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Mar 31, 2020
Customers Bancorp Q1 2020 Earnings Report
Reported net income of $7.0 million and adjusted pre-tax pre-provision earnings increased by 53% over Q1 2019.
Key Takeaways
Customers Bancorp reported a net income of $7.0 million, or $0.22 per diluted share, for the first quarter of 2020. The results include the adoption of the Current Expected Credit Loss (CECL) standard, which resulted in a build of credit reserves of $100.4 million and a charge to Q1 2020 earnings of $23 million. Adjusted pre-tax pre-provision net income for Q1 2020 was $38.6 million, a 53% increase over Q1 2019.
GAAP earnings were $7.0 million, or $0.22 per diluted share, while core earnings were $8.1 million, or $0.26 per diluted share.
The adoption of CECL standard on January 1, 2020, resulted in a $100.4 million build of credit reserves and a $23 million charge to Q1 2020 earnings.
Adjusted pre-tax pre-provision net income for Q1 2020 increased by 53% over Q1 2019, reaching $38.6 million.
Net interest margin expanded by 10 basis points from Q4 2019 to 2.99%, marking the sixth consecutive quarter of expansion.
Forward Guidance
Customers Bancorp anticipates uncertainty in near-term profitability due to rapid changes in economic activity. The company has shifted its strategy to building a stronger balance sheet and assisting customers, team members, and the community.
Positive Outlook
- Positive trends in deposits.
- Opportunities to serve customers through the SBA Paycheck Protection Program.
- Opportunities to serve customers through other U.S. Treasury and Federal stimulus programs.
- Longer term, confident in ability to achieve a run rate of $6 per share in annual core earnings by the end of 2025 or 2026.
Challenges Ahead
- Higher provision for credit losses.
- Slower customer activity.
- Potential disruptions.
- Rapid recent changes in economic activity introduce uncertainty to our near-term profitability.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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