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What changed in Customers Bancorp, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Customers Bancorp, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+683 added−760 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-29)

Top changes in Customers Bancorp, Inc.'s 2024 10-K

683 paragraphs added · 760 removed · 570 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

119 edited+23 added−38 removed175 unchanged
Biggest changeThe wellness program has a multi-tiered reward system in which wellness points are awarded to team members for their participation. ◦ Over 200 team members participated in the program in 2023, with 116 successfully completing the program. • Corporate Trainer – We continue to promote Bank-sponsored personal training sessions offered both in person and virtually to all team members throughout the company.
Biggest changeOur robust wellness program offers a variety of challenges, workshops, webinars, and health coaching sessions. ◦ Provide an enhanced wellness platform whereby team members can participate in on-demand activities and initiatives to improve their physical and mental well-being through a multi-tiered reward system in which wellness points are awarded to team members for their participation. ◦ The program centers around physical, mental, emotional, and financial well-being. ◦ More than one-third of team members took advantage of our wellness initiatives during 2024, with 96 successfully participating to maximize their wellness points. • Corporate Trainer – We continue to promote Bank-sponsored personal training sessions offered both in person and virtually to all team members throughout the company.
Customers may create franchise value through a disciplined approach to acquisitions, both in terms of identifying opportunities and structuring transactions. Enterprise risk management is at the core of the strategies Customers employs. 8 The management team of Customers consists of experienced banking executives led by its Chairman and CEO, Jay Sidhu, who joined Customers in June 2009. Mr.
Customers may create franchise value through a disciplined approach to acquisitions, both in terms of identifying opportunities and structuring transactions. Enterprise risk management is at the core of the strategies Customers employs. The management team of Customers consists of experienced banking executives led by its Chairman and CEO, Jay Sidhu, who joined Customers in June 2009. Mr.
The “high-tech, high-touch,” model requires less staff and smaller branch locations to operate, thereby significantly reducing operating costs. 11 • Acquisition expertise. The depth of Customers’ management team and their experience successfully completing acquisitions provides unique insight in identifying and analyzing potential markets and acquisition targets.
The “high-tech, high-touch,” model requires less staff and smaller branch locations to operate, thereby significantly reducing operating costs. • Acquisition expertise. The depth of Customers’ management team and their experience successfully completing acquisitions provides unique insight in identifying and analyzing potential markets and acquisition targets.
The Bank also offers digital banking to commercial and consumer businesses nationwide, including Banking-as-a-Service to fintech companies, payments and treasury services to businesses, and consumer loans through relationships with fintech companies. The Bank’s specialty lending includes fund finance, real estate specialty finance, technology and venture, healthcare and financial institutions group.
The Bank also offers digital banking to commercial and consumer businesses nationwide, including payments and treasury services to businesses, consumer loans through relationships with fintech companies and Banking-as-a-Service to fintech companies. The Bank’s specialized lending includes fund finance, real estate specialty finance, technology and venture, healthcare and financial institutions group.
Fueled by a digital-forward, super community bank hybrid business model, and the Bank’s recent successes, Customers Bank launched other new commercial financial product lines and opened additional offices in key metro markets around the country. • Unique asset and deposit generation strategies.
Fueled by a digital-forward, super community bank hybrid business model, and the Bank’s recent successes, Customers Bank launched other new commercial financial product lines and opened additional offices in key metro markets around the country. 10 • Unique asset and deposit generation strategies.
In addition, bank holding companies are required to act as a source of financial strength to each of their banking subsidiaries pursuant to which such holding company may be required to commit financial resources to support such subsidiaries in circumstances when, absent such requirements, they might not do so. 27 A bank holding company is prohibited from engaging in or acquiring direct or indirect control of more than five percent (5%) of the voting shares of any company engaged in non-banking activities unless the Federal Reserve Board, by order or regulation, has found such activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
In addition, bank holding companies are required to act as a source of financial strength to each of their banking subsidiaries pursuant to which such holding company may be required to commit financial resources to support such subsidiaries in circumstances when, absent such requirements, they might not do so. 26 A bank holding company is prohibited from engaging in or acquiring direct or indirect control of more than five percent (5%) of the voting shares of any company engaged in non-banking activities unless the Federal Reserve Board, by order or regulation, has found such activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
The new minimum capital level requirements applicable to the Bancorp and Customers Bank under the final rules are: (i) a common equity Tier 1 risk-based capital ratio of 4.5%; (ii) a Tier 1 risk-based capital ratio of 6%; (iii) a total risk-based capital ratio of 8% and (iv) a Tier 1 leverage ratio of 4% for all institutions.
The minimum capital level requirements applicable to the Bancorp and Customers Bank under the final rules are: (i) a common equity Tier 1 risk-based capital ratio of 4.5%; (ii) a Tier 1 risk-based capital ratio of 6%; (iii) a total risk-based capital ratio of 8% and (iv) a Tier 1 leverage ratio of 4% for all institutions.
The intended goal of the law, which applies to the Bank, is to modernize Pennsylvania’s banking laws and to reduce regulatory burden at the state level where possible, given the increased regulatory demands at the federal level as described below. 28 The law also permits banks to disclose formal enforcement actions initiated by the Department, clarifies that the Department has examination and enforcement authority over subsidiaries as well as affiliates of regulated banks and bolsters the Department’s enforcement authority over its regulated institutions by clarifying its ability to remove directors, officers and employees from institutions for violations of laws or orders or for any unsafe or unsound practice or breach of fiduciary duty.
The intended goal of the law, which applies to the Bank, is to modernize Pennsylvania’s banking laws and to reduce regulatory burden at the state level where possible, given the increased regulatory demands at the federal level as described below. 27 The law also permits banks to disclose formal enforcement actions initiated by the Department, clarifies that the Department has examination and enforcement authority over subsidiaries as well as affiliates of regulated banks and bolsters the Department’s enforcement authority over its regulated institutions by clarifying its ability to remove directors, officers and employees from institutions for violations of laws or orders or for any unsafe or unsound practice or breach of fiduciary duty.
As our business continues to evolve, so does the way we need to attract talent to achieve future success. Customers remains committed to refining and evolving our talent acquisition practices meeting the evolving needs of our organization and the dynamic external landscape.
As our business continues to evolve, so does the way we need to attract talent to achieve future success. Customers Bank remains committed to refining and evolving our talent acquisition practices meeting the evolving needs of our organization and the dynamic external landscape.
Federal Reserve, which has substantive rule-making authority over a wide variety of consumer financial services and products, including the power to regulate unfair, deceptive or abusive acts or practices; 23 • permitted state attorney generals and other state enforcement authorities broader power to enforce consumer protection laws against banks; • required that the amount of any interchange fee charged by a debit card issuer with respect to a debit card transaction must be reasonable and proportional to the cost incurred by the issuer.
Federal Reserve, which has substantive rule-making authority over a wide variety of consumer financial services and products, including the power to regulate unfair, deceptive or abusive acts or practices; 22 • permitted state attorney generals and other state enforcement authorities broader power to enforce consumer protection laws against banks; • required that the amount of any interchange fee charged by a debit card issuer with respect to a debit card transaction must be reasonable and proportional to the cost incurred by the issuer.
Customers currently monitors and manages its assets and liabilities for interest-rate risk, and management believes that the interest-rate risk rules which have been implemented and proposed will not materially adversely affect its operations. 21 The Federal Reserve Board’s “leverage” ratio rules require member banks which are rated the highest in the composite areas of capital, asset quality, management, earnings and liquidity to maintain a ratio of “Tier 1” capital to “adjusted total assets” of not less than 3.0%.
Customers currently monitors and manages its assets and liabilities for interest-rate risk, and management believes that the interest-rate risk rules which have been implemented and proposed will not materially adversely affect its operations. 20 The Federal Reserve Board’s “leverage” ratio rules require member banks which are rated the highest in the composite areas of capital, asset quality, management, earnings and liquidity to maintain a ratio of “Tier 1” capital to “adjusted total assets” of not less than 3.0%.
Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization’s safety and soundness, and the organization is not taking prompt and effective measures to correct the deficiencies. 25 In addition, Section 956 of the Dodd-Frank Act required certain regulators (including the FDIC, SEC and Federal Reserve Board) to adopt requirements or guidelines prohibiting excessive compensation.
Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization’s safety and soundness, and the organization is not taking prompt and effective measures to correct the deficiencies. 24 In addition, Section 956 of the Dodd-Frank Act required certain regulators (including the FDIC, SEC and Federal Reserve Board) to adopt requirements or guidelines prohibiting excessive compensation.
In addition, in October 2018, the federal bank regulators proposed to revise their liquidity requirements so that banking organizations that are not global systemically important banks and have less than $250 billion in total consolidated assets and less than $75 billion in each of off-balance-sheet exposure, nonbank assets, cross-jurisdictional activity and short-term wholesale funding would not be subject to any liquid coverage ratio or net stable funding ratio requirements.
In addition, in October 2018, the federal bank regulators proposed to revise their liquidity requirements so that banking organizations that are not global systemically important banks and have less than $250 billion in total consolidated assets and less than $75 billion in each of off-balance-sheet exposure, non-bank assets, cross-jurisdictional activity and short-term wholesale funding would not be subject to any liquid coverage ratio or net stable funding ratio requirements.
Customers has significantly expanded its lending and deposit gathering activities through its specialty lending verticals including fund finance (capital call lines and lender finance), real estate specialty finance, technology and venture, healthcare and financial institutions group.
Customers has significantly expanded its lending and deposit gathering activities through its specialized lending verticals including fund finance (capital call lines and lender finance), real estate specialty finance, technology and venture, healthcare and financial institutions group.
Customers also focuses on specialty businesses as a source of lower-cost core deposits, including property management and mortgage banking businesses, title and escrow funds, health savings accounts, and Section 1031 of the IRS exchange deposits. Using its “high-tech, high-touch” model, Customers has experienced strong growth in core deposits.
Customers also focuses on specialized businesses as a source of lower-cost core deposits, including property management and mortgage banking businesses, title and escrow funds, health savings accounts, and Section 1031 of the IRS exchange deposits. Using its “high-tech, high-touch” model, Customers has experienced strong growth in core deposits.
Because our securities are listed on the NYSE, we are subject to NYSE’s rules for listed companies, including rules relating to corporate governance. 20 FEDERAL BANKING LAWS Interstate Branching. The Interstate Act, among other things, permits bank holding companies to acquire banks in any state. A bank may also merge with a bank in another state.
Because our securities are listed on the NYSE, we are subject to NYSE’s rules for listed companies, including rules relating to corporate governance. 19 FEDERAL BANKING LAWS Interstate Branching. The Interstate Act, among other things, permits bank holding companies to acquire banks in any state. A bank may also merge with a bank in another state.
The Bank selected the opt-out election in its March 31, 2015 Call Report. 22 The final rules also set forth the prompt corrective action framework, which is designed to place restrictions on insured depository institutions, including the Bank, if their capital levels begin to show signs of weakness.
The Bank selected the opt-out election in its March 31, 2015 Call Report. 21 The final rules also set forth the prompt corrective action framework, which is designed to place restrictions on insured depository institutions, including the Bank, if their capital levels begin to show signs of weakness.
Customers focuses on local market lending combined with relatively low-risk specialty lending verticals as we expand into new markets across the country. Local market asset generation provides various types of business lending products (i.e., commercial and industrial loans) and consumer lending products, such as mortgage loans and home equity loans.
Customers focuses on local market lending combined with relatively low-risk specialized lending verticals as we expand into new markets across the country. Local market asset generation provides various types of business lending products (i.e., commercial and industrial loans) and consumer lending products, such as mortgage loans and home equity loans.
In 2021, Customers Bank launched CBIT TM on the TassatPay TM blockchain-based instant B2B payments platform, which serves a growing array of B2B clients who want the benefit of instant payments, including key over-the-counter desks, exchanges, liquidity providers, market makers, funds, and other B2B verticals.
In 2021, Customers Bank launched CBIT TM on the TassatPay TM blockchain-based instant B2B payments platform, which served a growing array of B2B clients who want the benefit of instant payments, including key over-the-counter desks, exchanges, liquidity providers, market makers, funds, and other B2B verticals.
In addition, in the case of those institutions in the lowest risk category, the FDIC further determines its assessment rates based on certain specified financial ratios. 24 On June 22, 2020, the FDIC issued a final rule that mitigates the deposit insurance assessment effects of participating in the PPP, the PPPLF and MMLF.
In addition, in the case of those institutions in the lowest risk category, the FDIC further determines its assessment rates based on certain specified financial ratios. 23 On June 22, 2020, the FDIC issued a final rule that mitigates the deposit insurance assessment effects of participating in the PPP, the PPPLF and MMLF.
In 2023, Customers sold $556.7 million of consumer installment loans that were classified as held for sale, inclusive of other installment loans transferred from held for investment to held for sale, accrued interest and unamortized deferred loan origination costs, to two third-party sponsored VIEs.
In 2023, Customers sold $556.7 million of personal and other installment loans that were classified as held for sale, inclusive of other installment loans transferred from held for investment to held for sale, accrued interest and unamortized deferred loan origination costs to two third-party sponsored VIEs.
The CFPB, other financial regulatory agencies, including the Federal Reserve, as well as the DOJ, have, over the past several years, pursued a number of enforcement actions against depository institutions with respect to compliance with fair lending laws. 26 UDAP and UDAAP.
The CFPB, other financial regulatory agencies, including the Federal Reserve, as well as the DOJ, have, over the past several years, pursued a number of enforcement actions against depository institutions with respect to compliance with fair lending laws. 25 UDAP and UDAAP.
As a result, the executive management team undertook a complete rebranding to reposition Customers as a digital-forward super community bank that provides commercial and consumer customers the stability and trust inherent in working with an established and regulated financial institution.
As a result, the executive management team undertook a complete rebranding to reposition Customers as a digital-forward super community bank that provides enterprise and commercial customers the stability and trust inherent in working with an established and regulated financial institution.
The loans are predominately short-term facilities used by mortgage companies to fund their pipelines from closing of individual mortgage loans until their sale into the secondary market. Most of the individual mortgage loans that collateralize our commercial loans to mortgage companies are insured or guaranteed by the U.S.
The loans are predominately short-term facilities used by mortgage companies to fund their pipelines from closing of individual mortgage loans until their sale into the secondary market. Most of the individual mortgage loans that collateralize our mortgage finance loans to mortgage companies are insured or guaranteed by the U.S.
In the event that the Department and the applicable host state regulator disagree regarding whether a particular host state law is pre-empted, the Department and the applicable host state regulator would use their reasonable best efforts to consider all points of view and to resolve the disagreement. 29
In the event that the Department and the applicable host state regulator disagree regarding whether a particular host state law is pre-empted, the Department and the applicable host state regulator would use their reasonable best efforts to consider all points of view and to resolve the disagreement. 28
The number of CBIT outstanding in the CBIT instant payments platform is always equal to the U.S. dollars held in the omnibus deposit account at Customers Bank and is reported as a deposit liability on the consolidated balance sheet.
The number of CBIT outstanding in the CBIT instant payments platform was always equal to the U.S. dollars held in the omnibus deposit account at Customers Bank and was reported as a deposit liability on the consolidated balance sheet.
Topics covered included steps on how to invest, saving for the future, and money management. • Retirement Readiness Workshop – This workshop is hosted by our 401(k) Plan Investment Advisors and are target all team members who have reached at least age 50 or over to help them to begin the process of preparing for retirement.
Topics covered included steps on how to invest, saving for the future, and money management. • Retirement Readiness Workshop – This workshop is hosted by our 401(k) Plan Investment Advisors and are targeted to team members who have reached at least age 50 or over to help them to begin the process of preparing for retirement.
Central to our talent acquisition philosophy is the provision of an exceptional candidate experience at every stage of the recruitment process. From the initial outreach and application submission to interviews, assessments, and final offers, we prioritize transparency, communication, and responsiveness to ensure that candidates feel valued and engaged throughout their interactions with our organization.
Central to our talent acquisition philosophy is the commitment to providing an exceptional candidate experience at every stage of the recruitment process. From the initial outreach and application submission to interviews, assessments, and final offers, we prioritize transparency, communication, and responsiveness to ensure that candidates feel valued and engaged throughout their interactions with our organization.
Sidhu established a track record of producing strong financial results, integrating acquisitions, managing risk, working with regulators and achieving organic growth and expense control. Team leaders Timothy Romig, Head of Middle Market and Community Banking; and Lyle Cunningham, Chief Lending Officer and Head of Corporate and Specialty Banking; have over 30 years of experience.
Sidhu established a track record of producing strong financial results, integrating acquisitions, managing risk, working with regulators and achieving organic growth and expense control. Team leaders Timothy Romig, Head of Middle Market and Community Banking and Lyle Cunningham, Chief Banking Officer; have over 30 years of experience.
The experience of Customers’ team, which includes the acquisition and integration of over 35 institutions, as well as numerous asset and branch acquisitions, provides a substantial advantage in pursuing and consummating future acquisitions.
The experience of Customers’ team, which includes the acquisition and integration of over 30 institutions, as well as numerous asset and branch acquisitions, provides a substantial advantage in pursuing and consummating future acquisitions.
The primary collateral for these loans is a first-lien mortgage on the commercial real estate or multifamily property, plus an assignment of all leases related to such property. Customers had $2.1 billion and $2.2 billion of multifamily loans outstanding as of December 31, 2023 and 2022, respectively.
The primary collateral for these loans is a first-lien mortgage on the commercial real estate or multifamily property, plus an assignment of all leases related to such property. Customers had $2.3 billion and $2.1 billion of multifamily loans outstanding as of December 31, 2024 and 2023, respectively.
Customers is selective with its consumer installment loan portfolios by focusing on prime borrowers (defined as borrowers with a FICO score of 660 or above at origination) combined with a risk-adjusted pricing model and early identification of potential problem assets.
Customers is selective with its held for investment consumer installment loan portfolios by focusing on prime borrowers (defined as borrowers with a FICO score of 660 or above at origination) combined with a risk-adjusted pricing model and early identification of potential problem assets.
Human Capital Customers’ success is intrinsically linked to our ability to consistently attract, develop, and retain a diverse pool of highly qualified and engaged team members who are also committed to delivering on our corporate and cultural strategies. Customers does this by optimizing our workforce, developing our leaders and team members, and creating a safe and supportive workplace environment.
Human Capital Customers Bank’s success is intrinsically linked to our ability to consistently attract, develop, and retain a pool of highly qualified and engaged team members who are also committed to delivering on our corporate and cultural strategies. Customers Bank does this by optimizing our workforce, developing our leaders and team members, and creating a safe and supportive workplace environment.
The Bank also serves specialty businesses nationwide, including its specialty lending, commercial loans to mortgage companies and commercial equipment financing. The Bank offers digital banking to commercial and consumer businesses nationwide, including Banking-as-a-Service to fintech companies, payments and treasury services to businesses, and consumer loans through relationships with fintech companies.
The Bank also serves specialized businesses nationwide, including its specialized lending, mortgage finance loans and commercial equipment financing. The Bank offers digital banking to commercial and consumer businesses nationwide, including payments and treasury services to businesses, consumer loans through relationships with fintech companies and Banking-as-a-Service to fintech companies.
Customers believes its expanded target market has highly attractive demographic, economic and competitive dynamics that are consistent with its objectives and favorable to executing its organic core loan and deposit growth and opportunistic acquisition strategies. Customers believes that digital delivery without geographic limitations is the future of retail banking.
Customers believes its expanded target markets have highly attractive demographic, economic and competitive dynamics that are consistent with its objectives and favorable to executing its organic core loan and deposit growth and opportunistic acquisition strategies. Customers believes that digital delivery without geographic limitations is the future of retail banking.
Customers also strives to provide maximum convenience of access to services by employing innovative delivery vehicles such as internet and digital banking, and the convenience of our single-point-of-contact business model. Customers’ current market is primarily served by large national and regional banks, with a few larger institutions capturing a significant portion of deposit market share.
Customers also strives to provide maximum convenience of access to services by employing innovative delivery vehicles such as internet and digital banking, B2B instant real time payments and the convenience of our single-point-of-contact business model. Customers’ current market is primarily served by large national and regional banks, with a few larger institutions capturing a significant portion of deposit market share.
