Regulatory Capital

12 Months Ended

Dec. 31, 2020

Regulatory Capital [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 Bancorp must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items, as calculated under 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.

In first quarter 2020, U.S. federal banking regulatory agencies permitted banking organizations to phase-in, for regulatory capital purposes, the day-one impact of the new CECL accounting rule on retained earnings over a period of three years. As part of its response to the impact of COVID-19, on March 31, 2020, the U.S. federal banking regulatory agencies issued an interim final rule that provided the option to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period. The interim final rule allows banking organizations to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. Customers has elected to adopt the interim final rule, which is reflected in the regulatory capital data presented below.

In April 2020, the U.S. federal banking regulatory agencies issued an interim final rule that permits banks to exclude the impact of participating in the SBA PPP program in their regulatory capital ratios. Specifically, PPP loans are zero percent risk weighted and a bank can exclude all PPP loans pledged as collateral to the PPPLF from its average total consolidated assets for purposes of calculating the Tier 1 capital to average assets ratio (i.e. leverage ratio). Customers applied this regulatory guidance in the calculation of its regulatory capital ratios presented below.

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, and total capital to risk-weighted assets, and Tier 1 capital to average assets (as defined in the regulations). At December 31, 2020 and 2019, the Bank and the Bancorp satisfied all capital requirements to which they were subject.

Generally, to comply with the regulatory definition of adequately capitalized, or well capitalized, respectively, or to comply with the Basel III capital requirements, an institution must at least maintain the common equity Tier 1, Tier 1 and total risk-based capital ratios and the Tier 1 leverage ratio in excess of the related minimum ratios set forth in the following table:

					Minimum Capital Levels to be Classified as:
	Actual				Adequately Capitalized				Well Capitalized				Basel III Compliant
(amounts in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2020
Common equity Tier 1 (to risk-weighted assets)
Customers Bancorp, Inc.	$	954,839	8.079	%	$	531,844	4.500	%	N/A		N/A		$	827,312	7.000	%
Customers Bank	$	1,254,082	10.615	%	$	531,639	4.500	%	$	767,923	6.500	%	$	826,994	7.000	%
Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.	$	1,172,310	9.919	%	$	709,125	6.000	%	N/A		N/A		$	1,004,594	8.500	%
Customers Bank	$	1,254,082	10.615	%	$	708,852	6.000	%	$	945,136	8.000	%	$	1,004,207	8.500	%
Total capital (to risk-weighted assets)
Customers Bancorp, Inc.	$	1,401,119	11.855	%	$	945,500	8.000	%	N/A		N/A		$	1,240,969	10.500	%
Customers Bank	$	1,424,791	12.060	%	$	945,136	8.000	%	$	1,181,421	10.000	%	$	1,240,492	10.500	%
Tier 1 capital (to average assets)
Customers Bancorp, Inc.	$	1,172,310	8.597	%	$	545,485	4.000	%	N/A		N/A		$	545,485	4.000	%
Customers Bank	$	1,254,082	9.208	%	$	544,758	4.000	%	$	680,947	5.000	%	$	544,758	4.000	%
December 31, 2019
Common equity Tier 1 (to risk-weighted assets)
Customers Bancorp, Inc.	$	821,810	7.984	%	$	463,211	4.500	%	N/A		N/A		$	720,551	7.000	%
Customers Bank	$	1,164,652	11.323	%	$	462,842	4.500	%	$	668,549	6.500	%	$	719,976	7.000	%
Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.	$	1,039,281	10.096	%	$	617,615	6.000	%	N/A		N/A		$	874,955	8.500	%
Customers Bank	$	1,164,652	11.323	%	$	617,122	6.000	%	$	822,829	8.000	%	$	874,256	8.500	%
Total capital (to risk-weighted assets)
Customers Bancorp, Inc.	$	1,256,309	12.205	%	$	823,487	8.000	%	N/A		N/A		$	1,080,827	10.500	%
Customers Bank	$	1,330,155	12.933	%	$	822,829	8.000	%	$	1,028,537	10.000	%	$	1,079,964	10.500	%
Tier 1 capital (to average assets)
Customers Bancorp, Inc.	$	1,039,281	9.258	%	$	449,026	4.000	%	N/A		N/A		$	449,026	4.000	%
Customers Bank	$	1,164,652	10.379	%	$	448,851	4.000	%	$	561,064	5.000	%	$	448,851	4.000	%

The Basel III Capital Rules require that we maintain a 2.500% capital conservation buffer with respect to each of CET1, Tier 1 and total capital to risk-weighted assets, which provides for capital levels that exceed the minimum risk-based capital adequacy requirements. A financial institution with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers.