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].

Core Viewpoint - Rosen Law Firm is investigating potential securities claims on behalf of shareholders of Customers Bancorp, Inc. due to allegations of materially misleading business information [1][2] Group 1: Legal Actions and Investigations - Rosen Law Firm is preparing a class action to seek recovery of investor losses for those who purchased Customers Bancorp securities [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 regulations [2] - Following the Federal Reserve's announcement, Customers Bancorp's stock price dropped by $7.22, or 13.3%, closing at $47.01 per share on August 8, 2024 [2] Group 2: 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 being ranked No. 1 for securities class action settlements in 2017 [3] - The firm has recovered hundreds of millions of dollars for investors, securing over $438 million in 2019 alone [3] - Founding partner Laurence Rosen was recognized as a Titan of Plaintiffs' Bar by Law360 in 2020, highlighting the firm's expertise and recognition in the field [3]

Customers Bancorp (CUBI) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, if they miss, the s ...

Investors in Customers Bancorp, Inc. (CUBI) need to pay close attention to the stock based on moves in the options market lately. That is because the Feb 21, 2025 $35.00 Call had some of the highest implied volatility of all equity options today. What is Implied Volatility? Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It c ...

Core Viewpoint - Rosen Law Firm is investigating potential securities claims on behalf of shareholders of Customers Bancorp, Inc. due to allegations of materially misleading business information issued by the company [1]. Group 1: Investigation and Legal Action - Shareholders who purchased Customers Bancorp securities may be entitled to compensation through a class action lawsuit without any out-of-pocket fees [2]. - The Rosen Law Firm is preparing a class action to seek recovery of investor losses related to the allegations against Customers Bancorp [2]. Group 2: Regulatory Issues - On August 8, 2024, the Federal Reserve Board announced an enforcement action against Customers Bancorp, citing significant deficiencies in the bank's risk management practices and compliance with anti-money laundering regulations [3]. - Following the announcement, Customers Bancorp's stock price dropped by 13.3%, closing at $47.01 on the same day [3]. Group 3: Rosen Law Firm's Credentials - The Rosen Law Firm has a strong track record in securities class actions, having achieved the largest settlement against a Chinese company and being ranked highly for securities class action settlements since 2013 [4]. - In 2019, the firm secured over $438 million for investors, showcasing its capability in recovering investor losses [4].

NEW YORK, Aug. 20, 2024 (GLOBE NEWSWIRE) -- Attorney Advertising-- Bronstein, Gewirtz & Grossman, LLC is investigating potential claims on behalf of purchasers of Customers Bancorp, Inc ("Customers Bancorp" or "the Company") (NYSE: CUBI). Investors who purchased Customers Bancorp securities are encouraged to obtain additional information and assist the investigation by visiting the firm's site: bgandg.com/CUBI. Investigation Details On April 12, 2024, Customers Bancorp disclosed in a filing with the U.S. Se ...

SAN FRANCISCO, Aug. 14, 2024 (GLOBE NEWSWIRE) -- Hagens Berman urges Customers Bancorp, Inc. (NYSE: CUBI) investors who suffered substantial losses to submit your losses now. The firm also encourages persons with knowledge who may assist the investigation to contact its attorneys. Visit: www.hbsslaw.com/investor-fraud/CUBI Contact the Firm Now: CUBI@hbsslaw.com 844-916-0895 Investigation Into Customers Bancorp, Inc. (CUBI): The investigation focuses on the propriety of Customers Bancorp's recent assurances ...