,598	4.18	%		515,612		4,898	3.81	%
Installment loans		1,684,215		37,141	8.84	%		1,727,995		39,425	9.25	%		1,909,551		43,928	9.23	%
Total loans and leases ⁽³⁾		14,842,432		252,894	6.83	%		15,477,973		255,913	6.70	%		14,918,498		168,941	4.54	%
Other interest-earning assets		131,362		1,616	4.93	%		91,308		1,321	5.87	%		68,025		1,032	6.09	%
Total interest-earning assets		21,073,680		330,160	6.28	%		20,514,677		314,945	6.21	%		19,525,936		196,334	4.03	%
Non-interest-earning assets		581,055						538,243						530,084
Total assets	$	21,654,735					$	21,052,920					$	20,056,020
Liabilities
Interest checking accounts	$	5,309,775	$	49,862	3.77	%	$	7,494,379	$	70,485	3.81	%	$	6,409,617	$	13,644	0.85	%
Money market deposit accounts		1,978,546		19,678	3.99	%		2,470,004		20,783	3.41	%		4,704,767		7,523	0.64	%
Other savings accounts		997,205		9,839	3.96	%		822,312		6,286	3.10	%		695,176		758	0.44	%
Certificates of deposit		5,020,205		56,996	4.55	%		4,504,333		46,376	4.18	%		530,180		856	0.65	%
Total interest-bearing deposits ⁽⁴⁾		13,305,731		136,375	4.11	%		15,291,028		143,930	3.82	%		12,339,740		22,781	0.74	%
Federal funds purchased		—		—	—	%		15,333		188	4.97	%		642,747		1,429	0.89	%
Borrowings		2,357,981		28,514	4.85	%		1,788,116		20,928	4.75	%		940,068		7,272	3.10	%
Total interest-bearing liabilities		15,663,712		164,889	4.22	%		17,094,477		165,046	3.91	%		13,922,555		31,482	0.91	%
Non-interest-bearing deposits ⁽⁴⁾		4,258,711						2,299,295						4,491,574
Total deposits and borrowings		19,922,423			3.32	%		19,393,772			3.45	%		18,414,129			0.69	%
Other non-interest-bearing liabilities		259,111						247,575						259,279
Total liabilities		20,181,534						19,641,347						18,673,408
Shareholders' equity		1,473,201						1,411,573						1,382,612
Total liabilities and shareholders' equity	$	21,654,735					$	21,052,920					$	20,056,020
Net interest income				165,271						149,899						164,852
Tax-equivalent adjustment				390						375						270
Net interest earnings			$	165,661					$	150,274					$	165,122
Interest spread					2.96	%					2.76	%					3.35	%
Net interest margin					3.14	%					2.95	%					3.38	%
Net interest margin tax equivalent					3.15	%					2.96	%					3.39	%
Net interest margin tax equivalent excl. PPP ⁽⁵⁾					3.20	%					2.80	%					3.32	%



(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 3.11%, 3.32% and 0.54% for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, respectively.
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended June 30, 2023, March 31, 2023 and June 30, 2022, presented to approximate interest income as a taxable asset and 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.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED (CONTINUED)
(Dollars in thousands)
	Six Months Ended
	June 30, 2023						June 30, 2022
	Average Balance		Interest Income or Expense		Average Yield or Cost (%)		Average Balance		Interest Income or Expense		Average Yield or Cost (%)
Assets
Interest earning deposits	$	1,535,566	$	38,019	4.99	%	$	629,514	$	1,248	0.40	%
Investment securities ⁽¹⁾		3,990,265		95,342	4.78	%		4,070,901		45,737	2.25	%
Loans and leases:
Commercial & industrial:
Specialty lending loans and leases ⁽²⁾		5,763,708		225,467	7.89	%		3,403,276		62,551	3.71	%
Other commercial & industrial loans ⁽²⁾		1,688,847		51,598	6.16	%		1,451,858		27,974	3.89	%
Commercial loans to mortgage companies		1,281,424		37,018	5.83	%		1,867,772		29,620	3.20	%
Multifamily loans		2,194,039		41,565	3.82	%		1,689,553		31,079	3.71	%
Loans receivable, PPP		546,297		25,184	9.30	%		2,250,224		57,466	5.15	%
Non-owner occupied commercial real estate loans		1,438,844		40,076	5.62	%		1,310,091		24,956	3.84	%
Residential mortgages		539,304		11,333	4.24	%		466,288		8,578	3.71	%
Installment loans		1,705,984		76,566	9.05	%		1,852,167		83,892	9.13	%
Total loans and leases ⁽³⁾		15,158,447		508,807	6.77	%		14,291,229		326,116	4.60	%
Other interest-earning assets		111,446		2,937	5.32	%		60,113		6,709	NM ⁽⁶⁾
Total interest-earning assets		20,795,724		645,105	6.25	%		19,051,757		379,810	4.02	%
Non-interest-earning assets		559,766						543,479
Total assets	$	21,355,490					$	19,595,236
Liabilities
Interest checking accounts	$	6,396,042	$	120,347	3.79	%	$	6,091,263	$	21,374	0.71	%
Money market deposit accounts		2,222,917		40,461	3.67	%		4,791,925		12,197	0.51	%
Other savings accounts		910,241		16,125	3.57	%		787,134		1,542	0.39	%
Certificates of deposit		4,763,694		103,372	4.38	%		490,632		1,380	0.57	%
Total interest-bearing deposits ⁽⁴⁾		14,292,894		280,305	3.95	%		12,160,954		36,493	0.61	%
Federal funds purchased		7,624		188	4.97	%		367,210		1,502	0.82	%
Borrowings		2,074,623		49,442	4.81	%		737,464		12,264	3.35	%
Total interest-bearing liabilities		16,375,141		329,935	4.06	%		13,265,628		50,259	0.76	%
Non-interest-bearing deposits ⁽⁴⁾		3,284,416						4,695,148
Total deposits and borrowings		19,659,557			3.38	%		17,960,776			0.56	%
Other non-interest-bearing liabilities		253,376						248,266
Total liabilities		19,912,933						18,209,042
Shareholders' equity		1,442,557						1,386,194
Total liabilities and shareholders' equity	$	21,355,490					$	19,595,236
Net interest income				315,170						329,551
Tax-equivalent adjustment				765						509
Net interest earnings			$	315,935					$	330,060
Interest spread					2.86	%					3.45	%
Net interest margin					3.05	%					3.48	%
Net interest margin tax equivalent					3.06	%					3.49	%
Net interest margin tax equivalent excl. PPP ⁽⁵⁾					3.01	%					3.32	%


