Pennsylvania | 27-2290659 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of Each Class | Name of Each Exchange on which Registered | |
Voting Common Stock, par value $1.00 per share | New York Stock Exchange | |
6.375% Senior Notes due 2018 | New York Stock Exchange | |
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per share | New York Stock Exchange | |
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, par value $1.00 per share | New York Stock Exchange |
Large accelerated filer | ¨ | Accelerated filer | x | ||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
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• | Changes in the external competitive market factors that might impact results of operations; |
• | Changes in laws and regulations, including without limitation changes in capital requirements under Basel III; |
• | Changes in business strategy or an inability to execute our strategy due to the occurrence of unanticipated events; |
• | Our ability to identify potential candidates for, and consummate, acquisition or investment transactions; |
• | The timing of acquisition or investment transactions; |
• | Constraints on our ability to consummate an attractive acquisition or investment transaction because of significant competition for these opportunities; |
• | Failure to complete any or all of the transactions described herein on the terms currently contemplated; |
• | Local, regional and national economic conditions and events and the impact they may have on the Bancorp and its customers; |
• | Our ability to attract deposits and other sources of liquidity; |
• | Changes in the financial performance and/or condition of the Bank’s borrowers; |
• | Changes in the level of non-performing and classified assets and charge-offs; |
• | Changes in estimates of future loan loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; |
• | Unforeseen challenges that may arise in connection with the consummation of our recently-announced transaction with Higher One; |
• | Inflation, interest rate, securities market and monetary fluctuations; |
• | Timely development and acceptance of new banking products and services and perceived overall value of these products and services by users; |
• | Changes in consumer spending, borrowing and saving habits; |
• | Technological changes; |
• | Our ability to increase market share and control expenses; |
• | Continued volatility in the credit and equity markets and its effect on the general economy; |
• | Effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; |
• | The businesses of Customers Bank and any acquisition targets or merger partners and subsidiaries not integrating successfully or such integration being more difficult, time-consuming or costly than expected, including with respect to our proposed acquisition of certain assets from Higher One; |
• | Material differences in the actual financial results of merger and acquisition activities compared with expectations, such as with respect to the full realization of anticipated cost savings and revenue enhancements within an expected time frame, including with respect to our proposed acquisition of certain assets of Higher One; |
• | Our ability to successfully implement our growth strategy, control expenses and maintain liquidity; and |
• | Customers Bank’s ability to pay dividends to Customers Bancorp. |
• | Population density; |
• | Concentration of business activity; |
• | Attractive deposit bases; |
• | Significant market share held by large banks; |
• | Advantageous competitive landscape that provides opportunity to achieve meaningful market presence; |
• | Lack of consolidation in the banking sector and corresponding opportunities for add-on transactions; |
• | Potential for economic growth over time; and |
• | Management experience in the applicable markets. |
Market | Offices | Type | ||
Berks County, PA | 4 | Branch | ||
Boston, Massachusetts | 1 | LPO | ||
Mercer County, NJ | 1 | Branch | ||
New York, NY | 1 | LPO | ||
Philadelphia-Southeastern PA | 9 | Branch/LPO | ||
Portsmouth, NH | 1 | LPO | ||
Providence, RI | 1 | LPO | ||
Suffolk County, NY | 1 | LPO | ||
Westchester County, NY | 1 | Branch/LPO |
• | Experienced and respected management team. An integral element of the business strategy of Customers is to capitalize on and leverage the prior experience of its executive management team. The management team is led by Chairman and Chief Executive Officer, Jay Sidhu, who is the former Chief Executive Officer and Chairman of Sovereign Bancorp. In addition to Mr. Sidhu, a number of the members of the current management team of Customers have experience working together at Sovereign with Mr. Sidhu, including Richard Ehst, President and Chief Operating Officer, as well as Warren Taylor, President of BankMobile. During their tenure at Sovereign, these individuals established a track record of producing strong financial results, integrating acquisitions, managing risk, working with regulators and achieving organic growth and expense control. Team leaders Timothy Romig, Regional Chief Lending Officer, Steve Issa, New England Marketing President and Chief Lending Officer, and George Maroulis, Head of Private and Commercial Banking - New York, head the New Jersey and Pennsylvania, New England, and New York commercial lending areas, respectively, with 32, 39, and 24 years of experience, respectively. Ken Keiser, Director of Multi-Family and Investment Commercial Real Estate Lending, leads the commercial real estate and multi-family lending group and brings more than 39 years of experience including oversight of the Mid-Atlantic commercial real estate group at Sovereign. In addition, the residential lending group, which includes mortgage loans to individuals and commercial loans (warehouse facilities) to residential mortgage originators, is led by Glenn Hedde, President of Warehouse Lending who brings more than 25 years of experience in this sector. This team has significant experience in successfully building a banking organization as well as existing valuable community and business relationships in our core markets. |
• | Unique Asset and Deposit Generation Strategies. Customers focuses on local market lending combined with relatively low-risk specialty lending segments. Local market asset generation provides various types of business lending products and consumer lending products, such as mortgage loans and home equity loans. Customers has also established a multi-family and commercial real estate product line that is focused on the Mid-Atlantic region, particularly New York City. The strategy is to focus on refinancing existing loans with conservative underwriting and to keep costs low. Through the multi-family and commercial real estate product, Customers earns interest and fee income and generates commercial deposits. Customers also maintains a specialty lending business, commercial loans to mortgage originators, which is a national business where the Bank provides liquidity to non- |
• | BankMobile Strategy. Customers launched BankMobile as a key strategic initiative in January 2015, recognizing the product delivery flexibility demanded by the millennial generation and the low cost of the smart phone delivery channel. BankMobile refers to Customers' efforts to build a full service bank that is accessible to our customers anywhere and anytime through the customer's smartphone or other web-enabled device. BankMobile provides a nationwide deposit-aggregation platform. BankMobile focuses on the aggregation of low-cost deposits and currently offers no fee banking, lines of credits to qualified customers, no overdraft fees, higher than average interest rate on savings, and access to 55,000 (and if the customer makes a monthly direct deposit over 400,000) ATMs across the U.S. Customers believes that by consolidating BankMobile with the Disbursements business to be obtained from Higher One, Inc., with approximately 2.0 million student deposit customers, targeted for second quarter 2016, Customers will be uniquely positioned to become the graduating students "bank for life" and service each graduate's financial needs throughout their life. Successful execution of the BankMobile strategy, including its consolidation with Higher One's Disbursements business, will greatly accelerate BankMobile's ability to achieve profitability. BankMobile's revenues are largely derived from interchange charges paid by the product selling vendor and user based fees for specific activities (such as lost card replacement) and net interest income on assets funded by the aggregated deposits. |
• | Attractive risk profile. Customers has sought to maintain high asset quality and moderate credit risk by using conservative underwriting standards and early identification of potential problem assets. Customers has also formed a special assets department to manage the covered assets portfolio and review other classified and non-performing assets. As of December 31, 2015, only $10.8 million, or 0.15%, of the Bank's total loan portfolio was non performing. |
• | Superior Community Banking Model. Customers expects to drive organic growth by employing its Concierge Banking® strategy, which provides specific relationship managers or private bankers for all customers, delivering an appointment banking approach available 12 hours a day, seven days a week. This allows Customers to provide services in a personalized, convenient and expeditious manner. This approach, coupled with superior technology, including remote account opening, remote deposit capture, mobile banking and the first fee free mobile first digital bank, BankMobile, results in a competitive advantage over larger institutions, which management believes contributes to the profitability of its franchise and allows the Bank to generate core deposits. The “high-tech, high-touch,” model requires less staff and smaller branch locations to operate, thereby significantly reducing operating costs. |
• | Acquisition Expertise. The depth of Customers' management team and their experience working together and successfully completing acquisitions provides unique insight in identifying and analyzing potential markets and acquisition targets. The experience of Customers' team, which includes the acquisition and integration of over 35 institutions, as well as numerous asset and branch acquisitions, provides a substantial advantage in pursuing and consummating future acquisitions. Additionally, management believes Customers' strengths in structuring transactions to limit its risk, its experience in the financial reporting and regulatory process related to troubled bank acquisitions, and its ongoing risk management expertise, particularly in problem loan workouts, collectively enable it to capitalize on the potential of the franchises it acquires. With Customers' depth of operational experience in connection with completing merger and acquisition transactions, it expects to be able to integrate and reposition acquired franchises cost-efficiently with a minimum disruption to customer relationships. |
• | Commercial Lending – includes Business Banking (commercial and industrial lending), Small and Middle Market Business Banking, including small business administration (SBA) loans, Multi-family and Commercial Real Estate lending, and commercial loans to mortgage originators; and |
• | Consumer Lending – local market mortgage and home equity lending. |
• | established the Financial Stability Oversight Council, a federal agency acting as the financial system’s systemic risk regulator with the authority to review the activities of significant bank holding companies and non-bank financial firms, to make recommendations and impose standards regarding capital, leverage, conflicts and other requirements for financial firms and to impose regulatory standards on certain financial firms deemed to pose a systemic threat to the financial health of the U.S. economy; |
• | created a new Consumer Financial Protection Bureau within the U.S. Federal Reserve, which has substantive rule-making authority over a wide variety of consumer financial services and products, including the power to regulate unfair, deceptive, or abusive acts or practices; |
• | permitted state attorneys general and other state enforcement authorities broader power to enforce consumer protection laws against banks; |
• | authorized federal regulatory agencies to ban compensation arrangements at financial institutions that give employees incentives to engage in conduct that could pose risks to the nation’s financial system; |
• | granted the U.S. government resolution authority to liquidate or take emergency measures with regard to troubled financial institutions, such as bank holding companies, that fall outside the existing resolution authority of the Federal Deposit Insurance Corporation; |
• | gave the FDIC substantial new authority and flexibility in assessing deposit insurance premiums, which may result in increased deposit insurance premiums for us in the future; |
• | increased the deposit insurance coverage limit for insurable deposits to $250,000 generally, and removes the limit entirely for transaction accounts; |
• | permitted banks to pay interest on business demand deposit accounts; |
• | extended the national bank lending (or loans-to-one-borrower) limits to other institutions; |
• | prohibited banks subject to enforcement action such as a memorandum of understanding from changing their charter without the approval of both their existing charter regulator and their proposed new charter regulator; and |
• | imposed new limits on asset purchase and sale transactions between banks and their insiders. |
• | the financial condition and cash flows of the borrower and/or the project being financed; |
• | the changes and uncertainties as to the future value of the collateral, in the case of a collateralized loan; |
• | the discount on the loan at the time of its acquisition and capital, which could have regulatory implications; |
• | the duration of the loan; |
• | the credit history of a particular borrower; and |
• | changes in economic and industry conditions. |
• | the ability to develop, maintain and build upon long-term customer relationships based on high quality, personal service, effective and efficient products and services, high ethical standards and safe and sound assets; |
• | the scope, relevance and competitive pricing of products and services offered to meet customer needs and demands; |
• | the ability to provide customers with maximum convenience of access to services and availability of banking representatives; |
• | the ability to attract and retain highly qualified employees to operate our business; |
• | the ability to expand our market position; |
• | customer access to our decision makers, and customer satisfaction with our level of service; and |
• | the ability to operate our business effectively and efficiently. |
• | incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating the terms of potential transactions, resulting in our attention being diverted from the operation of our existing business; |
• | using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target institution or assets; |
• | being potentially exposed to unknown or contingent liabilities of banks and businesses we acquire; |
• | being required to expend time and expense to integrate the operations and personnel of the combined businesses; |
• | experiencing higher operating expenses relative to operating income from the new operations; |
• | creating an adverse short-term effect on our results of operations; |
• | losing key employees and customers as a result of an acquisition that is poorly received; and |
• | incurring significant problems relating to the conversion of the financial and customer data of the entity being acquired into our financial and customer product systems. |
• | the effect of the acquisition on competition; |
• | the financial condition, liquidity, results of operations, capital levels and future prospects of the applicant and the bank(s) involved; |
• | the quantity and complexity of previously consummated acquisitions; |
• | the managerial resources of the applicant and the bank(s) involved; |
• | the convenience and needs of the community, including the record of performance under the Community Reinvestment Act (“CRA”); |
• | the effectiveness of the applicant in combating money laundering activities; and |
• | the extent to which the acquisition would result in greater or more concentrated risks to the stability of the United States banking or financial system. |
• | fully integrate, and to integrate successfully, the branches acquired into bank operations; |
• | limit the outflow of deposits held by new customers in the acquired branches and to successfully retain and manage interest-earning assets (loans) acquired in FDIC-assisted acquisitions; |
• | retain existing deposits and to generate new interest-earning assets in the geographic areas previously served by the acquired banks; |
• | effectively compete in new markets in which we did not previously have a presence; |
• | successfully deploy the cash received in the FDIC-assisted acquisitions into assets bearing sufficiently high yields without incurring unacceptable credit or interest rate risk; |
• | control the incremental non-interest expense from the acquired branches in a manner that enables us to maintain a favorable overall efficiency ratio; |
• | retain and attract the appropriate personnel to staff the acquired branches; and |
• | earn acceptable levels of interest and non-interest income, including fee income, from the acquired bank. |
• | continue to implement and improve our operational, credit underwriting and administration, financial, accounting, enterprise risk management and other internal and disclosure controls and processes and our reporting systems and procedures in order to manage a growing number of client relationships; |
• | comply with changes in, and an increasing number of, laws, rules and regulations, including those of any national securities exchange on which any of our securities become listed; |
• | scale our technology and other systems’ platforms; |
• | maintain and attract appropriate staffing; |
• | operate profitable or raise capital; and |
• | support our asset growth with adequate deposits, funding and liquidity while maintaining our net interest margin and meeting our customers’ and regulators’ liquidity requirements. |
• | changes to regulatory capital requirements; |
• | exclusion of hybrid securities, including trust preferred securities, issued on or after May 19, 2010 from tier 1 capital; |
• | creation of new government regulatory agencies (such as the Financial Stability Oversight Council, which will oversee systemic risk, and the Consumer Financial Protection Bureau, which will develop and enforce rules for bank and non-bank providers of consumer financial products); |
• | potential limitations on federal preemption; |
• | changes to deposit insurance assessments; |
• | regulation of debit interchange fees we earn; |
• | changes in retail banking regulations, including potential limitations on certain fees we may charge; and |
• | changes in regulation of consumer mortgage loan origination and risk retention. |
• | whether we declare or fail to declare dividends on the series of preferred stock from time to time; |
• | our operating performance, financial condition and prospects, or the operating performance financial condition and prospects of our competitors; |
• | real or anticipated changes in the credit ratings (if any) assigned to the Series C or Series D Preferred Stock or our other securities; |
• | our creditworthiness; |
• | changes in interest rates and expectations regarding changes in rates; |
• | our issuance of additional preferred equity; |
• | the market for similar securities; |
• | developments in the securities, credit and housing markets, and developments with respect to financial institutions generally; and |
• | economic, financial, corporate, securities market, geopolitical, regulatory or judicial events that affect us, the banking industry or the financial markets generally. |
• | yields on U.S. Treasury obligations and expectations about future interest rates; |
• | actual or anticipated changes in our financial condition or results, including our levels of indebtedness; |
• | general economic conditions and expectations regarding the effects of national policies; |
• | investors’ views of securities issued by both holding companies and similar financial service firms; and |
• | the market for similar securities. |
Bank Branches | |||
County | State | Leased | |
Berks (1) | PA | 4 | |
Bucks | PA | 3 | |
Chester (2) | PA | 3 | |
Delaware | PA | 2 | |
Westchester | NY | 1 | |
Mercer | NJ | 1 | |
14 |
Limited Purpose and Administrative Offices | |||
County | State | Leased | |
Berks (3) | PA | 3 | |
Bucks (6) | PA | 1 | |
Chester (2) | PA | 2 | |
Delaware (7) | PA | 1 | |
Lancaster (14) | PA | 1 | |
Philadelphia (8) | PA | 1 | |
Fairfax (9) | VA | 1 | |
Mercer (4) | NJ | 2 | |
Morris (14) | NJ | 1 | |
New York (10) | NY | 1 | |
Westchester (5) | NY | 2 | |
Suffolk (13) | NY | 1 | |
Providence (11) | RI | 1 | |
Rockingham (15) | NH | 1 | |
Suffolk (12) | MA | 1 | |
20 |
(1) | Includes the full service branch at 1001 Penn Avenue, Wyomissing, PA as well as three branches acquired through the Berkshire Bancorp, Inc. acquisition. The lease expirations range from 2017 to 2021. |
(2) | Includes the corporate headquarters of Customers Bank and a full service branch located in a freestanding building at 99 Bridge St., Phoenixville, PA 19460, wherein we lease approximately 31,054 square feet on 4 floors. The lease on this location expires in 2023. Also includes the lease of 5,523 square feet of property at 513 Kimberton Road in Phoenixville, PA where we maintain a full service commercial bank branch and corporate offices. The lease on this location expires in 2019. |
(3) | Includes the corporate headquarters of Customers Bancorp and a full service branch located at 1015 Penn Avenue, Wyomissing, PA. The leased space covers a total of 23,719 square feet. This lease expires in 2020. Also, includes the leased administrative offices for the corporate lending group which is housed within the Exeter branch location, expiring in 2021, and an administrative offices for Company personnel in Shillington, PA, expiring in 2018. |
(4) | We lease 7,327 square feet of space in Hamilton, NJ from which we conduct our mortgage warehouse activities. The lease on this location expires in 2019. |
(5) | Represents administrative offices for Customers personnel. The leases at these locations expire in 2019 and 2022. |
(6) | Represents administrative office for Customers personnel. The lease on this location expires in 2017. |
(7) | Represents administrative office for Customers personnel. The lease on this location expires in 2018. |
(8) | Represents limited purpose office for Customers personnel. The lease on this location expires in 2023. |
(9) | Represents limited purpose office. The space is currently sublet to a third party. The lease on this location expires in 2019. |
(10) | Represents limited purpose office for Customers personnel. The lease on this location expires in 2020. |
(11) | Represents limited purpose office for Customers personnel. The lease on this location expires in 2021. |
(12) | Represents limited purpose office for Customers personnel. The lease on this location expires in 2019. |
(13) | Represents limited purpose office for Customers personnel. The lease on this location expires in 2025. |
(14) | Represents administrative office for Customers personnel. The lease on this location expires in 2016. |
(15) | Represents limited purpose office for Customers personnel. The lease on this location expires in 2018. |
Item 5. | Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
High | Low | ||||||
2015 | |||||||
Fourth quarter | $ | 31.00 | $ | 24.30 | |||
Third quarter | 29.02 | 22.51 | |||||
Second quarter | 27.49 | 24.05 | |||||
First quarter | 24.65 | 17.96 | |||||
2014 | |||||||
Fourth quarter | $ | 20.16 | $ | 17.10 | |||
Third quarter | 20.66 | 17.71 | |||||
Second quarter | 21.25 | 18.25 | |||||
First quarter | 20.03 | 17.27 | |||||
Number of Securities | |||||||||
Number of Securities | Remaining | ||||||||
to be Issued upon | Available for Future Issuance | ||||||||
Exercise of | Weighted-Average | Issuance Under Equity | |||||||
Outstanding Options, | Exercise Price of | Compensation Plans | |||||||
Warrants, and | Outstanding Options | (Excluding Securities Reflected | |||||||
Plan Category | Rights (#) | ($) (2) | in the First Column) (#) | ||||||
Equity Compensation Plans | |||||||||
Approved by Security Holders (1) | 4,605,025 | $ | 14.33 | 2,895,784 (3) | |||||
Equity Compensation Plans Not | |||||||||
Approved by Security Holders | N/A | N/A | N/A |
2015 | 2014 | 2013 | 2012 | 2011 (1) | |||||||||||||||
(dollars in thousands, except per share information) | |||||||||||||||||||
For the Year ended December 31, | |||||||||||||||||||
Interest income | $ | 249,850 | $ | 190,427 | $ | 128,156 | $ | 93,814 | $ | 61,245 | |||||||||
Interest expense | 53,560 | 38,504 | 24,301 | 21,761 | 22,464 | ||||||||||||||
Net interest income | 196,290 | 151,923 | 103,855 | 72,053 | 38,781 | ||||||||||||||
Provision for loan losses | 20,566 | 14,747 | 2,236 | 14,270 | 7,495 | ||||||||||||||
Total non-interest income | 27,717 | 25,126 | 22,703 | 28,958 | 11,469 | ||||||||||||||
Total non-interest expense | 114,946 | 98,914 | 74,024 | 50,651 | 36,886 | ||||||||||||||
Income before taxes | 88,495 | 63,388 | 50,298 | 36,090 | 5,869 | ||||||||||||||
Income tax expense | 29,912 | 20,174 | 17,604 | 12,272 | 1,835 | ||||||||||||||
Net income | 58,583 | 43,214 | 32,694 | 23,818 | 4,034 | ||||||||||||||
Preferred stock dividends | 2,493 | — | — | — | — | ||||||||||||||
