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What changed in Customers Bancorp, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Customers Bancorp, Inc.'s 2024 and 2025 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 2025 report.

+641 added−762 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)

Top changes in Customers Bancorp, Inc.'s 2025 10-K

641 paragraphs added · 762 removed · 511 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

102 edited+42 added−74 removed141 unchanged
Biggest changeIn 2023, Customers acquired a venture banking loan portfolio from the FDIC. Customers also recruited team members that originated these loans to service the venture-backed growth industry from seed-stage through late-stage. The newly recruited team gives clients access to the capital to grow from innovation to maturity and leverage a customized, best-in-class tech platform to support their growth.
Biggest changeCustomers’ technology and venture capital banking group services the venture-backed growth industry from seed-stage through late-stage. In 2023, Customers acquired a venture banking loan portfolio. Customers also recruited team members that originated these loans to service the industries and companies where growth needs are typically provided by venture capital.
In 2024, Customers sold $202.5 million of personal and other installment loans that were classified as held for sale, inclusive of personal 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 2024, Customers sold $202.5 million of personal and other installment loans that were classified as held for sale, inclusive of 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 standardized approach final rule utilizes an increased number of credit-risk exposure categories and risk weights and also addressed: (i) an alternative standard of creditworthiness consistent with Section 939A of the Dodd-Frank Act; (ii) revisions to recognition of credit-risk mitigation; (iii) rules for risk weighting of equity exposures and past-due loans; (iv) revised capital treatment for derivatives and repo-style transactions; (v) the option to use a formula-based approach referred to as the simplified supervisory formula approach to determine the risk weight of various securitization tranches in addition to the previous “gross-up” method (replacing the credit ratings approach for certain securitization); and (vi) disclosure requirements for top-tier banking organizations with $50 billion or more in total assets that are not subject to the “advanced approach rules” that apply to banks with greater than $250 billion in consolidated assets.
The standardized approach final rule utilizes an increased number of credit-risk exposure categories and risk weights and also addressed: (i) an alternative standard of creditworthiness consistent with Section 939A of the Dodd-Frank Act; (ii) revisions to recognition of credit-risk mitigation; (iii) rules for risk weighting of equity exposures and past-due loans; 19 (iv) revised capital treatment for derivatives and repo-style transactions; (v) the option to use a formula-based approach referred to as the simplified supervisory formula approach to determine the risk weight of various securitization tranches in addition to the previous “gross-up” method (replacing the credit ratings approach for certain securitization); and (vi) disclosure requirements for top-tier banking organizations with $50 billion or more in total assets that are not subject to the “advanced approach rules” that apply to banks with greater than $250 billion in consolidated assets.
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.
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; • 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.
While maintaining physical branch locations remains an important component of Customers’ strategy, Customers utilizes an operating model with fewer and less expensive locations, thereby lowering overhead costs and allowing for greater pricing flexibility. Corporate Social Responsibility CSR considerations are integrated across our business and incorporated into the policies and principles that govern how we operate.
While maintaining physical branch locations remains an important component of Customers’ strategy, Customers utilizes an operating model with fewer and less expensive locations, thereby lowering overhead costs and allowing for greater pricing flexibility. 14 Corporate Social Responsibility CSR considerations are integrated across our business and incorporated into the policies and principles that govern how we operate.
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.
These areas also support Customers’ commitment to lower-and-moderate-income families in its market area. 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.
The Dodd-Frank Act created a more permissive interstate branching regime by permitting banks to establish de novo branches in any state if a bank chartered by such state would have been permitted to establish the branch. For more information on interstate branching under Pennsylvania law, see “Pennsylvania Banking Laws – Interstate Branching” below. Prompt Corrective Action .
The Dodd-Frank Act created a more permissive interstate branching regime by permitting banks to establish de novo branches in any state if a bank chartered by such state would have been permitted to establish the branch. For more information on interstate branching under Pennsylvania law, see “Pennsylvania Banking Laws – Interstate Branching” below. 17 Prompt Corrective Action .
All newly onboarded bankers are highly respected in the commercial deposits space and augment existing expertise in private banking, treasury management, and commercial and industrial lending. They are enhancing the growth of the Bank’s low-cost, relationship-focused deposit portfolio, and their addition strengthens the Bank’s commitment to its single point of contact relationship-oriented service approach.
All onboarded bankers are highly respected in the commercial deposits space and augment existing expertise in private banking, treasury management, and commercial and industrial lending. They are enhancing the growth of the Bank’s low-cost, relationship-focused deposit portfolio, and their addition strengthens the Bank’s commitment to its single point of contact relationship-oriented service approach.
All newly onboarded bankers are highly respected in the commercial deposits space and augment existing expertise in private banking, treasury management, and commercial and industrial lending. They are enhancing the growth of the Bank’s low-cost, relationship-focused deposit portfolio, and their addition strengthens the Bank’s commitment to its single point of contact relationship-oriented service approach.
All onboarded bankers are highly respected in the commercial deposits space and augment existing expertise in private banking, treasury management, and commercial and industrial lending. They are enhancing the growth of the Bank’s low-cost, relationship-focused deposit portfolio, and their addition strengthens the Bank’s commitment to its single point of contact relationship-oriented service approach.
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.
Because our securities are listed on the NYSE, we are subject to NYSE’s rules for listed companies, including rules relating to corporate governance. 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 new teams are enhancing the Bank’s presence in New York City, where it has successfully operated for over seven years; reinforcing its dedication to Los Angeles; adding representation in Orange County, California; and bringing client coverage to the communities of Reno and Las Vegas, Nevada.
These teams are enhancing the Bank’s presence in New York City, where it has successfully operated for over seven years; reinforcing its dedication to Los Angeles; adding representation in Orange County, California; and bringing client coverage to the communities of Reno and Las Vegas, Nevada.
The new teams are enhancing the Bank’s presence in New York City, where it has successfully operated for over seven years; reinforcing its dedication to Los Angeles; adding representation in Orange County, California; and bringing client coverage to the communities of Reno and Las Vegas, Nevada.
These teams are enhancing the Bank’s presence in New York City, where it has successfully operated for over seven years; reinforcing its dedication to Los Angeles; adding representation in Orange County, California; and bringing client coverage to the communities of Reno and Las Vegas, Nevada.
The final rules also implement revisions and clarifications consistent with Basel III regarding the various components of Tier 1 capital, including common equity, unrealized gains and losses, as well as certain instruments that will no longer qualify as Tier 1 capital, some of which will be phased out over time.
The Basel III Capital Rules also implement revisions and clarifications consistent with Basel III regarding the various components of Tier 1 capital, including common equity, unrealized gains and losses, as well as certain instruments that will no longer qualify as Tier 1 capital, some of which will be phased out over time.
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 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. 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.
The final rule required Customers to adopt a clawback policy within 60 days after such listing standard becomes effective, which Customers did on November 15, 2023. Consumer Financial Protection Laws and Enforcement . The CFPB and the federal banking agencies continue to focus attention on consumer protection laws and regulations.
The final rule required Customers to adopt a clawback policy within 60 days after such listing standard becomes effective, which Customers did on November 15, 2023. 22 Consumer Financial Protection Laws and Enforcement . The CFPB and the federal banking agencies continue to focus attention on consumer protection laws and regulations.
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.
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. 24 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 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.
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. 25 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 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.
The mortgage finance loans are reported as loans receivable, mortgage finance, 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 CFPB has published its first Supervision and Examination Manual that addresses compliance with and the examination of UDAAP. Privacy Protection and Cybersecurity. The Bank is subject to regulations implementing the privacy protection provisions of the GLBA.
The CFPB has published its first Supervision and Examination Manual that addresses compliance with and the examination of UDAAP. 23 Privacy Protection and Cybersecurity. The Bank is subject to regulations implementing the privacy protection provisions of the GLBA.
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.
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 diversity is designed to allow for greater resource deployment, higher standards of risk management, stronger asset quality, lower interest-rate risk and higher productivity levels.
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.
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, respectively.
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. 9 In 2024, Customers onboarded 10 experienced commercial and business banking teams in New York, California and Nevada to accelerate the Bank’s deposit growth potential.
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. 9 In 2024, Customers onboarded ten experienced commercial and business banking teams in New York, California and Nevada to accelerate the Bank’s deposit growth potential.
Customers also utilizes wholesale deposit products, money market accounts and certificates of deposits obtained through listing services and borrowings from the FRB and FHLB as a source of funding. In 2024, Customers onboarded 10 experienced commercial and business banking teams in New York, California and Nevada to accelerate the Bank’s deposit growth potential.
Customers also utilizes wholesale deposit products, money market accounts and certificates of deposits obtained through listing services and borrowings from the FRB and FHLB as a source of funding. In 2024, Customers onboarded ten experienced commercial and business banking teams in New York, California and Nevada to accelerate the Bank’s deposit growth potential.
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 believes its expanded target markets and verticals 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 banking.
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.
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, technology capabilities, and management expertise to successfully compete. Competitive Strengths • Experienced and respected management team.
Effective January 1, 2019, the minimum capital level requirements (including the capital conservation buffer) applicable to the Bancorp and Customers Bank under the final rules are: (i) a common equity Tier 1 capital ratio of 7.0%; (ii) a Tier 1 risk-based capital ratio of 8.5%; and (iii) a total risk-based capital ratio of 10.5%.
Effective January 1, 2019, the minimum capital level requirements (including the capital conservation buffer) applicable to the Bancorp and Customers Bank under the Basel III Capital Rules are: (i) a common equity Tier 1 capital ratio of 7.0%; (ii) a Tier 1 risk-based capital ratio of 8.5%; and (iii) a total risk-based capital ratio of 10.5%.
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.
As of December 31, 2025 and 2024, 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.
Investors can obtain copies of Customers Bancorp’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, on Customers Bancorp’s website (accessible under “Investors” – “SEC filings”) as soon as reasonably practicable after Customers Bancorp has filed such materials with, or furnished them to, the SEC.
Investors can obtain copies of Customers Bancorp’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished by us pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, on Customers Bancorp’s website (accessible under “Investors” – “SEC filings”) as soon as reasonably practicable after Customers Bancorp has electronically filed such materials with, or furnished them to, the SEC.
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.
Pursuant to the Basel III Capital Rules, 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.
However, the final rules provide that small depository institution holding companies with less than $15 billion in total assets as of December 31, 2009, (which includes the Bancorp) will be able to permanently include non-qualifying instruments that were issued and included in Tier 1 or Tier 2 capital prior to May 19, 2010, as additional Tier 1 or Tier 2 capital until they redeem such instruments or until the instruments mature.
However, the final rules provide that small depository institution holding companies with less than $15 billion in total assets as of December 31, 2009, (which includes the Bancorp) are able to permanently include non-qualifying instruments that were issued and included in Tier 1 or Tier 2 capital prior to May 19, 2010, as additional Tier 1 or Tier 2 capital until they redeem such instruments or until the instruments mature.
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
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. 26
Under the final rules, institutions are subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if their capital levels fall below the minimum capital level plus capital conservation buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.
Under the Basel III Capital Rules, institutions are subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if their capital levels fall below the minimum capital level plus capital conservation buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.
While our loan and deposit activities remained largely based in the Northeast and Mid-Atlantic regions, the Bank expanded significantly in our national specialized lending verticals through opportunistic acquisitions and team lift-outs in recent years.
While our geographic-focused loan and deposit activities remained largely based in the Northeast and Mid-Atlantic regions, the Bank expanded significantly in our national specialized lending and deposit verticals through opportunistic acquisitions and team lift-outs in recent years.
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.
Customers focuses on markets and industries 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; • Management experience in the applicable markets; and • Advanced technology needs.
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.
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 11 • Consumer Lending – local-market mortgage and home equity lending and the origination and purchase of installment loans through arrangements with third-party fintech companies.
An integral element of Customers’ business strategy is to capitalize on and leverage the prior experience of its executive management team. The management team is led by Chairman and CEO, Jay Sidhu, who is the former CEO and Chairman of Sovereign Bancorp. During his tenure at Sovereign, Mr.
An integral element of Customers’ business strategy is to capitalize on and leverage the prior experience of its executive management team. The management team includes Executive Chairman, Jay Sidhu, who is the former CEO and Chairman of Sovereign Bancorp. During his tenure at Sovereign, Mr.
In addition, other jurisdictions in which our customers do business, such as the European Union, have adopted similar requirements. This trend of activity is expected to continue to expand, requiring continual monitoring of developments in the states and nations in which our customers are located and ongoing investments in our information systems and compliance capabilities.
In addition, other jurisdictions in which our customers do business, such as the European Union, have adopted similar requirements. This trend of activity is expected to continue to expand, requiring continual monitoring of developments in the states and nations in which our customers are located and ongoing investments in our information systems and compliance capabilities. Fair Access to Financial Services.
This evaluation includes a descriptive rating (outstanding, satisfactory, needs to improve or substantial noncompliance) and a statement describing the basis for the rating.
This evaluation includes a descriptive rating (outstanding, satisfactory, needs to improve or substantial noncompliance) and a statement describing the basis for the rating. Incentive Compensation.
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.
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, 2025 and 2024, Customers Bank funded $26.9 billion and $22.1 billion of mortgage loans, respectively, to mortgage originators via warehouse facilities.
In November 2023, the FDIC issued a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank, at a quarterly rate of 3.36 basis points of an institution’s uninsured deposits in excess of $5 billion as of December 31, 2022, to be paid over eight quarterly assessment periods beginning in the first quarter of 2024.
As a result of the new rule, the FDIC insurance costs of Customers Bank increased. 21 In November 2023, the FDIC issued a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank, at a quarterly rate of 3.36 basis points of an institution’s uninsured deposits in excess of $5 billion as of December 31, 2022, to be paid over eight quarterly assessment periods beginning in the first quarter of 2024.
In October 2023, the CFPB proposed a new rule that would require a provider of payment accounts or products, such as a bank, to make data available to consumers upon request regarding the products or services they obtain from the provider.
In October 2024, the CFPB issued a new rule that would require a provider of payment accounts or products, such as a bank, to make data available to consumers upon request regarding the products or services they obtain from the provider.
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.
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, 2025 and 2024, Customers had $813.7 million and $675.4 million, respectively, of equipment finance loans outstanding.
In November 2024, Customers launched a new B2B instant payments platform, cubiX, which was developed in-house, is not based on blockchain and offers more extensive products and services compared to CBIT.
In 2024, Customers launched a new B2B instant payments platform, cubiX, which was developed in-house, is not based on blockchain and offers more extensive products and services compared to CBIT TM on the TassatPay TM blockchain-based instant B2B payments platform.
During the years ended December 31, 2024 and 2023, the Bank originated $4.0 billion and $2.9 billion, respectively, of commercial and industrial loans and leases, exclusive of commercial equipment finance loans and leases, multifamily and non-owner occupied commercial real estate loan originations, loans to mortgage originators via warehouse facilities and PPP loans.
During the years ended December 31, 2025 and 2024, the Bank originated $5.0 billion and $4.0 billion, respectively, of commercial and industrial loans and leases, exclusive of commercial equipment finance loans and leases, multifamily and non-owner occupied commercial real estate loan originations and loans to mortgage originators via warehouse facilities.
Customers expects to drive organic core loan and deposit growth by employing its single-point-of-contact strategy, which provide specific relationship managers or private bankers for all customers, delivering an appointment banking approach available 12 hours a day, seven days a week. This allows Customers to provide services in a personalized, convenient and expeditious manner.
Customers expects to drive organic core loan and deposit growth by employing its single-point-of-contact strategy, which provide specific relationship managers or private bankers for customers, delivering an appointment banking approach. This allows Customers to provide services in a personalized, convenient and expeditious manner.
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.
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. Customers has Special Assets Group (“SAG”) to manage classified and NPAs.
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.
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, 2025, our regulatory capital ratios reflected the full impact of the CECL transition provisions.
On June 29, 2011, for banks with assets of $10 billion or greater, such as the Bank, the Federal Reserve Board set the interchange rate cap at $0.21 per transaction and 5 basis points multiplied by the value of the transaction; • gave the FDIC substantial new authority and flexibility in assessing deposit insurance premiums, which may result in increased deposit insurance premiums for Customers in the future; • increased the deposit insurance coverage limit for insurable deposits to $250,000 generally, and removes the limit entirely for transaction accounts; • permitted banks to pay interest on business demand deposit accounts; and • prohibited banks subject to enforcement action such as a MOU from changing their charter without the approval of both their existing charter regulator and their proposed new charter regulator.
On June 29, 2011, for banks with assets of $10 billion or greater, such as the Bank, the Federal Reserve Board set the interchange rate cap at $0.21 per transaction and 5 basis points multiplied by the value of the transaction; • gave the FDIC substantial new authority and flexibility in assessing deposit insurance premiums, which may result in increased deposit insurance premiums for Customers in the future; • increased the deposit insurance coverage limit for insurable deposits to $250,000 generally, and removes the limit entirely for transaction accounts; • permitted banks to pay interest on business demand deposit accounts; and • prohibited banks subject to enforcement action such as a MOU from changing their charter without the approval of both their existing charter regulator and their proposed new charter regulator. 20 In July 2018, the Federal Reserve stated that it would no longer require bank holding companies with less than $100 billion in total consolidated assets to comply with the modified version of the liquidity coverage ratio.
Importantly, the opt-out excludes from regulatory capital not only unrealized gains and losses on available for sale debt securities, but also accumulated net gains and losses on cash-flow hedges and amounts attributable to defined benefit postretirement plans.
Importantly, the opt-out excludes from regulatory capital not only unrealized gains and losses on available for sale debt securities, but also accumulated net gains and losses on cash-flow hedges and amounts attributable to defined benefit postretirement plans. The Bank selected the opt-out election in its March 31, 2015 Call Report.
As of December 31, 2024 and 2023, Customers had $262.7 million and $205.7 million, respectively, of equipment finance leases outstanding. As of December 31, 2024 and 2023, Customers had $214.9 million and $205.7 million, respectively, of operating leases entered into under this program, net of accumulated depreciation of $95.1 million and $77.7 million, respectively.
As of December 31, 2025 and 2024, Customers had $306.5 million and $262.7 million, respectively, of equipment finance leases outstanding. As of December 31, 2025 and 2024, Customers had $303.4 million and $214.9 million, respectively, of operating leases entered into under this program, net of accumulated depreciation of $105.7 million and $95.1 million, respectively.
BANK HOLDING COMPANY REGULATION As a bank holding company, Customers Bancorp is also subject to additional regulation. The BHC Act requires the Bancorp to secure the prior approval of the Federal Reserve Board before it owns or controls, directly or indirectly, more than five percent (5%) of the voting shares or substantially all of the assets of any bank.
The BHC Act requires the Bancorp to secure the prior approval of the Federal Reserve Board before it owns or controls, directly or indirectly, more than five percent (5%) of the voting shares or substantially all of the assets of any bank.
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.
Customers had $2.5 billion and $2.3 billion of multifamily loans outstanding as of December 31, 2025 and 2024, respectively. 12 As of December 31, 2025 and 2024, Customers Bank had $15.4 billion and $13.2 billion, respectively, in commercial loans outstanding, composing approximately 91.5% and 90.1%, respectively, of its total loan portfolio, which includes loans held for sale, loans receivable, mortgage finance, at fair value, loans receivable, installment, at fair value and PPP loans.
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.
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. During 2025, the CFPB reduced its staff by over 80%.
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.
In addition, on a national level, the Bank provides financing to corporate businesses such as specialized lending, mortgage finance loans, commercial equipment financing and SBA lending. 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.
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.
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.
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).
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 proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers.
Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents. The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers.
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.
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 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 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 final rules also established a “capital conservation buffer” above the regulatory minimum capital requirements2.500% for 2019 and thereafter.
The Basel III Capital Rules also established a “capital conservation buffer” above the regulatory minimum capital requirements of 2.500% for 2019 and thereafter.
This strategy was most recently employed through the onboarding of a venture banking team that had previously originated and serviced loans acquired from the FDIC and the onboarding of 10 experienced commercial and business banking teams in New York, California and Nevada to accelerate the Bank’s deposit growth potential.
This strategy was most recently employed through the onboarding of a venture banking team that had previously originated and serviced loans acquired in 2024 and the onboarding of ten experienced commercial and business banking teams in New York, California and Nevada to accelerate the Bank’s deposit growth potential and in 2025 of seven banking teams including geographic commercial and business banking teams and national teams including sports and entertainment, title solutions and municipal finance.
Data that would be required to be made available under the rule would include transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data.
Data that would be required to be made available under the rule would include transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data. The rule is the subject of litigation, which is currently stayed while the CFPB considers revisions to the rule.
Customers Bancorp has adopted a Code of Ethics and Business Conduct that applies to its directors and officers (including its principal executive officer, principal financial officer and principal accounting officer), which is available at www.customersbank.com/investor-relations/governance-documents. In addition, any future waivers from a provision of the Code of Ethics and Business Conduct will be posted at this internet address.
Customers Bancorp also has adopted a Code of Ethics and Business Conduct that applies to its directors and officers (including its principal executive officer, principal financial officer and principal accounting officer), which is available at www.customersbank.com/investor-relations/governance-documents.
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.
As of December 31, 2025 and 2024, Customers had $1.4 billion, respectively, in consumer loans outstanding (including consumer loans held for investment and held for sale), comprising 8.5% and 9.9%, respectively, of Customers’ total loan portfolio. During the years ended December 31, 2025 and 2024, Customers purchased $347.2 million and $189.4 million of consumer loans held for investment, respectively.
The digital-forward super community bank hybrid business model enables Customers to earn interest income and generate core deposits. • Attractive low-credit risk profile. Customers has sought to maintain high asset quality and moderate credit risk by using conservative underwriting standards, maintaining a diversified loan portfolio, and participating in lending verticals where historical loss rates are extremely low.
Customers also has digital, online savings banking products that generate core deposits nationally. 10 • Attractive low-credit risk profile. Customers has sought to maintain high asset quality and moderate credit risk by using conservative underwriting standards, maintaining a diversified loan portfolio, and participating in lending verticals where historical loss rates are extremely low.
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.
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 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.
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.
Deposit Products and Other Funding Sources Customers offers a variety of deposit products to its customers, including checking accounts, savings accounts, MMDA and other deposit accounts, including fixed-rate, fixed-maturity retail time deposits ranging in terms from 30 days to five years, individual retirement accounts, and non-retail time deposits consisting of jumbo certificates greater than or equal to $100,000.
With a world-class suite of sophisticated cash management products, these private bankers deliver on Customers’ “high-tech, high-touch” strategy and provide real value to its mid-market commercial clients. 13 Deposit Products and Other Funding Sources Customers offers a variety of deposit products to its customers, including checking accounts, savings accounts, MMDA and other deposit accounts, including fixed-rate, fixed-maturity retail time deposits ranging in terms from 30 days to five years, individual retirement accounts, and non-retail time deposits consisting of jumbo certificates greater than or equal to $100,000.
Customers Bancorp will also furnish a paper copy of such filings free of charge upon request. Customers Bancorp’s filings can also be accessed at the SEC’s internet website: www.sec.gov.
Customers Bancorp will also furnish a paper copy of such filings free of charge upon request. Customers Bancorp’s filings can also be accessed at the SEC’s internet website: www.sec.gov. Customers Bancorp’s Corporate Governance Guidelines and the charters of the committees of the Board are posted on our website at www.customersbank.com/investor-relations/governance-documents.
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%.
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. 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.
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.
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.
The Bank has a diversified lending business consisting of geographically in-market commercial banking offerings such as commercial and industrial loans, commercial real estate loans, multifamily loans and consumer banking products such as residential mortgage loans.
SUPERVISION AND REGULATION GENERAL Customers Bancorp is subject to extensive regulation, examination and supervision by the Pennsylvania Department of Banking and Securities and, as a member of the Federal Reserve System, by the Federal Reserve Board.
The website addresses listed in this paragraph are provided for the information of the reader and are not intended to be active links. SUPERVISION AND REGULATION GENERAL Customers Bancorp is subject to extensive regulation, examination and supervision by the Pennsylvania Department of Banking and Securities and, as a member of the Federal Reserve System, by the Federal Reserve Board.