Programs include body relaxation, body muscle recovery, light pain management, and strengthening exercises. 139 team members participated in this benefit in 2023. • Day of Learning – Team members are granted up to 8 hours of paid time off to participate in an educational course, seminar, or class. • Matching Gift Program acknowledges the importance of both individual and corporate support for charitable organizations.
Programs include body relaxation, body muscle recovery, light pain management, and strengthening exercises. • Day of Learning – Team members are granted up to 8 hours of paid time off to participate in an educational course, seminar, or class. • Matching Gift Program acknowledges the importance of both individual and corporate support for charitable organizations.
The Bank has a diversified lending business consisting of geographically in-market community banking offerings such as commercial and industrial loans, commercial real estate loans, multifamily loans and residential mortgage loans. In addition, on a national level, the Bank also provides financing to specialty banking businesses such as specialty lending, commercial loans to mortgage companies, commercial equipment financing and SBA lending.
The Bank has a diversified lending business consisting of geographically in-market community banking offerings such as commercial and industrial loans, commercial real estate loans, multifamily loans and residential mortgage loans. In addition, on a national level, the Bank also provides financing to specialized banking businesses such as specialized lending, mortgage finance loans, commercial equipment financing and SBA lending.
As of December 31, 2023 and 2022, Customers Bank and the Bancorp met all capital adequacy requirements to which they were subject. For additional information on Customers’ regulatory capital ratios, refer to “NOTE 19 – REGULATORY CAPITAL” to Customers’ audited consolidated financial statements. Dodd-Frank Act.
As of December 31, 2024 and 2023, Customers Bank and the Bancorp met all capital adequacy requirements to which they were subject. For additional information on Customers’ regulatory capital ratios, refer to “NOTE 18 – REGULATORY CAPITAL” to Customers’ audited consolidated financial statements. Dodd-Frank Act.
CBIT may only be created by, transferred to and redeemed by commercial customers of Customers Bank on the instant B2B payments platform by maintaining U.S. dollars in deposit accounts at Customers Bank. CBIT is not listed or traded on any digital currency exchange.
CBIT could only be created by, transferred to and redeemed by commercial customers of Customers Bank on the instant B2B payments platform by maintaining U.S. dollars in deposit accounts at Customers Bank. CBIT was not listed or traded on any digital currency exchange.
Government through one of its programs, such as FHA, VA, or they are conventional loans eligible for sale to Fannie Mae and Freddie Mac. During the years ended December 31, 2023 and 2022, Customers Bank funded $20.1 billion and $29.0 billion of mortgage loans, respectively, to mortgage originators via warehouse facilities.
Government through one of its programs, such as FHA, VA, or they are conventional loans eligible for sale to Fannie Mae and Freddie Mac. During the years ended December 31, 2024 and 2023, Customers Bank funded $22.1 billion and $20.1 billion of mortgage loans, respectively, to mortgage originators via warehouse facilities.
Lending Activities Customers focuses its lending efforts on the following lending areas: • Commercial Lending – Customers’ primary focus is on business banking (i.e., commercial and industrial lending), including small and middle market business banking (including SBA loans), specialty lending, commercial loans to mortgage companies, multifamily and commercial real estate lending and commercial equipment financing, and • Consumer Lending – local-market mortgage and home equity lending and the origination and purchase of installment loans through arrangements with third-party fintech companies and other marketplace lenders.
Lending Activities Customers focuses its lending efforts on the following lending areas: • Commercial Lending – Customers’ primary focus is on business banking (i.e., commercial and industrial lending), including small and middle market business banking (including SBA loans), specialized lending, mortgage finance, multifamily and commercial real estate lending and commercial equipment financing, and • Consumer Lending – local-market mortgage and home equity lending and the origination and purchase of installment loans through arrangements with third-party fintech companies and other market place lenders.
The commercial loans to mortgage companies are reported as loans receivable, mortgage warehouse, at fair value on the consolidated balance sheet. Customers’ commercial equipment financing group goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets.
The mortgage finance loans are reported as loans receivable, mortgage finance, at fair value on the consolidated balance sheet. 12 Customers’ commercial equipment financing group goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets.
Customers’ commercial loans to mortgage originators is a national business where Customers provides liquidity to non-depository mortgage companies to fund their mortgage pipelines and meet other business needs. Through the loans to mortgage companies, Customers earns interest and fee income and generates core deposits.
Customers’ mortgage finance group is a national business where Customers provides liquidity to non-depository mortgage companies to fund their mortgage pipelines and meet other business needs. Through the mortgage finance loans, Customers earns interest and fee income and generates core deposits.
The commercial equipment financing group is primarily focused on serving the following industries: transportation, construction (including crane and utility), marine, franchise, general manufacturing (including machine tool), helicopter/fixed wing, solar, packaging, plastics and food processing. As of December 31, 2023 and 2022, Customers had $547.0 million and $560.3 million, respectively, of equipment finance loans outstanding.
The commercial equipment financing group is primarily focused on serving the following industries: transportation, construction (including crane and utility), marine, franchise, general manufacturing (including machine tool), helicopter/fixed wing, solar, packaging, plastics and food processing. As of December 31, 2024 and 2023, Customers had $675.4 million and $547.0 million, respectively, of equipment finance loans outstanding.
Customers’ environmental, social and governance, or ESG practices, emphasize its unwavering commitment to its team members, customers, shareholders, and communities in which we live and work. The primary customers of the Bank are privately held businesses, business customers, large corporate clients, not-for-profit organizations and consumers.
Customers’ corporate social responsibility, or CSR practices, emphasize its unwavering commitment to its team members, customers, shareholders, and communities in which we live and work. The primary customers of the Bank are privately held businesses, business customers, large corporate clients, not-for-profit organizations and consumers.
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 December 31, 2023, our regulatory capital ratios reflected 50%, or $30.8 million, benefit associated with the CECL transition provisions.
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 December 31, 2024, our regulatory capital ratios reflected 25%, or $15.4 million, benefit associated with the CECL transition provisions.
Customers offers an array of lending products to cater to its customers’ needs, including specialty loans, commercial mortgage warehouse loans, multifamily and commercial real estate loans, business banking, small business loans, equipment financing, residential mortgage loans and installment loans.
Customers offers an array of lending products to cater to its customers’ needs, including specialized loans, mortgage finance loans, multifamily and commercial real estate loans, business banking, small business loans, commercial equipment financing, residential mortgage loans and installment loans.
As Customers evaluates potential acquisition and asset purchase opportunities and team lift-outs, it believes that there are banking institutions that continue to face credit challenges, capital constraints and liquidity issues and that lack the scale and management expertise to manage the regulatory burden. 10 Competitive Strengths • Experienced and respected management team.
As Customers evaluates potential acquisition and asset purchase opportunities and team lift-outs, it believes that there are banking institutions that continue to face credit challenges, capital constraints and liquidity issues and that lack the scale and management expertise to successfully compete. Competitive Strengths • Experienced and respected management team.
In 2023, a total of $100,000 was distributed among 14 of our team members’ children. 19 Management and Succession Planning Strategic succession management starts with position-based succession planning approach and is implemented alongside our performance management process to facilitate cohesive people-centric decision-making and follow-through.
In 2024, a total of $70,000 was distributed among 14 of our team members’ children. 18 Management and Succession Planning Strategic succession management starts with position-based succession planning approach and is implemented alongside our performance management process to facilitate cohesive people-centric decision-making and follow-through.
Through the multifamily and commercial real estate products, Customers primarily earns interest income and generates commercial deposits. Customers also maintains specialty lending businesses, commercial loans to mortgage originators and installment loans originated directly or with third-party fintech companies.
Through the multifamily and commercial real estate products, Customers primarily earns interest income and generates commercial deposits. Customers also maintains specialized lending businesses, mortgage finance loans and installment loans originated directly or with third-party fintech companies.
Commercial Lending Customers’ commercial lending activities are divided into six groups: business banking; small and middle market business banking; specialty banking; multifamily and commercial real estate lending; mortgage banking lending; and SBA lending. This grouping is designed to allow for greater resource deployment, higher standards of risk management, stronger asset quality, lower interest-rate risk and higher productivity levels.
Commercial Lending Customers’ commercial lending activities are broadly divided into the following groups: small and middle market business banking; specialized banking; multifamily and commercial real estate lending; mortgage finance; and SBA lending. This grouping is designed to allow for greater resource deployment, higher standards of risk management, stronger asset quality, lower interest-rate risk and higher productivity levels.
As of December 31, 2023 and 2022, Customers had $1.7 billion and $2.2 billion, respectively, in consumer loans outstanding (including consumer loans held for investment and held for sale), comprising 13.2% and 14.2%, respectively, of Customers’ total loan portfolio.
As of December 31, 2024 and 2023, Customers had $1.4 billion and $1.7 billion, respectively, in consumer loans outstanding (including consumer loans held for investment and held for sale), comprising 9.9% and 13.2%, respectively, of Customers’ total loan portfolio.
In 2023, 63 hires were referrals from team members, with 19 team members being eligible to receive a referral bonus. • United Way – Customers continues to encourage team members to support their local United Way Chapters which provide significant support to the communities in which they live and work.
In 2024, 44 hires were referrals from team members, with 21 team members being eligible to receive a referral bonus. • United Way – Customers Bank continues to encourage team members to support their local United Way Chapters which provide significant support to the communities in which they live and work.
As of December 31, 2023 and 2022, Customers Bank had $11.5 billion and $13.5 billion, respectively, in commercial loans outstanding, composing approximately 86.8% and 85.8%, respectively, of its total loan portfolio, which includes loans held for sale, loans receivable, mortgage warehouse, at fair value and loans receivable, PPP.
As of December 31, 2024 and 2023, Customers Bank had $13.2 billion and $11.5 billion, respectively, in commercial loans outstanding, composing approximately 90.1% and 86.8%, respectively, of its total loan portfolio, which includes loans held for sale, loans receivable, mortgage finance, at fair value and PPP loans.
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 created venture banking client coverage in Austin, the Bay Area, Boston, Southern California, Chicago, Denver, Raleigh/Durham, and Washington, D.C.
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 created 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 was combined with Customers’ existing technology and venture capital banking vertical.
The Bank is transitioning its consumer installment lending business from a held-for-investment to a held-for-sale strategy to further reduce credit risk. Customers has also formed a Special Assets Group (“SAG”) to manage classified and NPAs. As of December 31, 2023, only $27.1 million, or 0.21%, of the Bank’s total loan portfolio was non-performing. • Superior community banking model.
The Bank has been transitioning its consumer installment lending business from a held-for-investment to a held-for-sale strategy to further reduce credit risk. Customers has Special Assets Group (“SAG”) to manage classified and NPAs. As of December 31, 2024, only $43.3 million, or 0.30%, of the Bank’s total loan portfolio was non-performing. • Superior community banking model.
Talent Acquisition The demand for highly qualified candidates increases as our business grows. In the pursuit of securing top-tier talent aligned with our organizational objectives, the Talent Acquisition team has crafted a robust framework aimed at identifying, attracting, and onboarding exceptional individuals. We recruit nationally and are currently located across 32 states.
Talent Acquisition The demand for highly qualified candidates has increased as our business has grown. In the pursuit of securing top-tier talent aligned with our organizational objectives, the Talent Acquisition team has crafted a robust framework aimed at identifying, attracting, and onboarding exceptional individuals. We currently do business in 31 states and recruit nationally across the U.S.
At December 31, 2023, Customers had total assets of $21.3 billion, including total loans and leases, net of the ACL of $13.1 billion, total deposits of $17.9 billion and shareholders’ equity of $1.6 billion. Customers differentiates itself through its superior technology capabilities combined with a unique single-point-of-contact business strategy executed by very experienced management teams.
At December 31, 2024, Customers had total assets of $22.3 billion, including total loans and leases, net of the ACL of $14.5 billion, total deposits of $18.8 billion and shareholders’ equity of $1.8 billion. Customers differentiates itself through its superior technology capabilities combined with a unique single-point-of-contact business strategy executed by very experienced management teams.
We offer three referral bonus reward levels to team members who submit qualified referrals who are subsequently hired.
We offer a referral bonus to team members who submit qualified referrals who are subsequently hired.
Business Summary Customers Bancorp and its wholly owned subsidiary, Customers Bank, provide banking products, primarily loans and deposits, to businesses and consumers through its branches, limited production offices and administrative offices in Berks County and Southeastern Pennsylvania (Bucks, Chester and Philadelphia Counties); New York (Westchester and Suffolk Counties, and Manhattan); Hamilton, New Jersey; Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire; Chicago, Illinois; Dallas, Texas; Wilmington, North Carolina; and other locations.
Business Summary Customers Bancorp and its wholly owned subsidiary, Customers Bank, provide banking products, primarily loans and deposits, to businesses and consumers through its branches, limited production offices and administrative offices in Berks County and Southeastern Pennsylvania (Bucks, Chester and Philadelphia Counties); New York (Westchester and Suffolk Counties, and Manhattan); Hamilton, New Jersey; Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire; California (Southern California and the Bay Area); Nevada (Las Vegas and Reno); and other locations.
The deposits from customers participating in CBIT include the omnibus deposit account established for the CBIT instant payments platform, which had an outstanding balance of $826.9 million and $23 thousand at December 31, 2023 and 2022, respectively.
The deposits from customers participating in CBIT included the omnibus deposit account established for the CBIT instant payments platform, which had no outstanding balance and $826.9 million at December 31, 2024 and 2023, respectively.
The Company continues to provide free of charge access to telehealth services to include general medicine, dermatological visits, nutritional counseling, mental health visits, neck and back care, among other services, to team members and their qualified dependents.
We periodically evaluate our benefit packages to ensure they meet the needs of our team members. The Company continues to provide free of charge access to telehealth services to include general medicine, dermatological visits, nutritional counseling, mental health visits, neck and back care, among other services, to team members and their qualified dependents.
Customers focuses on markets that it believes are characterized by some or all of the following: • Attractive deposit bases; • Population density; • Concentration of business activity; • Significant market share held by large banks; • Advantageous competitive landscape that provides opportunity to achieve meaningful market presence; • Lack of consolidation in the banking sector and corresponding opportunities for add-on transactions; • Potential for economic growth over time; and • Management experience in the applicable markets. 9 Current Markets Customers’ target market has been broadly defined as extending from Washington, D.C. to Boston, Massachusetts roughly following Interstate 95.
Customers focuses on markets that it believes are characterized by some or all of the following: • Attractive deposit bases; • Population density; • Concentration of business activity; • Significant market share held by large banks; • Advantageous competitive landscape that provides opportunity to achieve meaningful market presence; • Lack of consolidation in the banking sector and corresponding opportunities for add-on transactions; • Potential for economic growth over time; and • Management experience in the applicable markets.
The main telephone number is (610) 933-2000. The deposits of the Bank are insured by the FDIC. The Bank’s home office is located at 40 General Warren Boulevard, Malvern, PA 19355. The main telephone number is (610) 933-2000.
Customers Bancorp’s corporate headquarters are located at 701 Reading Avenue, West Reading, PA 19611. The main telephone number is (610) 933-2000. The deposits of the Bank are insured by the FDIC. The Bank’s home office is located at 40 General Warren Boulevard, Malvern, PA 19355. The main telephone number is (610) 933-2000.
Customers Bank has a community outreach program in Philadelphia to finance homeownership in urban communities. As part of this program, Customers is offering an “Affordable Mortgage Product.” This community outreach program is penetrating the underserved population, especially in low-and moderate income neighborhoods.
These areas also support Customers’ commitment to lower-and-moderate-income families in its market area. 13 Customers Bank has a community outreach program in Philadelphia to finance homeownership in urban communities. As part of this program, Customers is offering an “Affordable Mortgage Product.” This community outreach program is penetrating the underserved population, especially in low-and moderate income neighborhoods.
Customers’ recruitment strategies encompass a diverse array of channels and tactics tailored to reach a broad spectrum of candidates. We leverage traditional (and also pursue innovative) methods, including job boards, social media platforms, and team member referrals, casting a wide net to attract candidates with the requisite skills and qualifications.
Customers Bank recruitment strategies encompass a diverse array of channels and tactics tailored to reach a broad spectrum of candidates. We leverage traditional strategies, and innovative approaches, including job boards, social media platforms, and team member referrals, and direct outreach in order to cast a wide net to attract candidates with the requisite skills and qualifications.
Sam Sidhu became the President and Chief Executive Officer of Customers Bank. Under Mr. Sam Sidhu’s leadership, Customers Bank partnered with several leading fintech companies to establish a technology enabled hybrid banking model, allowing Customers to outperform larger lenders’ efforts to support small businesses during the COVID-19 pandemic through the SBA’s PPP loans.
Sam Sidhu’s leadership, Customers Bank partnered with several leading fintech companies to establish a technology enabled hybrid banking model, allowing Customers to outperform larger lenders’ efforts to support small businesses during the pandemic through the SBA’s PPP loans.
Refer to “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” and “NOTE 3 – DISCONTINUED OPERATIONS” to Customers’ audited consolidated financial statements. Products Customers offers a broad range of traditional loan and deposit banking products and financial services, and non-traditional products and services such as CBIT TM , to its commercial and consumer customers.
Refer to “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” and “NOTE 23 – BUSINESS SEGMENTS” to Customers’ audited consolidated financial statements. 11 Products Customers offers a broad range of traditional loan and deposit banking products and financial services, and non-traditional products and services to its commercial and consumer customers.
Customers also offers traditional deposit products, including commercial and consumer checking accounts, non-interest-bearing and interest-bearing demand accounts, MMDA, savings accounts, time deposit accounts and cash management services.
Customers also offers traditional deposit products, including commercial and consumer checking accounts, non-interest-bearing and interest-bearing demand accounts, MMDA, savings accounts, time deposit accounts, cash management services and in-house developed B2B instant payments platform, cubiX.
Customers’ lender finance vertical within fund finance provides variable rate loans secured by diverse collateral pools to private debt funds. Customers’ capital call lines vertical within fund finance provides variable rate loans secured by collateral pools and limited partnership commitments from institutional investors in private equity funds and cash management services to the alternative investment industry.
Customers’ capital call lines vertical within fund finance provides variable rate loans secured by collateral pools and limited partnership commitments from institutional investors in private equity funds and cash management services to the alternative investment industry. Customers’ technology and venture capital banking group services the venture-backed growth industry from seed-stage through late-stage.
Financial Products and Services In addition to traditional banking activities, Customers provides other financial services to its customers, including: mobile phone banking, internet banking, wire transfers, electronic bill payment, lock box services, remote deposit capture services, courier services, merchant processing services, cash vault, controlled disbursements, positive pay and cash management services (including account reconciliation, collections and sweep accounts).
The deposits from these customers who transitioned to cubiX was $3.6 billion at December 31, 2024. 14 Financial Products and Services In addition to traditional banking activities, Customers provides other financial services to its customers, including: mobile phone banking, internet banking, wire transfers, electronic bill payment, lock box services, remote deposit capture services, courier services, merchant processing services, cash vault, controlled disbursements, positive pay and cash management services (including account reconciliation, collections and sweep accounts).
Customers recorded $3.7 million of FDIC special assessment in the consolidated statement of income for the year ended December 31, 2023.
Customers recorded $0.7 million and $3.7 million of FDIC special assessment in the consolidated statements of income for the years ended December 31, 2024 and 2023.
Team members who contribute at a certain level are eligible for additional paid time off. • Juneteenth – Federal holiday commemorating the emancipation of enslaved African Americans is incorporated into our Bank holidays. • Digital Feedback Tool – Team members need to be heard, included, recognized, and cared for and provided with positive leadership to promote a productive and engaging working environment.
Team members who contribute at a certain level are eligible for additional paid time off. 17 • Juneteenth – Federal holiday commemorating the emancipation of enslaved African Americans is incorporated into our Bank holidays, encouraging engagement through reflection, education, and community involvement. • Team Member Feedback – Team members need to be heard, included, and recognized, with positive leadership that promotes a productive and engaging work environment.
The program includes homebuyer seminars that prepare potential homebuyers for homeownership by teaching money management and budgeting skills, including the financial responsibilities that come with having a mortgage and owning a home. The “Affordable Mortgage Product” is offered throughout Customers’ assessment areas.
The program includes homebuyer seminars that prepare potential homebuyers for homeownership by teaching money management and budgeting skills, including the financial responsibilities that come with having a mortgage and owning a home. The “Affordable Mortgage Product” is offered throughout Customers’ assessment areas. Customers Bank also offers, FHA, VA, Pennsylvania Housing Finance Agency Finance and Fannie Mae’s HomeReady residential mortgages.
Customers offers a 401(k) plan whereby eligible team members may contribute an amount (percentage) of their salary (less applicable tax and benefit deductions) and the Company will provide a matching contribution. 95% of team members actively participate in the 401(k) plan.
Customers Bank continues to provide Company-paid Life, Accidental Death & Dismemberment, Short-term and Long-term disability benefits. Customers Bank offers a 401(k) plan whereby eligible team members may contribute an amount (percentage) of their salary (less applicable tax and benefit deductions) and the Company will provide a matching contribution. More than 95% of team members actively participate in the 401(k) plan.
We continue to partner with leadership to also identify high potential team members who possess the technical abilities and leadership attributes to be assessed and considered for succession.
We continue to partner with leadership to also identify high potential team members who possess the technical abilities and leadership attributes to be assessed and considered for succession. Available Information Customers Bancorp’s internet website address is www.customersbank.com.
ESG ESG considerations are integrated across our business and incorporated into the policies and principles that govern how we operate. We continuously seek to address some of the practical challenges in balancing short-term and long-term business trade-offs to ensure that our stakeholders and shareholders prosper together.
We continuously seek to address some of the practical challenges in balancing short-term and long-term business trade-offs to ensure that our stakeholders and shareholders prosper together.
Customers has helped thousands of small businesses by funding over $10 billion in PPP loans directly or through partnerships and purchases.
Customers has helped thousands of small businesses by funding over $10 billion in PPP loans directly or through partnerships and purchases. Customers substantially completed processing forgiveness and guarantee claims for the PPP in early 2023.
Underwriting standards for home equity lending are conservative, and lending is offered to solidify customer relationships and grow relationship revenues in the long term. This lending is important in Customers’ efforts to grow total relationship revenues for its consumer households. These areas also support Customers’ commitment to lower-and-moderate-income families in its market area.
Customers also provides home equity and residential mortgage loans to customers. Underwriting standards for home equity lending are conservative, and lending is offered to solidify customer relationships and grow relationship revenues in the long term. This lending is important in Customers’ efforts to grow total relationship revenues for its consumer households.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese changes could adversely affect our business, operating results, reported assets and liabilities, financial condition and capital levels; ◦ Risks related to changes in accounting standards and policies which can be difficult to predict and can materially impact how we record and report our financial results; ◦ Risks related to our geographic concentration in the Northeast and Mid-Atlantic regions; ◦ Risks related to our concentration in certain business lines or product types; ◦ Risks related to our dependency on our executive officers and key personnel to implement our strategy and our ability to retain their services; ◦ Risks related to significant competition from other financial institutions and financial services providers; ◦ Risks related to CBIT, our blockchain-based instant B2B payments platform; ◦ Risks associated with our dependency on our information technology and telecommunications systems and third-party service providers including exposures to systems failures, interruptions or breaches of security; ◦ Risks associated with the loss of, or failure to adequately safeguard, confidential or proprietary information; ◦ Risks associated with negative public opinion regarding us; • Risks related to the divestiture of BMT: ◦ Risks associated with BM Technologies through our various service agreements with BM Technologies; • Risks related to macroeconomic conditions, COVID-19, climate change and geopolitical conflicts: ◦ Risks related to worsening general business and economic conditions which could materially and adversely affect us; ◦ Risks associated with COVID-19 and its variants including their scope, duration and severity and actions taken by governmental authorities in response to COVID-19 and its variants; ◦ Risks related to the SBA’s PPP program and PPP loans remaining on our balance sheet; ◦ Risks related to climate change and related legislative and regulatory initiatives on our business; 30 • Risks related to the regulation of our industry: ◦ Risks associated with the highly regulated environment in which we operate, including the effects of heightened regulatory and supervisory requirements applicable to banks with assets in excess of $10 billion; ◦ Risks related to maintaining adequate regulatory capital to support our business strategies including the long-term impact of the new regulatory capital standards and the capital rules on U.S. banks; ◦ Risks related to our use of third-party service providers and our other ongoing third-party business relationships, which are subject to increasing regulatory requirements and attention; ◦ Risks associated to us being subject to numerous laws and governmental regulations and to regular examinations by our regulators of our business and compliance with laws and regulations.
Biggest changeThese changes could adversely affect our business, operating results, reported assets and liabilities, financial condition and capital levels; ◦ Risks related to changes in accounting standards and policies which can be difficult to predict and can materially impact how we record and report our financial results; ◦ Risks related to our geographic concentration in the Northeast and Mid-Atlantic regions; ◦ Risks related to our concentration in certain business lines or product types; ◦ Risks related to our dependency on our executive officers and key personnel to implement our strategy and our ability to retain their services; ◦ Risks related to significant competition from other financial institutions and financial services providers; ◦ Risks related to inflation, interest rates, and securities market and monetary fluctuations; ◦ Risks related to our proprietary B2B instant payments platform, cubiX; ◦ Risks associated with our dependency on our information technology and telecommunications systems and third-party service providers including exposures to systems failures, interruptions or breaches of security; ◦ Risks associated with the evolving regulatory frameworks around the development and use of artificial intelligence; ◦ Risks associated with the loss of, or failure to adequately safeguard, confidential or proprietary information; ◦ Risks associated with negative public opinion regarding us; ◦ Risks related to increasing, complex and evolving regulatory, stakeholder, and other third party expectations on CSR matters; ◦ Risks related to our system of internal controls, including internal controls over financial reporting; ◦ Risks associated with the acquisitions of or investments in other businesses; • Risks related to the divestiture of BMT: ◦ Risks associated with BM Technologies through our various service agreements with BM Technologies; 29 • Risks related to macroeconomic conditions, climate change and geopolitical conflicts: ◦ Risks related to turmoil in the financial services industry, or our ability to adequately manage our liquidity, deposits, capital levels, interest rate risk or reputation risk, in light of recent bank failures; ◦ Risks related to worsening general business and economic conditions which could materially and adversely affect us; ◦ Risks related to the SBA’s PPP program and PPP loans remaining on our balance sheet; ◦ Risks related to climate change and related legislative and regulatory initiatives on our business; • Risks related to the regulation of our industry: ◦ Risks associated with the highly regulated environment in which we operate, including the effects of heightened regulatory and supervisory requirements, expectations and scrutiny in the U.S. leading to increased compliance, regulatory and other risks and costs and subject us to legal and regulatory examinations, investigations and enforcement actions; ◦ Risks related to maintaining adequate regulatory capital to support our business strategies including the long-term impact of the new regulatory capital standards and the capital rules on U.S. banks; ◦ Risks related to our use of third-party service providers and our other ongoing third-party business relationships, which are subject to increasing regulatory requirements and attention; ◦ Risks related to litigation and regulatory actions, including enforcement actions, which could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities; ◦ Risks associated to us being subject to numerous laws and governmental regulations and to regular examinations by our regulators of our business and compliance with laws and regulations, and the possible material and adverse effects that could result if we fail to comply with such laws and regulations or to adequately address any matters identified during these examinations could materially and adversely affect us; ◦ Risks related to the FDIC’s restoration plan and related increased assessment rates; ◦ Risks related to reviews performed by the IRS and state taxing authorities for the fiscal years that remain open for investigation and potential changes in U.S. federal, state or local tax laws; • Risks related to our securities: ◦ Risks related to our voting common stock; ◦ Risks related to our fixed-to-floating-rate non-cumulative perpetual preferred stock, Series E and Series F; ◦ Risks related to our senior notes and subordinated notes; • General risk factors ◦ Risks related to downgrades in U.S. government and federal agency securities; and ◦ Risks related to our ability to maintain consistent earnings or profitability. 30 Risks Related to the Bancorp’s Banking Operations Our business is highly susceptible to credit risk.
Federal and state banking agencies continue to deliberate over the regulatory treatment of fintech companies, including whether the agencies are authorized to grant charters or licenses to such companies and whether it would be appropriate to do so in consideration of several regulatory and economic factors.
Federal and state banking agencies continue to deliberate over the regulatory treatment of fintech companies, including whether the agencies are authorized to grant charters or licenses to such companies and whether it would be appropriate to do so in consideration of several regulatory and economic factors.
Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI, machine learning and automated decision making could adversely affect our business, results of operations, and financial condition. Loss of, or failure to adequately safeguard, confidential or proprietary information may adversely affect our operations, net income or reputation.
Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI, machine learning and automated decision making could adversely affect our business, results of operations, reputation and financial condition. Loss of, or failure to adequately safeguard, confidential or proprietary information may adversely affect our operations, net income or reputation.
For example, one of our locations experienced flooding and incurred property damage in 2021 as a result. Although management has established disaster recovery policies and procedures, the occurrence of any such event could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.
For example, in 2021, one of our locations experienced flooding and incurred property damage as a result. Although management has established disaster recovery policies and procedures, the occurrence of any such event could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.
Federal bank regulatory agencies have the authority to prohibit bank holding companies from engaging in unsafe or unsound practices in conducting their business, which, depending on the financial condition and liquidity of the holding company at the time, could include the payment of dividends.
Federal bank regulatory agencies have the authority to prohibit bank holding companies from engaging in unsafe or unsound practices in conducting their business, which, depending on the financial condition and liquidity of the holding company at the time, could include the payment of dividends.
Various federal and state statutes, regulations and rules limit, directly or indirectly, the amount of dividends that our banking and other subsidiaries may pay to us without regulatory approval. In particular, dividend and other distributions from Customers Bank to us would require notice to or approval of the applicable regulatory authority.
Various federal and state statutes, regulations and rules limit, directly or indirectly, the amount of dividends that our banking and other subsidiaries may pay to us without regulatory approval. In particular, dividend and other distributions from Customers Bank to us would require notice to or approval of the applicable regulatory authority.
There can be no assurances that we would receive such approval.
There can be no assurances that we would receive such approval.
Investors owning 80% or more of two or more banks or savings associations would be required to pledge their proportionate interests in each institution to cross-guarantee the FDIC against losses to the DIF. 59 Under the policy statement, the FDIC also could prohibit investment through ownership structures involving multiple investment vehicles that are owned or controlled by the same parent company.
Investors owning 80% or more of two or more banks or savings associations would be required to pledge their proportionate interests in each institution to cross-guarantee the FDIC against losses to the DIF. Under the policy statement, the FDIC also could prohibit investment through ownership structures involving multiple investment vehicles that are owned or controlled by the same parent company.
Further, because customer data may also be collected, stored or processed by third-party service providers, it is possible that these third-party service providers could intentionally, negligently or otherwise disclose data about our clients or customers. We rely to a large extent upon sophisticated information technology systems, databases and infrastructure, and take reasonable steps to protect them.
Further, because customer data may also be collected, stored or processed by third-party service providers, it is possible that these third-party service providers could intentionally, negligently or otherwise disclose data about our clients or customers. We rely to a large extent upon sophisticated information technology systems, databases and infrastructure, and take steps to protect them.
We require our team members to agree to keep all such information confidential, and we monitor compliance. Failure to comply with confidentiality requirements could result in material liability and adversely affect our business, financial condition, results of operations and future prospects. 52 Bank holding companies and financial institutions are extensively regulated and currently face an uncertain regulatory environment.
We require our team members to agree to keep all such information confidential, and we monitor compliance. Failure to comply with confidentiality requirements could result in material liability and adversely affect our business, financial condition, results of operations and future prospects. Bank holding companies and financial institutions are extensively regulated and currently face an uncertain regulatory environment.
The loss of any guarantees for loans we have extended under U.S. government agency guarantee programs or the loss of our ability to participate in such programs could have a material adverse effect on our business, financial condition or results of operations. 56 We are subject to regulatory restrictions on transactions with our affiliates and related parties.
The loss of any guarantees for loans we have extended under U.S. government agency guarantee programs or the loss of our ability to participate in such programs could have a material adverse effect on our business, financial condition or results of operations. We are subject to regulatory restrictions on transactions with our affiliates and related parties.
Similarly, when interest-earning assets mature or reprice more quickly, and because the magnitude of repricing of interest-earning assets is often greater than interest-bearing liabilities, falling interest rates would reduce net interest income. Accordingly, changes in the level of market interest rates affect our net yield on interest-earning assets and liabilities, loan and investment securities portfolios and our overall financial results.
Similarly, when interest-earning assets mature or reprice more quickly, and because the magnitude of repricing of interest-earning assets is often greater than interest-bearing liabilities, falling interest rates would reduce net interest income. 36 Accordingly, changes in the level of market interest rates affect our net yield on interest-earning assets and liabilities, loan and investment securities portfolios and our overall financial results.
Our earnings also may be reduced by increased expenses associated with increased assets, such as additional team member compensation expense, and increased interest expense on any liabilities incurred or deposits solicited to fund increases in assets. If earnings do not grow proportionately with our assets or equity, our overall profitability may be adversely affected. Item 1B.
Our earnings also may be reduced by increased expenses associated with increased assets, such as additional team member compensation expense, and increased interest expense on any liabilities incurred or deposits solicited to fund increases in assets. If earnings do not grow proportionately with our assets or equity, our overall profitability may be adversely affected. 63 Item 1B.
We expect our loan and deposit activities to continue expanding beyond the Northeast and Mid-Atlantic regions to service customers across the nation. 34 Additionally, we have made a significant investment in commercial real estate loans. Often in a commercial real estate transaction, repayment of the loan is dependent on the property generating sufficient rental income to service the loan.
We expect our loan and deposit activities to continue expanding beyond the Northeast and Mid-Atlantic regions to service customers across the nation. Additionally, we have made a significant investment in commercial real estate loans. Often in a commercial real estate transaction, repayment of the loan is dependent on the property generating sufficient rental income to service the loan.
Failure to perform in any of these areas could significantly weaken our competitive position, which could materially and adversely affect us. 36 In addition, the financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services including internet services, cryptocurrencies and payment systems.
Failure to perform in any of these areas could significantly weaken our competitive position, which could materially and adversely affect us. In addition, the financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services including internet services, cryptocurrencies and payment systems.
Although our CEO, CFO, and President have entered into employment agreements with us, it is possible that they may not complete the term of their employment agreement or may choose not to renew it upon expiration. Our customers also rely on us to deliver personalized financial services.
Although our CEO and President have entered into employment agreements with us, it is possible that they may not complete the term of their employment agreement or may choose not to renew it upon expiration. Our customers also rely on us to deliver personalized financial services.
Commercial loans, including commercial real estate loans, can expose a lender to risk of non-payment and loss because repayment of the loans often depends on the successful operation of a business or property, which could be affected by factors outside of the borrower’s control, and the borrower’s cash flows.
Commercial loans, including commercial real estate loans, expose a lender to risk of non-payment and loss because repayment of the loans often depends on the successful operation of a business or property, which could be affected by factors outside of the borrower’s control, and the borrower’s cash flows.
Any of these factors, among others, such as a change in management’s intent to sell the securities, could cause credit losses and realized and/or unrealized losses in future periods and declines in OCI, which could have a material adverse effect on us.
Any of these factors, among others, such as a change in management’s intent to sell the securities, have in the past and could in the future cause credit losses and realized and/or unrealized losses in future periods and declines in OCI, which could have a material adverse effect on us.
Negative publicity or reputational harm can result from actual or alleged conduct in a number of areas, including legal and regulatory compliance, lending practices, corporate governance, litigation, inadequate protection of customer data, illegal or unauthorized acts taken by third parties that supply products or services to us, the behavior of our team members, the customers with whom we have chosen to do business, the industries in which we operate, corporate initiatives (such as those related to diversity, equity and inclusion or ESG) and negative publicity for other financial institutions.
Negative publicity or reputational harm can result from actual or alleged conduct in a number of areas, including legal and regulatory compliance, lending practices, corporate governance, litigation, inadequate protection of customer data, illegal or unauthorized acts taken by third parties that supply products or services to us, the behavior of our team members, the customers with whom we have chosen to do business, the industries in which we operate, corporate initiatives (such as those related to diversity, equity and inclusion or CSR) and negative publicity for other financial institutions.
As a result, the difference between bid and ask prices in any secondary market could be substantial. 61 The Series E and Series F Preferred Stock may be junior or equal in rights and preferences to preferred stock we may issue in the future. Our Series E and Series F Preferred Stock rank equally.
As a result, the difference between bid and ask prices in any secondary market could be substantial. The Series E and Series F Preferred Stock may be junior or equal in rights and preferences to preferred stock we may issue in the future. Our Series E and Series F Preferred Stock rank equally.
Such inadvertent disclosures have occurred and are likely to occur in the future. Any disclosures of confidential or proprietary information, whether intentional or unintentional, subject us to liability for damages, including expenses of credit monitoring for those effected, and reputational damage.
Such disclosures have occurred and are likely to occur in the future. Any disclosures of confidential or proprietary information, whether intentional or unintentional, subject us to liability for damages, including expenses of credit monitoring for those effected, and reputational damage.
In acting on applications, federal banking regulators consider, among other factors: • the effect of the acquisition on competition; • the financial condition, liquidity, results of operations, capital levels and future prospects of the applicant and the bank(s) involved; • the quantity and complexity of previously consummated acquisitions; • the managerial resources of the applicant and the bank(s) involved; • the convenience and needs of the community, including the record of performance under CRA; • the effectiveness of the applicant in combating money laundering activities; and 45 • the extent to which the acquisition would result in greater or more concentrated risks to the stability of the United States banking or financial system.
In acting on applications, federal banking regulators consider, among other factors: • the effect of the acquisition on competition; • the financial condition, liquidity, results of operations, capital levels and future prospects of the applicant and the bank(s) involved; • the quantity and complexity of previously consummated acquisitions; • the managerial resources of the applicant and the bank(s) involved; • the convenience and needs of the community, including the record of performance under CRA; • the effectiveness of the applicant in combating money laundering activities; and 44 • the extent to which the acquisition would result in greater or more concentrated risks to the stability of the United States banking or financial system.
Other actions, formal or informal, that may be imposed could restrict our growth, including regulatory denials to expand branches, relocate, add subsidiaries and affiliates, expand into new financial activities or merge with or purchase other financial institutions.
Other actions, formal or informal, that may be imposed could restrict our growth, including regulatory denials to expand branches, relocate, add or restructure subsidiaries and affiliates, expand into new financial activities or merge with or purchase other financial institutions.
Examples of those actions, conditions or limitations include enjoining “unsafe or unsound” practices, requiring affirmative actions to correct any conditions resulting from any asserted violation of law, issuing administrative orders that can be judicially enforced, directing increases in our capital, assessing civil monetary penalties against our officers or directors, removing officers and directors and, if a conclusion was reached that the offending conditions cannot be corrected, or there is an imminent risk of loss to depositors, terminating our deposit insurance.
Examples of those actions could include requiring affirmative actions to correct any conditions resulting from any asserted violation of law, issuing administrative orders that can be judicially enforced, enjoining “unsafe or unsound” practices, directing increases in our capital, assessing civil monetary penalties against our officers or directors, removing officers and directors and, if a conclusion was reached that the offending conditions cannot be corrected, or there is an imminent risk of loss to depositors, terminating our deposit insurance.
The terms of our 2.875% Senior Notes and 4.5% Senior Notes, which we refer to as the Senior Notes, and 6.125% and 5.375% Subordinated Notes, which we refer to as the Subordinated Notes, generally do not prohibit us from incurring additional debt or other liabilities.
The terms of our 2.875% Senior Notes, which we refer to as the Senior Notes, and 6.125% and 5.375% Subordinated Notes, which we refer to as the Subordinated Notes, generally do not prohibit us from incurring additional debt or other liabilities.
Because the Subordinated Notes are unsecured, they will be effectively subordinated to all of our future secured subordinated indebtedness to the extent of the value of the assets securing such indebtedness. The Senior Notes and Subordinated Notes may not have an active trading market.