Net income attributable to common shareholders | 56,090 | 43,214 | 32,694 | 23,818 | 3,990 | ||||||||||||||
Basic earnings per common share | 2.09 | 1.62 | 1.34 | 1.61 | 0.36 | ||||||||||||||
Diluted earnings per common share | 1.96 | 1.55 | 1.30 | 1.57 | 0.35 | ||||||||||||||
At Period End | |||||||||||||||||||
Total assets | $ | 8,401,313 | $ | 6,825,370 | $ | 4,153,173 | $ | 3,201,234 | $ | 2,077,532 | |||||||||
Cash and cash equivalents | 264,593 | 371,023 | 233,068 | 186,016 | 73,570 | ||||||||||||||
Investment securities (2) | 560,253 | 416,685 | 497,573 | 129,093 | 398,684 | ||||||||||||||
Loans held for sale (3) | 1,797,064 | 1,435,459 | 747,593 | 1,439,889 | 174,999 | ||||||||||||||
Loans receivable | 5,453,479 | 4,312,173 | 2,465,078 | 1,324,467 | 1,341,393 | ||||||||||||||
Allowance for loan losses | 35,647 | 30,932 | 23,998 | 25,837 | 15,032 | ||||||||||||||
FDIC loss sharing receivable (4) | — | 2,320 | 10,046 | 12,343 | 13,077 | ||||||||||||||
Deposits | 5,909,501 | 4,532,538 | 2,959,922 | 2,440,818 | 1,583,189 | ||||||||||||||
Borrowings | 1,893,550 | 1,816,250 | 771,750 | 471,000 | 331,000 | ||||||||||||||
Shareholders’ equity | 553,902 | 443,145 | 386,623 | 269,475 | 147,748 | ||||||||||||||
Tangible common equity (5) | 494,682 | 439,481 | 382,947 | 265,786 | 144,043 | ||||||||||||||
Selected Ratios and Share Data | |||||||||||||||||||
Return on average assets | 0.81 | % | 0.78 | % | 0.95 | % | 1.02 | % | 0.24 | % | |||||||||
Return on average common equity | 11.82 | % | 10.39 | % | 9.49 | % | 12.69 | % | 3.04 | % | |||||||||
Common book value per share | $ | 18.52 | $ | 16.57 | $ | 14.51 | $ | 13.27 | $ | 11.84 | |||||||||
Tangible book value per common share (5) | $ | 18.39 | $ | 16.43 | $ | 14.37 | $ | 13.09 | $ | 11.54 | |||||||||
Common shares outstanding | 26,901,801 | 26,745,529 | 26,646,566 | 20,305,452 | 12,482,451 | ||||||||||||||
Net interest margin | 2.81 | % | 2.86 | % | 3.13 | % | 3.21 | % | 2.47 | % | |||||||||
Equity to assets | 6.59 | % | 6.49 | % | 9.31 | % | 8.42 | % | 7.11 | % | |||||||||
Tangible common equity to tangible assets (5) | 5.89 | % | 6.44 | % | 9.23 | % | 8.31 | % | 6.95 | % |
Tier 1 leverage ratio – Customers Bank | 7.30 | % | 7.39 | % | 10.81 | % | 7.74 | % | 7.11 | % | |||||||||
Tier 1 leverage ratio – Customers Bancorp | 7.16 | % | 6.69 | % | 10.11 | % | 9.30 | % | 7.37 | % | |||||||||
Tier 1 risk-based capital ratio – Customers Bank | 8.62 | % | 9.27 | % | 13.33 | % | 8.50 | % | 9.66 | % | |||||||||
Tier 1 risk-based capital ratio – Customers Bancorp | 8.46 | % | 8.39 | % | 12.44 | % | 10.23 | % | 10.01 | % | |||||||||
Total risk-based capital ratio – Customers Bank | 10.85 | % | 11.98 | % | 14.11 | % | 9.53 | % | 10.78 | % | |||||||||
Total risk-based capital ratio – Customers Bancorp | 10.62 | % | 11.09 | % | 13.21 | % | 11.26 | % | 11.13 | % | |||||||||
Asset Quality | |||||||||||||||||||
Non-performing loans | $ | 10,771 | $ | 11,733 | $ | 19,163 | $ | 32,851 | $ | 36,626 | |||||||||
Non-performing loans to total loans receivable | 0.20 | % | 0.27 | % | 0.78 | % | 2.48 | % | 2.73 | % | |||||||||
Non-performing loans to total loans | 0.15 | % | 0.20 | % | 0.60 | % | 1.19 | % | 2.42 | % | |||||||||
Other real estate owned | $ | 5,057 | $ | 15,371 | $ | 12,265 | $ | 8,114 | $ | 13,482 | |||||||||
Non-performing assets | 15,828 | 27,104 | 31,428 | 40,965 | 50,108 | ||||||||||||||
Non-performing assets to total assets | 0.19 | % | 0.40 | % | 0.76 | % | 1.28 | % | 2.41 | % | |||||||||
Allowance for loan losses to total loans receivable | 0.65 | % | 0.72 | % | 0.97 | % | 1.95 | % | 1.12 | % | |||||||||
Allowance for loan losses to non-performing loans | 330.95 | % | 263.63 | % | 125.23 | % | 78.65 | % | 41.04 | % | |||||||||
Net charge-offs | $ | 11,979 | $ | 3,124 | $ | 6,894 | $ | 5,466 | $ | 9,547 | |||||||||
Net charge-offs to average total loans receivable | 0.26 | % | 0.09 | % | 0.37 | % | 0.38 | % | 1.20 | % |
(1) | On September 17, 2011, Customers Bancorp completed its acquisition of Berkshire Bancorp, Inc. using the purchase accounting method in accounting for the acquisition. The purchase method provides that all transactions after the acquisition date are reflected in the acquirers’ financial accounting records. |
(2) | Includes available-for-sale and held-to-maturity investment securities. |
(3) | In 2015 and 2014, loans held for sale included $1,754,950 and $1,332,019 of mortgage warehouse loans at fair value, respectively. |
(4) | The FDIC loss sharing receivable, as of December 2015, is included in "Accrued interest payable and other liabilities" net of the clawback liability. |
(5) | Customers’ selected financial data contains non-GAAP financial measures calculated using non-GAAP amounts. These measures include tangible common equity and tangible book value per common share and tangible common equity to tangible assets. Management uses these non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing the Bancorp’s financial results and use of equity. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. Customers Bancorp calculates tangible common equity by excluding intangible assets from total shareholders’ equity. Tangible book value per common share equals tangible common equity divided by common shares outstanding. |
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||
Shareholders’ equity | $ | 553,902 | $ | 443,145 | $ | 386,623 | $ | 269,475 | $ | 147,748 | |||||||||
Less: intangible assets | (3,651 | ) | (3,664 | ) | (3,676 | ) | (3,689 | ) | (3,705 | ) | |||||||||
Less: preferred stock | (55,569 | ) | — | — | — | — | |||||||||||||
Tangible common equity | $ | 494,682 | $ | 439,481 | $ | 382,947 | $ | 265,786 | $ | 144,043 | |||||||||
Shares outstanding | 26,902 | 26,746 | 26,647 | 20,305 | 12,482 | ||||||||||||||
Common book value per share | $ | 18.52 | $ | 16.57 | $ | 14.51 | $ | 13.27 | $ | 11.84 | |||||||||
Less: effect of excluding intangible assets | (0.13 | ) | (0.14 | ) | (0.14 | ) | (0.18 | ) | (0.30 | ) | |||||||||
Common tangible book value per share | $ | 18.39 | $ | 16.43 | $ | 14.37 | $ | 13.09 | $ | 11.54 | |||||||||
Total assets | $ | 8,401,313 | $ | 6,825,370 | $ | 4,153,173 | $ | 3,201,234 | $ | 2,077,532 | |||||||||
Less: intangible assets | (3,651 | ) | (3,664 | ) | (3,676 | ) | (3,689 | ) | (3,705 | ) | |||||||||
Total tangible assets | $ | 8,397,662 | $ | 6,821,706 | $ | 4,149,497 | $ | 3,197,545 | $ | 2,073,827 | |||||||||
Equity to assets | 6.59 | % | 6.49 | % | 9.31 | % | 8.42 | % | 7.11 | % | |||||||||
Tangible common equity to tangible assets | 5.89 | % | 6.44 | % | 9.23 | % | 8.31 | % | 6.95 | % |
For the Years Ended December 31, | ||||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||||||||||||||
Average balance | Interest income or expense | Average yield or cost | 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 | $ | 271,201 | $ | 718 | 0.26 | % | $ | 228,668 | $ | 577 | 0.25 | % | $ | 190,298 | $ | 482 | 0.25 | % | ||||||||||||||
Investment securities (A) | 427,638 | 10,405 | 2.43 | 451,932 | 10,386 | 2.30 | 260,862 | 6,314 | 2.42 | |||||||||||||||||||||||
Loans held for sale | 1,589,176 | 51,553 | 3.24 | 911,594 | 30,801 | 3.38 | 992,421 | 38,140 | 3.84 | |||||||||||||||||||||||
Loans receivable (B) | 4,635,887 | 182,280 | 3.93 | 3,656,891 | 146,388 | 4.00 | 1,842,310 | 82,580 | 4.48 | |||||||||||||||||||||||
Other interest earning assets | 72,693 | 4,894 | 6.73 | 66,669 | 2,275 | 3.41 | 27,095 | 640 | 2.36 | |||||||||||||||||||||||
Total interest-earning assets | 6,996,595 | 249,850 | 3.57 | 5,315,754 | 190,427 | 3.58 | 3,312,986 | 128,156 | 3.87 | |||||||||||||||||||||||
Non-interest-earning assets | 269,454 | 227,045 | 142,350 | |||||||||||||||||||||||||||||
Total assets | $ | 7,266,049 | $ | 5,542,799 | $ | 3,455,336 | ||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Interest checking | $ | 123,527 | 686 | 0.56 | $ | 62,840 | 361 | 0.57 | 45,613 | 191 | 0.42 | |||||||||||||||||||||
Money market deposit accounts | 2,412,958 | 12,548 | 0.52 | 1,712,896 | 10,391 | 0.61 | 1,106,457 | 7,619 | 0.69 | |||||||||||||||||||||||
Other savings accounts | 36,820 | 111 | 0.30 | 40,795 | 172 | 0.42 | 31,741 | 152 | 0.48 | |||||||||||||||||||||||
Certificates of deposit | 2,087,641 | 20,637 | 0.99 | 1,403,774 | 13,530 | 0.96 | 1,251,709 | 13,058 | 1.04 | |||||||||||||||||||||||
Total interest-bearing deposits | 4,660,946 | 33,982 | 0.73 | 3,220,305 | 24,454 | 0.76 | 2,435,520 | 21,020 | 0.86 | |||||||||||||||||||||||
Borrowings | 1,373,359 | 19,578 | 1.43 | 1,268,205 | 14,050 | 1.11 | 278,297 | 3,281 | 1.18 | |||||||||||||||||||||||
Total interest-bearing liabilities | 6,034,305 | 53,560 | 0.89 | 4,488,510 | 38,504 | 0.86 | 2,713,817 | 24,301 | 0.90 | |||||||||||||||||||||||
Non-interest-bearing deposits | 692,159 | 620,385 | 385,187 | |||||||||||||||||||||||||||||
Total deposits and borrowings | 6,726,464 | 0.80 | 5,108,895 | 0.75 | 3,099,004 | 0.78 | ||||||||||||||||||||||||||
Other non-interest-bearing liabilities | 30,394 | 17,905 | 11,779 | |||||||||||||||||||||||||||||
Total liabilities | 6,756,858 | 5,126,800 | 3,110,783 | |||||||||||||||||||||||||||||
Shareholders’ equity | 509,191 | 415,999 | 344,553 | |||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 7,266,049 | $ | 5,542,799 | $ | 3,455,336 | ||||||||||||||||||||||||||
Net interest earnings | 196,290 | 151,923 | 103,855 | |||||||||||||||||||||||||||||
Tax-equivalent adjustment (C) | 449 | 405 | 244 | |||||||||||||||||||||||||||||
Net interest earnings | $ | 196,739 | $ | 152,328 | $ | 104,099 | ||||||||||||||||||||||||||
Interest spread | 2.77 | % | 2.83 | % | 3.09 | % | ||||||||||||||||||||||||||
Net interest margin (D) | 2.81 | 2.86 | 3.13 | |||||||||||||||||||||||||||||
Net interest margin tax equivalent (C)(D) | 2.81 | 2.87 | 3.14 |
(A) | For presentation in this table, balances and the corresponding average rates 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) | Full tax equivalent basis, using a 35% statutory tax rate to approximate interest income as a taxable asset. |
(D) | Excluding an adjustment to interest income for the change in accounting estimate on purchased-credit-impaired loans of $4.5 million, net interest margin and net interest margin tax equivalent are 3.05% for the year ended December 31, 2013. |
2015 vs. 2014 | 2014 vs. 2013 | ||||||||||||||||||||||
Increase (decrease) due to change in | Increase (decrease) due to change in | ||||||||||||||||||||||
Rate | Volume | Total | Rate | Volume | Total | ||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Interest income: | |||||||||||||||||||||||
Interest earning deposits | $ | 29 | $ | 112 | $ | 141 | $ | (2 | ) | $ | 97 | $ | 95 | ||||||||||
Investment securities, taxable | 594 | (575 | ) | 19 | (335 | ) | 4,407 | 4,072 | |||||||||||||||
Loans held for sale | (1,279 | ) | 22,031 | 20,752 | (4,384 | ) | (2,955 | ) | (7,339 | ) | |||||||||||||
Loans receivable | (2,645 | ) | 38,537 | 35,892 | (9,683 | ) | 73,491 | 63,808 | |||||||||||||||
Other interest earning assets | 2,396 | 223 | 2,619 | 382 | 1,253 | 1,635 | |||||||||||||||||
Total interest income | (905 | ) | 60,328 | 59,423 | (14,022 | ) | 76,293 | 62,271 | |||||||||||||||
Interest expense: | |||||||||||||||||||||||
Interest checking | (12 | ) | 337 | 325 | 84 | 86 | 170 | ||||||||||||||||
Money market deposit accounts | (1,640 | ) | 3,797 | 2,157 | (996 | ) | 3,768 | 2,772 | |||||||||||||||
Savings | (46 | ) | (15 | ) | (61 | ) | (20 | ) | 40 | 20 | |||||||||||||
Certificates of deposit | 355 | 6,752 | 7,107 | (1,040 | ) | 1,512 | 472 | ||||||||||||||||
Total interest bearing deposits | (1,343 | ) | 10,871 | 9,528 | (1,972 | ) | 5,406 | 3,434 | |||||||||||||||
Borrowings | 4,288 | 1,240 | 5,528 | (210 | ) | 10,979 | 10,769 | ||||||||||||||||
Total interest expense | 2,945 | 12,111 | 15,056 | (2,182 | ) | 16,385 | 14,203 | ||||||||||||||||
Net interest income | $ | (3,850 | ) | $ | 48,217 | $ | 44,367 | $ | (11,840 | ) | $ | 59,908 | $ | 48,068 |
Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Mortgage warehouse transactional fees | $ | 10,394 | $ | 8,233 | $ | 12,962 | |||||
Bank-owned life insurance | 7,006 | 3,702 | 2,482 | ||||||||
Gains on sales of loans | 4,047 | 3,125 | 852 | ||||||||
Deposit fees | 944 | 801 | 675 | ||||||||
Mortgage loan and banking income | 741 | 2,048 | 1,142 | ||||||||
Gain (loss) on sales of investment securities | (85 | ) | 3,191 | 1,274 | |||||||
Other | 4,670 | 4,026 | 3,316 | ||||||||
Total non-interest income | $ | 27,717 | $ | 25,126 | $ | 22,703 |
Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Salaries and employee benefits | $ | 58,777 | $ | 46,427 | $ | 35,493 | |||||
Professional services | 11,042 | 7,748 | 5,548 | ||||||||
FDIC assessments, taxes, and regulatory fees | 10,728 | 11,812 | 5,568 | ||||||||
Technology, communication and bank operations | 10,596 | 8,798 | 6,607 | ||||||||
Occupancy | 8,668 | 8,068 | 6,552 | ||||||||
Other real estate owned | 2,516 | 3,601 | 1,365 | ||||||||
Advertising and promotion | 1,475 | 1,325 | 1,274 | ||||||||
Loan workout | 1,127 | 1,706 | 2,245 | ||||||||
Loss contingency | — | — | 2,000 | ||||||||
Other | 10,017 | 9,429 | 7,372 | ||||||||
Total non-interest expense | $ | 114,946 | $ | 98,914 | $ | 74,024 |
December 31, | |||||||
2015 | 2014 | ||||||
(amounts in thousands) | |||||||
Cash and cash equivalents | $ | 264,593 | $ | 371,023 | |||
Investment securities available for sale, at fair value | 560,253 | 416,685 | |||||
Loans held for sale (includes $1,757,807 and $1,335,668, respectively at fair value) | 1,797,064 | 1,435,459 | |||||
Loans receivable | 5,453,479 | 4,312,173 | |||||
Total loans receivable, net of allowance for loan losses | 5,417,832 | 4,281,241 | |||||
Total assets | 8,401,313 | 6,825,370 | |||||
Total deposits | 5,909,501 | 4,532,538 | |||||
Federal funds purchased | 70,000 | — | |||||
FHLB advances | 1,625,300 | 1,618,000 | |||||
Other borrowings | 88,250 | 88,250 | |||||
Subordinated debt | 110,000 | 110,000 | |||||
Total liabilities | 7,847,411 | 6,382,225 | |||||
Total shareholders’ equity | 553,902 | 443,145 | |||||
Total liabilities and shareholders’ equity | 8,401,313 | 6,825,370 |
December 31, | |||||||
2015 | 2014 | ||||||
(amounts in thousands) | |||||||
Available for Sale: | |||||||
Residential mortgage-backed securities (1) | $ | 299,392 | $ | 376,854 | |||
Commercial real estate mortgage-backed securities (1) | 206,719 | — | |||||
Corporate notes (2) | 39,925 | 15,000 | |||||
Equity securities (3) | 22,514 | 23,074 | |||||
$ | 568,550 | $ | 414,928 |
(1) | Consists entirely of mortgage-backed securities issued by government-sponsored agencies, including FHLMC, FNMA, and GNMA at December 31, 2015. Consists primarily of mortgage-backed securities issued by government-sponsored agencies, including FHLMC, FNMA, and GNMA at December 31, 2014. |
(2) | Includes subordinated debt issued by other bank holding companies. |
(3) | Consists primarily of equity securities in a foreign entity. |
December 31, 2015 | |||||||||||||||||||||||||||
Amortized Cost | Fair Value | ||||||||||||||||||||||||||
< 1yr | 1 -5 years | 5 -10 years | After 10 years | No Specific Maturity | Total | Total | |||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||
Available for Sale | |||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | — | $ | — | $ | — | $ | — | $ | 299,392 | $ | 299,392 | $ | 298,104 | |||||||||||||
Yield | 2.65 | % | 2.65 | % | — | ||||||||||||||||||||||
Commercial real estate mortgage-backed securities | 206,719 | $ | 206,719 | 202,870 | |||||||||||||||||||||||
Yield | — | — | — | — | 2.80 | % | 2.80 | % | — | ||||||||||||||||||
Corporate notes | — | — | 32,925 | 7,000 | — | 39,925 | 40,067 | ||||||||||||||||||||
Yield | — | — | 5.59 | % | 5.54 | % | — | 5.58 | % | — | |||||||||||||||||
Equity securities | — | — | — | — | 22,514 | 22,514 | 19,212 | ||||||||||||||||||||
Yield | — | — | — | — | — | % | — | % | — | ||||||||||||||||||
Total | $ | — | $ | — | $ | 32,925 | $ | 7,000 | $ | 528,625 | $ | 568,550 | $ | 560,253 | |||||||||||||
Weighted Average Yield | — | % | — | % | 5.59 | % | 5.54 | % | 2.60 | % | 2.81 | % |
December 31, | |||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
(amounts in thousands) | |||||||||||||||||||
Commercial Loans: | |||||||||||||||||||
Mortgage warehouse loans at fair value | $ | 1,754,950 | $ | 1,332,019 | $ | 740,694 | $ | 1,439,889 | $ | 174,999 | |||||||||
Multi-family loans at lower of cost or fair value | 39,257 | 99,791 | — | — | — | ||||||||||||||
Total commercial loans held for sale | 1,794,207 | 1,431,810 | 740,694 | 1,439,889 | 174,999 | ||||||||||||||
Consumer Loans: | |||||||||||||||||||
Residential mortgage loans at fair value | 2,857 | 3,649 | 6,899 | — | — | ||||||||||||||
Loans held for sale | $ | 1,797,064 | $ | 1,435,459 | $ | 747,593 | $ | 1,439,889 | $ | 174,999 |
December 31, | |||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
(amounts in thousands) | |||||||||||||||||||
Commercial: | |||||||||||||||||||
Multi-family | $ | 2,909,439 | $ | 2,208,405 | $ | 1,064,059 | $ | 363,336 | $ | 70,945 | |||||||||
Commercial and industrial (a) | 1,111,400 | 785,669 | 296,595 | 126,333 | 123,784 | ||||||||||||||
Commercial real estate (b) | 956,255 | 839,310 | 753,591 | 489,332 | 305,234 | ||||||||||||||
Construction | 87,240 | 49,718 | 42,917 | 45,554 | 35,605 | ||||||||||||||
Mortgage warehouse (c) | — | — | — | 9,565 | 619,318 | ||||||||||||||
Total commercial loans | 5,064,334 | 3,883,102 | 2,157,162 | 1,034,120 | 1,154,886 | ||||||||||||||
Consumer: | |||||||||||||||||||
Residential real estate | 271,613 | 297,395 | 163,920 | 129,960 | 76,111 | ||||||||||||||
Manufactured housing | 113,490 | 126,731 | 139,471 | 153,429 | 104,565 | ||||||||||||||
Other | 3,708 | 4,433 | 5,437 | 5,801 | 6,220 | ||||||||||||||
Total consumer loans | 388,811 | 428,559 | 308,828 | 289,190 | 186,896 | ||||||||||||||
Total loans receivable | 5,453,145 | 4,311,661 | 2,465,990 | 1,323,310 | 1,341,782 | ||||||||||||||
Deferred costs (fees) and unamortized premiums (discounts), net | 334 | 512 | (912 | ) | 1,157 | (389 | ) | ||||||||||||
Allowance for loan losses | (35,647 | ) | (30,932 | ) | (23,998 | ) | (25,837 | ) | (15,032 | ) | |||||||||
Loans receivable, net of allowance | $ | 5,417,832 | $ | 4,281,241 | $ | 2,441,080 | $ | 1,298,630 | $ | 1,326,361 |
(a) | Includes owner occupied commercial real estate loans for 2015 and 2014. |
(b) | Includes non-owner occupied commercial real estate loans for 2015 and 2014. For 2013, 2012 and 2011, includes owner occupied and non-owner occupied commercial real estate loans. |
(c) | Beginning in third quarter 2012, certain mortgage warehouse lending transactions were documented under master repurchase agreements and classified as held for sale. |
Within one year | After one but within five years | After five years | Total | ||||||||||||
(amounts in thousands) | |||||||||||||||
Commercial Loans: | |||||||||||||||
Multi-family | $ | 5,322 | $ | 1,886,364 | $ | 1,017,753 | $ | 2,909,439 | |||||||
Commercial and industrial (including owner occupied commercial real estate) | 147,103 | 489,748 | 474,549 | 1,111,400 | |||||||||||
Commercial real estate non-owner occupied | 41,665 | 557,382 | 357,208 | 956,255 | |||||||||||
Construction | 368 | 48,568 | 38,304 | 87,240 | |||||||||||
Total commercial loans | $ | 194,458 | $ | 2,982,062 | $ | 1,887,814 | $ | 5,064,334 | |||||||
Amount of such loans with: | |||||||||||||||
Predetermined rates | $ | 51,343 | $ | 2,466,942 | $ | 1,186,577 | $ | 3,704,862 | |||||||
Floating or adjustable rates | 143,115 | 515,120 | 701,237 | 1,359,472 | |||||||||||
Total commercial loans | $ | 194,458 | $ | 2,982,062 | $ | 1,887,814 | $ | 5,064,334 |
For the Years Ended December 31, | |||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
(amounts in thousands) | |||||||||||||||||||
Beginning Balance | $ | 30,932 | $ | 23,998 | $ | 25,837 | $ | 15,032 | $ | 15,129 | |||||||||
Loan charge-offs: (1) | |||||||||||||||||||
Construction | 1,064 | 895 | 2,096 | 2,507 | 1,179 | ||||||||||||||
Commercial and industrial (2) | 11,709 | 1,637 | 1,387 | 522 | 2,543 | ||||||||||||||
Commercial real estate (3) | 327 | 1,715 | 3,358 | 2,462 | 5,775 | ||||||||||||||
Residential real estate | 276 | 667 | 410 | 649 | 109 | ||||||||||||||
Other consumer | 36 | 33 | 87 | 26 | 55 | ||||||||||||||
Total Charge-offs | 13,412 | 4,947 | 7,338 | 6,166 | 9,661 | ||||||||||||||
Loan recoveries (1): | |||||||||||||||||||
Construction | 204 | 13 | — | 4 | 2 | ||||||||||||||
Commercial and industrial (2) | 562 | 736 | 391 | 514 | 11 | ||||||||||||||
Commercial real estate (3) | — | 801 | 42 | 63 | 94 | ||||||||||||||
Residential real estate | 575 | 265 | 2 | 5 | — | ||||||||||||||
Other consumer | 92 | 8 | 9 | 114 | 7 | ||||||||||||||
Total Recoveries | 1,433 | 1,823 | 444 | 700 | 114 | ||||||||||||||
Total net charge-offs | 11,979 | 3,124 | 6,894 | 5,466 | 9,547 | ||||||||||||||
Provision for loan losses (4) | 16,694 | 10,058 | 5,055 | 16,271 | 9,450 | ||||||||||||||
Ending Balance | $ | 35,647 | $ | 30,932 | $ | 23,998 | $ | 25,837 | $ | 15,032 | |||||||||
Net charge-offs as a percentage of average loans receivable | 0.26 | % | 0.09 | % | 0.37 | % | 0.38 | % | 1.20 | % |
(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. |
(2) | Includes owner occupied commercial real estate loans for 2015 and 2014. |
(3) | Includes non-owner occupied commercial real estate loans for 2015 and 2014. For 2013, 2012 and 2011, includes owner occupied and non-owner occupied commercial real estate loans. |
(4) | The provision amounts exclude the (cost)/benefit of the FDIC loss share arrangements of $(3.9) million, $(4.7) million, $2.8 million, $2.0 million, and $2.0 million, respectively. |
December 31, | ||||||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||||||
Allowance for loan losses | Percent of Loans in each category to total loans | Allowance for loan losses | Percent of Loans in each category to total loans | Allowance for loan losses | Percent of Loans in each category to total loans | Allowance for loan losses | Percent of Loans in each category to total loans | Allowance for loan losses | Percent of Loans in each category to total loans | |||||||||||||||||||||||||
(amounts in thousands) | ||||||||||||||||||||||||||||||||||
Construction | $ | 1,074 | 3.0 | % | $ | 1,047 | 3.4 | % | $ | 2,385 | 9.9 | % | $ | 3,991 | 15.4 | % | $ | 4,656 | 31.0 | % | ||||||||||||||
Commercial and industrial (a) | 10,212 | 28.6 | % | 9,120 | 29.5 | % | 2,674 | 11.2 | % | 1,477 | 5.7 | % | 1,441 | 9.6 | % | |||||||||||||||||||
Commercial real estate (b) | 8,420 | 23.6 | % | 9,198 | 29.7 | % | 11,478 | 47.8 | % | 13,645 | 52.9 | % | 5,447 | 36.2 | % | |||||||||||||||||||
Multi-family | 12,016 | 33.7 | % | 8,493 | 27.5 | % | 4,227 | 17.6 | % | 1,794 | 6.9 | % | 1,583 | 10.5 | % | |||||||||||||||||||
Residential real estate | 3,298 | 9.3 | % | 2,698 | 8.7 | % | 2,490 | 10.4 | % | 3,233 | 12.5 | % | 844 | 5.6 | % | |||||||||||||||||||
Other consumer | 133 | 0.4 | % | 114 | 0.4 | % | 130 | 0.5 | % | 154 | 0.6 | % | 77 | 0.5 | % | |||||||||||||||||||
Manufactured housing | 494 | 1.4 | % | 262 | 0.8 | % | 614 | 2.6 | % | 750 | 2.9 | % | 1 | — | % | |||||||||||||||||||
Mortgage warehouse | — | — | % | — | — | % | — | — | % | 71 | 0.3 | % | 929 | 6.2 | % | |||||||||||||||||||
Residual reserve | — | — | % | — | — | % | — | — | % | 722 | 2.8 | % | 54 | 0.4 | % | |||||||||||||||||||
$ | 35,647 | 100.0 | % | $ | 30,932 | 100.0 | % | $ | 23,998 | 100.0 | % | $ | 25,837 | 100.0 | % | $ | 15,032 | 100.0 | % |
Loan Type | Total Loans | Current | 30-90 Days | Greater than 90 Days 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 | 2,903,814 | 2,903,814 | — | — | — | — | — | — | % | — | % | ||||||||||||||||||||||
Commercial & Industrial (1) | 990,621 | 987,783 | 78 | — | 2,760 | 153 | 2,913 | 0.28 | % | 0.29 | % | ||||||||||||||||||||||
Commercial Real Estate Non-Owner Occupied | 906,544 | 905,756 | — | — | 788 | — | 788 | 0.09 | % | 0.09 | % | ||||||||||||||||||||||
Residential | 113,858 | 113,757 | 69 | — | 32 | — | 32 | 0.03 | % | 0.03 | % | ||||||||||||||||||||||
Construction | 87,006 | 87,006 | — | — | — | — | — | — | % | — | % | ||||||||||||||||||||||
Other Consumer | 712 | 712 | — | — | — | — | — | — | % | — | % | ||||||||||||||||||||||
Total Originated Loans | 5,002,555 | 4,998,828 | 147 | — | 3,580 | 153 | 3,733 | 0.07 | % | 0.07 | % | ||||||||||||||||||||||
Loans Acquired | |||||||||||||||||||||||||||||||||
Bank Acquisitions | 206,971 | 190,117 | 5,842 | 6,269 | 4,743 | 4,379 | 9,122 | 2.29 | % | 4.32 | % | ||||||||||||||||||||||
Loan Purchases | 243,619 | 232,692 | 3,898 | 4,581 | 2,448 | 525 | 2,973 | 1.00 | % | 1.22 | % | ||||||||||||||||||||||
Total Loans Acquired | 450,590 | 422,809 | 9,740 | 10,850 | 7,191 | 4,904 | 12,095 | 1.60 | % | 2.66 | % | ||||||||||||||||||||||
Unearned Origination Fees | 334 | 334 | — | — | — | — | — | ||||||||||||||||||||||||||
Total Loans Receivable | 5,453,479 | 5,421,971 | 9,887 | 10,850 | 10,771 | 5,057 | 15,828 | 0.20 | % | 0.29 | % | ||||||||||||||||||||||
Total Loans Held for Sale | 1,797,064 | 1,797,064 | — | — | — | — | — | ||||||||||||||||||||||||||
Total Portfolio | $ | 7,250,543 | $ | 7,219,035 | $ | 9,887 | $ | 10,850 | $ | 10,771 | $ | 5,057 | $ | 15,828 | 0.15 | % | 0.22 | % |
Loan Type | Total Loans | NPL | ALL | Cash Reserve | Total Credit Reserves | Reserves to Loans (%) | Reserves to NPLs (%) | ||||||||||||||||||
Originated Loans | |||||||||||||||||||||||||
Multi-Family | 2,903,814 | — | 12,016 | — | 12,016 | 0.41 | % | n/a | |||||||||||||||||
Commercial & Industrial | 990,621 | 2,760 | 8,864 | — | 8,864 | 0.89 | % | 321.16 | % | ||||||||||||||||
Commercial Real Estate | 906,544 | 788 | 3,706 | — | 3,706 | 0.41 | % | 470.30 | % | ||||||||||||||||
Residential | 113,858 | 32 | 1,992 | — | 1,992 | 1.75 | % | 6,225.00 | % | ||||||||||||||||
Construction | 87,006 | — | 1,074 | — | 1,074 | 1.23 | % | n/a | |||||||||||||||||
Other Consumer | 712 | — | 9 | — | 9 | 1.26 | % | n/a | |||||||||||||||||