(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 3.22% and 0.44% for the six months ended June 30, 2023 and 2022, respectively.
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the six months ended June 30, 2023 and 2022, presented to approximate interest income as a taxable asset and 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.
(6) Not meaningful.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END LOAN AND LEASE COMPOSITION - UNAUDITED
(Dollars in thousands)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2023		2023		2022		2022		2022
Loans and leases held for investment
Commercial:
Commercial & industrial:
Specialty lending	$	5,534,832	$	5,519,176	$	5,412,887	$	5,103,974	$	4,599,640
Other commercial & industrial		1,052,145		1,168,161		1,135,336		1,064,332		1,037,444
Multifamily		2,151,734		2,195,211		2,213,019		2,263,268		2,008,784
Loans to mortgage companies		1,108,598		1,374,894		1,447,919		1,708,587		1,975,189
Commercial real estate owner occupied		842,042		895,314		885,339		726,670		710,577
Loans receivable, PPP		188,763		246,258		998,153		1,154,632		1,570,160
Commercial real estate non-owner occupied		1,211,091		1,245,248		1,290,730		1,263,211		1,152,869
Construction		212,214		188,123		162,009		136,133		195,687
Total commercial loans and leases		12,301,419		12,832,385		13,545,392		13,420,807		13,250,350
Consumer:
Residential		487,199		494,815		497,952		465,772		457,768
Manufactured housing		41,664		43,272		45,076		46,990		48,570
Installment:
Personal		752,470		849,420		964,641		1,056,432		1,613,628
Other		250,047		419,085		413,298		341,463		287,442
Total installment loans		1,002,517		1,268,505		1,377,939		1,397,895		1,901,070
Total consumer loans		1,531,380		1,806,592		1,920,967		1,910,657		2,407,408
Total loans and leases held for investment	$	13,832,799	$	14,638,977	$	15,466,359	$	15,331,464	$	15,657,758

Loans held for sale
Commercial:
Multifamily	$	—	$	4,051	$	4,079	$	4,108	$	4,136
Commercial real estate non-owner occupied		—		16,000		—		—		—
Total commercial loans and leases		—		20,051		4,079		4,108		4,136
Consumer:
Residential		1,234		821		829		1,116		2,459
Installment:
Personal		76,874		307,336		133,801		—		—
Other		—		95,849		189,603		—		—
Total installment loans		76,874		403,185		323,404		—		—
Total consumer loans		78,108		404,006		324,233		1,116		2,459
Total loans held for sale	$	78,108	$	424,057	$	328,312	$	5,224	$	6,595

Total loans and leases portfolio	$	13,910,907	$	15,063,034	$	15,794,671	$	15,336,688	$	15,664,353

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION - UNAUDITED
(Dollars in thousands)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2023		2023		2022		2022		2022

