Core Viewpoint - Customers Bancorp, Inc. is under investigation for potential violations of federal securities laws following significant deficiencies identified in its risk management practices and compliance with anti-money laundering regulations, leading to a notable drop in its stock price [1][2]. Group 1: Investigation and Regulatory Actions - Rosen Law Firm is investigating Customers Bancorp for potential violations of federal securities laws [1]. - The Federal Reserve Board announced enforcement actions against Customers Bancorp and Customers Bank due to significant deficiencies in risk management and compliance with anti-money laundering laws [2]. Group 2: Stock Performance - Following the announcement from the Federal Reserve, Customers Bancorp's stock price fell by $7.22, or 13.3%, closing at $47.01 per share on August 8, 2024 [2]. Group 3: Legal Options for Investors - Investors in Customers Bancorp may have legal options and are encouraged to submit their information to Rosen Law Firm, which operates on a contingency fee basis [4]. - Shareholders will not be responsible for any court costs or litigation expenses, as the firm will seek court approval for any potential fees [4]. Group 4: Rosen Law Firm's Credentials - Rosen Law Firm has a strong track record in securities class actions, having achieved significant settlements and recognition in the field [6]. - The firm was ranked No. 1 for securities class action settlements in 2017 and has recovered hundreds of millions of dollars for investors over the years [6].

Credit Losses and Provisions - Customers Bancorp's Allowance for Credit Losses (ACL) as of September 30, 2024, was $138.8 million, with $133.2 million for loans and leases and $5.6 million for unfunded lending-related commitments[206]. - The provision for credit losses on loans and leases was $17.8 million for the three months and $51.6 million for the nine months ended September 30, 2024[206]. - The ACL decreased from $138.2 million as of December 31, 2023, primarily due to slight improvements in macroeconomic forecasts and lower consumer installment loan balances[206]. - Customers Bancorp's management utilized Moody's September 2024 Baseline forecast to estimate expected losses, reflecting slight improvements in macroeconomic conditions[207]. - Provision for credit losses decreased by $0.8 million (4.4%) for the three months ended September 30, 2024, reflecting a $0.7 million increase in provision for loans and leases[217]. - The provision for credit losses on loans and leases for the nine months ended September 30, 2024, was $51.570 million[312]. - Customers recognized a provision for credit losses on unfunded lending-related commitments of $0.6 million and $2.7 million during the three and nine months ended September 30, 2024, respectively[350]. - The allowance for credit losses (ACL) for loans and leases receivable was $133.2 million, or 1.06% of loans and leases receivable, as of September 30, 2024[309]. - Net charge-offs for the three months ended September 30, 2024, were $17.0 million, a decrease of $0.5 million compared to the same period in 2023[310]. - For the nine months ended September 30, 2024, net charge-offs increased to $53.7 million, up by $2.0 million compared to the same period in 2023[310]. Financial Performance - Net income available to common shareholders was $42.9 million for the three months ended September 30, 2024, a decrease of $40.0 million (48.2%) compared to $82.9 million for the same period in 2023[214]. - Net interest income decreased by $41.2 million (20.6%) for the three months ended September 30, 2024, compared to the same period in 2023, primarily due to higher interest expense on deposits and a decrease in average interest-earning assets by $790.4 million[214]. - Non-interest income decreased by $9.2 million (51.9%) for the three months ended September 30, 2024, primarily due to a $14.2 million increase in net loss on sale of loans and leases[220]. - Total non-interest expense increased by $14.6 million (16.3%) for the three months ended September 30, 2024, driven by higher salaries and employee benefits[222]. - Income before income tax expense decreased by $64.2 million (58.3%) to $46.0 million for the three months ended September 30, 2024, compared to $110.2 million for the same period in 2023[271]. - The effective tax rate for the three months ended September 30, 2024, was (1.58)%, a decrease from 21.29% for the same period in 2023, attributed to $14.3 million in investment tax credits from commercial clean vehicles[225]. - The company reported net income of $154.6 million for the nine months ended September 30, 2024, down from $188.1 million in 2023[356][357]. Liquidity and Deposits - Customers Bancorp maintained approximately $5.2 billion in immediate available liquidity from the Federal Reserve Bank (FRB) and Federal Home Loan Bank (FHLB) as of September 30, 2024[198]. - The estimated FDIC insured deposits represented approximately 66% of total deposits, increasing to 75% when including collateralized and affiliate deposits as of September 30, 2024[198]. - Total deposits reached $18.1 billion at September 30, 2024, reflecting an increase of $149.2 million, or 0.8%, from $17.9 billion at December 31, 2023[334]. - Savings deposits, including MMDA, increased by $731.7 million, or 15.8%, to $5.4 billion at September 30, 2024[334]. - Non-interest bearing demand deposits rose by $248.3 million, or 5.6%, to $4.7 billion at September 30, 2024[334]. - Time deposits decreased by $856.8 million, or 26.1%, to $2.4 billion at September 30, 2024[334]. - The loan to deposit ratio was 78% at September 30, 2024, indicating a strong liquidity position[352]. Interest Income and Expenses - Net interest income decreased by $40.6 million to $158.5 million for the three months ended September 30, 2024, compared to $199.8 million for the same period in 2023[229]. - The average cost of total interest-bearing deposits was 4.64% for the three months ended September 30, 2024, compared to 4.29% for the same period in 2023[229]. - The net interest margin for the three months ended September 30, 2024, was 3.05%, down from 3.70% for the same period in 2023[229]. - The NIM decreased by 12 basis points to 3.16% for the nine months ended September 30, 2024, from 3.28% for the same period in 2023[237]. - Customers' total cost of funds, including non-interest bearing deposits, was 3.55% for the nine months ended September 30, 2024, compared to 3.42% for the same period in 2023[237]. Asset Management - Total assets as of September 30, 2024, were $21.23 billion, a decrease from $21.98 billion as of September 30, 2023[229]. - Total loans and leases amounted to $13.64 billion for the three months ended September 30, 2024, with interest income of $239.6 million[229]. - The total loan and lease portfolio was $14.1 billion at September 30, 2024, an increase from $13.2 billion at December 31, 2023[329]. - Non-performing loans and leases amounted to $47.3 million, or 0.34% of total loans and leases, at September 30, 2024, compared to $27.1 million, or 0.21%, at December 31, 2023[329]. - Total loans and leases receivable, net of allowance for credit losses, amounted to $13.6 billion as of September 30, 2024, compared to $12.7 billion at December 31, 2023[305]. Market and Economic Conditions - The Federal Reserve has begun lowering the federal funds rate, with expectations of a 0.25 percentage point reduction twice in 2024[207]. - The unemployment rate is projected to rise to 4.1% in 2024 and 2025, with the Consumer Price Index (CPI) expected to increase by 2.9% in 2024[207]. - Customers Bancorp continues to monitor the impact of macroeconomic uncertainties, including inflation and geopolitical conflicts, on its operations and financial results[198]. Shareholder Equity and Capital - Shareholders' equity increased by $162.8 million, or 9.9%, to $1.8 billion at September 30, 2024, compared to $1.6 billion at December 31, 2023, primarily due to a $143.2 million increase in retained earnings[343]. - The capital ratios for Customers Bancorp, Inc. as of September 30, 2024, included a common equity Tier 1 capital ratio of 12.463%[366]. - The total capital to risk-weighted assets ratio for Customers Bancorp, Inc. was 15.362% as of September 30, 2024, exceeding the minimum requirement[366]. - The company is in compliance with the Basel III capital requirements as of September 30, 2024[366]. Strategic Initiatives - The bank onboarded 10 experienced commercial and business banking teams in April 2024 to enhance deposit growth potential in key markets[332]. - The company is transitioning its consumer installment lending strategy from held for investment to held for sale to mitigate credit risk exposure[290].