Total Originated Loans | 5,002,555 | 3,580 | 27,661 | — | 27,661 | 0.55 | % | 772.65 | % | ||||||||||||||||
Loans Acquired | |||||||||||||||||||||||||
Bank Acquisitions | 206,971 | 4,743 | 7,492 | — | 7,492 | 3.62 | % | 157.96 | % | ||||||||||||||||
Loan Purchases | 243,619 | 2,448 | 494 | 1,159 | 1,653 | 0.68 | % | 67.52 | % | ||||||||||||||||
Total Loans Acquired | 450,590 | 7,191 | 7,986 | 1,159 | 9,145 | 2.03 | % | 127.17 | % | ||||||||||||||||
Unearned Origination Fees | 334 | ||||||||||||||||||||||||
Total Loans Held for Investment | 5,453,479 | 10,771 | 35,647 | 1,159 | 36,806 | 0.67 | % | 341.71 | % | ||||||||||||||||
Total Loans Held for Sale | 1,797,064 | — | — | — | — | ||||||||||||||||||||
Total Portfolio | $ | 7,250,543 | $ | 10,771 | $ | 35,647 | $ | 1,159 | $ | 36,806 | 0.51 | % | 341.71 | % |
December 31, | |||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
(amounts in thousands) | |||||||||||||||||||
Loans 90+ days delinquent still accruing (1) | $ | 2,805 | $ | 4,388 | $ | 3,772 | $ | 1,966 | $ | — | |||||||||
Non-accrual loans | 10,771 | 11,733 | 19,163 | 32,851 | 36,626 | ||||||||||||||
OREO | 5,057 | 15,371 | 12,265 | 8,114 | 13,482 | ||||||||||||||
Total non-performing assets | $ | 15,828 | $ | 27,104 | $ | 31,428 | $ | 40,965 | $ | 50,108 |
(1) | Excludes purchased-credit-impaired loans. |
December 31, | ||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||
Non-accrual loans to total loans receivable | 0.20 | % | 0.27 | % | 0.78 | % | 2.48 | % | 2.73 | % | ||||
Non-accrual loans to total loans | 0.15 | % | 0.20 | % | 0.60 | % | 1.19 | % | 2.42 | % | ||||
Non-performing assets to total assets | 0.19 | % | 0.40 | % | 0.76 | % | 1.28 | % | 2.41 | % | ||||
Non-accrual loans and 90+ days delinquent to total assets | 0.16 | % | 0.24 | % | 0.55 | % | 1.09 | % | 1.76 | % | ||||
Allowance for loan losses to: | ||||||||||||||
Total loans receivable | 0.65 | % | 0.72 | % | 0.97 | % | 1.95 | % | 1.12 | % | ||||
Non-accrual loans | 330.95 | % | 263.63 | % | 125.23 | % | 78.65 | % | 41.04 | % |
December 31, | |||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
(amounts in thousands) | |||||||||||||||||||
Commercial and industrial (1) | $ | 1,973 | $ | 2,513 | $ | 125 | $ | 388 | $ | 2,857 | |||||||||
Commercial real estate (2) | 2,700 | 2,514 | 11,615 | 21,482 | 22,720 | ||||||||||||||
Commercial real estate non-owner occupied | 1,307 | 1,460 | N/A | N/A | N/A | ||||||||||||||
Construction | — | 2,325 | 5,431 | 7,667 | 8,214 | ||||||||||||||
Residential real estate | 2,202 | 1,855 | 1,533 | 3,027 | 2,717 | ||||||||||||||
Manufactured housing | 2,449 | 931 | 459 | 231 | 78 | ||||||||||||||
Other consumer | 140 | 135 | — | 56 | 40 | ||||||||||||||
Total non-performing loans | $ | 10,771 | $ | 11,733 | $ | 19,163 | $ | 32,851 | $ | 36,626 |
(1) | Includes owner occupied commercial real estate loans for 2015 and 2014. |
(2) | Includes non-owner occupied commercial real estate loans for 2015 and 2014. For 2013, 2012 and 2011, includes owner occupied and non-owner occupied commercial real estate loans. |
December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Demand, non-interest bearing | $ | 653,679 | $ | 546,436 | $ | 478,103 | |||||
Demand, interest bearing | 127,215 | 71,202 | 58,013 | ||||||||
Savings, including MMDA | 2,781,010 | 2,203,237 | 1,298,468 | ||||||||
Time, $100,000 and over | 1,624,562 | 1,043,265 | 797,322 | ||||||||
Time, other | 723,035 | 668,398 | 328,016 | ||||||||
Total deposits | $ | 5,909,501 | $ | 4,532,538 | $ | 2,959,922 |
For the Years ended December 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||
Average Balance | Average Rate Paid | Average Balance | Average Rate Paid | Average Balance | Average Rate Paid | |||||||||||||||
(amounts in thousands) | ||||||||||||||||||||
Demand deposits | $ | 692,159 | 0.00 | % | $ | 620,385 | 0.00 | % | $ | 385,175 | 0.00 | % | ||||||||
Interest-bearing demand deposits | 123,527 | 0.56 | 62,840 | 0.61 | 45,613 | 0.52 | ||||||||||||||
Savings, including MMDA | 2,449,778 | 0.52 | 1,753,691 | 0.42 | 1,138,200 | 0.68 | ||||||||||||||
Time deposits | 2,087,641 | 0.99 | 1,403,774 | 0.96 | 1,251,707 | 1.04 | ||||||||||||||
Total | $ | 5,353,105 | $ | 3,840,690 | $ | 2,820,695 |
December 31, 2015 | |||
(amounts in thousands) | |||
3 months or less | $ | 289,462 | |
Over 3 through 6 months | 653,273 | ||
Over 6 through 12 months | 397,203 | ||
Over 12 months | 284,624 | ||
Total | $ | 1,624,562 |
December 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||
(amounts in thousands) | ||||||||||||||||||||
FHLB advances | $ | 1,365,300 | 0.48 | % | $ | 1,298,000 | 0.29 | % | $ | 611,500 | 0.26 | % | ||||||||
Federal funds purchased | 70,000 | 0.56 | — | — | 13,000 | 0.48 | % | |||||||||||||
Total short-term borrowings | $ | 1,435,300 | $ | 1,298,000 | $ | 624,500 |
December 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Amount | Rate | Amount | Rate | ||||||||||
(amounts in thousands) | |||||||||||||
2016 | $ | — | — | % | $ | 85,000 | 0.59 | % | |||||
2017 | 205,000 | 1.18 | 180,000 | 1.21 | |||||||||
2018 | 55,000 | 1.61 | 55,000 | 1.61 | |||||||||
2019 | — | — | — | — | |||||||||
$ | 260,000 | $ | 320,000 |
• | declared a 10% stock dividend to all shareholders of record as of May 27, 2014. This special dividend was paid on June 30, 2014 in the form of an aggregate of 2.4 million additional shares of Common Stock; |
• | issued 91,457 shares of Common Stock, 52,770 shares were issued to directors in lieu of meeting retainer fees, 34,414 shares were issued under share-based compensation arrangements and 4,273 shares under the employee stock purchase plan. |
• | sold 6.2 million shares of new issue Voting Common Stock to the public at a price of $16.75 per share. The net proceeds after deducting underwriting discounts and commissions and offering expenses were $97.5 million; |
• | converted 3.7 million shares of Class B Non-Voting Common Stock into 3.7 million shares of Voting Common Stock; |
• | authorized a stock repurchase plan in which the Bancorp could acquire up to 5% of its current outstanding shares at prices not to exceed a 20% premium over the current book value. The repurchase program may be suspended, modified or |
• | repurchased 0.5 million shares under the stock repurchase program discussed above; |
• | issued 23,413 shares of Common Stock under share-based compensation arrangements; |
• | issued 31,904 shares of Class B Non-Voting Common Stock and 14,869 shares of Voting Common Stock upon exercise of outstanding warrants; and |
• | repurchased warrants to purchase 17,227 shares of voting Common Stock and 17,227 shares of Class B Non-Voting stock. |
Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||
(amounts in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Common equity Tier 1 (to risk-weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 500,624 | 7.61 | % | $ | 296,014 | 4.50 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 565,217 | 8.62 | % | $ | 294,916 | 4.50 | % | $ | 425,990 | 6.50 | % | ||||||||
Total capital (to risk-weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 698,323 | 10.62 | % | $ | 526,247 | 8.0 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 710,864 | 10.85 | % | $ | 524,295 | 8.0 | % | $ | 655,369 | 10.0 | % | ||||||||
Tier 1 capital (to risk-weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 556,193 | 8.46 | % | $ | 394,685 | 6.0 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 565,217 | 8.62 | % | $ | 393,221 | 6.0 | % | $ | 524,295 | 8.0 | % | ||||||||
Tier 1 capital (to average assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 556,193 | 7.16 | % | $ | 310,812 | 4.0 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 565,217 | 7.30 | % | $ | 309,883 | 4.0 | % | $ | 387,353 | 5.0 | % | ||||||||
December 31, 2014 | ||||||||||||||||||||
Total capital (to risk-weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 578,644 | 11.09 | % | $ | 417,473 | 8.0 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 621,894 | 11.98 | % | $ | 415,141 | 8.0 | % | $ | 518,926 | 10.0 | % | ||||||||
Tier 1 capital (to risk-weighted assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 437,712 | 8.39 | % | $ | 208,737 | 4.0 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 480,963 | 9.27 | % | $ | 207,570 | 4.0 | % | $ | 311,356 | 6.0 | % | ||||||||
Tier 1 capital (to average assets) | ||||||||||||||||||||
Customers Bancorp, Inc. | $ | 437,712 | 6.69 | % | $ | 261,622 | 4.0 | % | N/A | N/A | ||||||||||
Customers Bank | $ | 480,963 | 7.39 | % | $ | 260,462 | 4.0 | % | $ | 325,577 | 5.0 | % |
• | $4.0 million declared on March 17, 2015 and paid on March 31, 2015; |
• | $4.0 million declared and paid on June 30, 2015; |
• | $5.5 million declared and paid on September 23, 2015; |
• | $5.0 million declared on October 28, 2015 and paid on December 10, 2015; and |
• | $5.1 million declared on January 20, 2016 and payable on March 10, 2016. |
December 31, | |||||||
2015 | 2014 | ||||||
(amounts in thousands) | |||||||
Commitments to fund loans | $ | 537,380 | $ | 231,294 | |||
Unfunded commitments to fund mortgage warehouse loans | 1,302,759 | 713,619 | |||||
Unfunded commitments under lines of credit | 436,550 | 430,995 | |||||
Letters of credit | 42,002 | 36,206 | |||||
Other unused commitments | 6,360 | 7,685 |
Total | Within one year | After one but within three years | After three but within five years | More than five years | |||||||||||||||
(amounts in thousands) | |||||||||||||||||||
Operating leases | $ | 19,051 | $ | 3,861 | $ | 7,112 | $ | 4,820 | $ | 3,258 | |||||||||
Benefit plan commitments | 4,500 | 300 | 600 | 600 | 3,000 | ||||||||||||||
Contractual maturities of time deposits | 2,347,597 | 1,799,310 | 448,765 | 99,522 | — | ||||||||||||||
Subordinated notes | 110,000 | — | — | — | 110,000 | ||||||||||||||
Interest on subordinated notes | 90,882 | 6,738 | 13,475 | 13,475 | 57,194 | ||||||||||||||
Loan commitments | 2,276,689 | 1,975,809 | 96,241 | 91,478 | 113,161 | ||||||||||||||
FHLB long-term advances | 260,000 | — | 260,000 | — | — | ||||||||||||||
Interest on FHLB long-term advances | 5,873 | 3,304 | 2,569 | — | — | ||||||||||||||
Senior notes | 88,250 | — | 63,250 | 25,000 | — | ||||||||||||||
Interest on senior notes | 14,547 | 5,188 | 8,697 | 662 | — | ||||||||||||||
Other commitments (1) | 6,360 | — | 6,360 | — | — | ||||||||||||||
Standby letters of credit | 42,002 | 35,053 | 5,746 | 1,203 | — | ||||||||||||||
Total | $ | 5,265,751 | $ | 3,829,563 | $ | 912,815 | $ | 236,760 | $ | 286,613 |
(1) | Represents a commitment expiring in approximately three years that is subject to unscheduled requests for payment. |
Rate Shocks | % Change | |
Up 3% | (10.2 | )% |
Up 2% | (3.4 | )% |
Up 1% | 0.1 | % |
Down 1% | 2.4 | % |
Rate Shocks | From base | |
Up 3% | (34.1 | )% |
Up 2% | (17.3 | )% |
Up 1% | (5.8 | )% |
Down 1% | 0.2 | % |
Balance Sheet Gap Analysis at December 31, 2015 | |||||||||||||||||||||||||||
3 months or less | 3 to 6 months | 6 to 12 months | 1 to 3 years | 3 to 5 years | Over 5 years | Total | |||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||
Interest earning deposits and federal funds sold | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 210,548 | $ | 210,548 | |||||||||||||
Investment securities | 33,087 | 31,424 | 59,161 | 190,664 | 141,610 | 80,040 | 535,986 | ||||||||||||||||||||
Loans (a) | 2,898,089 | 153,676 | 241,013 | 1,249,367 | 2,402,771 | 264,747 | 7,209,663 | ||||||||||||||||||||
Other interest-earning assets | — | — | — | — | — | 93,580 | 93,580 | ||||||||||||||||||||
Total interest-earning assets | 2,931,176 | 185,100 | 300,174 | 1,440,031 | 2,544,381 | 648,915 | 8,049,777 | ||||||||||||||||||||
Non interest-earning assets | — | — | — | — | — | 316,461 | 316,461 | ||||||||||||||||||||
Total assets | 2,931,176 | 185,100 | 300,174 | 1,440,031 | 2,544,381 | 965,376 | $ | 8,366,238 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||
Other interest-bearing deposits | $ | 52,674 | $ | 50,850 | $ | 96,502 | $ | 325,446 | $ | 2,269,814 | $ | 112,939 | $ | 2,908,225 | |||||||||||||
Time deposits | 432,304 | 822,460 | 547,332 | 446,818 | 100,734 | (2,051 | ) | 2,347,597 | |||||||||||||||||||
Other borrowings | 1,385,300 | 50,000 | 10,000 | 250,000 | — | — | 1,695,300 | ||||||||||||||||||||
Subordinated debt | — | — | — | — | — | 110,000 | 110,000 | ||||||||||||||||||||
Total interest-bearing liabilities | 1,870,278 | 923,310 | 653,834 | 1,022,264 | 2,370,548 | 220,888 | 7,061,122 | ||||||||||||||||||||
Non-interest-bearing liabilities | 27,413 | 26,322 | 49,542 | 162,403 | 342,017 | 143,517 | 751,214 | ||||||||||||||||||||
Shareholders’ equity | — | — | — | — | — | 553,902 | 553,902 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | 1,897,691 | 949,632 | 703,376 | 1,184,667 | 2,712,565 | 918,307 | $ | 8,366,238 | |||||||||||||||||||
Interest sensitivity gap | $ | 1,033,485 | $ | (764,532 | ) | $ | (403,202 | ) | $ | 255,364 | $ | (168,184 | ) | $ | 47,069 | ||||||||||||
Cumulative interest sensitivity gap | $ | 268,953 | $ | (134,249 | ) | $ | 121,115 | $ | (47,069 | ) | $ | — | |||||||||||||||
Cumulative interest sensitivity gap to total assets | 12.4 | % | 3.2 | % | (1.6 | )% | 1.5 | % | (0.6 | )% | (0.9 | )% | |||||||||||||||
Cumulative interest-earning assets to cumulative interest-bearing liabilities | 154.5 | % | 109.5 | % | 96.2 | % | 102.6 | % | 99.4 | % | 99.1 | % |
(a) | Including loans held for sale |
December 31, | |||||||
2015 | 2014 | ||||||
ASSETS | |||||||
Cash and due from banks | $ | 53,550 | $ | 62,746 | |||
Interest earning deposits | 211,043 | 308,277 | |||||
Cash and cash equivalents | 264,593 | 371,023 | |||||
Investment securities available for sale, at fair value | 560,253 | 416,685 | |||||
Loans held for sale (includes $1,757,807 and $1,335,668, respectively at fair value) | 1,797,064 | 1,435,459 | |||||
Loans receivable | 5,453,479 | 4,312,173 | |||||
Allowance for loan losses | (35,647 | ) | (30,932 | ) | |||
Total loans receivable, net of allowance for loan losses | 5,417,832 | 4,281,241 | |||||
FHLB, Federal Reserve Bank, and other restricted stock | 90,841 | 82,002 | |||||
Accrued interest receivable | 19,939 | 15,205 | |||||
FDIC loss sharing receivable | — | 2,320 | |||||
Bank premises and equipment, net | 11,531 | 10,810 | |||||
Bank-owned life insurance | 157,211 | 138,676 | |||||
Other real estate owned | 5,057 | 15,371 | |||||
Goodwill and other intangibles | 3,651 | 3,664 | |||||
Other assets | 73,341 | 52,914 | |||||
Total assets | $ | 8,401,313 | $ | 6,825,370 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Deposits: | |||||||
Demand, non-interest bearing | $ | 653,679 | $ | 546,436 | |||
Interest bearing | 5,255,822 | 3,986,102 | |||||
Total deposits | 5,909,501 | 4,532,538 | |||||
Federal funds purchased | 70,000 | — | |||||
FHLB advances | 1,625,300 | 1,618,000 | |||||
Other borrowings | 88,250 | 88,250 | |||||
Subordinated debt | 110,000 | 110,000 | |||||
Accrued interest payable and other liabilities | 44,360 | 33,437 | |||||
Total liabilities | 7,847,411 | 6,382,225 | |||||
Commitments and contingencies (NOTES 17 and 21) | |||||||
Shareholders’ equity: | |||||||
Preferred stock, par value $1.00 per share; liquidation preference $25.00 per share; 100,000,000 shares authorized, 2,300,000 and 0 shares issued and outstanding as of December 31, 2015 and 2014 | 55,569 | — | |||||
Common stock, par value $1.00 per share; 200,000,000 shares authorized; 27,432,061 and 27,277,789 shares issued as of December 31, 2015 and 2014; 26,901,801 and 26,745,529 shares outstanding as of December 31, 2015 and 2014 | 27,432 | 27,278 | |||||
Additional paid in capital | 362,607 | 355,822 | |||||
Retained earnings | 124,511 | 68,421 | |||||
Accumulated other comprehensive loss, net | (7,984 | ) | (122 | ) | |||
Treasury stock, at cost (530,260 shares as of December 31, 2015 and 532,260 shares as of December 31, 2014) | (8,233 | ) | (8,254 | ) | |||
Total shareholders’ equity | 553,902 | 443,145 | |||||
Total liabilities and shareholders’ equity | $ | 8,401,313 | $ | 6,825,370 |
For the Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Interest income: | |||||||||||
Loans receivable, including fees | $ | 182,280 | $ | 146,388 | $ | 82,580 | |||||
Loans held for sale | 51,553 | 30,801 | 38,140 | ||||||||
Investment securities | 10,405 | 10,386 | 6,314 | ||||||||
Other | 5,612 | 2,852 | 1,122 | ||||||||
Total interest income | 249,850 | 190,427 | 128,156 | ||||||||
Interest expense: | |||||||||||
Deposits | 33,982 | 24,454 | 21,020 | ||||||||
Other borrowings | 6,096 | 5,342 | 2,024 | ||||||||
FHLB advances | 6,743 | 5,194 | 1,192 | ||||||||
Subordinated debt | 6,739 | 3,514 | 65 | ||||||||
Total interest expense | 53,560 | 38,504 | 24,301 | ||||||||
Net interest income | 196,290 | 151,923 | 103,855 | ||||||||
Provision for loan losses | 20,566 | 14,747 | 2,236 | ||||||||
Net interest income after provision for loan losses | 175,724 | 137,176 | 101,619 | ||||||||
Non-interest income: | |||||||||||
Mortgage warehouse transactional fees | 10,394 | 8,233 | 12,962 | ||||||||
Bank-owned life insurance | 7,006 | 3,702 | 2,482 | ||||||||
Gains on sales of loans | 4,047 | 3,125 | 852 | ||||||||
Deposit fees | 944 | 801 | 675 | ||||||||
Mortgage loan and banking income | 741 | 2,048 | 1,142 | ||||||||
Gain (loss) on sale of investment securities | (85 | ) | 3,191 | 1,274 | |||||||
Other | 4,670 | 4,026 | 3,316 | ||||||||
Total non-interest income | 27,717 | 25,126 | 22,703 | ||||||||
Non-interest expense: | |||||||||||
Salaries and employee benefits | 58,777 | 46,427 | 35,493 | ||||||||
Professional services | 11,042 | 7,748 | 5,548 | ||||||||
FDIC assessments, taxes, and regulatory fees | 10,728 | 11,812 | 5,568 | ||||||||
Technology, communication and bank operations | 10,596 | 8,798 | 6,607 | ||||||||
Occupancy | 8,668 | 8,068 | 6,552 | ||||||||
Other real estate owned | 2,516 | 3,601 | 1,365 | ||||||||
Advertising and promotion | 1,475 | 1,325 | 1,274 | ||||||||
Loan workout | 1,127 | 1,706 | 2,245 | ||||||||
Loss contingency | — | — | 2,000 | ||||||||
Other | 10,017 | 9,429 | 7,372 | ||||||||
Total non-interest expense | 114,946 | 98,914 | 74,024 | ||||||||
Income before income tax expense | 88,495 | 63,388 | 50,298 | ||||||||
Income tax expense | 29,912 | 20,174 | 17,604 | ||||||||
Net income | 58,583 | 43,214 | 32,694 | ||||||||
Preferred stock dividend | 2,493 | — | — | ||||||||
Net income available to common shareholders | $ | 56,090 | $ | 43,214 | $ | 32,694 | |||||
Basic earnings per common share | $ | 2.09 | $ | 1.62 | $ | 1.34 | |||||
Diluted earnings per common share | $ | 1.96 | $ | 1.55 | $ | 1.30 |
For the Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Net income | $ | 58,583 | $ | 43,214 | $ | 32,694 | |||||
Unrealized gains (losses) on securities: | |||||||||||
Unrealized gains (losses) on available-for-sale securities arising during the period | (10,140 | ) | 17,437 | (12,853 | ) | ||||||
Income tax effect | 3,759 | (6,103 | ) | 4,499 | |||||||
Less: reclassification adjustments for losses (gains) on securities included in net income | 85 | (3,191 | ) | (1,274 | ) | ||||||
Income tax effect | (32 | ) | 1,117 | 446 | |||||||
Net unrealized gains (losses) on securities | (6,328 | ) | 9,260 | (9,182 | ) | ||||||
Unrealized losses on cash flow hedges: | |||||||||||
Unrealized losses on cash flow hedges arising during the period | (2,532 | ) | (1,945 | ) | — | ||||||
Income tax effect | 998 | 681 | — | ||||||||
Net unrealized losses on cash flow hedges | (1,534 | ) | (1,264 | ) | — | ||||||
Other comprehensive income (loss), net of income tax effect | (7,862 | ) | 7,996 | (9,182 | ) | ||||||
Comprehensive income | $ | 50,721 | $ | 51,210 | $ | 23,512 |
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, January 1, 2013 | — | $ | — | 18,459,502 | $ | 18,507 | $ | 212,090 | $ | 38,314 | $ | 1,064 | $ | (500 | ) | $ | 269,475 | ||||||||||||||||
Net income | — | — | — | — | — | 32,694 | — | — | 32,694 | ||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (9,182 | ) | — | (9,182 | ) | ||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 3,368 | — | — | — | 3,368 | ||||||||||||||||||||||||
Public offering of common stock, net of costs of $5,994 | — | — | 6,179,104 | 6,179 | 91,328 | — | — | — | 97,507 | ||||||||||||||||||||||||
Exercise and redemption of warrants | — | — | 46,773 | 47 | 217 | — | — | — | 264 | ||||||||||||||||||||||||
Issuance of common stock under share-based-compensation arrangements | — | — | 23,413 | 23 | 228 | — | — | — | 251 | ||||||||||||||||||||||||
Repurchase of shares | — | — | (484,641 | ) | — | — | — | — | (7,754 | ) | (7,754 | ) | |||||||||||||||||||||
Balance, December 31, 2013 | — | — | 24,224,151 | 24,756 | 307,231 | 71,008 | (8,118 | ) | (8,254 | ) | 386,623 | ||||||||||||||||||||||
Net income | — | — | — | — | — | 43,214 | — | — | 43,214 | ||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 7,996 | — | 7,996 | ||||||||||||||||||||||||
Stock dividend | — | — | 2,429,375 | 2,429 | 43,364 | (45,801 | ) | — | — | (8 | ) | ||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 4,209 | — | — | — | 4,209 | ||||||||||||||||||||||||
Exercise of warrants | — | — | 546 | 1 | 5 | — | — | — | 6 | ||||||||||||||||||||||||
Issuance of common stock under share-based-compensation arrangements | — | — | 91,457 | 92 | 1,013 | — | — | — | 1,105 | ||||||||||||||||||||||||
Balance, December 31, 2014 | — | — | 26,745,529 | 27,278 | 355,822 | 68,421 | (122 | ) | (8,254 | ) | 443,145 | ||||||||||||||||||||||
Net income | — | — | — | — | — | 58,583 | — | — | 58,583 | ||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (7,862 | ) | — | (7,862 | ) | ||||||||||||||||||||||
Issuance of preferred stock, net of offering costs of $1,931 | 2,300,000 | 55,569 | — | — | — | — | — | — | 55,569 | ||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | (2,493 | ) | — | — | (2,493 | ) | ||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | 4,862 | — | — | — | 4,862 | ||||||||||||||||||||||||
Exercise of warrants | — | — | 7,611 | 8 | 90 | — | — | — | 98 | ||||||||||||||||||||||||
Issuance of common stock under share-based-compensation arrangements | — | — | 148,661 | 146 | 1,833 | — | — | 21 | 2,000 | ||||||||||||||||||||||||
Balance, December 31, 2015 | 2,300,000 | $ | 55,569 | 26,901,801 | $ | 27,432 | $ | 362,607 | $ | 124,511 | $ | (7,984 | ) | $ | (8,233 | ) | $ | 553,902 |
For the Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Cash Flows from Operating Activities | |||||||||||
Net income | $ | 58,583 | $ | 43,214 | $ | 32,694 | |||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
Provision for loan losses, net of change to FDIC receivable and clawback liability | 20,566 | 14,747 | 2,236 | ||||||||
Loss contingency | — | — | 2,000 | ||||||||
Provision for depreciation and amortization | 3,998 | 3,604 | 3,129 | ||||||||
Share-based compensation expense | 5,661 | 5,237 | 3,368 | ||||||||
Deferred taxes | (10,092 | ) | (6,187 | ) | 2,210 | ||||||
Net amortization of investment securities premiums and discounts | 858 | 821 | 475 | ||||||||
Loss (gain) on sale of investment securities | 85 | (3,191 | ) | (1,274 | ) | ||||||
Gain on sale of mortgages and other loans | (4,479 | ) | (5,344 | ) | (852 | ) | |||||
Origination of loans held for sale | (29,925,763 | ) | (18,138,339 | ) | (20,670,866 | ) | |||||
Proceeds from the sale of loans held for sale | 29,504,104 | 17,553,196 | 21,360,465 | ||||||||
Increase in FDIC loss sharing receivable net of clawback liability | (2,430 | ) | (2,409 | ) | (1,610 | ) | |||||
Amortization (accretion) of fair value discounts | 832 | (273 | ) | (912 | ) | ||||||
Net loss on sales of other real estate owned | 761 | 966 | 732 | ||||||||
Valuation and other adjustments to other real estate owned, net of FDIC receivable | 992 | 1,979 | 839 | ||||||||
Earnings on investment in bank-owned life insurance | (7,006 | ) | (3,702 | ) | (2,482 | ) | |||||
Increase in accrued interest receivable and other assets | (12,024 | ) | (16,423 | ) | (15,091 | ) | |||||
Increase in accrued interest payable and other liabilities | 8,706 | 9,606 | 6,974 | ||||||||
Net Cash (Used in) Provided by Operating Activities | (356,648 | ) | (542,498 | ) | 722,035 | ||||||
Cash Flows from Investing Activities | |||||||||||
Purchases of investment securities available for sale | (231,703 | ) | (164,940 | ) | (542,110 | ) | |||||
Proceeds from maturities, calls and principal repayments on investment securities available for sale | 76,331 | 49,195 | 25,109 | ||||||||
Proceeds from sales of investment securities available for sale | 806 | 213,249 | 135,193 | ||||||||
Net increase in loans | (1,341,133 | ) | (1,814,196 | ) | (1,008,410 | ) | |||||
Purchase of loan portfolios | — | (309,927 | ) | (164,033 | ) | ||||||
Proceeds from sale of loans held for investment | 248,060 | 162,724 | 11,624 | ||||||||
Net purchases of bank-owned life insurance | (15,000 | ) | (30,465 | ) | (45,465 | ) | |||||
Proceeds from bank-owned life insurance | 3,384 | — | — | ||||||||
Net purchases of FHLB, Federal Reserve Bank, and other restricted stock | (8,839 | ) | (39,578 | ) | (12,261 | ) | |||||
Reimbursements from the FDIC on loss sharing agreements | 3,917 | 5,446 | 6,726 | ||||||||
Purchases of bank premises and equipment | (2,939 | ) | (1,419 | ) | (3,894 | ) | |||||
Proceeds from sales of other real estate owned | 8,890 | 7,991 | 9,506 | ||||||||
Net Cash Used in Investing Activities | (1,258,226 | ) | (1,921,920 | ) | (1,588,015 | ) | |||||
Cash Flows from Financing Activities | |||||||||||
Net increase in deposits | 1,376,985 | 1,572,648 | 519,179 | ||||||||
Net increase in short-term borrowed funds from the FHLB | (17,700 | ) | 633,500 | 208,500 | |||||||
Net increase in federal funds purchased | 70,000 | — | — | ||||||||
Proceeds from long-term FHLB borrowings | 25,000 | 265,000 | 35,000 | ||||||||
Proceeds from issuance of long-term debt, net | — | 133,142 | 60,336 | ||||||||
Repayment of subordinated debt | — | (2,000 | ) | — | |||||||
Net proceeds from issuance of preferred stock | 55,569 | — | — | ||||||||
Preferred stock dividends paid | (2,314 | ) | — | — | |||||||
Exercise and redemption of warrants | 98 | 6 | 264 | ||||||||
Purchase of treasury stock | — | — | (7,754 | ) | |||||||
Net proceeds from issuance of common stock | 806 | 77 | 97,507 | ||||||||
Net Cash Provided by Financing Activities | 1,508,444 | 2,602,373 | 913,032 | ||||||||
Net (Decrease) Increase in Cash and Cash Equivalents | (106,430 | ) | 137,955 | 47,052 | |||||||
Cash and Cash Equivalents – Beginning | 371,023 | 233,068 | 186,016 | ||||||||
Cash and Cash Equivalents – Ending | $ | 264,593 | $ | 371,023 | $ | 233,068 |
For the Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Supplementary Cash Flow Information | |||||||||||
Interest paid | $ | 51,313 | $ | 37,580 | $ | 24,157 | |||||
Income taxes paid | 38,734 | 29,843 | 9,815 | ||||||||
Non-cash Items: | |||||||||||
Transfer of loans to other real estate owned | $ | 3,467 | $ | 14,042 | $ | 15,003 | |||||
Transfer of loans from held for investment to held for sale | — | 164,681 | — | ||||||||
Transfer of loans from held for sale to held for investment | 30,365 | 18,826 | — |
• | Loans Held for Sale |
• | Loans at Fair Value |
• | Loans Receivable |
• | Purchased loans |
• | Loans receivable covered under Loss Sharing Agreements with the FDIC. |
• | National, regional, and local economic and business conditions including review of changes in the unemployment rate. |
• | Volume and severity of past due loans and classified loans. |
• | Lending policies and procedures, including underwriting standards and historical-based loss/collection, charge-off, and recovery practices. |
• | Nature and volume of the portfolio including lending concentrations. |
• | Experience, ability, and depth of lending management and staff. |
1. | Limited partnerships and similar legal entities. |
2. | Evaluating fees paid to a decision maker or a service provider as a variable interest. |
3. | The effect of fee arrangements on the primary beneficiary determination. |
4. | The effect of related parties on the primary beneficiary determination. |
5. | Certain investment funds. |
1. | The loan has a government guarantee that is not separable from the loan before foreclosure. |
2. | At the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim. |
3. | At the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. |
For the Years Ended | |||||||||||
December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands, except share and per share data) | |||||||||||
Net income available to common shareholders | $ | 56,090 | $ | 43,214 | $ | 32,694 | |||||
Weighted-average number of common shares outstanding – basic | 26,844,545 | 26,719,626 | 24,485,078 | ||||||||
Share-based compensation plans | 1,516,297 | 968,671 | 464,054 | ||||||||
Warrants | 324,097 | 250,707 | 198,520 | ||||||||
Weighted-average number of common shares – diluted | 28,684,939 | 27,939,004 | 25,147,652 | ||||||||
Basic earnings per share | $ | 2.09 | $ | 1.62 | $ | 1.34 | |||||
Diluted earnings per share | 1.96 | 1.55 | 1.30 |
For the Years Ended | ||||||||
December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Anti-dilutive securities: | ||||||||
Share-based compensation awards | 606,095 | 135,861 | 819,539 | |||||
Warrants | 52,242 | 118,745 | 118,745 | |||||
Total anti-dilutive securities | 658,337 | 254,606 | 938,284 |
Available-for-sale Securities | ||||||||||||||||||||
Total | ||||||||||||||||||||
Unrealized | Foreign | Unrealized | Unrealized | |||||||||||||||||
Gains | Currency | Gains | Loss on Cash | |||||||||||||||||
(amounts in thousands) | (Losses) (2) | Items | (Losses) | Flow Hedge | Total | |||||||||||||||
Balance, January 1, 2014 | $ | (8,118 | ) | $ | — | $ | (8,118 | ) | $ | — | $ | (8,118 | ) | |||||||
Current period: | ||||||||||||||||||||
Other comprehensive income (loss) before | ||||||||||||||||||||
reclassifications | 11,334 | — | 11,334 | (1,264 | ) | 10,070 | ||||||||||||||
Amounts reclassified from accumulated other | ||||||||||||||||||||
comprehensive income to net income (3) | (2,074 | ) | — | (2,074 | ) | — | (2,074 | ) | ||||||||||||
Net current-period other comprehensive income (loss) | 9,260 | — | 9,260 | (1,264 | ) | 7,996 | ||||||||||||||
Balance, December 31, 2014 | 1,142 | — | 1,142 | (1,264 | ) | (122 | ) | |||||||||||||
Current period: | ||||||||||||||||||||
Other comprehensive income (loss) before | ||||||||||||||||||||
reclassifications | (5,797 | ) | (584 | ) | (6,381 | ) | (1,534 | ) | (7,915 | ) | ||||||||||
Amounts reclassified from accumulated other | ||||||||||||||||||||
comprehensive income to net income (3) | 53 | — | 53 | — | 53 | |||||||||||||||
Net current-period other comprehensive income (loss) | (5,744 | ) | (584 | ) | (6,328 | ) | (1,534 | ) | (7,862 | ) | ||||||||||
Balance, December 31, 2015 | $ | (4,602 | ) | $ | (584 | ) | $ | (5,186 | ) | $ | (2,798 | ) | $ | (7,984 | ) |
December 31, 2015 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(amounts in thousands) | |||||||||||||||
Available for Sale: | |||||||||||||||
Mortgage-backed securities (1) | $ | 506,111 | $ | 1,453 | $ | (6,590 | ) | $ | 500,974 | ||||||
Corporate notes (2) | 39,925 | 320 | (178 | ) | 40,067 | ||||||||||
Equity securities (3) | 22,514 | — | (3,302 | ) | 19,212 | ||||||||||
Total | $ | 568,550 | $ | 1,773 | $ | (10,070 | ) | $ | 560,253 |
(1) | Consists of mortgage-backed securities issued by government-sponsored agencies, including FHLMC, FNMA, and GNMA. |
(2) | Includes subordinated debt issued by other bank holding companies. |
(3) | Consists primarily of equity securities issued by a foreign entity. |
December 31, 2014 | |||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(amounts in thousands) | |||||||||||||||
Available for Sale: | |||||||||||||||
Mortgage-backed securities (1) | $ | 376,854 | $ | 2,805 | $ | (2,348 | ) | $ | 377,311 | ||||||
Corporate notes (2) | 15,000 | 104 | — | 15,104 | |||||||||||
Equity securities (3) | 23,074 | 1,197 | (1 | ) | 24,270 | ||||||||||
Total | $ | 414,928 | $ | 4,106 | $ | (2,349 | ) | $ | 416,685 |
(1) | Consists primarily of mortgage-backed securities issued by government-sponsored agencies, including FHLMC, FNMA, and GNMA. |
(2) | Includes subordinated debt issued by other bank holding companies. |
(3) | Consists primarily of equity securities issued by a foreign entity. |
For the Year Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Proceeds from sale of available-for-sale investment securities | $ | 806 | $ | 213,249 | $ | 135,193 | |||||
Gross gains | $ | — | $ | 3,191 | $ | 1,274 | |||||
Gross losses | (85 | ) | — | — | |||||||
Net gains | $ | (85 | ) | $ | 3,191 | $ | 1,274 |
December 31, 2015 | |||||||
Available for Sale | |||||||
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 | 32,925 | 33,112 | |||||
Due after ten years | 7,000 | 6,955 | |||||
Mortgage-backed securities | 506,111 | 500,974 | |||||
Total debt securities | $ | 546,036 | $ | 541,041 |
December 31, 2015 | |||||||||||||||||||||||
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: | |||||||||||||||||||||||
Mortgage-backed securities (1) | $ | 305,702 | $ | (4,384 | ) | $ | 57,357 | $ | (2,206 | ) | $ | 363,059 | $ | (6,590 | ) | ||||||||
Corporate notes (2) | 9,748 | (178 | ) | — | — | 9,748 | (178 | ) | |||||||||||||||
Equity securities (3) | 19,206 | (3,301 | ) | 6 | (1 | ) | 19,212 | (3,302 | ) | ||||||||||||||
Total | $ | 334,656 | $ | (7,863 | ) | $ | 57,363 | $ | (2,207 | ) | $ | 392,019 | $ | (10,070 | ) |
(1) | Consists of mortgage-backed securities issued by government-sponsored agencies, including FHLMC, FNMA, and GNMA. |
(2) | Includes subordinated debt issued by other bank holding companies. |
(3) | Consists primarily of equity securities issued by a foreign entity. |
December 31, 2014 | |||||||||||||||||||||||
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: | |||||||||||||||||||||||
Mortgage-backed securities (1) | $ | 60,388 | $ | (81 | ) | $ | 80,426 | $ | (2,267 | ) | $ | 140,814 | $ | (2,348 | ) | ||||||||
Equity securities (2) | — | — | 5 | (1 | ) | 5 | (1 | ) | |||||||||||||||
Total | $ | 60,388 | $ | (81 | ) | $ | 80,431 | $ | (2,268 | ) | $ | 140,819 | $ | (2,349 | ) |
(1) | Consists primarily of mortgage-backed securities issued by government-sponsored agencies, including FHLMC, FNMA, and GNMA. |
(2) | Consists primarily of equity securities issued by a foreign entity. |
December 31, | |||||||
2015 | 2014 | ||||||
(amounts in thousands) | |||||||
Commercial loans: | |||||||
Mortgage warehouse loans at fair value | $ | 1,754,950 | $ | 1,332,019 | |||
Multi-family loans at lower of cost or fair value | 39,257 | 99,791 | |||||
Total commercial loans held for sale | 1,794,207 | 1,431,810 | |||||
Consumer loans: | |||||||
Residential mortgage loans at fair value | 2,857 | 3,649 | |||||
Total loans held for sale | $ | 1,797,064 | $ | 1,435,459 |
December 31, | |||||||
2015 | 2014 | ||||||
(amounts in thousands) | |||||||
Commercial: | |||||||
Multi-family | $ | 2,909,439 | $ | 2,208,405 | |||
Commercial and industrial (including owner occupied commercial real estate) | 1,111,400 | 785,669 | |||||
Commercial real estate non-owner occupied | 956,255 | 839,310 | |||||
Construction | 87,240 | 49,718 | |||||
Total commercial loans | 5,064,334 | 3,883,102 | |||||
Consumer: | |||||||
Residential real estate | 271,613 | 297,395 | |||||
Manufactured housing | 113,490 | 126,731 | |||||
Other | 3,708 | 4,433 | |||||
Total consumer loans | 388,811 | 428,559 | |||||
Total loans receivable | 5,453,145 | 4,311,661 | |||||
Deferred costs and unamortized premiums, net | 334 | 512 | |||||
Allowance for loan losses | (35,647 | ) | (30,932 | ) | |||
Loans receivable, net of allowance for loan losses | $ | 5,417,832 | $ | 4,281,241 |
December 31, 2015 | |||||||||||||||||||||||||||
30-89 Days Past Due (1) | 90 Or More Days Past Due (1) | Total Past Due Still Accruing (1) | Non- Accrual | Current (2) | Purchased- Credit- Impaired Loans (3) | Total Loans (4) | |||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||
Multi-family | $ | — | $ | — | $ | — | $ | — | $ | 2,905,789 | $ | 3,650 | $ | 2,909,439 | |||||||||||||
Commercial and industrial | 39 | — | 39 | 1,973 | 799,595 | 1,552 | 803,159 | ||||||||||||||||||||
Commercial real estate - owner occupied | 268 | — | 268 | 2,700 | 292,312 | 12,961 | 308,241 | ||||||||||||||||||||
Commercial real estate - non-owner occupied | 1,997 | — | 1,997 | 1,307 | 940,895 | 12,056 | 956,255 | ||||||||||||||||||||
Construction | — | — | — | — | 87,006 | 234 | 87,240 | ||||||||||||||||||||
Residential real estate | 2,986 | — | 2,986 | 2,202 | 257,984 | 8,441 | 271,613 | ||||||||||||||||||||
Manufactured housing (5) | 3,752 | 2,805 | 6,557 | 2,449 | 101,132 | 3,352 | 113,490 | ||||||||||||||||||||
Other consumer | 107 | — | 107 | 140 | 3,227 | 234 | 3,708 | ||||||||||||||||||||
Total | $ | 9,149 | $ | 2,805 | $ | 11,954 | $ | 10,771 | $ | 5,387,940 | $ | 42,480 | $ | 5,453,145 |
December 31, 2014 | |||||||||||||||||||||||||||
30-89 Days Past Due (1) | 90 Or More Days Past Due (1) | Total Past Due Still Accruing (1) | Non- Accrual | Current (2) | Purchased- Credit- Impaired Loans (3) | Total Loans (4) | |||||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||||||
Multi-family | $ | — | $ | — | $ | — | $ | — | $ | 2,204,059 | $ | 4,346 | $ | 2,208,405 | |||||||||||||
Commercial and industrial | 884 | — | 884 | 2,513 | 543,245 | 3,293 | 549,935 | ||||||||||||||||||||
Commercial real estate - owner occupied | — | — | — | 2,514 | 217,187 | 16,033 | 235,734 | ||||||||||||||||||||
Commercial real estate - non-owner occupied | — | — | — | 1,460 | 822,046 | 15,804 | 839,310 | ||||||||||||||||||||
Construction | — | — | — | 2,325 | 44,483 | 2,910 | 49,718 | ||||||||||||||||||||
Residential real estate | 1,226 | — | 1,226 | 1,855 | 284,347 | 9,967 | 297,395 | ||||||||||||||||||||
Manufactured housing (5) | 6,324 | 4,388 | 10,712 | 931 | 111,072 | 4,016 | 126,731 | ||||||||||||||||||||
Other consumer | 147 | — | 147 | 135 | 3,903 | 248 | 4,433 | ||||||||||||||||||||
Total | $ | 8,581 | $ | 4,388 | $ | 12,969 | $ | 11,733 | $ | 4,230,342 | $ | 56,617 | $ | 4,311,661 |
(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 supported by 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. |
Allowance for Loan Losses For The Year Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Beginning Balance | $ | 30,932 | $ | 23,998 | $ | 25,837 | |||||
Provision for loan losses (1) | 16,694 | 10,058 | 5,055 | ||||||||
Charge-offs | (13,412 | ) | (4,947 | ) | (7,338 | ) | |||||
Recoveries | 1,433 | 1,823 | 444 | ||||||||
Ending Balance | $ | 35,647 | $ | 30,932 | $ | 23,998 |
FDIC Loss Sharing Receivable For The Year Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Beginning Balance | $ | 2,320 | $ | 10,046 | $ | 12,343 | |||||
Increased (decreased) estimated cash flows (2) | (3,872 | ) | (4,689 | ) | 2,819 | ||||||
Increased estimated cash flows from covered OREO (a) | 3,138 | — | — | ||||||||
Other activity, net (b) | 248 | 2,409 | 1,610 | ||||||||
Cash receipts from FDIC | (3,917 | ) | (5,446 | ) | (6,726 | ) | |||||
Ending Balance | $ | (2,083 | ) | $ | 2,320 | $ | 10,046 | ||||
(1) Provision for loan losses | $ | 16,694 | $ | 10,058 | $ | 5,055 | |||||
(2) Effect attributable to FDIC loss share arrangements | 3,872 | 4,689 | (2,819 | ) | |||||||
Net amount reported as provision for loan losses | $ | 20,566 | $ | 14,747 | $ | 2,236 |
December 31, 2015 | Year Ended December 31, 2015 | ||||||||||||||||||
Recorded Investment Net of Charge Offs | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
(amounts in thousands) | |||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||
Multi-family | $ | 661 | $ | 661 | $ | — | $ | 267 | $ | 24 | |||||||||
Commercial and industrial | 12,056 | 13,028 | — | 8,543 | 891 | ||||||||||||||
Commercial real estate - owner occupied | 8,317 | 8,317 | — | 6,526 | 454 | ||||||||||||||
Commercial real estate - non-owner occupied | 4,276 | 4,276 | — | 6,605 | 648 | ||||||||||||||
Construction | — | — | — | 749 | — | ||||||||||||||
Other consumer | 48 | 48 | — | 42 | 1 | ||||||||||||||
Residential real estate | 4,331 | 4,331 | — | 2,254 | 86 | ||||||||||||||
Manufactured housing | 8,300 | 8,300 | — | 5,433 | 368 | ||||||||||||||
With an allowance recorded: | |||||||||||||||||||
Commercial and industrial | 5,565 | 5,914 | 1,990 | 9,331 | 191 | ||||||||||||||
Commercial real estate - owner occupied | 12 | 12 | 1 | 15 | 1 | ||||||||||||||
Commercial real estate - non-owner occupied | 555 | 555 | 148 | 817 | 12 | ||||||||||||||
Construction | — | — | — | — | — | ||||||||||||||
Other consumer | 92 | 92 | 50 | 83 | — | ||||||||||||||
Residential real estate | 395 | 395 | 84 | 426 | 2 | ||||||||||||||
Total | $ | 44,608 | $ | 45,929 | $ | 2,273 | $ | 41,091 | $ | 2,678 |
December 31, 2014 | Year Ended December 31, 2014 | ||||||||||||||||||
Recorded Investment Net of Charge Offs | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
(amounts in thousands) | |||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||
Commercial and industrial | $ | 14,600 | $ | 16,122 | $ | — | $ | 13,329 | $ | 674 | |||||||||
Commercial real estate - owner occupied | 12,599 | 12,744 | — | 10,204 | 504 | ||||||||||||||
Commercial real estate - non-owner occupied | 5,602 | 5,602 | 7,770 | 383 | |||||||||||||||
Construction | 2,325 | 2,325 | — | 2,415 | 41 | ||||||||||||||
Other consumer | 21 | 21 | — | 26 | — | ||||||||||||||
Residential real estate | 3,675 | 5,917 | — | 4,145 | 87 | ||||||||||||||
Manufactured housing | 2,588 | 2,588 | — | 2,588 | 128 | ||||||||||||||
With an allowance recorded: | |||||||||||||||||||
Commercial and industrial | 1,923 | 1,923 | 857 | 1,725 | 28 | ||||||||||||||
Commercial real estate - owner occupied | 750 | 750 | 95 | 1,184 | 22 | ||||||||||||||
Commercial real estate - non-owner occupied | 571 | 571 | 170 | 902 | 17 | ||||||||||||||
Construction | — | — | — | 851 | — | ||||||||||||||
Other consumer | 114 | 114 | 32 | 82 | 1 | ||||||||||||||
Residential real estate | 365 | 365 | 188 | 296 | 1 | ||||||||||||||
Total | $ | 45,133 | $ | 49,042 | $ | 1,342 | $ | 45,517 | $ | 1,886 |
December 31, 2015 | ||||||
Number of Loans | Recorded Investment | |||||
(dollars in thousands) | ||||||
Extended under forbearance | 1 | $ | 183 | |||
Interest-rate reductions | 161 | 7,274 | ||||
Total | 162 | $ | 7,457 |
December 31, 2014 | ||||||
Number of Loans | Recorded Investment | |||||
(dollars in thousands) | ||||||
Extended under forbearance | 11 | $ | 460 | |||
Interest rate reductions | 10 | 620 | ||||
Total | 21 | $ | 1,080 |
December 31, 2013 | ||||||
Number of Loans | Recorded Investment | |||||
(dollars in thousands) | ||||||
Extended under forbearance | — | $ | — | |||
Interest rate reductions | 14 | 1,238 | ||||
Total | 14 | $ | 1,238 |
December 31, 2015 | ||||||
Number of Loans | Recorded Investment | |||||
(dollars in thousands) | ||||||
Commercial and industrial | 3 | $ | 791 | |||
Commercial real estate non-owner occupied | 1 | 211 | ||||
Manufactured housing | 156 | 6,251 | ||||
Residential real estate | 2 | 204 | ||||
Total loans | 162 | $ | 7,457 |
December 31, 2014 | ||||||
Number of Loans | Recorded Investment | |||||
(dollars in thousands) | ||||||
Manufactured housing | 10 | $ | 620 | |||
Home equity / other | 11 | 460 | ||||
Total loans | 21 | $ | 1,080 |
December 31, 2013 | ||||||
Number of Loans | Recorded Investment | |||||
(dollars in thousands) | ||||||
Manufactured housing | 13 | $ | 1,206 | |||
Home equity / other | 1 | 32 | ||||
Total loans | 14 | $ | 1,238 |
December 31, 2015 | |||||||||||||||||||||||||||||||||||
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 | $ | 2,907,362 | $ | 784,892 | $ | 295,762 | $ | 950,886 | $ | 87,240 | $ | 268,210 | $ | — | $ | — | $ | 5,294,352 | |||||||||||||||||
Special Mention | 661 | 14,052 | 7,840 | 1,671 | — | 282 | — | — | 24,506 | ||||||||||||||||||||||||||
Substandard | 1,416 | 4,215 | 4,639 | 3,698 | — | 3,121 | — | — | 17,089 | ||||||||||||||||||||||||||
Performing (1) | — | — | — | — | — | — | 104,484 | 3,461 | 107,945 | ||||||||||||||||||||||||||
Non-performing (2) | — | — | — | — | — | — | 9,006 | 247 | 9,253 | ||||||||||||||||||||||||||
Total | $ | 2,909,439 | $ | 803,159 | $ | 308,241 | $ | 956,255 | $ | 87,240 | $ | 271,613 | $ | 113,490 | $ | 3,708 | $ | 5,453,145 |
December 31, 2014 | |||||||||||||||||||||||||||||||||||
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 | $ | 2,206,776 | $ | 531,790 | $ | 217,356 | $ | 829,238 | $ | 44,642 | $ | 294,225 | $ | — | $ | — | $ | 4,124,027 | |||||||||||||||||
Special Mention | — | 14,565 | 13,056 | 6,694 | — | 243 | — | — | 34,558 | ||||||||||||||||||||||||||
Substandard | 1,629 | 3,580 | 5,322 | 3,378 | 5,076 | 2,927 | — | — | 21,912 | ||||||||||||||||||||||||||
Performing (1) | — | — | — | — | — | — | 115,088 | 4,151 | 119,239 | ||||||||||||||||||||||||||
Non-performing (2) | — | — | — | — | — | — | 11,643 | 282 | 11,925 | ||||||||||||||||||||||||||
Total | $ | 2,208,405 | $ | 549,935 | $ | 235,734 | $ | 839,310 | $ | 49,718 | $ | 297,395 | $ | 126,731 | $ | 4,433 | $ | 4,311,661 |
(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 non-accrual status. |
Twelve months ended December 31, 2015 | 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) | |||||||||||||||||||||||||||||||||||
Beginning Balance, January 1, 2015 | $ | 8,493 | $ | 4,784 | $ | 4,336 | $ | 9,198 | $ | 1,047 | $ | 2,698 | $ | 262 | $ | 114 | $ | 30,932 | |||||||||||||||||
Charge-offs | — | (11,331 | ) | (378 | ) | (327 | ) | (1,064 | ) | (276 | ) | — | (36 | ) | (13,412 | ) | |||||||||||||||||||
Recoveries | — | 548 | 14 | 0 | 204 | 575 | — | 92 | 1,433 | ||||||||||||||||||||||||||
Provision for loan losses | 3,523 | 14,863 | (2,624 | ) | (451 | ) | 887 | 301 | 232 | (37 | ) | 16,694 | |||||||||||||||||||||||
Ending Balance, December 31, 2015 | $ | 12,016 | $ | 8,864 | $ | 1,348 | $ | 8,420 | $ | 1,074 | $ | 3,298 | $ | 494 | $ | 133 | $ | 35,647 | |||||||||||||||||
Loans: | |||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 661 | $ | 17,621 | $ | 8,329 | $ | 4,831 | $ | — | $ | 4,726 | $ | 8,300 | $ | 140 | $ | 44,608 | |||||||||||||||||
Collectively evaluated for impairment | 2,905,128 | 783,986 | 286,951 | 939,368 | 87,006 | 258,446 | 101,838 | 3,334 | 5,366,057 | ||||||||||||||||||||||||||
Loans acquired with credit deterioration | 3,650 | 1,552 | 12,961 | 12,056 | 234 | 8,441 | 3,352 | 234 | 42,480 | ||||||||||||||||||||||||||
$ | 2,909,439 | $ | 803,159 | $ | 308,241 | $ | 956,255 | $ | 87,240 | $ | 271,613 | $ | 113,490 | $ | 3,708 | $ | 5,453,145 | ||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | 1,990 | $ | 1 | $ | 148 | $ | — | $ | 84 | $ | — | $ | 50 | $ | 2,273 | |||||||||||||||||
Collectively evaluated for impairment | 12,016 | 6,650 | 1,347 | 3,858 | 1,074 | 2,141 | 98 | 28 | 27,212 | ||||||||||||||||||||||||||
Loans acquired with credit deterioration | — | 224 | — | 4,414 | — | 1,073 | 396 | 55 | 6,162 | ||||||||||||||||||||||||||
$ | 12,016 | $ | 8,864 | $ | 1,348 | $ | 8,420 | $ | 1,074 | $ | 3,298 | $ | 494 | $ | 133 | $ | 35,647 |
Twelve months ended December 31, 2014 | 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) | |||||||||||||||||||||||||||||||||||
Beginning Balance, January 1, 2014 | $ | 4,227 | $ | 2,674 | $ | 2,517 | $ | 8,961 | $ | 2,385 | $ | 2,490 | $ | 614 | $ | 130 | $ | 23,998 | |||||||||||||||||
Charge-offs | — | (1,155 | ) | (482 | ) | (1,715 | ) | (895 | ) | (667 | ) | — | (33 | ) | (4,947 | ) | |||||||||||||||||||
Recoveries | — | 511 | 225 | 801 | 13 | 265 | — | 8 | 1,823 | ||||||||||||||||||||||||||
Provision for loan losses | 4,266 | 2,754 | 2,076 | 1,151 | (456 | ) | 610 | (352 | ) | 9 | 10,058 | ||||||||||||||||||||||||
Ending Balance, December 31, 2014 | $ | 8,493 | $ | 4,784 | $ | 4,336 | $ | 9,198 | $ | 1,047 | $ | 2,698 | $ | 262 | $ | 114 | $ | 30,932 | |||||||||||||||||
Loans: | |||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | 16,523 | $ | 13,349 | $ | 6,173 | $ | 2,325 | $ | 4,040 | $ | 2,588 | $ | 135 | $ | 45,133 | |||||||||||||||||
Collectively evaluated for impairment | 2,204,059 | 530,119 | 206,352 | 817,333 | 44,483 | 283,388 | 120,127 | 4,050 | 4,209,911 | ||||||||||||||||||||||||||
Loans acquired with credit deterioration | 4,346 | 3,293 | 16,033 | 15,804 | 2,910 | 9,967 | 4,016 | 248 | 56,617 | ||||||||||||||||||||||||||
$ | 2,208,405 | $ | 549,935 | $ | 235,734 | $ | 839,310 | $ | 49,718 | $ | 297,395 | $ | 126,731 | $ | 4,433 | $ | 4,311,661 | ||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | — | $ | 857 | $ | 95 | $ | 170 | $ | — | $ | 188 | $ | — | $ | 32 | $ | 1,342 | |||||||||||||||||
Collectively evaluated for impairment | 8,493 | 3,765 | 1,757 | 6,580 | 424 | 1,436 | 92 | 28 | 22,575 | ||||||||||||||||||||||||||
Loans acquired with credit deterioration | — | 162 | 2,484 | 2,448 | 623 | 1,074 | 170 | 54 | 7,015 | ||||||||||||||||||||||||||
$ | 8,493 | $ | 4,784 | $ | 4,336 | $ | 9,198 | $ | 1,047 | $ | 2,698 | $ | 262 | $ | 114 | $ | 30,932 |
December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Accretable yield balance, beginning of period | $ | 17,606 | $ | 22,557 | $ | 32,174 | |||||
Accretion to interest income | (2,299 | ) | (3,201 | ) | (6,213 | ) | |||||
Reclassification from nonaccretable difference and disposals, net | (2,360 | ) | (1,750 | ) | (3,404 | ) | |||||
Accretable yield balance, end of period | $ | 12,947 | $ | 17,606 | $ | 22,557 |
December 31, | |||||||||
Expected Useful Life | 2015 | 2014 | |||||||
(amounts in thousands) | |||||||||
Leasehold improvements | 3 to 25 years | $ | 12,531 | $ | 11,680 | ||||
Furniture, fixtures and equipment | 5 to 10 years | 5,312 | 4,504 | ||||||
IT equipment | 3 to 5 years | 5,909 | 4,696 | ||||||
Automobiles | 5 to 10 years | 206 | 174 | ||||||
23,958 | 21,054 | ||||||||
Accumulated depreciation | (12,427 | ) | (10,244 | ) | |||||
Total | $ | 11,531 | $ | 10,810 |
December 31, 2015 | ||||
(amounts in thousands) | ||||
2016 | $ | 3,861 | ||
2017 | 3,662 | |||
2018 | 3,450 | |||
2019 | 2,826 | |||
2020 | 1,994 | |||
Subsequent to 2020 | 3,258 | |||
Total minimum payments | $ | 19,051 |
December 31, | |||||||
2015 | 2014 | ||||||
(amounts in thousands) | |||||||
Demand, non-interest bearing | $ | 653,679 | $ | 546,436 | |||
Demand, interest bearing | 127,215 | 71,202 | |||||
Savings, including money market deposit accounts | 2,781,010 | 2,203,237 | |||||
Time, $100,000 and over | 1,624,562 | 1,043,265 | |||||
Time, other | 723,035 | 668,398 | |||||
Total deposits | $ | 5,909,501 | $ | 4,532,538 |
December 31, 2015 | |||
(amounts in thousands) | |||
2016 | $ | 1,799,310 | |
2017 | 312,813 | ||
2018 | 135,952 | ||
2019 | 53,591 | ||
2020 | 45,931 | ||
Total time deposits | $ | 2,347,597 |
December 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Amount | Rate | Amount | Rate | ||||||||||
(amounts in thousands) | |||||||||||||
FHLB advances | $ | 1,365,300 | 0.48 | % | $ | 1,298,000 | 0.29 | % | |||||
Federal funds purchased | 70,000 | 0.56 | — | — | |||||||||
Total short-term debt | $ | 1,435,300 | $ | 1,298,000 |
December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
FHLB advances: | |||||||||||
Maximum outstanding at any month end | $ | 1,365,300 | $ | 1,383,000 | $ | 769,750 | |||||
Average balance during the year | 844,835 | 898,396 | 120,309 | ||||||||
Weighted-average interest rate during the year | 0.60 | % | 0.46 | % | 0.55 | % | |||||
Federal funds purchased: | |||||||||||
Maximum outstanding at any month end | 85,000 | 35,000 | 125,000 | ||||||||
Average balance during the year | 41,397 | 13,312 | 32,351 | ||||||||
Weighted-average interest rate during the year | 0.35 | % | 0.31 | % | 0.31 | % |
December 31, | |||||||||||||
2015 | 2014 | ||||||||||||
Amount | Rate | Amount | Rate | ||||||||||
(amounts in thousands) | |||||||||||||
2016 | $ | — | — | % | $ | 85,000 | 0.59 | % | |||||