Demand, non-interest bearing	$	4,490,198	$	3,487,517	$	1,885,045	$	2,993,793	$	4,683,030
Demand, interest bearing		5,551,037		5,791,302		8,476,027		7,124,663		6,644,398
Total demand deposits		10,041,235		9,278,819		10,361,072		10,118,456		11,327,428
Savings		1,048,229		924,359		811,798		592,002		640,062
Money market		2,004,264		2,019,633		2,734,217		4,913,967		4,254,205
Time deposits		4,856,703		5,500,806		4,249,866		1,898,013		723,024
Total deposits	$	17,950,431	$	17,723,617	$	18,156,953	$	17,522,438	$	16,944,719

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY - UNAUDITED
(Dollars in thousands)	As of June 30, 2023										As of March 31, 2023										As of June 30, 2022
	Total loans		Non accrual /NPLs		Allowance for credit losses		Total NPLs to total loans		Total reserves to total NPLs		Total loans		Non accrual /NPLs		Allowance for credit losses		Total NPLs to total loans		Total reserves to total NPLs		Total loans		Non accrual /NPLs		Allowance for credit losses		Total NPLs to total loans		Total reserves to total NPLs
	Total loans		Non accrual /NPLs		Allowance for credit losses		Total NPLs to total loans		Total reserves to total NPLs		Total loans		Non accrual /NPLs		Allowance for credit losses		Total NPLs to total loans		Total reserves to total NPLs		Total loans		Non accrual /NPLs		Allowance for credit losses		Total NPLs to total loans		Total reserves to total NPLs
Loan type
Commercial & industrial, including specialty lending ⁽¹⁾	$	6,689,307	$	4,441	$	29,092	0.07	%	655.08	%	$	6,814,864	$	3,886	$	20,050	0.06	%	515.95	%	$	5,737,670	$	4,061	$	11,081	0.07	%	272.86	%
Multifamily		2,151,734		4,022		15,400	0.19	%	382.89	%		2,195,211		881		15,084	0.04	%	1712.15	%		2,008,784		1,153		9,765	0.06	%	846.92	%
Commercial real estate owner occupied		842,042		3,304		10,215	0.39	%	309.17	%		895,314		3,621		8,472	0.40	%	233.97	%		710,577		2,913		4,745	0.41	%	162.89	%
Commercial real estate non-owner occupied		1,211,091		—		13,495	—	%	—	%		1,245,248		—		11,032	—	%	—	%		1,152,869		—		8,880	—	%	—	%
Construction		212,214		—		2,639	—	%	—	%		188,123		—		2,336	—	%	—	%		195,687		—		1,179	—	%	—	%
*Total commercial loans and leases receivable*		11,106,388		11,767		70,841	0.11	%	602.03	%		11,338,760		8,388		56,974	0.07	%	679.23	%		9,805,587		8,127		35,650	0.08	%	438.66	%
Residential		487,199		7,306		6,846	1.50	%	93.70	%		494,815		6,473		6,853	1.31	%	105.87	%		457,768		6,258		5,578	1.37	%	89.13	%
Manufactured housing		41,664		2,634		4,338	6.32	%	164.69	%		43,272		2,568		4,339	5.93	%	168.96	%		48,570		3,071		4,080	6.32	%	132.86	%
Installment		1,002,517		6,537		57,631	0.65	%	881.61	%		1,268,505		8,720		62,115	0.69	%	712.33	%		1,901,070		5,965		111,222	0.31	%	1864.58	%
*Total consumer loans receivable*		1,531,380		16,477		68,815	1.08	%	417.64	%		1,806,592		17,761		73,307	0.98	%	412.74	%		2,407,408		15,294		120,880	0.64	%	790.38	%
*Loans and leases receivable ⁽¹⁾*		12,637,768		28,244		139,656	0.22	%	494.46	%		13,145,352		26,149		130,281	0.20	%	498.23	%		12,212,995		23,421		156,530	0.19	%	668.33	%
*Loans receivable, PPP*		188,763		—		—	—	%	—	%		246,258		—		—	—	%	—	%		1,570,160		—		—	—	%	—	%
*Loans receivable, mortgage warehouse, at fair value*		1,006,268		—		—	—	%	—	%		1,247,367		—		—	—	%	—	%		1,874,603		—		—	—	%	—	%
*Total loans held for sale*		78,108		—		—	—	%	—	%		424,057		5,975		—	1.41	%	—	%		6,595		4,643		—	70.40	%	—	%
*Total portfolio*	$	13,910,907	$	28,244	$	139,656	0.20	%	494.46	%	$	15,063,034	$	32,124	$	130,281	0.21	%	405.56	%	$	15,664,353	$	28,064	$	156,530	0.18	%	557.76	%

(1)