Core Viewpoint - Rosen Law Firm is investigating Customers Bancorp, Inc. for potential violations of federal securities laws, and is preparing a class action to recover investor losses [1][5]. Investigation Details - The investigation follows an enforcement action announced by the Federal Reserve Board on August 8, 2024, which identified significant deficiencies in Customers Bancorp's risk management practices and compliance with anti-money laundering regulations [3][4]. - Following the announcement, Customers Bancorp's common stock experienced a decline of 13.3% on the same day [4]. Class Action Information - Investors who purchased Customers Bancorp securities may be eligible for compensation through a contingency fee arrangement, allowing them to recover losses without upfront costs [1]. - Interested parties can join the class action by submitting a form or contacting the law firm directly [2]. Rosen Law Firm's Credentials - Rosen Law Firm has a strong track record in securities class actions, having achieved significant settlements and recognition in the field [5]. - The firm has recovered hundreds of millions of dollars for investors, with notable achievements in 2019 and 2020 [5].

E F Let's take on tomorrow. Investor Presentation: Q3 2024 October 2024 Forward-Looking Statements Let's take on tomorrow. In addition to historical information, this press release may contain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.'s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts ...

Financial Data and Key Metrics Changes - The company reported core earnings per share of $1.34 for the quarter, with net income of $43.8 million, reflecting strong growth in both loans and deposits, with loans growing at an annualized rate of 16% and deposits increasing by 9% annualized [24][30] - The tangible book value reached nearly $53 per share, representing an 18% annualized growth in the quarter, marking the sixth consecutive quarter of double-digit increases [16][65] - The net interest margin (NIM) was reported at 3.06%, with a noted decline in reported NIM, although the base NIM remained stable [52][14] Business Line Data and Key Metrics Changes - The company experienced strong high-quality diversified loan growth at a 16% annualized pace, with significant contributions from mortgage finance, commercial real estate, and equipment finance [13][44] - The deposit transformation strategy led to gross deposit inflows of $1.1 billion, primarily from the commercial client franchise, allowing the company to pay down approximately $700 million in higher-cost deposits [29][72] - The venture banking vertical has grown to nearly a $1 billion business, demonstrating the effectiveness of the team lift-out strategy and contributing to overall growth [35][37] Market Data and Key Metrics Changes - The company added close to 4,000 net new commercial accounts over the last year, representing more than a 25% increase in the deposit base [32] - The average interest-bearing deposit cost was reported at around 2.9%, with expectations for further reductions as higher-cost deposits are replaced [101][81] - The company maintained a strong liquidity position, with coverage of immediately available liquidity to uninsured deposits at 183% [68] Company Strategy and Development Direction - The company aims to evolve from a regional community bank to a high-performing specialized commercial and business bank with a national presence [7] - Investments in technology and product improvement, along with a focus on risk management infrastructure, are expected to pay off in the coming quarters, supporting revenue growth and NIM expansion [11][10] - The strategy emphasizes exceptional client service through a single point-of-contact model, which is expected to drive organic growth and enhance franchise value [19][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong deposit and loan pipelines and the ability to take market share on a national scale [18][74] - The company anticipates achieving EPS growth of 30% or more in 2025, driven by the profitability of new banking teams and a tapering of elevated risk management investments [27][74] - Management acknowledged the transitional nature of 2024 but remains confident in returning to mid-teens ROE and ROA in the near future [26][27] Other Important Information - The