Because the Subordinated Notes are unsecured, they will be effectively subordinated to all of our future secured subordinated indebtedness to the extent of the value of the assets securing such indebtedness. 62 The Senior Notes and Subordinated Notes may not have an active trading market.
Whether through additional acquisitions or organic growth, our current plan to expand our business is dependent upon our ability to: • continue to implement and improve our operational, credit underwriting and administration, financial, accounting, enterprise risk management and other internal and disclosure controls and procedures and our reporting systems and processes in order to manage a growing number of client relationships; • comply with changes in, and an increasing number of, laws, rules and regulations, including those of any national securities exchange on which any of our securities become listed; • scale our technology and other systems’ platforms; • maintain and attract appropriate staffing; • operate profitably or raise capital; and • support our asset growth with adequate deposits, funding and liquidity while expanding our net interest margin and meeting our customers’ and regulators’ liquidity requirements.
Whether through additional acquisitions or organic growth, our current plan to expand our business is dependent upon our ability to: • continue to implement and improve our operational, credit underwriting and administration, financial, accounting, legal, regulatory, compliance and enterprise risk management, internal and disclosure controls and procedures and our reporting systems and processes in order to manage a growing number of client relationships; • comply with changes in, and an increasing number of, laws, rules and regulations, including those of any national securities exchange on which any of our securities become listed; • scale our technology and other systems’ platforms; • maintain and attract appropriate staffing; • operate profitably or raise capital; and • support our asset growth with adequate deposits, funding and liquidity while expanding our net interest margin and meeting our customers’ and regulators’ liquidity requirements.
Accordingly, account data breaches and related fraudulent activity could have a material adverse effect on our future growth prospects, business, financial condition and results of operations. 42 A disruption to our systems or infrastructure could damage our reputation, expose us to legal liability, cause us to lose customers and revenue, result in the unintentional disclosure of confidential information or require us to expend significant efforts and resources or incur significant expense to eliminate these problems and address related data and security concerns.
Accordingly, account data breaches and related fraudulent activity could have a material adverse effect on our future growth prospects, business, financial condition and results of operations. 41 A disruption to our systems or infrastructure could damage our reputation, expose us to legal liability, cause us to lose customers and revenue, result in the unintentional disclosure of confidential information or require us to expend significant efforts and resources or incur significant expense to eliminate these problems and address related data and security concerns.
The preparation of our consolidated financial statements requires management to make certain critical accounting estimates and assumptions that could affect the reported amounts of assets and liabilities and the reported amounts of income and expense during the reporting periods.
The preparation of our consolidated financial statements requires management to make certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expense during the reporting periods.
Competitors may also have greater resources and access to capital and may possess other advantages such as operating more ATMs and conducting extensive promotional and advertising campaigns or operating a more developed Internet platform.
Competitors may also have greater resources and access to capital and may possess other advantages such as operating more branches and ATMs and conducting extensive promotional and advertising campaigns or operating a more developed Internet platform.
The Senior Notes will rank equal in right of payment with all of our secured and unsecured senior indebtedness and will rank senior in right of payment to all of our subordinated indebtedness. 62 Although the Senior Notes are “senior notes,” they will be effectively subordinated to all liabilities of our subsidiaries.
The Senior Notes will rank equal in right of payment with all of our secured and unsecured senior indebtedness and will rank senior in right of payment to all of our subordinated indebtedness. Although the Senior Notes are “senior notes,” they will be effectively subordinated to all liabilities of our subsidiaries.
Additionally, as information security risks and cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate any information security vulnerabilities. 41 Breaches of security measures, computer viruses or malware, fraudulent activity and infrastructure failures could materially and adversely affect our reputation or harm our business, including the unauthorized access to or disclosure of data relating to third-party serviced deposit account holders.
Additionally, as information security risks and cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate any information security vulnerabilities. 40 Breaches of security measures, computer viruses or malware, fraudulent activity and infrastructure failures could materially and adversely affect our reputation or harm our business, including the unauthorized access to or disclosure of data relating to third-party serviced deposit account holders.
The ability to keep pace with technological change is important and the failure to do so could adversely affect our business, financial condition and results of operations. 39 We are dependent on our information technology and telecommunications systems and third-party service providers, and systems failures, interruptions or breaches of security, or the failure of our third-party service providers to adequately perform their services, could have a material adverse effect on us.
The ability to keep pace with technological change is important and the failure to do so could adversely affect our business, financial condition and results of operations. 38 We are dependent on our information technology and telecommunications systems and third-party service providers, and systems failures, interruptions or breaches of security, or the failure of our third-party service providers to adequately perform their services, could have a material adverse effect on us.
In addition, if a competitor or another third party were to launch an alternative to CBIT (such as Federal Reserve’s FedNow Service, a virtual real time payment system for banks launched in 2023), we could lose non-interest bearing deposits and our business, financial condition, results of operations and growth strategy could be adversely impacted.
In addition, if a competitor or another third party were to launch an alternative to cubiX (such as Federal Reserve’s FedNow Service, a virtual real time payment system for banks launched in 2023), we could lose non-interest bearing deposits and our business, financial condition, results of operations and growth strategy could be adversely impacted.
Because many of our competitors have substantially greater resources to invest in technological improvements than we do, or, at present, operate in a less-burdensome regulatory environment, these institutions could pose a significant competitive threat to us. As noted above, our commercial customers utilizing CBIT are currently concentrated in the digital currency industry.
Because many of our competitors have substantially greater resources to invest in technological improvements than we do, or, at present, operate in a less-burdensome regulatory environment, these institutions could pose a significant competitive threat to us. As noted above, our commercial customers utilizing cubiX are currently concentrated in the digital currency industry.
In addition, our right to participate in any distribution of assets of any of our subsidiaries upon the subsidiary’s liquidation or otherwise, and, as a result, the ability of a holder of the 2.875% Senior Notes and 4.5% Senior Notes to benefit indirectly from such distribution will be subject to the prior claims of preferred equity holders and creditors of that subsidiary, except to the extent that any of our claims as a creditor of such subsidiary may be recognized.
In addition, our right to participate in any distribution of assets of any of our subsidiaries upon the subsidiary’s liquidation or otherwise, and, as a result, the ability of a holder of the 2.875% Senior Notes to benefit indirectly from such distribution will be subject to the prior claims of preferred equity holders and creditors of that subsidiary, except to the extent that any of our claims as a creditor of such subsidiary may be recognized.
This, in turn, could have an adverse effect on our ability to attract and retain customers and team members and could have a negative impact on the market price for securities. Investors have begun to consider the steps taken and resources allocated by financial institutions and other commercial organizations to address ESG matters when making investment and operational decisions.
This, in turn, could have an adverse effect on our ability to attract and retain customers and team members and could have a negative impact on the market price for our securities. Investors have begun to consider the steps taken and resources allocated by financial institutions and other commercial organizations to address CSR matters when making investment and operational decisions.
Our business increasingly relies on AI, machine learning and automated decision making to improve our services and our customer’s experience. The regulatory framework around the development and use of these emerging technologies is rapidly evolving, and many federal, state and foreign government bodies and agencies have introduced and/or are currently considering additional laws and regulations.
Our business increasingly relies on AI, machine learning and automated decision making to improve our services and our customers’ experience. The regulatory framework around the development and use of these emerging technologies is rapidly evolving, and many federal, state and foreign government bodies and agencies have introduced and/or are currently considering additional laws and regulations.
The ability to keep pace with technological change is important, and the failure to do so could have a material adverse impact on our business and therefore on our financial condition and results of operations. 40 Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of artificial intelligence could adversely affect our business, results of operations, and financial condition.
The ability to keep pace with technological change is important, and the failure to do so could have a material adverse impact on our business and therefore on our financial condition and results of operations. 39 Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of artificial intelligence could adversely affect our business, results of operations, and financial condition.
If any regulatory agency’s assessment of the quality of our assets, operations, lending practices, investment practices, capital structure or other assets of our business differs from our assessment, we may be required to take additional charges or undertake or refrain from undertaking actions that would have the effect of materially reducing our earnings, capital ratios and share price.
If any regulatory agency’s assessment of the quality of our assets, operations, lending practices, investment practices, reporting practices, capital structure, deposits or other assets of our business differs from our assessment, we may be required to take additional charges or undertake or refrain from undertaking actions that would have the effect of materially reducing our earnings, capital ratios and share price.
Holders of Series E and Series F Preferred stock have limited voting rights. Holders of Series E and Series F Preferred Stock have no voting rights with respect to matters that generally require the approval of voting shareholders.
Holders of Series E and Series F Preferred Stock have no voting rights with respect to matters that generally require the approval of voting shareholders.
Any change to or termination of our borrowings from the FHLB or correspondent banks could have an adverse effect on our profitability and financial condition, including liquidity. 47 We may not be able to develop and retain a strong core deposit base and other low-cost, stable funding sources.
Any change to or termination of our borrowings from the FHLB or correspondent banks could have an adverse effect on our profitability and financial condition, including liquidity. 46 We may not be able to develop and retain a strong core deposit base and other low-cost, stable funding sources.
ESG matters include, among other things, climate risk, hiring practices, the diversity of our work force, and racial and social justice issues involving our personnel, customers and third parties with whom we otherwise do business. Risks arising from ESG matters may adversely affect, among other things, our reputation and the market price of our securities.
CSR matters include, among other things, climate risk, hiring practices, the diversity of our work force, and racial and social justice issues involving our personnel, customers and third parties with whom we otherwise do business. Risks arising from CSR matters may adversely affect, among other things, our reputation and the market price of our securities.
Certain investors are beginning to incorporate the business risks of climate change and the adequacy of companies’ responses to the risks posed by climate change and other ESG matters into their investment theses. Additionally, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.
Certain investors are beginning to incorporate the business risks of climate change and the adequacy of companies’ responses to the risks posed by climate change and other CSR matters into their investment theses. Additionally, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to CSR matters.
In addition, a director of Customers Bank who is not a director or executive officer of Customers Bancorp owns an additional 1,000 shares of common stock, which if combined with the directors and executive officers of Customers Bancorp, potentially gives them, as a group, the ability to control approximately 9.48% of the outstanding common stock.
In addition, a director of Customers Bank who is not a director or executive officer of Customers Bancorp owns an additional 1,000 shares of common stock, which if combined with the directors and executive officers of Customers Bancorp, potentially gives them, as a group, the ability to control approximately 9.44% of the outstanding common stock.
We expect to drive organic growth by employing our single-point-of-contact strategy, which provides specific relationship managers or private bankers for all customers, and by focusing on our corporate and specialty banking verticals. Many of our competitors provide similar services, and others may replicate our model.
We expect to drive organic growth by employing our single-point-of-contact strategy, which provides specific relationship managers or private bankers for all customers, and by focusing on our corporate and specialized banking verticals. Many of our competitors provide similar services, and others may replicate our model.
Considering our immediate response to originate PPP loans, the loans originated under this program may present potential fraud or other risks, increasing the risk that loan forgiveness may not be obtained by the borrowers and that the guaranty may not be honored and may result in increased provision expense or charge-offs.
Considering our immediate response to originate PPP loans, certain of loans originated under this program present potential fraud or other risks, increasing the risk that loan forgiveness may not be obtained by the borrowers and that the guaranty may not be honored and may result in increased provision expense or charge-offs.
Our ability to compete successfully depends on a number of factors, including, among others: • the ability to develop, maintain and build upon long-term customer relationships based on high quality, personal service, effective and efficient products and services, high ethical standards and safe and sound assets; • the scope, relevance and competitive pricing of products and services offered to meet customer needs and demands; • the ability to provide customers with maximum convenience of access to services and availability of banking representatives; • the ability to attract and retain highly qualified team members to operate our business; • the ability to expand our market position in current and new markets; • customer access to our decision makers and customer satisfaction with our level of service; • the ability to effectively manage our enterprise risk; and • the ability to operate our business effectively and efficiently.
Our ability to compete successfully depends on a number of factors, including, among others: • the ability to develop, maintain and build upon long-term customer relationships based on high quality, personal service, effective and efficient products and services, high ethical standards and safe and sound assets; • the scope, relevance and competitive pricing of products and services offered to meet customer needs and demands; • the ability to provide customers with maximum convenience of access to services and availability of banking representatives; • the ability to attract and retain highly qualified team members to operate our business; • the ability to expand our market position in current and new markets; • customer access to our decision makers and customer satisfaction with our level of service; • the ability to effectively manage our regulatory, compliance, legal, reputation and enterprise risk; and • the ability to operate our business effectively and efficiently.
If we do so, we may not be able to influence the activities of companies in which we invest and may suffer losses due to these activities. 48 Risks related to the divestiture of BMT We continue to face the risks and challenges associated with BM Technologies following the merger of BMT with Megalith Financial Acquisition Corp.
If we do so, we may not be able to influence the activities of companies in which we invest and may suffer losses due to these activities. 47 Risks related to the divestiture of BMT We continue to face the risks and challenges associated with BM Technologies following the merger of BMT with Megalith Financial Acquisition Corp.
We are subject to U.S. federal income tax as well as income tax of various state and local taxing authorities. Generally, Customers is no longer subject to examination by federal, state, and local taxing authorities for years prior to the year ended December 31, 2020, with the exception of New Jersey and New York City.
We are subject to U.S. federal income tax as well as income tax of various state and local taxing authorities. Generally, Customers is no longer subject to examination by federal, state, and local taxing authorities for years prior to the year ended December 31, 2021, with the exception of New Jersey and New York City.
Conversely, the market price of our securities may be adversely affected if a government official or agency seeks to limit the Company’s business with a certain government entity or initiates an investigation or enforcement action because of what is perceived to be the Company’s unwarranted focus on ESG matters.
Conversely, the market price of our securities may be adversely affected if a government official or agency seeks to limit the Company’s business with a certain government entity or initiates an investigation or enforcement action because of what is perceived to be the Company’s unwarranted focus on CSR matters.
Any damage to our reputation could have a material adverse effect on our business, results of operations, and financial condition. Increasing, complex and evolving regulatory, stakeholder, and other third party expectations on ESG matters could adversely affect our reputation, our access to capital and the market price of our securities.
Any damage to our reputation could have a material adverse effect on our business, results of operations, and financial condition. Increasing, complex and evolving regulatory, stakeholder, and other third party expectations on CSR matters could adversely affect our reputation, our access to capital and the market price of our securities.
Additional issuances by us of preferred stock ranking equally with Series E and Series F Preferred Stock do not generally require the approval of holders of the Series E and Series F Preferred Stock. Risks Related to Our Senior Notes and Subordinated Notes Our 2.875% Senior Notes, 4.5% Senior Notes, 6.125% Subordinated Notes and 5.375% Subordinated Notes contain limited covenants.
Additional issuances by us of preferred stock ranking equally with Series E and Series F Preferred Stock do not generally require the approval of holders of the Series E and Series F Preferred Stock. 61 Risks Related to Our Senior Notes and Subordinated Notes Our 2.875% Senior Notes, 6.125% Subordinated Notes and 5.375% Subordinated Notes contain limited covenants.
As a result, the 2.875% Senior Notes and 4.5% Senior Notes are effectively subordinated to all existing and future liabilities and any outstanding preferred equity of our subsidiaries. We may not be able to generate sufficient cash to service our debt obligations, including our obligations under the Senior Notes and Subordinated Notes.
As a result, the 2.875% Senior Notes are effectively subordinated to all existing and future liabilities and any outstanding preferred equity of our subsidiaries. We may not be able to generate sufficient cash to service our debt obligations, including our obligations under the Senior Notes and Subordinated Notes.
Shifts in investing priorities based on ESG principles may result in adverse effects on the market price of our securities to the extent that investors that give significant weight to such principles determine that the Company has not made sufficient progress on ESG matters.
Shifts in investing priorities based on CSR principles may result in adverse effects on the market price of our securities to the extent that investors that give significant weight to such principles determine that the Company has not made sufficient progress on CSR matters.
While we select third-party service providers carefully, we do not control their operations and at times they encounter difficulties, including disruptions in communications, failures to handle current or increased transaction volumes, cyberattacks, security breaches, data corruption or similar events, during which our ability to operate effectively is adversely affected.
While we intend to select third-party service providers carefully, we do not control their operations and at times they encounter difficulties, including disruptions in communications, failures to handle current or increased transaction volumes, cyberattacks, security breaches, regulatory or compliance failures, data corruption or similar events, during which our ability to operate effectively is adversely affected.
Any further action could have a material adverse effect on our business, financial conditions and/or results of operations or our reputation. 44 We intend to engage in acquisitions of other businesses from time to time.
Any further action could have a material adverse effect on our business, financial conditions and/or results of operations or our reputation. 43 We intend to engage in acquisitions of other businesses from time to time.
Although we made profit for the years 2011 through 2023, there can be no assurance that we will be able to remain profitable in future periods, or, if profitable, that our overall earnings will remain consistent or increase in the future.
Although we made profit for the years 2011 through 2024, there can be no assurance that we will be able to remain profitable in future periods, or, if profitable, that our overall earnings will remain consistent or increase in the future.
Customers is subject to a variety of risks arising from ESG matters as governmental and regulatory bodies, investors, customers, team members and other stakeholders and third parties have been increasingly focused on ESG matters.
Customers is subject to a variety of risks arising from CSR matters as governmental and regulatory bodies, investors, customers, team members and other stakeholders and third parties have been increasingly focused on CSR matters.
Applicable laws, regulations, interpretations, enforcement policies and accounting principles have been subject to significant changes in recent years and may be subject to significant future changes. The recent turmoil in the banking industry has increased the likelihood of additional regulation and heightened supervision. Future changes may have a material adverse effect on our business, financial condition and results of operations.
Applicable laws, regulations, interpretations, enforcement policies and accounting principles have been subject to significant changes in recent years and may be subject to significant future changes. The recent turmoil in the banking industry may increase the likelihood of additional regulation and heightened supervision. Future changes may have a material adverse effect on our business, financial condition and results of operations.
Failure to realize (or timely achieve progress on) such aspirational goals and targets could adversely affect our third party ESG ratings, our reputation or otherwise adversely affect us. 43 Increased attention to ESG matters also has caused public officials, including certain state attorneys general, treasurers, and legislators, to take various actions to impact the extent to which ESG principles are considered by private investors.
Failure to realize (or timely achieve progress on) such aspirational goals and targets could adversely affect our third party CSR ratings, our reputation or otherwise adversely affect us. 42 Increased attention to CSR matters also has caused public officials, including certain state attorneys general, treasurers, and legislators, to take various actions to impact the extent to which CSR principles are considered by private investors.
A number of changes to the Code were introduced through the Tax Act, the CARES Act and the CAA, and some of the provisions are set to expire in future years. There is substantial uncertainty concerning whether those expiring provisions will be extended, or whether future legislation will further revise the Code.
A number of changes to the Code were introduced through the Tax Act, and the CARES Act, as amended, and some of the provisions are set to expire in future years. There is substantial uncertainty concerning whether those expiring provisions will be extended, or whether future legislation will further revise the Code.
Risks related to Macroeconomic Conditions, COVID-19, Climate Change and Geopolitical Conflicts A continuation of recent turmoil in the financial services industry, and responsive measures to manage it, could have an adverse effect on our stock price, financial position and results of operations.
Risks related to Macroeconomic Conditions, Pandemics, Climate Change and Geopolitical Conflicts A continuation of recent turmoil in the financial services industry, and responsive measures to manage it, could have an adverse effect on our stock price, financial position and results of operations.
Compliance with current and potential regulation, as well as regulatory scrutiny, may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital and limit our ability to pursue business opportunities in an efficient manner by requiring us to expend significant time, effort and resources to ensure compliance and respond to any regulatory inquiries or investigations.
Compliance with current and potential regulation, as well as regulatory scrutiny have and could in the future significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital and limit our ability to pursue business opportunities in an efficient manner by requiring us to expend significant time, effort and resources to ensure compliance and respond to any regulatory inquiries or investigations.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party servicers. We outsource many of our major technology and business process functions, such as data processing, loan servicing and deposit processing systems to third-party service providers.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party providers. We outsource many of our major technology and business process functions, such as data processing, loan servicing, deposit processing and money transfer systems to third-party service providers.