Excluding loans receivable, PPP from total loans and leases receivable is a non-GAAP measure. 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. Please refer to the reconciliation schedules that follow this table.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED
(Dollars in thousands)
	Q2			Q1			Q4			Q3			Q2			Six Months Ended June 30,
	2023 ⁽¹⁾			2023			2022 ⁽²⁾			2022			2022			2023			2022
*Loan type*
Commercial & industrial, including specialty lending	$	258		$	(71	)	$	12,960		$	2,581		$	(416	)	$	187		$	(475	)
Multifamily		1,448			—			—			—			1,990			1,448			1,653
Commercial real estate owner occupied		(34	)		—			(2	)		—			(42	)		(34	)		(49	)
Commercial real estate non-owner occupied		266			4,234			972			4,831			159			4,500			151
Construction		—			(116	)		(10	)		(10	)		(103	)		(116	)		(216	)
Residential		24			(2	)		7			(13	)		(39	)		22			(41	)
Installment		13,602			14,606			13,237			11,108			11,932			28,208			19,684
Total net charge-offs (recoveries) from loans held for investment	$	15,564		$	18,651		$	27,164		$	18,497		$	13,481		$	34,215		$	20,707

(1)	Excludes $6.2 million of charge-offs for certain PCD loans acquired from FDIC during the three months ended June 30, 2023 that were applied against $8.7 million of allowance for credit losses on PCD loans recognized upon the acquisition of the loan portfolio on June 15, 2023.
(2)	Includes $11.0 million of one-time charge-offs from certain C&I loans originated under the PPP program that were subsequently determined to be ineligible for SBA forgiveness and guarantee and were deemed uncollectible during the three months ended December 31, 2022.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED

We believe that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. The non-GAAP measures presented are not necessarily comparable to non-GAAP measures that may be presented by other financial institutions. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP.

The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document.

*Core Earnings - Customers Bancorp*																											Six Months Ended June 30,
*Core Earnings - Customers Bancorp*	Q2 2023					Q1 2023					Q4 2022				Q3 2022						Q2 2022						2023				2022
(Dollars in thousands, except per share data)	USD			Per share		USD			Per share		USD		Per share		USD			Per share			USD			Per share			USD		Per share		USD			Per share
GAAP net income to common shareholders	$	44,007		$	1.39	$	50,265		$	1.55	$	25,623	$	0.77	$	61,364		$	1.85		$	56,519		$	1.68		$	94,272	$	2.95	$	131,415		$	3.87
Reconciling items (after tax):
Severance expense		141			0.00		637			0.02		—		—		1,058			0.03			—			—			778		0.02		—			—
Impairments on fixed assets and leases		12			0.00		86			0.00		—		—		126			0.00			705			0.02			98		0.00		925			0.03
Loss on sale of consumer installment loans		—			—		—			—		—		—		18,221			0.55			—			—			—		—		—			—
Loss on sale of capital call lines of credit		3,914			0.12		—			—		—		—		—			—			—			—			3,914		0.12		—			—
(Gains) losses on investment securities		49			0.00		(49	)		0.00		13,543		0.41		1,859			0.06			2,494			0.07			0		0.00		3,524			0.10
Derivative credit valuation adjustment		(101	)		0.00		204			0.01		202		0.01		(358	)		(0.01	)		(351	)		(0.01	)		103		0.00		(1,087	)		(0.03	)
Tax on surrender of bank-owned life insurance policies		4,141			0.13		—			—		—		—		—			—			—			—			4,141		0.13		—			—
Core earnings	$	52,163		$	1.65	$	51,143		$	1.58	$	39,368	$	1.19	$	82,270		$	2.48		$	59,367		$	1.77		$	103,306	$	3.22	$	134,777		$	3.97

*Core Earnings, excluding PPP - Customers Bancorp*																														Six Months Ended June 30,
*Core Earnings, excluding PPP - Customers Bancorp*	Q2 2023						Q1 2023					Q4 2022						Q3 2022						Q2 2022						2023				2022
(Dollars in thousands, except per share data)	USD			Per share			USD			Per share		USD			Per share			USD			Per share			USD			Per share			USD		Per share		USD			Per share
GAAP net income to common shareholders	$	44,007		$	1.39		$	50,265		$	1.55	$	25,623		$	0.77		$	61,364		$	1.85		$	56,519		$	1.68		$	94,272	$	2.95	$	131,415		$	3.87
Less: PPP net income (loss) (after tax)		(2,068	)		(0.07	)		9,606			0.30		(5,956	)		(0.18	)		5,846			0.18			13,066			0.39			7,538		0.24		37,779			1.11
Net income to common shareholders, excluding PPP		46,075			1.46			40,659			1.26		31,579			0.95			55,518			1.67			43,453			1.29			86,734		2.71		93,636			2.76
Reconciling items (after tax):
Severance expense		141			0.00			637			0.02		—			—			1,058			0.03			—			—			778		0.02		—			—
Impairments on fixed assets and leases		12			0.00			86			0.00		—			—			126			0.00			705			0.02			98		0.00		925			0.03
Loss on sale of consumer installment loans		—			—			—			—		—			—			18,221			0.55			—			—			—		—		—			—
Loss on sale of capital call lines of credit		3,914			0.12			—			—		—			—			—			—			—			—			3,914		0.12		—			—
(Gains) losses on investment securities		49			0.00			(49	)		0.00		13,543			0.41			1,859			0.06			2,494			0.07			0		0.00		3,524			0.10
Derivative credit valuation adjustment		(101	)		0.00			204			0.01		202			0.01			(358	)		(0.01	)		(351	)		(0.01	)		103		0.00		(1,087	)		(0.03	)
Tax on surrender of bank-owned life insurance policies		4,141			0.13			—			—		—			—			—			—			—			—			4,141		0.13		—			—
Core earnings, excluding PPP	$	54,231		$	1.72		$	41,537		$	1.28	$	45,324		$	1.37		$	76,424		$	2.30		$	46,301		$	1.38		$	95,768	$	2.99	$	96,998		$	2.86

