x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Pennsylvania | 27-2290659 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Large accelerated filer | ¨ | Accelerated filer | x | |||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller Reporting Company | ¨ | |||
Emerging Growth Company | ¨ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ¨ |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Ex-31.1 | ||
Ex-31.2 | ||
Ex-32.1 | ||
Ex-32.2 | ||
Ex-101 |
September 30, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Cash and due from banks | $ | 13,318 | $ | 37,485 | |||
Interest-earning deposits | 206,162 | 227,224 | |||||
Cash and cash equivalents | 219,480 | 264,709 | |||||
Investment securities available for sale, at fair value | 584,823 | 493,474 | |||||
Loans held for sale (includes $1,963,076 and $2,117,510, respectively, at fair value) | 2,113,293 | 2,117,510 | |||||
Loans receivable | 7,061,338 | 6,154,637 | |||||
Allowance for loan losses | (38,314 | ) | (37,315 | ) | |||
Total loans receivable, net of allowance for loan losses | 7,023,024 | 6,117,322 | |||||
FHLB, Federal Reserve Bank, and other restricted stock | 98,611 | 68,408 | |||||
Accrued interest receivable | 27,135 | 23,690 | |||||
Bank premises and equipment, net | 12,369 | 12,769 | |||||
Bank-owned life insurance | 255,683 | 161,494 | |||||
Other real estate owned | 1,059 | 3,108 | |||||
Goodwill and other intangibles | 16,604 | 17,621 | |||||
Other assets | 119,748 | 102,631 | |||||
Total assets | $ | 10,471,829 | $ | 9,382,736 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Deposits: | |||||||
Demand, non-interest bearing | $ | 1,427,304 | $ | 966,058 | |||
Interest-bearing | 6,169,772 | 6,337,717 | |||||
Total deposits | 7,597,076 | 7,303,775 | |||||
Federal funds purchased | 147,000 | 83,000 | |||||
FHLB advances | 1,462,343 | 868,800 | |||||
Other borrowings | 186,258 | 87,123 | |||||
Subordinated debt | 108,856 | 108,783 | |||||
Accrued interest payable and other liabilities | 59,654 | 75,383 | |||||
Total liabilities | 9,561,187 | 8,526,864 | |||||
Shareholders’ equity: | |||||||
Preferred stock, par value $1.00 per share; liquidation preference $25.00 per share; 100,000,000 shares authorized, 9,000,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016 | 217,471 | 217,471 | |||||
Common stock, par value $1.00 per share; 200,000,000 shares authorized; 31,317,892 and 30,820,177 shares issued as of September 30, 2017 and December 31, 2016; 30,787,632 and 30,289,917 shares outstanding as of September 30, 2017 and December 31, 2016 | 31,318 | 30,820 | |||||
Additional paid in capital | 429,633 | 427,008 | |||||
Retained earnings | 240,076 | 193,698 | |||||
Accumulated other comprehensive income (loss), net | 377 | (4,892 | ) | ||||
Treasury stock, at cost (530,260 shares as of September 30, 2017 and December 31, 2016) | (8,233 | ) | (8,233 | ) | |||
Total shareholders’ equity | 910,642 | 855,872 | |||||
Total liabilities and shareholders’ equity | $ | 10,471,829 | $ | 9,382,736 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Interest income: | |||||||||||||||
Loans receivable | $ | 67,107 | $ | 60,362 | $ | 195,605 | $ | 173,847 | |||||||
Loans held for sale | 21,633 | 18,737 | 53,103 | 50,272 | |||||||||||
Investment securities | 7,307 | 3,528 | 21,017 | 10,875 | |||||||||||
Other | 2,238 | 1,585 | 5,507 | 3,937 | |||||||||||
Total interest income | 98,285 | 84,212 | 275,232 | 238,931 | |||||||||||
Interest expense: | |||||||||||||||
Deposits | 18,381 | 13,009 | 48,934 | 34,365 | |||||||||||
Other borrowings | 3,168 | 1,642 | 6,767 | 4,867 | |||||||||||
FHLB advances | 7,032 | 3,291 | 15,433 | 9,274 | |||||||||||
Subordinated debt | 1,685 | 1,685 | 5,055 | 5,055 | |||||||||||
Total interest expense | 30,266 | 19,627 | 76,189 | 53,561 | |||||||||||
Net interest income | 68,019 | 64,585 | 199,043 | 185,370 | |||||||||||
Provision for loan losses | 2,352 | 88 | 5,937 | 2,854 | |||||||||||
Net interest income after provision for loan losses | 65,667 | 64,497 | 193,106 | 182,516 | |||||||||||
Non-interest income: | |||||||||||||||
Interchange and card revenue | 9,570 | 11,547 | 31,729 | 13,806 | |||||||||||
Gain (loss) on sale of investment securities | 5,349 | (1 | ) | 8,532 | 25 | ||||||||||
Deposit fees | 2,659 | 4,218 | 7,918 | 5,260 | |||||||||||
Mortgage warehouse transactional fees | 2,396 | 3,080 | 7,139 | 8,702 | |||||||||||
Bank-owned life insurance | 1,672 | 1,386 | 5,297 | 3,629 | |||||||||||
Gain on sale of SBA and other loans | 1,144 | 1,206 | 3,045 | 2,135 | |||||||||||
Mortgage banking income | 257 | 287 | 703 | 737 | |||||||||||
Impairment loss on investment securities | (8,349 | ) | — | (12,934 | ) | — | |||||||||
Other | 3,328 | 5,763 | 7,741 | 6,943 | |||||||||||
Total non-interest income | 18,026 | 27,486 | 59,170 | 41,237 | |||||||||||
Non-interest expense: | |||||||||||||||
Salaries and employee benefits | 24,807 | 22,681 | 69,569 | 58,051 | |||||||||||
Technology, communication and bank operations | 14,401 | 12,525 | 33,227 | 19,021 | |||||||||||
Professional services | 7,403 | 7,006 | 21,142 | 13,213 | |||||||||||
Occupancy | 2,857 | 2,450 | 8,228 | 7,248 | |||||||||||
FDIC assessments, taxes, and regulatory fees | 2,475 | 2,726 | 6,615 | 11,191 | |||||||||||
Provision for operating losses | 1,509 | 1,406 | 4,901 | 1,943 | |||||||||||
Loan workout | 915 | 592 | 1,844 | 1,497 | |||||||||||
Other real estate owned | 445 | 1,192 | 550 | 1,663 | |||||||||||
Advertising and promotion | 404 | 591 | 1,108 | 1,178 | |||||||||||
Acquisition related expenses | — | 144 | — | 1,195 | |||||||||||
Other | 5,824 | 4,905 | 13,634 | 12,106 | |||||||||||
Total non-interest expense | 61,040 | 56,218 | 160,818 | 128,306 | |||||||||||
Income before income tax expense | 22,653 | 35,765 | 91,458 | 95,447 | |||||||||||
Income tax expense | 14,899 | 14,558 | 34,236 | 36,572 | |||||||||||
Net income | 7,754 | 21,207 | 57,222 | 58,875 | |||||||||||
Preferred stock dividends | 3,615 | 2,552 | 10,844 | 5,900 | |||||||||||
Net income available to common shareholders | $ | 4,139 | $ | 18,655 | $ | 46,378 | $ | 52,975 | |||||||
Basic earnings per common share | $ | 0.13 | $ | 0.68 | $ | 1.52 | $ | 1.95 | |||||||
Diluted earnings per common share | $ | 0.13 | $ | 0.63 | $ | 1.42 | $ | 1.80 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 7,754 | $ | 21,207 | $ | 57,222 | $ | 58,875 | |||||||
Unrealized (losses) gains on available-for-sale securities: | |||||||||||||||
Unrealized holding (losses) gains on securities arising during the period | (3,570 | ) | 329 | 15,192 | 15,256 | ||||||||||
Income tax effect | 1,393 | (124 | ) | (5,924 | ) | (5,721 | ) | ||||||||
Reclassification adjustments for (gains) losses on securities included in net income | (5,349 | ) | 1 | (8,532 | ) | (25 | ) | ||||||||
Income tax effect | 2,086 | — | 3,327 | 9 | |||||||||||
Net unrealized (losses) gains on available-for-sale securities | (5,440 | ) | 206 | 4,063 | 9,519 | ||||||||||
Unrealized gains (losses) on cash flow hedges: | |||||||||||||||
Unrealized gains (losses) arising during the period | 171 | 890 | (189 | ) | (2,523 | ) | |||||||||
Income tax effect | (67 | ) | (334 | ) | 74 | 946 | |||||||||
Reclassification adjustment for losses included in net income | 572 | 703 | 2,166 | 1,306 | |||||||||||
Income tax effect | (223 | ) | (264 | ) | (845 | ) | (490 | ) | |||||||
Net unrealized gains (losses) on cash flow hedges | 453 | 995 | 1,206 | (761 | ) | ||||||||||
Other comprehensive (loss) income, net of income tax effect | (4,987 | ) | 1,201 | 5,269 | 8,758 | ||||||||||
Comprehensive income | $ | 2,767 | $ | 22,408 | $ | 62,491 | $ | 67,633 |
Nine Months Ended September 30, 2017 | |||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||
Shares of Preferred Stock Outstanding | Preferred Stock | Shares of Common Stock Outstanding | Common Stock | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Treasury Stock | Total | |||||||||||||||||||||||||
Balance, December 31, 2016 | 9,000,000 | $ | 217,471 | 30,289,917 | $ | 30,820 | $ | 427,008 | $ | 193,698 | $ | (4,892 | ) | $ | (8,233 | ) | $ | 855,872 | |||||||||||||||
Net income | — | — | — | — | — | 57,222 | — | — | 57,222 | ||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 5,269 | — | 5,269 | ||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | (10,844 | ) | — | — | (10,844 | ) | ||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 4,536 | — | — | — | 4,536 | ||||||||||||||||||||||||
Exercise of warrants | — | — | 50,387 | 50 | 507 | — | — | — | 557 | ||||||||||||||||||||||||
Issuance of common stock under share-based compensation arrangements | — | — | 447,328 | 448 | (2,418 | ) | — | — | — | (1,970 | ) | ||||||||||||||||||||||
Balance, September 30, 2017 | 9,000,000 | $ | 217,471 | 30,787,632 | $ | 31,318 | $ | 429,633 | $ | 240,076 | $ | 377 | $ | (8,233 | ) | $ | 910,642 | ||||||||||||||||
Nine Months Ended September 30, 2016 | |||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||
Shares of Preferred Stock Outstanding | Preferred Stock | Shares of Common Stock Outstanding | Common Stock | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Treasury Stock | Total | |||||||||||||||||||||||||
Balance, December 31, 2015 | 2,300,000 | $ | 55,569 | 26,901,801 | $ | 27,432 | $ | 362,607 | $ | 124,511 | $ | (7,984 | ) | $ | (8,233 | ) | $ | 553,902 | |||||||||||||||
Net income | — | — | — | — | — | 58,875 | — | — | 58,875 | ||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 8,758 | — | 8,758 | ||||||||||||||||||||||||
Issuance of common stock, net of offering costs of $217 | — | — | 226,677 | 227 | 5,450 | — | — | — | 5,677 | ||||||||||||||||||||||||
Issuance of preferred stock, net of offering costs of $5,520 | 6,700,000 | 161,980 | — | — | — | — | — | — | 161,980 | ||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | (5,900 | ) | — | (5,900 | ) | |||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 4,569 | — | — | — | 4,569 | ||||||||||||||||||||||||
Exercise of warrants | — | — | 259,851 | 259 | 862 | — | — | — | 1,121 | ||||||||||||||||||||||||
Issuance of common stock under share-based compensation arrangements | — | — | 155,888 | 156 | 673 | — | — | — | 829 | ||||||||||||||||||||||||
Balance, September 30, 2016 | 9,000,000 | $ | 217,549 | 27,544,217 | $ | 28,074 | $ | 374,161 | $ | 177,486 | $ | 774 | $ | (8,233 | ) | $ | 789,811 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash Flows from Operating Activities | |||||||
Net income | $ | 57,222 | $ | 58,875 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Provision for loan losses, net of change to FDIC receivable and clawback liability | 5,937 | 2,854 | |||||
Depreciation and amortization | 7,476 | 4,138 | |||||
Share-based compensation expense | 5,377 | 5,213 | |||||
Deferred taxes | 286 | (4,846 | ) | ||||
Net amortization of investment securities premiums and discounts | 520 | 664 | |||||
Gain on sale of investment securities | (8,532 | ) | (25 | ) | |||
Impairment loss on investment securities | 12,934 | — | |||||
Gain on sale of SBA and other loans | (3,553 | ) | (2,674 | ) | |||
Origination of loans held for sale | (22,770,726 | ) | (27,092,862 | ) | |||
Proceeds from the sale of loans held for sale | 22,925,668 | 26,473,789 | |||||
Decrease in FDIC loss sharing receivable net of clawback liability | — | 255 | |||||
Amortization of fair value discounts and premiums | 93 | 312 | |||||
Net loss on sales of other real estate owned | 154 | 85 | |||||
Valuation and other adjustments to other real estate owned, net of FDIC receivable | 298 | 1,261 | |||||
Earnings on investment in bank-owned life insurance | (5,297 | ) | (3,629 | ) | |||
Increase in accrued interest receivable and other assets | (27,862 | ) | (38,672 | ) | |||
(Decrease) increase in accrued interest payable and other liabilities | (14,106 | ) | 66,577 | ||||
Net Cash Provided By (Used In) Operating Activities | 185,889 | (528,685 | ) | ||||
Cash Flows from Investing Activities | |||||||
Proceeds from maturities, calls and principal repayments of securities available for sale | 36,461 | 46,097 | |||||
Proceeds from sales of investment securities available for sale | 698,451 | 2,853 | |||||
Purchases of investment securities available for sale | (796,594 | ) | (5,000 | ) | |||
Net increase in loans | (921,049 | ) | (641,093 | ) | |||
Proceeds from sales of loans | 124,703 | 91,868 | |||||
Purchase of loans | (262,641 | ) | — | ||||
Purchases of bank-owned life insurance | (90,000 | ) | — | ||||
Proceeds from bank-owned life insurance | 1,418 | 619 | |||||
Net (purchases of) proceeds from FHLB, Federal Reserve Bank, and other restricted stock | (30,203 | ) | 19,220 | ||||
Payments to the FDIC on loss sharing agreements | — | (2,049 | ) | ||||
Purchases of bank premises and equipment | (1,725 | ) | (3,343 | ) | |||
Proceeds from sales of other real estate owned | 1,680 | 419 | |||||
Acquisition of Disbursements business, net | — | (17,000 | ) | ||||
Net Cash Used In Investing Activities | (1,267,428 | ) | (507,409 | ) | |||
Cash Flows from Financing Activities | |||||||
Net increase in deposits | 293,301 | 1,479,471 | |||||
Net increase (decrease) in short-term borrowed funds from the FHLB | 593,543 | (663,600 | ) | ||||
Net increase (decrease) in federal funds purchased | 64,000 | (18,000 | ) | ||||
Proceeds from long-term FHLB borrowings | — | 75,000 | |||||
Net proceeds from issuance of long-term debt | 98,564 | — | |||||
Net proceeds from issuance of preferred stock | — | 161,980 | |||||
Preferred stock dividends paid | (10,844 | ) | (5,450 | ) | |||
Exercise of warrants | 557 | 1,121 | |||||
Payments of employee taxes withheld from share-based awards | (4,923 | ) | (702 | ) | |||
Proceeds from issuance of common stock | 2,112 | 7,269 | |||||
Net Cash Provided By Financing Activities | 1,036,310 | 1,037,089 | |||||
Net (Decrease) Increase in Cash and Cash Equivalents | (45,229 | ) | 995 | ||||
Cash and Cash Equivalents – Beginning | 264,709 | 264,593 | |||||
Cash and Cash Equivalents – Ending | $ | 219,480 | $ | 265,588 | |||
(continued) | |||||||
Supplementary Cash Flows Information | |||||||
Interest paid | $ | 70,706 | $ | 50,410 | |||
Income taxes paid | 31,545 | 40,966 | |||||
Non-cash items: | |||||||
Transfer of loans to other real estate owned | $ | 83 | $ | 605 | |||
Transfer of loans held for investment to loans held for sale | 150,638 | — |
(amounts in thousands) | |||
Fair value of assets acquired: | |||
Developed software | $ | 27,400 | |
Other intangible assets | 9,300 | ||
Accounts receivable | 2,784 | ||
Prepaid expenses | 418 | ||
Fixed assets, net | 229 | ||
Total assets acquired | 40,131 | ||
Fair value of liabilities assumed: | |||
Other liabilities | 5,735 | ||
Deferred revenue | 2,655 | ||
Total liabilities assumed | 8,390 | ||
Net assets acquired | $ | 31,741 | |
Transaction cash consideration (1) | $ | 37,000 | |
Goodwill recognized | $ | 5,259 |
December 31, 2016 As Previously Reported | Effect of Reclassification From Held For Sale to Held and Used | December 31, 2016 After Reclassification | |||||||||
(amounts in thousands) | |||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 244,709 | $ | 20,000 | $ | 264,709 | |||||
Loans receivable | 6,142,390 | 12,247 | 6,154,637 | ||||||||
Bank premises and equipment, net | 12,259 | 510 | 12,769 | ||||||||
Goodwill and other intangibles | 3,639 | 13,982 | 17,621 | ||||||||
Assets held for sale | 79,271 | (79,271 | ) | — | |||||||
Other assets | 70,099 | 32,532 | 102,631 | ||||||||
LIABILITIES | |||||||||||
Demand, non-interest bearing deposits | $ | 512,664 | $ | 453,394 | $ | 966,058 | |||||
Interest bearing deposits | 6,334,316 | 3,401 | 6,337,717 | ||||||||
Non-interest bearing deposits held for sale | 453,394 | (453,394 | ) | — | |||||||
Other liabilities held for sale | 31,403 | (31,403 | ) | — | |||||||
Accrued interest payable and other liabilities | 47,381 | 28,002 | 75,383 |
Three Months Ended September 30, 2016 | Effect of Reclassification From Held For Sale to Held and Used | Three Months Ended September 30, 2016 | |||||||||
As Previously Reported | After Reclassification | ||||||||||
Interest income | $ | 84,212 | $ | — | $ | 84,212 | |||||
Interest expense | 19,622 | 5 | 19,627 | ||||||||
Net interest income | 64,590 | (5 | ) | 64,585 | |||||||
Provision for loan losses | (161 | ) | 249 | 88 | |||||||
Non-interest income | 11,121 | 16,365 | 27,486 | ||||||||
Non-interest expenses | 36,750 | 19,468 | 56,218 | ||||||||
Income from continuing operations before income taxes | 39,122 | (3,357 | ) | 35,765 | |||||||
Provision for income taxes | 15,834 | (1,276 | ) | 14,558 | |||||||
Net income from continuing operations | 23,288 | (2,081 | ) | 21,207 | |||||||
Loss from discontinued operations before income taxes | (3,357 | ) | 3,357 | — | |||||||
Income tax benefit from discontinued operations | (1,276 | ) | 1,276 | — | |||||||
Net loss from discontinued operations | (2,081 | ) | 2,081 | — | |||||||
Net income | 21,207 | — | 21,207 | ||||||||
Preferred stock dividend | 2,552 | — | 2,552 | ||||||||
Net income available to common shareholders | $ | 18,655 | $ | — | $ | 18,655 | |||||
Nine Months Ended September 30, 2016 | Effect of Reclassification From Held For Sale to Held and Used | Nine Months Ended September 30, 2016 | |||||||||
As Previously Reported | After Reclassification | ||||||||||
Interest income | $ | 238,931 | $ | — | $ | 238,931 | |||||
Interest expense | 53,548 | 13 | 53,561 | ||||||||
Net interest income | 185,383 | (13 | ) | 185,370 | |||||||
Provision for loan losses | 2,605 | 249 | 2,854 | ||||||||
Non-interest income | 22,241 | 18,996 | 41,237 | ||||||||
Non-interest expenses | 100,706 | 27,600 | 128,306 | ||||||||
Income from continuing operations before income taxes | 104,313 | (8,866 | ) | 95,447 | |||||||
Provision for income taxes | 39,942 | (3,370 | ) | 36,572 | |||||||
Net income from continuing operations | 64,371 | (5,496 | ) | 58,875 | |||||||
Loss from discontinued operations before income taxes | (8,865 | ) | 8,865 | — | |||||||
Income tax benefit from discontinued operations | (3,369 | ) | 3,369 | — | |||||||
Net loss from discontinued operations | (5,496 | ) | 5,496 | — | |||||||
Net income | 58,875 | — | 58,875 | ||||||||
Preferred stock dividend | 5,900 | — | 5,900 | ||||||||
Net income available to common shareholders | $ | 52,975 | $ | — | $ | 52,975 | |||||
• | Customers adopted ASU 2016-05, Derivatives and Hedging: Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships, on a prospective basis. This ASU clarifies that a change in the counterparties to a derivative contract (i.e., a novation), in and of itself, does not require the de-designation of a hedging relationship provided that all the other hedge accounting criteria continue to be met. |
• | Customers also adopted ASU 2016-06, Contingent Put and Call Options in Debt Instruments. This ASU clarifies that a contingency of put or call exercise does not need to be evaluated to determine whether it relates to interest rates and credit risk in an embedded derivative analysis of hybrid financial instruments. In other words, a contingent put or call option embedded in a debt instrument would be evaluated for possible separate accounting as a derivative instrument without regard to the nature of the exercise contingency. However, as required under the existing guidance, companies will still need to evaluate the other relevant embedded derivative guidance, such as whether the payoff from the contingent put or call option is adjusted based on changes in an index other than interest rates or credit risk, and whether the debt involves a substantial premium or discount. As the adoption did not result in any significant impact to Customers’ consolidated financial statements, it did not result in a modified retrospective application. |
• | Customers also adopted ASU 2016-07, Simplifying the Transition to the Equity Method of Accounting, on a prospective basis. This ASU eliminates the requirement for the retrospective use of the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence of an investor. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of |
• | Customers also adopted ASU 2016-17, Consolidation - Interests Held Through Related Parties that are Under Common Control. This ASU amends the guidance included in ASU 2015-02, Consolidation: Amendments to Consolidation Analysis which Customers adopted in first quarter 2016. This ASU makes a narrow amendment that requires that a single decision maker considers indirect economic interests in an entity held through related parties that are under common control on a proportionate basis when determining whether it is the primary beneficiary of that VIE. Prior to this amendment, indirect interests held through related parties that are under common control were to be considered equivalent of the single decision maker’s direct interests in their entirety which could result in a single decision maker consolidating the VIE. As the adoption did not result in any significant impact to Customers’ consolidated financial statements, it did not result in a full or modified retrospective application. |
1. | Cash payments for debt prepayment or extinguishment costs will be classified in financing activities. |
2. | Upon settlement of zero-coupon bonds and bonds with insignificant cash coupons, the portion of the payment attributable to imputed interest will be classified as an operating activity, while the portion of the payment attributable to principal will be classified as a financing activity. |
3. | Cash paid by an acquirer soon after a business combination (i.e. approximately three months or less) for the settlement of a contingent consideration liability will be classified in investing activities. Payments made thereafter should be separated between financing activities and operating activities. Cash payments up to the amount of the contingent consideration liability recognized at the acquisition date will be classified in financing activities; any excess will be classified in operating activities. |
4. | Cash proceeds received from the settlement of insurance claims will be classified on the basis of the related insurance coverage (i.e., the nature of the loss). Cash proceeds from lump-sum settlements will be classified based on the nature of each loss component included in the settlement. |
5. | Cash proceeds received from the settlement of bank-owned life insurance (BOLI) policies will be classified as cash inflows from investing activities. Cash payments for premiums on BOLI may be classified as cash outflows for investing, operating, or a combination of both. |
6. | A transferor’s beneficial interest obtained in a securitization of financial assets will be disclosed as a non-cash activity, and cash received from beneficial interests will be classified in investing activities. |
7. | Distributions received from equity method investees will be classified using either a cumulative earnings approach or a look-through approach as an accounting policy election. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(amounts in thousands, except share and per share data) | |||||||||||||||
Net income available to common shareholders | $ | 4,139 | $ | 18,655 | $ | 46,378 | $ | 52,975 | |||||||
Weighted-average number of common shares outstanding - basic | 30,739,671 | 27,367,551 | 30,597,314 | 27,131,960 | |||||||||||
Share-based compensation plans | 1,754,480 | 2,205,291 | 2,004,917 | 2,119,717 | |||||||||||
Warrants | 18,541 | 124,365 | 24,392 | 243,531 | |||||||||||
Weighted-average number of common shares - diluted | 32,512,692 | 29,697,207 | 32,626,623 | 29,495,208 | |||||||||||
Basic earnings per common share | $ | 0.13 | $ | 0.68 | $ | 1.52 | $ | 1.95 | |||||||
Diluted earnings per common share | $ | 0.13 | $ | 0.63 | $ | 1.42 | $ | 1.80 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
Anti-dilutive securities: | |||||||||||
Share-based compensation awards | 409,225 | 616,995 | 409,225 | 616,995 | |||||||
Warrants | 52,242 | 52,242 | 52,242 | 52,242 | |||||||
Total anti-dilutive securities | 461,467 | 669,237 | 461,467 | 669,237 |
Three Months Ended September 30, 2017 | |||||||||||
(amounts in thousands) | Unrealized Gains (Losses) on Available-For-Sale Securities | Unrealized Loss on Cash Flow Hedges | Total | ||||||||
Balance - June 30, 2017 | $ | 6,822 | $ | (1,458 | ) | $ | 5,364 | ||||
Other comprehensive income (loss) before reclassifications | (2,177 | ) | 104 | (2,073 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) to net income (2) | (3,263 | ) | 349 | (2,914 | ) | ||||||
Net current-period other comprehensive (loss) income | (5,440 | ) | 453 | (4,987 | ) | ||||||
Balance - September 30, 2017 | $ | 1,382 | $ | (1,005 | ) | $ | 377 |
Nine Months Ended September 30, 2017 | |||||||||||
(amounts in thousands) | Unrealized Gains (Losses) on Available-For-Sale Securities | Unrealized Loss on Cash Flow Hedges | Total | ||||||||
Balance - December 31, 2016 | $ | (2,681 | ) | $ | (2,211 | ) | $ | (4,892 | ) | ||
Other comprehensive income (loss) before reclassifications | 9,268 | (115 | ) | 9,153 | |||||||
Amounts reclassified from accumulated other comprehensive income (loss) to net income (2) | (5,205 | ) | 1,321 | (3,884 | ) | ||||||
Net current-period other comprehensive income | 4,063 | 1,206 | 5,269 | ||||||||
Balance - September 30, 2017 | $ | 1,382 | $ | (1,005 | ) | $ | 377 | ||||
(1) | All amounts are presented net of tax. Amounts in parentheses indicate reductions to accumulated other comprehensive income. |
(2) | Reclassification amounts for available-for-sale securities are reported as gain on sale of investment securities on the consolidated statements of income. Reclassification amounts for cash flow hedges are reported as interest expense on FHLB advances on the consolidated statements of income. |
Three Months Ended September 30, 2016 | |||||||||||||||||
Available-for-sale-securities | |||||||||||||||||
(amounts in thousands) | Unrealized Gains | Foreign Currency Items | Total Unrealized Gains | Unrealized Loss on Cash Flow Hedge | Total | ||||||||||||
Balance - June 30, 2016 | $ | 4,895 | $ | (768 | ) | $ | 4,127 | $ | (4,554 | ) | $ | (427 | ) | ||||
Other comprehensive income (loss) before reclassifications | 15 | 190 | 205 | 556 | 761 | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) to net income (2) | 1 | — | 1 | 439 | 440 | ||||||||||||
Net current-period other comprehensive income | 16 | 190 | 206 | 995 | 1,201 | ||||||||||||
Balance - September 30, 2016 | $ | 4,911 | $ | (578 | ) | $ | 4,333 | $ | (3,559 | ) | $ | 774 |
Nine Months Ended September 30, 2016 | |||||||||||||||||
Available-for-sale-securities | |||||||||||||||||
(amounts in thousands) | Unrealized Gains (Losses) | Foreign Currency Items | Total Unrealized Gains (Losses) | Unrealized Loss on Cash Flow Hedge | Total | ||||||||||||