Furthermore, Customers anticipates additional expense synergies from the integration of its acquisitions, which it believes will enhance its financial performance. Segments Customers operates as a single reportable segment.
Furthermore, Customers anticipates additional expense synergies from the integration of its acquisitions, which it believes will enhance its financial performance. Segments Customers operates as a single reportable segment. Refer to “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” and “NOTE 23 – BUSINESS SEGMENTS” to Customers’ audited consolidated financial statements.
In 2023, Customers recruited team members that originated a venture banking loan portfolio purchased from the FDIC to service the venture-backed growth industry from seed-stage through late-stage. The newly recruited team gives clients access to the capital to grow from innovation to maturity and leverage a customized, best-in-class tech platform to support their growth.
In 2023, Customers acquired a venture banking loan portfolio, and Customers recruited team members that originated the venture banking loan portfolio to service the industries and companies where growth needs are typically provided by venture capital. This team gives clients access to the capital to grow from innovation to maturity and leverage a customized tech platform to support their growth.
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.
Customers did not purchase any consumer loans held for sale during the years ended December 31, 2025 and 2024. 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.
In October 2023, the Federal Reserve issued a proposal under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction. Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents.
The outcome of this litigation could significantly and adversely affect the fees banks can charge on debit card transactions. In October 2023, the Federal Reserve issued a proposal under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction.
The Bank has diversified lending activities that build overall franchise value and a high-tech, high-touch branch-light strategy that serves its customers through a single-point-of-contact private banking strategy with a focus on community banking businesses, including commercial and industrial and commercial real estate loans (to borrowers in Pennsylvania, New Jersey, New York City, New England and other geographies), multifamily lending, SBA lending and residential mortgage lending.
The Bank has diversified lending activities that build overall franchise value and a high-tech, high-touch, branch-light strategy that serves its customers through a single-point-of-contact private banking strategy. The Bank serves commercial businesses, through community, SBA, and private client groups.
“Tier 2,” or “qualifying supplementary,” capital is defined to include a bank’s ACL up to 1.25% of risk-weighted assets, plus certain types of preferred stock and related surplus, certain “hybrid capital instruments” and certain term subordinated debt instruments.
“Tier 2,” or “qualifying supplementary,” capital is defined to include a bank’s ACL up to 1.25% of risk-weighted assets, plus certain types of preferred stock and related surplus, certain “hybrid capital instruments” and certain term subordinated debt instruments. 18 Customers Bancorp and the Bank are each required to comply with applicable capital adequacy standards adopted by the Federal Reserve Board (the “Basel III Capital Rules”) and codified in 12 C.F.R.
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.
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. Customers’ installment loan business is a national business in which Customers originates directly or purchases installment loans through arrangements with third-party fintech companies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

163 edited+49 added−105 removed300 unchanged
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.
Biggest changeThese risks are discussed in more detail following this summary and should be read together with this summary and considered along with other information contained in this report before investing in our securities. • Risks related to the Bancorp’s banking operations: ◦ Risks related to maintaining an appropriate level of ACL; ◦ Risks related to changes in the composition of our loan portfolio including our current emphasis on commercial and industrial, including specialized lending, mortgage finance, commercial real estate, multifamily and consumer loans; ◦ Risks related to the commercial real estate market; ◦ Risks related to the impacts of changes in legislation or regulation on our New York state multifamily loan portfolio; ◦ Risks associated with our investment securities portfolio including market and credit risks and the uncertainties surrounding macroeconomic conditions; ◦ Risks associated with our lending activities and effective management of credit risks in our loan and lease portfolio; ◦ Risks associated with maintaining sufficient liquidity including our ability to gather, grow and retain our lower cost deposits and our ability to maintain a favorable deposit composition; ◦ Risks and uncertainties associated with the effectiveness of our business strategies, operations, and technology in managing growth and maintaining profitability; ◦ Risks related to changes to estimates and assumptions made by management in preparing financial statements; ◦ 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 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; 27 ◦ 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 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 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. 28 Risks Related to the Bancorp’s Banking Operations Our business is highly susceptible to credit risk.
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.
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 quality, 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.
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.
We have also made and will continue to make grants of restricted stock units and stock options with respect to shares of our common stock to our directors and certain team members.
We have also made and will continue to make grants of shares of common stock to our directors and grants of restricted stock units and stock options with respect to shares of our common stock to certain team members.
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.
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 • 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.
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.
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. 41 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.
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.
Many of our 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.
These technological advances are intended to allow us to generate additional core deposits at a lower cost than generating deposits through opening and operating branch locations. Some of our competitors may have greater resources to invest in technology, including AI, and may be better equipped to market new technology-driven products and services.
These technological advances are intended to allow us to generate additional core deposits at a lower cost than generating deposits through opening and operating branch locations. Some of our competitors may have greater resources to invest in technology, including AI, and may be better equipped to implement and market new technology-driven products and services.
These loan and deposit concentrations present unique risks and involve specialized underwriting and management as they often involve large loan balances to or deposit balances from a single customer or group of related customers. Consequently, an adverse development with respect to one credit relationship, business line or product type may adversely affect us.
These loan and deposit concentrations present unique risks and involve specialized underwriting and management as they often involve large loan balances to or deposit balances from a single customer or group of related customers. Consequently, an adverse development with respect to one credit relationship, industry, business line or product type may adversely affect us.
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.
We expect our loan and deposit activities to continue expanding beyond the Northeast and Mid-Atlantic regions to service customers across the nation. 32 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.
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.
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. We may not be able to develop and retain a strong core deposit base and other low-cost, stable funding sources.
See “ 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. ” below for further detail. Our use of third-party service providers and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention.
See “ 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. ” below for further detail. 49 Our use of third-party service providers and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention.
CubiX does not operate on a blockchain and does not utilize tokens or other digital assets and therefore there is no omnibus account maintained in connection with cubiX. The customers using cubiX are primarily concentrated in the digital currency industry, which experienced significant disruptions and bankruptcies of FTX and other participants in the digital currency industry in 2022.
CubiX does not operate on a blockchain and does not utilize tokens or other digital assets and therefore there is no omnibus account maintained in connection with cubiX. 35 The customers using cubiX are primarily concentrated in the digital currency industry, which experienced significant disruptions and bankruptcies of FTX and other participants in the digital currency industry in 2022.
As a result, our larger competitors may be able to offer additional or superior products compared to those that we will be able to provide, which would put us at a competitive disadvantage. We may lose customers seeking new technology-driven products and services to the extent we are unable to provide such products and services.
As a result, our competitors may be able to offer additional or superior products compared to those that we will be able to provide, which would put us at a competitive disadvantage. We may lose customers seeking new technology-driven products and services to the extent we are unable to provide such products and services.
If our digital currency customers withdraw deposits, we would lose a low-cost source of funds which would likely increase our funding costs and reduce our net interest income and net interest margin. These factors could have material effect on our business, financial condition and results of operations.
If our digital currency customers withdraw deposits, we would lose a low-cost source of funds and fee income, which would likely increase our funding costs and reduce our net interest income and net interest margin. These factors could have material effect on our business, financial condition and results of operations.
These recent events also have led to a greater focus by regulators and investors on liquidity of existing assets and funding sources for financial institutions, the composition of deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management.
These events also have led to a greater focus by regulators and investors on liquidity of existing assets and funding sources for financial institutions, the composition of deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management.
Many factors can lead to a finding of acting in concert, including where: (i) the shareholders are commonly controlled or managed; (ii) the shareholders are parties to an oral or written agreement or understanding regarding the acquisition, voting or transfer of control of voting securities of a bank or bank holding company; (iii) the shareholders each own stock in a bank and are also management officials, controlling shareholders, partners or trustees of another company or (iv) both a shareholder and a controlling shareholder, partner, trustee or management official of such shareholder own equity in the bank or bank holding company. 58 Our directors and executive officers can influence the outcome of shareholder votes and, in some cases, shareholders may not have the opportunity to evaluate and affect the investment decision regarding potential investment, acquisition or disposition transactions.
Many factors can lead to a finding of acting in concert, including where: (i) the shareholders are commonly controlled or managed; (ii) the shareholders are parties to an oral or written agreement or understanding regarding the acquisition, voting or transfer of control of voting securities of a bank or bank holding company; (iii) the shareholders each own stock in a bank and are also management officials, controlling shareholders, partners or trustees of another company or (iv) both a shareholder and a controlling shareholder, partner, trustee or management official of such shareholder own equity in the bank or bank holding company. 55 Our directors and executive officers can influence the outcome of shareholder votes and, in some cases, shareholders may not have the opportunity to evaluate and affect the investment decision regarding potential investment, acquisition or disposition transactions.
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.
Any damage to our reputation could have a material adverse effect on our stock price, 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.
Our growth has in the past and could in the future lead to increases in our legal, audit, administrative and financial compliance costs, which could materially and adversely affect us. 45 If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses.
Our growth has in the past and could in the future lead to increases in our legal, audit, administrative and financial compliance costs, which could materially and adversely affect us. If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses.
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.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and the effectiveness of our third-party service 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.
Evolving regulations and guidance concerning executive compensation may also impose limitations on us that affect our ability to compete successfully for executive and management talent. 51 In addition, given the current economic and financial environment, regulators may elect to alter standards or the interpretation of the standards used to measure regulatory compliance or to determine the adequacy of liquidity, certain risk management or other operational practices for financial services companies in a manner that impacts our ability to implement our strategy and could affect us in substantial and unpredictable ways and could have a material adverse effect on our business, financial condition and results of operations.
Evolving regulations and guidance concerning executive compensation may also impose limitations on us that affect our ability to compete successfully for executive and management talent. 48 In addition, given the current economic and financial environment, regulators may elect to alter standards or the interpretation of the standards used to measure regulatory compliance or to determine the adequacy of liquidity, certain risk management or other operational practices for financial services companies in a manner that impacts our ability to implement our strategy and could affect us in substantial and unpredictable ways and could have a material adverse effect on our business, financial condition and results of operations.
The Senior Notes and 6.125% Subordinated Notes are not listed on any securities exchange, and there is no active trading market for these notes. Although the 5.375% Subordinated Notes are listed on the NYSE, there is no guarantee that a trading market will develop or be maintained.
The Senior Notes and the 6.875% Subordinated Notes and 6.125% Subordinated Notes are not listed on any securities exchange, and there is no active trading market for these notes. Although the 5.375% Subordinated Notes are listed on the NYSE, there is no guarantee that a trading market will develop or be maintained.
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.
The terms of our 2.875% Senior Notes, which we refer to as the Senior Notes, and of our 6.125%, 5.375% and 6.875% Subordinated Notes, which we refer to collectively as the Subordinated Notes, generally do not prohibit us from incurring additional debt or other liabilities.
It is possible that hackers, customers or team members acting unlawfully or contrary to our policies or other individuals, could improperly access our or our third-party service providers’ systems and obtain or disclose data about our customers.
It is possible that hackers, fraudsters, customers or team members acting unlawfully or contrary to our policies or other individuals, could improperly access our or our third-party service providers’ systems and obtain or disclose data about our customers.
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.
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. 39 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.
We believe that the implementation of our strategy will depend in large part on the skills of our executive management team, and our ability to motivate and retain these and other key personnel.
We believe that the implementation of our strategy will depend in large part on the skills of our executive management team, and our ability to recruit, motivate and retain these and other key personnel.
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.
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. 37 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.
We have incurred debt and may incur additional debt in the future, and that debt may also be sensitive to interest rates and any increase in interest rates could materially and adversely affect us.
We have incurred debt and expect to incur additional debt in the future, and that debt may also be sensitive to interest rates and any increase in interest rates could materially and adversely affect us.
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.
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 fee income and our business, financial condition, results of operations and growth strategy could be adversely impacted.
This same risk exists on our other technology and processing systems, and wire transfer and automated clearing house (ACH) operations that are outsourced to third-party service providers. The importance of cubiX means that any technological problems in its functionality may have a material adverse effect on Customers’ operations, business model and growth strategy.
This same risk exists on our other technology and processing systems, and wire transfer and automated clearing house (ACH) operations that are outsourced to third-party service providers. The importance of cubiX means that any technological or operational problems in its functionality may have a material adverse effect on Customers’ operations, business model and growth strategy.