*Core Return on Average Assets - Customers Bancorp*																Six Months Ended June 30,
(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			2023			2022
GAAP net income	$	47,574		$	53,721		$	28,711		$	63,912		$	58,650		$	101,295		$	135,411
Reconciling items (after tax):
Severance expense		141			637			—			1,058			—			778			—
Impairments on fixed assets and leases		12			86			—			126			705			98			925
Loss on sale of consumer installment loans		—			—			—			18,221			—			—			—
Loss on sale of capital call lines of credit		3,914			—			—			—			—			3,914			—
(Gains) losses on investment securities		49			(49	)		13,543			1,859			2,494			0			3,524
Derivative credit valuation adjustment		(101	)		204			202			(358	)		(351	)		103			(1,087	)
Tax on surrender of bank-owned life insurance policies		4,141			—			—			—			—			4,141			—
Core net income	$	55,730		$	54,599		$	42,456		$	84,818		$	61,498		$	110,329		$	138,773

Average total assets	$	21,654,735		$	21,052,920		$	20,717,362		$	20,514,366		$	20,056,020		$	21,355,490		$	19,595,236

Core return on average assets		1.03	%		1.05	%		0.81	%		1.64	%		1.23	%		1.04	%		1.43	%

*Core Return on Average Assets, excluding PPP - Customers Bancorp*																Six Months Ended June 30,
(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			2023			2022
GAAP net income	$	47,574		$	53,721		$	28,711		$	63,912		$	58,650		$	101,295		$	135,411
Less: PPP net income (loss) (after tax)		(2,068	)		9,606			(5,956	)		5,846			13,066			7,538			37,779
Net income, excluding PPP		49,642			44,115			34,667			58,066			45,584			93,757			97,632
Reconciling items (after tax):
Severance expense		141			637			—			1,058			—			778			—
Impairments on fixed assets and leases		12			86			—			126			705			98			925
Loss on sale of consumer installment loans		—			—			—			18,221			—			—			—
Loss on sale of capital call lines of credit		3,914			—			—			—			—			3,914			—
(Gains) losses on investment securities		49			(49	)		13,543			1,859			2,494			0			3,524
Derivative credit valuation adjustment		(101	)		204			202			(358	)		(351	)		103			(1,087	)
Tax on surrender of bank-owned life insurance policies		4,141			—			—			—			—			4,141			—
Core net income, excluding PPP	$	57,798		$	44,993		$	48,412		$	78,972		$	48,432		$	102,791		$	100,994

Average total assets	$	21,654,735		$	21,052,920		$	20,717,362		$	20,514,366		$	20,056,020		$	21,355,490		$	19,595,236

Core return on average assets, excluding PPP		1.07	%		0.87	%		0.93	%		1.53	%		0.97	%		0.97	%		1.04	%

*Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp*																Six Months Ended June 30,
(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			2023			2022
GAAP net income	$	47,574		$	53,721		$	28,711		$	63,912		$	58,650		$	101,295		$	135,411
Reconciling items:
Income tax expense		20,768			14,563			7,136			17,899			18,896			35,331			38,228
Provision (benefit) for credit losses		23,629			19,603			28,216			(7,994	)		23,847			43,232			39,844
Provision (benefit) for credit losses on unfunded commitments		(304	)		280			153			254			608			(24	)		499
Severance expense		182			809			—			1,363			—			991			—
Impairments on fixed assets and leases		15			109			—			162			914			124			1,200
Loss on sale of consumer installment loans		—			—			—			23,465			—			—			—
Loss on sale of capital call lines of credit		5,037			—			—			—			—			5,037			—
(Gains) losses on investment securities		62			(62	)		16,909			2,394			3,232			0			4,571
Derivative credit valuation adjustment		(130	)		259			252			(461	)		(455	)		129			(1,412	)
Adjusted net income - pre-tax pre-provision	$	96,833		$	89,282		$	81,377		$	100,994		$	105,692		$	186,115		$	218,341

Average total assets	$	21,654,735		$	21,052,920		$	20,717,362		$	20,514,366		$	20,056,020		$	21,355,490		$	19,595,236