Balance - December 31, 2015 | $ | (4,602 | ) | $ | (584 | ) | $ | (5,186 | ) | $ | (2,798 | ) | $ | (7,984 | ) | ||
Other comprehensive income (loss) before reclassifications | 9,529 | 6 | 9,535 | (1,577 | ) | 7,958 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) to net income (2) | (16 | ) | — | (16 | ) | 816 | 800 | ||||||||||
Net current-period other comprehensive income (loss) | 9,513 | 6 | 9,519 | (761 | ) | 8,758 | |||||||||||
Balance - September 30, 2016 | $ | 4,911 | $ | (578 | ) | $ | 4,333 | $ | (3,559 | ) | $ | 774 | |||||
(1) | All amounts are presented net of tax. Amounts in parentheses indicate reductions to accumulated other comprehensive income. |
(2) | Reclassification amounts for available-for-sale securities are reported as gain (loss) on sale of investment securities on the consolidated statements of income. Reclassification amounts for cash flow hedges are reported as interest expense on FHLB advances on the consolidated statements of income. |
September 30, 2017 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(amounts in thousands) | |||||||||||||||
Available for Sale: | |||||||||||||||
Agency-guaranteed residential mortgage-backed securities | $ | 197,606 | $ | 521 | $ | (1,800 | ) | $ | 196,327 | ||||||
Agency-guaranteed commercial real estate mortgage-backed securities | 337,683 | 2,843 | (418 | ) | 340,108 | ||||||||||
Corporate notes (1) | 44,958 | 1,119 | — | 46,077 | |||||||||||
Equity securities (2) | 2,311 | — | — | 2,311 | |||||||||||
$ | 582,558 | $ | 4,483 | $ | (2,218 | ) | $ | 584,823 |
(1) | Includes subordinated debt issued by other bank holding companies. |
(2) | Includes equity securities issued by a foreign entity. |
December 31, 2016 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(amounts in thousands) | |||||||||||||||
Available for Sale: | |||||||||||||||
Agency-guaranteed residential mortgage-backed securities | $ | 233,002 | $ | 918 | $ | (2,657 | ) | $ | 231,263 | ||||||
Agency-guaranteed commercial real estate mortgage-backed securities | 204,689 | — | (2,872 | ) | 201,817 | ||||||||||
Corporate notes (1) | 44,932 | 401 | (185 | ) | 45,148 | ||||||||||
Equity securities (2) | 15,246 | — | — | 15,246 | |||||||||||
$ | 497,869 | $ | 1,319 | $ | (5,714 | ) | $ | 493,474 |
(1) | Includes subordinated debt issued by other bank holding companies. |
(2) | Includes equity securities issued by a foreign entity. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(amounts in thousands) | |||||||||||||||
Proceeds from sale of available-for-sale securities | $ | 554,540 | $ | 5 | $ | 698,451 | $ | 2,853 | |||||||
Gross gains | $ | 5,349 | $ | — | $ | 8,532 | $ | 26 | |||||||
Gross losses | — | (1 | ) | — | (1 | ) | |||||||||
Net gains (losses) | $ | 5,349 | $ | (1 | ) | $ | 8,532 | $ | 25 |
September 30, 2017 | |||||||
Amortized Cost | Fair Value | ||||||
(amounts in thousands) | |||||||
Due in one year or less | $ | — | $ | — | |||
Due after one year through five years | — | — | |||||
Due after five years through ten years | 42,958 | 43,854 | |||||
Due after ten years | 2,000 | 2,223 | |||||
Agency-guaranteed residential mortgage-backed securities | 197,606 | 196,327 | |||||
Agency-guaranteed commercial real estate mortgage-backed securities | 337,683 | 340,108 | |||||
Total debt securities | $ | 580,247 | $ | 582,512 |
September 30, 2017 | |||||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Available for Sale: | |||||||||||||||||||||||
Agency-guaranteed residential mortgage-backed securities | $ | 54,525 | $ | (279 | ) | $ | 45,682 | $ | (1,521 | ) | $ | 100,207 | $ | (1,800 | ) | ||||||||
Agency-guaranteed commercial real estate mortgage-backed securities | 105,044 | (418 | ) | — | — | 105,044 | (418 | ) | |||||||||||||||
Total | $ | 159,569 | $ | (697 | ) | $ | 45,682 | $ | (1,521 | ) | $ | 205,251 | $ | (2,218 | ) |
December 31, 2016 | |||||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Available for Sale: | |||||||||||||||||||||||
Agency-guaranteed residential mortgage-backed securities | $ | 87,433 | $ | (1,330 | ) | $ | 30,592 | $ | (1,327 | ) | $ | 118,025 | $ | (2,657 | ) | ||||||||
Agency-guaranteed commercial real estate mortgage-backed securities | 201,817 | (2,872 | ) | — | — | 201,817 | (2,872 | ) | |||||||||||||||
Corporate notes (1) | 9,747 | (185 | ) | — | — | 9,747 | (185 | ) | |||||||||||||||
Total | $ | 298,997 | $ | (4,387 | ) | $ | 30,592 | $ | (1,327 | ) | $ | 329,589 | $ | (5,714 | ) |
(1) | Includes subordinated debt issued by other bank holding companies. |
September 30, 2017 | December 31, 2016 | ||||||
(amounts in thousands) | |||||||
Commercial loans: | |||||||
Mortgage warehouse loans, at fair value | $ | 1,961,248 | $ | 2,116,815 | |||
Multi-family loans at lower of cost or fair value | 150,217 | — | |||||
Total commercial loans held for sale | 2,111,465 | 2,116,815 | |||||
Consumer loans: | |||||||
Residential mortgage loans, at fair value | 1,828 | 695 | |||||
Loans held for sale | $ | 2,113,293 | $ | 2,117,510 |
September 30, 2017 | December 31, 2016 | ||||||
(amounts in thousands) | |||||||
Commercial: | |||||||
Multi-family | $ | 3,618,989 | $ | 3,214,999 | |||
Commercial and industrial (including owner occupied commercial real estate) | 1,601,789 | 1,382,343 | |||||
Commercial real estate non-owner occupied | 1,237,849 | 1,193,715 | |||||
Construction | 73,203 | 64,789 | |||||
Total commercial loans | 6,531,830 | 5,855,846 | |||||
Consumer: | |||||||
Residential real estate | 435,188 | 193,502 | |||||
Manufactured housing | 92,938 | 101,730 | |||||
Other | 3,819 | 3,483 | |||||
Total consumer loans | 531,945 | 298,715 | |||||
Total loans receivable | 7,063,775 | 6,154,561 | |||||
Deferred (fees)/costs and unamortized (discounts)/premiums, net | (2,437 | ) | 76 | ||||
Allowance for loan losses | (38,314 | ) | (37,315 | ) | |||
Loans receivable, net of allowance for loan losses | $ | 7,023,024 | $ | 6,117,322 |
September 30, 2017 | |||||||||||||||||||||||||||
30-89 Days Past Due (1) | 90 Days Or More Past Due(1) | Total Past Due (1) | Non- Accrual | Current (2) | Purchased- Credit- Impaired Loans (3) | Total Loans (4) | |||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||
Multi-family | $ | — | $ | — | $ | — | $ | — | $ | 3,617,062 | $ | 1,927 | $ | 3,618,989 | |||||||||||||
Commercial and industrial | — | — | — | 20,423 | 1,093,997 | 802 | 1,115,222 | ||||||||||||||||||||
Commercial real estate - owner occupied | — | — | — | 2,949 | 472,832 | 10,786 | 486,567 | ||||||||||||||||||||
Commercial real estate - non-owner occupied | — | — | — | 184 | 1,232,212 | 5,453 | 1,237,849 | ||||||||||||||||||||
Construction | — | — | — | — | 73,203 | — | 73,203 | ||||||||||||||||||||
Residential real estate | 1,607 | — | 1,607 | 4,269 | 423,551 | 5,761 | 435,188 | ||||||||||||||||||||
Manufactured housing (5) | 2,937 | 2,505 | 5,442 | 1,959 | 82,896 | 2,641 | 92,938 | ||||||||||||||||||||
Other consumer | 67 | — | 67 | 58 | 3,474 | 220 | 3,819 | ||||||||||||||||||||
Total | $ | 4,611 | $ | 2,505 | $ | 7,116 | $ | 29,842 | $ | 6,999,227 | $ | 27,590 | $ | 7,063,775 | |||||||||||||
December 31, 2016 | |||||||||||||||||||||||||||
30-89 Days Past Due (1) | 90 Days Or More Past Due(1) | Total Past Due (1) | Non- Accrual | Current (2) | Purchased- Credit- Impaired Loans (3) | Total Loans (4) | |||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||
Multi-family | $ | 12,573 | $ | — | $ | 12,573 | $ | — | $ | 3,200,322 | $ | 2,104 | $ | 3,214,999 | |||||||||||||
Commercial and industrial | 350 | — | 350 | 8,443 | 978,881 | 1,037 | 988,711 | ||||||||||||||||||||
Commercial real estate - owner occupied | 137 | — | 137 | 2,039 | 379,227 | 12,229 | 393,632 | ||||||||||||||||||||
Commercial real estate - non-owner occupied | — | — | — | 2,057 | 1,185,331 | 6,327 | 1,193,715 | ||||||||||||||||||||
Construction | — | — | — | — | 64,789 | — | 64,789 | ||||||||||||||||||||
Residential real estate | 4,417 | — | 4,417 | 2,959 | 178,559 | 7,567 | 193,502 | ||||||||||||||||||||
Manufactured housing (5) | 3,761 | 2,813 | 6,574 | 2,236 | 89,850 | 3,070 | 101,730 | ||||||||||||||||||||
Other consumer | 12 | — | 12 | 58 | 3,177 | 236 | 3,483 | ||||||||||||||||||||
Total | $ | 21,250 | $ | 2,813 | $ | 24,063 | $ | 17,792 | $ | 6,080,136 | $ | 32,570 | $ | 6,154,561 |
(1) | Includes past due loans that are accruing interest because collection is considered probable. |
(2) | Loans where next payment due is less than 30 days from the report date. |
(3) | Purchased-credit-impaired loans aggregated into a pool are accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, and the past due status of the pools, or that of the individual loans within the pools, is not meaningful. Because of the credit impaired nature of the loans, the loans are recorded at a discount reflecting estimated future cash flows and the Bank recognizes interest income on each pool of loans reflecting the estimated yield and passage of time. Such loans are considered to be performing. Purchased-credit-impaired loans that are not in pools accrete interest when the timing and amount of their expected cash flows are reasonably estimable, and are reported as performing loans. |
(4) | Amounts exclude deferred costs and fees, unamortized premiums and discounts, and the allowance for loan losses. |
(5) | Manufactured housing loans purchased in 2010 are subject to cash reserves held at the Bank that are used to fund past-due payments when the loan becomes 90 days or more delinquent. Subsequent purchases are subject to varying provisions in the event of borrowers’ delinquencies. |
Three Months Ended September 30, 2017 | Multi-family | Commercial and Industrial | Commercial Real Estate Owner Occupied | Commercial Real Estate Non-Owner Occupied | Construction | Residential Real Estate | Manufactured Housing | Other Consumer | Total | ||||||||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||||||||||
Ending Balance, June 30, 2017 | $ | 12,028 | $ | 11,585 | $ | 2,976 | $ | 7,786 | $ | 716 | $ | 2,995 | $ | 268 | $ | 104 | $ | 38,458 | |||||||||||||||||
Charge-offs | — | (2,032 | ) | — | (77 | ) | — | (120 | ) | — | (356 | ) | (2,585 | ) | |||||||||||||||||||||
Recoveries | — | 54 | — | — | 27 | 7 | — | 1 | 89 | ||||||||||||||||||||||||||
Provision for loan losses | 668 | 966 | 262 | (53 | ) | 104 | 72 | (77 | ) | 410 | 2,352 | ||||||||||||||||||||||||
Ending Balance, September 30, 2017 | $ | 12,696 | $ | 10,573 | $ | 3,238 | $ | 7,656 | $ | 847 | $ | 2,954 | $ | 191 | $ | 159 | $ | 38,314 | |||||||||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||||||||||||||||||
Ending Balance, December 31, 2016 | $ | 11,602 | $ | 11,050 | $ | 2,183 | $ | 7,894 | $ | 840 | $ | 3,342 | $ | 286 | $ | 118 | $ | 37,315 | |||||||||||||||||
Charge-offs | — | (4,079 | ) | — | (485 | ) | — | (410 | ) | — | (602 | ) | (5,576 | ) | |||||||||||||||||||||
Recoveries | — | 337 | 9 | — | 157 | 34 | — | 101 | 638 | ||||||||||||||||||||||||||
Provision for loan losses | 1,094 | 3,265 | 1,046 | 247 | (150 | ) | (12 | ) | (95 | ) | 542 | 5,937 | |||||||||||||||||||||||
Ending Balance, September 30, 2017 | $ | 12,696 | $ | 10,573 | $ | 3,238 | $ | 7,656 | $ | 847 | $ | 2,954 | $ | 191 | $ | 159 | $ | 38,314 | |||||||||||||||||
As of September 30, 2017 | |||||||||||||||||||||||||||||||||||
Loans: | |||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | 20,493 | $ | 2,950 | $ | 184 | $ | — | $ | 8,178 | $ | 10,340 | $ | 56 | $ | 42,201 | |||||||||||||||||
Collectively evaluated for impairment | 3,617,062 | 1,093,927 | 472,831 | 1,232,212 | 73,203 | 421,249 | 79,957 | 3,543 | 6,993,984 | ||||||||||||||||||||||||||
Loans acquired with credit deterioration | 1,927 | 802 | 10,786 | 5,453 | — | 5,761 | 2,641 | 220 | 27,590 | ||||||||||||||||||||||||||
$ | 3,618,989 | $ | 1,115,222 | $ | 486,567 | $ | 1,237,849 | $ | 73,203 | $ | 435,188 | $ | 92,938 | $ | 3,819 | $ | 7,063,775 | ||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | 625 | $ | 740 | $ | — | $ | — | $ | 142 | $ | 5 | $ | 15 | $ | 1,527 | |||||||||||||||||
Collectively evaluated for impairment | 12,696 | 9,462 | 2,481 | 4,732 | 847 | 2,222 | 83 | 93 | 32,616 | ||||||||||||||||||||||||||
Loans acquired with credit deterioration | — | 486 | 17 | 2,924 | — | 590 | 103 | 51 | 4,171 | ||||||||||||||||||||||||||
$ | 12,696 | $ | 10,573 | $ | 3,238 | $ | 7,656 | $ | 847 | $ | 2,954 | $ | 191 | $ | 159 | $ | 38,314 |
Three Months Ended September 30, 2016 | Multi-family | Commercial and Industrial | Commercial Real Estate Owner Occupied | Commercial Real Estate Non-Owner Occupied | Construction | Residential Real Estate | Manufactured Housing | Other Consumer | Total | ||||||||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||||||||||
Ending Balance, June 30, 2016 | $ | 12,368 | $ | 10,370 | $ | 1,582 | $ | 8,483 | $ | 1,209 | $ | 3,535 | $ | 440 | $ | 110 | $ | 38,097 | |||||||||||||||||
Charge-offs | — | (237 | ) | — | (140 | ) | — | (43 | ) | — | (246 | ) | (666 | ) | |||||||||||||||||||||
Recoveries | — | 62 | — | — | 8 | 298 | — | 10 | 378 | ||||||||||||||||||||||||||
Provision for loan losses | (695 | ) | 832 | 305 | 3 | (168 | ) | (411 | ) | (18 | ) | 240 | 88 | ||||||||||||||||||||||
Ending Balance, September 30, 2016 | $ | 11,673 | $ | 11,027 | $ | 1,887 | $ | 8,346 | $ | 1,049 | $ | 3,379 | $ | 422 | $ | 114 | $ | 37,897 | |||||||||||||||||
Nine Months Ended September 30, 2016 | |||||||||||||||||||||||||||||||||||
Ending Balance, December 31, 2015 | $ | 12,016 | $ | 8,864 | $ | 1,348 | $ | 8,420 | $ | 1,074 | $ | 3,298 | $ | 494 | $ | 133 | $ | 35,647 | |||||||||||||||||
Charge-offs | — | (774 | ) | — | (140 | ) | — | (456 | ) | — | (478 | ) | (1,848 | ) | |||||||||||||||||||||
Recoveries | — | 173 | — | 8 | 465 | 299 | — | 10 | 955 | ||||||||||||||||||||||||||
Provision for loan losses | (343 | ) | 2,764 | 539 | 58 | (490 | ) | 238 | (72 | ) | 449 | 3,143 | |||||||||||||||||||||||
Ending Balance, September 30, 2016 | $ | 11,673 | $ | 11,027 | $ | 1,887 | $ | 8,346 | $ | 1,049 | $ | 3,379 | $ | 422 | $ | 114 | $ | 37,897 | |||||||||||||||||
As of December 31, 2016 | |||||||||||||||||||||||||||||||||||
Loans: | |||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | 8,516 | $ | 2,050 | $ | 2,151 | $ | — | $ | 6,972 | $ | 9,665 | $ | 57 | $ | 29,411 | |||||||||||||||||
Collectively evaluated for impairment | 3,212,895 | 979,158 | 379,353 | 1,185,237 | 64,789 | 178,963 | 88,995 | 3,190 | 6,092,580 | ||||||||||||||||||||||||||
Loans acquired with credit deterioration | 2,104 | 1,037 | 12,229 | 6,327 | — | 7,567 | 3,070 | 236 | 32,570 | ||||||||||||||||||||||||||
$ | 3,214,999 | $ | 988,711 | $ | 393,632 | $ | 1,193,715 | $ | 64,789 | $ | 193,502 | $ | 101,730 | $ | 3,483 | $ | 6,154,561 | ||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | 1,024 | $ | 287 | $ | 14 | $ | — | $ | 35 | $ | — | $ | — | $ | 1,360 | |||||||||||||||||
Collectively evaluated for impairment | 11,602 | 9,686 | 1,896 | 4,626 | 772 | 2,414 | 88 | 60 | 31,144 | ||||||||||||||||||||||||||
Loans acquired with credit deterioration | — | 340 | — | 3,254 | 68 | 893 | 198 | 58 | 4,811 | ||||||||||||||||||||||||||
$ | 11,602 | $ | 11,050 | $ | 2,183 | $ | 7,894 | $ | 840 | $ | 3,342 | $ | 286 | $ | 118 | $ | 37,315 |
September 30, 2017 | Three Months Ended September 30, 2017 | Nine Months Ended September 30, 2017 | |||||||||||||||||||||||||
Recorded Investment Net of Charge offs | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||||||
Commercial and industrial | $ | 19,433 | $ | 22,354 | $ | — | $ | 13,345 | $ | 354 | $ | 8,796 | $ | 450 | |||||||||||||
Commercial real estate owner occupied | 1,669 | 1,936 | — | 1,744 | 15 | 1,589 | 18 | ||||||||||||||||||||
Commercial real estate non-owner occupied | 184 | 428 | — | 184 | 91 | 989 | 93 | ||||||||||||||||||||
Other consumer | 32 | 32 | — | 44 | — | 50 | — | ||||||||||||||||||||
Residential real estate | 7,457 | 7,664 | — | 5,228 | 125 | 4,865 | 126 | ||||||||||||||||||||
Manufactured housing | 10,340 | 10,340 | — | 10,243 | 164 | 10,038 | 457 | ||||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||||||
Commercial and industrial | 1,060 | 1,331 | 625 | 1,963 | — | 5,400 | 22 | ||||||||||||||||||||
Commercial real estate owner occupied | 1,281 | 1,281 | 740 | 1,056 | 1 | 950 | 3 | ||||||||||||||||||||
Commercial real estate non-owner occupied | — | — | — | 51 | — | 94 | — | ||||||||||||||||||||
Other consumer | 24 | 24 | 15 | 12 | — | 6 | — | ||||||||||||||||||||
Residential real estate | 721 | 741 | 142 | 2,862 | — | 2,729 | 84 | ||||||||||||||||||||
Manufactured housing | — | — | 5 | 114 | — | 108 | 8 | ||||||||||||||||||||
Total | $ | 42,201 | $ | 46,131 | $ | 1,527 | $ | 36,846 | $ | 750 | $ | 35,614 | $ | 1,261 |
December 31, 2016 | Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | |||||||||||||||||||||||||
Recorded Investment Net of Charge offs | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||||||
Multi-family | $ | — | $ | — | $ | — | $ | 2,080 | $ | 38 | $ | 1,205 | $ | 38 | |||||||||||||
Commercial and industrial | 2,396 | 3,430 | — | 21,859 | 406 | 18,681 | 879 | ||||||||||||||||||||
Commercial real estate owner occupied | 1,210 | 1,210 | — | 10,182 | 201 | 9,651 | 403 | ||||||||||||||||||||
Commercial real estate non-owner occupied | 2,002 | 2,114 | — | 7,983 | 118 | 6,081 | 133 | ||||||||||||||||||||
Other consumer | 57 | 57 | — | 43 | — | 45 | — | ||||||||||||||||||||
Residential real estate | 6,682 | 6,749 | — | 3,835 | 39 | 4,039 | 83 | ||||||||||||||||||||
Manufactured housing | 9,665 | 9,665 | — | 8,971 | 9 | 8,785 | 290 | ||||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||||||
Multi-family | — | — | — | 383 | 5 | 290 | 15 | ||||||||||||||||||||
Commercial and industrial | 6,120 | 6,120 | 1,024 | 7,561 | 43 | 7,256 | 155 | ||||||||||||||||||||
Commercial real estate - owner occupied | 840 | 840 | 287 | — | — | 6 | — | ||||||||||||||||||||
Commercial real estate non-owner occupied | 149 | 204 | 14 | 328 | 2 | 438 | 6 | ||||||||||||||||||||
Other consumer | — | — | — | — | — | 36 | — | ||||||||||||||||||||
Residential real estate | 290 | 303 | 35 | 300 | — | 421 | — | ||||||||||||||||||||
Total | $ | 29,411 | $ | 30,692 | $ | 1,360 | $ | 63,525 | $ | 861 | $ | 56,934 | $ | 2,002 |
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | ||||||||||||
Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | ||||||||||
(dollars in thousands) | |||||||||||||
Extensions of maturity | 1 | $ | 60 | — | $ | — | |||||||
Interest-rate reductions | 3 | 122 | 10 | 533 | |||||||||
Total | 4 | $ | 182 | 10 | $ | 533 |
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||||||||
Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | ||||||||||
(dollars in thousands) | |||||||||||||
Extensions of maturity | 4 | $ | 6,263 | 3 | $ | 1,995 | |||||||
Interest-rate reductions | 32 | 1,297 | 49 | 1,932 | |||||||||
Total | 36 | $ | 7,560 | 52 | $ | 3,927 |
Three Months Ended September 30, 2017 | Three Months Ended September 30, 2016 | ||||||||||||
Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | ||||||||||
(dollars in thousands) | |||||||||||||
Commercial and industrial | — | $ | — | — | $ | — | |||||||
Manufactured housing | 4 | 182 | 10 | 533 | |||||||||
Residential real estate | — | — | — | — | |||||||||
Total loans | 4 | $ | 182 | 10 | $ | 533 |
Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||||||||
Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | ||||||||||
(dollars in thousands) | |||||||||||||
Commercial and industrial | 3 | $ | 6,203 | 1 | $ | 76 | |||||||
Commercial real estate non-owner occupied | — | — | 1 | 1,844 | |||||||||
Manufactured housing | 33 | 1,357 | 47 | 1,716 | |||||||||
Residential real estate | — | — | 3 | 291 | |||||||||
Total loans | 36 | $ | 7,560 | 52 | $ | 3,927 |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(amounts in thousands) | |||||||
Accretable yield balance as of June 30, | $ | 9,006 | $ | 11,165 | |||
Accretion to interest income | (368 | ) | (460 | ) | |||
Reclassification from nonaccretable difference and disposals, net | (276 | ) | 107 | ||||
Accretable yield balance as of September 30, | $ | 8,362 | $ | 10,812 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(amounts in thousands) | |||||||
Accretable yield balance as of December 31, | $ | 10,202 | $ | 12,947 | |||
Accretion to interest income | (1,326 | ) | (1,429 | ) | |||
Reclassification from nonaccretable difference and disposals, net | (514 | ) | (706 | ) | |||
Accretable yield balance as of September 30, | $ | 8,362 | $ | 10,812 |
Allowance for Loan Losses | |||||||
Three Months Ended September 30, | |||||||
(amounts in thousands) | 2017 | 2016 | |||||
Ending balance as of June 30, | $ | 38,458 | $ | 38,097 | |||
Provision for loan losses (1) | 2,352 | 88 | |||||
Charge-offs | (2,585 | ) | (666 | ) | |||
Recoveries | 89 | 378 | |||||
Ending balance as of September 30, | $ | 38,314 | $ | 37,897 |
FDIC Loss Sharing Receivable/ Clawback Liability | |||||||
Three Months Ended September 30, | |||||||
(amounts in thousands) | 2017 | 2016 | |||||
Ending balance as of June 30, | $ | — | $ | (1,381 | ) | ||
Cash payments to the FDIC | — | 1,381 | |||||
Ending balance as of September 30, | $ | — | $ | — | |||
(1) Provision for loan losses | $ | 2,352 | $ | 88 | |||
Net amount reported as provision for loan losses | $ | 2,352 | $ | 88 |
Allowance for Loan Losses | |||||||
Nine Months Ended September 30, | |||||||
(amounts in thousands) | 2017 | 2016 | |||||
Ending balance as of December 31, | $ | 37,315 | $ | 35,647 | |||
Provision for loan losses (1) | 5,937 | 3,143 | |||||
Charge-offs | (5,576 | ) | (1,848 | ) | |||
Recoveries | 638 | 955 | |||||
Ending balance as of September 30, | $ | 38,314 | $ | 37,897 |
FDIC Loss Sharing Receivable/ Clawback Liability | |||||||
Nine Months Ended September 30, | |||||||
(amounts in thousands) | 2017 | 2016 | |||||
Ending balance as of December 31, | $ | — | $ | (2,083 | ) | ||
Increased estimated cash flows (2) | — | 289 | |||||
Other activity, net (a) | — | (255 | ) | ||||
Cash payments to the FDIC | — | 2,049 | |||||
Ending balance as of September 30, | $ | — | $ | — | |||
(1) Provision for loan losses | $ | 5,937 | $ | 3,143 | |||
(2) Effect attributable to FDIC loss share arrangements | — | (289 | ) | ||||
Net amount reported as provision for loan losses | $ | 5,937 | $ | 2,854 |
September 30, 2017 | |||||||||||||||||||||||||||||||||||
Multi-family | Commercial and Industrial | Commercial Real Estate Owner Occupied | Commercial Real Estate Non-Owner Occupied | Construction | Residential Real Estate | Manufactured Housing | Other Consumer | Total | |||||||||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||||||||||
Pass/Satisfactory | $ | 3,577,304 | $ | 1,080,797 | $ | 468,389 | $ | 1,212,945 | $ | 73,203 | $ | 431,364 | $ | — | $ | — | $ | 6,844,002 | |||||||||||||||||
Special Mention | 36,604 | 8,663 | 9,716 | 22,008 | — | — | — | — | 76,991 | ||||||||||||||||||||||||||
Substandard | 5,081 | 25,762 | 8,462 | 2,896 | — | 3,824 | — | — | 46,025 | ||||||||||||||||||||||||||
Performing (1) | — | — | — | — | — | — | 85,537 | 3,694 | 89,231 | ||||||||||||||||||||||||||
Non-performing (2) | — | — | — | — | — | — | 7,401 | 125 | 7,526 | ||||||||||||||||||||||||||
Total | $ | 3,618,989 | $ | 1,115,222 | $ | 486,567 | $ | 1,237,849 | $ | 73,203 | $ | 435,188 | $ | 92,938 | $ | 3,819 | $ | 7,063,775 |
December 31, 2016 | |||||||||||||||||||||||||||||||||||
Multi-family | Commercial and Industrial | Commercial Real Estate Owner Occupied | Commercial Real Estate Non-Owner Occupied | Construction | Residential Real Estate | Manufactured Housing | Other Consumer | Total | |||||||||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||||||||||
Pass/Satisfactory | $ | 3,198,290 | $ | 954,846 | $ | 375,919 | $ | 1,175,850 | $ | 50,291 | $ | 189,919 | $ | — | $ | — | $ | 5,945,115 | |||||||||||||||||
Special Mention | — | 19,552 | 12,065 | 10,824 | 14,498 | — | — | — | 56,939 | ||||||||||||||||||||||||||
Substandard | 16,709 | 14,313 | 5,648 | 7,041 | — | 3,583 | — | — | 47,294 | ||||||||||||||||||||||||||
Performing (1) | — | — | — | — | — | — | 92,920 | 3,413 | 96,333 | ||||||||||||||||||||||||||
Non-performing (2) | — | — | — | — | — | — | 8,810 | 70 | 8,880 | ||||||||||||||||||||||||||
Total | $ | 3,214,999 | $ | 988,711 | $ | 393,632 | $ | 1,193,715 | $ | 64,789 | $ | 193,502 | $ | 101,730 | $ | 3,483 | $ | 6,154,561 |
(1) | Includes consumer and other installment loans not subject to risk ratings. |
(2) | Includes loans that are past due and still accruing interest and loans on nonaccrual status. |
Actual | For Capital Adequacy Purposes (Minimum Plus Capital Buffer) | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||
(amounts in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||
As of September 30, 2017: | ||||||||||||||||||||
Common equity Tier 1 capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 677,976 | 8.284 | % | $ | 470,603 | 5.750 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 1,009,380 | 12.342 | % | $ | 470,242 | 5.750 | % | $ | 531,578 | 6.500 | % | ||||||||
Tier 1 capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 895,447 | 10.941 | % | $ | 593,369 | 7.250 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 1,009,380 | 12.342 | % | $ | 592,914 | 7.250 | % | $ | 654,250 | 8.000 | % | ||||||||
Total capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 1,014,784 | 12.399 | % | $ | 757,057 | 9.250 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 1,156,766 | 14.145 | % | $ | 756,477 | 9.250 | % | $ | 817,813 | 10.000 | % | ||||||||
Tier 1 capital (to average assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 895,447 | 8.355 | % | $ | 428,709 | 4.000 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 1,009,380 | 9.434 | % | $ | 427,963 | 4.000 | % | $ | 534,954 | 5.000 | % | ||||||||
As of December 31, 2016: | ||||||||||||||||||||
Common equity Tier 1 capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 628,139 | 8.487 | % | $ | 379,306 | 5.125 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 857,421 | 11.626 | % | $ | 377,973 | 5.125 | % | $ | 479,380 | 6.500 | % | ||||||||
Tier 1 capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 844,755 | 11.414 | % | $ | 490,322 | 6.625 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 857,421 | 11.626 | % | $ | 488,599 | 6.625 | % | $ | 590,006 | 8.000 | % | ||||||||
Total capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 966,097 | 13.053 | % | $ | 638,343 | 8.625 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 1,003,609 | 13.608 | % | $ | 636,101 | 8.625 | % | $ | 737,508 | 10.000 | % | ||||||||
Tier 1 capital (to average assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 844,755 | 9.067 | % | $ | 372,652 | 4.000 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 857,421 | 9.233 | % | $ | 371,466 | 4.000 | % | $ | 464,333 | 5.000 | % |
Fair Value Measurements at September 30, 2017 | |||||||||||||||||||