If we become subject to such regulatory actions, we could be materially and adversely affected. 54 Other litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities.
If we become subject to such regulatory actions, we could be materially and adversely affected. 53 Other litigation and regulatory actions, including enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities.
Many of our larger competitors have substantially greater resources to invest in technological improvements. Third parties upon which we rely for the technology underlying CBIT may not be able to develop, on a cost-effective basis, systems that will enable us to keep pace with such developments.
Many of our larger competitors have substantially greater resources to invest in technological improvements. Third parties upon which we rely for the technology underlying and supporting cubiX may not be able to develop, on a cost-effective basis, systems that will enable us to keep pace with such developments.
As a result, cyber security and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us.
As a result, cybersecurity and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us.
Reputation risk, or the risk to our business, earnings and capital from negative public opinion, is inherent in our business and is expected to increase as our size, profile and product offerings in the financial services industry grows.
Reputation risk, or the risk to our business, earnings, liquidity, capital, stability or viability from negative public opinion, is inherent in our business and is expected to increase as our size, profile and product offerings in the financial services industry grows.
Other factors affecting the further development and acceptance of the digital currency and tokenized payment industry, such as CBIT, include, but are not limited to: • the adoption and use of digital currencies, including adoption and use as a substitute for fiat currency or for other uses, which may be adversely impacted by continued price volatility; • the use of digital currencies, or the perception of such use, to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware or other scams by our customers; • heightened risks to digital currency businesses, such as digital currency exchanges, of hacking, malware attacks, and other cyber-security risks, which can lead to significant losses; • developments in digital currency trading markets, including decreasing price volatility of digital currencies, resulting in narrowing spreads for digital currency trading and diminishing arbitrage opportunities across digital currency exchanges, or increased price volatility, which could negatively impact our customers and therefore our deposits, either of which in turn may reduce the benefits of CBIT and negatively impact our business; and • the maintenance and development of the software protocol of the digital currency networks.
Other factors affecting the industries in which users of cubiX include, but are not limited to: • the adoption and use of digital currencies, including adoption and use as a substitute for fiat currency or for other uses, which may be adversely impacted by continued price volatility; • the use of digital currencies, or the perception of such use, to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware or other scams by our customers; 37 • heightened risks to digital currency businesses, such as digital currency exchanges, of hacking, malware attacks, and other cyber-security risks, which can lead to significant losses; • developments in digital currency trading markets, including decreasing price volatility of digital currencies, resulting in narrowing spreads for digital currency trading and diminishing arbitrage opportunities across digital currency exchanges, or increased price volatility, which could negatively impact our customers and therefore our deposits, either of which in turn may reduce the benefits of cubiX and negatively impact our business; and • the maintenance and development of the software protocol of the digital currency networks.
We had previously set aside a reserve for the civil money penalty and made payment in 2016. In June 2016, Customers acquired the Disbursement Business of Higher One and subsequently combined that business with BankMobile. Customers successfully launched BankMobile, America’s first mobile platform based full-service consumer bank in January 2015.
We had previously set aside a reserve for the civil money penalty and made payment in 2016. The Order was terminated in March 2022. In June 2016, Customers acquired the Disbursement Business of Higher One and subsequently combined that business with BankMobile. Customers successfully launched BankMobile, America’s first mobile platform based full-service consumer bank in January 2015.
Changes in the composition of our loan portfolio could have a significant adverse effect on our overall credit profile, which could result in a higher percentage of non-accrual loans, increased provision for loan losses, loss of future income on loans sold, sales of loans at a discount below book value and an increased level of net charge-offs, all of which could have a material and adverse effect on our financial condition and results of operations.
Changes in the composition of our loan portfolio effects our overall credit profile, and these effects can be significantly adverse, and could result in a higher percentage of non-accrual loans, increased provision for loan losses, loss of future income on loans sold, sales of loans at a discount below book value and an increased level of net charge-offs, all of which could have a material and adverse effect on our financial condition and results of operations.
Further, we may be exposed to negative publicity based on the identity and activities of those to whom we lend and with which we otherwise do business and the public’s view of the approach and performance of our customers and business partners with respect to ESG matters.
Further, we may be exposed to negative publicity based on the identity and activities of those to whom we lend and with which we otherwise do business and the public’s view of the approach and performance of our customers and business partners with respect to CSR or other matters.
Our credit standards, policies and procedures are designed to reduce the risk of credit losses to a low level but may not prevent us from incurring substantial credit losses.
Our credit standards, policies and procedures are designed to reduce the risk of credit losses but may not prevent us from incurring substantial credit losses.
Our regulators have extensive discretion in their supervisory and enforcement activities and may impose a variety of remedial actions, conditions or limitations on our business operations if, as a result of an examination, they determined that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we or our management were in violation of any law, regulation or policy.
Our regulators have extensive discretion in their supervisory and enforcement activities and have imposed and may in the future impose a variety of remedial actions if, as a result of an examination, they determined that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we or our management were in violation of any law, regulation or policy.
On March 11, 2021, the American Rescue Plan Act of 2021 was enacted expanding eligibility for first and second round of PPP loans and revising the exclusions from payroll costs for purposes of loan forgiveness. The PPP ended on May 31, 2021. As of December 31, 2023, we had PPP loans with outstanding balances of $74.7 million.
On March 11, 2021, the American Rescue Plan Act of 2021 was enacted expanding eligibility for first and second round of PPP loans and revising the exclusions from payroll costs for purposes of loan forgiveness. The PPP ended on May 31, 2021. As of December 31, 2024, we had PPP loans with outstanding balances of $22.8 million.
Our asset growth over the past few years has been funded with various forms of deposits and wholesale funding, including brokered deposits, FHLB advances, FRB advances and Federal funds line borrowings. Total brokered deposits were 37% of total deposits at December 31, 2023. Our loan to deposit ratio was 74% at December 31, 2023.
Our asset growth over the past few years has been funded with various forms of deposits and wholesale funding, including brokered deposits, FHLB advances, FRB advances and Federal funds line borrowings. Total brokered deposits were 35% of total deposits at December 31, 2024. Our loan to deposit ratio was 78% at December 31, 2024.
Our emphasis on commercial, commercial real estate and mortgage warehouse lending may expose us to increased lending risks. We intend to continue emphasizing the origination of commercial loans including our specialty lending verticals.
Our emphasis on commercial, commercial real estate and mortgage finance may expose us to increased lending risks. We intend to continue emphasizing the origination of commercial loans including our specialized lending verticals.
Our loan and deposit portfolios consist primarily of commercial and industrial loans, including specialty lending activities, multifamily lending, commercial real estate loans, and loans to mortgage companies, and related deposits, which contain material concentrations in certain business lines or product types.
Our loan and deposit portfolios consist primarily of commercial and industrial loans, including specialized lending activities, multifamily lending, commercial real estate loans, and mortgage finance loans, and related deposits, which contain material concentrations in certain business lines or product types.
We make and will continue to consider making additional minority investments in other financial institutions or technology companies in the financial services business, or other unrelated businesses, including for strategic reasons or to see technological improvements or advantages.
We may incur losses due to minority investments in other financial institutions or related companies. We make and will continue to consider making additional minority investments in other financial institutions or technology companies in the financial services business, or other unrelated businesses, including for strategic reasons or to see technological improvements or advantages.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe cybersecurity group for Customers reports to the Chief Information Officer and is overseen by Customers’ Directors’ Risk Committee. Our Program is led by the CISO. The Program has been designed to conform with the National Institute of Standards & Technology’s (“NIST”) Cybersecurity Framework, International Organization for Standardization (“ISO”) 27001, as well as the FFIEC guidelines for cybersecurity.
Biggest changeOur motto is that every member of our organization is a part of our security team, a mantra that is embedded in our overall culture of service to our customers. The cybersecurity group for Customers reports to the Chief Information Officer and is overseen by the Customers’ Directors’ Risk Committee. Our Program is led by the CISO.
Customers’ IT Risk Assessment and FFIEC Cybersecurity Assessment are presented annually to Customers’ Directors’ Risk Committee and Board of Directors, identifying Customers’ cybersecurity risk posture, with recommendations for reduction as the Customers’ Directors’ Risk Committee and Board of Directors deems appropriate.
The Customers’ IT Risk Assessment and FFIEC Cybersecurity Assessment are presented annually to the Customers’ Directors’ Risk Committee and Board of Directors, identifying Customers’ cybersecurity risk posture, with recommendations for reduction as deemed appropriate by the Customers’ Directors’ Risk Committee and Board of Directors.
Cybersecurity risk management is an integral element of Customers' overall risk management strategy. The Cybersecurity Risk Management and Strategy, Governance, and Incident Disclosure Program (the “Program”) of Customers consists of six key areas focused on technology governance and compliance, standards management and architecture, physical security, application security, cybersecurity operations, and workforce training and preparedness.
Cybersecurity risk management is an integral element of Customers’ overall risk management strategies. The Cybersecurity Risk Management and Strategy, Governance, and Incident Disclosure Program (the “Program”) at Customers encompasses six key areas that focus on technology governance and compliance, standards management and architecture, physical security, application security, cybersecurity operations, and workforce training and preparedness.
Customers also utilizes several global external advisors to ensure the appropriateness of its security posture, adherence to established controls, proper assessment of risk, and efficient operation of its cybersecurity discipline. Customers’ Board of Directors includes a vetted board member who possesses expertise in Information Security across various domains .
Customers also engages several global external advisors to ensure the appropriate security posture, adherence to established controls, proper risk assessment, and efficient operation of its cybersecurity discipline. The Customers’ Board of Directors includes a vetted board member with expertise in information security across various domains . 64
An annual report named “The State of Security” is compiled and shared with Customers’ Directors’ Risk Committee summarizing the previous year’s activities along with a comprehensive view of trends and the risks they pose. Customers’ security policies are reviewed and ratified on an annual basis by the Board of Directors who provide oversight of executive-level enforcement and compliance.
An annual report titled, “The State of Security” is compiled and shared with the Customers’ Directors’ Risk Committee summarizing the previous year’s activities and offering a comprehensive view of trends and the risks they pose. Customers’ security policies are reviewed and ratified annually by the Board of Directors, who oversee executive-level enforcement and compliance.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy, Governance and Incident Disclosure Cybersecurity risk is a significant operational risk facing our business. Cybersecurity risks result from intentional malicious attacks or unintentional acts that result in an impact to the confidentiality, integrity or availability of our or our clients’ or third parties’ operations, systems or data.
Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy, Governance and Incident Disclosure Cybersecurity risk is a significant operational risk facing businesses today. It results from intentional malicious attacks or unintentional acts that impact the confidentiality, integrity, or availability of our, our clients’ or third parties’ operations, systems, or data.
Third-Party Risks Our Program is designed to decrease the likelihood of an impact to Customers’ operations, reputation, or revenue due to a third-party or fourth-party vendor, supplier, service provider or partner of Customers (“Third-Party”) issue, vulnerability, or compromise.
Third-Party Risks Our Program is designed to reduce the likelihood of impacts on Customers’ operations, reputation, or revenue due to issues, vulnerabilities, or compromises related to a third-party or fourth-party vendor, supplier, service provider, or partner of Customers (“Third-Party”).
Priority Levels 4 and 5 Incidents that may cause material or significant disruption to Customers are immediately reported to Customers’ Directors Risk Committee for appropriate disclosure in a Current Report on Form 8-K as required by SEC rules requiring public companies to promptly disclose material cybersecurity Incidents. Our Incident Management Process is illustrated below.
Incidents classified as Levels 4 and 5, which could lead to material or significant disruptions to Customers, are immediately reported to the Customers’ Directors’ Risk Committee for appropriate disclosure in a Current Report on Form 8-K as required by SEC rules requiring public companies to promptly disclose material cybersecurity Incidents.
Customers’ Directors’ Risk Committee receives a monthly Cybersecurity Risk Indicators report from the CISO which provides information on cyber risk, vulnerabilities, disaster recovery testing, employee security awareness training, and Third-Party cybersecurity risk.
The FFIEC Cybersecurity Assessment will be phased out on August 31, 2025, with Customers introducing an annual NIST CSF 2.0 assessment in its place. The Customers’ Directors’ Risk Committee receives a quarterly Cybersecurity Risk Indicators report from the CISO, which provides information on cyber risk, vulnerabilities, disaster recovery testing, employee security awareness training, and Third-Party cybersecurity risk.
The Corporate Security Group manages Customers’ documented security and cybersecurity incident (“Incident”) response and business continuity functions and utilizes annual table-top exercises to test Customers’ preparedness for any Incidents ranging from pandemics to cybersecurity events. Incidents are classified with a priority Level 1 (low) to a priority Level 5 (high) rating.
This training includes monthly phishing exercises and annual cybersecurity training required by all employees. The Corporate Security Group oversees Customers’ documented security and cybersecurity incident (“Incident”) response and business continuity functions employing annual table-top exercises to test Customers’ preparedness for any Incidents, ranging from pandemics to cybersecurity events.
We use these frameworks to assist our organization as it seeks to ensure the confidentiality, integrity, and availability of technology and services for its customers, employees, and partners. Our Program is ISO 27001 certified and is audited annually by an external accredited ISO 27001 certification body.
The Program has been designed to conform to the ISO 27001 standard, as well as the FFIEC guidelines for cybersecurity. We use these frameworks to help our organization ensure the confidentiality, integrity, and availability of technology and services for customers, team members, and partners.
Customers has a formal budgeting process. Corporate Security expenses, solutions and staffing needs are subject to zero-based budgeting and additional needs are forecasted based on the previous year’s metrics. 64 Customers’ Board of Directors periodically reviews and determines Customers’ cyber risk tolerance level. The Statement of Cyber Risk Appetite is maintained for record by Customer’s Enterprise Risk Management team.
The Program manages numerous metrics and operates on a 24x7x365 basis to meet the growing needs of Customers and ensure the continued protection of its customers. The Customers’ Board of Directors periodically reviews and determines Customers’ cyber risk tolerance level. The Statement of Cyber Risk Appetite is kept on record by Customer’s Enterprise Risk Management team.
Our Program takes a holistic approach to organizational security focusing on both the protection of our core technologies and the protection of the operations and areas of business it supports. The Program manages 86 distinct metrics and operates 24x7x365 to meet the growing needs of Customers as it seeks to ensure the continued protection of its customers.
Our Program is ISO 27001 certified and is audited annually by an external accredited ISO 27001 certification body. Customers has recently achieved SOC2 Type 2 attestation. Our Program takes a holistic approach to organizational security, focusing on protecting our core technologies and the operations and areas of business it supports.
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The Program achieves this mission through a mix of monitoring, information gathering, and analysis of Third-Party quality and security at the contracting, pre-production and post-implementation stages. Third-Party technology risks that exceed Customers’ tolerance level are escalated monthly within the Cybersecurity Risk Indicators Report. Customers’ Directors’ Risk Committee approves the CISO’s mitigant decisioning, including prioritization and resource allocation.
Added
Incidents are classified by priority levels from Level 1 (low) to Level 5 (high).
Removed
Cybersecurity Governance While often viewed as a technical discipline, we approach cybersecurity as a corporate governance responsibility that involves risk management, reporting controls, testing, and training, and executive accountability. Our motto is that every member of our organization is a member of our security team, a mantra that is driven as part of Customers’ overall culture.
Added
The Program accomplishes this goal through a combination of monitoring, information gathering, and analysis of Third-Party quality and security at the due diligence, contracting, ongoing monitoring and termination stages. Cybersecurity Governance Although often seen as a technical discipline, we view cybersecurity as a responsibility of corporate governance that encompasses risk management, reporting controls, testing, training, and executive accountability.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLegal Proceedings For information on Customers’ legal proceedings, refer to “NOTE 22 – LOSS CONTINGENCIES” to Customers’ audited consolidated financial statements. Item 4. Mine Safety Disclosures Not Applicable. 65 PART II
Biggest changeLegal Proceedings For information on Customers’ legal proceedings, refer to “NOTE 21 – LOSS CONTINGENCIES” to Customers’ audited consolidated financial statements. Item 4. Mine Safety Disclosures Not Applicable. 65 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe common shares repurchased during the year ended December 31, 2023 pursuant to the Share Repurchase Program were as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares purchased as part of publicly announced plans or programs Maximum Number of Shares that may yet be purchased under the plans or programs January 1 - January 31, 2023 — $ — — 1,877,392 February 1 - February 28, 2023 1,013,283 31.48 1,013,283 864,109 March 1 - March 31, 2023 366,600 20.57 366,600 497,509 April 1 - April 30, 2023 — — — 497,509 May 1 - May 31, 2023 — — — 497,509 June1 - June 30, 2023 — — — 497,509 July 1 - July 31, 2023 — — — 497,509 August 1 - August 31, 2023 — — — 497,509 September 1 - September 30, 2023 — — — — October 1 - October 31, 2023 — — — — November 1 - November 30, 2023 — — — — December 1 - December 31, 2023 — — — — Total 1,379,883 $ 28.58 1,379,883 — Common Stock Performance Graph The following graph compares the performance of our common stock over the period from December 31, 2018 to December 31, 2023, to that of the total return index for the SNL Mid-Atlantic U.S.
Biggest changeThe common shares repurchased during the three months ended December 31, 2024 pursuant to the 2024 Share Repurchase Program were as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares purchased as part of publicly announced plans or programs Maximum Number of Shares that may yet be purchased under the plans or programs October 1 - October 31, 2024 — $ — — 123,535 November 1 - November 30, 2024 — — — 123,535 December 1 - December 31, 2024 19,329 52.90 19,329 104,206 Total 19,329 $ 52.90 19,329 104,206 67 Common Stock Performance Graph The following graph compares the performance of our common stock over the period from December 31, 2019 to December 31, 2024, to that of the total return index for the SNL Mid-Atlantic U.S.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Trading Market for Common Stock Our common stock is traded on the NYSE under the symbol “CUBI.” As of February 26, 2024, there were approximately 294 registered shareholders of Customers Bancorp’s common stock.
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Trading Market for Common Stock Our common stock is traded on the NYSE under the symbol “CUBI.” As of February 25, 2025, there were approximately 282 registered shareholders of Customers Bancorp’s common stock.
The exact number of shares, timing for such purchases, and the price and terms at and on which such purchases are to be made were at the discretion of the Company and complied with all applicable regulatory limitations. The term of the Share Repurchase Program was extended to September 27, 2023, unless earlier terminated.
The exact number of shares, timing for such purchases, and the price and terms at and on which such purchases are to be made were at the discretion of the Company and complied with all applicable regulatory limitations. On September 27, 2023, the Share Repurchase Program expired.
Customers Bancorp obtained the information contained in the performance graph from SNL Financial. 67 The graph below is furnished under this Part II, Item 5 of this Annual Report on Form 10-K and shall not be deemed to be “soliciting material” or to be “filed” with the Commission or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
The graph below is furnished under this Part II, Item 5 of this Annual Report on Form 10-K and shall not be deemed to be “soliciting material” or to be “filed” with the Commission or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
Bank Index, SNL U.S. Bank NASDAQ Index, SNL U.S. Bank NYSE Index, and SNL Mid Cap U.S. Bank index, assuming an investment of $100 on December 31, 2018 for the SNL indices when calculating total annual shareholder return, reinvestment of dividends, if any, is assumed.
Bank Index, SNL U.S. Bank NASDAQ Index, SNL U.S. Bank NYSE Index, and SNL Mid Cap U.S. Bank index, assuming an investment of $100 on December 31, 2019 for the SNL indices when calculating total annual shareholder return, reinvestment of dividends, if any, is assumed. Customers Bancorp obtained the information contained in the performance graph from SNL Financial.
Certain team members of BMT also received 1,348,748 shares of BM Technologies’ common stock as severance. 66 Issuer Purchases of Equity Securities On August 25, 2021, the Board of Directors of Customers Bancorp authorized the Share Repurchase Program to repurchase up to 3,235,326 shares of the Company’s common stock (representing 10% of the Company’s outstanding shares of common stock on June 30, 2021).