Certain of our third-party service providers have experienced performance issues, financial difficulties (including bankruptcy) and staff shortages, and others will in the future. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions.
Certain of our third-party service providers have experienced performance issues, financial difficulties (including bankruptcy) and staff shortages, and we expect that others will in the future. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions.
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.
If any regulatory agency’s assessment of the quality of our assets, operations, compliance program, 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.
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.
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. 38 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.
They increase our cost of doing business and, ultimately, may prevent us from making certain loans and cause us to reduce the average percentage rate or the points and fees on loans that we do make. 55 Loans that we make through certain federal programs are dependent on the Federal Government’s continuation and support of these programs and on our compliance with their requirements .
They increase our cost of doing business and, ultimately, may prevent us from making certain loans and cause us to reduce the average percentage rate or the points and fees on loans that we do make. 52 Loans that we make through certain federal programs are dependent on the Federal Government’s continuation and support of these programs and on our compliance with their requirements .
Thus, holders of our common stock bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings will negatively affect the value of our common stock. 57 Future issuances of debt securities, which would rank senior to our common stock upon our liquidation, and future issuances of equity securities, which would dilute the holdings of our existing holders of common stock and may be senior to our common stock for the purposes of making distributions, periodically or upon liquidation, may negatively affect the market price of our common stock.
Thus, holders of our common stock bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings will negatively affect the value of our common stock. 54 Future issuances of debt securities, which would rank senior to our common stock upon our liquidation, and future issuances of equity securities, which would dilute the holdings of our existing holders of common stock and may be senior to our common stock for the purposes of making distributions, periodically or upon liquidation, may negatively affect the market price of our common stock.
The harm to our business could be even greater if such an event occurs during a period of disproportionately heavy demand for our products or services or traffic on our systems or networks. Negative public opinion regarding us could adversely affect our business, results of operations, and financial condition.
The harm to our business could be even greater if such an event occurs during a period of disproportionately heavy demand for our products or services or traffic on our systems or networks. Negative public opinion regarding us could adversely affect our stock price, business, results of operations, and financial condition.
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.
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 9.88% of the outstanding common stock.
Management regularly reviews and seeks to improve our internal controls, including annual review of key policies and procedures and annual review and testing of key internal controls over financial reporting.
Management regularly reviews and seeks to improve our internal controls, including annual reviews of key policies and procedures and annual reviews and testing of key internal controls over financial reporting.
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.
Although Executive Chairman and our President and CEO 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.
We intend to grow in these new markets and enter additional markets in the future. Nevertheless, as of December 31, 2024, our loan and deposit activities remained largely based in the Northeast and Mid-Atlantic regions. As a result, our financial performance depends in part upon economic conditions in these regions.
We intend to grow in these new markets and enter additional markets in the future. Nevertheless, as of December 31, 2025, our loan and deposit activities remained largely based in the Northeast and Mid-Atlantic regions. As a result, our financial performance depends in part upon economic conditions in these regions.
Our strategic model is dependent upon relationship managers and private bankers who act as a customer’s single point of contact to us. Many of our specialized lending verticals rely on our relationship managers’ expertise and relationships in their respective industries.
Our strategic model is dependent upon relationship managers and private bankers who act as a customer’s single point of contact with us. Many of our specialized lending verticals rely on our relationship managers’ expertise and relationships in their respective industries.
Management makes various assumptions and judgments about the collectibility of our loan and lease portfolio, including the creditworthiness of our borrowers and the probability of our borrowers making payments, as well as the value of real estate and other assets serving as collateral for the repayment of many of our loans and leases.
Management makes various assumptions and judgments about the collectability of our loan and lease portfolio, including the creditworthiness of our borrowers and the probability of our borrowers making payments, as well as the value of real estate and other assets serving as collateral for the repayment of many of our loans and leases.
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.
Although we made profit for the years 2011 through 2025, 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.
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.
Failure to perform in any of these areas could significantly weaken our competitive position, which could materially and adversely affect us. 34 In addition, the financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services including artificial intelligence, internet services, cryptocurrencies and payment systems.
In addition to confidential information regarding our customers, team members and others, we compile, process, transmit and store proprietary, non-public information concerning our own business, operations, plans and strategies. In some cases, this confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on our behalf.
In addition to confidential information regarding our customers, team members, third party service providers and others, we compile, process, transmit and store proprietary, non-public information concerning our own business, operations, plans and strategies. In some cases, this confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on our behalf.
Reputational harm, including as a result of our actual or alleged conduct or public opinion of the financial services industry generally, could adversely affect our business, results of operations, and financial condition.
Reputational harm, including as a result of our actual or alleged conduct or public opinion of the financial services industry generally, could adversely affect our stock price, business, results of operations, and financial condition.
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.
As a result, the 2.875% Senior Notes, 5.375% Subordinated Notes and 6.875% Subordinated 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.
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.
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, 5.375% Subordinated Notes and 6.875% Subordinated 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.
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.
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, funding of terrorism and other illicit activities and ransomware or other scams by our customers; • heightened risks to digital currency businesses, such as digital currency exchanges, of fraud, 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, including our generation of fee income, and negatively impact our business; and • the maintenance and development of the software protocol of the digital currency networks.
Our acquisition activities could involve a number of additional risks, including the risks of: • incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating the terms of potential transactions, resulting in our attention being diverted from the operation of our existing business; • using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • being potentially exposed to unknown or contingent liabilities of banks and businesses we acquire; • being required to expend time and expense to integrate the operations and personnel of the combined businesses; • experiencing higher operating expenses relative to operating income from the new operations; • creating an adverse effect on our results of operations; • losing key team members and customers as a result of an acquisition that is poorly received; and • incurring significant problems relating to the conversion of the financial and customer data of the entity being acquired into our financial and customer product systems.
Our acquisition activities could involve a number of additional risks, including the risks of: • incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating the terms of potential transactions, resulting in our attention being diverted from the operation of our existing business; • using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; • being potentially exposed to unknown or contingent liabilities of banks and businesses we acquire; • being required to expend time and expense to integrate the operations and personnel of the combined businesses; • experiencing higher operating expenses relative to operating income from the new operations; • creating an adverse effect on our results of operations; • losing key team members and customers as a result of an acquisition that is poorly received; and • incurring significant problems relating to the conversion of the financial and customer data of the entity being acquired into our financial and customer product systems. 42 Additionally, in evaluating potential acquisition opportunities, we may seek to acquire failed banks or assets of failed banks through FDIC-assisted acquisitions.
The risk of fraud associated with this type of lending includes, but is not limited to, settlement process risks, the risk of financing nonexistent loans or fictitious mortgage loan transactions, or the risk that collateral delivered is fraudulent or non-existent, creating a risk of loss of the full amount financed on the underlying residential mortgage loan, or in the settlement processes.
The risk of fraud associated with this type of lending includes, but is not limited to, settlement process risks, the risk of financing nonexistent loans or fictitious mortgage loan transactions, the risk that collateral delivered is fraudulent or non-existent, or the risk that the value of such collateral is artificially inflated, creating a risk of loss of the full amount financed on the underlying residential mortgage loan, or in the settlement processes.
We may not successfully implement improvements to, or integrate, our management information and control systems, credit underwriting and administration, internal and disclosure controls, and procedures and processes in an efficient or timely manner and may discover deficiencies in existing systems and controls.
We may not successfully implement improvements to, or integrate, our management information and control systems, credit underwriting and administration, new products and services, internal and disclosure controls, and procedures and processes in an efficient or timely manner and may discover deficiencies in existing systems and controls.
Because different types of assets and liabilities may react differently and at different times to market interest-rate changes, changes in interest rates can increase or decrease our net interest income. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a period, an increase in interest rates would reduce net interest income.
Because different types of assets and liabilities may react differently and at different times to market interest-rate changes, changes in interest rates can increase or decrease our net interest income. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a period (i.e., liability sensitive), an increase in interest rates would reduce net interest income.
While loan growth has been strong, and our loan balances increased in 2024, if we are unsuccessful in diversifying our loan originations, or if we do not grow the business lines, our results of operations and financial condition could be negatively impacted. We may not be able to effectively manage our growth.
While loan and deposit growth has historically been strong, and our loan and deposit balances increased in 2025, if we are unsuccessful in diversifying our loan and deposit originations, or if we do not grow the business lines, our results of operations and financial condition could be negatively impacted. We may not be able to effectively manage our growth.
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.
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, 2022, with the exception of California, New York State, and New York City.
Competitors’ technology-driven products and services and improvements to such products and services may adversely affect our ability to generate core deposits through mobile banking. Our organic growth strategy focuses on, among other things, expanding market share through our “high-tech” model, which includes remote account opening, remote deposit capture, mobile and digital banking and instant payments.
Competitors’ technology-driven products and services and improvements to such products and services may adversely affect our ability to generate core deposits through mobile banking. Our organic growth strategy focuses on, among other things, expanding market share through our “high-tech” model, which includes remote account opening, remote deposit capture, mobile and digital banking, instant payments and customers system integrations (including APIs).
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.
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. Unresolved Staff Comments None.
Accordingly, the loss of service of one or more of our executive officers or key personnel could reduce our ability to successfully implement our growth strategy and materially and adversely affect us.
Accordingly, the loss of service of one or more of our executive officers or key personnel, or our inability to recruit and retain key personnel, could reduce our ability to successfully implement our growth strategy and materially and adversely affect us.
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.
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 and our specialized product offerings, such as cubiX. Many of our competitors provide similar services, and others may replicate our model.
Any inability to prevent security breaches could damage our relationships with our customers, cause a decrease in transactions by individual cardholders, expose us to liability for unauthorized purchases and subject us to network fines. These claims also could result in protracted and costly litigation.
Any inability to prevent security breaches could damage our relationships with our customers, cause a decrease in transactions by customers, expose us to liability for unauthorized purchases, payments or other transactions and subject us to network fines. These claims also could result in protracted and costly litigation.
Adverse changes in any of these factors could be detrimental to our business. Our business is also significantly affected by monetary and related policies of the U.S. federal government, its agencies and government-sponsored entities. Adverse changes in economic factors or U.S. government policies could have a negative effect on us.
Our business is also significantly affected by monetary and related policies of the U.S. federal government, its agencies and government-sponsored entities. Adverse changes in economic factors or U.S. government policies could have a negative effect on us.
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.
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 online presence.
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.
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, 2025, we had PPP loans with outstanding balances of $4.7 million.
If we experience difficulties with the development of new business activities or the integration process of acquired businesses, the anticipated benefits of any particular acquisition may not be realized fully, or at all, or may take longer to realize than expected.
If we experience difficulties with the development of new business activities or the integration process of acquired businesses or newly hired teams, the anticipated benefits of any particular new activity may not be realized fully, or at all, or may take longer to realize than expected.
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.
Risks related to Macroeconomic Conditions, Pandemics, Climate Change and Geopolitical Conflicts Adverse developments 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.
In addition, our ability to expand into new business lines, such as specialized lending and digital banking including our proprietary B2B instant payments platform, cubiX, and Banking-as-a-Service offerings, are highly dependent upon our ability to attract and retain key personnel.
In addition, our ability to expand into new business lines or grow existing business lines, such as specialized lending, digital banking, including our proprietary B2B instant payments platform, cubiX, and Banking-as-a-Service offerings, are highly dependent upon our ability to identify, recruit and retain key personnel.
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.
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 and increasingly complex product and service offerings; • 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; 43 • identify, implement and offer key products and services; • successfully integrate newly-hired teams and key personnel; • 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.
As of December 31, 2024, $1.0 billion, or 35.8%, of our total time deposits, are scheduled to mature through December 31, 2025. If interest rates increase, whether due to changes in inflation, monetary policy, competition or other factors, we would expect to pay higher interest rates on deposits, which would increase our funding costs and compress our net interest margin.
As of December 31, 2025, $1.7 billion, or 51.3%, of our total time deposits, are scheduled to mature through December 31, 2026. If interest rates increase, whether due to changes in inflation, monetary policy, competition or other factors, we would expect to pay higher interest rates on deposits, which would increase our funding costs and compress our net interest margin.