Adjusted ROAA - pre-tax pre-provision		1.79	%		1.72	%		1.56	%		1.95	%		2.11	%		1.76	%		2.25	%

*Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision, excluding PPP - Customers Bancorp*																Six Months Ended June 30,
(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			2023			2022
GAAP net income	$	47,574		$	53,721		$	28,711		$	63,912		$	58,650		$	101,295		$	135,411
Less: PPP net income (loss) (after tax)		(2,068	)		9,606			(5,956	)		5,846			13,066			7,538			37,779
Net income, excluding PPP		49,642			44,115			34,667			58,066			45,584			93,757			97,632
Reconciling items:
Income tax expense		20,768			14,563			7,136			17,899			18,896			35,331			38,228
Provision (benefit) for credit losses		23,629			19,603			28,216			(7,994	)		23,847			43,232			39,844
Provision (benefit) for credit losses on unfunded commitments		(304	)		280			153			254			608			(24	)		499
Severance expense		182			809			—			1,363			—			991			—
Impairments on fixed assets and leases		15			109			—			162			914			124			1,200
Loss on sale of consumer installment loans		—			—			—			23,465			—			—			—
Loss on sale of capital call lines of credit		5,037			—			—			—			—			5,037			—
(Gains) losses on investment securities		62			(62	)		16,909			2,394			3,232			0			4,571
Derivative credit valuation adjustment		(130	)		259			252			(461	)		(455	)		129			(1,412	)
Adjusted net income - pre-tax pre-provision, excluding PPP	$	98,901		$	79,676		$	87,333		$	95,148		$	92,626		$	178,577		$	180,562

Average total assets	$	21,654,735		$	21,052,920		$	20,717,362		$	20,514,366		$	20,056,020		$	21,355,490		$	19,595,236

Adjusted ROAA - pre-tax pre-provision, excluding PPP		1.83	%		1.53	%		1.67	%		1.84	%		1.85	%		1.69	%		1.86	%

*Core Return on Average Common Equity - Customers Bancorp*																Six Months Ended June 30,
(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			2023			2022
GAAP net income to common shareholders	$	44,007		$	50,265		$	25,623		$	61,364		$	56,519		$	94,272		$	131,415
Reconciling items (after tax):
Severance expense		141			637			—			1,058			—			778			—
Impairments on fixed assets and leases		12			86			—			126			705			98			925
Loss on sale of consumer installment loans		—			—			—			18,221			—			—			—
Loss on sale of capital call lines of credit		3,914			—			—			—			—			3,914			—
(Gains) losses on investment securities		49			(49	)		13,543			1,859			2,494			0			3,524
Derivative credit valuation adjustment		(101	)		204			202			(358	)		(351	)		103			(1,087	)
Tax on surrender of bank-owned life insurance policies		4,141			—			—			—			—			4,141			—
Core earnings	$	52,163		$	51,143		$	39,368		$	82,270		$	59,367		$	103,306		$	134,777

Average total common shareholders' equity	$	1,335,408		$	1,273,780		$	1,263,190		$	1,259,711		$	1,244,819		$	1,304,764		$	1,248,400

Core return on average common equity		15.67	%		16.28	%		12.36	%		25.91	%		19.13	%		15.97	%		21.77	%

*Adjusted ROCE - Pre-Tax Pre-Provision - Customers Bancorp*																Six Months Ended June 30,
(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			2023			2022
GAAP net income to common shareholders	$	44,007		$	50,265		$	25,623		$	61,364		$	56,519		$	94,272		$	131,415
Reconciling items:
Income tax expense		20,768			14,563			7,136			17,899			18,896			35,331			38,228
Provision (benefit) for credit losses		23,629			19,603			28,216			(7,994	)		23,847			43,232			39,844
Provision (benefit) for credit losses on unfunded commitments		(304	)		280			153			254			608			(24	)		499
Severance expense		182			809			—			1,363			—			991			—
Impairments on fixed assets and leases		15			109			—			162			914			124			1,200
Loss on sale of consumer installment loans		—			—			—			23,465			—			—			—
Loss on sale of capital call lines of credit		5,037			—			—			—			—			5,037			—
(Gains) losses on investment securities		62			(62	)		16,909			2,394			3,232			0			4,571
Derivative credit valuation adjustment		(130	)		259			252			(461	)		(455	)		129			(1,412	)
Pre-tax pre-provision adjusted net income available to common shareholders	$	93,266		$	85,826		$	78,289		$	98,446		$	103,561		$	179,092		$	214,345

Average total common shareholders' equity	$	1,335,408		$	1,273,780		$	1,263,190		$	1,259,711		$	1,244,819		$	1,304,764		$	1,248,400

Adjusted ROCE - pre-tax pre-provision		28.01	%		27.33	%		24.59	%		31.01	%		33.37	%		27.68	%		34.62	%

*Net Interest Margin, Tax Equivalent, excluding PPP - Customers Bancorp*																Six Months Ended June 30,
(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			2023			2022
GAAP net interest income	$	165,271		$	149,899		$	135,137		$	159,032		$	164,852		$	315,170		$	329,551
PPP net interest (income) expense		765			(14,106	)		2,791			(9,632	)		(18,946	)		(13,341	)		(53,561	)
Tax-equivalent adjustment		390			375			342			334			270			765			509
Net interest income, tax equivalent, excluding PPP	$	166,426		$	136,168		$	138,270		$	149,734		$	146,176		$	302,594		$	276,499


GAAP average total interest earning assets	$	21,073,680		$	20,514,677		$	20,211,028		$	20,021,455		$	19,525,936		$	20,795,724		$	19,051,757
Average PPP loans		(207,127	)		(889,235	)		(1,065,919	)		(1,349,403	)		(1,863,429	)		(546,297	)		(2,250,224	)
Adjusted average total interest earning assets, excluding PPP	$	20,866,553		$	19,625,442		$	19,145,109		$	18,672,052		$	17,662,507		$	20,249,427		$	16,801,533

Net interest margin, tax equivalent, excluding PPP		3.20	%		2.80	%		2.87	%		3.18	%		3.32	%		3.01	%		3.32	%

*Loan Yield, excluding PPP*																Six Months Ended June 30,
(Dollars in thousands except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			2023			2022
Interest income on loans and leases	$	252,894		$	255,913		$	218,740		$	200,457		$	168,941		$	508,807		$	326,116

PPP interest income		(1,633	)		(23,551	)		(7,249	)		(14,666	)		(20,572	)		(25,184	)		(57,466	)
Interest income on core loans (Loans and leases, excluding PPP)	$	251,261		$	232,362		$	211,491		$	185,791		$	148,369		$	483,623		$	268,650


Average total loans and leases	$	14,842,432		$	15,477,973		$	15,388,003		$	15,653,983		$	14,918,498		$	15,158,447		$	14,291,229
Average PPP loans		(207,127	)		(889,235	)		(1,065,919	)		(1,349,403	)		(1,863,429	)		(546,297	)		(2,250,224	)
Adjusted average total loans and leases	$	14,635,305		$	14,588,738		$	14,322,084		$	14,304,580		$	13,055,069		$	14,612,150		$	12,041,005

Loan yield, excluding PPP		6.89	%		6.46	%		5.86	%		5.15	%		4.56	%		6.67	%		4.50	%

*Core Efficiency Ratio - Customers Bancorp*																Six Months Ended June 30,
(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022			2023			2022
GAAP net interest income	$	165,271		$	149,899		$	135,137		$	159,032		$	164,852		$	315,170		$	329,551

GAAP non-interest income	$	15,997		$	18,121		$	7,345		$	(9,017	)	$	12,746		$	34,118		$	33,944
Loss on sale of consumer installment loans		—			—			—			23,465			—			—			—
Loss on sale of capital call lines of credit		5,037			—			—			—			—			5,037			—
(Gains) losses on investment securities		62			(62	)		16,909			2,394			3,232			—			4,571
Derivative credit valuation adjustment		(130	)		259			252			(461	)		(455	)		129			(1,412	)
Core non-interest income		20,966			18,318			24,506			16,381			15,523			39,284			37,103
Core revenue	$	186,237		$	168,217		$	159,643		$	175,413		$	180,375		$	354,454		$	366,654


GAAP non-interest expense	$	89,297		$	80,133		$	78,419		$	76,198		$	76,205		$	169,430		$	150,012
Severance expense		(182	)		(809	)		—			(1,363	)		—			(991	)		—
Impairments on fixed assets and leases		(15	)		(109	)		—			(162	)		(914	)		(124	)		(1,200	)
Core non-interest expense	$	89,100		$	79,215		$	78,419		$	74,673		$	75,291		$	168,315		$	148,812

Core efficiency ratio ⁽¹⁾		47.84	%		47.09	%		49.12	%		42.57	%		41.74	%		47.49	%		40.59	%

(1)	Core efficiency ratio calculated as core non-interest expense divided by core revenue.