See “Item 1, Business - Federal Banking Laws” for more information relating to restrictions on the Bank’s ability to pay dividends to the Bancorp and the Bancorp’s payment of dividends. 66 Issuer Purchases of Equity Securities On August 25, 2021, the Board of Directors of Customers Bancorp authorized the Share Repurchase Program to repurchase up to 3,235,326 shares of the Company’s common stock (representing 10% of the Company’s outstanding shares of common stock on June 30, 2021).
Removed
See “Item 1, Business - Federal Banking Laws” for more information relating to restrictions on the Bank’s ability to pay dividends to the Bancorp and the Bancorp’s payment of dividends. Special Dividends of BM Technologies, Inc.
Added
At expiration, the Share Repurchase Program had 497,509 shares that had not been repurchased. On June 26, 2024, the Board of Directors of Customers Bancorp authorized a new common stock repurchase program, the 2024 Share Repurchase Program, to repurchase up to 497,509 shares of the Company’s common stock.
Removed
Common Stock On January 4, 2021, Customers Bancorp completed the divestiture of BankMobile Technologies, Inc., a wholly owned subsidiary of Customers Bank, to MFAC Merger Sub Inc., an indirect wholly-owned subsidiary of MFAC, pursuant to an Agreement and Plan of Merger, dated August 6, 2020, as amended, by and among MFAC, MFAC Merger Sub Inc., BMT, Customers Bank and Customers Bancorp.
Added
The term of the 2024 Share Repurchase Program will extend for one year from June 26, 2024, unless earlier terminated. Purchases of shares under the 2024 Share Repurchase Program may be executed through open market purchases, privately negotiated transactions, through the use of Rule 10b5-1 plans, or otherwise.
Removed
In connection with the closing of the divestiture, MFAC changed its name to “BM Technologies, Inc.” and began trading on the NYSE under the ticker symbol “BMTX”. Customers received cash consideration of $23.1 million upon closing of the divestiture, and $3.7 million of additional cash consideration in May 2021.
Added
The exact number of shares, timing for such purchases, and the price and terms at and on which such purchases are to be made will be at the discretion of the Company and will comply with all applicable regulatory limitations.
Removed
Upon closing of the divestiture, holders of Customers common stock who held their Customers shares as of the close of business on December 18, 2020 received an aggregate of 4,876,387 shares of BM Technologies’ common stock in the form of special dividend.
Removed
Each holder of Customers common stock was entitled to receive 0.15389 shares of BM Technologies’ common stock for each share of Customers common stock held as of the close of business on December 18, 2020. No fractional shares of BM Technologies’ common stock were issued; fractional share otherwise issuable were rounded to the nearest whole share.
Removed
On September 27, 2023, the Share Repurchase Program expired.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor the Years Ended December 31, For the Years Ended December 31, 2023 2022 2023 vs. 2022 (dollars in thousands) Average balance Interest income or expense Average yield or cost Average balance Interest income or expense Average yield or cost Due to rate Due to volume Total Assets Interest-earning deposits $ 2,375,488 $ 125,923 5.30 % $ 620,071 $ 10,952 1.77 % $ 47,519 $ 67,452 $ 114,971 Investment securities (1) 4,057,564 200,659 4.95 % 3,992,934 119,236 2.99 % 79,461 1,962 81,423 Loans and leases: Commercial and industrial: Specialty lending loans and leases (2) 5,704,220 513,976 9.01 % 4,357,995 218,189 5.01 % 213,271 82,516 295,787 Other commercial and industrial loans (2) 1,634,937 106,824 6.53 % 1,540,435 69,564 4.52 % 32,742 4,518 37,260 Commercial loans to mortgage companies 1,179,141 67,660 5.74 % 1,682,471 64,413 3.83 % 26,128 (22,881) 3,247 Multifamily loans 2,165,067 85,204 3.94 % 1,957,672 73,987 3.78 % 3,202 8,015 11,217 PPP loans 341,987 26,627 7.79 % 1,724,659 79,381 4.60 % 34,531 (87,285) (52,754) Non-owner occupied commercial real estate loans 1,423,929 81,970 5.76 % 1,356,086 59,087 4.36 % 19,798 3,085 22,883 Residential mortgages 533,213 23,240 4.36 % 492,870 19,048 3.86 % 2,569 1,623 4,192 Installment loans 1,437,078 127,237 8.85 % 1,798,977 161,644 8.99 % (2,473) (31,934) (34,407) Total loans and leases (3) 14,419,572 1,032,738 7.16 % 14,911,165 745,313 5.00 % 312,719 (25,294) 287,425 Other interest-earning assets 118,574 8,040 6.78 % 64,204 9,872 NM (6) (7,380) 5,548 (1,832) Total interest-earning assets 20,971,198 1,367,360 6.52 % 19,588,374 885,373 4.52 % 415,670 66,317 481,987 Non-interest-earning assets 515,185 521,370 Total assets $ 21,486,383 $ 20,109,744 Liabilities Interest checking accounts $ 6,048,797 241,025 3.98 % $ 6,853,533 125,100 1.83 % 132,169 (16,244) 115,925 Money market deposit accounts 2,358,437 93,434 3.96 % 4,615,574 57,765 1.25 % 75,147 (39,478) 35,669 Other savings accounts 1,029,951 41,556 4.03 % 716,838 6,727 0.94 % 30,744 4,085 34,829 Certificates of deposit 4,401,855 200,422 4.55 % 1,352,787 36,647 2.71 % 37,914 125,861 163,775 Total interest-bearing deposits (4) 13,839,040 576,437 4.17 % 13,538,732 226,239 1.67 % 345,085 5,113 350,198 Federal funds purchased 3,781 188 4.97 % 349,581 5,811 1.66 % 3,915 (9,538) (5,623) Borrowings 2,073,553 103,286 4.98 % 792,563 29,603 3.74 % 12,542 61,141 73,683 Total interest-bearing liabilities 15,916,374 679,911 4.27 % 14,680,876 261,653 1.78 % 394,523 23,735 418,258 Non-interest-bearing deposits (4) 3,801,053 3,780,185 Total deposits and borrowings 19,717,427 3.45 % 18,461,061 1.42 % Other non-interest-bearing liabilities 272,599 255,911 Total liabilities 19,990,026 18,716,972 Shareholders’ equity 1,496,357 1,392,772 Total liabilities and shareholders’ equity $ 21,486,383 $ 20,109,744 Net interest income 687,449 623,720 $ 21,147 $ 42,582 $ 63,729 Tax-equivalent adjustment 1,568 1,185 Net interest earnings $ 689,017 $ 624,905 Interest spread 3.07 % 3.10 % Net interest margin 3.28 % 3.18 % Net interest margin tax equivalent 3.29 % 3.19 % Net interest margin tax equivalent, excluding PPP loans (5) 3.28 % 3.16 % 76 (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.
Biggest changeFor purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate. 74 For the Years Ended December 31, For the Years Ended December 31, 2024 2023 2024 vs. 2023 (dollars in thousands) Average balance Interest income or expense Average yield or cost Average balance Interest income or expense Average yield or cost Due to rate Due to volume Total Assets Interest-earning deposits $ 3,597,260 $ 190,842 5.31 % $ 2,375,488 $ 125,923 5.30 % $ 238 $ 64,681 $ 64,919 Investment securities (1) 3,650,320 180,291 4.94 % 4,057,564 200,659 4.95 % (402) (19,966) (20,368) Loans and leases: Commercial and industrial: Specialized lending loans and leases (2) 5,637,189 483,052 8.57 % 5,704,220 513,976 9.01 % (24,926) (5,998) (30,924) Other commercial and industrial loans (2)(3) 1,564,167 102,001 6.52 % 1,976,924 133,451 6.75 % (4,412) (27,038) (31,450) Mortgage finance loans 1,192,827 62,344 5.23 % 1,179,141 67,660 5.74 % (6,092) 776 (5,316) Multifamily loans 2,116,168 86,263 4.08 % 2,165,067 85,204 3.94 % 3,004 (1,945) 1,059 Non-owner occupied commercial real estate loans 1,412,201 83,484 5.91 % 1,423,929 81,970 5.76 % 2,177 (663) 1,514 Residential mortgages 526,133 24,046 4.57 % 533,213 23,240 4.36 % 1,116 (310) 806 Installment loans 1,104,470 106,340 9.63 % 1,437,078 127,237 8.85 % 10,473 (31,370) (20,897) Total loans and leases (4) 13,553,155 947,530 6.99 % 14,419,572 1,032,738 7.16 % (24,133) (61,075) (85,208) Other interest-earning assets 114,983 9,171 7.98 % 118,574 8,040 6.78 % 1,381 (250) 1,131 Total interest-earning assets 20,915,718 1,327,834 6.35 % 20,971,198 1,367,360 6.52 % (35,885) (3,641) (39,526) Non-interest-earning assets 518,472 515,185 Total assets $ 21,434,190 $ 21,486,383 Liabilities Interest checking accounts $ 5,660,890 248,400 4.39 % $ 6,048,797 241,025 3.98 % 23,576 (16,201) 7,375 Money market deposit accounts 3,559,362 159,598 4.48 % 2,358,437 93,434 3.96 % 13,565 52,599 66,164 Other savings accounts 1,595,357 73,947 4.64 % 1,029,951 41,556 4.03 % 7,001 25,390 32,391 Certificates of deposit 2,434,622 121,367 4.99 % 4,401,855 200,422 4.55 % 17,782 (96,837) (79,055) Total interest-bearing deposits (5) 13,250,231 603,312 4.55 % 13,839,040 576,437 4.17 % 51,798 (24,923) 26,875 Federal funds purchased — — — % 3,781 188 4.97 % — (188) (188) Borrowings 1,414,583 70,118 4.96 % 2,073,553 103,286 4.98 % (414) (32,754) (33,168) Total interest-bearing liabilities 14,664,814 673,430 4.59 % 15,916,374 679,911 4.27 % 48,994 (55,475) (6,481) Non-interest-bearing deposits (5) 4,807,647 3,801,053 Total deposits and borrowings 19,472,461 3.46 % 19,717,427 3.45 % Other non-interest-bearing liabilities 217,172 272,599 Total liabilities 19,689,633 19,990,026 Shareholders’ equity 1,744,557 1,496,357 Total liabilities and shareholders’ equity $ 21,434,190 $ 21,486,383 Net interest income 654,404 687,449 $ (84,879) $ 51,834 $ (33,045) Tax-equivalent adjustment 1,556 1,568 Net interest earnings $ 655,960 $ 689,017 Interest spread 2.89 % 3.07 % Net interest margin 3.14 % 3.28 % Net interest margin tax equivalent (6) 3.15 % 3.29 % (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.
The net charge-offs of $69.0 million for the year ended December 31, 2023 excludes $6.2 million of charge-offs for certain PCD loans acquired from the FDIC applied against $8.7 million of allowance for credit losses on PCD loans recognized upon acquisition of the Venture Banking loan portfolio on June 15, 2023.
The net charge-offs of $69.0 million for the year ended December 31, 2023 excludes $6.2 million of charge-offs for certain PCD loans acquired from the FDIC applied against $8.7 million of allowance for credit losses on PCD loans recognized upon acquisition of the venture banking loan portfolio on June 15, 2023.
Subsequent recoveries and charge-offs of these PCD loans are included in the period in which they occur.
Subsequent recoveries and charge-offs of these PCD loans are included in the period in which they occur.
The Baseline forecast at December 31, 2023 assumed lower growth rates in macroeconomic forecasts compared to the macroeconomic forecasts used by Customers in 2022; the Federal Reserve Board not raising the effective fed funds rate further as it has reached its terminal range of 5.25% to 5.5%, and easing gradually beginning in mid-2024; the federal government avoiding a shutdown in the fourth quarter 2023 and remaining in continuous operation through 2024; recent U.S. bank failures are not symptomatic of a broader problem in the U.S. financial system and policymakers’ aggressive response will ensure that the failures do not weaken the financial system or the U.S. economy; the military conflict between Russia and Ukraine continuing for the foreseeable future but its fallout on energy, agriculture and other commodity markets and the global economy fading; the war in Israel not broadening to a regional conflict and disrupting global energy markets; the CPI rising 2.8% in 2024 and 2.4% in 2025; and the unemployment rate rising to 4.0% in 2024 and 4.1% in 2025.
The Baseline forecast at December 31, 2023 assumed lower growth rates in macroeconomic forecasts compared to the macroeconomic forecasts used by Customers in 2022; the Federal Reserve Board not raising the effective federal funds rate further as it has reached its terminal range of 5.25% to 5.5%, and easing gradually beginning in mid-2024; the federal government avoiding a shutdown in the fourth quarter 2023 and remaining in continuous operation through 2024; recent U.S. bank failures are not symptomatic of a broader problem in the U.S. financial system and policymakers’ aggressive response will ensure that the failures do not weaken the financial system or the U.S. economy; the military conflict between Russia and Ukraine continuing for the foreseeable future but its fallout on energy, agriculture and other commodity markets and the global economy fading; the war in Israel not broadening to a regional conflict and disrupting global energy markets; the CPI rising 2.8% in 2024 and 2.4% in 2025; and the unemployment rate rising to 4.0% in 2024 and 4.1% in 2025.
During 2023 and 2022, Customers Bancorp did not issue any preferred stock or common stock other than in connection with share-based compensation agreements. In 2021, Customers Bancorp issued $100 million in fixed-to-floating rate senior notes, and utilized the proceeds to redeem all of the outstanding shares of Series C and Series D Preferred Stock.
During 2024, 2023 and 2022, Customers Bancorp did not issue any preferred stock or common stock other than in connection with share-based compensation agreements. In 2021, Customers Bancorp issued $100 million in fixed-to-floating rate senior notes, and utilized the proceeds to redeem all of the outstanding shares of Series C and Series D Preferred Stock.
New Accounting Pronouncements For information about the impact that recently adopted or issued accounting guidance will have on us, refer to “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” to Customers’ audited consolidated financial statements. Critical Accounting Policies and Estimates Customers has adopted various accounting policies that govern the application of U.S.
New Accounting Pronouncements For information about the impact that recently adopted or issued accounting guidance will have on us, refer to “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” to Customers’ audited consolidated financial statements. 69 Critical Accounting Policies and Estimates Customers has adopted various accounting policies that govern the application of U.S.
Customers added three new verticals within its specialty banking, which included capital call lines, technology and venture capital banking and financial institutions group in 2021 to further build its franchise and support the growth of its commercial lending. Customers’ lender finance vertical within fund finance provides variable rate loans secured by diverse collateral pools to private debt funds.
In 2021, Customers added three new verticals within its specialized lending, which included capital call lines, technology and venture capital banking and financial institutions group to further build its franchise and support the growth of its commercial lending. Customers’ lender finance vertical within fund finance provides variable rate loans secured by diverse collateral pools to private debt funds.
Purchases of shares under the Share Repurchase Program may be executed through open market purchases, privately negotiated transactions, through the use of Rule 10b5-1 plans, or otherwise.
Purchases of shares under the 2024 Share Repurchase Program may be executed through open market purchases, privately negotiated transactions, through the use of Rule 10b5-1 plans, or otherwise.
Cash flows provided by (used in) financing activities Cash provided by financing activities of $108.1 million for the year ended December 31, 2023 primarily resulted from proceeds from long-term borrowed funds from the FHLB and FRB of $2.6 billion, partially offset by repayments of long-term borrowed funds from the FHLB and FRB of $1.9 billion, a net decrease in short-term borrowed funds from the FHLB of $300.0 million, a net decrease in deposits of $238.1 million and purchases of treasury stock of $39.8 million.
Cash provided by financing activities of $108.1 million for the year ended December 31, 2023 primarily resulted from proceeds from long-term borrowed funds from the FHLB and the FRB of $2.6 billion, partially offset by repayments of long-term borrowed funds from the FHLB and the FRB of $1.9 billion, a net decrease in short-term borrowed funds from the FHLB of $300.0 million, a net decrease in deposits of $238.1 million and purchases of treasury stock of $39.8 million.
Refer to Critical Accounting Policies and Estimates herein and “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” to Customers’ audited consolidated financial statements for management’s methodology for estimating the ACL. 92 Customers’ commercial real estate, commercial and residential construction, consumer residential and commercial and industrial loan types have real estate as collateral (collectively, “the real estate portfolio”), primarily in the form of a first lien position.
Refer to Critical Accounting Policies and Estimates herein and “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” to Customers’ audited consolidated financial statements for management’s methodology for estimating the ACL. 90 Customers’ commercial real estate, commercial and residential construction, consumer residential and commercial and industrial loan types have real estate as collateral (collectively, “the real estate portfolio”), primarily in the form of a first lien position.
Cash flows provided by (used in) investing activities Cash provided by investing activities of $3.2 billion for the year ended December 31, 2023 primarily resulted from a net decrease in loans and leases, excluding mortgage warehouse loans, of $2.3 billion mostly from PPP loan forgiveness and guarantee payments by the SBA, proceeds from sales of loans and leases of $409.5 million including the sales of capital call lines of credit held for investment, proceeds from net repayments of mortgage warehouse loans of $408.3 million, proceeds from maturities, calls and principal repayments on investment securities available for sale of $323.3 million and held to maturity of $252.4 million, proceeds from sales of investment securities available for sale of $297.4 million and proceeds from surrenders and death benefits from the BOLI of $56.6 million, partially offset by purchases of loans of $709.2 million including the Venture Banking loans purchased from the FDIC, purchases of investment securities held to maturity of $73.1 million, purchases of leased assets under lessor operating leases of $40.8 million, and net purchases of FHLB, Federal Reserve Bank, and other restricted stock of $35.1 million.
Cash provided by investing activities of $3.2 billion for the year ended December 31, 2023 primarily resulted from a net decrease in loans and leases, excluding mortgage finance loans, of $2.3 billion mostly from PPP loan forgiveness and guarantee payments by the SBA, proceeds from sales of loans and leases of $409.5 million including the sales of capital call lines of credit held for investment, proceeds from net repayments of mortgage finance loans of $408.3 million, proceeds from maturities, calls and principal repayments on investment securities available for sale of $323.3 million and held to maturity of $252.4 million, proceeds from sales of investment securities available for sale of $297.4 million and proceeds from surrenders and death benefits from the BOLI of $56.6 million, partially offset by purchases of loans of $709.2 million including the venture banking loans purchased from the FDIC, purchases of investment securities held to maturity of $73.1 million, purchases of leased assets under lessor operating leases of $40.8 million and net purchases of FHLB, Federal Reserve Bank, and other restricted stock of $35.1 million.
From June 26, 2024 until maturity, the notes will bear an annual interest rate equal to the three-month LIBOR plus 344.3 basis points.
From June 26, 2024 until maturity, the notes bear an annual interest rate equal to the three-month LIBOR plus 344.3 basis points.
During the year ended December 31, 2023, Customers sold $556.7 million of consumer installment loans that were classified as held for sale, inclusive of $154.0 million of other installment loans transferred from held for investment to held for sale, accrued interest and unamortized deferred loan origination costs, to two third-party sponsored VIEs.
During the year ended December 31, 2023, Customers sold $556.7 million of personal and other installment loans that were classified as held for sale, inclusive of $154.0 million of other installment loans transferred from held for investment to held for sale, accrued interest and unamortized deferred loan origination costs to two third-party sponsored VIEs.
Customers Bank capital growth for the past few years has been achieved primarily by retained earnings and capital contributions from Customers Bancorp from proceeds received from issuances of senior and subordinated notes. For more information relating to preferred and common stock, refer to “NOTE 13 – SHAREHOLDERS' EQUITY” to Customers’ audited consolidated financial statements.
Customers Bank capital growth for the past few years has been achieved primarily by retained earnings and capital contributions from Customers Bancorp from proceeds received from issuances of senior and subordinated notes. For more information relating to preferred and common stock, refer to “NOTE 12 – SHAREHOLDERS’ EQUITY” to Customers’ audited consolidated financial statements.
Customers’ borrowings include short-term and long-term advances from the FHLB, FRB, federal funds purchased, senior unsecured notes and subordinated debt. Subordinated debt is also considered as Tier 2 capital for certain regulatory calculations. Refer to “NOTE 12 – BORROWINGS” to Customers’ audited consolidated financial statements for additional information.