2017 | 205,000 | 1.18 | 180,000 | 1.21 | |||||||||
2018 | 55,000 | 1.61 | 55,000 | 1.61 | |||||||||
$ | 260,000 | $ | 320,000 |
• | Total shareholder returns over the five-year vesting period must be a minimum of 50%, or |
• | Customers Bancorp must have achieved a compound annual growth rate in diluted EPS of at least 10% over the five-year vesting period. |
2015 | 2014 | 2013 | |||||||||
Weighted-average risk-free interest rate | 1.90 | % | 2.16 | % | 1.42 | % | |||||
Expected dividend yield | — | % | — | % | — | % | |||||
Weighted-average expected volatility | 21.18 | % | 18.00 | % | 13.77 | % | |||||
Weighted-average expected life (in years) | 7.00 | 7.00 | 7.00 | ||||||||
Weighted-average fair value of each option granted | $ | 6.42 | $ | 4.52 | $ | 3.17 |
Number of Shares | Weighted- average Exercise Price | Weighted- average Remaining Contractual Term in Years | Aggregate Intrinsic Value | |||||||||
(dollars in thousands, except Weighted-average Exercise Price) | ||||||||||||
Outstanding, January 1, 2015 | 3,168,067 | $ | 12.61 | |||||||||
Granted | 599,745 | 23.36 | ||||||||||
Exercised | (31,168 | ) | 10.53 | 455 | ||||||||
Forfeited | (2,200 | ) | 17.65 | |||||||||
Expired | (2,683 | ) | 29.33 | |||||||||
Outstanding, December 31, 2015 | 3,731,761 | $ | 14.33 | 6.78 | $ | 48,086 | ||||||
Exercisable at December 31, 2015 | 707,745 | $ | 9.19 | 4.38 | $ | 12,760 |
Options | Weighted- average exercise price | |||||
Non-vested at January 1, 2015 | 3,154,384 | $ | 12.59 | |||
Granted | 599,745 | 23.36 | ||||
Vested | (725,163 | ) | 12.50 | |||
Forfeited | (2,200 | ) | 17.65 | |||
Non-vested at December 31, 2015 | 3,026,766 | 15.53 |
Restricted Stock Units | Weighted- average grant- date fair value | |||||
Outstanding and unvested at January 1, 2015 | 788,971 | $ | 13.00 | |||
Granted | 158,581 | 19.67 | ||||
Vested | (65,218 | ) | 12.02 | |||
Forfeited | (9,070 | ) | 17.15 | |||
Outstanding and unvested at December 31, 2015 | 873,264 | $ | 14.24 |
For the Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Current | $ | 40,004 | $ | 26,361 | $ | 15,394 | |||||
Deferred | (10,092 | ) | (6,187 | ) | 2,210 | ||||||
Total | $ | 29,912 | $ | 20,174 | $ | 17,604 |
For the Years Ended December 31, | ||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||
Amount | % of pretax income | Amount | % of pretax income | Amount | % of pretax income | |||||||||||||||
(amounts in thousands) | ||||||||||||||||||||
Federal income tax at statutory rate | $ | 30,973 | 35.00 | % | $ | 22,185 | 35.00 | % | $ | 17,604 | 35.00 | % | ||||||||
State income tax | 1,434 | 1.62 | 1,355 | 2.14 | 353 | 0.70 | ||||||||||||||
Tax-exempt interest, net of disallowance | (277 | ) | (0.31 | ) | (249 | ) | (0.39 | ) | (148 | ) | (0.30 | ) | ||||||||
Bank-owned life insurance | (2,422 | ) | (2.73 | ) | (1,296 | ) | (2.04 | ) | (868 | ) | (1.73 | ) | ||||||||
Other | 204 | 0.22 | (1,821 | ) | (2.88 | ) | 663 | 1.33 | ||||||||||||
Effective income tax rate | $ | 29,912 | 33.80 | % | $ | 20,174 | 31.83 | % | $ | 17,604 | 35.00 | % |
December 31, | |||||||
2015 | 2014 | ||||||
(amounts in thousands) | |||||||
Deferred tax assets: | |||||||
Allowance for loan losses | $ | 13,248 | $ | 11,555 | |||
Net unrealized losses on securities | 3,112 | — | |||||
OREO expenses | 728 | 588 | |||||
Non-accrual interest | 840 | 541 | |||||
Net operating losses | 2,290 | 1,892 | |||||
Deferred compensation | 1,337 | 1,361 | |||||
Equity-based compensation | 5,196 | 3,751 | |||||
Fair value adjustments on acquisitions | 428 | — | |||||
Cash flow hedge | 1,679 | 681 | |||||
Incentive compensation | 2,497 | 1,558 | |||||
Other | 1,374 | 1,120 | |||||
Total deferred tax assets | 32,729 | 23,047 | |||||
Deferred tax liabilities: | |||||||
Fair value adjustments on acquisitions | — | (2,002 | ) | ||||
Net unrealized gains on securities | — | (615 | ) | ||||
Net deferred loan fees | (2,688 | ) | (4,524 | ) | |||
Bank premises and equipment | (875 | ) | (1,009 | ) | |||
Other | (592 | ) | (1,140 | ) | |||
Total deferred tax liabilities | (4,155 | ) | (9,290 | ) | |||
Net deferred tax asset | $ | 28,574 | $ | 13,757 |
For the Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Balance – January 1 | $ | 9 | $ | 7,273 | $ | 3,272 | |||||
Additions | 2,218 | 5 | 9,280 | ||||||||
Repayments | (2,007 | ) | (7,269 | ) | (5,279 | ) | |||||
Balance – December 31 | $ | 220 | $ | 9 | $ | 7,273 |
December 31, | |||||||
2015 | 2014 | ||||||
(amounts in thousands) | |||||||
Commitments to fund loans | $ | 537,380 | $ | 231,294 | |||
Unfunded commitments to fund mortgage warehouse loans | 1,302,759 | 713,619 | |||||
Unfunded commitments under lines of credit | 436,550 | 430,995 | |||||
Letters of credit | 42,002 | 36,206 | |||||
Other unused commitments | 6,360 | 7,685 |
Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | |||||||||||||||||||
(amounts in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
December 31, 2015 | |||||||||||||||||||||
Common equity Tier 1 (to risk-weighted assets) | |||||||||||||||||||||
Customers Bancorp, Inc. | $ | 500,624 | 7.61 | % | $ | 296,014 | 4.5 | % | N/A | N/A | |||||||||||
Customers Bank | $ | 565,217 | 8.62 | % | $ | 294,916 | 4.5 | % | $ | 425,990 | 6.5 | % | |||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||||
Customers Bancorp, Inc. | $ | 698,323 | 10.62 | % | $ | 526,247 | 8.0 | % | N/A | N/A | |||||||||||
Customers Bank | $ | 710,864 | 10.85 | % | $ | 524,295 | 8.0 | % | $ | 655,369 | 10.0 | % | |||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||||
Customers Bancorp, Inc. | $ | 556,193 | 8.46 | % | $ | 394,685 | 6.0 | % | N/A | N/A | |||||||||||
Customers Bank | $ | 565,217 | 8.62 | % | $ | 393,221 | 6.0 | % | $ | 524,295 | 8.0 | % | |||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||||
Customers Bancorp, Inc. | $ | 556,193 | 7.16 | % | $ | 310,812 | 4.0 | % | N/A | N/A | |||||||||||
Customers Bank | $ | 565,217 | 7.30 | % | $ | 309,883 | 4.0 | % | $ | 387,353 | 5.0 | % | |||||||||
December 31, 2014 | |||||||||||||||||||||
Total capital (to risk-weighted assets) | |||||||||||||||||||||
Customers Bancorp, Inc. | $ | 578,644 | 11.09 | % | $ | 417,473 | 8.0 | % | N/A | N/A | |||||||||||
Customers Bank | $ | 621,894 | 11.98 | % | $ | 415,141 | 8.0 | % | $ | 518,926 | 10.0 | % | |||||||||
Tier 1 capital (to risk-weighted assets) | |||||||||||||||||||||
Customers Bancorp, Inc. | $ | 437,712 | 8.39 | % | $ | 208,737 | 4.0 | % | N/A | N/A | |||||||||||
Customers Bank | $ | 480,963 | 9.27 | % | $ | 207,570 | 4.0 | % | $ | 311,356 | 6.0 | % | |||||||||
Tier 1 capital (to average assets) | |||||||||||||||||||||
Customers Bancorp, Inc. | $ | 437,712 | 6.69 | % | $ | 261,622 | 4.0 | % | N/A | N/A | |||||||||||
Customers Bank | $ | 480,963 | 7.39 | % | $ | 260,462 | 4.0 | % | $ | 325,577 | 5.0 | % |
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 inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity). |
Carrying Amount | Estimated Fair Value | Fair Value Measurements at December 31, 2015 | |||||||||||||||||
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 | $ | 264,593 | $ | 264,593 | $ | 264,593 | $ | — | $ | — | |||||||||
Investment securities, available for sale | 560,253 | 560,253 | 19,212 | 541,041 | — | ||||||||||||||
Loans held for sale | 1,797,064 | 1,797,458 | — | 1,757,807 | 39,651 | ||||||||||||||
Loans receivable, net of allowance for loan losses | 5,417,832 | 5,353,903 | — | — | 5,353,903 | ||||||||||||||
FHLB, Federal Reserve Bank and other restricted stock | 90,841 | 90,841 | — | 90,841 | — | ||||||||||||||
Derivatives | 9,295 | 9,295 | — | 9,250 | 45 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Deposits | $ | 5,909,501 | $ | 5,911,754 | $ | 3,561,905 | $ | 2,349,849 | $ | — | |||||||||
Federal funds purchased | 70,000 | 70,000 | 70,000 | — | — | ||||||||||||||
FHLB advances | 1,625,300 | 1,625,468 | 1,365,300 | 260,168 | — | ||||||||||||||
Other borrowings | 88,250 | 93,804 | 68,867 | 24,937 | — | ||||||||||||||
Subordinated debt | 110,000 | 110,825 | — | 110,825 | — | ||||||||||||||
Derivatives | 13,932 | 13,932 | — | 13,932 | — |
Carrying Amount | Estimated Fair Value | Fair Value Measurements at December 31, 2014 | |||||||||||||||||
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 | $ | 371,023 | $ | 371,023 | $ | 371,023 | $ | — | $ | — | |||||||||
Investment securities, available for sale | 416,685 | 416,685 | 24,270 | 392,415 | — | ||||||||||||||
Loans held for sale | 1,435,459 | 1,436,460 | — | 1,335,668 | 100,792 | ||||||||||||||
Loans receivable, net of allowance for loan losses | 4,281,241 | 4,285,537 | — | — | 4,285,537 | ||||||||||||||
FHLB and Federal Reserve Bank, and other restricted stock | 82,002 | 82,002 | — | 82,002 | — | ||||||||||||||
Derivatives | 7,552 | 7,552 | — | 7,509 | 43 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Deposits | $ | 4,532,538 | $ | 4,540,507 | $ | 2,820,875 | $ | 1,719,632 | $ | — | |||||||||
FHLB advances | 1,618,000 | 1,619,858 | 1,298,000 | 321,858 | — | ||||||||||||||
Other borrowings | 88,250 | 92,069 | 66,944 | 25,125 | — | ||||||||||||||
Subordinated debt | 110,000 | 111,925 | — | 111,925 | — | ||||||||||||||
Derivatives | 9,716 | 9,716 | — | 9,716 | — |
December 31, 2015 | |||||||||||||||
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: | |||||||||||||||
Mortgage-backed securities | $ | — | $ | 500,974 | $ | — | $ | 500,974 | |||||||
Corporate notes | — | 40,067 | — | 40,067 | |||||||||||
Equity securities | 19,212 | — | — | 19,212 | |||||||||||
Derivatives (1) | — | 9,250 | 45 | 9,295 | |||||||||||
Loans held for sale – fair value option | — | 1,757,807 | — | 1,757,807 | |||||||||||
Total assets - recurring fair value measurements | $ | 19,212 | $ | 2,308,098 | $ | 45 | $ | 2,327,355 | |||||||
Liabilities | |||||||||||||||
Derivatives (2) | $ | — | $ | 13,932 | $ | — | $ | 13,932 | |||||||
Measured at Fair Value on a Nonrecurring Basis: | |||||||||||||||
Assets | |||||||||||||||
Impaired loans, net of specific reserves of $2,273 | $ | — | $ | — | $ | 4,346 | $ | 4,346 | |||||||
Other real estate owned | — | — | 358 | 358 | |||||||||||
Total assets - nonrecurring fair value measurements | $ | — | $ | — | $ | 4,704 | $ | 4,704 |
December 31, 2014 | |||||||||||||||
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: | |||||||||||||||
Mortgage-backed securities | $ | — | $ | 377,311 | $ | — | $ | 377,311 | |||||||
Corporate notes | — | 15,104 | — | 15,104 | |||||||||||
Equity securities | 24,270 | — | — | 24,270 | |||||||||||
Derivatives (1) | — | 7,509 | 43 | 7,552 | |||||||||||
Loans held for sale – fair value option | — | 1,335,668 | — | 1,335,668 | |||||||||||
Total assets - recurring fair value measurements | $ | 24,270 | $ | 1,735,592 | $ | 43 | $ | 1,759,905 | |||||||
Liabilities | |||||||||||||||
Derivatives (2) | $ | — | $ | 9,716 | $ | — | $ | 9,716 | |||||||
Measured at Fair Value on a Nonrecurring Basis: | |||||||||||||||
Assets | |||||||||||||||
Impaired loans, net of specific reserves of $1,342 | $ | — | $ | — | $ | 2,380 | $ | 2,380 | |||||||
Other real estate owned | — | — | 9,149 | 9,149 | |||||||||||
Total assets - nonrecurring fair value measurements | $ | — | $ | — | $ | 11,529 | $ | 11,529 |
(1) | Included in Other Assets |
(2) | Included in Other Liabilities |
For the Years Ended December 31, | ||||||||
2015 | 2014 | |||||||
Residential Mortgage Loan Commitments | ||||||||
(amounts in thousands) | ||||||||
Balance at January 1, | $ | 43 | $ | 240 | ||||
Issuances | 273 | 235 | ||||||
Settlements | (271 | ) | (432 | ) | ||||
Balance at December 31, | $ | 45 | $ | 43 |
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||
December 31, 2015 | Fair Value Estimate | Valuation Technique | Unobservable Input | Range (Weighted Average) (3) | ||||||
(dollars in thousands) | ||||||||||
Impaired loans | $ | 4,346 | Collateral appraisal (1) | Liquidation expenses (2) | (8 | )% | ||||
Other real estate owned | 358 | Collateral appraisal (1) | Liquidation expenses (2) | (8 | )% | |||||
Residential mortgage loan commitments | 45 | Adjusted market bid | Pull-through rate | 94 | % |
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||
December 31, 2014 | Fair Value Estimate | Valuation Technique | Unobservable Input | Range (Weighted Average) (3) | ||||||
(dollars in thousands) | ||||||||||
Impaired loans | $ | 2,380 | Collateral appraisal (1) | Liquidation expenses (2) | (8 | )% | ||||
Other real estate owned | 9,149 | Collateral appraisal (1) | Liquidation expenses (2) | (8 | )% | |||||
Residential mortgage loan commitments | 43 | Adjusted market bid | Pull-through rate | 80 | % |
(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. |
(3) | Presented as a percentage of the value determined by appraisal for impaired loans and other real estate owned. |
December 31, 2015 | ||||||||||||
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 | $ | 4,477 | ||||||
Total | $ | — | $ | 4,477 | ||||||||
Derivatives not designated as hedging instruments: | ||||||||||||
Interest rate swaps | Other assets | $ | 9,088 | Other liabilities | $ | 9,455 | ||||||
Credit contracts | Other assets | 162 | Other liabilities | — | ||||||||
Residential mortgage loan commitments | Other assets | 45 | Other liabilities | — | ||||||||
Total | $ | 9,295 | $ | 9,455 |
December 31, 2014 | |||||||||||
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 | $ | — | Other liabilities | $ | 1,945 | |||||
Total | $ | — | $ | 1,945 | |||||||
Derivatives not designated as hedging instruments: | |||||||||||
Interest rate swaps | Other assets | $ | 7,332 | Other liabilities | $ | 7,771 | |||||
Credit contracts | Other assets | 177 | Other liabilities | — | |||||||
Residential mortgage loan commitments | Other assets | 43 | Other liabilities | — | |||||||
Total | $ | 7,552 | $ | 7,771 |
For the Year Ended December 31, 2015 | ||||
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 | $ | 1,889 | |
Credit contracts | Other non-interest income | (15 | ) | |
Residential mortgage loan commitments | Mortgage loan and banking income | 2 | ||
Total | $ | 1,876 |
For the Year Ended December 31, 2014 | ||||
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 | $ | 550 | |
Credit contracts | Other non-interest income | (91 | ) | |
Residential mortgage loan commitments | Mortgage loan and banking income | (197 | ) | |
Total | $ | 262 |
For the Year Ended December 31, 2013 | ||||
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 | $ | 711 | |
Residential mortgage loan commitments | Mortgage loan and banking income | 240 | ||
Total | $ | 951 |
For the Year Ended December 31, 2015 | ||||||||||
Location of Gain | Amount of Gain (Loss) | |||||||||
Amount of Loss | (Loss) Reclassified | Reclassified from | ||||||||
Recognized in OCI on | from Accumulated | Accumulated OCI into | ||||||||
Derivatives (Effective | OCI into Income | Income (Effective | ||||||||
Portion) (1) | (Effective Portion) | Portion) | ||||||||
(amounts in thousands) | ||||||||||
Derivatives in cash flow hedging relationships: | ||||||||||
Interest rate swaps | $ | (1,534 | ) | Interest expense | $ | — |
For the Year Ended December 31, 2014 | ||||||||||
Location of Gain | Amount of Gain (Loss) | |||||||||
Amount of Loss | (Loss) Reclassified | Reclassified from | ||||||||
Recognized in OCI on | from Accumulated | Accumulated OCI into | ||||||||
Derivatives (Effective | OCI into Income | Income (Effective | ||||||||
Portion) (1) | (Effective Portion) | Portion) | ||||||||
(amounts in thousands) | ||||||||||
Derivative in cash flow hedging relationship: | ||||||||||
Interest rate swaps | $ | (1,264 | ) | Interest expense | $ | — |
Offsetting of Financial Assets and Derivative Assets at | |||||||||||||||||||||||
December 31, 2015 | |||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheet | |||||||||||||||||||||||
Gross Amount of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Assets Presented in the Consolidated Balance Sheet | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Description | |||||||||||||||||||||||
Interest rate swap derivatives with institutional counterparties | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
Offsetting of Financial Assets and Derivative Assets at | |||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheet | |||||||||||||||||||||||
Gross Amount of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Assets Presented in the Consolidated Balance Sheet | Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Description | |||||||||||||||||||||||
Interest rate swap derivatives with institutional counterparties | $ | 192 | $ | — | $ | 192 | $ | 192 | $ | — | $ | — |
Offsetting of Financial Liabilities and Derivative Liabilities at | |||||||||||||||||||||||
December 31, 2015 | |||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheet | |||||||||||||||||||||||
Gross Amount of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | Financial Instruments | Cash Collateral Pledged | Net Amount | ||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Description | |||||||||||||||||||||||
Interest rate swap derivatives with institutional counterparties | $ | 13,932 | $ | — | $ | 13,932 | $ | — | $ | 13,932 | $ | — |
Offsetting of Financial Liabilities and Derivative Liabilities at | |||||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||||
Gross Amount of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheet | Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | Financial Instruments | Cash Collateral Pledged | Net Amount | ||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Description | |||||||||||||||||||||||
Interest rate swap derivatives with institutional counterparties | $ | 9,703 | $ | — | $ | 9,703 | $ | 192 | $ | 9,511 | $ | — |
December 31, | |||||||
2015 | 2014 | ||||||
(amounts in thousands) | |||||||
Assets | |||||||
Cash in subsidiary bank | $ | 54,567 | $ | 16,465 | |||
Investment securities available for sale, at fair value | 5 | 5 | |||||
Investments in and receivables due from subsidiaries | 583,875 | 509,465 | |||||
Other assets | 4,190 | 6,678 | |||||
Total assets | $ | 642,637 | $ | 532,613 | |||
Liabilities and Shareholders’ equity | |||||||
Borrowings | 88,250 | 88,250 | |||||
Other liabilities | 485 | 1,218 | |||||
Total liabilities | 88,735 | 89,468 | |||||
Shareholders’ equity | 553,902 | 443,145 | |||||
Total Liabilities and Shareholders’ Equity | $ | 642,637 | $ | 532,613 |
For the Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Operating income: | |||||||||||
Other | $ | 18,545 | $ | 90 | $ | 758 | |||||
Total operating income | 18,545 | 90 | 758 | ||||||||
Operating expense: | |||||||||||
Interest | 5,854 | 5,251 | 1,923 | ||||||||
Other | 4,604 | 5,611 | 3,395 | ||||||||
Total operating expense | 10,458 | 10,862 | 5,318 | ||||||||
Income (loss) before taxes and undistributed income of subsidiaries | 8,087 | (10,772 | ) | (4,560 | ) | ||||||
Income tax benefit | 3,516 | 3,797 | 1,596 | ||||||||
Income (loss) before undistributed income of subsidiaries | 11,603 | (6,975 | ) | (2,964 | ) | ||||||
Equity in undistributed income of subsidiaries | 46,980 | 50,189 | 35,658 | ||||||||
Net income | 58,583 | 43,214 | 32,694 | ||||||||
Preferred stock dividends | 2,493 | — | — | ||||||||
Net income available to common shareholders | 56,090 | 43,214 | 32,694 | ||||||||
Comprehensive income | $ | 50,721 | $ | 51,210 | $ | 23,512 |
For the Years Ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
(amounts in thousands) | |||||||||||
Cash Flows from Operating Activities: | |||||||||||
Net income | $ | 58,583 | $ | 43,214 | $ | 32,694 | |||||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||
Equity in undistributed earnings of subsidiaries, net of dividends received from Bank | (46,980 | ) | (50,189 | ) | (35,658 | ) | |||||
(Increase) decrease in other assets | 2,488 | (1,354 | ) | (1,465 | ) | ||||||
Increase (decrease) in other liabilities | (112 | ) | 1,497 | (281 | ) | ||||||
Net Cash Provided By (Used in) Operating Activities | 13,979 | (6,832 | ) | (4,710 | ) | ||||||
Cash Flows from Investing Activities: | |||||||||||
Purchases of investment securities available for sale | — | — | — | ||||||||
Payments for investments in and advances to subsidiaries | (30,036 | ) | (15,032 | ) | (177,068 | ) | |||||
Net Cash Used in Investing Activities | (30,036 | ) | (15,032 | ) | (177,068 | ) | |||||
Cash Flows from Financing Activities: | |||||||||||
Proceeds from issuance of common stock | 904 | 77 | 97,507 | ||||||||
Proceeds from issuance of preferred stock | 55,569 | — | — | ||||||||
Proceeds from issuance of long-term debt | — | 25,000 | 60,336 | ||||||||
Exercise and redemption of warrants | — | 6 | 264 | ||||||||
Payments on partial shares for stock dividend | — | (8 | ) | — | |||||||
Preferred stock dividends paid | (2,314 | ) | — | — | |||||||
Purchase of treasury stock | — | — | (7,754 | ) | |||||||
Net Cash Provided by Financing Activities | 54,159 | 25,075 | 150,353 | ||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 38,102 | 3,211 | (31,425 | ) | |||||||
Cash and Cash Equivalents – Beginning | 16,465 | 13,254 | 44,679 | ||||||||
Cash and Cash Equivalents – Ending | $ | 54,567 | $ | 16,465 | $ | 13,254 |
2015 | |||||||||||||||
Quarter Ended | December 31 | September 30 | June 30 | March 31 | |||||||||||
(amounts in thousands, except per share data) | |||||||||||||||
Interest income | $ | 67,713 | $ | 63,736 | $ | 59,683 | $ | 58,718 | |||||||
Interest expense | 14,245 | 13,802 | 13,125 | 12,388 | |||||||||||
Net interest income | 53,468 | 49,934 | 46,558 | 46,330 | |||||||||||
Provision for loan losses | 6,173 | 2,094 | 9,335 | 2,964 | |||||||||||
Non-interest income | 9,420 | 6,171 | 6,393 | 5,733 | |||||||||||
Non-interest expenses | 31,514 | 30,307 | 25,660 | 27,465 | |||||||||||
Income before income taxes | 25,201 | 23,704 | 17,956 | 21,634 | |||||||||||
Provision for income taxes | 7,415 | 8,415 | 6,400 | 7,682 | |||||||||||
Net income | 17,786 | 15,289 | 11,556 | 13,952 | |||||||||||
Preferred stock dividend | 1,006 | 980 | 507 | — | |||||||||||
Net income available to common shareholders | $ | 16,780 | $ | 14,309 | $ | 11,049 | $ | 13,952 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.62 | $ | 0.53 | $ | 0.41 | $ | 0.52 | |||||||
Diluted | 0.58 | 0.50 | 0.39 | 0.49 |
2014 | |||||||||||||||
Quarter Ended | December 31 | September 30 | June 30 | March 31 | |||||||||||
(amounts in thousands, except per share data) | |||||||||||||||
Interest income | $ | 57,161 | $ | 51,298 | $ | 45,092 | $ | 36,874 | |||||||
Interest expense | 12,175 | 11,084 | 8,162 | 7,082 | |||||||||||
Net interest income | 44,986 | 40,214 | 36,930 | 29,792 | |||||||||||
Provision for loan losses | 2,459 | 5,035 | 2,886 | 4,368 | |||||||||||
Non-interest income | 5,804 | 5,102 | 6,911 | 7,310 | |||||||||||
Non-interest expenses | 27,864 | 24,679 | 25,205 | 21,169 | |||||||||||
Income before income taxes | 20,467 | 15,602 | 15,750 | 11,565 | |||||||||||
Provision for income taxes | 7,289 | 3,940 | 5,517 | 3,429 | |||||||||||
Net income available to common shareholders | $ | 13,178 | $ | 11,662 | $ | 10,233 | $ | 8,136 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.49 | $ | 0.44 | $ | 0.38 | $ | 0.30 | |||||||
Diluted | 0.47 | 0.42 | 0.37 | 0.29 |
(a) | 1. Financial Statements |
(b) | 2. Financial Statements Schedules |
(c) | Exhibits |
Exhibit No. | Description | |
2.1 | Purchase and Assumption Agreement, dated as of July 9, 2010, by and among Customers Bank, the FDIC as Receiver of USA Bank, and the FDIC acting in its corporate capacity, incorporated by reference to Exhibit 2.3 to the Customers Bancorp Form S-1/A filed with the SEC on January 13, 2011 | |
2.2 | Purchase and Assumption Agreement, dated as of September 17, 2010, by and among Customers Bank, the FDIC as Receiver of ISN Bank, and the FDIC acting in its corporate capacity, incorporated by reference to Exhibit 2.4 to the Customers Bancorp Form S-1/A filed with the SEC on January 13, 2011 | |
2.3 | Asset Purchase Agreement dated as of December 15, 2015 by and among Customers Bancorp, Customers Bank, Higher One, Inc. and Higher One Holdings, Inc. | |
3.1 | Amended and Restated Articles of Incorporation of Customers Bancorp, Inc., incorporated by reference to Exhibit 3.1 to the Customers Bancorp Form 8-K filed with the SEC on April 30, 2012 | |
3.2 | Amended and Restated Bylaws of Customers Bancorp, Inc., incorporated by reference to Exhibit 3.2 to the Customers Bancorp Form 8-K filed with the SEC on April 30, 2012 | |
3.3 | Articles of Amendment to the Amended and Restated Articles of Incorporation of Customers Bancorp, Inc., incorporated by reference to Exhibit 3.1 to the Customers Bancorp Form 8-K filed with the SEC on July 2, 2012 | |
3.4 | Statement with Respect to Shares relating to the Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C, incorporated by reference to Exhibit 3.1 to the Customers Bancorp Form 8-K filed with the SEC on May 18, 2015 | |
3.5 | Statement with Respect to Shares relating to the Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, incorporated by reference to Exhibit 3.1 to the Customers Bancorp Form 8-K filed with the SEC on January 29, 2016 | |
4.1 | Specimen stock certificate of Customers Bancorp, Inc. Voting Common Stock and Class B Non-Voting Common Stock, incorporated by reference to Exhibit 4.1 to the Customers Bancorp Form S-1/A filed with the SEC on May 1, 2012 | |
4.2 | Form of Warrant issued to investors in New Century Bank’s March and February 2010 private offerings, 2009 private offering, and in partial exchange for New Century Bank’s shares of 10% Series A Non-Cumulative Perpetual Convertible Preferred Stock in June 2009, incorporated by reference to Exhibit 4.8 to the Customers Bancorp Form S-1 filed with the SEC on April 22, 2010 | |
4.3 | Warrants issued to Jay S. Sidhu, June 30, 2009, incorporated by reference to Exhibit 4.9 to the Customers Bancorp Form S-1 filed with the SEC on April 22, 2010 | |
