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Dec 31, 2020
Customers Bancorp Q4 2020 Earnings Report
Reported record results with net income up 121% compared to Q4 2019.
Key Takeaways
Customers Bancorp reported record fourth-quarter earnings, driven by net interest margin expansion and Paycheck Protection Program (PPP) loan income. The company's net income reached $52.8 million, or $1.65 per diluted share, a 121% increase over the same period in 2019. Strong asset quality and funding mix improvements also contributed to the positive results.
Net income of $52.8 million, or $1.65 per diluted share, up 121% over Q4 2019.
Q4 2020 core earnings were $52.6 million or $1.65 per diluted share, up 121% over Q4 2019.
Adjusted pre-tax pre-provision net income for Q4 2020 was $74.9 million, an increase of 67.6% over Q4 2019.
Total revenues in Q4 2020 were up 41.9% on a year-over-year basis.
Customers Bancorp
Customers Bancorp
Forward Guidance
Customers Bancorp anticipates continued growth and improved financial performance, driven by digital transformation, PPP participation, and fintech partnerships. The company expects to achieve targeted capital levels and maintain strong credit quality, with recurring earnings power expanding above $4.00 in 2021 and on track to reach $6.00 in core EPS in 2026.
Positive Outlook
- Loan growth, excluding PPP and mortgage warehouse balances, is expected to average in the mid-to-high single digits over the next several quarters.
- The Total Capital Ratio is expected to exceed 13.0% by year-end 2021.
- The TCE-to-TA ratio excluding PPP loans is expected to be 7.5-8.0% by year-end 2021.
- We project the NIM excluding PPP loans to expand into the 3.10%-3.30% range by Q4 2021.
- We project an effective tax rate for 2021 of 21.0%-22.0%, down from 24.7% in 2020.
Challenges Ahead
- The balance of commercial loans to mortgage companies is expected to decline to $2.8-$3.2 billion at March 31, 2021 and $1.6-$2.4 billion at December 31, 2021.
- Impacted by the divestiture of BankMobile, we project non-interest income of $9.0-11.0 million and operating expenses of $59.0-$61.0 million in Q1 2021 (excluding BankMobile related severance expense).
- Our earnings trend is likely to be volatile over the next several quarters owing to our participation in PPP.
- Remixing the loan portfolio away from commercial loans to mortgage companies toward other C&I categories and consumer loans.
- Bringing our cost of deposits to around 40 basis points during 2021.