company has maintained robust credit quality, with improvements in most credit metrics, including a decline in the NPA ratio to just 22 basis points [17][70] - Core noninterest expenses increased due to investments in talent and risk management, but the company remains focused on operating efficiency [15][60] - The company plans to provide a full management outlook for 2025 in the next earnings call scheduled for January [76] Q&A Session Summary Question: Balance sheet remix and deposit pricing trends - Management explained that the balance sheet remix involved increasing fixed-rate lending and implementing forward starting swap hedges to reduce asset sensitivity, with deposit pricing expected to improve as higher-cost deposits are replaced [78][79] Question: Deposit gathering and account sizes - Management noted that the new accounts opened are highly granular, with an average size around a couple of hundred thousand, and emphasized the focus on top-tier markets [85][86] Question: Deposit costs and NII growth dynamics - Management clarified that while deposit costs have not significantly changed, the timing of deposit remixing and the onboarding of new accounts will provide opportunities for future reductions in interest expense [90][91] Question: Future deposit growth and remixing - Management confirmed that the company expects to continue remixing deposits for several quarters, with a strong pipeline indicating ongoing growth [110] Question: Compliance investments and expense expectations - Management indicated that compliance-related expenses are expected to be elevated in the next couple of quarters before normalizing, emphasizing the franchise-enhancing nature of these investments [111][113]

Core Insights - Customers Bancorp (CUBI) reported a revenue of $167.1 million for the quarter ended September 2024, reflecting a decline of 23.2% year-over-year and missing the Zacks Consensus Estimate of $192.64 million by 13.26% [1] - The earnings per share (EPS) for the quarter was $1.26, down from $2.59 in the same quarter last year, and also below the consensus estimate of $1.45, resulting in an EPS surprise of -13.10% [1] Financial Performance Metrics - Efficiency Ratio stood at 62.4%, significantly higher than the four-analyst average estimate of 54% [3] - Net Interest Margin was reported at 3.1%, slightly below the estimated 3.3% by three analysts [3] - Average Interest-Earning Assets totaled $20.69 billion, marginally lower than the $20.72 billion average estimate [3] - Net charge-offs to average loans were 0.5%, better than the two-analyst average estimate of 0.6% [3] - Total Non-Interest Income was $8.56 million, substantially below the estimated $21.32 million by four analysts [3] - Net Interest Income (tax equivalent) was reported at $158.94 million, lower than the average estimate of $171.83 million [3] - Mortgage warehouse transactional fees were $1.09 million, compared to the $1.35 million average estimate [3] - Commercial lease income was $10.09 million, slightly above the average estimate of $10.06 million [3] - Loan fees reached $8.01 million, exceeding the estimated $5.28 million [3] - Other Non-Interest Income was $1.87 million, slightly below the two-analyst average estimate of $1.98 million [3] Stock Performance - Shares of Customers Bancorp have returned +3.2% over the past month, outperforming the Zacks S&P 500 composite's +1% change [4] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [4]

Core Insights - Customers Bancorp (CUBI) reported quarterly earnings of $1.26 per share, missing the Zacks Consensus Estimate of $1.45 per share, and down from $2.59 per share a year ago, representing an earnings surprise of -13.10% [1] - The company posted revenues of $167.1 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 13.26%, and down from $217.55 million year-over-year [2] - Customers Bancorp shares have declined approximately 20.8% since the beginning of the year, contrasting with the S&P 500's gain of 21.9% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.55 on revenues of $198.53 million, and for the current fiscal year, it is $6.11 on revenues of $768.84 million [7] - The estimate revisions trend for Customers Bancorp is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Banks - Southeast industry, to which Customers Bancorp belongs, is currently in the top 36% of over 250 Zacks industries, suggesting that stocks in the top 50% of Zacks-ranked industries outperform those in the bottom 50% by more than 2 to 1 [8]

[Third Quarter 2024 Highlights](index=1&type=section&id=Third%20Quarter%202024%20Highlights) Customers Bancorp reported Q3 2024 net income of $42.9 million and diluted EPS of $1.31, maintaining strong capital ratios and asset quality despite NIM compression Q3 2024 Key Performance Indicators | Metric | Q3 2024 Value | | :--- | :--- | | Net Income (Common) | $42.9 million | | Diluted EPS | $1.31 | | Core Earnings* | $43.8 million | | Core Diluted EPS* | $1.34 | | ROAA | 0.88% | | ROCE | 10.44% | | CET 1 Ratio | 12.5% | | TCE / TA Ratio* | 7.7% | | Net Interest Margin (NIM) | 3.06% | | Non-Performing Assets / Total Assets | 0.22% | | Tangible Book Value Per Share* | $52.96 | - Total loans and leases held for investment grew by **$520.8 million** in Q3 2024, representing a **16% annualized growth rate**[1](index=1&type=chunk) - The bank experienced deposit inflows from commercial customers of **$1.1 billion**, which was used to pay down **$0.7 billion** of higher-cost deposits, resulting in a net increase of **$391.3 million** in total deposits[1](index=1&type=chunk) - Liquidity remains strong, with immediately available liquidity covering an estimated **183%** of uninsured deposits, and approximately **75%** of total deposits are estimated to be insured[1](index=1&type=chunk) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) CEO Jay Sidhu highlighted successful deposit transformation, strong loan growth, robust asset quality, and strategic share repurchases - The bank is in phase two of its deposit transformation strategy, remixing higher-cost deposits into core lower-cost and granular deposits[4](index=4&type=chunk) - New commercial banking teams have opened over **3,000** new deposit accounts, gathering **$536 million** in deposits at an average interest rate of approximately **2.9%**, with **30%** being non-interest bearing[4](index=4&type=chunk) - Asset quality remains a key differentiator, with a non-performing asset (NPA) ratio of **0.22%** and minimal exposure to the higher-risk commercial real estate office sector (approx. **1%** of the loan portfolio)[4](index=4&type=chunk) - The bank repurchased **373,974 shares** of common stock at an average price below Tangible Book Value per share, while the TCE / TA ratio remained flat at **7.7%**[4](index=4&type=chunk) [Financial Highlights](index=3&type=section&id=Financial%20Highlights) Q3 2024 profitability declined QoQ and YoY due to lower NIM and higher expenses, while the balance sheet grew and capital metrics improved Q3 2024 Profitability vs. Q2 2024 | Metric | Q3 2024 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Income (Common) | $42.9M | $54.3M | (20.9)% | | Diluted EPS | $1.31 | $1.66 | (21.1)% | | Net Interest Margin | 3.06% | 3.29% | (0.23) bps | | Efficiency Ratio | 62.40% | 51.87% | 10.53 bps | Q3 2024 Profitability vs. Q3 2023 | Metric | Q3 2024 | Q3 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Net Income (Common) | $42.9M | $83.0M | (48.2)% | | Diluted EPS | $1.31 | $2.58 | (49.2)% | | Net Interest Margin | 3.06% | 3.70% | (0.64) bps | | Efficiency Ratio | 62.40% | 41.01% | 21.39 bps | Balance Sheet and Capital Trends (as of Sept 30, 2024) | Metric | vs. Q2 2024 | vs. Q3 2023 | | :--- | :--- | :--- | | Total Assets | +2.5% | -1.8% | | Total Loans & Leases | +3.1% | +2.5% | | Total Deposits | +2.2% | -0.7% | | Tangible Book Value/Share* | +4.5% | +16.8% | [Key Balance Sheet Trends](index=6&type=section&id=Key%20Balance%20Sheet%20Trends) The balance sheet expanded with growth in loans and deposits, while capital levels remained robust due to earnings and AOCI improvements [Loans and Leases](index=6&type=section&id=Loans%20and%20Leases) Total loans and leases held for investment grew by $520.8 million, driven by commercial loans, partially offset by a decrease in consumer installment loans Loan Portfolio Composition (Held for Investment) | Loan Category | Sept 30, 2024 ($M) | % of Total | | :--- | :--- | :--- | | Total Commercial Loans | $12,522.3 | 90.9% | | Total Consumer Loans | $1,255.4 | 9.1% | | **Total HFI Loans** | **$13,777.7** | **100.0%** | - Quarter-over-quarter loan growth was driven by mortgage finance (**+21.8%**), owner-occupied CRE (**+21.9%**), and non-owner occupied CRE (**+10.3%**)[12](index=12&type=chunk) - The bank sold consumer installment loans with a carrying value of **$200.8 million** during Q3 2024, recognizing a loss of **$0.3 million**[14](index=14&type=chunk) [Allowance for Credit Losses and Provision](index=7&type=section&id=Allowance%20for%20Credit%20Losses%20and%20Provision) Provision for credit losses remained stable at $17.8 million, with a modest decrease in net charge-offs and an allowance of 1.06% of loans Credit Loss Provision and Charge-offs (Q3 2024) | Metric | Q3 2024 | Q2 2024 | | :--- | :--- | :--- | | Provision for Credit Losses (Loans) | $17.8M | $17.9M | | Net Charge-offs | $17.0M | $18.7M | | Annualized Net Charge-offs / Avg Loans | 0.50% | 0.56% | - The provision for credit losses on available-for-sale investment securities was a benefit of **$0.7 million** in Q3 2024, compared to a provision of **$0.3 million** in Q2 2024[17](index=17&type=chunk) [Asset Quality](index=8&type=section&id=Asset%20Quality) Asset quality remains strong with NPAs at 0.22% of total assets and NPLs at 0.34%, supported by robust allowance coverage Asset Quality Metrics | Metric | Sept 30, 2024 | June 30, 2024 | | :--- | :--- | :--- | | Non-performing assets (NPAs) | $47.3M | $47.4M | | NPAs to total assets | 0.22% | 0.23% | | Non-performing loans (NPLs) to total loans | 0.34% | 0.35% | | Reserves to NPLs | 281.36% | 279.52% | - The bank's strategy focuses on commercial loan products with relatively low credit risk, such as C&I, mortgage finance, and multifamily loans[21](index=21&type=chunk) - The consumer installment portfolio is small, representing less than **4%** of total assets, with strong borrower characteristics (average FICO of **746**)[22](index=22&type=chunk) [Investment Securities](index=8&type=section&id=Investment%20Securities) The $3.5 billion investment securities portfolio is highly liquid and short-duration, with AFS at $2.4 billion and HTM at 5.0% of total assets - The AFS debt securities portfolio has a spot yield of **5.23%**, an effective duration of **~2.0 years**, and is **63%** AAA rated[25](index=25&type=chunk) - The HTM debt securities portfolio represents only **5.0%** of total assets, with a spot yield of **4.31%** and an effective duration of **~3.5 years**[26](index=26&type=chunk) - HTM securities increased due to the addition of **$160.0 million** of asset-backed securities related to financing provided for the sale of consumer installment loans[27](index=27&type=chunk) [Deposits](index=9&type=section&id=Deposits) Total deposits increased by $391.3 million to $18.1 billion, with a shift towards non-interest bearing and money market deposits Deposit Composition (Sept 30, 2024) | Deposit Category | Balance ($B) | % of Total | | :--- | :--- | :--- | | Demand, non-interest bearing | $4.7 | 25.9% | | Demand, interest bearing | $5.6 | 31.0% | | Money market | $4.0 | 21.9% | | Savings | $1.4 | 7.7% | | Time deposits | $2.4 | 13.5% | | **Total Deposits** | **$18.1** | **100.0%** | - The total average cost of deposits increased by **6 basis points** to **3.46%** in Q3 2024 from **3.40%** in Q2 2024[28](index=28&type=chunk) - Year-over-year, total deposits decreased slightly by **0.7%**, with a significant **$1.6 billion** reduction in time deposits offset by a **$1.5 billion** increase in money market deposits[29](index=29&type=chunk) [Borrowings](index=10&type=section&id=Borrowings) Total borrowings increased by $74.0 million QoQ to $1.4 billion, driven by FHLB advances, but decreased YoY by $437.1 million - Total borrowings increased **5.6%** quarter-over-quarter to **$1.4 billion**, mainly from higher FHLB advances[30](index=30&type=chunk) - Total borrowings decreased **23.8%** year-over-year, primarily from net repayments of **$435.0 million** in FHLB advances[31](index=31&type=chunk) [Capital](index=10&type=section&id=Capital) Capital ratios remain strong with CET1 at 12.5% and TCE/TA at 7.7%, as tangible common equity increased by $54.3 million Key Capital Ratios (Sept 30, 2024) | Ratio | Value | Target | | :--- | :--- | :--- | | CET 1 Ratio | 12.5% | 11.5% | | Total Risk Based Capital | 15.4% | N/A | | TCE / TA Ratio* | 7.7% | 7.5% | - Tangible book value per common share increased by **$2.26** to **$52.96** in Q3 2024, a **4.5%** increase over