4.4 | Indenture, dated as of July 30, 2013, by and between Customers Bancorp, Inc., as Issuer, and Wilmington Trust, National Association, as Trustee, incorporated by reference to Exhibit 4.1 to the Customers Bancorp 8-K filed with the SEC on July 31, 2013 | |
4.5 | First Supplemental Indenture, dated as of July 30, 2013, by and between Customers Bancorp, Inc., as Issuer, and Wilmington Trust, National Association, as Trustee, incorporated by reference to Exhibit 4.2 to the Customers Bancorp 8-K filed with the SEC on July 31, 2013 | |
4.6 | 6.375% Global Note in aggregate principal amount of $55,000,000, incorporated by reference to Exhibit 4.3 to the Customers Bancorp 8-K filed with the SEC on July 31, 2013 | |
4.7 | Amendment to First Supplemental Indenture, dated August 27, 2013, by and between Customers Bancorp, Inc. and Wilmington Trust Company, National Association, as trustee, incorporated by reference to Exhibit 4.1 to the Customers Bancorp 8-K filed with the SEC on August 29, 2013 | |
4.8 | 6.375% Global Note in aggregate principal amount of $8,250,000, incorporated by reference to Exhibit 4.2 to the Customers Bancorp 8-K filed with the SEC on August 29, 2013 | |
Exhibit No. | Description | |
4.9 | Form of Note Subscription Agreement (including form of Subordinated Note Certificate and Senior Note Certificate) incorporated by reference to Exhibit 10.1 to the Customers Bancorp 8-K filed with the SEC on June 26, 2014 | |
10.1+ | New Century Bank Management Stock Purchase Plan, incorporated by reference to Exhibit 10.1 to the Customers Bancorp Form S-1 filed with the SEC on April 22, 2010 | |
10.2+ | Amended and Restated Customers Bancorp, Inc. 2010 Stock Option Plan, incorporated by reference to Exhibit 10.2 to the Customers Bancorp Form 10-K filed with the SEC on March 21, 2012 | |
10.3+ | Amended and Restated Employment Agreement, dated as of March 26, 2012, by and between Customers Bancorp, Inc. and Jay S. Sidhu, incorporated by reference to Exhibit 10.3 to the Customers Bancorp Form S-1 filed with the SEC on March 28, 2012 | |
10.4+ | Amended and Restated Employment Agreement, dated as of March 26, 2012, by and between Customers Bancorp, Inc. and Richard Ehst, incorporated by reference to Exhibit 10.4 to the Customers Bancorp Form S-1 filed with the SEC on March 28, 2012 | |
10.5+ | Amended and Restated Customers Bancorp, Inc. 2004 Incentive Equity and Deferred Compensation Plan, incorporated by reference to Exhibit 10.7 to the Customers Bancorp Form 10-K filed with the SEC on March 21, 2012 | |
10.6+ | Form of Restricted Stock Unit Award Agreement for Employees relating to the 2012 Special Stock Reward Program, incorporated by reference to Exhibit 10.25 to the Customers Bancorp Form S-1/A filed with the SEC on May 1, 2012 | |
10.7+ | Amended and Restated Customers Bancorp, Inc. Bonus Recognition and Retention Plan, incorporated by reference to Exhibit 10.15 to the Customers Bancorp Form 10-K filed with the SEC on March 21, 2012 | |
10.8+ | Supplemental Executive Retirement Plan of Jay S. Sidhu, incorporated by reference to Exhibit 10.15 to the Customers Bancorp Form S-1/A filed with the SEC on April 18, 2011 | |
10.9+ | Form of Restricted Stock Unit Award Agreement for Directors relating to the 2012 Special Stock Reward Program, incorporated by reference to Exhibit 10.26 to the Customers Bancorp Form S-1/A filed with the SEC on May 1, 2012 | |
10.10+ | Form of Stock Option Agreement, incorporated by reference to Exhibit 10.18 to the Customers Bancorp Form 10-K filed with the SEC on March 21, 2012 | |
10.11+ | Form of Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.17 to the Customers Bancorp Form 10-K filed with the SEC on March 21, 2012 | |
10.12+ | Change of Control Agreement, dated as of January 30, 2013, by and between Customers Bancorp, Inc. and Glenn Hedde, incorporated by reference to Exhibit 10.29 to Customers Bancorp’s Form 10-K filed with the SEC on March 18, 2013 | |
10.13+ | Change of Control Agreement, dated as of January 30, 2013, by and between Customers Bancorp, Inc. and Warren Taylor, incorporated by reference to Exhibit 10.30 to Customers Bancorp’s Form 10-K filed with the SEC on March 18, 2013 | |
10.14+ | Change of Control Agreement, dated as of December 22, 2012, by and between Customers Bancorp, Inc. and Ken Keiser | |
10.15+ | Employment Agreement, dated as of August 5, 2013, by and between Customers Bancorp, Inc. and Robert Wahlman | |
10.16+ | Employment Agreement, dated as of March 1, 2014, by and between Customers Bancorp, Inc. and Steven Issa | |
10.17+ | Amendment to Employment Agreement, dated as of February 26, 2016, by and between Customers Bancorp, Inc. and Steven Issa | |
10.18 | Termination and Non-Renewal Agreement, dated as of April 4, 2013, by and among Customers Bancorp, Inc., Acacia Life Insurance Company, and Ameritas Life Insurance Corp., incorporated by reference to Exhibit 10.1 to the Customers Bancorp Form 8-K filed with the SEC on April 10, 2013 | |
Exhibit No. | Description | |
10.19 | At Market Issuance Sales Agreement dated as of December 23, 2015, by and among the Company, FBR Capital Markets & Co., MLV & Co. LLC and Maxim Group LLC, incorporated by reference to Exhibit 10.1 to the Customers Bancorp Form 8-K filed with the SEC on December 23, 2015 | |
10.20 | Termination of At Market Issuance Sales Agreement dated as of January 20, 2016 | |
21.1 | List of Subsidiaries of Customers Bancorp, Inc. | |
23.1 | Consent of BDO USA, LLP, filed herewith | |
31.1 | Certification of the Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a) | |
31.2 | Certification of the Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a) or Rule 15d-14(a) | |
32.1 | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 | Interactive Data Files regarding (a) Balance Sheets as of December 31, 2015 and 2014, (b) Statements of Income for the years ended December 31, 2015, 2014 and 2013, (c) Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013, (d) Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013, (e) Statements of Changes in Shareholders’ Equity for the years ended December 31, 2015, 2014 and 2013 and (f) Notes to Financial Statements for the years ended December 31, 2015, 2014 and 2013. | |
+ | Management Contract or compensatory plan or arrangement |
Customers Bancorp, Inc. | |||
February 26, 2016 | By: | /s/ Jay S. Sidhu | |
Name: | Jay S. Sidhu | ||
Title: | Chairman and Chief Executive Officer | ||
Customers Bancorp, Inc. | |||
February 26, 2016 | By: | /s/ Robert E. Wahlman | |
Name: | Robert E. Wahlman | ||
Title: | Chief Financial Officer |
Signature: | Title(s): | Date: | ||
/s/ Jay S. Sidhu | Chairman, Chief Executive Officer and Director (principal executive officer) | February 26, 2016 | ||
Jay S. Sidhu | ||||
/s/ Robert E. Wahlman | Executive Vice President and Chief Financial Officer (principal financial officer) | February 26, 2016 | ||
Robert E. Wahlman | ||||
/s/ Carla A. Leibold | Senior Vice President - Chief Accounting Officer and Controller (principal accounting officer) | February 26, 2016 | ||
Carla A. Leibold | ||||
/s/ Daniel K. Rothermel | Director | |||
Daniel K. Rothermel | February 26, 2016 | |||
/s/ Bhanu Choudhrie | Director | |||
Bhanu Choudhrie | February 26, 2016 | |||
/s/ John R. Miller | Director | |||
John R. Miller | February 26, 2016 | |||
/s/ T. Lawrence Way | Director | |||
T. Lawrence Way | February 26, 2016 | |||
/s/ Steven J. Zuckerman | Director | |||
Steven J. Zuckerman | February 26, 2016 |
ARTICLE I DEFINITIONS | |
ARTICLE II PURCHASE AND SALE | |
Section 2.01 Purchase and Sale of Assets. | |
Section 2.02 Excluded Assets. | |
Section 2.03 Assumed Liabilities. | |
Section 2.04 Excluded Liabilities. | |
Section 2.05 Purchase Price; Closing Payments. | |
Section 2.06 Purchase Price Adjustment. | |
Section 2.07 Incentive Payment. | |
Section 2.08 Allocation of Purchase Price. | |
Section 2.09 Non-assignable Assets. | |
ARTICLE III CLOSING | |
Section 3.01 Closing. | |
Section 3.02 Closing Deliverables. | |
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER | |
Section 4.01 Organization and Qualification of Seller. | |
Section 4.02 Authority of Seller. | |
Section 4.03 No Conflicts; Consents. | |
Section 4.04 Financial Statements. | |
Section 4.05 Absence of Certain Changes, Events and Conditions. | |
Section 4.06 Material Contracts. | |
Section 4.07 Title to Tangible Personal Property. | |
Section 4.08 Sufficiency of Assets. | |
Section 4.09 Real Property | |
Section 4.10 Intellectual Property. | |
Section 4.11 Legal Proceedings; Governmental Orders. | |
Section 4.12 Compliance With Laws; Permits. | |
Section 4.13 Brokers. | |
Section 4.14 Employee Benefit Matters. | |
Section 4.15 Employment Matters. | |
Section 4.16 Taxes. | |
Section 4.17 No Other Representations and Warranties. | |
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER | |
Section 5.01 Organization and Authority of Buyer. | |
Section 5.02 Authority of Buyer | |
Section 5.03 No Conflicts; Consents. | |
Section 5.04 Brokers. | |
Section 5.05 Sufficiency of Funds. | |
Section 5.06 Solvency. | |
Section 5.07 Legal Proceedings. | |
Section 5.08 Independent Investigation. | |
ARTICLE VI COVENANTS | |
Section 6.01 Conduct of Business Prior to the Closing. | |
Section 6.02 Non-competition; Non-solicitation | |
Section 6.03 Access to Information. | |
Section 6.04 Supplement to Disclosure Schedules. | |
Section 6.05 Employees and Employee Benefits. | |
Section 6.06 Confidentiality. | |
Section 6.07 Intentionally Omitted. | |
Section 6.08 Governmental Approvals and Consents | |
Section 6.09 Books and Records. | |
Section 6.10 Closing Conditions | |
Section 6.11 No Other Bids and Related Matters | |
Section 6.12 Public Announcements. | |
Section 6.13 Bulk Sales Laws. | |
Section 6.14 Transfer Taxes. | |
Section 6.15 Services to be Provided by Buyer | |
Section 6.16 Services to be Provided by Seller | |
Section 6.17 Further Assurances. | |
ARTICLE VII CONDITIONS TO CLOSING | |
Section 7.01 Conditions to Obligations of All Parties. | |
Section 7.02 Conditions to Obligations of Buyer. | |
Section 7.03 Conditions to Obligations of Seller. | |
ARTICLE VIII INDEMNIFICATION | |
Section 8.01 Survival. | |
Section 8.02 Indemnification By Seller. | |
Section 8.03 Indemnification By Buyer. | |
Section 8.04 Certain Limitations. | |
Section 8.05 Indemnification Procedures. | |
Section 8.06 Tax Treatment of Indemnification Payments. | |
Section 8.07 Exclusive Remedies. | |
ARTICLE IX TERMINATION | |
Section 9.01 Termination. | |
Section 9.02 Effect of Termination. | |
ARTICLE X MISCELLANEOUS | |
Section 10.01 Expenses. | |
Section 10.02 Notices. | |
Section 10.03 Interpretation. | |
Section 10.04 Headings. | |
Section 10.05 Severability. | |
Section 10.06 Entire Agreement. | |
Section 10.07 Successors and Assigns. | |
Section 10.08 No Third Party Beneficiaries. | |
Section 10.09 Amendment and Modification; Waiver. | |
Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. | |
Section 10.11 Specific Performance. | |
Section 10.12 Counterparts. | |
Section 10.13 Non-recourse. |
If to Seller or Parent: | 115 Munson Street New Haven, CT 06511 Attention: Christopher Wolf, Executive VP and Chief Financial Officer Facsimile: (203) 776-7796 E-mail: christopher.wolf@higherone.com |
with a copy to: | Wiggin and Dana LLP One Century Tower 265 Church Street P.O. Box 1832 New Haven, CT 06508-1832 Attention: Paul A. Hughes Facsimile: (203) 782-2889 E-mail: phughes@wiggin.com |
If to Buyer: | 1015 Penn Avenue, Suite 103 Wyomissing, PA 19610 Attention: Robert Wahlman, Chief Financial Officer E-mail: rwahlman@customersbank.com |
with a copy to: | Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 Attention: Christopher S. Connell, Esquire Facsimile: 215-564-8120 E-mail: cconnell@stradley.com |
HIGHER ONE, INC. | |
By: /s/ Marc Sheinbaum Name: Marc Sheinbaum Title: President and CEO For purposes of Sections 6.10 and 6.11 only: HIGHER ONE HOLDINGS, INC. By: /s/ Marc Sheinbaum Name: Marc Sheinbaum Title: President and CEO | |
CUSTOMERS BANK | |
By: /s/ Jay Sidhu Name: Jay Sidhu Title: Chairman and CEO | |
CUSTOMER’S BANCORP, INC. | |
By: /s/ Jay Sidhu Name: Jay Sidhu Title: Chairman and CEO |
If to the Buyer: 1015 Penn Avenue, Suite 103 Wyomissing, PA 19610 Attention: Robert Wahlman, Chief Financial Officer Facsimile: [FAX NUMBER] E-mail: rwahlman@customersbank.com | Copy to: Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 Attention: Christopher S. Connell, Esquire Facsimile: 215-564-8120 E-mail: cconnell@stradley.com |
If to the Seller: Higher One, Inc. 115 Munson St. New Haven, CT 06511 Attention: Christopher Wolf, Executive VP and Chief Financial Officer Email: christopher.wolf@higherone.com | Copies to: Wiggin and Dana LLP One Century Tower 265 Church Street New Haven, CT 06508 Attention: Paul Hughes Email: phughes@wiggin.com |
HIGHER ONE, INC. | |
By: | |
Name: | |
Title: | |
CUSTOMERS BANK | |
By: | |
Name: Title: |
ANNEX A | TRANSITION SERVICES |
ANNEX B | SECURITY REQUIREMENTS |
● | Chenai Engineering Services |
o | Provide engineering services relating to the Business furnished by personnel located in Chenai, India |
● | Consulting |
o | Provide “SME” consulting hours to support the planning and build-out of primary and secondary computer environments to support OneDisburse/OneAccount at Buyer, and provide cut-over support for tasks such as data migration for up to 30 days post migration. |
● | Computers and Access |
o | Maintain (“break/fix”) Transferred Employee computers, onsite and remote access, office phones, local and long distance service, print services and current network connectivity at current support levels for Seller employees. Changes to computers’ configurations and installed software will not occur during the Term. |
o | Provide data ports on a separate VLAN to allow Buyer provided computers to access the Internet. Computers will not have access to systems on Seller’s internal network. If additional ports are required to support the additional computers, Buyer will reimburse Seller for any network and wiring costs incurred. |
o | Process new access/access change requests from Transferred Employees to systems supported by Seller. |
o | Process new password reset requests from Transferred Employees to systems supported by Seller. |
o | Provide Seller computers to Buyer employees that require access to Seller IT systems. |
o | Create and support new access requests for up to twenty (20) Buyer employees who are not Transferred Employees to Seller IT systems, utilizing a computer provided by Seller that will use VPN with two-factor authentication for the sole purpose of accessing systems maintained on Seller’s internal networks. All costs incurred by Seller in connection with transferred computer hardware and installed software will be reimbursed by Buyer. |
● | Email |
o | Maintain email accounts and access to email accounts for Transferred Employees. |
o | Provide ability for “auto response” for inbound emails to notify sender of new email addresses and forward inbound emails to new Buyer email accounts. |
o | In accordance with Seller’s data retention policies, maintain historical email files to allow customer requested research, customer complaint related research and regulatory inquiries. Seller data retention policies are subject to change. |
● | Data Center Operations |
o | Maintain and support the production environment located at the Seller data centers for the OneDisburse/OneAccount application. This includes all systems that are involved in supporting the OneDisburse/OneAccount application, including but not limited to the WAN and LAN network infrastructure, the security infrastructure, database infrastructure, application server infrastructure, monitoring systems, SAN/NAS infrastructure and appliances (Terradata, load balancers). All current vulnerability and penetration testing, patch management policies, applicable vendor relations and software licenses will be maintained. Support and maintenance contracts for the data center facilities, which include HVAC, UPS, fire suppression systems, access control and generators, will be maintained at current levels. |
o | Maintain and support the development environment located at the New Haven Seller data center for the OneDisburse/OneAccount application. This includes all systems that are involved in supporting the OneDisburse/OneAccount application, including but not limited to the WAN and LAN network infrastructure, the security infrastructure, database infrastructure, application server infrastructure, monitoring systems, SAN/NAS infrastructure and appliances (Terradata, load balancers). Also included are development tools utilized in the development of the OneDisburse/OneAccount software, including code repositories, testing tools, and required tools for audit and security. All current patch management policies, applicable vendor relations and software licenses will be maintained. Support and maintenance contracts for the data center facilities, which include HVAC, UPS, fire suppression systems, access control and generators, will be maintained at current levels. |
o | Maintain and support the QA/testing environment located at the New Haven Seller data center for the OneDisburse/OneAccount application. This includes all systems that are involved in supporting the OneDisburse/OneAccount application, including but not limited to the WAN and LAN network infrastructure, the security infrastructure, database infrastructure, application server infrastructure, monitoring systems, SAN/NAS infrastructure and appliances (Terradata, load balancers). Also included are QA/testing tools utilized in the QA/testing of the OneDisburse/OneAccount software, including code repositories, testing tools, and required tools for audit and security. All current patch management policies, applicable vendor relations and software licenses will be maintained. Support and maintenance contracts for the data center facilities, which include HVAC, UPS, fire suppression systems, access control and generators, will be maintained at current levels. |
o | Maintain and support back office systems that are currently in place and used by the OneDisburse/OneAccount employees, including but not limited to the file shares, Microsoft Exchange, Bugzilla, Chat and ALM. Seller will also maintain all access to 3rd party SaaS applications that are currently in place and used by the OneDisburse/OneAccount employees, including but not limited to WebEx, ADP, SalesForce and RightNow. Seller will maintain and support the underlying infrastructure, which includes but is not limited to the WAN and LAN network infrastructure, the security infrastructure, database infrastructure, application server infrastructure, monitoring systems and SAN/NAS infrastructure. All current patch management policies, applicable vendor relations and software licenses will be maintained. A list of the current back office systems and 3rd party SaaS applications are provided in the application and 3rd party SaaS application documents. |
o | Provide IT operations management reports at the same intervals such reports were generated prior to the Closing, including product and infrastructure availability, application issues, application outages, and root cause analysis for systems outages impacting OneDisburse and/or OneAccount. |
o | Data extracts and configuration information or system clones, as determined by the Migration Plan, will be supplied for systems where data and configuration information has been agreed to be migrated to Buyer, including but not limited to Bugzilla, ALM, source code repositories, and “H” drive. |
o | Support implementation of Buyer initiated circuits. |
o | Continue providing the current disk storage for electronic files, data backups and backups of production and development environments. |
o | Physically separate OneDisburse/OneAccount Oracle database server from all other Oracle database servers of Seller. |
o | In accordance with Seller’s service agreement with SUNY, maintain a current copy of OneDisburse code at Iron Mountain until Buyer is able to make other arrangements. |
● | Governance |
o | A member of the Buyer transition team will be invited to the Seller change management board meetings for the OneDisburse/OneAccount environment and supporting systems changes. No more than 75 designated Buyer employees will be included on OneDisburse/OneAccount environment incident notifications email distribution. |
o | Define and participate in a governance process with Buyer to support changes to the application environment and software for OneDisburse/OneAccount. |
o | Deploy Buyer initiated change management/code deployment for OneDisburse/OneAccount. |
● | Audit |
o | Perform and maintain all current audit schedules for the SSAE16 and SOX audits on the OneDisburse/OneAccount environment during the Term. |
o | Support Buyer-initiated audits (financial, internal audit or any other audits) to the extent such audits are not duplicative of any audits performed by Seller. |
● | Staffing |
o | Hire, onboard and train OneDisburse/OneAccount engineering resources to replace Seller’s Chennai-based resources that will not support OneDisburse/OneAccount post-Closing. Buyer shall be solely responsible for any incremental expense. |
o | Develop and manage process to replace employee attrition. |
o | Cooperate with Buyer to identify and hire temporary staff resources for new demand. |
(a) | Subject to clause (b) below, the service period applicable to the Transition Services set forth in this Annex A – Section 1 shall begin on the Closing Date and end one (1) year thereafter. |
(b) | The service period applicable to the Chenai Engineering Services set forth in this Annex A – Section 1 shall begin on the Closing Date and end ninety (90) days thereafter. |
● | Process OneDisburse/OneAccount vendor invoices received by Seller after Closing. |
● | Assist Buyer’s legal team with the transfer of OneDisburse/OneAccount dedicated vendor contracts. |
● | Assist Buyer’s legal team with the separation of vendor contracts that support both OneDisburse/One Account and the other businesses of Seller. |
● | Advise Buyer’s legal team with respect to the transfer of customer agreements. |
● | Complete, at Buyers’ reasonable request, any attestations required of Seller under Title IV regulations. |
● | Provide office space at 115 Munson Street, New Haven and 3284 Northside Parkway, Atlanta. |
● | Maintain New Haven and Atlanta sites to current standards. |
● | Maintain employee access to Seller facilities for employees transferred to Buyer. |
● | Provide access to Seller facilities for Buyer employees who are not Transferred Employees. |
● | Provide secure space for hard copy files at the New Haven location. |
● | Maintain existing copy files located at Iron Mountain and enable access to Transferred Employees. |
● | For so long as Seller provides food service to its employees in New Haven, provide food service to Buyer employees in New Haven, including lunch three times per week (Tuesday – Thursday), and coffee daily from 8:00a - 10:30a. |
● | Integrate into Buyer’s business continuity and disaster recovery plan as related to data center operations and closures of New Haven and/or Atlanta Facilities. |
1.1 | Privacy Policy |
1 | Ensure integrity, confidentiality and availability of information and resources. |
2 | Investigate possible security incidents. |
3 | Ensure conformance to security policies. |
4 | Monitor system or user activity where appropriate. |
1 | User and/or system level access to any computing or communications device. |
2 | Access to information, whether electronic or hard copy, that may be produced, transmitted or stored on Company equipment or premises. |
3 | Access to work areas such as labs, offices, cubicles or storage areas. |
4 | Access to interactively monitor and log traffic on networks. |
1.2 | Password Management Policy |
1 | At least 8 (eight) characters in length, where applicable. |
2 | Contain both upper and lower case letters. |
3 | Contain at least one number. |
4 | Contain at least one special character (within the bounds of those special characters supported by the system in question). |
5 | May not contain more than 3 (three) consecutive identical characters. |
6 | System level passwords must expire and be changed no more than every 42 days. |
7 | At a minimum, the prior 13 (thirteen) passwords may not be reused. |
8 | Users must have the ability to change a password at any time. |
9 | Accounts must be locked after at least 5 (five) unsuccessful login attempts. |
10 | User accounts with elevated privileges must have a password that is unique to that account and not the same as lower-privileged account(s) held by the same user. |
11 | Passwords are to be treated as sensitive and confidential information and are not to be shared, written down or stored in an unsecured manner. |
12 | Passwords are not to be conveyed via email. |
13 | Passwords must not be displayed in clear text (e.g., must be masked) while being entered. |
14 | Default vendor or manufacturer accounts and passwords should be changed as soon as reasonably possible. |
15 | If a password is suspected to have been compromised, change the password immediately and report the incident to the IT Operations Support Desk, which will inform the Information Security Office. |
16 | Where Simple Network Management Protocol(“SNMP”) is used, the community strings must be defined as something other than the standard defaults of "public", "private" and "system", and must be different than the passwords used to log in interactively. A keyed hash must be used where available (e.g., SNMPv2). |
17 | Passwords must be changed in the event of a user's departure. |
● | Avoid poor, weak or common passwords such as Welcome123, Password1, or ChangeMe123. |
● | Avoid common words, even if spelled backwards or with the addition of a number, such as secret1, 1secret, or terces. |
● | Avoid patterns of numbers or letters such as aabbcc, qwerty, or 12344321. |
● | Avoid commonly known personal information such as birthdates, addresses, names of family members, friends or pets. |
● | Avoid work-related information such as company names, building sites, etc. |
● | Should not contain common nouns, proper names or dictionary words. |
● | To create a secure but memorable password, consider creating a passphrase based on a song title, affirmation or memorable phrase that contains multiple words. For instance, This May Be One Way To Remember could become the password TmB1w2R! or I saw my favorite band last Friday night! becomes IsmF3lFn!. |
1 | Are highly privileged (e.g., have root level access on a Linux system, local or domain administrator access on a Microsoft Windows system, sa level access on a Microsoft SQL Server system, sys/system on an Oracle database, etc.). |
2 | Permits interactive logons (e.g., a user can use ssh to open a shell prompt on a Linux system, use Remote Desktop Services to access a desktop on a Microsoft Windows system, may use SQL Studio to perform queries on a Windows system, etc.). |
3 | The account passwords are retained (e.g., stored in Password Safe, Password Manager or some other location for future access). |
1 | Are not highly privileged (e.g., do not have root level access on a Linux system, local or domain administrator access on a Microsoft Windows system, sa level access on a Microsoft SQL Server system, sys/system on an Oracle database, etc.). |
2 | Does not permit interactive logons (e.g., a user cannot use ssh to open a shell prompt on a Linux system, use Remote Desktop Services to access a desktop on a Microsoft Windows system, or use SQL Studio to perform queries on a Windows system, etc.). |
3 | The account passwords are not retained (e.g., not stored in Password Safe, Password Manager or some other location for future access). This circumstance applies to accounts where there is no need to use the password in the future and so the password is set to a long random value and not saved. |
1 | At least 12 (twelve) characters in length. |
2 | Service accounts shall have Deny Logon Locally or comparable attribute set if supported on the operating system. |
3 | Interactive Service Account passwords will expire and must be changed no more than every 90 days. |
4 | Non-interactive Service Account passwords will expire and must be changed no more than every 720 days. |
5 | In the event that the account password cannot be changed or the application vendor recommends against changing the password because it would adversely impact the application, an exception will be documented and approved by the Information Security Officer and that password will be exempt from periodic changes. |
1.2.1 | Initial Passwords and Password Resets |
1.3 | Identity and Access Policy |
1 | Access Administration: This area focuses on ensuring authorized user access, and preventing unauthorized user access, to information and information systems. |
a. | Procedures covering all stages in the life-cycle of user access, from provisioning and modification to de-provisioning. |
b. | Documentation of approval from the hiring Supervisor or System Owner for each user's access, where appropriate. |
c. | Ensuring restricted or sensitive access is not granted until all authorization procedures are completed. |
d. | Special attention to control of privileged ("super-user") access rights. |
2 | Compliance |
a. | Attestation - Confirmation by a reviewing Supervisor or designee that each user's access is consistent with business purposes and with other security controls (e.g., segregation of duties). |
b. | Access Permissions Review - A formal process must be conducted periodically (quarterly) by System Owners to review user access rights to critical systems. This review shall be documented / approved by System Owners and retained by the Information Security Office (as defined below) for audit verification purposes. Each System Owner is accountable for identifying inappropriate access and inactive user access in a timely manner to the Security Administrators. |
c. | Access to non-critical systems will be reviewed based on risk but no less frequently than annually. |
1.4 | User Identity Verification Policy |
1 | This policy applies to the following systems: |
a. | Active Directory, any domain |
b. | RSA SecurID PIN |
c. | CASHNet/IDC |
d. | LDAP (Corporate and Production) |
e. | Higheronesupport.com |
f. | TPP Applications |
g. | NetPay Applications |
2 | A user's identity must be verified prior to resetting his/her password on any in-scope system. |
a. | If the request is made in person, photo identification is an acceptable means of verifying the user's identity. |
b. | If the request is made by telephone, the user must provide a matching and valid Employee ID which will be verified against records. |
c. | Requests by email will not be accepted, and the user will be instructed to telephone. |
3 | In the event the user cannot provide a valid Employee ID, the user's manager or (if a contractor) employee sponsor can verify the user's identity, after verifying his/her own identity. |
1.5 | Privileged Account Policy |
1 | System Approval and Authorization |
a. | Providing clarity on what administrative privileges are necessary. |
b. | Minimizing the use of shared administrative accounts. |
c. | Having a method of being able to verify the privileges associated with each account. |
2 | Privileged User ID Activity Logging: All ID creation, deletion, and privilege change activity performed by Systems/Security Administrators and others with privileged user IDs must be securely logged. |
3 | Privileged Account Types |
a. | Domain Administrative Accounts: These accounts give privileged administrative access across all workstations and servers within a Windows domain. While these accounts are few in number, they provide the most extensive and robust access across the network. |
b. | Emergency Accounts: These provide unprivileged users with administrative access to secure systems in the case of an emergency and are sometimes referred to as ‘firecall’ or ‘breakglass’ accounts. Access to these accounts typically requires managerial approval for security reasons. |
c. | Service Accounts: These can be privileged local or domain accounts that are used by an application or service to interact with the operating system. In some cases, these service accounts have domain administrative privileges depending on the requirements of the application they are being used for. Local service accounts can interact with a variety of Windows components |
d. | Application Accounts: These are accounts used by applications to access databases, run batch jobs or scripts, or provide access to other applications. These privileged accounts usually have broad access to underlying company information that resides in applications and databases. |
1.6 | Remote Access Policy |
1 | Secure remote access must be strictly controlled with encryption (i.e., Virtual Private Networks (VPNs)) and strong pass-phrases. |
2 | Authorized Users shall protect their login and password, even from family members. |
3 | All hosts that are connected to Higher One internal networks (including employee owned equipment) via remote access technologies must use up-to-date anti-virus software. Third party connections must comply with requirements as stated in the Third Party Agreement. |
4 | Users must not leave workstations unattended without locking or logging off the system. |
5 | Users must use personal desktop firewall software on any device connecting to Higher One networks or resources. |
6 | Higher One users who wish to implement non-standard Remote Access solutions to the Higher One production network must obtain prior approval from the Information Security Office. |
7 | The use of third-party managed remote access connections such as Webex and Go2MyPC can only be used for remote access in a support situation where personnel are present at both the asset being accessed and the system being used to obtain the remote access. This type of managed connection is explicitly not to be used to allow a user to remotely access a device which has been left unattended on the Higher One network. |
8 | Higher One Client VPN with the use of two-factor (FOB with Pin/Token plus password) authentication is required to connect to the HigherOne corporate network. |
1.7 | Third-Party/Vendor Access Policy |
1 | Controls and confidentiality clauses must be agreed on and defined in a contract with the third party. |
2 | All third party requests for Higher One data or connections to the Higher One network must be justified by business requirements, assessed for potential risks and control requirements, and then directed to appropriate Higher One management for review and approval. |
3 | All third party connections require approval from the Information Security Office. |
4 | Third-Parties must adhere to all Vendor Management Program requirements. |
5 | Reviews to ensure third-party access is still required and appropriate will be conducted periodically. |
6 | There are three methods allowed for direct connectivity between Higher One and third parties. |
a. | Dedicated circuits - A leased line obtained through a telephony-communication provider. |
b. | Site-to-Site Virtual Private Network (VPN) over the Internet – A two-way encrypted communications session between two networks that protect against eavesdropping by an unauthorized source and provides non-repudiation. |
c. | Client-based VPN |
1.7.1 | Requirements for Connectivity |
1 | Before connectivity is established with a third party, a risk assessment must be performed as part of the vendor management assessment to validate that there are no high-risk issues involved with connecting to an external entity’s network. A third party must not be immediately trusted and given immediate access to Higher One’s network or application system without performing an appropriate level of due diligence. |
2 | Firewalls must restrict third party access to Higher One’s network and application systems for which they have a defined business purpose. |
a. | Explicit source and destination IP and ports must be defined in the firewall rules |
b. | Must not be able to access other business partners’ networks. |
3 | Firewalls must restrict Higher One’s users from unlimited access to the third party network. |
a. | Explicit source and destination IP and ports must be defined in the firewall rules |
b. | Must only be able to access business partners’ networks for which the user has a business purpose. |
4 | A list of approved third party connections must be maintained by the Information Security Office. |
1.8 | Data Classification |
1.8.1 | Asset Inventory |
1 | A clear definition of each asset, including its business purpose and security classification. |
2 | Location of the asset. |
3 | Whether or not the asset contains personally identifiable customer information or card-related data. |
1.8.2 | Data Classification and Confidentiality |
1 | Restricted - The Restricted class applied to business and customer related information requiring the highest level of protection. If Restricted Data is disclosed, it could result in financial loss, violation of privacy and other laws or Regulations and significant negative publicity. Disclosure of Restricted Data may require initiating state or federal disclosure requirements. (e.g., PCI, PII, HIPAA) |
2 | Confidential - The Confidential class applies to business and customer related information that requires role-based protection and is sensitive enough to require elaborate controls. If Confidential Data is disclosed, employees or customers could be negatively impacted, initiating possible state or federal disclosure requirements. |
3 | Private - The Private classification applies to business and customer related information that requires some level of protection but is not sensitive enough to require extensive controls. Disclosure of Private data should be avoided but will have minimal impact. |
4 | Public - The Public class applies to information that has been made available for public distribution through authorized Higher One channels or information that will not cause any damage to Higher One if accidentally disclosed. |
1.8.3 | Credit Card Information Processing Applications |
1 | All Error! Unknown document property name. applications dealing with the processing or retrieval of cardholder information, must, where there is not a business need to display full primary account numbers (PAN), mask displayed PAN to no more than the first six (6) and last four (4) digits of the full PAN. |
2 | If the application is designed for a specific purpose in which the full PAN must be displayed, approval must be given by the Information Security Office during the Requirements Phase as described in the SDLC process. In all cases the application must limit the display of the full PAN to the fewest number of users possible. |
1.8.4 | Credit Card Storage Applications |
1 | All Higher One application systems dealing with the storage of cardholder data must be on an internal network segregated from the demilitarized zone (“DMZ”). |
2 | All access to networked storage devices containing cardholder data shall have its authentication communication encrypted. |
3 | The Primary Account Number (“PAN”) must be rendered unreadable through one of the following: |
a. | Strong one-way hash functions (hashed indexes) such as Secure Hash Algorithm 1) SHA-1 with salts. |
b. | Truncation. |
c. | Index tokens and pads (pads must be securely stored). |
d. | Strong cryptography, based on industry-tested and accepted algorithms, with proper key management processes and procedures. |
4 | The PAN must never be stored in clear text in databases, files, or removable media. |
5 | The PAN must not be written to audit logs. |
6 | Full PAN must never be emailed or sent via instant messaging programs. |
1.9 | Technology Equipment Policies |
1.9.1 | Warning Banners |
1 | Higher One computing systems and devices, where supported by the device, must display a warning banner during the system login process. The message must state that the system must only be used for Higher One business purposes and is subject to monitoring. |
2 | Warning banners must be in a language consistent with the system's interface language. |
3 | The word "Welcome" or any similar language shall not be displayed prior to a successful user login. |
1.9.2 | Physical and Virtual Workstations |
1 | Equipment is to be protected from theft or damage, including damage caused by foreign substances, impacts or misuse. |
2 | All laptop computers will be encrypted. |
3 | Online backup accounts will be provided to laptop users to ensure recoverability of data stored locally on the device. |
4 | Ensure that all vendor supplied defaults are changed before the system goes into production. |
5 | All desktops and laptops shall have personal firewall software which users should not be able to disable. |
6 | All desktops and laptops used to remotely access Higher One systems shall have VPN Client software capable of supporting the company’s 2-factor authentication solution. |
7 | Workstation Configuration Standards will be reviewed on a periodic basis. |
● | Having actual possession of a computer at all times. |
● | Locking the computer in an unusable state to an object that is immovable. |
● | Never leaving a laptop or other portable computing device unattended in a conference room, hotel room or on an airplane seat, etc. |
● | Locking the device in a hotel safe when traveling. |
1.9.3 | Server and Network Devices |
1 | All servers and network devices should be designated for a single primary purpose where possible. |
2 | All servers and network devices, prior to deployment in the production environment must conform to the Company’s System Configuration and Hardening Standards. |
3 | Always use standard security principles of least required access to perform a function. Do not use root when a non-privileged account will do. |
4 | Ensure that all vendor or manufacturer supplied defaults are changed before the server goes into production. |
5 | Servers storing or processing confidential or restricted information shall have file integrity monitoring software installed. |
6 | File integrity monitoring software shall alert IT personnel to unauthorized modification of critical system or content files. The file integrity monitoring software shall be configured to perform critical file comparisons at least daily and should be logged. Information Security should be alerted to any abnormal activity. |
7 | All servers must have anti-virus software installed. |
8 | Information in the server inventory list must be kept up-to-date. |
9 | Configuration changes for production servers must follow the appropriate change management procedures. |
10 | Access to services should be logged and/or protected through access-control methods such as a web application firewall, if possible. |
11 | Trust relationships between systems are a security risk, and their use should be avoided. Do not use a trust relationship when some other method of communication is sufficient. |
12 | If a methodology for secure channel connection is available (i.e., technically feasible), privileged access must be performed over secure channels, (e.g., encrypted network connections using Secure Shell (“SSH”) or Internet Protocol Security “IPSec”). |
13 | Servers should be physically located in an access-controlled environment. |
14 | Servers are specifically prohibited from operating from uncontrolled cubicle areas. |
15 | For security, compliance, and maintenance purposes, authorized Information Security personnel may monitor and audit equipment, systems, processes, and network traffic. |
1 | Operating System configuration should be in accordance with approved System Configuration and Hardening Standards. |
2 | A valid business justification must exist for all deviations from Error! Unknown document property name. published configuration standards. Deviations require written approval by the Error! Unknown document property name. and must be noted on the asset inventory for the server. |
3 | Services and applications that will not be used must be disabled where practical. |
4 | All servers and network devices must be configured to use an internal authoritative time source to maintain time synchronization with other servers in the environment. |
5 | Server and network device Configuration Standards will be updated as new public standards become available and are approved by the Information Security Office and Information Technology. |
1 | All security-related events on critical or sensitive systems must be logged and audit trails saved. |
2 | Security-related events will be reported to Information Security, who will review logs and report incidents to IT management. Corrective measures will be prescribed as needed. Security-related events include, but are not limited to: |
a. | Port-scan attacks. |
b. | Evidence of unauthorized access to privileged accounts. |
c. | Anomalous occurrences that are not related to specific applications on the host. |
1.9.4 | Cellular Device Policy |
1 | Tablets |
2 | Mobile/Cellular/Smart Telephones |
3 | Mobile Broadband devices (MiFis) |
1 | IT reserves the right to refuse the ability to connect mobile devices to the Higher One infrastructure. |
1.9.5 | Equipment Disposal |
1 | All information assets or office equipment which may contain a storage media component is in scope or this policy. This includes such items as computer workstations, servers, storage arrays, fax machines, printers, and copiers. |
2 | All forms of electronic media (e.g., fixed hard disks, flash memory, external drives, CDs, DVDs, tapes, USB drives) are within the scope of this policy. |
3 | At the time an in scope device or media is decommissioned or replaced, the item shall be destroyed, disabled or disposed of using methods and timing consistent with Higher One's Record Retention policies, any applicable retention laws and with due consideration for any litigation hold requirements currently in force. |
a. | Hard drives will be erased to Department of Defense standards (DoD 5220.22M) or |
b. | Physically destroyed by drilling or shredding. |
4 | When a computer workstation is transferred to a new user, the storage media will be: |
a. | Replaced, if under a litigation hold, with the original component stored as per Higher One's procedures. |
b. | Reformatted, if not subject to litigation hold. |
5 | The Facilities department will ensure that vendors remove any storage media contained within copiers, printers and fax machines prior to removing any such item from Higher One's premises. |
6 | Information Technology will maintain: |
a. | Procedures for the proper erasure of data and/or destruction of storage media. |
b. | Procedures for secure storage of media prior to destruction or disposal. |
1.9.6 | Software Installation Policy |
1 | Users may not install software on Higher One’s computing devices operated within the Higher One network. |
2 | Software must be selected from an approved software list, maintained by the Information Technology department, unless no selection on the list meets the requestor’s need. |
3 | Requests for software installations must first be approved by the requestor’s manager and then submitted to the IT Support Desk in writing. |
4 | Any requests for software not on the approved list must be reviewed and approved by Information Technology and Information Security before purchase or installation. |
Attest: | Bank: | |
CUSTOMERS BANCORP, INC. | ||
/s/ Edward Shultz | By:/s/ Richard Ehst | |
Print Name: Edward Shultz | Print Name: Richard Ehst | |
Title: Assistant to President | Title: President | |
Witness: | Executive: | |
/s/ Brett V. Long | /s/ Kenneth A. Keiser | |
Print Name: Brett V. Long | Print Name: Kenneth A. Keiser |
Attest: | CUSTOMERS BANCORP, INC. | |
/s/ Glenn A Yeager | By: /s/ Jay S. Sidhu | |
Glenn Yeager | Jay S. Sidhu | |
Secretary | For the Board of Directors | |
Witness: | ||
/s/ Maria Benevides | /s/ Steven Issa , Individually 3/5/2014 | |
Maria Benevides | Steven Issa | |
ATTEST: /s/ Glenn A. Yeager Glenn A. Yeager Secretary | CUSTOMERS BANCORP, INC. /s/ Robert E. Wahlman Robert E. Wahlman For the Board of Directors | |
Witness: /s/ Paula Pais-Leach | /s/ Steven Issa | |
Paula Pais-Leach | Steven Issa |
Very truly yours, | ||
CUSTOMERS BANCORP, INC. |
By: | /s/ Robert E. Wahlman | ||
Name: Robert Wahlman | |||
Title: CFO |
FBR CAPITAL MARKETS & CO. |
By: | /s/ Patrice McNicoll | ||
Name: Patrice McNicoll | |||
Title: Co-head of Capital Markets |
MLV & CO. LLC |
By: | /s/ Patrice McNicoll | ||
Name: Patrice McNicoll | |||
Title: CEO |
MAXIM GROUP LLC |
By: | /s/ Jacob Eisen | ||
Name: Jacob Eisen | |||
Title: Managing Director |
1. | Customers Bank Pennsylvania |
1. | I have reviewed this Annual Report on Form10-K 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-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(s) 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: February 26, 2016 |
1. | I have reviewed this Annual Report on Form10-K 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-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(s) 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: February 26, 2016 |
(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. |
/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. |
/s/ Robert E. Wahlman |
Robert E. Wahlman, Chief Financial Officer |
(Principal Financial Officer) |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Feb. 19, 2016 |
Jun. 30, 2015 |
|
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Customers Bancorp, Inc. | ||
Entity Central Index Key | 0001488813 | ||
Trading Symbol | CUBI | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 26,935,953 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 677,880,282 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Loans held for sale at fair value | $ 1,757,807 | $ 1,335,668 |
Preferred stock, par value (usd per share) | $ 1.00 | $ 1.00 |
Preferred stock, liquidation preference (usd per share) | $ 25.00 | $ 25.00 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 2,300,000 | 0 |
Preferred stock, shares outstanding | 2,300,000 | 0 |
Common stock, par value (usd per share) | $ 1.00 | $ 1.00 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 27,432,061 | 27,277,789 |
Common stock, shares outstanding | 26,901,801 | 26,745,529 |
Treasury stock, shares | 530,260 | 532,260 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 58,583 | $ 43,214 | $ 32,694 |
Unrealized gains (losses) on securities: | |||
Unrealized gains (losses) on available-for-sale securities arising during the period | (10,140) | 17,437 | (12,853) |
Income tax effect | 3,759 | (6,103) | 4,499 |
Reclassification adjustment for available-for-sale-security gains included in net income | 85 | (3,191) | (1,274) |
Income tax effect | (32) | 1,117 | 446 |
Net unrealized gains (losses) on securities | (6,328) | 9,260 | (9,182) |
Unrealized losses on cash flow hedges arising during the period | (2,532) | (1,945) | 0 |
Income tax effect | 998 | 681 | 0 |
Net unrealized losses on cash flow hedges | (1,534) | (1,264) | 0 |
Other comprehensive income (loss), net of income tax effect | (7,862) | 7,996 | (9,182) |
Comprehensive income | $ 50,721 | $ 51,210 | $ 23,512 |
Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2015 |
Dec. 31, 2013 |
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Statement of Stockholders' Equity [Abstract] | ||
Public offering of common stock, costs | $ 1,931 | $ 5,994 |
Description of the Business |
12 Months Ended |
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Dec. 31, 2015 | |
Text Block [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), and Manhattan, New York. The Bank has 14 full-service branches and provides commercial banking products, primarily loans and deposits. Customers Bank provides 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. Customers Bank 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 |