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.
Because the 5.375% Subordinated Notes and 6.875% 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. 57 The Senior Notes and Subordinated Notes may not have an active trading market.
We could also become the target of various cyberattacks as a result of our focus on the digital currency industry. The technology underlying cubiX may not function properly, which may have a material impact on Customers’ operations and financial condition.
We could also become the target of various cyberattacks as a result of our focus on the digital currency industry. The technology underlying cubiX may not function properly, or the personnel operating cubiX may not operate it correctly, either of which may have a material impact on Customers’ operations and financial condition.
As of December 31, 2024, our total multifamily exposure in New York State was approximately $1.1 billion, of which approximately $714.0 million, or 68% was provided for loans to properties with 50% or more rent-regulated units, primarily in New York City.
As of December 31, 2025, our total multifamily exposure in New York State was approximately $1.2 billion, of which approximately $849.0 million, or 69% was provided for loans to properties with 50% or more rent-regulated units, primarily in New York City.
Customers Bank has no loans to any customers in the digital currency industry. However, continued disruptions in the digital currency industry could have adverse effects on Customers’ business, reputation, financial condition and results of operations. 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.
Customers Bank’s loans to customers in the digital currency industry are not significant. However, disruptions in the digital currency industry could have adverse effects on Customers’ business, reputation, financial condition and results of operations. 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.
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.
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 an ongoing risk.
Weak economic conditions may be characterized by deflation or stagflation, instability in debt and equity capital markets, a lack of liquidity and/or depressed prices in the secondary market for mortgage loans, increased delinquencies on loans, residential and commercial real estate price declines and lower home sales and commercial activity.
Weak economic conditions may be characterized by deflation or stagflation, instability in debt and equity capital markets, a lack of liquidity and/or depressed prices in the secondary market for mortgage loans, increased delinquencies on loans, residential and commercial real estate price declines and lower home sales and commercial activity and similar conditions or additional adverse changes could be detrimental to our business.
We regularly collect, process, transmit and store significant amounts of confidential information regarding our customers, team members and others.
We regularly collect, process, transmit and store significant amounts of confidential information regarding our customers, team members, third party service providers and others.
As of December 31, 2024, our directors and executive officers, as a group, owned a total of 2,331,998 shares of common stock and exercisable options to purchase up to an additional 625,123 shares of common stock, which potentially gives them, as a group, the ability to control approximately 9.43% of the outstanding common stock.
As of December 31, 2025, our directors and executive officers, as a group, owned a total of 2,753,108 shares of common stock and exercisable options to purchase up to an additional 625,123 shares of common stock, which potentially gives them, as a group, the ability to control approximately 9.88% of the outstanding common stock.
As of December 31, 2024, Customers had $1.4 billion in consumer loans outstanding, or 9.9% of the total loan and lease portfolio, which includes loans held for sale and loans receivable, mortgage finance, at fair value, compared to $1.7 billion, or 13.2% of the total loan and lease portfolio, as of December 31, 2023.
As of December 31, 2025, Customers had $1.4 billion in consumer loans outstanding, or 8.5% of the total loan and lease portfolio, which includes loans held for sale, loans receivable, mortgage finance, at fair value, and loans receivable, installment, at fair value, compared to $1.4 billion, or 9.9% of the total loan and lease portfolio, as of December 31, 2024.
As of December 31, 2024, we had $13.2 billion in commercial loans outstanding, approximately 90.1% of our total loan and lease portfolio, which includes loans held for sale and loans receivable, mortgage finance, at fair value, as compared to $11.5 billion, or 86.8% of the total loan and lease portfolio, as of December 31, 2023. 32 We are subject to risks arising from conditions in the commercial real estate market.
As of December 31, 2025, we had $15.4 billion in commercial loans outstanding, approximately 91.5% of our total loan and lease portfolio, which includes loans held for sale, loans receivable, mortgage finance, at fair value, and loans receivable, installment, at fair value, as compared to $13.2 billion, or 90.1% of the total loan and lease portfolio, as of December 31, 2024. 30 We are subject to risks arising from conditions in the commercial real estate market.
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.
These developments illustrate that CSR-based investing has become a divisive political issue. 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.
Wholesale funding can cost more than deposits generated from our traditional branch system and customer relationships and is subject to certain practical limits such as our liquidity policy limits, our available collateral for FHLB and FRB borrowing capacity and Federal funds line limits with our lenders.
Our loan to deposit ratio was 81% at December 31, 2025. Wholesale funding can cost more than deposits generated from our traditional branch system and customer relationships and is subject to certain practical limits such as our liquidity policy limits, our available collateral for FHLB and FRB borrowing capacity and Federal funds line limits with our lenders.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe 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.
Biggest changeThe Customers’ Directors’ Risk & Compliance Committee receives a quarterly Cybersecurity Risk Indicators report from the CISO, which provides information on cyber risk, vulnerabilities, disaster recovery testing, team member security awareness training, and Third-Party cybersecurity risk.
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.
An annual report titled, “The State of Security” is compiled and shared with the Customers’ Directors’ Risk & Compliance 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.
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.
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 & Compliance 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 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
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 .
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.
Cybersecurity risk management is an integral element of Customers’ overall risk management strategies. 58 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, identity governance, application security, cybersecurity operations, and workforce training and preparedness.
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.
The Program has been designed to conform to the ISO 27001 standard, NIST Cyber Security Framework 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.
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.
Our Program is ISO 27001 certified and is audited annually by an external accredited ISO 27001 certification body. Annually, Customers also achieves 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.
Our 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.
Our 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 Information Security Department for Customers reports to the Chief Information Officer and is overseen by the Customers’ Directors Risk & Compliance Committee. Our Program is led by the CISO.
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.
This training includes monthly phishing exercises and annual cybersecurity training required by all team members. The Information Security Department 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.
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.
The Customers’ IT Risk Assessment and NIST Cyber Security Framework assessment are presented annually to the Customers’ Directors’ Risk & Compliance Committee and Board of Directors, identifying Customers’ cybersecurity risk posture, with recommendations for reduction as deemed appropriate by the Customers’ Directors’ Risk & Compliance Committee and Board of Directors.
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The FFIEC Cybersecurity Assessment was phased out on August 31, 2025, with Customers introducing an annual NIST Cyber Security Framework 2.0 assessment in its place.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Customers leases its Corporate headquarters located at 701 Reading Avenue, West Reading, PA 19611, and its Bank headquarters at 40 General Warren Boulevard, Malvern, PA 19355. Customers also leases all of its branches, limited purpose, and administrative office properties from third parties. Customers believes that its offices are sufficient for its present operations. Item 3.
Biggest changeItem 2. Properties Customers leases its Corporate headquarters located at 701 Reading Avenue, West Reading, PA 19611, and its Bank headquarters at 40 General Warren Boulevard, Malvern, PA 19355. Customers also leases all of its branches, limited purpose, and administrative office properties from third parties. Customers believes that its offices are sufficient for its present operations. 59 Item 3.
Legal 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
Legal 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. 60 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 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.
Biggest changeThe shares of Series F Preferred Stock redeemed during the three months ended December 31, 2025 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, 2025 — $ — — — November 1 - November 30, 2025 — — — — December 1 - December 31, 2025 3,400,000 25.00 3,400,000 — Total 3,400,000 $ 25.00 3,400,000 — Common Stock Performance Graph The following graph compares the performance of our common stock over the period from December 31, 2020 to December 31, 2025, to that of the total return index for the SNL Mid-Atlantic U.S.
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.
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, 2020 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.
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: Total Return Performance Item 6. [Reserved] 62
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.
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 24, 2026, there were approximately 264 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 will be at the discretion of the Company and will comply with all applicable regulatory limitations.
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. Customers had purchased all shares authorized under the 2024 Share Repurchase Program.
Beginning January 1, 2015, the ability to pay dividends and the amounts that can be paid will be limited to the extent the Bank’s capital ratios do not exceed the minimum required levels plus 250 basis points, as these requirements were phased in through January 1, 2019.
The ability to pay dividends and the amounts that can be paid will be limited to the extent the Bank’s capital ratios do not exceed the minimum required levels plus 250 basis points.
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).
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).
Added
Refer to “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.
Added
On February 11, 2026, the Board of Directors of Customers Bancorp authorized a new common stock repurchase program, the 2026 Share Repurchase Program, to repurchase up to $100.0 million of the Company’s common stock. The term of the 2026 Share Repurchase Program will extend for one year from February 12, 2026, unless earlier terminated.
Added
Purchases of shares under the 2026 Share Repurchase Program may be executed through open market purchases, privately negotiated transactions, through the use of Rule 10b5-1 plans, or otherwise.
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. 61 On December 15, 2025, Customers redeemed all of the outstanding shares of Series F Preferred Stock for an aggregate payment of $85 million, at a redemption price of $25.00 per share.

Item 7. Management's Discussion & Analysis

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

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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.
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. 68 For the Years Ended December 31, For the Years Ended December 31, 2025 2024 2025 vs. 2024 (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 $ 4,065,804 $ 177,387 4.36 % $ 3,597,260 $ 190,842 5.31 % $ (36,582) $ 23,127 $ (13,455) Investment securities (1) 2,942,386 139,790 4.75 % 3,650,320 180,291 4.94 % (6,703) (33,798) (40,501) Loans and leases: Commercial and industrial: Specialized lending loans and leases (2) 7,092,259 524,009 7.39 % 5,637,189 483,052 8.57 % (72,510) 113,467 40,957 Other commercial and industrial loans (2) 1,499,021 117,590 7.84 % 1,564,167 102,001 6.52 % 19,975 (4,386) 15,589 Mortgage finance loans 1,443,183 69,417 4.81 % 1,192,827 62,344 5.23 % (5,290) 12,363 7,073 Multifamily loans 2,336,288 102,866 4.40 % 2,116,168 86,263 4.08 % 7,137 9,466 16,603 Non-owner occupied commercial real estate loans 1,638,695 95,350 5.82 % 1,412,201 83,484 5.91 % (1,293) 13,159 11,866 Residential mortgages 540,097 25,611 4.74 % 526,133 24,046 4.57 % 913 652 1,565 Installment loans 925,745 99,505 10.75 % 1,104,470 106,340 9.63 % 11,536 (18,371) (6,835) Total loans and leases (3) 15,475,288 1,034,348 6.68 % 13,553,155 947,530 6.99 % (43,331) 130,149 86,818 Other interest-earning assets 138,851 8,062 5.81 % 114,983 9,171 7.98 % (2,789) 1,680 (1,109) Total interest-earning assets 22,622,329 1,359,587 6.01 % 20,915,718 1,327,834 6.35 % (73,294) 105,047 31,753 Non-interest-earning assets 718,415 518,472 Total assets $ 23,340,744 $ 21,434,190 Liabilities Interest checking accounts $ 5,040,107 187,421 3.72 % $ 5,660,890 248,400 4.39 % (35,483) (25,496) (60,979) Money market deposit accounts 4,202,317 161,531 3.84 % 3,559,362 159,598 4.48 % (24,587) 26,520 1,933 Other savings accounts 1,382,787 52,566 3.80 % 1,595,357 73,947 4.64 % (12,316) (9,065) (21,381) Certificates of deposit 2,967,454 137,615 4.64 % 2,434,622 121,367 4.99 % (8,962) 25,210 16,248 Total interest-bearing deposits (4) 13,592,665 539,133 3.97 % 13,250,231 603,312 4.55 % (79,270) 15,091 (64,179) Borrowings 1,465,852 69,965 4.77 % 1,414,583 70,118 4.96 % (2,692) 2,539 (153) Total interest-bearing liabilities 15,058,517 609,098 4.04 % 14,664,814 673,430 4.59 % (82,083) 17,751 (64,332) Non-interest-bearing deposits (4) 6,069,665 4,807,647 Total deposits and borrowings 21,128,182 2.88 % 19,472,461 3.46 % Other non-interest-bearing liabilities 244,480 217,172 Total liabilities 21,372,662 19,689,633 Shareholders’ equity 1,968,082 1,744,557 Total liabilities and shareholders’ equity $ 23,340,744 $ 21,434,190 Net interest income 750,489 654,404 $ 8,789 $ 87,296 $ 96,085 Tax-equivalent adjustment 1,437 1,556 Net interest earnings $ 751,926 $ 655,960 Interest spread 3.13 % 2.89 % Net interest margin 3.32 % 3.14 % Net interest margin tax equivalent (5) 3.32 % 3.15 % (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.