Q2 2024 (**17.7% annualized**)[33](index=33&type=chunk) - The increase in common equity was driven by **$42.9 million** in earnings and a **$25.3 million** decrease in AOCI losses, partially offset by **$18.2 million** in share repurchases[33](index=33&type=chunk) [Key Profitability Trends](index=11&type=section&id=Key%20Profitability%20Trends) Profitability declined due to decreased net interest income and margin compression, while non-interest income fell sharply and expenses remained flat [Net Interest Income](index=11&type=section&id=Net%20Interest%20Income) Net interest income declined by $9.1 million to $158.5 million, with NIM compressing to 3.06% due to non-recurring benefits - NII decreased by **$9.1 million** from Q2 2024, due to lower interest income from loans and higher interest expense on deposits and borrowings[37](index=37&type=chunk) - The decline in NIM was primarily attributed to non-recurring benefits in Q2 2024, the sale of consumer installment loans, and a securities portfolio repositioning[38](index=38&type=chunk) [Non-Interest Income](index=11&type=section&id=Non-Interest%20Income) Non-interest income decreased significantly by $22.5 million to $8.6 million, primarily due to a non-recurring gain and a loss on leases Non-Interest Income Breakdown (Q3 2024 vs Q2 2024) | Category | Q3 2024 ($M) | Q2 2024 ($M) | | :--- | :--- | :--- | | Net gain (loss) on sale of loans/leases | ($14.5) | ($0.2) | | Unrealized gain on equity investments | $0.0 | $11.0 | | Loan fees | $8.0 | $5.2 | | **Total Non-Interest Income** | **$8.6** | **$31.0** | - The decrease from Q2 2024 was mainly due to a non-recurring **$11.0 million** unrealized gain in Q2 and a **$14.3 million** loss on commercial clean vehicle leases in Q3[41](index=41&type=chunk) [Non-Interest Expense](index=12&type=section&id=Non-Interest%20Expense) Non-interest expenses remained relatively flat at $104.0 million, with increases in salaries and professional fees offset by other reductions - Salaries and employee benefits rose by **$2.8 million** due to higher headcount from Q2 hires and annual merit increases[43](index=43&type=chunk) - The bank incurred approximately **$3.0 million** in professional services expenses for investments to enhance its risk management infrastructure, with an additional **$3.0-$5.0 million** expected in each of the next two quarters[44](index=44&type=chunk) - Year-over-year, non-interest expenses increased by **$14.6 million**, primarily due to a **$13.9 million** rise in salaries and benefits from the addition of new banking teams[45](index=45&type=chunk) [Taxes](index=13&type=section&id=Taxes) The company recorded an income tax benefit of $0.7 million in Q3 2024, driven by lower pre-tax income and investment tax credits - Income tax expense decreased by **$19.8 million** to a benefit of **$0.7 million** in Q3 2024, primarily due to lower pre-tax income and higher estimated income tax credits[47](index=47&type=chunk) - The company generated **$14.3 million** of investment tax credits from commercial clean vehicle leases, which offset the loss of the same amount recognized in non-interest income[47](index=47&type=chunk)[48](index=48&type=chunk) [Outlook](index=13&type=section&id=Outlook) The company reaffirms its strategy for deposit growth, profitability, and capital, with specific guidance on loan growth, NIM, expenses, and tax rate - **Loan Growth:** Confident in delivering **10% - 15%** loan growth for the full year 2024[49](index=49&type=chunk) - **Net Interest Margin:** Expects NIM in Q4 2024 to be roughly flat with Q3 2024, with positive impacts to profitability and earnings in 2025[49](index=49&type=chunk) - **Expenses:** Investments in new teams (**$8-10 million** quarterly) and risk management (**$3-5 million** quarterly for a few quarters) will elevate the efficiency ratio near-term, with a medium-term target in the mid-40s[49](index=49&type=chunk) - **Tax Rate:** Full-year 2024 effective tax rate guidance adjusted to **18% - 20%**[49](index=49&type=chunk) - **Capital Targets:** Committed to maintaining CET 1 ratio of **11.5%** and TCE / TA ratio of **7.5%** in 2024[49](index=49&type=chunk) [Appendix: Financial Statements and Reconciliations](index=16&type=section&id=Appendix%3A%20Financial%20Statements%20and%20Reconciliations) This appendix provides detailed unaudited