Carrying Amount | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
(amounts in thousands) | |||||||||||||||||||
Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 219,480 | $ | 219,480 | $ | 219,480 | $ | — | $ | — | |||||||||
Investment securities, available for sale | 584,823 | 584,823 | 2,311 | 582,512 | — | ||||||||||||||
Loans held for sale | 2,113,293 | 2,113,473 | — | 1,963,076 | 150,397 | ||||||||||||||
Loans receivable, net of allowance for loan losses | 7,023,024 | 7,020,487 | — | — | 7,020,487 | ||||||||||||||
FHLB, Federal Reserve Bank and other restricted stock | 98,611 | 98,611 | — | 98,611 | — | ||||||||||||||
Derivatives | 10,447 | 10,447 | — | 10,344 | 103 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Deposits | $ | 7,597,076 | $ | 7,596,324 | $ | 5,296,636 | $ | 2,299,688 | $ | — | |||||||||
Federal funds purchased | 147,000 | 147,000 | 147,000 | — | — | ||||||||||||||
FHLB advances | 1,462,343 | 1,462,245 | 727,343 | 734,902 | — | ||||||||||||||
Other borrowings | 186,258 | 194,157 | 65,704 | 128,453 | — | ||||||||||||||
Subordinated debt | 108,856 | 115,500 | — | 115,500 | — | ||||||||||||||
Derivatives | 12,092 | 12,092 | — | 12,092 | — |
Fair Value Measurements at December 31, 2016 | |||||||||||||||||||
Carrying Amount | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||
(amounts in thousands) | |||||||||||||||||||
Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 264,709 | $ | 264,709 | $ | 264,709 | $ | — | $ | — | |||||||||
Investment securities, available for sale | 493,474 | 493,474 | 15,246 | 478,228 | — | ||||||||||||||
Loans held for sale | 2,117,510 | 2,117,510 | — | 2,117,510 | — | ||||||||||||||
Loans receivable, net of allowance for loan losses | 6,117,322 | 6,162,020 | — | — | 6,162,020 | ||||||||||||||
FHLB, Federal Reserve Bank and other restricted stock | 68,408 | 68,408 | — | 68,408 | — | ||||||||||||||
Derivatives | 10,864 | 10,864 | — | 10,819 | 45 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Deposits | $ | 7,303,775 | $ | 7,303,663 | $ | 4,472,013 | $ | 2,831,650 | $ | — | |||||||||
Federal funds purchased | 83,000 | 83,000 | 83,000 | — | — | ||||||||||||||
FHLB advances | 868,800 | 869,049 | 688,800 | 180,249 | — | ||||||||||||||
Other borrowings | 87,123 | 91,761 | 66,261 | 25,500 | — | ||||||||||||||
Subordinated debt | 108,783 | 111,375 | — | 111,375 | — | ||||||||||||||
Derivatives | 14,172 | 14,172 | — | 14,172 | — |
September 30, 2017 | |||||||||||||||
Fair Value Measurements at the End of the Reporting Period Using | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
(amounts in thousands) | |||||||||||||||
Measured at Fair Value on a Recurring Basis: | |||||||||||||||
Assets | |||||||||||||||
Available-for-sale securities: | |||||||||||||||
Agency-guaranteed residential mortgage-backed securities | $ | — | $ | 196,327 | $ | — | $ | 196,327 | |||||||
Agency guaranteed commercial mortgage-backed securities | — | 340,108 | — | 340,108 | |||||||||||
Corporate notes | — | 46,077 | — | 46,077 | |||||||||||
Equity securities | 2,311 | — | — | 2,311 | |||||||||||
Derivatives | — | 10,344 | 103 | 10,447 | |||||||||||
Loans held for sale – fair value option | — | 1,963,076 | — | 1,963,076 | |||||||||||
Total assets - recurring fair value measurements | $ | 2,311 | $ | 2,555,932 | $ | 103 | $ | 2,558,346 | |||||||
Liabilities | |||||||||||||||
Derivatives | $ | — | $ | 12,092 | $ | — | $ | 12,092 | |||||||
Measured at Fair Value on a Nonrecurring Basis: | |||||||||||||||
Assets | |||||||||||||||
Impaired loans, net of reserves of $1,527 | $ | — | $ | — | $ | 2,976 | $ | 2,976 | |||||||
Other real estate owned | — | — | 782 | 782 | |||||||||||
Total assets - nonrecurring fair value measurements | $ | — | $ | — | $ | 3,758 | $ | 3,758 |
December 31, 2016 | |||||||||||||||
Fair Value Measurements at the End of the Reporting Period Using | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||
(amounts in thousands) | |||||||||||||||
Measured at Fair Value on a Recurring Basis: | |||||||||||||||
Assets | |||||||||||||||
Available-for-sale securities: | |||||||||||||||
Agency-guaranteed residential mortgage-backed securities | $ | — | $ | 231,263 | $ | — | $ | 231,263 | |||||||
Agency-guaranteed commercial mortgage-backed securities | — | 201,817 | — | 201,817 | |||||||||||
Corporate notes | — | 45,148 | — | 45,148 | |||||||||||
Equity securities | 15,246 | — | — | 15,246 | |||||||||||
Derivatives | — | 10,819 | 45 | 10,864 | |||||||||||
Loans held for sale – fair value option | — | 2,117,510 | — | 2,117,510 | |||||||||||
Total assets - recurring fair value measurements | $ | 15,246 | $ | 2,606,557 | $ | 45 | $ | 2,621,848 | |||||||
Liabilities | |||||||||||||||
Derivatives | $ | — | $ | 14,172 | $ | — | $ | 14,172 | |||||||
Measured at Fair Value on a Nonrecurring Basis: | |||||||||||||||
Assets | |||||||||||||||
Impaired loans, net of reserves of $1,360 | $ | — | $ | — | $ | 6,527 | $ | 6,527 | |||||||
Other real estate owned | — | — | 2,731 | 2,731 | |||||||||||
Total assets - nonrecurring fair value measurements | $ | — | $ | — | $ | 9,258 | $ | 9,258 |
Residential Mortgage Loan Commitments | |||||||
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(amounts in thousands) | |||||||
Balance at June 30 | $ | 102 | $ | 157 | |||
Issuances | 103 | 85 | |||||
Settlements | (102 | ) | (157 | ) | |||
Balance at September 30 | $ | 103 | $ | 85 |
Residential Mortgage Loan Commitments | |||||||
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(amounts in thousands) | |||||||
Balance at December 31 | $ | 45 | $ | 45 | |||
Issuances | 300 | 315 | |||||
Settlements | (242 | ) | (275 | ) | |||
Balance at September 30 | $ | 103 | $ | 85 | |||
Quantitative Information about Level 3 Fair Value Measurements | |||||||||
September 30, 2017 | Fair Value Estimate | Valuation Technique | Unobservable Input | Range (Weighted Average) (4) | |||||
(amounts in thousands) | |||||||||
Impaired loans | $ | 2,976 | Collateral appraisal (1) | Liquidation expenses (2) | (8)% | ||||
Other real estate owned | 782 | Collateral appraisal (1) | Liquidation expenses (2) | (8)% | |||||
Residential mortgage loan commitments | 103 | Adjusted market bid | Pull-through rate | 90% |
Quantitative Information about Level 3 Fair Value Measurements | |||||||||
December 31, 2016 | Fair Value Estimate | Valuation Technique | Unobservable Input | Range (Weighted Average) (4) | |||||
(amounts in thousands) | |||||||||
Impaired loans | $ | 1,431 | Collateral appraisal (1) | Liquidation expenses (2) | (8)% | ||||
Impaired loans | 5,096 | Discounted cash flow | Projected cash flows (3) | 4 times EBITDA | |||||
Other real estate owned | 2,731 | Collateral appraisal (1) | Liquidation expenses (2) | (8)% | |||||
Residential mortgage loan commitments | 45 | Adjusted market bid | Pull-through rate | 90% |
(1) | Obtained from approved independent appraisers. Appraisals are current and in compliance with credit policy. The Bank does not generally discount appraisals. |
(2) | Fair value is adjusted for estimated costs to sell based on a percentage of the value as determined by the appraisal. |
(3) | Projected cash flows of the business derived using EBITDA multiple based on management's best estimate. |
(4) | Presented as a percentage of the value determined by appraisal for impaired loans and other real estate owned. |
September 30, 2017 | ||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||
(amounts in thousands) | ||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||
Interest rate swaps | Other assets | $ | 355 | Other liabilities | $ | 2,001 | ||||||
Total | $ | 355 | $ | 2,001 | ||||||||
Derivatives not designated as hedging instruments: | ||||||||||||
Interest rate swaps | Other assets | $ | 9,861 | Other liabilities | $ | 10,083 | ||||||
Credit contracts | Other assets | 128 | Other liabilities | 8 | ||||||||
Residential mortgage loan commitments | Other assets | 103 | Other liabilities | — | ||||||||
Total | $ | 10,092 | $ | 10,091 |
December 31, 2016 | ||||||||||||
Derivative Assets | Derivative Liabilities | |||||||||||
Balance Sheet | Balance Sheet | |||||||||||
Location | Fair Value | Location | Fair Value | |||||||||
(amounts in thousands) | ||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||
Interest rate swaps | Other assets | $ | — | Other liabilities | $ | 3,624 | ||||||
Total | $ | — | $ | 3,624 | ||||||||
Derivatives not designated as hedging instruments: | ||||||||||||
Interest rate swaps | Other assets | $ | 10,683 | Other liabilities | $ | 10,537 | ||||||
Credit contracts | Other assets | 136 | Other liabilities | 11 | ||||||||
Residential mortgage loan commitments | Other assets | 45 | Other liabilities | — | ||||||||
Total | $ | 10,864 | $ | 10,548 |
Three Months Ended September 30, 2017 | |||||
Income Statement Location | Amount of Income (Loss) Recognized in Earnings | ||||
(amounts in thousands) | |||||
Derivatives not designated as hedging instruments: | |||||
Interest rate swaps | Other non-interest income | $ | 91 | ||
Credit contracts | Other non-interest income | (6 | ) | ||
Residential mortgage loan commitments | Mortgage banking income | 1 | |||
Total | $ | 86 |
Three Months Ended September 30, 2016 | |||||
Income Statement Location | Amount of Income (Loss) Recognized in Earnings | ||||
(amounts in thousands) | |||||
Derivatives not designated as hedging instruments: | |||||
Interest rate swaps | Other non-interest income | $ | 1,737 | ||
Credit contracts | Other non-interest income | (15 | ) | ||
Residential mortgage loan commitments | Mortgage banking income | (71 | ) | ||
Total | $ | 1,651 |
Nine Months Ended September 30, 2017 | |||||
Income Statement Location | Amount of Income (Loss) Recognized in Earnings | ||||
(amounts in thousands) | |||||
Derivatives not designated as hedging instruments: | |||||
Interest rate swaps | Other non-interest income | $ | 429 | ||
Credit contracts | Other non-interest income | (5 | ) | ||
Residential mortgage loan commitments | Mortgage banking income | 58 | |||
Total | $ | 482 | |||
Nine Months Ended September 30, 2016 | |||||
Income Statement Location | Amount of Income Recognized in Earnings | ||||
(amounts in thousands) | |||||
Derivatives not designated as hedging instruments: | |||||
Interest rate swaps | Other non-interest income | $ | 1,250 | ||
Credit contracts | Other non-interest income | 257 | |||
Residential mortgage loan commitments | Mortgage banking income | 41 | |||
Total | $ | 1,548 | |||
Three Months Ended September 30, 2017 | |||||||||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) (1) | Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion) | |||||||
(amounts in thousands) | |||||||||
Derivatives in cash flow hedging relationships: | |||||||||
Interest rate swaps | $ | 104 | Interest expense | $ | (572 | ) |
Three Months Ended September 30, 2016 | |||||||||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) (1) | Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion) | |||||||
(amounts in thousands) | |||||||||
Derivatives in cash flow hedging relationships: | |||||||||
Interest rate swaps | $ | 556 | Interest expense | $ | (703 | ) |
Nine Months Ended September 30, 2017 | |||||||||
Amount of Loss Recognized in OCI on Derivatives (Effective Portion) (1) | Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion) | |||||||
(amounts in thousands) | |||||||||
Derivative in cash flow hedging relationships: | |||||||||
Interest rate swaps | $ | (115 | ) | Interest expense | $ | (2,166 | ) | ||
Nine Months Ended September 30, 2016 | |||||||||
Amount of Loss Recognized in OCI on Derivatives (Effective Portion) (1) | Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion) | |||||||
(amounts in thousands) | |||||||||
Derivative in cash flow hedging relationships: | |||||||||
Interest rate swaps | $ | (1,577 | ) | Interest expense | $ | (1,306 | ) | ||
Gross Amount of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Assets Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet | Net Amount | |||||||||||||||||||
Financial Instruments | Cash Collateral Received | ||||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Description | |||||||||||||||||||||||
Interest rate swap derivatives with institutional counterparties | $ | 4,190 | $ | — | $ | 4,190 | $ | — | $ | 1,900 | $ | 2,290 |
Gross Amount of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet | ||||||||||||||||||||
Financial Instruments | Cash Collateral Pledged | Net Amount | |||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Description | |||||||||||||||||||||||
Interest rate swap derivatives with institutional counterparties | $ | 8,400 | $ | — | $ | 8,400 | $ | — | $ | 8,262 | $ | 138 |
Gross Amount of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Assets Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet | Net Amount | |||||||||||||||||||
Financial Instruments | Cash Collateral Received | ||||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Description | |||||||||||||||||||||||
Interest rate swap derivatives with institutional counterparties | $ | 4,723 | $ | — | $ | 4,723 | $ | — | $ | — | $ | 4,723 |
Gross Amount of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | Gross Amounts Not Offset in the Consolidated Balance Sheet | Net Amount | |||||||||||||||||||
Financial Instruments | Cash Collateral Pledged | ||||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Description | |||||||||||||||||||||||
Interest rate swap derivatives with institutional counterparties | $ | 9,825 | $ | — | $ | 9,825 | $ | — | $ | 4,472 | $ | 5,353 |
Three Months Ended September 30, 2017 | ||||||||||||
Community Business Banking | BankMobile | Consolidated | ||||||||||
Interest income | $ | 95,585 | $ | 2,700 | (1 | ) | $ | 98,285 | ||||
Interest expense | 30,250 | 16 | 30,266 | |||||||||
Net interest income | 65,335 | 2,684 | 68,019 | |||||||||
Provision for loan losses | 1,874 | 478 | 2,352 | |||||||||
Non-interest income | 4,190 | 13,836 | 18,026 | |||||||||
Non-interest expense | 33,990 | 27,050 | 61,040 | |||||||||
Income (loss) before income tax expense (benefit) | 33,661 | (11,008 | ) | 22,653 | ||||||||
Income tax expense (benefit) | 18,999 | (4,100 | ) | 14,899 | ||||||||
Net income (loss) | 14,662 | (6,908 | ) | 7,754 | ||||||||
Preferred stock dividends | 3,615 | — | 3,615 | |||||||||
Net income (loss) available to common shareholders | $ | 11,047 | $ | (6,908 | ) | $ | 4,139 | |||||
Three Months Ended September 30, 2016 | ||||||||||||
Community Business Banking | BankMobile | Consolidated | ||||||||||
Interest income | $ | 82,828 | $ | 1,384 | (1 | ) | $ | 84,212 | ||||
Interest expense | 19,620 | 7 | 19,627 | |||||||||
Net interest income | 63,208 | 1,377 | 64,585 | |||||||||
Provision for loan losses | (162 | ) | 250 | 88 | ||||||||
Non-interest income | 11,121 | 16,365 | 27,486 | |||||||||
Non-interest expense | 36,864 | 19,354 | 56,218 | |||||||||
Income (loss) before income tax expense (benefit) | 37,627 | (1,862 | ) | 35,765 | ||||||||
Income tax expense (benefit) | 15,266 | (708 | ) | 14,558 | ||||||||
Net income (loss) | 22,361 | (1,154 | ) | 21,207 | ||||||||
Preferred stock dividends | 2,552 | — | 2,552 | |||||||||
Net income (loss) available to common shareholders | $ | 19,809 | $ | (1,154 | ) | $ | 18,655 | |||||
Nine Months Ended September 30, 2017 | ||||||||||||
Community Business Banking | BankMobile | Consolidated | ||||||||||
Interest income | $ | 265,524 | $ | 9,708 | (1 | ) | $ | 275,232 | ||||
Interest expense | 76,134 | 55 | 76,189 | |||||||||
Net interest income | 189,390 | 9,653 | 199,043 | |||||||||
Provision for loan losses | 5,459 | 478 | 5,937 | |||||||||
Non-interest income | 16,587 | 42,583 | 59,170 | |||||||||
Non-interest expense | 94,704 | 66,114 | 160,818 | |||||||||
Income before income tax expense (benefit) | 105,814 | (14,356 | ) | 91,458 | ||||||||
Income tax expense (benefit) | 39,584 | (5,348 | ) | 34,236 | ||||||||
Net income (loss) | 66,230 | (9,008 | ) | 57,222 | ||||||||
Preferred stock dividends | 10,844 | — | 10,844 | |||||||||
Net income (loss) available to common shareholders | $ | 55,386 | $ | (9,008 | ) | $ | 46,378 | |||||
As of September 30, 2017 | ||||||||||||
Goodwill and other intangibles | $ | 3,632 | $ | 12,972 | $ | 16,604 | ||||||
Total assets | $ | 10,405,452 | $ | 66,377 | (2 | ) | $ | 10,471,829 | ||||
Total deposits | $ | 6,815,994 | $ | 781,082 | $ | 7,597,076 | ||||||
Nine Months Ended September 30, 2016 | ||||||||||||
Community Business Banking | BankMobile | Consolidated | ||||||||||
Interest income | $ | 234,513 | $ | 4,418 | (1 | ) | $ | 238,931 | ||||
Interest expense | 53,539 | 22 | 53,561 | |||||||||
Net interest income | 180,974 | 4,396 | 185,370 | |||||||||
Provision for loan losses | 2,605 | 249 | 2,854 | |||||||||
Non-interest income | 22,241 | 18,996 | 41,237 | |||||||||
Non-interest expense | 101,053 | 27,253 | 128,306 | |||||||||
Income (loss) before income tax expense (benefit) | 99,557 | (4,110 | ) | 95,447 | ||||||||
Income tax expense (benefit) | 38,134 | (1,562 | ) | 36,572 | ||||||||
Net income (loss) | 61,423 | (2,548 | ) | 58,875 | ||||||||
Preferred stock dividends | 5,900 | — | 5,900 | |||||||||
Net income (loss) available to common shareholders | $ | 55,523 | $ | (2,548 | ) | $ | 52,975 | |||||
As of September 30, 2016 | ||||||||||||
Goodwill and other intangibles | $ | 3,642 | $ | 13,282 | $ | 16,924 | ||||||
Total assets | $ | 9,532,281 | $ | 70,329 | (2 | ) | $ | 9,602,610 | ||||
Total deposits | $ | 6,855,788 | $ | 533,182 | $ | 7,388,970 | ||||||
• | Change in BankMobile disposition strategy ($10.4 million after tax). As further described under the "Third Quarter Events of Note" above, Customers' reclassification of BankMobile as part of the continuing business resulted in the capture of depreciation and amortization expense not recognized during the period the related assets were classified as held for sale ($4.2 million pre-tax and $2.6 million after tax). In addition, Customers' decision to spin-off and then merge the BankMobile business eliminated Customers’ tax strategy to offset capital losses on disposition of the Religare common stock with capital gains from the sale of BankMobile, reducing earnings by $7.7 million after tax in third quarter 2017. |
• | Religare investment impairment charge of $8.3 million ($5.2 million after tax). Customers recorded an other-than-temporary impairment loss of $8.3 million for three months ended September 30, 2017 for the full amount of the decline in fair value of the Religare investment below the cost basis established at June 30, 2017. |
Three Months Ended September 30, | |||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||
Average Balance | Interest Income or Expense | Average Yield or Cost (%) | Average Balance | Interest Income or Expense | Average Yield or Cost (%) | ||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Interest-earning deposits | $ | 280,845 | $ | 923 | 1.30 | % | $ | 237,753 | $ | 326 | 0.55 | % | |||||||||
Investment securities (A) | 1,017,065 | 7,307 | 2.87 | % | 534,333 | 3,528 | 2.64 | % | |||||||||||||
Loans: | |||||||||||||||||||||
Commercial loans to mortgage companies | 1,956,587 | 21,099 | 4.28 | % | 2,142,986 | 18,990 | 3.53 | % | |||||||||||||
Multifamily loans | 3,639,566 | 33,301 | 3.63 | % | 3,283,007 | 31,373 | 3.80 | % | |||||||||||||
Commercial and industrial | 1,476,083 | 15,792 | 4.24 | % | 1,193,906 | 11,887 | 3.96 | % | |||||||||||||
Non-owner occupied commercial real estate | 1,294,996 | 12,706 | 3.89 | % | 1,236,054 | 12,295 | 3.96 | % | |||||||||||||
All other loans | 561,911 | 5,842 | 4.12 | % | 385,511 | 4,554 | 4.70 | % | |||||||||||||
Total loans (B) | 8,929,143 | 88,740 | 3.94 | % | 8,241,464 | 79,099 | 3.82 | % | |||||||||||||
Other interest-earning assets | 125,341 | 1,315 | 4.16 | % | 90,010 | 1,259 | 5.56 | % | |||||||||||||
Total interest-earning assets | 10,352,394 | 98,285 | 3.77 | % | 9,103,560 | 84,212 | 3.68 | % | |||||||||||||
Non-interest-earning assets | 389,797 | 336,013 | |||||||||||||||||||
Total assets | $ | 10,742,191 | $ | 9,439,573 | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Interest checking accounts | $ | 351,422 | 708 | 0.80 | % | $ | 202,645 | 278 | 0.55 | % | |||||||||||
Money market deposit accounts | 3,427,682 | 9,866 | 1.14 | % | 3,115,076 | 5,200 | 0.66 | % | |||||||||||||
Other savings accounts | 40,310 | 29 | 0.28 | % | 36,516 | 22 | 0.24 | % | |||||||||||||
Certificates of deposit | 2,361,069 | 7,778 | 1.31 | % | 2,796,028 | 7,509 | 1.07 | % | |||||||||||||
Total interest-bearing deposits | 6,180,483 | 18,381 | 1.18 | % | 6,150,265 | 13,009 | 0.84 | % | |||||||||||||
Borrowings | 2,414,086 | 11,885 | 1.96 | % | 1,586,262 | 6,618 | 1.66 | % | |||||||||||||
Total interest-bearing liabilities | 8,594,569 | 30,266 | 1.40 | % | 7,736,527 | 19,627 | 1.01 | % | |||||||||||||
Non-interest-bearing deposits | 1,158,911 | 863,435 | |||||||||||||||||||
Total deposits and borrowings | 9,753,480 | 1.23 | % | 8,599,962 | 0.91 | % | |||||||||||||||
Other non-interest-bearing liabilities | 66,220 | 129,208 | |||||||||||||||||||
Total liabilities | 9,819,700 | 8,729,170 | |||||||||||||||||||
Shareholders’ Equity | 922,491 | 710,403 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 10,742,191 | $ | 9,439,573 | |||||||||||||||||
Net interest earnings | 68,019 | 64,585 | |||||||||||||||||||
Tax-equivalent adjustment (C) | 203 | 96 | |||||||||||||||||||
Net interest earnings | $ | 68,222 | $ | 64,681 | |||||||||||||||||
Interest spread | 2.54 | % | 2.77 | % | |||||||||||||||||
Net interest margin | 2.61 | % | 2.82 | % | |||||||||||||||||
Net interest margin tax equivalent (C) | 2.62 | % | 2.83 | % |
(A) | For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. |
(B) | Includes non-accrual loans, the effect of which is to reduce the yield earned on loans, and deferred loan fees. |
(C) | Non-GAAP tax-equivalent basis, using a 35% statutory tax rate to approximate interest income as a taxable asset. |
Three Months Ended September 30, | |||||||||||
2017 vs. 2016 | |||||||||||
Increase (Decrease) due to Change in | |||||||||||
Rate | Volume | Total | |||||||||
(amounts in thousands) | |||||||||||
Interest income | |||||||||||
Interest-earning deposits | $ | 528 | $ | 69 | $ | 597 | |||||
Investment securities | 335 | 3,444 | 3,779 | ||||||||
Loans: | |||||||||||
Commercial loans to mortgage companies | 3,853 | (1,744 | ) | 2,109 | |||||||
Multifamily loans | (1,440 | ) | 3,368 | 1,928 | |||||||
Commercial and industrial | 908 | 2,997 | 3,905 | ||||||||
Non-owner occupied commercial real estate | (195 | ) | 606 | 411 | |||||||
All other loans | (610 | ) | 1,898 | 1,288 | |||||||
Total loans | 2,516 | 7,125 | 9,641 | ||||||||
Other interest-earning assets | (365 | ) | 421 | 56 | |||||||
Total interest income | 3,014 | 11,059 | 14,073 | ||||||||
Interest expense | |||||||||||
Interest checking accounts | 167 | 263 | 430 | ||||||||
Money market deposit accounts | 4,095 | 571 | 4,666 | ||||||||
Other savings accounts | 4 | 3 | 7 | ||||||||
Certificates of deposit | 1,539 | (1,270 | ) | 269 | |||||||
Total interest-bearing deposits | 5,805 | (433 | ) | 5,372 | |||||||
Borrowings | 1,337 | 3,930 | 5,267 | ||||||||
Total interest expense | 7,142 | 3,497 | 10,639 | ||||||||
Net interest income | $ | (4,128 | ) | $ | 7,562 | $ | 3,434 |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(amounts in thousands) | |||||||
Interchange and card revenue | $ | 9,570 | $ | 11,547 | |||
Gain (loss) on sale of investment securities | 5,349 | (1 | ) | ||||
Deposit fees | 2,659 | 4,218 | |||||
Mortgage warehouse transactional fees | 2,396 | 3,080 | |||||
Bank-owned life insurance | 1,672 | 1,386 | |||||
Gain on sale of SBA and other loans | 1,144 | 1,206 | |||||
Mortgage banking income | 257 | 287 | |||||
Impairment loss on investment securities | (8,349 | ) | — | ||||
Other | 3,328 | 5,763 | |||||
Total non-interest income | $ | 18,026 | $ | 27,486 |
Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(amounts in thousands) | |||||||
Salaries and employee benefits | $ | 24,807 | $ | 22,681 | |||
Technology, communication and bank operations | 14,401 | 12,525 | |||||
Professional services | 7,403 | 7,006 | |||||
Occupancy | 2,857 | 2,450 | |||||
FDIC assessments, taxes, and regulatory fees | 2,475 | 2,726 | |||||
Provision for operating losses | 1,509 | 1,406 | |||||
Loan workout | 915 | 592 | |||||
Other real estate owned | 445 | 1,192 | |||||
Advertising and promotion | 404 | 591 | |||||
Acquisition related expenses | — | 144 | |||||
Other | 5,824 | 4,905 | |||||
Total non-interest expense | $ | 61,040 | $ | 56,218 |
Nine Months Ended September 30, | |||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||
Average Balance | Interest Income or Expense | Average Yield or Cost (%) | Average Balance | Interest Income or Expense | Average Yield or Cost | ||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Interest-earning deposits | $ | 327,154 | $ | 2,446 | 1.00 | % | $ | 211,971 | $ | 845 | 0.53 | % | |||||||||
Investment securities (A) | 971,710 | 21,017 | 2.88 | % | 548,921 | 10,875 | 2.64 | % | |||||||||||||
Loans: | |||||||||||||||||||||
Commercial loans to mortgage companies | 1,734,874 | 53,860 | 4.15 | % | 1,931,892 | 50,767 | 3.51 | % | |||||||||||||
Multifamily loans | 3,496,276 | 96,570 | 3.69 | % | 3,235,689 | 91,611 | 3.78 | % | |||||||||||||
Commercial and industrial | 1,402,650 | 44,034 | 4.20 | % | 1,127,622 | 33,626 | 3.98 | % | |||||||||||||
Non-owner occupied commercial real estate | 1,290,762 | 37,654 | 3.90 | % | 1,170,996 | 33,759 | 3.85 | % | |||||||||||||
All other loans | 515,567 | 16,590 | 4.30 | % | 399,202 | 14,356 | 4.80 | % | |||||||||||||
Total loans (B) | 8,440,129 | 248,708 | 3.94 | % | 7,865,401 | 224,119 | 3.81 | % | |||||||||||||
Other interest-earning assets | 102,590 | 3,061 | 3.99 | % | 90,911 | 3,092 | 4.54 | % | |||||||||||||
Total interest earning assets | 9,841,583 | 275,232 | 3.74 | % | 8,717,204 | 238,931 | 3.66 | % | |||||||||||||
Non-interest-earning assets | 367,595 | 305,326 | |||||||||||||||||||
Total assets | $ | 10,209,178 | $ | 9,022,530 | |||||||||||||||||
Liabilities | |||||||||||||||||||||
Interest checking accounts | $ | 338,991 | 1,839 | 0.73 | % | $ | 160,525 | 681 | 0.57 | % | |||||||||||
Money market deposit accounts | 3,347,661 | 24,462 | 0.98 | % | 3,044,696 | 13,674 | 0.60 | % | |||||||||||||
Other savings accounts | 41,685 | 87 | 0.28 | % | 39,075 | 66 | 0.23 | % | |||||||||||||
Certificates of deposit | 2,489,970 | 22,546 | 1.21 | % | 2,556,935 | 19,944 | 1.04 | % | |||||||||||||
Total interest-bearing deposits | 6,218,307 | 48,934 | 1.05 | % | 5,801,231 | 34,365 | 0.79 | % | |||||||||||||
Borrowings | 1,836,654 | 27,255 | 1.98 | % | 1,693,455 | 19,196 | 1.51 | % | |||||||||||||
Total interest-bearing liabilities | 8,054,961 | 76,189 | 1.26 | % | 7,494,686 | 53,561 | 0.95 | % | |||||||||||||