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 included a detailed discussion of this process in “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” to Customers’ audited consolidated financial statements, as well as several tables describing its ACL in “NOTE 7 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES” to Customers’ audited consolidated financial statements.
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 on Series E and F Preferred Stock, plus 5.14% and 4.762%, respectively, beginning with dividends declared on October 25, 2023.
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 on Series E Preferred Stock and F Preferred Stock, plus 5.14% and 4.762%, respectively, beginning with dividends declared on October 25, 2023.
During the year ended December 31, 2024, Customers sold $202.5 million of personal and other installment loans that were classified as held for sale, inclusive of $53.0 million of personal 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, 2024, Customers sold $202.5 million of personal and other installment loans that were classified as held for sale, inclusive of $53.0 million of 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 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.
During 2024 and 2023, 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 Preferred Stock and Series D Preferred Stock.
This resulting difference is not intended to represent an expected increase in ACL levels since (i) Customers may use a weighted approach applied to multiple economic scenarios for its ACL process, (ii) the highly uncertain economic environment, (iii) the difficulty in predicting inter-relationships between macroeconomic variables used in various economic scenarios, and (iv) the sensitivity analysis does not account for any qualitative adjustments incorporated by Customers as part of its overall ACL framework. 71 There is no certainty that Customers’ ACL will be appropriate over time to cover losses in our portfolio as economic and market conditions may ultimately differ from our reasonable and supportable forecast.
This resulting difference is not intended to represent an expected increase in ACL levels since (i) Customers may use a weighted approach applied to multiple economic scenarios for its ACL process, (ii) the highly uncertain economic environment, (iii) the difficulty in predicting inter-relationships between macroeconomic variables used in various economic scenarios, and (iv) the sensitivity analysis does not account for any qualitative adjustments incorporated by Customers as part of its overall ACL framework. 65 There is no certainty that Customers’ ACL will be appropriate over time to cover losses in our portfolio as economic and market conditions may ultimately differ from our reasonable and supportable forecast.
Through its initial capitalization and subsequent offerings, Customers believes it has continued to maintain a strong capital position. Since first quarter 2015, Customers Bank’s board of directors has declared a quarterly cash dividend to the Bank’s sole shareholder, Customers Bancorp.
Through its initial capitalization and subsequent offerings, Customers believes it has continued to maintain a strong capital position. Since first quarter 2015 through first quarter 2025, Customers Bank’s board of directors has declared a quarterly cash dividend to the Bank’s sole shareholder, Customers Bancorp.
Customers has established credit policies and procedures, seeks the consistent application of those policies and procedures across the organization and adjusts policies as appropriate for changes in market conditions and applicable regulations. 93 Problem Loan Identification and Management To facilitate the monitoring of credit quality within the commercial and industrial, multifamily, commercial real estate and construction portfolios and for purposes of analyzing historical loss rates used in the determination of the ACL for individually assessed loans, Customers utilizes the following categories of risk ratings: pass (there are six risk ratings for pass loans), special mention, substandard, doubtful or loss.
Customers has established credit policies and procedures, seeks the consistent application of those policies and procedures across the organization and adjusts policies as appropriate for changes in market conditions and applicable regulations. 86 Problem Loan Identification and Management To facilitate the monitoring of credit quality within the commercial and industrial, multifamily, commercial real estate and construction portfolios and for purposes of analyzing historical loss rates used in the determination of the ACL for individually assessed loans, Customers utilizes the following categories of risk ratings: pass (there are six risk ratings for pass loans), special mention, substandard, doubtful or loss.
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 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 2026 is highly uncertain.
Cash flows provided by (used in) financing activities Cash provided by financing activities of $800.6 million for the year ended December 31, 2024 primarily resulted from a net increase in deposits of $933.7 million, proceeds from long-term borrowed funds from the FHLB and the FRB of $155.0 million and a net increase in short-term borrowed funds from the FHLB of $100.0 million, partially offset by repayments of long-term borrowed funds from the FHLB and the FRB of $325.0 million, repayments of other long-term borrowings of $25.0 million, purchases of treasury stock of $19.2 million and dividends paid on preferred stock of $15.1 million.
Cash provided by financing activities of $800.6 million for the year ended December 31, 2024 primarily resulted from a net increase in deposits of $933.7 million, proceeds from long-term borrowed funds from the FHLB and the FRB of $155.0 million and a net increase in short-term borrowed funds from the FHLB of $100.0 million, partially offset by repayments of long-term borrowed funds from the FHLB and the FRB of $325.0 million, repayments of other long-term borrowings of $25.0 million, purchases of treasury stock of $19.2 million and dividends paid on preferred stock of $15.1 million.
The ACL may be affected materially by a variety of qualitative factors that Customers considers to reflect its current judgment of various events and risks that are not measured in our statistical procedures, including uncertainty related to the economic forecasts used in the modelled credit loss estimates, nature and volume of the loan and lease portfolio, credit underwriting policy exceptions, peer comparison, industry data, and model and data limitations.
The ACL may be affected materially by a variety of qualitative factors that Customers considers to reflect its current judgment of various events and risks that are not measured in our statistical procedures, including uncertainty related to the economic forecasts used in the modeled credit loss estimates, nature and volume of the loan and lease portfolio, credit underwriting policy exceptions, peer comparison, industry data, and model and data limitations.
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.
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, 2025 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.
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.
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. 63 Critical Accounting Policies and Estimates Customers has adopted various accounting policies that govern the application of U.S.
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.
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, 2025, the Bank and the Bancorp were in compliance with the Basel III requirements.
The loans to borrowers experiencing financial difficulty that were modified during the years ended December 31, 2024 and 2023, respectively, that subsequently defaulted were not material. Customers’ ACL is influenced by loan level characteristics that inform the assessed propensity to default.
The loans to borrowers experiencing financial difficulty that were modified during the years ended December 31, 2025 and 2024, respectively, that subsequently defaulted were not material. Customers’ ACL is influenced by loan level characteristics that inform the assessed propensity to default.
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.
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, 2025.
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.
There can be no assurance that Customers will realize gains from sales of investment securities in 2026, given the significant uncertainty in the capital markets and fluctuations in our funding needs, which may impact Customers’ investment strategy.
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.
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, 2025.
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.
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, 2025 and 2024.
The interim final rule allows banking organizations to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. Customers has elected to adopt the interim final rule, which is reflected in the regulatory capital data presented below.
The interim final rule allowed banking organizations to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. Customers elected to adopt the interim final rule, which is reflected in the regulatory capital data presented below.
Most recently, the Federal Reserve has maintained the federal funds rate, and stated that they would assess incoming data, the evolving outlook and the balance of risks in further lowering the federal funds rate. Significant uncertainties exist as to the extent and timing of future rate cuts and their effects on the economic conditions.
The Federal Reserve has stated that they would assess incoming data, the evolving outlook and the balance of risks in further lowering the federal funds rate. Significant uncertainties exist as to the extent and timing of future rate cuts and their effects on the economic conditions.
It consists primarily of mortgage-backed securities and collateralized mortgage obligations guaranteed by agencies of the United States government, asset-backed securities, collateralized loan obligations, commercial mortgage-backed securities, private label collateralized mortgage obligations, corporate notes and certain equity securities.
It consists primarily of mortgage-backed securities and collateralized mortgage obligations guaranteed by agencies of the United States government, asset-backed securities, private label collateralized mortgage obligations, corporate notes and certain equity securities.
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.
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. 83 Customers’ commercial real estate, commercial and residential construction, consumer residential and owner occupied commercial and industrial loan types have real estate as collateral (collectively, “the real estate portfolio”), primarily in the form of a first lien position.
(2) Includes $(1.6) million and $3.2 million of unamortized basis adjustments from interest rate swaps designated as fair value hedges of long-term advances from FHLB at December 31, 2024 and 2023, respectively. Refer to “NOTE 20 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES” to Customers’ audited consolidated financial statements for additional information.
(2) Includes $5.1 million and $(1.6) million of unamortized basis adjustments from interest rate swaps designated as fair value hedges of long-term advances from FHLB at December 31, 2025 and 2024, respectively. Refer to “NOTE 20 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES” to Customers’ audited consolidated financial statements for additional information.
At December 31, 2024, all of Customers’ mortgage finance loans were current in terms of payment. 88 Customers is subject to the risks associated with such lending, including, but not limited to, the risks of fraud, bankruptcy and default of the mortgage banker or of the underlying residential borrower, any of which could result in credit losses.
At December 31, 2025, all of Customers’ mortgage finance loans were current in terms of payment. 81 Customers is subject to the risks associated with such lending, including, but not limited to, the risks of fraud, bankruptcy and default of the mortgage banker or of the underlying residential borrower, any of which could result in credit losses.
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.
Our loan to deposit ratio was 81% at December 31, 2025. 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.
Deposits are primarily obtained from Customers’ geographic service area and nationwide through our single point of contact relationship managers, our branchless digital banking products, our white label relationship, deposit brokers, listing services and other relationships. In April 2024, Customers onboarded 10 experienced commercial and business banking teams in New York, California and Nevada to accelerate the Bank’s deposit growth potential.
Deposits are primarily obtained from Customers’ geographic service area and nationwide through our single point of contact relationship managers, our branchless digital banking products, deposit brokers, listing services and other relationships. In 2024, Customers onboarded ten experienced commercial and business banking teams in New York, California and Nevada to accelerate the Bank’s deposit growth potential.
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.
For the comparison of the years ended December 31, 2024 and 2023, 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, 2024, filed with the SEC on February 28, 2025.
To determine the ACL as of December 31, 2023, Customers utilized Moody’s December 2023 Baseline forecast to generate its modelled expected losses and considered Moody’s other alternative economic forecast scenarios to qualitatively adjust the modelled ACL by loan portfolio in order to reflect management’s reasonable expectations of current and future economic conditions.
To determine the ACL as of December 31, 2024, Customers utilized Moody’s December 2024 Baseline forecast to generate its modeled expected losses and considered Moody’s other alternative economic forecast scenarios to qualitatively adjust the modeled ACL by loan portfolio in order to reflect management’s reasonable expectations of current and future economic conditions.
Customers recorded a provision for credit losses of $3.6 million and $3.8 million on certain debt securities available for sale during the years ended December 31, 2024 and 2023, respectively. 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.
Customers recorded a provision for credit losses of $20.7 million and $3.6 million on certain debt securities available for sale during the years ended December 31, 2025 and 2024, respectively. 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.
Customers continues to monitor the impact of the U.S. banking system weaknesses, the military conflicts between Russia and Ukraine and in the Middle East, inflation, and monetary and fiscal policy measures on the U.S. economy and, if pace of the expected recovery is worse than expected, further meaningful provisions for credit losses could be required.
Customers continues to monitor the impact of the military conflicts between Russia and Ukraine and in the Middle East, high tariffs, inflation, and monetary and fiscal policy measures on the U.S. economy and, if pace of the expected recovery is worse than expected, further meaningful provisions for credit losses could be required.
(3) Customers Bancorp has the ability to call the subordinated notes, in whole, or in part, at a redemption price equal to 100% of the principal balance at certain times on or after December 30, 2029. (4) The subordinated notes will bear an annual fixed rate of 6.125% until June 26, 2024.
(4) Customers Bancorp has the ability to call the subordinated notes, in whole, or in part, at a redemption price equal to 100% of the principal balance at certain times on or after December 30, 2029. (5) The subordinated notes had an annual fixed rate of 6.125% until June 26, 2024.
LOANS AND LEASES Existing lending relationships are primarily with small and middle market businesses and individual consumers primarily 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 nationally for certain loan and deposit products.
Existing lending relationships are primarily with small and middle market businesses and individual consumers primarily 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 nationally for certain loan and deposit products, such as the portfolio of specialized lending loans and leases and mortgage finance loans.