financial statements, supporting tables, and comprehensive reconciliations of GAAP to non-GAAP measures [Consolidated Financial Statements](index=17&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited Consolidated Statements of Operations and Consolidated Balance Sheet for Q3 2024 - The Consolidated Statement of Operations shows detailed breakdowns of interest income, interest expense, non-interest income, and non-interest expense leading to the net income calculation[57](index=57&type=chunk) - The Consolidated Balance Sheet provides a detailed view of assets (cash, securities, loans), liabilities (deposits, borrowings), and shareholders' equity at the end of the period[59](index=59&type=chunk) [Detailed Financial Metrics](index=20&type=section&id=Detailed%20Financial%20Metrics) This section provides granular financial data, including average balance sheets, loan/deposit compositions, and detailed asset quality metrics - Provides detailed tables on the composition of loans and deposits at period end, allowing for analysis of portfolio shifts[63](index=63&type=chunk)[64](index=64&type=chunk) - Includes comprehensive asset quality tables showing allowance for credit losses and non-performing loans broken down by specific commercial and consumer loan categories[66](index=66&type=chunk)[69](index=69&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=26&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliations of GAAP financial measures to non-GAAP metrics like Core Earnings and Tangible Common Equity - Provides a reconciliation from GAAP Net Income to Core Earnings by adjusting for items like severance expense, gains/losses on securities, and derivative valuation adjustments[74](index=74&type=chunk) - Details the calculation of Tangible Common Equity by subtracting preferred stock and goodwill/intangibles from total shareholders' equity[82](index=82&type=chunk) - Shows the calculation for the Core Efficiency Ratio by adjusting both non-interest income and non-interest expense for non-core items[81](index=81&type=chunk)

Core Insights - Customers Bancorp, Inc. is under investigation for potential violations of federal securities laws by the Rosen Law Firm, a global investor rights law firm [1] - The stock of Customers Bancorp dropped significantly following an announcement from the Federal Reserve regarding enforcement actions due to deficiencies in risk management and compliance with anti-money laundering regulations [2] Group 1: Investigation and Legal Actions - The Rosen Law Firm is investigating Customers Bancorp for potential violations of federal securities laws, encouraging investors to seek additional information [1] - The Federal Reserve Board issued an enforcement action against Customers Bancorp, citing significant deficiencies in risk management practices and compliance with anti-money laundering laws [2] Group 2: Stock Performance - Following the Federal Reserve's announcement, Customers Bancorp's stock fell by $7.22 per share, representing a 13.3% decrease, closing at $47.01 per share on August 8, 2024 [2]

Core Viewpoint - Rosen Law Firm is investigating Customers Bancorp, Inc. for potential violations of federal securities laws, and is preparing a class action to recover investor losses [1][4]. Group 1: Investigation and Legal Action - The investigation by Rosen Law Firm is focused on Customers Bancorp, Inc. and may allow investors who purchased its securities to seek compensation without upfront costs [1]. - A class action is being organized to recover losses incurred by investors due to the alleged violations [1]. Group 2: Regulatory Issues - On August 8, 2024, the Federal Reserve Board announced an enforcement action against Customers Bancorp, highlighting significant deficiencies in the bank's risk management and compliance with anti-money laundering laws [2][3]. - Following the announcement, Customers Bancorp's stock experienced a decline of 13.3% on the same day [3]. Group 3: Rosen Law Firm's Credentials - Rosen Law Firm has a strong track record in securities class actions, having achieved the largest settlement against a Chinese company and consistently ranking among the top firms for securities class action settlements [4]. - The firm has recovered hundreds of millions of dollars for investors, with over $438 million secured in 2019 alone [4].