Non-interest-bearing deposits | 1,185,062 | 800,358 | |||||||||||||||||||
Total deposits and borrowings | 9,240,023 | 1.10 | % | 8,295,044 | 0.86 | % | |||||||||||||||
Other non-interest-bearing liabilities | 72,622 | 76,774 | |||||||||||||||||||
Total liabilities | 9,312,645 | 8,371,818 | |||||||||||||||||||
Shareholders’ Equity | 896,533 | 650,712 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 10,209,178 | $ | 9,022,530 | |||||||||||||||||
Net interest earnings | 199,043 | 185,370 | |||||||||||||||||||
Tax-equivalent adjustment (C) | 399 | 298 | |||||||||||||||||||
Net interest earnings | $ | 199,442 | $ | 185,668 | |||||||||||||||||
Interest spread | 2.64 | % | 2.80 | % | |||||||||||||||||
Net interest margin | 2.70 | % | 2.84 | % | |||||||||||||||||
Net interest margin tax equivalent (C) | 2.71 | % | 2.84 | % |
(A) | For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. |
(B) | Includes non-accrual loans, the effect of which is to reduce the yield earned on loans, and deferred loan fees. |
(C) | Non-GAAP tax-equivalent basis, using a 35% statutory tax rate to approximate interest income as a taxable asset. |
Nine Months Ended September 30, | |||||||||||
2017 vs. 2016 | |||||||||||
Increase (Decrease) due to Change in | |||||||||||
Rate | Volume | Total | |||||||||
(amounts in thousands) | |||||||||||
Interest income | |||||||||||
Interest-earning deposits | $ | 989 | $ | 612 | $ | 1,601 | |||||
Investment securities | 1,079 | 9,063 | 10,142 | ||||||||
Loans: | |||||||||||
Commercial loans to mortgage companies | 8,621 | (5,528 | ) | 3,093 | |||||||
Multifamily loans | (2,213 | ) | 7,172 | 4,959 | |||||||
Commercial and industrial | 1,879 | 8,529 | 10,408 | ||||||||
Non-owner occupied commercial real estate | 434 | 3,461 | 3,895 | ||||||||
All other loans | (1,616 | ) | 3,850 | 2,234 | |||||||
Total loans | 7,105 | 17,484 | 24,589 | ||||||||
Other interest-earning assets | (402 | ) | 371 | (31 | ) | ||||||
Total interest income | 8,771 | 27,530 | 36,301 | ||||||||
Interest expense | |||||||||||
Interest checking accounts | 233 | 925 | 1,158 | ||||||||
Money market deposit accounts | 9,313 | 1,475 | 10,788 | ||||||||
Other savings accounts | 16 | 5 | 21 | ||||||||
Certificates of deposit | 3,138 | (536 | ) | 2,602 | |||||||
Total interest-bearing deposits | 12,700 | 1,869 | 14,569 | ||||||||
Borrowings | 6,333 | 1,726 | 8,059 | ||||||||
Total interest expense | 19,033 | 3,595 | 22,628 | ||||||||
Net interest income | $ | (10,262 | ) | $ | 23,935 | $ | 13,673 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(amounts in thousands) | |||||||
Interchange and card revenue | $ | 31,729 | $ | 13,806 | |||
Gain on sale of investment securities | 8,532 | 25 | |||||
Deposit fees | 7,918 | 5,260 | |||||
Mortgage warehouse transactional fees | 7,139 | 8,702 | |||||
Bank-owned life insurance | 5,297 | 3,629 | |||||
Gain on sale of SBA and other loans | 3,045 | 2,135 | |||||
Mortgage banking income | 703 | 737 | |||||
Impairment loss on investment securities | (12,934 | ) | — | ||||
Other | 7,741 | 6,943 | |||||
Total non-interest income | $ | 59,170 | $ | 41,237 |
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(amounts in thousands) | |||||||
Salaries and employee benefits | $ | 69,569 | $ | 58,051 | |||
Technology, communication and bank operations | 33,227 | 19,021 | |||||
Professional services | 21,142 | 13,213 | |||||
Occupancy | 8,228 | 7,248 | |||||
FDIC assessments, taxes, and regulatory fees | 6,615 | 11,191 | |||||
Provision for operating losses | 4,901 | 1,943 | |||||
Loan workout | 1,844 | 1,497 | |||||
Advertising and promotion | 1,108 | 1,178 | |||||
Other real estate owned | 550 | 1,663 | |||||
Acquisition related expenses | — | 1,195 | |||||
Other | 13,634 | 12,106 | |||||
Total non-interest expense | $ | 160,818 | $ | 128,306 |
September 30, 2017 | December 31, 2016 | ||||||
(amounts in thousands) | |||||||
Cash and cash equivalents | $ | 219,480 | $ | 264,709 | |||
Investment securities available for sale, at fair value | 584,823 | 493,474 | |||||
Loans held for sale (includes $1,963,076 and $2,117,510, respectively, at fair value) | 2,113,293 | 2,117,510 | |||||
Loans receivable | 7,061,338 | 6,154,637 | |||||
Allowance for loan losses | (38,314 | ) | (37,315 | ) | |||
Total assets | 10,471,829 | 9,382,736 | |||||
Total deposits | 7,597,076 | 7,303,775 | |||||
Federal funds purchased | 147,000 | 83,000 | |||||
FHLB advances | 1,462,343 | 868,800 | |||||
Other borrowings | 186,258 | 87,123 | |||||
Subordinated debt | 108,856 | 108,783 | |||||
Total liabilities | 9,561,187 | 8,526,864 | |||||
Total shareholders’ equity | 910,642 | 855,872 | |||||
Total liabilities and shareholders’ equity | 10,471,829 | 9,382,736 |
September 30, | December 31, | ||||||
2017 | 2016 | ||||||
(amounts in thousands) | |||||||
Commercial loans: | |||||||
Mortgage warehouse loans, at fair value | $ | 1,961,248 | $ | 2,116,815 | |||
Multi-family loans at lower of cost or fair value | 150,217 | — | |||||
Total commercial loans held for sale | 2,111,465 | 2,116,815 | |||||
Consumer Loans: | |||||||
Residential mortgage loans, at fair value | 1,828 | 695 | |||||
Loans held for sale | $ | 2,113,293 | $ | 2,117,510 |
September 30, | December 31, | ||||||
2017 | 2016 | ||||||
(amounts in thousands) | |||||||
Commercial: | |||||||
Multi-family | $ | 3,618,989 | $ | 3,214,999 | |||
Commercial and industrial (including owner occupied commercial real estate) | 1,601,789 | 1,382,343 | |||||
Commercial real estate non-owner occupied | 1,237,849 | 1,193,715 | |||||
Construction | 73,203 | 64,789 | |||||
Total commercial loans | 6,531,830 | 5,855,846 | |||||
Consumer: | |||||||
Residential real estate | 435,188 | 193,502 | |||||
Manufactured housing | 92,938 | 101,730 | |||||
Other | 3,819 | 3,483 | |||||
Total consumer loans | 531,945 | 298,715 | |||||
Total loans receivable | 7,063,775 | 6,154,561 | |||||
Deferred (fees)/costs and unamortized (discounts)/premiums, net | (2,437 | ) | 76 | ||||
Allowance for loan losses | (38,314 | ) | (37,315 | ) | |||
Loans receivable, net of allowance for loan losses | $ | 7,023,024 | $ | 6,117,322 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(amounts in thousands) | |||||||||||||||
Balance at the beginning of the period | $ | 38,458 | $ | 38,097 | $ | 37,315 | $ | 35,647 | |||||||
Loan charge-offs (1) | |||||||||||||||
Commercial and industrial | 2,032 | 237 | 4,079 | 774 | |||||||||||
Commercial real estate non-owner occupied | 77 | 140 | 485 | 140 | |||||||||||
Residential real estate | 120 | 43 | 410 | 456 | |||||||||||
Other consumer | 356 | 246 | 602 | 478 | |||||||||||
Total Charge-offs | 2,585 | 666 | 5,576 | 1,848 | |||||||||||
Loan recoveries (1) | |||||||||||||||
Commercial and industrial | 54 | 62 | 337 | 173 | |||||||||||
Commercial real estate owner occupied | — | — | 9 | — | |||||||||||
Commercial real estate non-owner occupied | — | — | — | 8 | |||||||||||
Construction | 27 | 8 | 157 | 465 | |||||||||||
Residential real estate | 7 | 298 | 34 | 299 | |||||||||||
Other consumer | 1 | 10 | 101 | 10 | |||||||||||
Total Recoveries | 89 | 378 | 638 | 955 | |||||||||||
Total net charge-offs | 2,496 | 288 | 4,938 | 893 | |||||||||||
Provision for loan losses | 2,352 | 88 | 5,937 | 3,143 | |||||||||||
Balance at the end of the period | $ | 38,314 | $ | 37,897 | $ | 38,314 | $ | 37,897 |
(1) | Charge-offs and recoveries on purchased-credit-impaired loans that are accounted for in pools are recognized on a net basis when the pool matures. |
Loan Type | Total Loans | Current | 30-89 Days Past Due | 90 Days or More Past Due and Accruing | Non- accrual/ NPL (a) | OREO (b) | NPA (a)+(b) | NPL to Loan Type (%) | NPA to Loans + OREO (%) | ||||||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||||||||
Originated Loans | |||||||||||||||||||||||||||||||||
Multi-Family | $ | 3,616,313 | $ | 3,616,313 | $ | — | $ | — | $ | — | $ | — | $ | — | — | % | — | % | |||||||||||||||
Commercial & Industrial (1) | 1,507,395 | 1,484,400 | — | — | 22,995 | — | 22,995 | 1.53 | % | 1.53 | % | ||||||||||||||||||||||
Commercial Real Estate Non-Owner Occupied | 1,215,099 | 1,215,099 | — | — | — | — | — | — | % | — | % | ||||||||||||||||||||||
Residential | 108,786 | 107,569 | 636 | — | 581 | — | 581 | 0.53 | % | 0.53 | % | ||||||||||||||||||||||
Construction | 73,203 | 73,203 | — | — | — | — | — | — | % | — | % | ||||||||||||||||||||||
Other consumer | 1,450 | 1,437 | 13 | — | — | — | — | — | % | — | % | ||||||||||||||||||||||
Total Originated Loans | 6,522,246 | 6,498,021 | 649 | — | 23,576 | — | 23,576 | 0.36 | % | 0.36 | % | ||||||||||||||||||||||
Loans Acquired | |||||||||||||||||||||||||||||||||
Bank Acquisitions | 153,772 | 147,172 | 1,352 | 941 | 4,307 | 782 | 5,089 | 2.80 | % | 3.29 | % | ||||||||||||||||||||||
Loan Purchases | 387,757 | 379,026 | 2,984 | 3,788 | 1,959 | 277 | 2,236 | 0.51 | % | 0.58 | % | ||||||||||||||||||||||
Total Loans Acquired | 541,529 | 526,198 | 4,336 | 4,729 | 6,266 | 1,059 | 7,325 | 1.16 | % | 1.35 | % | ||||||||||||||||||||||
Deferred fees and unamortized discounts, net | (2,437 | ) | (2,437 | ) | — | — | — | — | — | ||||||||||||||||||||||||
Total Loans Receivable | 7,061,338 | 7,021,782 | 4,985 | 4,729 | 29,842 | 1,059 | 30,901 | 0.42 | % | 0.44 | % | ||||||||||||||||||||||
Total Loans Held for Sale | 2,113,293 | 2,113,293 | — | — | — | — | — | ||||||||||||||||||||||||||
Total Portfolio | $ | 9,174,631 | $ | 9,135,075 | $ | 4,985 | $ | 4,729 | $ | 29,842 | $ | 1,059 | $ | 30,901 | 0.33 | % | 0.34 | % |
Loan Type | Total Loans | NPL | ALL | Cash Reserve | Total Credit Reserves | Reserves to Loans (%) | Reserves to NPLs (%) | ||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||
Originated Loans | |||||||||||||||||||||||||
Multi-Family | $ | 3,616,313 | $ | — | $ | 12,696 | $ | — | $ | 12,696 | 0.35 | % | — | % | |||||||||||
Commercial & Industrial (1) | 1,507,395 | 22,995 | 13,084 | — | 13,084 | 0.87 | % | 56.90 | % | ||||||||||||||||
Commercial Real Estate Non-Owner Occupied | 1,215,099 | — | 4,665 | — | 4,665 | 0.38 | % | — | % | ||||||||||||||||
Residential | 108,786 | 581 | 2,130 | — | 2,130 | 1.96 | % | 366.61 | % | ||||||||||||||||
Construction | 73,203 | — | 847 | — | 847 | 1.16 | % | — | % | ||||||||||||||||
Other consumer | 1,450 | — | 59 | — | 59 | 4.07 | % | — | % | ||||||||||||||||
Total Originated Loans | 6,522,246 | 23,576 | 33,481 | — | 33,481 | 0.51 | % | 142.01 | % | ||||||||||||||||
Loans Acquired | |||||||||||||||||||||||||
Bank Acquisitions | 153,772 | 4,307 | 4,642 | — | 4,642 | 3.02 | % | 107.78 | % | ||||||||||||||||
Loan Purchases | 387,757 | 1,959 | 191 | 728 | 919 | 0.24 | % | 46.91 | % | ||||||||||||||||
Total Loans Acquired | 541,529 | 6,266 | 4,833 | 728 | 5,561 | 1.03 | % | 88.75 | % | ||||||||||||||||
Deferred fees and unamortized discounts, net | (2,437 | ) | — | — | — | — | |||||||||||||||||||
Total Loans Receivable | 7,061,338 | 29,842 | 38,314 | 728 | 39,042 | 0.55 | % | 130.83 | % | ||||||||||||||||
Total Loans Held for Sale | 2,113,293 | — | — | — | — | ||||||||||||||||||||
Total Portfolio | $ | 9,174,631 | $ | 29,842 | $ | 38,314 | $ | 728 | $ | 39,042 | 0.43 | % | 130.83 | % |
September 30, 2017 | December 31, 2016 | ||||||
(amounts in thousands) | |||||||
Demand | $ | 1,789,573 | $ | 1,305,455 | |||
Savings, including MMDA | 3,507,063 | 3,166,558 | |||||
Time, $100,000 and over | 1,406,899 | 2,106,905 | |||||
Time, other | 893,541 | 724,857 | |||||
Total deposits | $ | 7,597,076 | $ | 7,303,775 |
• | net income of $57.2 million for the nine months ended September 30, 2017; |
• | other comprehensive income of $5.3 million for the nine months ended September 30, 2017, arising primarily from unrealized gains on available-for-sale securities; |
• | share-based compensation expense of $4.5 million for the nine months ended September 30, 2017; |
• | offset in part by preferred stock dividends of $10.8 million for the nine months ended September 30, 2017; and |
• | issuance of common stock under share-based compensation arrangements of $2.0 million for the nine months ended September 30, 2017. |
Actual | For Capital Adequacy Purposes (Minimum Plus Capital Buffer) | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||
(amounts in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||
As of September 30, 2017: | ||||||||||||||||||||
Common equity Tier 1 capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 677,976 | 8.284 | % | $ | 470,603 | 5.750 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 1,009,380 | 12.342 | % | $ | 470,242 | 5.750 | % | $ | 531,578 | 6.500 | % | ||||||||
Tier 1 capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 895,447 | 10.941 | % | $ | 593,369 | 7.250 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 1,009,380 | 12.342 | % | $ | 592,914 | 7.250 | % | $ | 654,250 | 8.000 | % | ||||||||
Total capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 1,014,784 | 12.399 | % | $ | 757,057 | 9.250 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 1,156,766 | 14.145 | % | $ | 756,477 | 9.250 | % | $ | 817,813 | 10.000 | % | ||||||||
Tier 1 capital (to average assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 895,447 | 8.355 | % | $ | 428,709 | 4.000 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 1,009,380 | 9.434 | % | $ | 427,963 | 4.000 | % | $ | 534,954 | 5.000 | % | ||||||||
As of December 31, 2016: | ||||||||||||||||||||
Common equity Tier 1 capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 628,139 | 8.487 | % | $ | 379,306 | 5.125 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 857,421 | 11.626 | % | $ | 377,973 | 5.125 | % | $ | 479,380 | 6.500 | % | ||||||||
Tier 1 capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 844,755 | 11.414 | % | $ | 490,322 | 6.625 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 857,421 | 11.626 | % | $ | 488,599 | 6.625 | % | $ | 590,006 | 8.000 | % | ||||||||
Total capital (to risk weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 966,097 | 13.053 | % | $ | 638,343 | 8.625 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 1,003,609 | 13.608 | % | $ | 636,101 | 8.625 | % | $ | 737,508 | 10.000 | % | ||||||||
Tier 1 capital (to average assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 844,755 | 9.067 | % | $ | 372,652 | 4.000 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 857,421 | 9.233 | % | $ | 371,466 | 4.000 | % | $ | 464,333 | 5.000 | % |
September 30, 2017 | December 31, 2016 | ||||||
(amounts in thousands) | |||||||
Commitments to fund loans | $ | 261,878 | $ | 244,784 | |||
Unfunded commitments to fund mortgage warehouse loans | 1,385,192 | 1,230,596 | |||||
Unfunded commitments under lines of credit | 498,316 | 480,446 | |||||
Letters of credit | 38,842 | 40,223 |
Rate Shocks | % Change | |
Up 3% | (8.2 | )% |
Up 2% | (3.0 | )% |
Up 1% | (0.3 | )% |
Down 1% | (2.4 | )% |
Rate Shocks | From base | |
Up 3% | (30.9 | )% |
Up 2% | (18.7 | )% |
Up 1% | (8.3 | )% |
Down 1% | 4.2 | % |
Exhibit No. | Description | |
101 | The Exhibits filed as part of this report are as follows: | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definitions Linkbase Document. |
Customers Bancorp, Inc. | |||
November 3, 2017 | By: | /s/ Jay S. Sidhu | |
Name: | Jay S. Sidhu | ||
Title: | Chairman and Chief Executive Officer (Principal Executive Officer) | ||
November 3, 2017 | By: | /s/ Robert E. Wahlman | |
Name: | Robert E. Wahlman | ||
Title: | Chief Financial Officer (Principal Financial Officer) |
Exhibit No. | Description | |
101 | The Exhibits filed as part of this report are as follows: | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definitions Linkbase Document. |
1. | I have reviewed this quarterly report on Form 10-Q of Customers Bancorp, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Jay S. Sidhu |
Jay S. Sidhu Chairman and Chief Executive Officer (Principal Executive Officer) |
Date: November 3, 2017 |
1. | I have reviewed this quarterly report on Form 10-Q of Customers Bancorp, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Robert E. Wahlman |
Robert E. Wahlman Chief Financial Officer (Principal Financial Officer) |
Date: November 3, 2017 |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
Date: November 3, 2017 | /s/ Jay S. Sidhu | |
Jay S. Sidhu, Chairman and Chief Executive Officer (Principal Executive Officer) |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
Date: November 3, 2017 | /s/ Robert E. Wahlman | |
Robert E. Wahlman, Chief Financial Officer (Principal Financial Officer) |
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Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Oct. 31, 2017 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | CUBI | |
Entity Registrant Name | Customers Bancorp, Inc. | |
Entity Central Index Key | 0001488813 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 30,806,122 |
Consolidated Balance Sheet - Unaudited (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Loans held for sale at fair value | $ 2,113,473 | $ 2,117,510 |
Preferred stock, par value (usd per share) | $ 1.0 | $ 1.00 |
Preferred stock, liquidation preference (usd per share) | $ 25.00 | $ 25.00 |
Preferred stock, shares authorized (shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (shares) | 9,000,000 | 9,000,000 |
Preferred stock, shares outstanding (shares) | 9,000,000 | 9,000,000 |
Common stock, par value (usd per share) | $ 1.00 | $ 1.00 |
Common stock, shares authorized (shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (shares) | 31,317,892 | 30,820,177 |
Common stock, shares outstanding (shares) | 30,787,632 | 30,289,917 |
Treasury stock, shares (shares) | 530,260 | 530,260 |
Significant Other Observable Inputs (Level 2) | ||
Loans held for sale at fair value | $ 1,963,076 | $ 2,117,510 |
Consolidated Statements of Income - Unaudited - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Interest income: | ||||
Loans receivable | $ 67,107 | $ 60,362 | $ 195,605 | $ 173,847 |
Loans held for sale | 21,633 | 18,737 | 53,103 | 50,272 |
Investment securities | 7,307 | 3,528 | 21,017 | 10,875 |
Other | 2,238 | 1,585 | 5,507 | 3,937 |
Total interest income | 98,285 | 84,212 | 275,232 | 238,931 |
Interest expense: | ||||
Deposits | 18,381 | 13,009 | 48,934 | 34,365 |
Other borrowings | 3,168 | 1,642 | 6,767 | 4,867 |
FHLB advances | 7,032 | 3,291 | 15,433 | 9,274 |
Subordinated debt | 1,685 | 1,685 | 5,055 | 5,055 |
Total interest expense | 30,266 | 19,627 | 76,189 | 53,561 |
Net interest income | 68,019 | 64,585 | 199,043 | 185,370 |
Provision for loan losses | 2,352 | 88 | 5,937 | 2,854 |
Net interest income after provision for loan losses | 65,667 | 64,497 | 193,106 | 182,516 |
Non-interest income: | ||||
Interchange and card revenue | 9,570 | 11,547 | 31,729 | 13,806 |
Gain (loss) on sale of investment securities | 5,349 | (1) | 8,532 | 25 |
Deposit fees | 2,659 | 4,218 | 7,918 | 5,260 |
Mortgage warehouse transactional fees | 2,396 | 3,080 | 7,139 | 8,702 |
Bank-owned life insurance | 1,672 | 1,386 | 5,297 | 3,629 |
Gain on sale of SBA and other loans | 1,144 | 1,206 | 3,045 | 2,135 |
Mortgage banking income | 257 | 287 | 703 | 737 |
Impairment loss on investment securities | (8,349) | 0 | (12,934) | 0 |
Other | 3,328 | 5,763 | 7,741 | 6,943 |
Total non-interest income | 18,026 | 27,486 | 59,170 | 41,237 |
Non-interest expense: | ||||
Salaries and employee benefits | 24,807 | 22,681 | 69,569 | 58,051 |
Technology, communication and bank operations | 14,401 | 12,525 | 33,227 | 19,021 |
Professional services | 7,403 | 7,006 | 21,142 | 13,213 |
Occupancy | 2,857 | 2,450 | 8,228 | 7,248 |
FDIC assessments, taxes, and regulatory fees | 2,475 | 2,726 | 6,615 | 11,191 |
Provision for operating losses | 1,509 | 1,406 | 4,901 | 1,943 |
Loan workout | 915 | 592 | 1,844 | 1,497 |
Other real estate owned | 445 | 1,192 | 550 | 1,663 |
Advertising and promotion | 404 | 591 | 1,108 | 1,178 |
Acquisition related expenses | 0 | 144 | 0 | 1,195 |
Other | 5,824 | 4,905 | 13,634 | 12,106 |
Total non-interest expense | 61,040 | 56,218 | 160,818 | 128,306 |
Income before income tax expense | 22,653 | 35,765 | 91,458 | 95,447 |
Income tax expense | 14,899 | 14,558 | 34,236 | 36,572 |
Net income | 7,754 | 21,207 | 57,222 | 58,875 |
Preferred stock dividends | 3,615 | 2,552 | 10,844 | 5,900 |
Net income (loss) available to common shareholders | $ 4,139 | $ 18,655 | $ 46,378 | $ 52,975 |
Basic earnings per common share (usd per share) | $ 0.13 | $ 0.68 | $ 1.52 | $ 1.95 |
Diluted earnings per common share (usd per share) | $ 0.13 | $ 0.63 | $ 1.42 | $ 1.80 |
Consolidated Statements of Changes in Shareholders' Equity - Unaudited (Parenthetical) $ in Thousands |
9 Months Ended |
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Sep. 30, 2016
USD ($)
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Common Stock | |
Offering costs | $ 217 |
Preferred Stock | |
Offering costs | $ 5,520 |
Description of the Business |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business | DESCRIPTION OF THE BUSINESS Customers Bancorp, Inc. (the “Bancorp” or “Customers Bancorp”) is a bank holding company engaged in banking activities through its wholly owned subsidiary, Customers Bank (the “Bank”), collectively referred to as “Customers” herein. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Customers Bancorp, Inc. and its wholly owned subsidiaries, Customers Bank, and non-bank subsidiaries, serve residents and businesses in Southeastern Pennsylvania (Bucks, Berks, Chester, Philadelphia and Delaware Counties); Rye, New York (Westchester County); Hamilton, New Jersey (Mercer County); Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire (Rockingham County); Manhattan, New York; and nationally for certain loan and deposit products. The Bank has 14 full-service branches and provides commercial banking products, primarily loans and deposits. In addition, Customers Bank also administratively supports loan and other financial products to customers through its limited-purpose offices in Boston, Massachusetts, Providence, Rhode Island, Portsmouth, New Hampshire, Manhattan and Melville, New York, and Philadelphia, Pennsylvania. The Bank also provides liquidity to residential mortgage originators nationwide through commercial loans to mortgage companies. Through BankMobile, a division of Customers Bank, Customers offers state of the art high tech digital banking services to consumers, students, and the "under banked" nationwide. The combination of the BankMobile technology software platform with the Vibe Student Checking and Refund Management Disbursement Services business (the "Disbursement business") acquired from Higher One Holdings, Inc. and Higher One, Inc. (together, "Higher One") in June 2016 propelled BankMobile to one of the largest mobile banking services in the United States by number of customers. Customers has announced its intent to spin-off BankMobile to Customers’ shareholders through a tax-free spin-off/merger transaction. Accordingly, the assets and liabilities of BankMobile will not be reported separately as held for sale, and its operating results and associated cash flows will not be reported as discontinued operations, until execution of the spin-off/merger transaction and will be considered held and used for all periods presented. Previously reported held-for-sale balances in the consolidated balance sheet as of December 31, 2016, and corresponding operating results and cash flows for the periods presented, have been reclassified to conform with the current period consolidated financial statement presentation. See NOTE 3 TAX-FREE SPIN-OFF AND MERGER. Customers is subject to regulation of the Pennsylvania Department of Banking and Securities and the Federal Reserve Bank and is periodically examined by those regulatory authorities. Customers Bancorp has made certain equity investments through its wholly owned subsidiaries CB Green Ventures Pte Ltd. and CUBI India Ventures Pte Ltd. |
Acquisition Activity |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition Activity | ACQUISITION ACTIVITY On June 15, 2016, Customers completed the acquisition of substantially all of the assets and the assumption of certain liabilities of the Disbursement business from Higher One. The acquisition was completed pursuant to the terms of an Asset Purchase Agreement (the "Purchase Agreement") dated as of December 15, 2015 between Customers and Higher One. Under the terms of the Purchase Agreement, Customers also acquired all existing relationships with vendors and educational institutions, and all intellectual property and assumed normal business related liabilities. In conjunction with the acquisition, Customers hired approximately 225 Higher One employees primarily located in New Haven, Connecticut that manage the Disbursement business and serve the Disbursement business customers. The transaction contemplates aggregate guaranteed payments to Higher One of $42 million. The aggregate purchase price payable by Customers is $37 million in cash, with the payments to be made as follows: (i) $17 million in cash paid upon the closing of the acquisition, (ii) $10 million in cash upon the first anniversary of the closing and (iii) $10 million in cash paid upon the second anniversary of the closing. In accordance with the terms of the agreement, $10 million was paid to Higher One in June 2017. In addition, concurrently with the closing, the parties entered into a Transition Services Agreement pursuant to which Higher One provided certain transition services to Customers through June 30, 2017. As consideration for these services, Customers paid Higher One an additional $5 million in cash. Customers also will be required to make additional payments to Higher One if, during the three years following the closing, revenues from the acquired Disbursement business exceed $75 million in a year. The potential payment is equal to 35% of the amount the Disbursement business related revenue exceeds $75 million in each year. As of September 30, 2017, Customers has not recorded a liability for any additional contingent consideration payable under the Purchase Agreement. As specified in the Purchase Agreement, the payments of $10 million payable to Higher One upon each of the first and second anniversary of the transaction closing were placed into an escrow account with a third party. The escrow account with $10 million and $20 million, respectively, as of September 30, 2017 and December 31, 2016 in aggregate restricted cash and the corresponding obligation to pay Higher One pursuant to the terms of the Purchase Agreement have been assigned to BankMobile and are included with "Cash and cash equivalents" and "Accrued interest payable and other liabilities" on the September 30, 2017 and December 31, 2016 consolidated balance sheets. For more information regarding Customers' plans for BankMobile and the presentation of BankMobile within the consolidated financial statements, see NOTE 3 - TAX-FREE SPIN-OFF AND MERGER. The assets acquired and liabilities assumed were initially presented at their estimated fair values based on a preliminary allocation of the purchase price. In many cases, the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that were highly subjective and subject to change. The fair value estimates were considered preliminary and subject to change for up to one year after the closing date of the acquisition as additional information became available. Based on a preliminary purchase price allocation, Customers recorded $4.3 million in goodwill as a result of the acquisition. At December 31, 2016, Customers recorded adjustments to the estimated fair values of prepaid expenses and other liabilities, which resulted in a $1.0 million increase in goodwill. The adjusted amount of goodwill of $5.3 million reflects the excess purchase price over the estimated fair value of the net assets acquired. The goodwill recorded is deductible for tax purposes. The purchase price allocation was considered final as of June 30, 2017. The following table summarizes the final adjusted amounts recognized for assets acquired and liabilities assumed:
(1) Includes $10 million payable to Higher One upon each of the first and second anniversary of the transaction closing, which has been placed into an escrow account with a third party (aggregate amount of $20 million at December 31, 2016). Customers paid the first $10 million due to Higher One in June 2017. The fair value for the developed software was estimated based on expected revenue attributable to the software utilizing a discounted cash flow methodology giving consideration to potential obsolescence. The developed software is being amortized over ten years based on the estimated economic benefits received. The fair values for the other intangible assets represent the value of existing student and university relationships and a non-compete agreement with Higher One based on estimated retention rates and discounted cash flows. Other intangible assets are being amortized over an estimated life ranging from four to twenty years. Because BankMobile met the criteria to be classified as held for sale at December 31, 2016, the acquired assets were not depreciated or amortized during first quarter 2017 and second quarter 2017. The reclassification of the acquired assets as held and used as of September 30, 2017 resulted in depreciation and amortization expense for the developed software, other intangible assets, and fixed assets totaling $3.5 million in third quarter 2017. The acquired assets were reclassified to held and used at their carrying amounts, adjusted for depreciation and amortization for the periods they were classified as held for sale, which was lower than their estimated fair values as of September 30, 2017. |
Tax-Free Spin-Off and Merger |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax-Free Spin-Off and Merger | In third quarter 2017, Customers decided that the best strategy for its shareholders for divesting BankMobile was to spin-off BankMobile to Customers’ shareholders through a spin-off/merger transaction. The tax-free spin-off is expected to be followed by a merger of Customers' BankMobile Technologies, Inc. subsidiary ("BMT") into Clearwater Florida based Flagship Community Bank ("Flagship"), with Customers' shareholders receiving shares of Flagship common stock in exchange for shares of BMT they receive in the spin-off. Flagship is expected to separately purchase BankMobile deposits directly from Customers for cash. Following completion of the spin-off and merger and other transactions contemplated in a purchase and sale agreement between Customers and Flagship, Customers' shareholders would receive collectively more than 50% of Flagship common stock, valued at approximately $110 million. The common stock of the merged entities, to be called BankMobile, is expected to be listed on a national securities exchange after completion of the transactions. Customers believes the transactions will be treated as a tax-free exchange for both Customers' shareholders and Customers. Customers expects to execute an Amended and Restated Purchase and Assumption Agreement and Plan of Merger (the “Amended Agreement”) with Flagship to effect the spin-off and merger and Flagship’s purchase of BankMobile deposits from Customers. Customers expects that the Amended Agreement will provide that completion of the transactions will be subject to the receipt of all necessary regulatory approvals, certain Flagship shareholder approvals, successful raising of capital by Flagship, and other customary closing conditions. Customers expects the transaction to close in mid-2018. At December 31, 2016, BankMobile met the criteria to be classified as held for sale, and accordingly the assets and liabilities of BankMobile were presented as “Assets held for sale,” “Non-interest bearing deposits held for sale,” and “Other liabilities held for sale” and BankMobile’s operating results and associated cash flows were presented as “Discontinued operations”. However, with the third quarter 2017 spin-off/merger decision, generally accepted accounting principles require that assets, liabilities, operating results, and cash flows associated with a business to be disposed of through a spin-off/merger transaction not be reported as held for sale or discontinued operations until execution of the spin-off/merger transaction. Accordingly, BankMobile's assets, liabilities, operating results and cash flows will not be reported separately as held for sale or discontinued operations at September 30, 2017 and December 31, 2016 and for the three and nine month periods ended September 30, 2017 and 2016 and instead will be reported as held and used. As a result, Customers measured the business at the lower of its (i) carrying amount before it was classified as held for sale, adjusted for depreciation and amortization expense that would have been recognized had the business been continuously classified as held and used, or (ii) fair value at the date the decision not to sell was made. Customers recorded a charge of $4.2 million in third quarter 2017 relating to the amount of depreciation and amortization expense that would have been recorded had the assets been continuously classified as held and used. Prior reported December 31, 2016 assets held for sale, non-interest bearing deposits held for sale and other liabilities held for sale have been reclassified to conform with the current period presentation as summarized below. Amounts previously reported as discontinued operations have also been reclassified to conform with the current period presentation within the accompanying consolidated financial statements as summarized below. Customers will continue reporting the Community Business Banking and BankMobile segment results. See NOTE 14 - BUSINESS SEGMENTS. The following summarizes the effect of the reclassification from held for sale classification to held and used classification on the previously reported consolidated balance sheet as of December 31, 2016 and the previously reported consolidated statements of income for the the three and nine months ended September 30, 2016:
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Significant Accounting Policies and Basis of Presentation |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies and Basis of Presentation | SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION Basis of Presentation The interim unaudited consolidated financial statements of Customers Bancorp and subsidiaries have been prepared pursuant to the rules and regulations of the SEC. These interim unaudited consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the financial position and the results of operations and cash flows of Customers Bancorp and subsidiaries for the interim periods presented. Certain information and footnote disclosures normally included in the annual consolidated financial statements have been omitted from these interim unaudited consolidated financial statements as permitted by SEC rules and regulations. The December 31, 2016 consolidated balance sheet presented in this report has been derived from Customers Bancorp’s audited 2016 consolidated financial statements. Management believes that the disclosures are adequate to present fairly the consolidated financial statements as of the dates and for the periods presented. These interim unaudited consolidated financial statements should be read in conjunction with the 2016 consolidated financial statements of Customers Bancorp and subsidiaries included in Customers' Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 8, 2017. That Form 10-K describes Customers Bancorp’s significant accounting policies, which include its policies on Principles of Consolidation; Cash and Cash Equivalents and Statements of Cash Flows; Restrictions on Cash and Amounts due from Banks; Business Combinations; Investment Securities; Loan Accounting Framework; Allowance for Loan Losses; Goodwill and other Intangible Assets; Investments in FHLB, Federal Reserve Bank, and other restricted stock; Other Real Estate Owned; FDIC Loss Sharing Receivable and Clawback Liability; Bank-Owned Life Insurance; Bank Premises and Equipment; Treasury Stock; Income Taxes; Share-Based Compensation; Segments; Derivative Instruments and Hedging; Comprehensive Income; and Earnings per Share. Certain prior period amounts have been reclassified to conform to the current period presentation. Results for interim periods are not necessarily indicative of those that may be expected for the fiscal year. Reclassifications As described in NOTE 3 - TAX-FREE SPIN-OFF AND MERGER, as of September 30, 2017, Customers reclassified BankMobile, a segment previously classified as held for sale to held and used, as it no longer met the held-for-sale criteria. Certain prior period amounts and note disclosures (including NOTE 9 and NOTE 12) have been reclassified to conform with the current period presentation. Except for these reclassifications, there have been no material changes to Customers' significant accounting policies as disclosed in Customers' Annual Report on Form 10-K for the year ended December 31, 2016. Presented below are recently issued accounting standards that Customers has adopted as well as those that the Financial Accounting Standards Board (“FASB”) has issued but are not yet effective or that Customers has not yet adopted. Recently Issued Accounting Standards Accounting Standards Adopted in 2017 Since January 1, 2017, Customers has adopted the following FASB Accounting Standard Updates (“ASUs”), none of which had a material impact to Customers’ consolidated financial statements:
Accounting Standards Issued But Not Yet Adopted In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, which amends the existing hedge accounting model and expands an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also changes certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. This ASU is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption permitted. Customers plans to adopt this ASU by January 1, 2018. Adoption of this new guidance must be applied on a modified retrospective approach. While Customers continues to assess all potential impacts of the standard, Customers does not currently expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, Accounting for Certain Financial Instruments with Down Round Features, which will change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) would no longer be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity-classified financial instruments, the amendments require entities to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic earnings per share ("EPS"). For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Customers currently does not have any equity-linked financial instruments (or embedded features) with down round features, accordingly Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements, however, Customers will continue to evaluate the potential impact through the adoption date. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification in Accounting Standards Codification (“ASC”) 718. Under this ASU, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award as equity or a liability changes as a result of the change in terms or conditions. This ASU does not change the accounting for modifications under ASC 718. The ASU will be effective for Customers for its first reporting period beginning after December 15, 2017, with early adoption permitted. Adoption of this new guidance must be applied prospectively to an award modified on or after the adoption date. Customers generally does not modify the terms of conditions of its share-based payment awards, accordingly Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements, however, Customers will continue to evaluate the potential impact through the adoption date. In March 2017, the FASB issued ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities, which requires that premiums for certain callable debt securities held be amortized to their earliest call date. This ASU does not affect the accounting for securities purchased at a discount. This ASU will be effective for Customers for its first reporting period beginning after December 15, 2018, with earlier adoption permitted. Adoption of this new guidance must be applied on a modified retrospective approach. Customers currently has an immaterial amount of callable debt securities purchased with premiums, accordingly Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements, however, Customers will continue to evaluate the potential impact through the adoption date. In February 2017, the FASB issued ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which clarifies the scope and application of the accounting guidance on the sale of nonfinancial assets to non-customers, including partial sales. This ASU defines an in-substance nonfinancial asset, in part, as a financial asset promised to a counterparty in a contract if substantially all of the fair value of the assets (recognized and unrecognized) that are promised to the counterparty in the contract is concentrated in nonfinancial assets. If substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets, then all of the financial assets promised to the counterparty are in substance nonfinancial assets within the scope of Subtopic 610-20. This ASU also unifies the guidance related to partial sales of nonfinancial assets, eliminates rules specifically addressing the sales of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of nonfinancial assets to joint ventures. This ASU will be effective for Customers for its first reporting period beginning after December 15, 2017, with early adoption permitted. The adoption of this new guidance must be applied on a full or modified retrospective basis. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which will simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test that requires an entity to determine the implied fair value of its goodwill through a hypothetical purchase price allocation. Instead, under this ASU, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. All other goodwill impairment guidance will remain largely unchanged. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will also be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This ASU is effective for Customers for its first reporting period beginning after December 15, 2019. Early adoption is permitted for impairment tests performed after January 1, 2017. Customers expects to early adopt this ASU upon its next annual goodwill impairment test in 2017 and does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, which narrows the definition of a business and clarifies that to be considered a business, the fair value of gross assets acquired (or disposed of) should not be concentrated in a single identifiable asset or a group of similar identifiable assets. In addition, to be considered a business, an acquisition would have to include an input and a substantive process that together will significantly contribute to the ability to create an output. Also, the amendments narrow the definition of the term “output” so that it is consistent with how outputs are defined in ASC Topic 606, Revenue from Contracts with Customers. This ASU is effective for Customers for its first reporting period beginning after December 15, 2017. Adoption of this new guidance must be applied on a prospective basis. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU is effective for Customers for its first reporting period beginning after December 15, 2017, with early adoption permitted. Customers does not expect the adoption to this ASU to have a significant impact on the presentation of its statement of cash flows. In October 2016, the FASB issued ASU 2016-16-Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This eliminates the current exception for all intra-entity transfers of an asset other than inventory that requires deferral of the tax effects until the asset is sold to a third party or otherwise recovered through use. This ASU is effective for Customers for its first reporting period beginning after December 15, 2017, with early adoption permitted. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which aims to reduce the existing diversity in practice with regards to the following specific items in the Statement of Cash Flows:
The ASU contains additional guidance clarifying when an entity should separate cash receipts and cash payments and classify them into more than one class of cash flows (including when reasonable judgment is required to estimate and allocate cash flows) versus when an entity should classify the aggregate amount into one class of cash flows on the basis of predominance. This ASU is effective for Customers for its first reporting period beginning after December 15, 2017, with early adoption permitted. Customers is currently evaluating the impact of this ASU and does not expect the ASU to have a material impact on the presentation of its statement of cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. This ASU requires an entity to utilize a new impairment model known as the current expected credit loss ("CECL") model to estimate lifetime expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset (including HTM securities), presents the net amount expected to be collected on the financial asset. This ASU will replace today’s “incurred loss” approach. The CECL model is expected to result in earlier recognition of credit losses. For available-for-sale debt securities, entities will be required to record allowances for credit losses rather than reduce the carrying amount, as they do today under the OTTI model, and will be allowed to reverse previously established allowances in the event the credit of the issuer improves. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for Customers for its first reporting period beginning after December 15, 2019. Earlier adoption is also permitted. Adoption of the new guidance can be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Customers is currently evaluating the impact of this ASU, initiating implementation efforts across the company, and planning for loss modeling requirements consistent with lifetime expected loss estimates. It is expected that the new model will include different assumptions used in calculating credit losses, such as estimating losses over the estimated life of a financial asset and will consider expected future changes in macroeconomic conditions. The adoption of this ASU may result in an increase to Customers' allowance for loan losses which will depend upon the nature and characteristics of Customers' loan portfolio at the adoption date, as well as the macroeconomic conditions and forecasts at that date. Customers currently does not intend to early adopt this new guidance. In March 2016, the FASB issued ASU 2016-04, Liabilities - Extinguishments of Liabilities: Recognition of Breakage for Certain Prepaid Stored-Value Products, that would require issuers of prepaid stored-value product (such as gift cards, telecommunication cards, and traveler’s checks), to derecognize the financial liability related to those products for breakage. Breakage is the value of prepaid stored-value products that is not redeemed by consumers for goods, services or cash. There is currently a diversity in the methodology used to recognize breakage. Subtopic 405-20, Extinguishment of Liabilities, includes derecognition guidance for both financial liabilities and nonfinancial liabilities, and Topic 606, Revenue from Contracts with Customers, includes authoritative breakage guidance but excludes financial liabilities. The amendments in this ASU provide a narrow scope exception to the guidance in Subtopic 405-20 to require that breakage be accounted for consistent with the breakage guidance in Topic 606. This ASU is effective for Customers for its first reporting period beginning after December 15, 2017. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes the current lease accounting guidance for both lessees and lessors under ASC 840, Leases. From the lessee's perspective, the new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for lessees. The new guidance will require lessors to account for leases using an approach that is substantially similar to the existing guidance for sales-type, direct financing leases and operating leases. The new standard is effective for Customers for its first reporting period beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. A modified retrospective transition approach is required for lessors for sales-type, direct financing, and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Customers is currently evaluating the impact of this ASU on its financial condition and results of operations and expects to recognize right-of-use assets and lease liabilities for substantially all of its operating lease commitments based on the present value of unpaid lease payments as of the date of adoption. Customers does not intend to early adopt this ASU. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance in this ASU among other things, (1) requires equity investments with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (3) eliminates the requirement for public entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (4) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (5) requires an entity to present separately in other comprehensive income the portion of the change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (6) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements and (7) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. The guidance in this ASU is effective for Customers for its first reporting period beginning after December 15, 2017, including interim periods within those fiscal years. Customers is in the process of evaluating the impacts of the adoption of this ASU, however, it does not expect the impact to be significant to its financial condition, results of operations and consolidated financial statements given the immaterial amount of its investment in equity securities. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), superseding the revenue recognition requirements in ASC 605. This ASU requires an entity to recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendment includes a five-step process to assist an entity in achieving the main principle(s) of revenue recognition under ASC 605. In August 2015, the FASB issued ASU 2015-14, which formalized the deferral of the effective date of the amendment for a period of one-year from the original effective date. Following the issuance of ASU 2015-14, the amendment will be effective for Customers for its first reporting period beginning after December 15, 2017. In March 2016, the FASB also issued ASU 2016-08, an amendment to the guidance in ASU 2014-09, which reframed the structure of the indicators of when an entity is acting as an agent and focused on evidence that an entity is acting as the principal or agent in a revenue transaction. ASU 2016-08 also eliminated two of the indicators (the entity’s consideration is in the form of a commission and the entity is not exposed to credit risk) in making that determination. This amendment also clarifies that each indicator may be more or less relevant to the assessment depending on the terms and conditions of the contract. In April 2016, the FASB also issued ASU 2016-10, which clarifies the implementation guidance on identifying promised goods or services and on determining whether an entity's promise to grant a license with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU 2016-12, an amendment to ASU 2014-09, which provided practical expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on transition, collectability, non-cash consideration and the presentation of sales and other similar taxes. The amendments, collectively, should be applied retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. Because the ASU does not apply to revenue associated with leases and financial instruments (including loans and securities), Customers current assessment is that the new guidance will not have a material impact on the elements of its consolidated statements of operations most closely associated with leases and financial instruments (such as interest income, interest expense and securities gain). Customers will adopt this ASU on January 1, 2018 using a modified retrospective approach. Customers has completed its identification of all revenue streams that are included in its financial statements and has identified its deposit related fees, service charges, debit card and prepaid card interchange income, and university fees to be within the scope of the standard. Customers is also substantially complete with its review of the related contracts and has also completed its evaluation of certain costs related to these revenue streams to determine whether such costs should be presented as expenses or contra-revenue (i.e., gross vs. net). Customers' overall assessment suggests that adoption of this ASU will not materially change its current method and timing of recognizing revenue for these revenue streams. Customers, however, is still evaluating the ASU’s expanded disclosure requirements. As provided above, Customers current assessment is that the adoption of this ASU will not have a significant impact to its financial condition, results of operations and consolidated financial statements. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE The following are the components and results of Customers' earnings per common share calculations for the periods presented.