Cash flows provided by (used in) investing activities Cash used in investing activities of $1.0 billion for the year ended December 31, 2024 primarily resulted from a net increase in loans and leases, excluding mortgage finance loans of $1.1 billion, purchases of investment securities available for sale of $845.8 million and CRA-qualified investment securities held to maturity of $15.0 million, net origination of mortgage finance loans of $426.5 million, purchases of loans of $198.4 million and purchases of leased assets under lessor operating leases of $63.7 million, partially offset by proceeds from maturities, calls and principal repayments on investment securities available for sale of $629.2 million and held to maturity of $291.5 million, proceeds from sales of investment securities available for sale of $624.9 million, proceeds from sales of loans and leases of $35.0 million, proceeds from sales of leased assets under lessor operating leases of $18.5 million and net proceeds from sales of FHLB, Federal Reserve Bank, and other restricted stock of $13.3 million.
Cash flows provided by (used in) investing activities Cash used in investing activities of $2.1 billion for the year ended December 31, 2025 primarily resulted from a net increase in loans and leases, excluding mortgage finance loans of $1.6 billion, purchases of investment securities available for sale of $940.8 million and investment securities held to maturity of $27.8 million, purchases of loans of $385.3 million, net origination of mortgage finance loans of $267.9 million and purchases of leased assets under lessor operating leases of $147.3 million, partially offset by proceeds from sales of investment securities available for sale of $594.2 million and proceeds from maturities, calls and principal repayments on investment securities available for sale of $405.6 million and held to maturity of $295.8 million. 93 Cash used in investing activities of $1.0 billion for the year ended December 31, 2024 primarily resulted from a net increase in loans and leases, excluding mortgage finance loans of $1.1 billion, purchases of investment securities available for sale of $845.8 million and CRA-qualified investment securities held to maturity of $15.0 million, net origination of mortgage finance loans of $426.5 million, purchases of loans of $198.4 million and purchases of leased assets under lessor operating leases of $63.7 million, partially offset by proceeds from maturities, calls and principal repayments on investment securities available for sale of $629.2 million and held to maturity of $291.5 million, proceeds from sales of investment securities available for sale of $624.9 million, proceeds from sales of loans and leases of $35.0 million, proceeds from sales of leased assets under lessor operating leases of $18.5 million and net proceeds from sales of FHLB, Federal Reserve Bank, and other restricted stock of $13.3 million.
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.
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, 2025 and 2024, special mention loans and leases were $216.5 million and $175.1 million, respectively, and are considered performing loans and are therefore not included in the tables above.
Refer to “NOTE 18 – REGULATORY CAPITAL” to Customers’ audited consolidated financial statements for additional discussion regarding regulatory capital requirements. 103 Capital Ratios Customers continued to build capital during 2024.
Refer to “NOTE 18 – REGULATORY CAPITAL” to Customers’ audited consolidated financial statements for additional discussion regarding regulatory capital requirements. Capital Ratios Customers continued to build capital during 2025.
Credit losses are charged-off when they are identified, and provisions are added for current expected credit losses, to the ACL at least quarterly. The ACL is estimated at least quarterly. The provision for credit losses on loans and leases was $69.8 million and $70.8 million for the years ended December 31, 2024 and 2023, respectively.
Credit losses are charged-off when they are identified, and provisions are added for current expected credit losses, to the ACL at least quarterly. The ACL is estimated at least quarterly. The provision for credit losses on loans and leases was $77.3 million and $69.8 million for the years ended December 31, 2025 and 2024, 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.
(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 2.74% and 3.34% for the years ended December 31, 2025 and 2024, respectively.
(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.
(3) 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) on June 15, 2023, net of $6.2 million of charge-offs for certain of these PCD loans upon acquisition.
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.
The purchase price was 92.9%, 97.5% and 87.9% of the loans’ unpaid principal balance for the years ended December 31, 2025, 2024 and 2023, respectively. (2) Installment loan purchases for the years ended December 31, 2025, 2024 and 2023 consist of third-party originated unsecured consumer loans.
Included in the $6.6 million increase in FDIC assessments, non-income taxes and regulatory fees for the year ended December 31, 2024 compared to the year ended December 31, 2023 was $4.2 million in FDIC premiums related to periods prior to 2024 and a credit of $3.0 million for Pennsylvania bank shares taxes related to periods prior to 2024 that were recorded in the year ended December 31, 2024.
Included in the $0.5 million decrease in FDIC assessments, non-income taxes and regulatory fees for the year ended December 31, 2025 compared to the year ended December 31, 2024 was $4.2 million in FDIC premiums related to periods prior to 2024 and a credit of $3.0 million for Pennsylvania bank shares taxes related to periods prior to 2024 that were recorded in the year ended December 31, 2024.
Included in the $0.4 million decrease in technology, communication and bank operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 was $7.1 million of deposit servicing-related fees related to periods prior to 2024 that were recorded in the year ended December 31, 2024.
Included in the $21.7 million decrease in technology, communication and bank operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 was $7.1 million of deposit servicing-related fees related to periods prior to 2024 that were recorded in the year ended December 31, 2024.
Longer-term borrowing arrangements are also maintained with the FHLB and FRB. As of December 31, 2024, Customers’ borrowing capacity with the FHLB was $3.6 billion, of which $1.1 billion was utilized in borrowings and $1.5 billion of available capacity was utilized to collateralize deposits.
Longer-term borrowing arrangements are also maintained with the FHLB and FRB. As of December 31, 2025, Customers’ borrowing capacity with the FHLB was $4.6 billion, of which $1.3 billion was utilized in borrowings and $1.8 billion of available capacity was utilized to collateralize deposits.
The increase in loans and leases receivable, net of the ACL, was primarily attributable to higher balances in specialized lending, multifamily, owner-occupied and non-owner occupied commercial real estate loans, partially offset by $1.5 million increase in ACL, as further described below, from December 31, 2023.
The increase in loans and leases receivable, net of the ACL, was primarily attributable to higher balances in specialized lending, multifamily, owner-occupied and non-owner occupied commercial real estate loans, partially offset by $18.9 million increase in ACL, as further described below, from December 31, 2024.
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.
Under this scenario, as an example, the unemployment rate is estimated at 7.4% and 8.1% in 2026 and 2027, respectively. These numbers represent a 2.7% and 3.4% higher unemployment estimate than the Baseline scenario projection of 4.7% 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 $77 million at December 31, 2024.
To demonstrate the sensitivity to key economic parameters, management calculated the difference between a 100% Baseline weighting and a 100% adverse scenario weighting for modeled results. This would result in an incremental quantitative impact to the ACL of approximately $101 million at December 31, 2025.
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.
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 $1.6 billion and $1.3 billion at December 31, 2025 and 2024, respectively.
For loans where real estate is not the primary source of collateral, updated financial information is obtained, including accounts receivable and inventory aging reports and relevant supplemental financial data to estimate the fair value of the loan, net of estimated selling costs, and compared to the outstanding loan balance to estimate the required reserve.
For loans where real estate is not the primary source of collateral, updated financial information is obtained, including any relevant supplemental financial data to estimate the fair value of the loan, net of estimated selling costs, and compared to the outstanding loan balance to estimate the required reserve.
The provision for credit losses is a charge to earnings to maintain the ACL at a level consistent with management’s assessment of expected lifetime losses in the loan and lease portfolio at the balance sheet date.
The provision for credit losses is a charge to earnings to maintain the ACL at a level consistent with management’s assessment of expected lifetime losses in the loan and lease portfolio, lending-related commitments and investment securities at the balance sheet date.
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.
At December 31, 2025, Customers Bank’s restricted stock holdings totaled $110.4 million compared to $96.2 million at December 31, 2024. 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.
As of December 31, 2023, Customers’ borrowing capacity with the FHLB was $3.5 billion, of which $1.2 billion was utilized in borrowings and $1.1 billion of available capacity was utilized to collateralize deposits. As of December 31, 2024 and 2023, Customers’ borrowing capacity with the FRB was $4.4 billion and $3.4 billion, respectively.
As of December 31, 2024, Customers’ borrowing capacity with the FHLB was $3.6 billion, of which $1.1 billion was utilized in borrowings and $1.5 billion of available capacity was utilized to collateralize deposits. As of December 31, 2025 and 2024, Customers’ borrowing capacity with the FRB was $4.7 billion and $4.4 billion, respectively.
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.
Commercial lease depreciation The $5.8 million increase in commercial lease depreciation for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily resulted from the growth of the operating lease arrangements originated by Customers’ commercial equipment financing group in which Customers is the lessor.
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.
The extent to which the geopolitical instability, higher tariffs and risks of rising inflation 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.
Other assets consist primarily of operating leases through Customers’ commercial equipment financing group (net investment in operating leases of $214.9 million at December 31, 2024 compared to $205.7 million at December 31, 2023), mark-to-market adjustments and receivable related to interest-rate swaps, investments in affordable housing projects and other limited partnerships or limited liability companies, ROU assets and prepaid expenses and taxes. 95 DEPOSITS Customers offers a variety of deposit accounts, including checking, savings, MMDA and time deposits.
Other assets consist primarily of operating leases through Customers’ commercial equipment financing group (net investment in operating leases of $303.4 million at December 31, 2025 compared to $214.9 million at December 31, 2024), mark-to-market adjustments and receivable related to interest-rate swaps, investments in affordable housing projects and other tax structures, limited partnerships and limited liability companies, ROU assets and prepaid expenses and taxes. 88 DEPOSITS Customers offers a variety of deposit accounts, including checking, savings, MMDA and time deposits.
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 ACL on loans and leases held for investment, represented 1.03% of total loans and leases receivable at December 31, 2025, compared to 1.04% at December 31, 2024.
As such, the provision for credit losses is impacted by changes in such loan level characteristics, such as payment performance. Loans made to borrowers experiencing financial difficulty can be classified as either accrual or nonaccrual. ACCRUED INTEREST RECEIVABLE At December 31, 2024, accrued interest receivable totaled $108.4 million compared to $114.8 million at December 31, 2023.
As such, the provision for credit losses is impacted by changes in such loan level characteristics, such as payment performance. Loans made to borrowers experiencing financial difficulty can be classified as either accrual or non-accrual. ACCRUED INTEREST RECEIVABLE At December 31, 2025, accrued interest receivable totaled $103.6 million compared to $108.4 million at December 31, 2024.
On December 15, 2021, the Series F Preferred Stock became floating at three-month LIBOR plus 4.762%, compared to a fixed rate of 6.00%.
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%. On December 15, 2021, the Series F Preferred Stock became floating at three-month LIBOR plus 4.762%, compared to a fixed rate of 6.00%.
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.
Short-term debt Short-term debt at December 31, 2025 and 2024 was as follows: December 31, 2025 2024 (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, 2025 and 2024 were as follows: December 31, 2025 2024 (dollars in thousands) Amount Rate Amount Rate FHLB advances (1) $ 1,325,068 (2) 4.04 % (3) $ 1,028,352 (2) 4.11 % (3) Total long-term FHLB and FRB advances $ 1,325,068 $ 1,028,352 (1) Amounts reported in the above table include fixed rate long-term advances from FHLB of $750.0 million with maturities ranging from March 2026 to March 2028, and variable rate long-term advances from FHLB of $570.0 million with maturities ranging from March 2027 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, 2025.
The provision for credit losses for the years ended December 31, 2024 and 2023 also included a provision for credit losses of $3.6 million and $3.8 million, respectively, on certain debt securities available for sale.
The provision for credit losses for the years ended December 31, 2025 and 2024 also included a provision for credit losses of $20.7 million and $3.6 million, respectively, on certain debt securities available for sale.
Customers coordinates its management of liquidity with its interest-rate sensitivity and capital position, and strives to maintain a strong liquidity position that is sufficient to meet Customers’ short-term and long-term needs, commitments and contractual obligations. Customers is involved with financial instruments and other commitments with off-balance sheet risks.
Ensuring adequate liquidity is an objective of the asset/liability management process. Customers coordinates its management of liquidity with its interest-rate sensitivity and capital position, and strives to maintain a strong liquidity position that is sufficient to meet Customers’ short-term and long-term needs, commitments and contractual obligations. Customers is involved with financial instruments and other commitments with off-balance sheet risks.