Customers’ borrowings include short-term and long-term advances from the FHLB, FRB, federal funds purchased, senior unsecured notes and subordinated debt. Subordinated debt is also considered as Tier 2 capital for certain regulatory calculations. Refer to “NOTE 11 – BORROWINGS” to Customers’ audited consolidated financial statements for additional information.
A financial institution with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers. As of December 31, 2023, the Bank and the Bancorp were in compliance with the Basel III requirements.
A financial institution with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers. As of December 31, 2024, the Bank and the Bancorp were in compliance with the Basel III requirements.
Customers has included a detailed discussion of this process, as well as several tables describing its ACL, in “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” and “NOTE 8 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements.
Customers has included a detailed discussion of this process, as well as several tables describing its ACL, in “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” and “NOTE 7 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements.
Customers has continued to build out its held-for-sale strategy in 2023 in which we accumulate loans with the intent to sell in the future while reducing consumer installment loans held for investment. The installment loan portfolio consists largely of originated and purchased personal, student loan refinancing, home improvement and medical loans.
Customers has continued to build out its held-for-sale strategy in 2024 in which we accumulate loans with the intent to sell in the future while reducing consumer installment loans held for investment. The installment loan portfolio consists largely of originated and purchased personal, student loan refinancing, home improvement and medical loans.
Installment charge-offs were attributable to unsecured consumer loans originated and purchased through arrangements with fintech companies and other market place lenders. Refer to the table of changes in Customers’ ACL for annualized net-charge offs to average loans by loan type for the periods indicated. 91 The table below presents changes in Customers’ ACL for the periods indicated.
Installment charge-offs were attributable to unsecured consumer loans originated and purchased through arrangements with fintech companies and other market place lenders. Refer to the table of changes in Customers’ ACL for annualized net-charge offs to average loans by loan type for the periods indicated. 89 The table below presents changes in Customers’ ACL for the periods indicated.
There were no changes to the amount of preferred stock outstanding during the years ended December 31, 2023 and 2022. On June 15, 2021, the Series E Preferred Stock became floating at three-month LIBOR plus 5.14%, compared to a fixed rate of 6.45%.
There were no changes to the amount of preferred stock outstanding during the years ended December 31, 2024 and 2023. On June 15, 2021, the Series E Preferred Stock became floating at three-month LIBOR plus 5.14%, compared to a fixed rate of 6.45%.
The balance of interest-earning deposits varies from day to day, depending on several factors, such as fluctuations in customers’ deposits with Customers, payment of checks drawn on customers’ accounts and strategic investment decisions made to maximize Customers’ net interest income, while effectively managing interest-rate risk and liquidity.
The balance of interest-earning deposits varies from day to day, depending on several factors, such as fluctuations in customers’ deposits with Customers, payment of checks drawn on customers’ accounts and strategic investment decisions made to optimize Customers’ net interest income, while effectively managing interest-rate risk and liquidity.
As a mortgage warehouse lender, Customers provides a form of financing to mortgage bankers by purchasing for resale the underlying residential mortgages on a short-term basis under a master repurchase agreement. These loans are reported as loans receivable, mortgage warehouse, at fair value on the consolidated balance sheets.
As a mortgage finance lender, Customers provides a form of financing to mortgage bankers by purchasing for resale the underlying residential mortgages on a short-term basis under a master repurchase agreement. These loans are reported as loans receivable, mortgage finance, at fair value on the consolidated balance sheets.
The ACL Committee, which includes the President, Chief Financial Officer, Chief Accounting Officer, Chief Lending Officer, and Chief Credit Officer, among others, reviews the adequacy of the ACL each quarter, together with Customers’ risk management team. The ACL policy, significant judgments and the related disclosures are reviewed by Customers’ Audit Committee of the Board of Directors.
The ACL Committee, which includes the President, Chief Financial Officer, Chief Accounting Officer, Chief Banking Officer, and Chief Credit Officer, among others, reviews the adequacy of the ACL each quarter, together with Customers’ risk management team. The ACL policy, significant judgments and the related disclosures are reviewed by Customers’ Audit Committee of the Board of Directors.
Refer to “NOTE 6 – INVESTMENT SECURITIES”, “NOTE 7 – LOANS HELD FOR SALE” and “NOTE 8 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements for additional information on the sales of consumer installment loans and capital call lines of credit.
Refer to “NOTE 5 – INVESTMENT SECURITIES”, “NOTE 6 – LOANS HELD FOR SALE” and “NOTE 7 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements for additional information on the sales of consumer installment loans and capital call lines of credit.
For additional information on purchases of treasury stock, refer to “NOTE 13 – SHAREHOLDERS' EQUITY” to Customers’ audited consolidated financial statements. CAPITAL ADEQUACY The Bank and the Bancorp are subject to various regulatory capital requirements administered by the federal banking agencies.
Refer to “NOTE 12 – SHAREHOLDERS’ EQUITY” to Customers’ audited consolidated financial statements for additional information on purchases of treasury stock. CAPITAL ADEQUACY The Bank and the Bancorp are subject to various regulatory capital requirements administered by the federal banking agencies.
Refer to “NOTE 8 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements for additional information on the sales of capital call lines of credit held for investment and the Venture Banking loans purchased from the FDIC.
Refer to “NOTE 7 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements for additional information on the sales of capital call lines of credit held for investment and the venture banking loans purchased from the FDIC.
All commercial loans, with the exception of PPP loans and commercial mortgage warehouse loans, which are reported at fair value, are assigned internal credit-risk ratings, based upon an assessment of the borrower, the structure of the transaction and the available collateral and/or guarantees.
All commercial loans, with the exception of PPP loans and mortgage finance loans, which are reported at fair value, are assigned internal credit-risk ratings, based upon an assessment of the borrower, the structure of the transaction and the available collateral and/or guarantees.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This Management’s Discussion and Analysis should be read in conjunction with “Business - Summary” and the Bancorp’s consolidated financial statements and related notes for the year ended December 31, 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This Management’s Discussion and Analysis should be read in conjunction with “Business - Summary” and the Bancorp’s consolidated financial statements and related notes for the year ended December 31, 2024.
The number of CBIT outstanding in the CBIT instant payments platform is always equal to the U.S. dollars held in the omnibus deposit account at Customers Bank and is reported as a deposit liability on the consolidated balance sheet.
The number of CBIT outstanding in the CBIT instant payments platform was always equal to the U.S. dollars held in the omnibus deposit account at Customers Bank and was reported as a deposit liability on the consolidated balance sheet.
The number of CBIT outstanding in the CBIT instant payments platform is always equal to the U.S. dollars held in the omnibus deposit account at Customers Bank and is reported as a deposit liability on the consolidated balance sheet.
The number of CBIT outstanding in the CBIT instant payments platform was always equal to the U.S. dollars held in the omnibus deposit account at Customers Bank and was reported as a deposit liability on the consolidated balance sheet.
This critical accounting policy and material estimate, along with the related disclosures, are reviewed by Customers’ Audit Committee of the Board of Directors. 70 Allowance for Credit Losses Customers’ ACL at December 31, 2023 represents Customers’ current estimate of the lifetime credit losses expected from its loan and lease portfolio and its unfunded lending-related commitments that are not unconditionally cancellable.
This critical accounting policy and material estimate, along with the related disclosures, are reviewed by Customers’ Audit Committee of the Board of Directors. Allowance for Credit Losses Customers’ ACL at December 31, 2024 represents Customers’ current estimate of the lifetime credit losses expected from its loan and lease portfolio and its unfunded lending-related commitments that are not unconditionally cancellable.
The following table summarizes Customers’ net interest income, related interest spread, net interest margin and the dollar amount of changes in interest income and interest expense for the major categories of interest-earning assets and interest-bearing liabilities for the years ended December 31, 2023 and 2022.
The following table summarizes Customers’ net interest income, related interest spread, net interest margin and the dollar amount of changes in interest income and interest expense for the major categories of interest-earning assets and interest-bearing liabilities for the years ended December 31, 2024 and 2023.
CBIT may only be created by, transferred to and redeemed by commercial customers of Customers Bank on the instant B2B payments platform by maintaining U.S. dollars in deposit accounts at Customers Bank.
CBIT could only be created by, transferred to and redeemed by commercial customers of Customers Bank on the instant B2B payments platform by maintaining U.S. dollars in deposit accounts at Customers Bank.
For more information, refer to “NOTE 8 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements. 72 Results of Operations The following discussion of Customers Bancorp’s consolidated results of operations should be read in conjunction with its consolidated financial statements, including the accompanying notes.
For more information, refer to “NOTE 7 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements. Results of Operations The following discussion of Customers Bancorp’s consolidated results of operations should be read in conjunction with its consolidated financial statements, including the accompanying notes.
Customers continues to monitor closely the impact of uncertainties affecting the macroeconomic conditions, the U.S. banking system, particularly regional banks, the military conflicts between Russia and Ukraine and in Israel, as well as any effects that may result from the federal government’s responses including future interest rate and regulatory actions; however, the extent to which inflation, interest rates and other macroeconomic and industry factors, the geopolitical conflicts and developments in the U.S. banking system will impact Customers’ operations and financial results in 2024 is highly uncertain.
Customers continues to monitor closely the impact of uncertainties affecting the macroeconomic conditions, the U.S. banking system, particularly regional banks, the military conflicts between Russia and Ukraine and in the Middle East, as well as any effects that may result from the federal government’s responses including future rate and regulatory actions; however, the extent to which inflation, interest rates and other macroeconomic and industry factors, the geopolitical conflicts and developments in the U.S. banking system will impact Customers’ operations and financial results in 2025 is highly uncertain.
Customers’ contractual obligations and other commitments representing required and potential cash outflows include operating leases, demand deposits, time deposits, long-term advances from FHLB, unsecured senior notes, subordinated debt, loan and other commitments as of December 31, 2023.
Customers’ contractual obligations and other commitments representing required and potential cash outflows include operating leases, demand deposits, time deposits, short-term and long-term advances from FHLB, unsecured senior notes, subordinated debt, loan and other commitments as of December 31, 2024.
The extent to which the geopolitical instability, risks of rising inflation and worsening of the U.S. banking system turmoil and federal government shutdown have and will continue to negatively impact Customers’ businesses, financial condition, liquidity and results will depend on future developments, which are highly uncertain and cannot be forecasted with precision at this time.
The extent to which the geopolitical instability, risks of rising inflation and worsening of the U.S. banking system have and will continue to negatively impact Customers’ businesses, financial condition, liquidity and results will depend on future developments, which are highly uncertain and cannot be forecasted with precision at this time.
Customers continues to focus on small and middle market business loans to grow its commercial lending efforts, particularly its commercial and industrial loan and lease portfolio and its specialty lending business.
Customers continues to focus on small and middle market business loans to grow its commercial lending efforts, particularly its commercial and industrial loan and lease portfolio and its specialized lending business.
(2) Charge-offs and recoveries on PCD loans that are accounted for in pools are recognized on a net basis when the pool matures.
(3) Charge-offs and recoveries on PCD loans that are accounted for in pools are recognized on a net basis when the pool matures.
There are no scenarios in which the transaction or redemption value of one CBIT would not be equal to one U.S. dollar. Each CBIT is minted with precisely one U.S. dollar equivalent, and those dollars are held in a non-interest bearing omnibus deposit account until the CBIT is burned or redeemed.
There were no scenarios in which the transaction or redemption value of one CBIT would not be equal to one U.S. dollar. Each CBIT was minted with precisely one U.S. dollar equivalent, and those dollars were held in a non-interest bearing omnibus deposit account until the CBIT was burned or redeemed.
Refer to “NOTE 6 – INVESTMENT SECURITIES” to Customers’ audited consolidated financial statements for additional information. 84 The following table sets forth information about the maturities and weighted-average yield of the investment securities held to maturity.
Refer to “NOTE 5 – INVESTMENT SECURITIES” to Customers’ audited consolidated financial statements for additional information. The following table sets forth information about the maturities and weighted-average yield of the investment securities held to maturity.
For the comparison of the years ended December 31, 2022 and 2021, refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for our fiscal year ended December 31, 2022, filed with the SEC on February 28, 2023.
For the comparison of the years ended December 31, 2023 and 2022, refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for our fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024.
Customers’ mortgage warehouse lending team members monitor these mortgage originators by obtaining financial and other relevant information to reduce these risks during the lending period. Loans receivable, mortgage warehouse, at fair value totaled $897.9 million and $1.3 billion at December 31, 2023 and 2022, respectively.
Customers’ mortgage finance lending team members monitor these mortgage originators by obtaining financial and other relevant information to reduce these risks during the lending period. Loans receivable, mortgage finance, at fair value totaled $1.3 billion and $897.9 million at December 31, 2024 and 2023, respectively.
(3) Represents $8.7 million of allowance for credit losses on PCD loans recognized upon acquisition of a Venture Banking loan portfolio (included within Specialty Lending) from the FDIC on June 15, 2023, net of $6.2 million of charge-offs for certain of these PCD loans upon acquisition.
(4) Represents $8.7 million of allowance for credit losses on PCD loans recognized upon acquisition of a Venture Banking loan portfolio (included within specialized lending) from the FDIC on June 15, 2023, net of $6.2 million of charge-offs for certain of these PCD loans upon acquisition.
CBIT may only be created or minted by, transferred to and redeemed by commercial customers of Customers Bank on the instant B2B payments platform by maintaining U.S. dollars in deposit accounts at Customers Bank. CBIT is not listed or traded on any digital currency exchange.
CBIT could only be created or minted by, transferred to and redeemed by commercial customers of Customers Bank on the instant B2B payments platform by maintaining U.S. dollars in deposit accounts at Customers Bank. CBIT was not listed or traded on any digital currency exchange.
At December 31, 2023, Customers Bank’s restricted stock holdings totaled $109.5 million compared to $74.2 million at December 31, 2022. These holdings consist of stock of the FRB, the FHLB and Atlantic Community Bankers Bank and are required as part of our relationship with these banks.
At December 31, 2024, Customers Bank’s restricted stock holdings totaled $96.2 million compared to $109.5 million at December 31, 2023. These holdings consist of stock of the FRB, the FHLB and Atlantic Community Bankers Bank and are required as part of our relationship with these banks.
Commercial lease depreciation The $6.9 million increase in commercial lease depreciation for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily resulted from the growth of the operating lease arrangements originated by Customers’ commercial equipment financing group in which Customers is the lessor.
Commercial lease depreciation The $2.6 million increase in commercial lease depreciation for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily resulted from the growth of the operating lease arrangements originated by Customers’ commercial equipment financing group in which Customers is the lessor.
Significant uncertainties as to future economic conditions continue to exist, including higher inflation and interest rate environment, elevated liquidity risk to the U.S. banking system and the exposure to the U.S. commercial real estate market, particularly to the regional banks, disruptions to global supply chain and labor markets, and higher oil and commodity prices exacerbated by the military conflicts between Russia and Ukraine and in Israel.
Significant uncertainties as to future economic conditions continue to exist, including risks of higher inflation and sustained higher interest rate environment, elevated liquidity risk to the U.S. banking system and the exposure to the U.S. commercial real estate market, particularly to the regional banks, disruptions to global supply chain and labor markets, and higher oil and commodity prices exacerbated by the military conflicts between Russia and Ukraine and in the Middle East.
If not addressed, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the loan and lease and Customers’ financial position. At December 31, 2023 and 2022, special mention loans and leases were $196.2 million and $138.8 million, respectively, and are considered performing loans and are therefore not included in the tables above.
If not addressed, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the loan and lease and Customers’ financial position. At December 31, 2024 and 2023, special mention loans and leases were $175.1 million and $196.2 million, respectively, and are considered performing loans and are therefore not included in the tables above.
Under this scenario, as an example, the unemployment rate is estimated at 6.7% and 7.4% in 2024 and 2025, respectively. These numbers represent a 2.7% and 3.3% higher unemployment estimate than Baseline scenario projections of 4.0% and 4.1% for the same time periods, respectively.
Under this scenario, as an example, the unemployment rate is estimated at 7.3% and 8.0% in 2025 and 2026, respectively. These numbers represent a 3.2% and 3.9% higher unemployment estimate than Baseline scenario projections of 4.1% for the same time periods, respectively.
To demonstrate the sensitivity to key economic parameters, management calculated the difference between a 100% Baseline weighting and a 100% adverse scenario weighting for modelled results. This would result in an incremental quantitative impact to the ACL of approximately $56.8 million at December 31, 2023.
To demonstrate the sensitivity to key economic parameters, management calculated the difference between a 100% Baseline weighting and a 100% adverse scenario weighting for modelled results. This would result in an incremental quantitative impact to the ACL of approximately $77 million at December 31, 2024.
Our loan to deposit ratio was 74% at December 31, 2023. Customers’ principal sources of funds are deposits, borrowings, principal and interest payments on loans and leases, other funds from operations, and proceeds from common and preferred stock issuances. Borrowing arrangements are maintained with the FHLB and the FRB, including the BTFP to meet short-term liquidity needs.
Our loan to deposit ratio was 78% at December 31, 2024. Customers’ principal sources of funds are deposits, borrowings, principal and interest payments on loans and leases, other funds from operations, and proceeds from common and preferred stock issuances. Borrowing arrangements are maintained with the FHLB and the FRB to meet short-term liquidity needs.
(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 3.27% and 1.31% for the years ended December 31, 2023 and 2022, respectively.
(2) Includes owner occupied commercial real estate loans. (3) Includes PPP loans. (4) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees. (5) Total costs of deposits (including interest bearing and non-interest-bearing) were 3.34% and 3.27% for the years ended December 31, 2024 and 2023, respectively.
Refer to “NOTE 6 – INVESTMENT SECURITIES” to Customers’ audited consolidated financial statements for additional information. NON-INTEREST INCOME The table below presents the components of non-interest income for the years ended December 31, 2023 and 2022.
Refer to “NOTE 5 – INVESTMENT SECURITIES” to Customers’ audited consolidated financial statements for additional information. NON-INTEREST INCOME The table below presents the components of non-interest income for the years ended December 31, 2024 and 2023.
Loss on sale of capital call lines of credit The $5.0 million increase in realized loss from the sale of capital call lines of credit for the year ended December 31, 2023 compared to the year ended December 31, 2022 reflected the sale of $670.0 million of short-term syndicated capital call lines of credit within specialty lending, inclusive of accrued interest and unamortized deferred loan origination costs for the year ended December 31, 2023, compared to no such sales for the year ended December 31, 2022.
Loss on sale of capital call lines of credit The $5.0 million decrease in realized loss from the sale of capital call lines of credit for the year ended December 31, 2024 compared to the year ended December 31, 2023 reflected the sale of $670.0 million of short-term syndicated capital call lines of credit within specialized lending, inclusive of accrued interest and unamortized deferred loan origination costs for the year ended December 31, 2023, compared to no such sales for the year ended December 31, 2024.
PPP loans include an embedded credit enhancement from the SBA, which guarantees 100% of the principal and interest owed by the borrower provided that the SBA’s eligibility criteria are met. As a result, the eligible PPP loans do not have an ACL and are therefore excluded from ACL-related disclosures.
(2) PPP loans include an embedded credit enhancement from the SBA, which guarantees 100% of the principal and interest owed by the borrower provided that the SBA’s eligibility criteria are met. As a result, the eligible PPP loans do not have an ACL.
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 December 31, 2023, our regulatory capital ratios reflected 50%, or $30.8 million, benefit associated with the CECL transition provisions.
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 December 31, 2024, our regulatory capital ratios reflected 25%, or $15.4 million, benefit associated with the CECL transition provisions.
Each CBIT is minted with precisely one U.S. dollar equivalent, and those dollars are held in a non-interest bearing omnibus deposit account until the CBIT is burned or redeemed.
Each CBIT was minted with precisely one U.S. dollar equivalent, and those dollars were held in a non-interest bearing omnibus deposit account until the CBIT was burned or redeemed.
The $8.5 million increase in commercial lease income for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily resulted from the growth of Customers’ equipment finance business.
The $4.5 million increase in commercial lease income for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily resulted from the growth of Customers’ equipment finance business.
