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Sep 30, 2023
Customers Bancorp Q3 2023 Earnings Report
Reported strong results driven by strategic execution and a differentiated deposit strategy.
Key Takeaways
Customers Bancorp reported a strong third quarter in 2023, with net income available to common shareholders of $83.0 million, or $2.58 per diluted share. The company demonstrated a strong deposit strategy, growing core deposits by $1.3 billion, and experienced net interest margin expansion. Capital levels increased significantly, and asset quality remained exceptional.
Net income available to common shareholders was $83.0 million, or $2.58 per diluted share.
Core deposits grew by $1.3 billion, driving the repayment of maturing wholesale CDs and callable FHLB advances.
Net interest margin increased to 3.70%, primarily due to higher than expected discount accretion on the Venture Banking portfolio.
CET 1 capital ratio increased to 11.3%, achieving the goal of 11.0% - 11.5% one quarter earlier than expected.
Customers Bancorp
Customers Bancorp
Forward Guidance
Customers Bancorp expects to manage risk, strengthen the deposit franchise, improve profitability, and increase capital ratios. Deposits are expected to be relatively flat with an improved quality of deposits. Following the robust 3.70% NIM in Q3 2023, a normalization of NIM to roughly 3.20%-3.25% is expected in Q4 2023. Core EPS (excluding PPP) remains on track for, and will likely well exceed, the target of $6.00 per diluted share with a core return on common equity of over 15%.
Positive Outlook
- Focus on managing risk effectively.
- Commitment to strengthening the deposit franchise.
- Aim to improve profitability and efficiency.
- Objective to increase capital ratios.
- Expectation of continued improvement in the quality of deposits.
Challenges Ahead
- Normalization of NIM to roughly 3.20%-3.25% in Q4 2023 following a robust 3.70% in Q3 2023.
- Uncertain environment impacting new loan production.
- Potential for higher funding costs.
- Possible net interest margin compression.
- Need to remain disciplined with balance sheet capacity to minimize risk.