The following is a summary of securities that could potentially dilute basic earnings per common share in future periods that were not included in the computation of diluted earnings per common share because to do so would have been anti-dilutive for the periods presented.
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Changes in Accumulated Other Comprehensive Income (Loss) By Component |
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Changes in Accumulated Other Comprehensive Income (Loss) By Component | CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT (1) The following tables present the changes in accumulated other comprehensive income (loss) by component for the three and nine months ended September 30, 2017 and 2016.
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Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | INVESTMENT SECURITIES The amortized cost and approximate fair value of investment securities as of September 30, 2017 and December 31, 2016 are summarized in the tables below:
The following table presents proceeds from the sale of available-for-sale investment securities and gross gains and gross losses realized on those sales for the three and nine months ended September 30, 2017 and 2016:
These gains (losses) were determined using the specific identification method and were reported as gain (loss) on sale of investment securities included in non-interest income on the consolidated statements of income. The following table presents available-for-sale debt securities by stated maturity. Debt securities backed by mortgages have expected maturities that differ from contractual maturities because borrowers have the right to call or prepay and, therefore, these debt securities are classified separately with no specific maturity date:
Gross unrealized losses and fair value of Customers' investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2017 and December 31, 2016 were as follows:
At September 30, 2017, there were sixteen available-for-sale investment securities in the less-than-twelve-month category and eleven available-for-sale investment securities in the twelve-month-or-more category. The unrealized losses on the mortgage-backed securities are guaranteed by government-sponsored entities and primarily relate to changes in market interest rates. All amounts are expected to be recovered when market prices recover or at maturity. Customers does not intend to sell these securities and it is not more likely than not that Customers will be required to sell the securities before recovery of the amortized cost basis. At September 30, 2017, management evaluated its equity holdings issued by Religare Enterprises, Ltd. ("Religare") for other-than-temporary impairment. Because management no longer has the intent to hold these securities until a recovery in fair value, Customers recorded an other-than-temporary impairment loss of $8.3 million and $12.9 million, respectively, for the three and nine months ended September 30, 2017 for the full amount of the decline in fair value below the cost basis established at June 30, 2017 and December 31, 2016. The fair value of the equity securities at September 30, 2017 of $2.3 million became the new cost basis of the securities. Because of the change in disposition strategy for BankMobile at September 30, 2017, Customers did not record a deferred tax asset for the other-than-temporary impairment loss recorded in third quarter 2017. In addition, Customers reversed $4.6 million of previously recorded deferred tax assets in third quarter 2017 as the tax-free spin-off/merger strategy for BankMobile does not result in capital gains that could be used to offset any capital losses resulting from the disposition of the Religare equity securities. At September 30, 2017 and December 31, 2016, Customers Bank had pledged investment securities aggregating $127.6 million and $231.3 million in fair value, respectively, as collateral against its borrowings primarily with the FHLB and an unused line of credit with another financial institution. These counterparties do not have the ability to sell or repledge these securities. |
Loans Held for Sale |
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Receivables Held-for-sale [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Held for Sale | LOANS HELD FOR SALE The composition of loans held for sale as of September 30, 2017 and December 31, 2016 was as follows:
Commercial loans held for sale consists predominately of commercial loans to mortgage companies (i.e., mortgage warehouse loans). These mortgage warehouse lending transactions are subject to master repurchase agreements and are designated as held for sale and reported at fair value based on an election made to account for the loans at fair value. Pursuant to the agreements, Customers funds the pipelines for these mortgage lenders by sending payments directly to the closing agents for funded loans (i.e., the purchase event) and receives proceeds directly from third party investors when the loans are sold into the secondary market (i.e., the sale event). The fair value of the mortgage warehouse loans is estimated as the amount of cash initially advanced to fund the mortgage, plus accrued interest and fees, as specified in the respective agreements. The interest rates on these loans are variable, and the lending transactions are short-term, with an average life of 21 days from purchase to sale. The primary goal of these lending transactions is to provide liquidity to mortgage companies. Effective June 30, 2017, Customers Bank transferred $150.8 million of multi-family loans from loans receivable (held for investment) to loans held for sale. Customers Bank transferred these loans at their carrying value, which was lower than the estimated fair value at the time of transfer. At September 30, 2017, the estimated fair value of these loans was higher than their carrying value. Accordingly, a lower of cost or market value adjustment was not recorded in third quarter 2017. Effective December 31, 2016, Customers Bank transferred $25.1 million of multi-family loans from held for sale to loans receivable (held for investment) because the Bank no longer has the intent to sell these loans. Customers Bank transferred these loans at their carrying value, which was lower than the estimated fair value at the time of transfer. |
Loans Receivable and Allowance for Loan Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Receivable and Allowance for Loan Losses | LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES The following table presents loans receivable as of September 30, 2017 and December 31, 2016. BankMobile loans receivable previously reported as held for sale have been reclassified as held and used to conform with the current period presentation.
The following tables summarize loans receivable by loan type and performance status as of September 30, 2017 and December 31, 2016:
As of September 30, 2017 and December 31, 2016, the Bank had $0.3 million and $0.5 million, respectively, of residential real estate held in other real estate owned. As of September 30, 2017 and December 31, 2016, the Bank had initiated foreclosure proceedings of $1.5 million and $0.4 million, respectively, on loans secured by residential real estate. Allowance for loan losses The changes in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 and the loans and allowance for loan losses by loan class based on impairment evaluation method as of September 30, 2017 and December 31, 2016 were as follows. The amounts presented for the provision for loan losses below do not include the effect of changes to estimated benefits resulting from the FDIC loss share arrangements for the covered loans for periods prior to the termination of the FDIC loss sharing arrangements.
Certain manufactured housing loans were purchased in August 2010. A portion of the purchase price may be used to reimburse the Bank under the specified terms in the purchase agreement for defaults of the underlying borrower and other specified items. At September 30, 2017 and December 31, 2016, funds available for reimbursement, if necessary, were $0.7 million and $1.0 million, respectively. Each quarter, these funds are evaluated to determine if they would be sufficient to absorb the probable incurred losses within the manufactured housing portfolio. Impaired Loans - Individually Evaluated for Impairment The following tables present the recorded investment (net of charge-offs), unpaid principal balance, and related allowance by loan type for impaired loans that were individually evaluated for impairment as of September 30, 2017 and December 31, 2016 and the average recorded investment and interest income recognized for the three and nine months ended September 30, 2017 and 2016. Purchased-credit-impaired loans are considered to be performing and are not included in the tables below.
Troubled Debt Restructurings At September 30, 2017 and December 31, 2016, there were $20.8 million and $16.4 million, respectively, in loans reported as troubled debt restructurings (“TDRs”). TDRs are reported as impaired loans in the calendar year of their restructuring and are evaluated to determine whether they should be placed on non-accrual status. In subsequent years, a TDR may be returned to accrual status if it satisfies a minimum six-month performance requirement, however, it will remain classified as impaired. Generally, the Bank requires sustained performance for nine months before returning a TDR to accrual status. Modification of purchased-credit-impaired loans that are accounted for within loan pools in accordance with the accounting standards for purchased-credit-impaired loans do not result in the removal of these loans from the pool even if the modifications would otherwise be considered a TDR. Accordingly, as each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows, modifications of loans within such pools are not considered TDRs. The following table presents loans modified in a troubled debt restructuring by type of concession for the three and nine months ended September 30, 2017 and 2016. There were no modifications that involved forgiveness of debt.
The following table provides, by loan type, the number of loans modified in troubled debt restructurings, and the related recorded investment, during the three and nine months ended September 30, 2017 and 2016.
As of September 30, 2017, except for one commercial and industrial loan with an outstanding commitment of $2.3 million, there were no other commitments to lend additional funds to debtors whose loans have been modified in TDRs. There were no commitments to lend additional funds to debtors whose loans have been modified in TDRs at December 31, 2016. As of September 30, 2017, ten manufactured housing loans totaling $0.5 million that were modified in TDRs within the past twelve months, defaulted on payments. As of September 30, 2016, five manufactured housing loans totaling $0.1 million, that were modified in TDRs within the past twelve months, defaulted on payments. Loans modified in troubled debt restructurings are evaluated for impairment. The nature and extent of impairment of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of allowance for loan losses. There was no allowance recorded as a result of TDR modifications during the three months ended September 30, 2017. For the nine months ended September 30, 2017, there was one allowance recorded resulting from TDR modifications, totaling $1 thousand for one manufactured housing loan. There was one specific allowance totaling $29 thousand for one commercial real estate non-owner occupied loan resulting from TDR modifications during the three and nine months ended September 30, 2016. Purchased Credit Impaired Loans The changes in accretable yield related to purchased-credit-impaired loans for the three and nine months ended September 30, 2017 and 2016 were as follows:
Allowance for Loan Losses and the FDIC Loss Sharing Receivable and Clawback Liability Losses incurred on covered loans were eligible for partial reimbursement by the FDIC. Subsequent to the purchase date, the expected cash flows on the covered loans were subject to evaluation. Decreases in the present value of expected cash flows on the covered loans were recognized by increasing the allowance for loan losses with a related charge to the provision for loan losses. At the same time, the FDIC indemnification asset was increased reflecting an estimated future collection from the FDIC, which was recorded as a reduction to the provision for loan losses. If the expected cash flows on the covered loans increased such that a previously recorded impairment could be reversed, the Bank recorded a reduction in the allowance for loan losses (with a related credit to the provision for loan losses) accompanied by a reduction in the FDIC receivable balance (with a related charge to the provision for loan losses). Increases in expected cash flows on covered loans and decreases in expected cash flows from the FDIC loss sharing receivable, when there were no previously recorded impairments, were considered together and recognized over the remaining life of the loans as interest income. Decreases in the valuations of other real estate owned covered by the loss sharing agreements were recorded net of the estimated FDIC receivable as an increase to other real estate owned expense (a component of non-interest expense). On July 11, 2016, Customers entered into an agreement to terminate all existing rights and obligations pursuant to the loss sharing agreements with the FDIC. In connection with the termination agreement, Customers paid the FDIC $1.4 million as final payment under these agreements. The negotiated settlement amount was based on net losses incurred on the covered assets through September 30, 2015, adjusted for cash payments to and receipts from the FDIC as part of the December 31, 2015 and March 31, 2016 certifications. Consequently, loans and other real estate owned previously reported as covered assets pursuant to the loss sharing agreements were no longer presented as covered assets as of June 30, 2016. The following table presents changes in the allowance for loan losses and the FDIC loss sharing receivable, including the effects of the estimated clawback liability and the termination agreement, for the three and nine months ended September 30, 2017 and 2016.
(a) Includes external costs, such as legal fees, real estate taxes, and appraisal expenses, which qualified for reimbursement under the FDIC loss sharing agreements. Credit Quality Indicators Multi-family, commercial and industrial, owner occupied commercial real estate, non-owner occupied commercial real estate, construction, and residential real estate loans are rated based on an internally assigned risk rating system which is assigned at the time of loan origination and reviewed on a periodic, or on an “as needed” basis. Manufactured housing and other consumer loans are evaluated based on the payment activity of the loan. To facilitate the monitoring of credit quality within the multi-family, commercial and industrial, owner occupied commercial real estate, non-owner occupied commercial real estate, construction and residential real estate classes, and for purposes of analyzing historical loss rates used in the determination of the allowance for loan losses for the respective loan portfolio class, the Bank utilizes the following categories of risk ratings: pass/satisfactory (includes risk rating 1 through 6), special mention, substandard, doubtful, and loss. The risk rating categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass/satisfactory ratings, which are assigned to those borrowers who do not have identified potential or well-defined weaknesses and for whom there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on a quarterly basis during the month preceding the end of the calendar quarter. While assigning risk ratings involves judgment, the risk-rating process allows management to identify riskier credits in a timely manner and allocate the appropriate resources to manage those loans. The risk rating grades are defined as follows: “1” – Pass/Excellent Loans rated 1 represent a credit extension of the highest quality. The borrower’s historic (at least five years) cash flows manifest extremely large and stable margins of coverage. Balance sheets are conservative, well capitalized, and liquid. After considering debt service for proposed and existing debt, projected cash flows continue to be strong and provide ample coverage. The borrower typically reflects broad geographic and product diversification and has access to alternative financial markets. “2” – Pass/Superior Loans rated 2 are those for which the borrower has a strong financial condition, balance sheet, operations, cash flow, debt capacity and coverage with ratios better than industry norms. The borrowers of these loans exhibit a limited leverage position, are virtually immune to local economies, and are in stable growing industries. The management team is well respected and the company has ready access to public markets. “3” – Pass/Strong Loans rated 3 are those loans for which the borrowers have above average financial condition and flexibility; more than satisfactory debt service coverage; balance sheet and operating ratios are consistent with or better than industry peers; operate in industries with little risk; move in diversified markets; and are experienced and competent in their industry. These borrowers’ access to capital markets is limited mostly to private sources, often secured, but the borrower typically has access to a wide range of refinancing alternatives. “4” – Pass/Good Loans rated 4 have a sound primary and secondary source of repayment. The borrower may have access to alternative sources of financing, but sources are not as widely available as they are to a higher grade borrower. These loans carry a normal level of risk, with very low loss exposure. The borrower has the ability to perform according to the terms of the credit facility. The margins of cash flow coverage are satisfactory but vulnerable to more rapid deterioration than the higher quality loans. “5” – Satisfactory Loans rated 5 are extended to borrowers who are determined to be a reasonable credit risk and demonstrate the ability to repay the debt from normal business operations. Risk factors may include reliability of margins and cash flows, liquidity, dependence on a single product or industry, cyclical trends, depth of management, or limited access to alternative financing sources. The borrower’s historical financial information may indicate erratic performance, but current trends are positive and the quality of financial information is adequate, but is not as detailed and sophisticated as information found on higher grade loans. If adverse circumstances arise, the impact on the borrower may be significant. “6” – Satisfactory/Bankable with Care Loans rated 6 are those for which the borrower has higher than normal credit risk; however, cash flow and asset values are generally intact. These borrowers may exhibit declining financial characteristics, with increasing leverage and decreasing liquidity and may have limited resources and access to financial alternatives. Signs of weakness in these borrowers may include delinquent taxes, trade slowness and eroding profit margins. “7” – Special Mention Loans rated Special Mention are credit facilities that may have potential developing weaknesses and deserve extra attention from the account manager and other management personnel. In the event potential weaknesses are not corrected or mitigated, deterioration in the ability of the borrower to repay the debt in the future may occur. This grade is not assigned to loans that bear certain peculiar risks normally associated with the type of financing involved, unless circumstances have caused the risk to increase to a level higher than would have been acceptable when the credit was originally approved. Loans where significant actual, not potential, weaknesses or problems are clearly evident are graded in the category below. “8” – Substandard Loans are classified Substandard when the loans are inadequately protected by the current sound worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and are characterized by the distinct possibility that the company will sustain some loss if the weaknesses are not corrected. “9” – Doubtful The Bank assigns a doubtful rating to loans that have all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans. “10” – Loss The Bank assigns a loss rating to loans considered uncollectible and of such little value that their continuance as an active asset is not warranted. Amounts classified as loss are immediately charged off. Risk ratings are not established for certain consumer loans, including home equity, manufactured housing, and installment loans, mainly because these portfolios consist of a larger number of homogeneous loans with smaller balances. Instead, these portfolios are evaluated for risk mainly based upon aggregate payment history through the monitoring of delinquency levels and trends and are classified as performing and non-performing. The following tables present the credit ratings of loans receivable as of September 30, 2017 and December 31, 2016.
Loan Purchases and Sales In first quarter 2017, Customers purchased $174.2 million of thirty-year fixed-rate residential mortgage loans from Florida-based Everbank. The purchase price was 98.5% of loans outstanding. In second quarter 2017, Customers purchased an additional $90.0 million of thirty-year fixed-rate residential mortgage loans from Everbank. The purchase price was 101.0% of loans outstanding. There were no loan purchases during the three months ended September 30, 2017 and during the three or nine months ended September 30, 2016. In first quarter 2017, Customers sold $94.9 million of multi-family loans for $95.4 million resulting in a gain on sale of $0.5 million and $8.7 million of Small Business Administration (SBA) loans resulting in a gain on sale of $0.8 million. In second quarter 2017, Customers sold $7.0 million of SBA loans resulting in a gain on sale of $0.6 million. In third quarter 2017, Customers sold $11.0 million of SBA loans resulting in a gain on sale of $1.1 million. In first quarter 2016, Customers sold $6.9 million of SBA loans resulting in a gain on sale of $0.6 million. In second quarter 2016, Customers sold one commercial loan amounting to $5.7 million resulting in a loss on sale of $0.1 million and $3.6 million of SBA loans resulting in a gain on sale of $0.4 million. There were no loan sales during the third quarter 2016. None of these purchases and sales during the nine months ended September 30, 2017 and 2016 materially affected the credit profile of Customers’ related loan portfolio. Loans Pledged as Collateral Customers has pledged eligible real estate loans as collateral for potential borrowings from the Federal Home Loan Bank of Pittsburgh ("FHLB") in the amount of $5.5 billion at September 30, 2017, compared to $4.8 billion at December 31, 2016. |
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Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Borrowings | BORROWINGS In June 2017, Customers Bancorp issued $100 million of senior notes at 99.775% of face value. The price to purchasers represents a yield-to-maturity of 4.0% on the fixed coupon rate of 3.95%. The senior notes mature in June 2022. The net proceeds to Customers after deducting the underwriting discount and estimated offering expenses were approximately $98.6 million. The net proceeds were contributed to Customers Bank for purposes of its working capital needs and the funding of its organic growth. |
Regulatory Capital |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital | REGULATORY CAPITAL The Bank and the Bancorp are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the minimum capital requirements can result in certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on Customers' financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank and the Bancorp must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items, as calculated under the regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies. Quantitative measures established by regulation to ensure capital adequacy require the Bank and the Bancorp to maintain minimum amounts and ratios (set forth in the following table) of common equity Tier 1, Tier 1, total capital to risk-weighted assets, and Tier 1 capital to average assets (as defined in the regulations). At September 30, 2017 and December 31, 2016, the Bank and the Bancorp satisfied all capital requirements to which they were subject. The Dodd-Frank Act required the Federal Reserve Bank to establish minimum consolidated capital requirements for bank holding companies that are as stringent as those required for insured depositary subsidiaries. In 2013, the federal banking agencies approved rules that implemented the Dodd-Frank requirements and certain other regulatory capital reforms effective January 1, 2015, that (i) introduced a new capital ratio pursuant to the prompt corrective action provisions, the common equity tier 1 capital to risk weighted assets ratio, (ii) increased the adequately capitalized and well capitalized thresholds for the Tier 1 risk based capital ratios to 6% and 8%, respectively, (iii) changed the treatment of certain capital components for determining Tier 1 and Tier 2 capital, and (iv) changed the risk weighting of certain assets and off-balance sheet items in determining risk weighted assets. Generally, to be considered adequately capitalized, or well capitalized, respectively, an institution must at least maintain the common equity Tier 1, Tier 1 and total risk based ratios and the Tier 1 leverage ratio in excess of the related minimum ratios as set forth in the following table:
The risk-based capital rules adopted effective January 1, 2015 require that banks and holding companies maintain a "capital conservation buffer" of 250 basis points in excess of the "minimum capital ratio." The minimum capital ratio is equal to the prompt corrective action adequately capitalized threshold ratio. The capital conservation buffer is being phased in over four years beginning on January 1, 2016, with a maximum buffer of 0.625% of risk weighted assets for 2016, 1.25% for 2017, 1.875% for 2018, and 2.5% for 2019 and thereafter. Effective January 1, 2017, the capital level required to avoid limitation on elective distributions applicable to the Bancorp and the Bank were as follows: (i) a common equity Tier 1 capital ratio of 5.750%; (ii) a Tier 1 Risk based capital ratio of 7.250%; and (iii) a Total Risk based capital ratio of 9.250%. Failure to maintain the required capital conservation buffer will result in limitations on capital distributions and on discretionary bonuses to executive officers. |
Disclosures About Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosures About Fair Value of Financial Instruments | DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Customers uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. ASC Topic 825, Financial Instruments, requires disclosure of the estimated fair value of an entity’s assets and liabilities considered to be financial instruments. For Customers, as for most financial institutions, the majority of its assets and liabilities are considered to be financial instruments. Many of these financial instruments lack an available trading market as characterized by a willing buyer and a willing seller engaging in an exchange transaction. For fair value disclosure purposes, Customers utilized certain fair value measurement criteria under ASC Topic 820, Fair Value Measurements and Disclosures, as explained below. In accordance with ASC 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for Customers' various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The fair value guidance provides a consistent definition of fair value, focusing on an exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. The fair value guidance also establishes a fair value hierarchy and describes the following three levels used to classify fair value measurements. Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. Level 3: Prices or valuation techniques that require adjustments to inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity). A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The following methods and assumptions were used to estimate the fair values of Customers' financial instruments as of September 30, 2017 and December 31, 2016: Cash and cash equivalents: The carrying amounts reported on the balance sheet for cash and cash equivalents approximate those assets’ fair values. These assets are classified as Level 1 fair values, based upon the lowest level of input that is significant to the fair value measurements. Investment securities: The fair values of investment securities available for sale are determined by obtaining quoted market prices on nationally recognized and foreign securities exchanges (Level 1), matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices, or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3). These assets are classified as Level 1, 2, or 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The carrying amount of investments in FHLB, Federal Reserve Bank, and other restricted stock approximates fair value, and considers the limited marketability of such securities. These assets are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans held for sale - Consumer residential mortgage loans: The Bank generally estimates the fair values of residential mortgage loans held for sale based on commitments on hand from investors within the secondary market for loans with similar characteristics. These assets are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans held for sale - Commercial mortgage warehouse loans: The fair value of mortgage warehouse loans is the amount of cash initially advanced to fund the mortgage, plus accrued interest and fees, as specified in the respective agreements. The loan is used by mortgage companies as short-term bridge financing between the funding of mortgage loans and the finalization of the sale of the loans to an investor. Changes in fair value are not expected to be recognized because at inception of the transaction the underlying loans have already been sold to an approved investor. Additionally, the interest rate is variable, and the transaction is short-term, with an average life of 21 days from purchase to sale. These assets are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans held for sale - Multifamily loans: The fair values of multi-family loans held for sale are estimated using pricing indications from letters of intent with third party investors, recent sale transactions within the secondary markets for loans with similar characteristics, non-binding indicative bids from brokers, or estimates made by management considering current market rates and terms. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans receivable, net of allowance for loan losses: The fair values of loans held for investment are estimated using discounted cash flows and market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. These assets are classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Impaired loans: Impaired loans are those loans that are accounted for under ASC 310, Receivables, in which the Bank has measured impairment generally based on the fair value of the loan’s collateral or discounted cash flow analysis. Fair value is generally determined based upon independent third-party appraisals of the properties that collateralize the loans or discounted cash flows based upon the expected proceeds. These assets are generally classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Other real estate owned: The fair value of other real estate owned ("OREO") is determined by using appraisals, which may be discounted based on management’s review and changes in market conditions or sales agreements with third parties. All appraisals must be performed in accordance with the Uniform Standards of Professional Appraisal Practice. Appraisals are certified to the Bank and performed by appraisers on the Bank’s approved list of appraisers. Evaluations are completed by a person independent of management. The content of the appraisal depends on the complexity of the property. Appraisals are completed on a “retail value” and an “as is value”. These assets are classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Deposit liabilities: The fair values disclosed for interest and non-interest bearing checking, passbook savings and money market deposit accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). These liabilities are classified as Level 1 fair values, based upon the lowest level of input that is significant to the fair value measurements. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. These liabilities are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Federal funds purchased: For these short-term instruments, the carrying amount is considered a reasonable estimate of fair value. These liabilities are classified as Level 1 fair values, based upon the lowest level of input that is significant to the fair value measurements. Borrowings: Borrowings consist of long-term and short-term FHLB advances, 5-year senior unsecured notes, and subordinated debt. For overnight borrowings, the carrying amounts are considered reasonable estimates of fair value and are classified as Level 1 fair value measurements. Fair values of all other FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. The prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party. Fair values of privately placed subordinated and senior unsecured debt are estimated by a third-party financial adviser using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit-risk characteristics, terms and remaining maturity. These liabilities are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. The $63 million senior unsecured notes issued during third quarter 2013 are traded on The New York Stock Exchange, and their price can be obtained daily. This fair value measurement is classified as Level 1. Derivatives (Assets and Liabilities): The fair values of interest rate swaps and credit derivatives are determined using models that incorporate readily observable market data into a market standard methodology. This methodology nets the discounted future cash receipts and the discounted expected cash payments. The discounted variable cash receipts and payments are based on expectations of future interest rates derived from observable market interest rate curves. In addition, fair value is adjusted for the effect of nonperformance risk by incorporating credit valuation adjustments for the Bank and its counterparties. These assets and liabilities are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair values of the residential mortgage loan commitments are derived from the estimated fair values that can be generated when the underlying mortgage loan is sold in the secondary market. The Bank generally uses commitments on hand from third- party investors to estimate an exit price and adjusts for the probability of the commitment being exercised based on the Bank’s internal experience (i.e., pull-through rate). These assets and liabilities are classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Derivative assets and liabilities are presented in "Other assets" and "Accrued interest payable and other liabilities" on the consolidated balance sheet. Off-balance-sheet financial instruments: The fair values of unused commitments to lend and standby letters of credit are considered to be the same as their contractual amounts. The following information should not be interpreted as an estimate of Customers' fair value in its entirety because fair value calculations are only provided for a limited portion of Customers' assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making these estimates, comparisons between Customer’s disclosures and those of other companies may not be meaningful. The estimated fair values of Customers' financial instruments at September 30, 2017 and December 31, 2016 were as follows. BankMobile assets and liabilities previously reported as held for sale have been reclassified as held and used to conform with the current period presentation.