Customers recorded a benefit to provision for credit losses of $0.1 million and a provision for credit losses of $0.9 million of lending-related commitments for the years ended December 31, 2023 and 2022, respectively.
Customers recorded a provision for credit losses of $2.0 million and a benefit to provision for credit losses of $0.1 million of lending-related commitments for the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2023, Customers had $1.7 billion in consumer loans outstanding (including consumer loans held for investment and held for sale), or 13.2% of the total loan and lease portfolio, compared to $2.2 billion, or 14.2% of the total loan and lease portfolio, as of December 31, 2022.
As of December 31, 2024, Customers had $1.4 billion in consumer loans outstanding (including consumer loans held for investment and held for sale), or 9.9% of the total loan and lease portfolio, compared to $1.7 billion, or 13.2% of the total loan and lease portfolio, as of December 31, 2023.
Pursuant to the Adjustable Interest Rate (LIBOR) Act enacted by Congress on March 15, 2022, Customers expects that the subordinated notes will substitute three-month term SOFR plus a tenor spread adjustment of 26.161 basis points for three-month LIBOR as the benchmark reference rate in order to calculate the annual interest rate after June 26, 2024.
Pursuant to the Adjustable Interest Rate (LIBOR) Act enacted by Congress on March 15, 2022, Customers substituted three-month term SOFR plus a tenor spread adjustment of 26.161 basis points for three-month LIBOR as the benchmark reference rate in order to calculate the annual interest rate after June 26, 2024.
Customers recognized a provision for credit losses on unfunded lending-related commitments of $0.9 million during the year ended December 31, 2022 resulting in an ACL of $3.0 million as of December 31, 2022.
Customers recognized a provision for credit losses on unfunded lending-related commitments of $2.0 million during the year ended December 31, 2024 resulting in an ACL of $4.9 million as of December 31, 2024.
The CBIT instant payments platform provides a closed-system for intrabank commercial transactions and is not intended to be a trading platform for tokens or digital assets. CBIT tokens are used only in connection with the CBIT instant payments platform and are not securities for purposes of applicable securities laws.
The CBIT instant payments platform provided a closed-system for intrabank commercial transactions and was not intended to be a trading platform for tokens or digital assets. CBIT tokens were used only in connection with the CBIT instant payments platform and were not securities for purposes of applicable securities laws.
Legal settlement expense The $4.1 million increase in legal settlement expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 reflects expenses from a settlement with a third party PPP service provider.
Legal settlement expense The $4.1 million decrease in legal settlement expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 reflects expenses from a settlement with a third party PPP service provider during the year ended December 31, 2023.
Additionally, events adversely affecting specific customers, industries, or Customers’ markets, such as geopolitical instability, risks of rising inflation including a near-term recession, or worsening of the U.S. banking system turmoil, could severely impact our current expectations.
Additionally, events adversely affecting specific customers, industries, or Customers’ markets, such as geopolitical instability, risks of rising inflation or worsening of the U.S. banking system could severely impact our current expectations.
Customers decided to exit completely the non-strategic, short-term syndicated call lines of credit with borrowers that Customers had no deposit relationships. Refer to “NOTE 8 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements for additional information.
Customers decided to exit completely the non-strategic, short-term syndicated call lines of credit with borrowers that Customers had no deposit relationships during the year ended December 31, 2023. Refer to “NOTE 7 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements for additional information.
There can be no assurance that Customers will realize gains on the sale of investment securities in 2024, given the significant uncertainty in the capital markets and fluctuations in our funding needs, which may impact Customers’ investment strategy.
There can be no assurance that Customers will realize gains from sales of investment securities in 2025, given the significant uncertainty in the capital markets and fluctuations in our funding needs, which may impact Customers’ investment strategy.
Refer to “NOTE 6 – INVESTMENT SECURITIES” and “NOTE 20 – DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS” to Customers’ audited consolidated financial statements for additional information.
Refer to “NOTE 5 – INVESTMENT SECURITIES” and “NOTE 19 – DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS” to Customers’ audited consolidated financial statements for additional information.
Refer to “NOTE 18 – FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK” to Customers’ audited consolidated financial statements for additional information. 102 As described in “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” to Customers’ audited consolidated financial statements, ACL on lending related commitments is a liability account, calculated in accordance with ASC 326, representing expected credit losses over the contractual period for which Customers is exposed to credit risk resulting from a contractual obligation to extend credit.
As described in “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” to Customers’ audited consolidated financial statements, ACL on lending related commitments is a liability account, calculated in accordance with ASC 326, representing expected credit losses over the contractual period for which Customers is exposed to credit risk resulting from a contractual obligation to extend credit.
The purchase price was 87.9%, 99.1% and 100.8% of the loans’ unpaid principal balance during the years ended December 31, 2023, 2022 and 2021, respectively. (2) Installment loan purchases for the years ended December 31, 2023, 2022 and 2021 consist of third-party originated unsecured consumer loans.
The purchase price was 97.5%, 87.9% and 99.1% of the loans’ unpaid principal balance for the years ended December 31, 2024, 2023 and 2022, respectively. (2) Installment loan purchases for the years ended December 31, 2024, 2023 and 2022 consist of third-party originated unsecured consumer loans.
As of December 31, 2023, Customers had multifamily loans of $2.1 billion outstanding, comprising approximately 16.2% of the total loan and lease portfolio, compared to $2.2 billion, or approximately 14.0% of the total loan and lease portfolio, at December 31, 2022. 86 Consumer Lending Customers provides unsecured consumer installment loans, residential mortgage and home equity loans to customers nationwide primarily through relationships with fintech companies.
As of December 31, 2024, Customers had multifamily loans of $2.3 billion outstanding, comprising approximately 15.4% of the total loan and lease portfolio, compared to $2.1 billion, or approximately 16.2% of the total loan and lease portfolio, at December 31, 2023. 84 Consumer Lending Customers provides unsecured consumer installment loans, residential mortgage and home equity loans to customers nationwide primarily through relationships with fintech companies.
None of this capacity was utilized as of December 31, 2023 and 2022. Customers Bank provides blockchain-based digital payments via CBIT, which allows clients to make instant payments in U.S. dollars.
None of this capacity was utilized as of December 31, 2024 and 2023. Customers Bank provided blockchain-based digital payments via CBIT, which allowed clients to make instant payments in U.S. dollars.
Customers provided financing to the purchasers for a portion of the sales price in the form of $436.8 million of asset-backed securities while $115.1 million of the remaining sales proceeds were paid in cash. Customers also recognized servicing assets of $3.8 million upon sale. Refer to “NOTE 6 – INVESTMENT SECURITIES” to Customers’ audited consolidated financial statements for additional information.
Customers provided financing to the purchasers for a portion of the sales price in the form of $436.8 million of asset-backed securities while $115.1 million of the remaining sales proceeds were paid in cash. Refer to “NOTE 5 – INVESTMENT SECURITIES” to Customers’ audited consolidated financial statements for additional information.
The ACL on loans and leases held for investment, represented 1.13% of total loans and leases receivable at December 31, 2023, compared to 0.93% at December 31, 2022.
The ACL on loans and leases held for investment, represented 1.04% of total loans and leases receivable at December 31, 2024, compared to 1.13% at December 31, 2023.
The portfolio of loans to mortgage companies is nationwide. The loan portfolio consists primarily of loans to support mortgage companies’ funding needs, multifamily, commercial real estate and commercial and industrial loans.
The portfolio of specialized lending loans and leases and mortgage finance loans is nationwide. The loan portfolio consists primarily of loans to support mortgage companies’ funding needs, multifamily, commercial real estate and commercial and industrial loans.
For the reconciliation of the effective tax rate and the statutory federal tax rate, refer to “NOTE 16 – INCOME TAXES” to Customers’ audited consolidated financial statements. PREFERRED STOCK DIVIDENDS Preferred stock dividends were $14.7 million and $9.6 million for the years ended December 31, 2023 and 2022, respectively.
For the reconciliation of the effective tax rate and the statutory federal tax rate, refer to “NOTE 15 – INCOME TAXES” to Customers’ audited consolidated financial statements. 80 PREFERRED STOCK DIVIDENDS Preferred stock dividends were $15.0 million and $14.7 million for the years ended December 31, 2024 and 2023, respectively.
Short-term debt Short-term debt at December 31, 2023 and 2022 was as follows: December 31, 2023 2022 (dollars in thousands) Amount Rate Amount Rate FHLB advances $ — — % $ 300,000 4.54 % Total short-term debt $ — $ 300,000 Long-term debt FHLB and FRB Advances Long-term FHLB and FRB advances at December 31, 2023 and 2022 were as follows: December 31, 2023 2022 (dollars in thousands) Amount Rate Amount Rate FHLB advances (1)(2) $ 1,203,207 3.91 % $ 500,000 3.37 % Total long-term FHLB and FRB advances $ 1,203,207 $ 500,000 (1) Amounts reported in the above table include a fixed rate long-term advance from FHLB of $250.0 million with a maturity of June 2024 and a returnable option that can be repaid without penalty on certain predetermined dates at Customers Bank’s option, and fixed rate long-term advances of $950.0 million with maturities ranging from March 2025 to March 2028, at December 31, 2023.
Short-term debt Short-term debt at December 31, 2024 and 2023 was as follows: December 31, 2024 2023 (dollars in thousands) Amount Rate Amount Rate FHLB advances $ 100,000 4.61 % $ — — % Total short-term debt $ 100,000 $ — Long-term debt FHLB and FRB Advances Long-term FHLB and FRB advances at December 31, 2024 and 2023 were as follows: December 31, 2024 2023 (dollars in thousands) Amount Rate Amount Rate FHLB advances (1) $ 1,028,352 (2) 4.11 % (3) $ 1,203,207 (2) 3.91 % (3) Total long-term FHLB and FRB advances $ 1,028,352 $ 1,203,207 (1) Amounts reported in the above table include fixed rate long-term advances from FHLB of $950.0 million with maturities ranging from March 2025 to March 2028, and variable rate long-term advances from FHLB of $80.0 million with maturities ranging from March 2028 to December 2028 with a returnable option that can be repaid without penalty on certain predetermined dates at Customers Bank's option, at December 31, 2024.
Refer to “NOTE 6 – INVESTMENT SECURITIES” and “NOTE 7 – LOANS HELD FOR SALE” to Customers’ audited consolidated financial statements for additional information on the sale of consumer installment loans held for sale.
Refer to “NOTE 5 – INVESTMENT SECURITIES” and “NOTE 6 – LOANS HELD FOR SALE” to Customers’ audited consolidated financial statements for additional information on the sale of consumer installment loans to third-party sponsored VIEs.
December 31, 2023 Within one year After one but within five years After five but within ten years No specific maturity Total Asset-backed securities — % — % — % 5.84 % 5.84 % Agency-guaranteed residential mortgage-backed securities — — — 1.80 1.80 Agency-guaranteed commercial mortgage-backed securities — — — 1.77 1.77 Agency-guaranteed residential collateralized mortgage obligations — — — 1.45 1.45 Agency-guaranteed commercial collateralized mortgage obligations — — — 2.33 2.33 Private label collateralized mortgage obligations — — — 4.46 4.46 Weighted-average yield — % — % — % 4.33 % 4.33 % The agency-guaranteed mortgage-backed securities and collateralized mortgage obligations in the portfolio were issued by Fannie Mae, Freddie Mac and Ginnie Mae, and contain guarantees for the collection of principal and interest on the underlying mortgages.
December 31, 2024 Within one year After one but within five years After five but within ten years No specific maturity Total Asset-backed securities — % — % — % 5.54 % 5.54 % Agency-guaranteed residential mortgage-backed securities — — — 1.79 1.79 Agency-guaranteed commercial mortgage-backed securities — — — 1.77 1.77 Agency-guaranteed residential collateralized mortgage obligations — — — 1.89 1.89 Agency-guaranteed commercial collateralized mortgage obligations — — — 2.39 2.39 Private label collateralized mortgage obligations — — — 4.61 4.61 Weighted-average yield — % — % — % 4.21 % 4.21 % The agency-guaranteed mortgage-backed securities and collateralized mortgage obligations in the HTM portfolio were issued by Fannie Mae, Freddie Mac and Ginnie Mae, and contain guarantees for the collection of principal and interest on the underlying mortgages.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+0 added−6 removed6 unchanged
Biggest changeHowever, the interest rate sensitivity of our assets, liabilities and off-balance sheet financial instruments, as well as the estimated effect of changes in interest rates on estimated net interest income, could vary substantially if different assumptions are used or actual experience differs from the assumptions used in the model. 108 LIBOR Transition Customers has variable rate loans, investment securities, fixed-to-floating rate senior and subordinated debt, preferred stocks and derivatives that reference LIBOR.
Biggest changeHowever, the interest rate sensitivity of our assets, liabilities and off-balance sheet financial instruments, as well as the estimated effect of changes in interest rates on estimated net interest income, could vary substantially if different assumptions are used or actual experience differs from the assumptions used in the model. 105
The combination of these two methods supplies a reasonably comprehensive summary of the levels of interest rate risk of Customers’ exposure to time factors and changes in interest rate environments. 107 Income scenario modeling is used to measure interest rate sensitivity and manage interest rate risk over a near term horizon.
The combination of these two methods supplies a reasonably comprehensive summary of the levels of interest rate risk of Customers’ exposure to time factors and changes in interest rate environments. 104 Income scenario modeling is used to measure interest rate sensitivity and manage interest rate risk over a near term horizon.
For upward rate shocks modeling a rising rate environment at December 31, 2023 and 2022, current market interest rates were shocked by a parallel and sustained shift in interest rates, in which the base market interest rate forecast was immediately increased by 100, 200 and 300 basis points.
For upward rate shocks modeling a rising rate environment at December 31, 2024 and 2023, current market interest rates were shocked by a parallel and sustained shift in interest rates, in which the base market interest rate forecast was immediately increased by 100, 200 and 300 basis points.
For downward rate shocks modeling a falling rate environment at December 31, 2023 and 2022, current market rates were shocked by a parallel and sustained shift in interest rates, in which the base market interest rate forecast was immediately decreased by 100, 200 and 300 basis points.
For downward rate shocks modeling a falling rate environment at December 31, 2024 and 2023, current market rates were shocked by a parallel and sustained shift in interest rates, in which the base market interest rate forecast was immediately decreased by 100, 200 and 300 basis points.
Through the use of income scenario modeling, Customers has estimated the net interest income for the twelve months ending December 31, 2024 and 2023, based upon the assets, liabilities and off-balance sheet financial instruments including derivatives in existence at December 31, 2023 and 2022.
Through the use of income scenario modeling, Customers has estimated the net interest income for the twelve months ending December 31, 2025 and 2024, based upon the assets, liabilities and off-balance sheet financial instruments including derivatives in existence at December 31, 2024 and 2023.
For upward rate shocks modeling a rising rate environment at December 31, 2023 and 2022, Customers used a parallel and sustained shift in interest rates, in which the base market interest rate forecast was immediately increased by 100, 200 and 300 basis points.
For upward rate shocks modeling a rising rate environment at December 31, 2024 and 2023, Customers used a parallel and sustained shift in interest rates, in which the base market interest rate forecast was immediately increased by 100, 200 and 300 basis points.
For downward rate shocks modeling a falling rate environment at December 31, 2023 and 2022, Customers used a parallel and sustained shift in interest rates, in which the base market interest rate forecast was immediately decreased by 100, 200 and 300 basis points.
For downward rate shocks modeling a falling rate environment at December 31, 2024 and 2023, Customers used a parallel and sustained shift in interest rates, in which the base market interest rate forecast was immediately decreased by 100, 200 and 300 basis points.
Discount rates are based upon market prices for comparable assets and liabilities. Upward and downward rate shocks are used to measure volatility of EVE in relation to a constant rate environment.
Discount rates are based upon market prices for comparable assets and liabilities. Upward and downward rate shocks are used to measure sensitivity of EVE in relation to a constant rate environment.
Net change in net interest income % Change December 31, Rate Shocks 2023 2022 Up 3% 9.9% 0.4% Up 2% 6.6% 0.4% Up 1% 3.6% 0.3% Down 1% (3.5)% (0.9)% Down 2% (7.2)% (2.0)% Down 3% (11.2)% (4.8)% EVE considers a longer-term horizon and estimates the hypothetical discounted net present value of asset and liability cash flows.
Net change in net interest income % Change December 31, Rate Shocks 2024 2023 Up 3% 8.4% 9.9% Up 2% 5.9% 6.6% Up 1% 3.2% 3.6% Down 1% (4.1)% (3.5)% Down 2% (8.8)% (7.2)% Down 3% (13.6)% (11.2)% EVE considers a longer-term horizon and estimates the hypothetical discounted net present value of asset and liability cash flows.
This method of measurement primarily evaluates the longer-term repricing risks and embedded options in Customers Bank’s balance sheet. The following table reflects the estimated change in EVE at risk at December 31, 2023 and 2022, resulting from rate shocks to interest rates.
This method of measurement primarily evaluates the longer-term repricing risks and embedded options in Customers Bank’s balance sheet. The following table reflects the estimated change in EVE at December 31, 2024 and 2023, resulting from shocks to interest rates.
The following table reflects the estimated percentage change in projected twelve-month net interest income under the rate shocks versus the base projected net interest income for the years ending December 31, 2024 and 2023, resulting from changes in interest rates.
The following table reflects the estimated percentage change in projected twelve-month net interest income under the rate shocks versus the base projected net interest income for the twelve months ending December 31, 2025 and 2024, resulting from changes in interest rates.
From Base December 31, Rate Shocks 2023 2022 Up 3% (6.2)% (27.8)% Up 2% (3.0)% (16.9)% Up 1% 0.3% (6.6)% Down 1% (5.4)% 0.0% Down 2% (13.2)% (31.3)% Down 3% (23.1)% (57.2)% Management believes that the assumptions and combination of methods used in evaluating interest rate risk are reasonable.
From Base December 31, Rate Shocks 2024 2023 Up 3% (5.5)% (6.2)% Up 2% (1.3)% (3.0)% Up 1% 0.5% 0.3% Down 1% (3.3)% (5.4)% Down 2% (8.1)% (13.2)% Down 3% (15.8)% (23.1)% Management believes that the assumptions and combination of methods used in evaluating interest rate risk are reasonable.
Removed
All tenors of LIBOR have ceased on June 30, 2023. The 1-, 3- and 6-month U.S. dollar LIBOR settings will continue to be published using a synthetic methodology until September 2024. Customers established an enterprise-wide LIBOR transition program, which includes a LIBOR transition team with senior management level leadership.
Removed
Progress on the LIBOR transition effort is monitored by executive management as well as the asset/liability committee and Customers’ Board of Directors. At December 31, 2023, all of Customers’ LIBOR-based commercial loans and leases, commercial real estate loans and residential mortgages have been transitioned to SOFR.
Removed
In addition, $110.0 million of fixed-to-floating rate borrowings and $137.8 million of preferred equity instruments reference LIBOR, which have been or will be transitioned to SOFR.
Removed
Pursuant to the Adjustable Interest Rate (LIBOR) Act enacted by Congress on March 15, 2022, Customers substituted three-month term SOFR plus a tenor spread adjustment of 26.161 basis points for three-month LIBOR as the benchmark reference rate, plus 5.14% and 4.762%, respectively, to calculate the dividends on Series E and F Preferred Stock, respectively, beginning with dividends declared on October 25, 2023.
Removed
Customers’ derivatives primarily reference LIBOR. In October 2020, the International Swaps and Derivatives Association, Inc. published the IBOR Fallbacks Supplement (“IBOR Supplement”) and the IBOR Fallback Protocol (“IBOR Protocol”). The IBOR Protocol enabled market participants to incorporate certain revisions into their legacy non-cleared derivatives with other counterparties that also choose to adhere to the IBOR Protocol.
Removed
Customers adhered to the IBOR Protocol in November 2020 and remediated its interest rate swap transactions with its end-user customers, which referenced the fallback SOFR per the IBOR Protocol. With respect to Customers’ cleared interest rate swap agreements that reference LIBOR, clearinghouses adopted the same relevant SOFR benchmark alternatives of the IBOR Supplement and the IBOR Protocol. 109

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