*Tangible Common Equity to Tangible Assets - Customers Bancorp*

(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022
GAAP total shareholders' equity	$	1,456,652		$	1,421,020		$	1,402,961		$	1,386,931		$	1,353,390
Reconciling items:
Preferred stock		(137,794	)		(137,794	)		(137,794	)		(137,794	)		(137,794	)
Goodwill and other intangibles		(3,629	)		(3,629	)		(3,629	)		(3,629	)		(3,629	)
Tangible common equity	$	1,315,229		$	1,279,597		$	1,261,538		$	1,245,508		$	1,211,967

GAAP total assets	$	22,028,565		$	21,751,614		$	20,896,112		$	20,367,621		$	20,251,996
Reconciling items:
Goodwill and other intangibles		(3,629	)		(3,629	)		(3,629	)		(3,629	)		(3,629	)
Tangible assets	$	22,024,936		$	21,747,985		$	20,892,483		$	20,363,992		$	20,248,367

Tangible common equity to tangible assets		6.0	%		5.9	%		6.0	%		6.1	%		6.0	%

*Tangible Common Equity to Tangible Assets, excluding PPP - Customers Bancorp*

(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022
GAAP total shareholders' equity	$	1,456,652		$	1,421,020		$	1,402,961		$	1,386,931		$	1,353,390
Reconciling items:
Preferred stock		(137,794	)		(137,794	)		(137,794	)		(137,794	)		(137,794	)
Goodwill and other intangibles		(3,629	)		(3,629	)		(3,629	)		(3,629	)		(3,629	)
Tangible common equity	$	1,315,229		$	1,279,597		$	1,261,538		$	1,245,508		$	1,211,967

GAAP total assets	$	22,028,565		$	21,751,614		$	20,896,112		$	20,367,621		$	20,251,996
Loans receivable, PPP		(188,763	)		(246,258	)		(998,153	)		(1,154,632	)		(1,570,160	)
Total assets, excluding PPP	$	21,839,802		$	21,505,356		$	19,897,959		$	19,212,989		$	18,681,836
Reconciling items:
Goodwill and other intangibles		(3,629	)		(3,629	)		(3,629	)		(3,629	)		(3,629	)
Tangible assets, excluding PPP	$	21,836,173		$	21,501,727		$	19,894,330		$	19,209,360		$	18,678,207

Tangible common equity to tangible assets, excluding PPP		6.0	%		6.0	%		6.3	%		6.5	%		6.5	%

*Tangible Book Value per Common Share - Customers Bancorp*

(Dollars in thousands, except share and per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022
GAAP total shareholders' equity	$	1,456,652		$	1,421,020		$	1,402,961		$	1,386,931		$	1,353,390
Reconciling Items:
Preferred stock		(137,794	)		(137,794	)		(137,794	)		(137,794	)		(137,794	)
Goodwill and other intangibles		(3,629	)		(3,629	)		(3,629	)		(3,629	)		(3,629	)
Tangible common equity	$	1,315,229		$	1,279,597		$	1,261,538		$	1,245,508		$	1,211,967

Common shares outstanding		31,282,318			31,239,750			32,373,697			32,475,502			32,449,486

Tangible book value per common share	$	42.04		$	40.96		$	38.97		$	38.35		$	37.35

*Core Loans (Total Loans and Leases, excluding PPP)*

(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022
Total loans and leases	$	13,910,907		$	15,063,034		$	15,794,671		$	15,336,688		$	15,664,353

Loans receivable, PPP		(188,763	)		(246,258	)		(998,153	)		(1,154,632	)		(1,570,160	)
Core Loans (Total loans and leases, excluding PPP)	$	13,722,144		$	14,816,776		$	14,796,518		$	14,182,056		$	14,094,193


*Core Loans Held for Investment* *(Total Loans and Leases Held for Investment, excluding PPP)*

(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022
Total loans and leases, held for investment	$	13,832,799		$	14,638,977		$	15,466,359		$	15,331,464		$	15,657,758

Loans receivable, PPP		(188,763	)		(246,258	)		(998,153	)		(1,154,632	)		(1,570,160	)
Core Loans Held for Investment (Total loans and leases held for investment, excluding PPP)	$	13,644,036		$	14,392,719		$	14,468,206		$	14,176,832		$	14,087,598

*Total Assets, excluding PPP*

(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022
Total assets	$	22,028,565		$	21,751,614		$	20,896,112		$	20,367,621		$	20,251,996

Loans receivable, PPP		(188,763	)		(246,258	)		(998,153	)		(1,154,632	)		(1,570,160	)
Total assets, excluding PPP	$	21,839,802		$	21,505,356		$	19,897,959		$	19,212,989		$	18,681,836

*Coverage of credit loss reserves for loans and leases held for investment, excluding PPP*

(Dollars in thousands, except per share data)	Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022
Loans and leases receivable	$	12,826,531		$	13,391,610		$	14,143,047		$	13,762,374		$	13,783,155

Loans receivable, PPP		(188,763	)		(246,258	)		(998,153	)		(1,154,632	)		(1,570,160	)
Loans and leases held for investment, excluding PPP	$	12,637,768		$	13,145,352		$	13,144,894		$	12,607,742		$	12,212,995

Allowance for credit losses on loans and leases	$	139,656		$	130,281		$	130,924		$	130,197		$	156,530

Coverage of credit loss reserves for loans and leases held for investment, excluding PPP		1.11	%		0.99	%		1.00	%		1.03	%		1.28	%

View source version on businesswire.com: https://www.businesswire.com/news/home/20230726448179/en/

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