For financial assets and liabilities measured at fair value on a recurring and nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2017 and December 31, 2016 were as follows:
The changes in Level 3 assets measured at fair value on a recurring basis for the three and nine months ended September 30, 2017 and 2016 are summarized as follows. Additional information about residential mortgage loan commitments can be found in NOTE 13 - DERIVATIVES INSTRUMENTS AND HEDGING ACTIVITIES.
Customers' policy is to recognize transfers between fair value levels when events or circumstances warrant transfers. There were no transfers between levels during the three and nine months ended September 30, 2017 and 2016. The following table summarizes financial assets and financial liabilities measured at fair value as of September 30, 2017 and December 31, 2016 on a recurring and nonrecurring basis for which Customers utilized Level 3 inputs to measure fair value.
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Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Risk Management Objectives of Using Derivatives Customers is exposed to certain risks arising from both its business operations and economic conditions. Customers manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and durations of its assets and liabilities. Specifically, Customers enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Customers' derivative financial instruments are used to manage differences in the amount, timing, and duration of Customers' known or expected cash receipts and its known or expected cash payments principally related to certain borrowings. Customers also has interest-rate derivatives resulting from a service provided to certain qualifying customers, and therefore, they are not used to manage Customers' interest-rate risk in assets or liabilities. Customers manages a matched book with respect to its derivative instruments used in this customer service in order to minimize its net risk exposure resulting from such transactions. Cash Flow Hedges of Interest Rate Risk Customers' objectives in using interest-rate derivatives are to add stability to interest expense and to manage exposure to interest-rate movements. To accomplish this objective, Customers primarily uses interest rate swaps as part of its interest-rate-risk management strategy. Interest-rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for Customers making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. To date, such derivatives were used to hedge the variable cash flows associated with the forecasted issuances of debt. The ineffective portion of the change in fair value of the derivatives is to be recognized directly in earnings. During the three and nine months ended September 30, 2017 and 2016, Customers did not record any hedge ineffectiveness. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on Customers' variable-rate debt. Customers expects to reclassify $1.2 million from accumulated other comprehensive income to interest expense during the next 12 months. Customers is hedging its exposure to the variability in future cash flows for forecasted transactions over a maximum period of 24 months (excluding forecasted transactions related to the payment of variable interest on existing financial instruments). At September 30, 2017, Customers had nine outstanding interest rate derivatives with notional amounts totaling $550.0 million that were designated as cash flow hedges of interest rate risk. At December 31, 2016, Customers had four outstanding interest rate derivatives with notional amounts totaling $325.0 million that were designated as cash flow hedges of interest rate risk. The hedges expire between January 2018 and April 2019. Derivatives Not Designated as Hedging Instruments Customers executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies (typically the loan customers will swap a floating-rate loan for a fixed-rate loan). The customer interest rate swaps are simultaneously offset by interest rate swaps that Customers executes with a third party in order to minimize interest rate risk exposure resulting from such transactions. Because the interest rate swaps associated with this program do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting third-party market swaps are recognized directly in earnings. At September 30, 2017, Customers had 76 interest rate swaps with an aggregate notional amount of $793.6 million related to this program. At December 31, 2016, Customers had 76 interest rate swaps with an aggregate notional amount of $716.6 million related to this program. Customers enters into residential mortgage loan commitments in connection with its consumer mortgage banking activities to fund mortgage loans at specified rates and times in the future. These commitments are short-term in nature and generally expire in 30 to 60 days. The residential mortgage loan commitments that relate to the origination of mortgage loans that will be held for sale are considered derivative instruments under the applicable accounting guidance and are reported at fair value, with changes in fair value recorded directly in earnings. At September 30, 2017 and December 31, 2016, Customers had an outstanding notional balance of residential mortgage loan commitments of $5.4 million and $3.6 million, respectively. Customers has also purchased and sold credit derivatives to either hedge or participate in the performance risk associated with some of its counterparties. These derivatives are not designated as hedging instruments and are reported at fair value, with changes in fair value reported directly in earnings. At September 30, 2017 and December 31, 2016, Customers had outstanding notional balances of credit derivatives of $53.3 million and $44.9 million, respectively. Fair Value of Derivative Instruments on the Balance Sheet The following tables present the fair value of Customers' derivative financial instruments as well as their presentation on the balance sheet as of September 30, 2017 and December 31, 2016.
Effect of Derivative Instruments on Comprehensive Income The following tables present the effect of Customers' derivative financial instruments on comprehensive income for the three and nine months ended September 30, 2017 and 2016.
(1) Amounts presented are net of taxes. See NOTE 6 - CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME for total effect on other comprehensive income from derivatives designated as cash flow hedges for the periods presented. Credit-risk-related Contingent Features By entering into derivative contracts, Customers is exposed to credit risk. The credit risk associated with derivatives executed with customers is the same as that involved in extending the related loans and is subject to the same standard credit policies. To mitigate the credit-risk exposure to major derivative dealer counterparties, Customers only enters into agreements with those counterparties that maintain credit ratings of high quality. Agreements with major derivative dealer counterparties contain provisions whereby default on any of Customers' indebtedness would be considered a default on its derivative obligations. Customers also has entered into agreements that contain provisions under which the counterparty could require Customers to settle its obligations if Customers fails to maintain its status as a well/adequately capitalized institution. As of September 30, 2017, the fair value of derivatives in a net liability position (which includes accrued interest but excludes any adjustment for nonperformance-risk) related to these agreements was $7.3 million. In addition, Customers has minimum collateral posting thresholds with certain of these counterparties and at September 30, 2017 had posted $8.3 million of cash as collateral. Customers records cash posted as collateral as a reduction in the outstanding balance of cash and cash equivalents and an increase in the balance of other assets. Disclosures about Offsetting Assets and Liabilities The following tables present derivative instruments that are subject to enforceable master netting arrangements. Customers' interest rate swaps with institutional counterparties are subject to master netting arrangements and are included in the table below. Interest rate swaps with commercial banking customers and residential mortgage loan commitments are not subject to master netting arrangements and are excluded from the table below. Customers has not made a policy election to offset its derivative positions. Offsetting of Financial Assets and Derivative Assets At September 30, 2017
Offsetting of Financial Liabilities and Derivative Liabilities At September 30, 2017
Offsetting of Financial Assets and Derivative Assets At December 31, 2016
Offsetting of Financial Liabilities and Derivative Liabilities At December 31, 2016
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Business Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | BUSINESS SEGMENTS Customers has historically operated under one business segment, "Community Banking." However, beginning in third quarter 2016, Customers revised its segment financial reporting to reflect the manner in which its chief operating decision makers (our Chief Executive Officer and Board of Directors) have begun allocating resources and assessing performance subsequent to Customers' acquisition of the Disbursement business from Higher One and the combination of that business with the BankMobile technology platform late in second quarter 2016. Management has determined that Customers' operations consist of two reportable segments - Community Business Banking and BankMobile. Each segment generates revenues, manages risk, and offers distinct products and services to targeted customers through different delivery channels. The strategy, marketing, and analysis of these segments vary considerably. The Community Business Banking segment is delivered predominately to commercial customers in Southeastern Pennsylvania, New York, New Jersey, Massachusetts, Rhode Island and New Hampshire through a single point of contact business model and provides liquidity to residential mortgage originators nationwide through commercial loans to mortgage companies. Lending and deposit gathering activities are focused primarily on privately held businesses, high net worth families, selected commercial real estate lending, and commercial mortgage companies. Revenues are generated primarily through net interest income (the difference between interest earned on loans, investments, and other interest earning assets and interest paid on deposits and other borrowed funds) and other non-interest income, such as mortgage warehouse transactional fees and bank owned life insurance. The BankMobile segment provides state of the art high tech digital banking and disbursement services to consumers, students, and the "under banked" nationwide. BankMobile, as a division of Customers Bank, is a full service banking platform that is accessible to customers anywhere and anytime through the customer's smartphone or other web-enabled device. Revenues are currently being generated primarily through interchange and card revenue, deposit and wire transfer fees and university fees. The majority of revenue and expenses for BankMobile are a result of the Disbursement business acquisition. The following tables present the operating results for Customers' reportable business segments for the three and nine months ended September 30, 2017 and 2016. Customers has presented the financial information and disclosures for prior periods to reflect the segment disclosures as if they had been in effect for the periods presented. The segment financial results include directly attributable revenues and expenses. Corporate overhead costs are assigned to the Community Business Banking segment as those expenses are expected to continue following the planned spin-off of BankMobile. Similarly, the preferred stock dividends have been allocated in their entirety to the Community Business Banking segment. The tax benefit assigned to BankMobile was based on an estimated effective tax rate of 37.25% for 2017 and 38% for 2016. BankMobile, previously presented as discontinued operations in the financial statements due to Customers' stated intent to sell the business, was reclassified as held and used at September 30, 2017. As of September 30, 2017, Customers has decided to spin off BankMobile to Customers’ shareholders through a spin-off/merger transaction which is currently being negotiated. For more information on BankMobile's reclassification, see NOTE 3 - TAX-FREE SPIN-OFF AND MERGER.
(1) - Amounts reported include funds transfer pricing of $2.7 million and 1.4 million for the three months ended September 30, 2017 and 2016, respectively, credited to BankMobile for the value provided to the Community Business Banking segment for the use of low/no cost deposits.
(1) - Amounts reported include funds transfer pricing of $9.7 million and $4.4 million for the nine months ended September 30, 2017 and 2016, respectively, credited to BankMobile for the value provided to the Community Business Banking segment for the use of low/no cost deposits. (2) - Amounts reported exclude intra company receivables. |
Significant Accounting Policies and Basis of Presentation (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The interim unaudited consolidated financial statements of Customers Bancorp and subsidiaries have been prepared pursuant to the rules and regulations of the SEC. These interim unaudited consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the financial position and the results of operations and cash flows of Customers Bancorp and subsidiaries for the interim periods presented. Certain information and footnote disclosures normally included in the annual consolidated financial statements have been omitted from these interim unaudited consolidated financial statements as permitted by SEC rules and regulations. The December 31, 2016 consolidated balance sheet presented in this report has been derived from Customers Bancorp’s audited 2016 consolidated financial statements. Management believes that the disclosures are adequate to present fairly the consolidated financial statements as of the dates and for the periods presented. These interim unaudited consolidated financial statements should be read in conjunction with the 2016 consolidated financial statements of Customers Bancorp and subsidiaries included in Customers' Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 8, 2017. That Form 10-K describes Customers Bancorp’s significant accounting policies, which include its policies on Principles of Consolidation; Cash and Cash Equivalents and Statements of Cash Flows; Restrictions on Cash and Amounts due from Banks; Business Combinations; Investment Securities; Loan Accounting Framework; Allowance for Loan Losses; Goodwill and other Intangible Assets; Investments in FHLB, Federal Reserve Bank, and other restricted stock; Other Real Estate Owned; FDIC Loss Sharing Receivable and Clawback Liability; Bank-Owned Life Insurance; Bank Premises and Equipment; Treasury Stock; Income Taxes; Share-Based Compensation; Segments; Derivative Instruments and Hedging; Comprehensive Income; and Earnings per Share. Certain prior period amounts have been reclassified to conform to the current period presentation. Results for interim periods are not necessarily indicative of those that may be expected for the fiscal year. |
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Reclassifications | Reclassifications As described in NOTE 3 - TAX-FREE SPIN-OFF AND MERGER, as of September 30, 2017, Customers reclassified BankMobile, a segment previously classified as held for sale to held and used, as it no longer met the held-for-sale criteria. Certain prior period amounts and note disclosures (including NOTE 9 and NOTE 12) have been reclassified to conform with the current period presentation. Except for these reclassifications, there have been no material changes to Customers' significant accounting policies as disclosed in Customers' Annual Report on Form 10-K for the year ended December 31, 2016. Presented below are recently issued accounting standards that Customers has adopted as well as those that the Financial Accounting Standards Board (“FASB”) has issued but are not yet effective or that Customers has not yet adopted. |
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Recently Issued Accounting Standards | Recently Issued Accounting Standards Accounting Standards Adopted in 2017 Since January 1, 2017, Customers has adopted the following FASB Accounting Standard Updates (“ASUs”), none of which had a material impact to Customers’ consolidated financial statements:
Accounting Standards Issued But Not Yet Adopted In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, which amends the existing hedge accounting model and expands an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The guidance also changes certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. This ASU is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption permitted. Customers plans to adopt this ASU by January 1, 2018. Adoption of this new guidance must be applied on a modified retrospective approach. While Customers continues to assess all potential impacts of the standard, Customers does not currently expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, Accounting for Certain Financial Instruments with Down Round Features, which will change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) would no longer be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity-classified financial instruments, the amendments require entities to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic earnings per share ("EPS"). For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Customers currently does not have any equity-linked financial instruments (or embedded features) with down round features, accordingly Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements, however, Customers will continue to evaluate the potential impact through the adoption date. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification in Accounting Standards Codification (“ASC”) 718. Under this ASU, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award as equity or a liability changes as a result of the change in terms or conditions. This ASU does not change the accounting for modifications under ASC 718. The ASU will be effective for Customers for its first reporting period beginning after December 15, 2017, with early adoption permitted. Adoption of this new guidance must be applied prospectively to an award modified on or after the adoption date. Customers generally does not modify the terms of conditions of its share-based payment awards, accordingly Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements, however, Customers will continue to evaluate the potential impact through the adoption date. In March 2017, the FASB issued ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities, which requires that premiums for certain callable debt securities held be amortized to their earliest call date. This ASU does not affect the accounting for securities purchased at a discount. This ASU will be effective for Customers for its first reporting period beginning after December 15, 2018, with earlier adoption permitted. Adoption of this new guidance must be applied on a modified retrospective approach. Customers currently has an immaterial amount of callable debt securities purchased with premiums, accordingly Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements, however, Customers will continue to evaluate the potential impact through the adoption date. In February 2017, the FASB issued ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which clarifies the scope and application of the accounting guidance on the sale of nonfinancial assets to non-customers, including partial sales. This ASU defines an in-substance nonfinancial asset, in part, as a financial asset promised to a counterparty in a contract if substantially all of the fair value of the assets (recognized and unrecognized) that are promised to the counterparty in the contract is concentrated in nonfinancial assets. If substantially all of the fair value of the assets that are promised to the counterparty in a contract is concentrated in nonfinancial assets, then all of the financial assets promised to the counterparty are in substance nonfinancial assets within the scope of Subtopic 610-20. This ASU also unifies the guidance related to partial sales of nonfinancial assets, eliminates rules specifically addressing the sales of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of nonfinancial assets to joint ventures. This ASU will be effective for Customers for its first reporting period beginning after December 15, 2017, with early adoption permitted. The adoption of this new guidance must be applied on a full or modified retrospective basis. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which will simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test that requires an entity to determine the implied fair value of its goodwill through a hypothetical purchase price allocation. Instead, under this ASU, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. All other goodwill impairment guidance will remain largely unchanged. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will also be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This ASU is effective for Customers for its first reporting period beginning after December 15, 2019. Early adoption is permitted for impairment tests performed after January 1, 2017. Customers expects to early adopt this ASU upon its next annual goodwill impairment test in 2017 and does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, which narrows the definition of a business and clarifies that to be considered a business, the fair value of gross assets acquired (or disposed of) should not be concentrated in a single identifiable asset or a group of similar identifiable assets. In addition, to be considered a business, an acquisition would have to include an input and a substantive process that together will significantly contribute to the ability to create an output. Also, the amendments narrow the definition of the term “output” so that it is consistent with how outputs are defined in ASC Topic 606, Revenue from Contracts with Customers. This ASU is effective for Customers for its first reporting period beginning after December 15, 2017. Adoption of this new guidance must be applied on a prospective basis. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash, which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU is effective for Customers for its first reporting period beginning after December 15, 2017, with early adoption permitted. Customers does not expect the adoption to this ASU to have a significant impact on the presentation of its statement of cash flows. In October 2016, the FASB issued ASU 2016-16-Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This eliminates the current exception for all intra-entity transfers of an asset other than inventory that requires deferral of the tax effects until the asset is sold to a third party or otherwise recovered through use. This ASU is effective for Customers for its first reporting period beginning after December 15, 2017, with early adoption permitted. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, which aims to reduce the existing diversity in practice with regards to the following specific items in the Statement of Cash Flows:
The ASU contains additional guidance clarifying when an entity should separate cash receipts and cash payments and classify them into more than one class of cash flows (including when reasonable judgment is required to estimate and allocate cash flows) versus when an entity should classify the aggregate amount into one class of cash flows on the basis of predominance. This ASU is effective for Customers for its first reporting period beginning after December 15, 2017, with early adoption permitted. Customers is currently evaluating the impact of this ASU and does not expect the ASU to have a material impact on the presentation of its statement of cash flows. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. This ASU requires an entity to utilize a new impairment model known as the current expected credit loss ("CECL") model to estimate lifetime expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset (including HTM securities), presents the net amount expected to be collected on the financial asset. This ASU will replace today’s “incurred loss” approach. The CECL model is expected to result in earlier recognition of credit losses. For available-for-sale debt securities, entities will be required to record allowances for credit losses rather than reduce the carrying amount, as they do today under the OTTI model, and will be allowed to reverse previously established allowances in the event the credit of the issuer improves. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for Customers for its first reporting period beginning after December 15, 2019. Earlier adoption is also permitted. Adoption of the new guidance can be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Customers is currently evaluating the impact of this ASU, initiating implementation efforts across the company, and planning for loss modeling requirements consistent with lifetime expected loss estimates. It is expected that the new model will include different assumptions used in calculating credit losses, such as estimating losses over the estimated life of a financial asset and will consider expected future changes in macroeconomic conditions. The adoption of this ASU may result in an increase to Customers' allowance for loan losses which will depend upon the nature and characteristics of Customers' loan portfolio at the adoption date, as well as the macroeconomic conditions and forecasts at that date. Customers currently does not intend to early adopt this new guidance. In March 2016, the FASB issued ASU 2016-04, Liabilities - Extinguishments of Liabilities: Recognition of Breakage for Certain Prepaid Stored-Value Products, that would require issuers of prepaid stored-value product (such as gift cards, telecommunication cards, and traveler’s checks), to derecognize the financial liability related to those products for breakage. Breakage is the value of prepaid stored-value products that is not redeemed by consumers for goods, services or cash. There is currently a diversity in the methodology used to recognize breakage. Subtopic 405-20, Extinguishment of Liabilities, includes derecognition guidance for both financial liabilities and nonfinancial liabilities, and Topic 606, Revenue from Contracts with Customers, includes authoritative breakage guidance but excludes financial liabilities. The amendments in this ASU provide a narrow scope exception to the guidance in Subtopic 405-20 to require that breakage be accounted for consistent with the breakage guidance in Topic 606. This ASU is effective for Customers for its first reporting period beginning after December 15, 2017. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition, results of operations and consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes the current lease accounting guidance for both lessees and lessors under ASC 840, Leases. From the lessee's perspective, the new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for lessees. The new guidance will require lessors to account for leases using an approach that is substantially similar to the existing guidance for sales-type, direct financing leases and operating leases. The new standard is effective for Customers for its first reporting period beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. A modified retrospective transition approach is required for lessors for sales-type, direct financing, and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Customers is currently evaluating the impact of this ASU on its financial condition and results of operations and expects to recognize right-of-use assets and lease liabilities for substantially all of its operating lease commitments based on the present value of unpaid lease payments as of the date of adoption. Customers does not intend to early adopt this ASU. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance in this ASU among other things, (1) requires equity investments with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (3) eliminates the requirement for public entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (4) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (5) requires an entity to present separately in other comprehensive income the portion of the change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (6) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements and (7) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. The guidance in this ASU is effective for Customers for its first reporting period beginning after December 15, 2017, including interim periods within those fiscal years. Customers is in the process of evaluating the impacts of the adoption of this ASU, however, it does not expect the impact to be significant to its financial condition, results of operations and consolidated financial statements given the immaterial amount of its investment in equity securities. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), superseding the revenue recognition requirements in ASC 605. This ASU requires an entity to recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendment includes a five-step process to assist an entity in achieving the main principle(s) of revenue recognition under ASC 605. In August 2015, the FASB issued ASU 2015-14, which formalized the deferral of the effective date of the amendment for a period of one-year from the original effective date. Following the issuance of ASU 2015-14, the amendment will be effective for Customers for its first reporting period beginning after December 15, 2017. In March 2016, the FASB also issued ASU 2016-08, an amendment to the guidance in ASU 2014-09, which reframed the structure of the indicators of when an entity is acting as an agent and focused on evidence that an entity is acting as the principal or agent in a revenue transaction. ASU 2016-08 also eliminated two of the indicators (the entity’s consideration is in the form of a commission and the entity is not exposed to credit risk) in making that determination. This amendment also clarifies that each indicator may be more or less relevant to the assessment depending on the terms and conditions of the contract. In April 2016, the FASB also issued ASU 2016-10, which clarifies the implementation guidance on identifying promised goods or services and on determining whether an entity's promise to grant a license with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU 2016-12, an amendment to ASU 2014-09, which provided practical expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on transition, collectability, non-cash consideration and the presentation of sales and other similar taxes. The amendments, collectively, should be applied retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. Because the ASU does not apply to revenue associated with leases and financial instruments (including loans and securities), Customers current assessment is that the new guidance will not have a material impact on the elements of its consolidated statements of operations most closely associated with leases and financial instruments (such as interest income, interest expense and securities gain). Customers will adopt this ASU on January 1, 2018 using a modified retrospective approach. Customers has completed its identification of all revenue streams that are included in its financial statements and has identified its deposit related fees, service charges, debit card and prepaid card interchange income, and university fees to be within the scope of the standard. Customers is also substantially complete with its review of the related contracts and has also completed its evaluation of certain costs related to these revenue streams to determine whether such costs should be presented as expenses or contra-revenue (i.e., gross vs. net). Customers' overall assessment suggests that adoption of this ASU will not materially change its current method and timing of recognizing revenue for these revenue streams. Customers, however, is still evaluating the ASU’s expanded disclosure requirements. As provided above, Customers current assessment is that the adoption of this ASU will not have a significant impact to its financial condition, results of operations and consolidated financial statements. |
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Fair Value Measurement | Customers uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. ASC Topic 825, Financial Instruments, requires disclosure of the estimated fair value of an entity’s assets and liabilities considered to be financial instruments. For Customers, as for most financial institutions, the majority of its assets and liabilities are considered to be financial instruments. Many of these financial instruments lack an available trading market as characterized by a willing buyer and a willing seller engaging in an exchange transaction. For fair value disclosure purposes, Customers utilized certain fair value measurement criteria under ASC Topic 820, Fair Value Measurements and Disclosures, as explained below. In accordance with ASC 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for Customers' various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. The fair value guidance provides a consistent definition of fair value, focusing on an exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions. The fair value guidance also establishes a fair value hierarchy and describes the following three levels used to classify fair value measurements. Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. Level 3: Prices or valuation techniques that require adjustments to inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity). A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. |
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Impaired Loans | Impaired loans: Impaired loans are those loans that are accounted for under ASC 310, Receivables, in which the Bank has measured impairment generally based on the fair value of the loan’s collateral or discounted cash flow analysis. Fair value is generally determined based upon independent third-party appraisals of the properties that collateralize the loans or discounted cash flows based upon the expected proceeds. These assets are generally classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. |
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Derivatives | Risk Management Objectives of Using Derivatives Customers is exposed to certain risks arising from both its business operations and economic conditions. Customers manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and durations of its assets and liabilities. Specifically, Customers enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Customers' derivative financial instruments are used to manage differences in the amount, timing, and duration of Customers' known or expected cash receipts and its known or expected cash payments principally related to certain borrowings. Customers also has interest-rate derivatives resulting from a service provided to certain qualifying customers, and therefore, they are not used to manage Customers' interest-rate risk in assets or liabilities. Customers manages a matched book with respect to its derivative instruments used in this customer service in order to minimize its net risk exposure resulting from such transactions. Cash Flow Hedges of Interest Rate Risk Customers' objectives in using interest-rate derivatives are to add stability to interest expense and to manage exposure to interest-rate movements. To accomplish this objective, Customers primarily uses interest rate swaps as part of its interest-rate-risk management strategy. Interest-rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for Customers making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. To date, such derivatives were used to hedge the variable cash flows associated with the forecasted issuances of debt. The ineffective portion of the change in fair value of the derivatives is to be recognized directly in earnings. |
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Amounts Recorded on the Balance Sheet | The following table summarizes the final adjusted amounts recognized for assets acquired and liabilities assumed:
(1) Includes $10 million payable to Higher One upon each of the first and second anniversary of the transaction closing, which has been placed into an escrow account with a third party (aggregate amount of $20 million at December 31, 2016). Customers paid the first $10 million due to Higher One in June 2017. |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations Income Statement and Balance Sheet | The following summarizes the effect of the reclassification from held for sale classification to held and used classification on the previously reported consolidated balance sheet as of December 31, 2016 and the previously reported consolidated statements of income for the the three and nine months ended September 30, 2016:
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Earnings Per Share | The following are the components and results of Customers' earnings per common share calculations for the periods presented.