Customers recognized a benefit to provision for credit losses on unfunded lending-related commitments of $0.1 million during the year ended December 31, 2023 resulting in an ACL of $2.9 million as of December 31, 2023.
Customers recognized a provision for credit losses on unfunded lending-related commitments of $4.1 million during the year ended December 31, 2025 resulting in an ACL of $9.0 million as of December 31, 2025.
Customers’ total cost of funds, including non-interest bearing deposits and borrowings, was 3.46% and 3.45% for the years ended December 31, 2024 and 2023, respectively.
Customers’ total cost of funds, including non-interest bearing deposits and borrowings was 2.88% and 3.46% for the years ended December 31, 2025 and 2024, respectively.
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.
Customers provided financing to the purchasers for a portion of the sales price in the form of $160.0 million of asset-backed securities while $40.2 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 portfolio of capital call loans to venture capital firms was combined with Customers’ existing capital call lines vertical within fund finance. Customers’ mortgage finance primarily provides financing to mortgage bankers for residential mortgage originations from loan closing until sale in the secondary market. The underlying residential loans are taken as collateral for Customers’ commercial loans to the mortgage companies.
The portfolio of capital call loans to venture capital firms was combined with Customers’ existing capital call lines vertical within fund finance. 77 Customers’ mortgage finance primarily provides financing to mortgage bankers for residential mortgage originations from loan closing until sale in the secondary market.
We maintain a strong liquidity position, with $9.1 billion of liquidity immediately available consisting of cash on hand and available borrowing capacity from the FHLB and the FRB, which covered approximately 124% of uninsured deposits and approximately 159% of uninsured deposits less collateralized and affiliate deposits at December 31, 2024.
We maintain a strong liquidity position, with $10.6 billion of liquidity immediately available consisting of cash on hand and available borrowing capacity from the FHLB and the FRB, which covered approximately 124% of uninsured deposits and approximately 161% of uninsured deposits less collateralized and affiliate deposits at December 31, 2025.
Refer to “NOTE 8 – LEASES”, “NOTE 10 – DEPOSITS”, “NOTE 11 – BORROWINGS” and “NOTE 17 – FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK” to Customers’ audited consolidated financial statements for additional information. 99 At December 31, 2024, Customers had $3.8 billion of cash on hand and $3.0 billion of investment securities.
Refer to “NOTE 8 – LEASES”, “NOTE 10 – DEPOSITS”, “NOTE 11 – BORROWINGS” and “NOTE 17 – FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK” to Customers’ audited consolidated financial statements for additional information. 92 At December 31, 2025, Customers had $4.4 billion of cash on hand and $2.7 billion of investment securities.
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.
December 31, 2025 Within one year After one but within five years After five but within ten years No specific maturity Total Asset-backed securities — % — % — % 5.03 % 5.03 % 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 — — — 1.87 1.87 Agency-guaranteed commercial collateralized mortgage obligations — — — 2.99 2.99 Private label collateralized mortgage obligations — — — 2.55 2.55 Weighted-average yield — % — % — % 3.31 % 3.31 % 76 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.
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.
The $6.8 million increase in commercial lease income for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily resulted from the growth of Customers’ equipment finance business.
Cash dividends declared by the Bank and paid to Customers Bancorp during 2024 and 2023, include the following: • $30.0 million declared on February 22, 2023, and paid on February 22, 2023; • $20.0 million declared on June 28, 2023, and paid on June 28, 2023; • $10.0 million declared on September 27, 2023, and paid on September 27, 2023; • $30.0 million declared on December 20, 2023, and paid on December 21, 2023; • $10.0 million declared on March 27, 2024, and paid on March 28, 2024; • $25.0 million declared on June 26, 2024, and paid on June 26, 2024; • $45.0 million declared on July 24, 2024, and paid on July 25, 2024; and • $45.0 million declared on October 23, 2024, and paid on October 23, 2024.
Cash dividends declared by the Bank and paid to Customers Bancorp during 2025 and 2024, include the following: • $10.0 million declared on March 27, 2024, and paid on March 28, 2024; • $25.0 million declared on June 26, 2024, and paid on June 26, 2024; • $45.0 million declared on July 24, 2024, and paid on July 25, 2024; • $45.0 million declared on October 23, 2024, and paid on October 23, 2024; and • $45.0 million declared on February 26, 2025, and paid on February 26, 2025.
The investment tax credits from commercial clean vehicle leases were the same amount as the loss on leases of commercial clean vehicles included within net gain (loss) on sale of loans and leases. Preferred stock dividends Preferred stock dividends were $15.0 million and $14.7 million for the years ended December 31, 2024 and 2023, respectively.
The investment tax credits from commercial clean vehicle leases in 2024 were the same amount as the loss on leases of commercial clean vehicles included within net gain (loss) on sale of loans and leases for the year ended December 31, 2024. 67 Preferred stock dividends and loss on redemption of preferred stock Preferred stock dividends were $10.2 million and $15.0 million for the years ended December 31, 2025 and 2024, respectively.
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.
Significant uncertainties as to future economic conditions continue to exist, including risks of higher inflation, changes in U.S. trade policies including the imposition of tariffs and retaliatory tariffs on its trading partners, 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.
The provision for credit losses on loans and leases for the year ended December 31, 2024 was $69.8 million, for an ending ACL balance of $141.7 million ($136.8 million for loans and leases and $4.9 million for unfunded lending-related commitments) as of December 31, 2024. 70 To determine the ACL as of December 31, 2024, Customers utilized Moody’s December 2024 Baseline forecast to generate its modelled expected losses and considered Moody’s other alternative economic forecast scenarios to qualitatively adjust the modelled ACL by loan portfolio in order to reflect management’s reasonable expectations of current and future economic conditions.
The provision for credit losses on loans and leases for the year ended December 31, 2025 was $77.3 million, for an ending ACL balance of $164.7 million ($155.7 million for loans and leases and $9.0 million for unfunded lending-related commitments) as of December 31, 2025. 64 To determine the ACL as of December 31, 2025, Customers utilized Moody’s December 2025 Baseline forecast to generate its modeled expected losses and considered Moody’s other alternative economic forecast scenarios to qualitatively adjust the modeled ACL by loan portfolio in order to reflect management’s reasonable expectations of current and future economic conditions.
Loans and leases receivable Loans and leases receivable (excluding loans held for sale and loans receivable, mortgage finance, at fair value), net of the ACL, increased by $1.2 billion to $13.0 billion at December 31, 2024, from $11.8 billion at December 31, 2023.
Loans and leases receivable Loans and leases receivable (excluding loans held for sale and loans receivable, mortgage finance, at fair value and loans receivable, installment, at fair value), net of the ACL, increased by $1.9 billion to $14.9 billion at December 31, 2025, from $13.0 billion at December 31, 2024.
In 2023, Customers repurchased 1,379,883 shares of its common stock for $39.8 million pursuant to the Share Repurchase Program. In 2024, Customers repurchased 393,303 shares of its common stock for $19.2 million pursuant to the 2024 Share Repurchase Program.
In 2024, Customers repurchased 393,303 shares of its common stock for $19.2 million pursuant to the 2024 Share Repurchase Program.
The decrease primarily resulted from a decrease in interest rates. BANK PREMISES AND EQUIPMENT AND OTHER ASSETS At December 31, 2024, bank premises and equipment, net of accumulated depreciation and amortization, totaled $6.7 million compared to $7.4 million at December 31, 2023. The decrease primarily resulted from higher depreciation and amortization expenses.
The decrease primarily resulted from a decrease in interest rates. BANK PREMISES AND EQUIPMENT AND OTHER ASSETS At December 31, 2025, bank premises and equipment, net of accumulated depreciation and amortization, totaled $16.7 million compared to $6.7 million at December 31, 2024. The increase primarily resulted from the Bank’s growth.
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.
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. PREFERRED STOCK DIVIDENDS AND LOSS ON REDEMPTION OF PREFERRED STOCK Preferred stock dividends were $10.2 million and $15.0 million for the years ended December 31, 2025 and 2024, respectively.
The investment tax credits from commercial clean vehicles were the same amount as the loss on leases of commercial clean vehicles included within net gain (loss) on sale of loans and leases.
The investment tax credits from commercial clean vehicles in 2024 were the same amount as the loss on leases of commercial clean vehicles included within net gain (loss) on sale of loans and leases for the year ended December 31, 2024.
Net charge-offs for the year ended December 31, 2024 were $68.3 million, or 50 basis points of average total loans and leases, compared to $69.0 million, or 48 basis points of average total loans and leases for the year ended December 31, 2023.
Net charge-offs for the year ended December 31, 2025 were $59.4 million, or 38 basis points of average total loans and leases, compared to $68.3 million, or 50 basis points of average total loans and leases for the year ended December 31, 2024.
Net charge-offs for the year ended December 31, 2024 were $68.3 million, or 50 basis points of average total loans and leases, compared to $69.0 million, or 48 basis points of average total loans and leases for the year ended December 31, 2023.
Net charge-offs for the year ended December 31, 2025 were $59.4 million, or 38 basis points of average total loans and leases, compared to $68.3 million, or 50 basis points of average total loans and leases for the year ended December 31, 2024.
However, there are statutory and regulatory limitations on the ability of the Bank to pay dividends or make other capital distributions or to extend credit to the Bancorp or its non-bank subsidiaries.
The Bank has generated sufficient positive cash flows from operations to pay dividends to the Bancorp. However, there are statutory and regulatory limitations on the ability of the Bank to pay dividends or make other capital distributions or to extend credit to the Bancorp or its non-bank subsidiaries.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+1 added−1 removed5 unchanged
Biggest changeNet 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.
Biggest changeThe 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, 2026 and 2025, resulting from changes in interest rates under the new balance sheet forecasting model: Net change in net interest income % change from base December 31, Rate Shocks 2025 2024 Up 3% 4.4% 5.2% Up 2% 3.0% 3.4% Up 1% 1.3% 1.5% Down 1% (0.8)% (1.2)% Down 2% (2.7)% (4.2)% Down 3% (4.4)% (7.2)% EVE considers a longer-term horizon and estimates the hypothetical discounted net present value of asset and liability cash flows.
However, 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
However, 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. 97
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 upward rate shocks modeling a rising rate environment at December 31, 2025 and 2024, 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, 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.
For downward rate shocks modeling a falling rate environment at December 31, 2025 and 2024, 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, 2025 and 2024, based upon the assets, liabilities and off-balance sheet financial instruments including derivatives in existence at December 31, 2024 and 2023.
Through the use of income scenario modeling, Customers has estimated the net interest income for the twelve months ending December 31, 2026 and 2025, based upon the assets, liabilities and off-balance sheet financial instruments including derivatives in existence at December 31, 2025 and 2024.
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 upward rate shocks modeling a rising rate environment at December 31, 2025 and 2024, 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, 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.
For downward rate shocks modeling a falling rate environment at December 31, 2025 and 2024, 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.
Customers has also estimated changes to that projected twelve-month net interest income based upon interest rates rising or falling immediately (“rate shocks”).
Customers has also estimated changes to that projected twelve-month net interest income based upon implied forward interest rates rising or falling immediately (“rate shocks”).
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.
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 using implied forward interest rates.
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.
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. 96 In 2025, Customers transitioned to a new balance sheet forecasting model used to determine and manage interest rate risk.
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.
The following table reflects the estimated change in EVE at December 31, 2025 and 2024, resulting from shocks to interest rates under the new balance sheet forecasting model: % change from base December 31, Rate Shocks 2025 2024 Up 3% (9.5)% (9.0)% Up 2% (5.8)% (5.3)% Up 1% (2.4)% (2.2)% Down 1% 2.4% 1.9% Down 2% 5.7% 3.6% Down 3% 10.1% 4.6% Management believes that the assumptions and combination of methods used in evaluating interest rate risk in the new balance sheet forecasting model as described above are reasonable.
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.
This method of measurement primarily evaluates the longer-term repricing risks and embedded options in Customers Bank’s balance sheet.
Removed
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.
Added
The Bank made this change to enhance the modeling of sensitivity to interest rates. Principal assumptions including those of investment performance, loan prepayments and deposit modeling were enhanced resulting in differences from the previous model. Income scenario modeling is used to measure interest rate sensitivity and manage interest rate risk over a near term horizon.

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