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Anti-dilutive Securities Excluded from Computation of Earnings Per Share | The following is a summary of securities that could potentially dilute basic earnings per common share in future periods that were not included in the computation of diluted earnings per common share because to do so would have been anti-dilutive for the periods presented.
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Changes in Accumulated Other Comprehensive Income (Loss) By Component (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income (loss) | The following tables present the changes in accumulated other comprehensive income (loss) by component for the three and nine months ended September 30, 2017 and 2016.
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Investment Securities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Amortized Cost and Approximate Fair Value of Investment Securities | The amortized cost and approximate fair value of investment securities as of September 30, 2017 and December 31, 2016 are summarized in the tables below:
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Statement of Proceeds from Sale of Available for Sale Investment Securities | The following table presents proceeds from the sale of available-for-sale investment securities and gross gains and gross losses realized on those sales for the three and nine months ended September 30, 2017 and 2016:
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Summary of Available-for-Sale Debt Securities by Stated Maturity | The following table presents available-for-sale debt securities by stated maturity. Debt securities backed by mortgages have expected maturities that differ from contractual maturities because borrowers have the right to call or prepay and, therefore, these debt securities are classified separately with no specific maturity date:
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Gross Unrealized Losses and Fair Value, Aggregated by Investment Category | Gross unrealized losses and fair value of Customers' investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2017 and December 31, 2016 were as follows:
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Loans Held for Sale (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables Held-for-sale [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of Loans Held for Sale | The composition of loans held for sale as of September 30, 2017 and December 31, 2016 was as follows:
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Loans Receivable and Allowance for Loan Losses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Receivable | The following table presents loans receivable as of September 30, 2017 and December 31, 2016. BankMobile loans receivable previously reported as held for sale have been reclassified as held and used to conform with the current period presentation.
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Loans Receivable by Loan Type and Performance Status | The following tables summarize loans receivable by loan type and performance status as of September 30, 2017 and December 31, 2016:
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Schedule of Allowance for Loan Losses | The changes in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 and the loans and allowance for loan losses by loan class based on impairment evaluation method as of September 30, 2017 and December 31, 2016 were as follows. The amounts presented for the provision for loan losses below do not include the effect of changes to estimated benefits resulting from the FDIC loss share arrangements for the covered loans for periods prior to the termination of the FDIC loss sharing arrangements.
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Summary of Recorded Investment Net Charge-Offs, Unpaid Principal Balance and Related Allowance for Impaired Loans | The following tables present the recorded investment (net of charge-offs), unpaid principal balance, and related allowance by loan type for impaired loans that were individually evaluated for impairment as of September 30, 2017 and December 31, 2016 and the average recorded investment and interest income recognized for the three and nine months ended September 30, 2017 and 2016. Purchased-credit-impaired loans are considered to be performing and are not included in the tables below.
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Analysis of Loans Modified in Troubled Debt Restructuring by Type of Concession | The following table presents loans modified in a troubled debt restructuring by type of concession for the three and nine months ended September 30, 2017 and 2016. There were no modifications that involved forgiveness of debt.
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Summary of Loans Modified in Troubled Debt Restructurings and Related Recorded Investment | The following table provides, by loan type, the number of loans modified in troubled debt restructurings, and the related recorded investment, during the three and nine months ended September 30, 2017 and 2016.
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Changes in Accretable Yield Related to Purchased-credit-impaired Loans | The changes in accretable yield related to purchased-credit-impaired loans for the three and nine months ended September 30, 2017 and 2016 were as follows:
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Schedule of Changes in Allowance for Loan Losses | The following table presents changes in the allowance for loan losses and the FDIC loss sharing receivable, including the effects of the estimated clawback liability and the termination agreement, for the three and nine months ended September 30, 2017 and 2016.
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Schedule of FDIC Loss Sharing Receivable |
(a) Includes external costs, such as legal fees, real estate taxes, and appraisal expenses, which qualified for reimbursement under the FDIC loss sharing agreements. |
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Credit Ratings of Covered and Non-Covered Loan Portfolio | The following tables present the credit ratings of loans receivable as of September 30, 2017 and December 31, 2016.
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Regulatory Capital (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Capital Amounts, Tier 1 Risk Based and Tier 1 Leveraged Ratios | Generally, to be considered adequately capitalized, or well capitalized, respectively, an institution must at least maintain the common equity Tier 1, Tier 1 and total risk based ratios and the Tier 1 leverage ratio in excess of the related minimum ratios as set forth in the following table:
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Disclosures About Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Values of Financial Instruments | The estimated fair values of Customers' financial instruments at September 30, 2017 and December 31, 2016 were as follows. BankMobile assets and liabilities previously reported as held for sale have been reclassified as held and used to conform with the current period presentation.
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Summary of Financial Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis | For financial assets and liabilities measured at fair value on a recurring and nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2017 and December 31, 2016 were as follows:
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Statement of Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis | The changes in Level 3 assets measured at fair value on a recurring basis for the three and nine months ended September 30, 2017 and 2016 are summarized as follows. Additional information about residential mortgage loan commitments can be found in NOTE 13 - DERIVATIVES INSTRUMENTS AND HEDGING ACTIVITIES.
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Summary of Financial Assets and Financial Liabilities Measured at Fair Value on Recurring and Nonrecurring Basis | The following table summarizes financial assets and financial liabilities measured at fair value as of September 30, 2017 and December 31, 2016 on a recurring and nonrecurring basis for which Customers utilized Level 3 inputs to measure fair value.
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Derivative Instruments and Hedging Activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivative Financial Instruments | The following tables present the fair value of Customers' derivative financial instruments as well as their presentation on the balance sheet as of September 30, 2017 and December 31, 2016.
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Effect of Derivative Financial Instruments on Comprehensive Income | The following tables present the effect of Customers' derivative financial instruments on comprehensive income for the three and nine months ended September 30, 2017 and 2016.
(1) Amounts presented are net of taxes. See NOTE 6 - CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME for total effect on other comprehensive income from derivatives designated as cash flow hedges for the periods presented. |
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Summary of Offsetting of Financial Assets and Derivative Assets | Offsetting of Financial Assets and Derivative Assets At December 31, 2016
Offsetting of Financial Assets and Derivative Assets At September 30, 2017
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Summary of Offsetting of Financial Liabilities and Derivative Liabilities | Offsetting of Financial Liabilities and Derivative Liabilities At December 31, 2016
Offsetting of Financial Liabilities and Derivative Liabilities At September 30, 2017
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Business Segments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following tables present the operating results for Customers' reportable business segments for the three and nine months ended September 30, 2017 and 2016. Customers has presented the financial information and disclosures for prior periods to reflect the segment disclosures as if they had been in effect for the periods presented. The segment financial results include directly attributable revenues and expenses. Corporate overhead costs are assigned to the Community Business Banking segment as those expenses are expected to continue following the planned spin-off of BankMobile. Similarly, the preferred stock dividends have been allocated in their entirety to the Community Business Banking segment. The tax benefit assigned to BankMobile was based on an estimated effective tax rate of 37.25% for 2017 and 38% for 2016. BankMobile, previously presented as discontinued operations in the financial statements due to Customers' stated intent to sell the business, was reclassified as held and used at September 30, 2017. As of September 30, 2017, Customers has decided to spin off BankMobile to Customers’ shareholders through a spin-off/merger transaction which is currently being negotiated. For more information on BankMobile's reclassification, see NOTE 3 - TAX-FREE SPIN-OFF AND MERGER.
(1) - Amounts reported include funds transfer pricing of $2.7 million and 1.4 million for the three months ended September 30, 2017 and 2016, respectively, credited to BankMobile for the value provided to the Community Business Banking segment for the use of low/no cost deposits.
(1) - Amounts reported include funds transfer pricing of $9.7 million and $4.4 million for the nine months ended September 30, 2017 and 2016, respectively, credited to BankMobile for the value provided to the Community Business Banking segment for the use of low/no cost deposits. (2) - Amounts reported exclude intra company receivables. |
Description of the Business - Additional Information (Detail) |
Sep. 30, 2017
Branch
|
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of branches (branch) | 14 |
Tax-Free Spin-Off and Merger - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2017 |
Jun. 30, 2018 |
|
Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | BankMobile | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Depreciation on reclassified assets | $ 4.2 | |
Flagship Community Bank | Forecast | Spinoff | Common Stock | Subsequent Event | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Sale of stock, percentage of ownership after transaction | 50.00% | |
Value of consideration received | $ 110.0 |
Earnings Per Share - Components of Earnings Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Net income (loss) available to common shareholders | $ 4,139 | $ 18,655 | $ 46,378 | $ 52,975 |
Weighted-average number of common shares outstanding - basic (shares) | 30,739,671 | 27,367,551 | 30,597,314 | 27,131,960 |
Share-based compensation plans (shares) | 1,754,480 | 2,205,291 | 2,004,917 | 2,119,717 |
Warrants (shares) | 18,541 | 124,365 | 24,392 | 243,531 |
Weighted-average number of common shares - diluted (shares) | 32,512,692 | 29,697,207 | 32,626,623 | 29,495,208 |
Basic earnings per common share (usd per share) | $ 0.13 | $ 0.68 | $ 1.52 | $ 1.95 |
Diluted earnings per common share (usd per share) | $ 0.13 | $ 0.63 | $ 1.42 | $ 1.80 |
Earnings Per Share - Anti-dilutive Securities Excluded from Computation of Earnings Per Share (Detail) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Anti-dilutive securities: | ||||
Total anti-dilutive securities (shares) | 461,467 | 669,237 | 461,467 | 669,237 |
Share-based compensation awards | ||||
Anti-dilutive securities: | ||||
Total anti-dilutive securities (shares) | 409,225 | 616,995 | 409,225 | 616,995 |
Warrants | ||||
Anti-dilutive securities: | ||||
Total anti-dilutive securities (shares) | 52,242 | 52,242 | 52,242 | 52,242 |
Investment Securities - Statement of Proceeds from Sale of Available for Sale Investment Securities (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Proceeds from sale of available-for-sale securities | $ 554,540 | $ 5 | $ 698,451 | $ 2,853 |
Gross gains | 5,349 | 0 | 8,532 | 26 |
Gross losses | 0 | (1) | 0 | (1) |
Net gains (losses) | $ 5,349 | $ (1) | $ 8,532 | $ 25 |
Investment Securities - Additional Information (Detail) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
Security
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
Security
|
Sep. 30, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Schedule of Available-for-sale Securities [Line Items] | |||||
Number of available-for-sale investment securities in the less than twelve month category (security) | Security | 16 | 16 | |||
Number of available-for-sale investment securities in the twelve month or more category (security) | Security | 11 | 11 | |||
Impairment loss on investment securities | $ 8,349 | $ 0 | $ 12,934 | $ 0 | |
Cost basis | 582,558 | 582,558 | $ 497,869 | ||
Pledged investment securities fair value | 127,600 | 127,600 | 231,300 | ||
Equity securities | |||||
Schedule of Available-for-sale Securities [Line Items] | |||||
Cost basis | 2,311 | 2,311 | $ 15,246 | ||
BankMobile | Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | |||||
Schedule of Available-for-sale Securities [Line Items] | |||||
Deferred tax assets | $ 4,600 | $ 4,600 |
Loans Held for Sale - Composition of Loans Held for Sale (Detail) - USD ($) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2017 |
Dec. 31, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Receivables Held-for-sale [Abstract] | ||||
Mortgage warehouse loans, at fair value | $ 2,116,815 | $ 1,961,248 | ||
Multi-family loans at lower of cost or fair value | 0 | 150,217 | ||
Total commercial loans held for sale | 2,116,815 | 2,111,465 | ||
Residential mortgage loans, at fair value | 695 | 1,828 | ||
Loans held for sale | 2,117,510 | $ 2,113,293 | ||
Loans held for sale, average life from purchase to sale | 21 days | |||
Transfer of loans held for investment to loans held for sale | $ 150,800 | $ 150,638 | $ 0 | |
Transfer of loans held for sale to held for investment | $ 25,100 |
Loans Receivable and Allowance for Loan Losses - Analysis of Loans Modified in Troubled Debt Restructuring by Type of Concession (Detail) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017
USD ($)
Loan
|
Sep. 30, 2016
USD ($)
Loan
|
Sep. 30, 2017
USD ($)
Loan
|
Sep. 30, 2016
USD ($)
Loan
|
|
Financing Receivable, Modifications [Line Items] | ||||
Number of Loans | Loan | 4 | 10 | 36 | 52 |
Recorded Investment | $ | $ 182 | $ 533 | $ 7,560 | $ 3,927 |
Extensions of maturity | ||||
Financing Receivable, Modifications [Line Items] | ||||
Number of Loans | Loan | 1 | 0 | 4 | 3 |
Recorded Investment | $ | $ 60 | $ 0 | $ 6,263 | $ 1,995 |
Interest-rate reductions | ||||
Financing Receivable, Modifications [Line Items] | ||||
Number of Loans | Loan | 3 | 10 | 32 | 49 |
Recorded Investment | $ | $ 122 | $ 533 | $ 1,297 | $ 1,932 |
Loans Receivable and Allowance for Loan Losses - Changes in Accretable Yield Related to Purchased-credit-impaired Loans (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Changes in Accretable Yield | ||||
Accretable yield balance, beginning of period | $ 9,006 | $ 11,165 | $ 10,202 | $ 12,947 |
Accretion to interest income | (368) | (460) | (1,326) | (1,429) |
Reclassification from nonaccretable difference and disposals, net | (276) | 107 | (514) | (706) |
Accretable yield balance, end of period | $ 8,362 | $ 10,812 | $ 8,362 | $ 10,812 |
Loans Receivable and Allowance for Loan Losses - Schedule of Changes in Allowance for Loan Losses (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Allowance for Loan and Lease Losses [Roll Forward] | ||||
Beginning balance | $ 38,458 | $ 38,097 | $ 37,315 | $ 35,647 |
Provision for loan losses | 2,352 | 88 | 5,937 | 3,143 |
Charge-offs | (2,585) | (666) | (5,576) | (1,848) |
Recoveries | 89 | 378 | 638 | 955 |
Ending balance | $ 38,314 | $ 37,897 | $ 38,314 | $ 37,897 |
Loans Receivable and Allowance for Loan Losses - Schedule of FDIC Loss Sharing Receivable (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
FDIC Indemnification Asset [Roll Forward] | ||||
Beginning balance | $ 0 | $ (1,381) | $ 0 | $ (2,083) |
Other activity, net | 0 | (255) | ||
Cash payments to (receipts from) the FDIC | 0 | 1,381 | 0 | 2,049 |
Ending balance | 0 | 0 | 0 | 0 |
Provision for loan losses | 2,352 | 88 | 5,937 | 3,143 |
Effect attributable to FDIC loss share arrangements | 0 | (289) | ||
Provision for loan losses | $ 2,352 | $ 88 | $ 5,937 | $ 2,854 |
Borrowings - Narrative (Details) - Senior Notes - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Sep. 30, 2017 |
|
Debt Instrument [Line Items] | ||
Debt Instrument, face amount | $ 100.0 | |
Face value (as a percent) | 99.775% | |
Effective rate (as a percent) | 4.00% | |
Stated rate (as a percent) | 3.95% | |
Proceeds from issuance of debt | $ 98.6 |
Disclosures About Fair Value of Financial Instruments - Narrative (Detail) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2013 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans held for sale, average life from purchase to sale | 21 days | |
Five-year Senior Unsecured Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Issuance of senior unsecured notes | $ 63 | |
Unsecured Debt | Five-year Senior Unsecured Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Senior unsecured notes term | 5 years |
Disclosures About Fair Value of Financial Instruments - Statement of Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis (Detail) - Significant Unobservable Inputs (Level 3) - Residential Mortgage Loan Commitments - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning | $ 102 | $ 157 | $ 45 | $ 45 |
Issuances | 103 | 85 | 300 | 315 |
Settlements | (102) | (157) | (242) | (275) |
Balance at ending | $ 103 | $ 85 | $ 103 | $ 85 |
Derivative Instruments and Hedging Activities - Summary of Offsetting of Financial Assets and Derivative Assets (Detail) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Offsetting Assets [Line Items] | ||
Net Amounts of Assets Presented in the Consolidated Balance Sheet | $ 10,447 | $ 10,864 |
Interest Rate Swaps | ||
Offsetting Assets [Line Items] | ||
Gross Amount of Recognized Assets | 4,190 | 4,723 |
Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Net Amounts of Assets Presented in the Consolidated Balance Sheet | 4,190 | 4,723 |
Gross amounts not offset in the consolidated balance sheet, Financial instruments | 0 | 0 |
Gross amounts not offset in the consolidated balance sheet, Cash collateral received | 1,900 | 0 |
Gross amounts not offset in the consolidated balance sheet, Net amount | $ 2,290 | $ 4,723 |
Derivative Instruments and Hedging Activities - Summary of Offsetting of Financial Liabilities and Derivative Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Offsetting Liabilities [Line Items] | ||
Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | $ 12,092 | $ 14,172 |
Interest Rate Swaps | ||
Offsetting Liabilities [Line Items] | ||
Gross Amount of Recognized Liabilities | 8,400 | 9,825 |
Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | 8,400 | 9,825 |
Gross amounts not offset in the consolidated balance sheet, Financial instruments | 0 | 0 |
Gross amounts not offset in the consolidated balance sheet, Cash collateral pledged | 8,262 | 4,472 |
Gross amounts not offset in the consolidated balance sheet, Net amount | $ 138 | $ 5,353 |
Business Segments (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
Segment
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
Segment
|
Dec. 31, 2016
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||
Number of reportable segments (segment) | Segment | 2 | 1 | |||
Interest income | $ 98,285 | $ 84,212 | $ 275,232 | $ 238,931 | |
Interest expense | 30,266 | 19,627 | 76,189 | 53,561 | |
Net interest income | 68,019 | 64,585 | 199,043 | 185,370 | |
Provision for loan losses | 2,352 | 88 | 5,937 | 2,854 | |
Non-interest income | 18,026 | 27,486 | 59,170 | 41,237 | |
Non-interest expense | 61,040 | 56,218 | 160,818 | 128,306 | |
Income before income tax expense | 22,653 | 35,765 | 91,458 | 95,447 | |
Income tax expense (benefit) | 14,899 | 14,558 | 34,236 | 36,572 | |
Net income (loss) | 7,754 | 21,207 | 57,222 | 58,875 | |
Preferred stock dividends | 3,615 | 2,552 | 10,844 | 5,900 | |
Net income (loss) available to common shareholders | 4,139 | 18,655 | 46,378 | 52,975 | |
Goodwill and other intangibles | 16,604 | 16,604 | $ 17,621 | ||
Assets | 10,471,829 | 10,471,829 | 9,382,736 | ||
Deposits | 7,597,076 | 7,597,076 | $ 7,303,775 | ||
Combined Business Segments | |||||
Segment Reporting Information [Line Items] | |||||
Interest income | 98,285 | 84,212 | 275,232 | 238,931 | |
Interest expense | 30,266 | 19,627 | 76,189 | 53,561 | |
Net interest income | 68,019 | 64,585 | 199,043 | 185,370 | |
Provision for loan losses | 2,352 | 88 | 5,937 | 2,854 | |
Non-interest income | 18,026 | 27,486 | 59,170 | 41,237 | |
Non-interest expense | 61,040 | 56,218 | 160,818 | 128,306 | |
Income before income tax expense | 22,653 | 35,765 | 91,458 | 95,447 | |
Income tax expense (benefit) | 14,899 | 14,558 | 34,236 | 36,572 | |
Net income (loss) | 7,754 | 21,207 | 57,222 | 58,875 | |
Preferred stock dividends | 3,615 | 2,552 | 10,844 | 5,900 | |
Net income (loss) available to common shareholders | 4,139 | 18,655 | 46,378 | 52,975 | |
Goodwill and other intangibles | 16,604 | 16,924 | 16,604 | 16,924 | |
Assets | 10,471,829 | 9,602,610 | 10,471,829 | 9,602,610 | |
Deposits | $ 7,597,076 | $ 7,388,970 | $ 7,597,076 | 7,388,970 | |
Operating Segments | Community Business Banking | |||||
Segment Reporting Information [Line Items] | |||||
Effective tax rate | 37.25% | 38.00% | 38.00% | ||
Interest income | $ 95,585 | $ 82,828 | $ 265,524 | 234,513 | |
Interest expense | 30,250 | 19,620 | 76,134 | 53,539 | |
Net interest income | 65,335 | 63,208 | 189,390 | 180,974 | |
Provision for loan losses | 1,874 | (162) | 5,459 | 2,605 | |
Non-interest income | 4,190 | 11,121 | 16,587 | 22,241 | |
Non-interest expense | 33,990 | 36,864 | 94,704 | 101,053 | |
Income before income tax expense | 33,661 | 37,627 | 105,814 | 99,557 | |
Income tax expense (benefit) | 18,999 | 15,266 | 39,584 | 38,134 | |
Net income (loss) | 14,662 | 22,361 | 66,230 | 61,423 | |
Preferred stock dividends | 3,615 | 2,552 | 10,844 | 5,900 | |
Net income (loss) available to common shareholders | 11,047 | 19,809 | 55,386 | 55,523 | |
Goodwill and other intangibles | 3,632 | 3,642 | 3,632 | 3,642 | |
Assets | 10,405,452 | 9,532,281 | 10,405,452 | 9,532,281 | |
Deposits | 6,815,994 | 6,855,788 | 6,815,994 | 6,855,788 | |
Operating Segments | BankMobile | |||||
Segment Reporting Information [Line Items] | |||||
Interest income | 2,700 | 1,384 | 9,708 | 4,418 | |
Interest expense | 16 | 7 | 55 | 22 | |
Net interest income | 2,684 | 1,377 | 9,653 | 4,396 | |
Provision for loan losses | 478 | 250 | 478 | 249 | |
Non-interest income | 13,836 | 16,365 | 42,583 | 18,996 | |
Non-interest expense | 27,050 | 19,354 | 66,114 | 27,253 | |
Income before income tax expense | (11,008) | (1,862) | (14,356) | (4,110) | |
Income tax expense (benefit) | (4,100) | (708) | (5,348) | (1,562) | |
Net income (loss) | (6,908) | (1,154) | (9,008) | (2,548) | |
Preferred stock dividends | 0 | 0 | 0 | 0 | |
Net income (loss) available to common shareholders | (6,908) | (1,154) | (9,008) | (2,548) | |
Goodwill and other intangibles | 12,972 | 13,282 | 12,972 | 13,282 | |
Assets | 66,377 | 70,329 | 66,377 | 70,329 | |
Deposits | 781,082 | 533,182 | 781,082 | 533,182 | |
Segment Reconciling Items | BankMobile | |||||
Segment Reporting Information [Line Items] | |||||
Interest income | $ 2,700 | $ 1,400 | $ 9,700 | $ 4,400 |
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