12 Months Ended |
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Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Acquisition Activity | ACQUISITION ACTIVITY Acquisition of Higher One, Inc.'s One Account Student Checking and Refund Management Disbursement Services Business On December 15, 2015, Customers announced that it had entered into an Asset Purchase Agreement (the "Agreement") to acquire assets related to the One Account Student Checking and Refund Management Disbursement Services business ("Disbursements") of Higher One, Inc. ("Higher One"). Pursuant to the Agreement, Customers will acquire all assets of the Disbursements business, including all property and equipment, existing contractual relationships with vendors and educational institutions, and all intellectual property, will assume certain normal business related liabilities, and will commit to hire approximately 225 current Higher One employees primarily located in New Haven, Connecticut that manage the Disbursement business and serve the customers. Customers intends to retain these team members in New Haven. Customers will pay Higher One an aggregate of $42 million in cash in connection with the acquisition of the Disbursements business. Under the Agreement, Customers will pay Higher One $17 million in cash at closing and make cash payments of $10 million each on the first and second anniversaries of the closing. Customers also will pay Higher One $5 million in cash for Higher One's services under a transition services agreement. The transaction is subject to approval by Higher One stockholders which is expected to occur in the first quarter of 2016 with the transaction closing expected no later than July 1, 2016. Acquisition of Loan Portfolio In the first quarter 2014, Customers Bank purchased $277.9 million of residential adjustable-rate jumbo mortgage loans (indexed to one-year LIBOR) from Michigan-based Flagstar Bank. The purchase price was 100.75% of loans outstanding. In first quarter 2013, Customers Bank completed the purchase of certain commercial loans from Michigan-based Flagstar Bank. Under the terms of the agreement, Customers Bank acquired $182.3 million in commercial loan and related commitments, of which $155.1 million was drawn at the date of acquisition. Also, as part of the agreement, Customers Bank assumed the leases for two of Flagstar’s commercial lending offices in New England. The purchase price was 98.7% of loans outstanding. |
Significant Accounting Policies and Basis of Presentation |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies and Basis of Presentation | SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION Basis of Presentation The accounting and reporting policies of Customers Bancorp, Inc. and subsidiaries are in conformity with accounting principles generally accepted in the United States of America and predominant practices of the banking industry. The preparation of financial statements requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses, credit deterioration and expected cash flows of purchased-credit-impaired loans, FDIC indemnification asset and related clawback liability, valuation of deferred tax assets, other-than-temporary impairment losses on securities, fair values of financial instruments, and annual goodwill impairment analysis. Certain amounts reported in the 2014 and 2013 financial statements have been reclassified to conform to the 2015 presentation. These reclassifications did not significantly impact Customers financial position or results of operations. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the parent company and its wholly owned subsidiaries: Customers Bank, CB Green Ventures Pte Ltd. and CUBI India Ventures Pte Ltd. Customers Bank includes the accounts of its wholly owned subsidiary CIC, Inc. and other subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Cash and Cash Equivalents and Statements of Cash Flows Cash and cash equivalents include cash on hand, amounts due from banks, and interest-bearing deposits with banks with a maturity date of three months or less and are recorded at cost. The carrying value of cash and cash equivalents is a reasonable estimate of its approximate fair value. Changes in the balances of cash and cash equivalents are reported in the consolidated statements of cash flows. Cash receipts from the repayment or sale of loans are classified within the statement of cash flows based on management's original intent upon origination of the loan, as prescribed by accounting guidance related to the statement of cash flows. Cash used upon initial funding of Customers' mortgage warehousing lending transactions and proceeds received when the mortgage loans are sold into the secondary market are classified as operating activities within the statement of cash flows. Restrictions on Cash and Amounts due from Banks Customers Bank is required to maintain average balances on hand or with the Federal Reserve Bank. At December 31, 2015 and 2014, these reserve balances were $73.2 million and $61.2 million, respectively. Investment Securities Customers acquires securities, largely mortgage-backed securities, to effectively utilize cash and capital and to generate earnings. Security transactions are recorded as of the trade date. Securities are classified at the time of acquisition as available for sale, held to maturity, or trading, and their designation determines their accounting as follows: Available for sale: Investments securities classified as available for sale are those debt and equity securities that Customers intends to hold for an indefinite period of time but not necessarily to maturity. Investment securities available for sale are carried at fair value. Unrealized gains or losses are reported as increases or decreases in accumulated other comprehensive income, net of the related deferred tax effect. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings and recorded at the trade date. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Held to maturity: Investment securities classified as held to maturity are those debt securities that Customers has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or changes in general economic conditions. These securities are carried at cost, adjusted for the amortization of premiums and accretion of discounts, computed by a method which approximates the interest method over the terms of the securities. There are no securities classified as held to maturity as of December 31, 2015 or 2014. Trading: Investment securities classified as trading are those debt and equity securities that management intends to actively trade. These securities are carried at their current fair value, with changes in fair value reported in income. Customers does not actively trade securities. For available-for-sale and held-to-maturity securities, management periodically assesses whether the securities are other than temporarily impaired. Other-than-temporary impairment means that management believes a security’s decline in fair value below its amortized cost basis is due to factors that could include the issuer’s inability to pay interest or dividends, its potential for default, and/or other factors. When a held-to-maturity or available-for-sale debt security is assessed for other-than-temporary impairment, management has to first consider (a) whether Customers intends to sell the security, and (b) whether it is more likely than not that Customers will be required to sell the security prior to recovery of its amortized cost basis. If one of these circumstances applies to a security, an other-than-temporary impairment loss is recognized in the consolidated statements of income equal to the full amount of the decline in fair value below amortized cost. If neither of these circumstances applies to a security, but Customers does not expect to recover the entire amortized cost, an other-than-temporary impairment has occurred that must be separated into two categories: (a) the amount related to credit loss, and (b) the amount related to other factors. In assessing the level of other-than-temporary impairment attributable to credit loss, management compares the present value of cash flows expected to be collected with the amortized cost basis of the security. The portion of the total other-than-temporary impairment related to credit loss is recognized in earnings (as the difference between the fair value and the present value of the estimated cash flows), while the amount related to other factors is recognized in other comprehensive income. The total other-than-temporary impairment loss is presented in the statement of income, less the portion recognized in other comprehensive income. When a debt security becomes other-than-temporarily impaired, its amortized cost basis is reduced to reflect the portion of the total impairment related to credit loss. For marketable equity securities, the Bancorp considers the issuer’s financial condition, capital strength and near term prospects to determine whether an impairment is temporary or other-than-temporary. The Bancorp also considers the volatility of a security’s price in comparison to the market as a whole and any recoveries or declines in fair value subsequent to the balance sheet date. If management determines that the impairment is other-than-temporary, the entire amount of the impairment as of the balance sheet date is recognized in earnings even if the decision to sell the security has not been made. The fair value of the security becomes the new amortized cost basis of the investment and is not adjusted for subsequent recoveries in fair value. Loan Accounting Framework The accounting for a loan depends on management’s strategy for the loan, and on whether the loan was credit impaired at the date of acquisition. The Bank accounts for loans based on the following categories:
The following provides a detailed discussion of the accounting for loans in these categories: Loans Held for Sale and Loans at Fair Value Loans originated or acquired by the Bank with the intent to sell in the secondary market are carried either at the lower of cost or fair value, determined in the aggregate, or at fair value, depending upon an election made at the time the loan is made. These loans are generally sold on a non-recourse basis with servicing released. Gains and losses on the sale of loans accounted for at lower of cost or fair value are recognized in earnings based on the difference between the proceeds received and the carrying amount of the loans, inclusive of deferred origination fees and costs, if any. As a result of changes in events and circumstances or developments regarding management’s view of the foreseeable future, loans not originated or acquired with the intent to sell may subsequently be designated as held for sale. These loans are transferred to the held-for-sale portfolio at the lower of amortized cost or fair value. Loans originated or acquired by the Bank with the intent to sell for which fair value accounting is elected are marked to fair value with any difference between the proceeds received and the carrying amount of the loan recognized in earnings. No fees or costs related to such loans are deferred, so they do not affect the gain or loss calculation at the time of sale. Certain mortgage warehouse lending transactions subject to master repurchase agreements are designated as held for sale and reported at fair value based on an election to account for the loans at fair value. Pursuant to these agreements, the Bank 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 repurchase event). An allowance for loan losses is not maintained on loans designated as held for sale or reported at fair value. Loans Receivable Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans using the level-yield method without anticipating prepayments. The Bank is generally amortizing these amounts over the contractual life of the loans. The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or when management has doubts about further collectibility of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is well secured. When a loan is placed on non-accrual status, unpaid accrued interest credited to income is reversed. Interest received on non-accrual loans is applied against principal until all principal has been recovered. Thereafter, payments are recognized as interest income until all unpaid amounts have been received. Generally, loans are restored to accrual status when the obligation is brought current and has performed in accordance with the contractual terms for a minimum of six months and the ultimate collectibility of the total contractual principal and interest is no longer in doubt. Transfers of financial assets, including loan participations sold, are accounted for as sales when control over the assets has been surrendered (settlement date). Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Purchased Loans Customers believes that the varying circumstances under which it purchases loans and the diverse credit quality of loans purchased should drive the decision as to whether loans in a portfolio should be deemed to be purchased-credit-impaired loans. Therefore, loan purchases are evaluated on a case-by-case basis to determine the appropriate accounting treatment. Loans acquired that do not have evidence of credit deterioration at the purchase date are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs, and loans acquired with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. Loans that are purchased that do not have evidence of credit deterioration Purchased performing loans are initially recorded at fair value and include credit and interest rate marks associated with acquisition accounting adjustments. Purchase premiums or discounts are subsequently amortized as an adjustment to yield over the estimated contractual lives of the loans. There is no allowance for loan losses established at the acquisition date for acquired performing loans. An allowance for loan losses is recorded for any credit deterioration in these loans subsequent to acquisition. Loans that are purchased that have evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected For purchases of this type of loan, evidence of deteriorated credit quality may include past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages. The fair value of loans with evidence of credit deterioration is recorded net of a nonaccretable difference and accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is the nonaccretable difference, which is not included in the carrying amount of acquired loans. Subsequent to acquisition, estimates of cash flows expected to be collected are updated each reporting period based on updated assumptions regarding default rates, loss severities, and other factors that are reflective of current market conditions. Subsequent decreases in expected cash flows will generally result in a provision for loan losses. Subsequent increases in expected cash flows result in a reversal of the provision for loan losses to the extent of prior charges, or a reclassification of the difference from nonaccretable to accretable with a positive impact on accretion of interest income in future periods. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of those cash flows. Purchased-credit-impaired loans acquired in the same fiscal quarter may be aggregated into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. On a quarterly basis, the Bank re-estimates the total cash flows (both principal and interest) expected to be collected over the remaining life of each pool. These estimates incorporate assumptions regarding default rates, loss severities, the amounts and timing of prepayments and other factors that reflect then-current market conditions. If the timing and/or amounts of expected cash flows on purchased-credit-impaired loans were determined not to be reasonably estimable, no interest would be accreted and the loans would be reported as non-accrual loans; however, when the timing and amounts of expected cash flows for purchased-credit-impaired loans are reasonably estimable, interest is being accreted and the loans are being reported as performing loans. Loans Receivable Covered Under Loss Sharing Agreements Loans acquired in the FDIC assisted transactions in 2010 from USA Bank and ISN Bank are subject to loss sharing agreements with the FDIC and are referred to as “covered loans.” The period to submit losses under the FDIC loss sharing arrangements for non-single family loans expired in third quarter 2015. The period to submit losses under the FDIC loss sharing arrangements for single family loans expires in third quarter 2017. The final maturity of the FDIC loss sharing arrangements occurs in third quarter 2020. Outstanding balances for covered loans were $13.8 million and $42.2 million as of December 31, 2015 and 2014, respectively. Allowance for Loan Losses The allowance for loan losses is established as losses are estimated to have occurred through provisions for loan losses. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance for loan losses. The allowance for loan losses is maintained at a level considered appropriate to absorb probable incurred loan losses inherent in the loan portfolio as of the reporting date. The Bank disaggregates its loan portfolio into groups of loans with similar risk characteristics for purposes of estimating the allowance for loan losses. The Bank’s loan groups include multi-family, commercial and industrial, commercial real estate, construction, residential real estate, manufactured housing, consumer, and PCI loans. The Bank further disaggregates its residential real estate portfolio into two classes based upon certain risk characteristics; first mortgage loans and home equity loans and lines of credit. The remaining loan groups are also considered classes for purposes of monitoring and assessing credit quality based on certain risk characteristics. Additionally, within each loan group the acquired loans that are accounted for under ASC 310-10 are further segregated. The total allowance for loan losses consists of an allowance for impaired loans, a general allowance for losses, and may also include residual non-specific reserve amounts. The allowance for loan losses is maintained at a level considered adequate to provide for losses that are estimated to have been incurred. Management performs a quarterly assessment of the adequacy of the allowance for loan losses, which is based on the Bank’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. The Bank’s current methodology for determining the allowance for loan losses is based on historical loss rates, peer and industry data, current economic conditions, risk ratings, specific allocations on loans identified as impaired, and other qualitative adjustments. The impaired loan component of the allowance for loan losses relates to loans for which it is probable that the Bank will be unable to collect all contractual principal and interest due. For such loans, an allowance is established when the (i) discounted cash flows, (ii) collateral value, or (iii) the impaired loan value is lower than the carrying value of the loan. The general component of the allowance for loan losses covers groups of loans by loan class, including commercial loans not considered impaired, as well as smaller balance homogeneous loans, such as residential real estate, home equity loans, home equity lines of credit and other consumer loans. These pools of loans are evaluated for loss exposure based upon loan risk ratings and industry or Customers' historical loss rates for each of these groups of loans. After determining the appropriate historical loss rate for each group of loans, management considers those current qualitative or environmental factors that are likely to cause estimated credit losses as of the evaluation date to differ from the historical loss experience. The overall effect of these factors is recorded as an adjustment that, as appropriate, increases or decreases the historical loss rate applied to the loan group. The qualitative factors that management considers includes the following:
A residual reserve may be maintained to cover uncertainties that could affect management’s estimate of probable losses. The residual reserve amount reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. Commercial and industrial loans are underwritten after evaluating historical and projected profitability and cash flow to determine the borrower’s ability to repay their obligation as agreed. Commercial and industrial loans are made primarily based on the identified cash flow of the borrower and secondarily on the underlying collateral supporting the loan facility. Accordingly, the repayment of a commercial and industrial loan depends primarily on the creditworthiness of the borrower (and any guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment. Construction loans are underwritten based upon a financial analysis of the developers and property owners and construction cost estimates, in addition to independent appraisal valuations. These loans will rely on the value associated with the project upon completion. These cost and valuation amounts used are estimates and may be inaccurate. Construction loans generally involve the disbursement of substantial funds over a short period of time with repayment substantially dependent upon the success of the completed project. Sources of repayment of these loans would be permanent financing upon completion or sales of developed property. These loans are closely monitored by onsite inspections and are considered to be of a higher risk than other real estate loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term financing, interest rate sensitivity, and governmental regulation of real property. Commercial real estate and multi-family loans are subject to the underwriting standards and processes similar to commercial and industrial loans, in addition to those underwriting standards for real estate loans. These loans are viewed primarily as cash flow dependent and secondarily as loans secured by real estate. Repayment of these loans is generally dependent upon the successful operation of the property securing the loan or the principal business conducted on the property securing the loan. In addition, the underwriting considers the amount of the principal advanced relative to the property value. Commercial real estate and multi-family loans may be adversely affected by conditions in the real estate markets or the economy in general. Management monitors and evaluates commercial real estate and multi-family loans based on cash flow estimates, collateral and risk-rating criteria. The Bank also utilizes third-party experts to provide environmental and market valuations. Substantial effort is required to underwrite, monitor and evaluate commercial real estate and multi-family loans. Residential real estate loans are secured by one to four dwelling units. This group is further divided into first mortgage and home equity loans. First mortgages are originated at a loan to value ratio of 80% or less. Home equity loans have additional risks as a result of typically being in a second position or lower in the event collateral is liquidated. Manufactured housing loans represent loans that are secured by the manufactured housing unit where the borrower may or may not own the underlying real estate and therefore have a higher risk than a residential real estate loan. Other consumer loans consist of loans to individuals originated through the Bank’s retail network and are typically unsecured or secured by personal property. Consumer loans have a greater credit risk than residential loans because of the difference in the underlying collateral, if any. The application of various federal and state bankruptcy and insolvency laws may limit the amount that can be recovered on such loans. Delinquency status and other borrower characteristics are used to monitor loans and identify credit risks, and the general reserves are established based on the expected net charge-offs, adjusted for qualitative factors. Loss rates are based on the average net charge-off history, either industry or Customers, by loan group. Historical loss rates may be adjusted for significant factors that, in management’s judgment, are necessary to reflect losses inherent in the portfolio. Factors that management considers in the analysis include the effects of the national and local economies; trends in the nature and volume of delinquencies, charge-offs and non-accrual loans; changes in loan mix; changes in risk management and loan administration; and changes in internal lending policies, credit standards and collection practices. Charge-offs on commercial and industrial, construction, multi-family and commercial real estate loans are recorded when management estimates that there are insufficient cash flows to repay the loan contractual obligation based upon financial information available and valuation of the underlying collateral. Additionally, the Bank takes into account the strength of any guarantees and the ability of the borrower to provide value related to those guarantees in determining the ultimate charge-off or reserve associated with any impaired loans. Accordingly, the Bank may charge-off a loan to a value below the net appraised value if it believes that an expeditious liquidation is desirable in the circumstance and it has legitimate offers or other indications of interest to support a value that is less than the net appraised value. Alternatively, the Bank may carry a loan at a value that is in excess of the appraised value certain circumstances, such as the Bank has a guarantee from a borrower that the Bank believes has realizable value. In evaluating the strength of any guarantee, the Bank evaluates the financial wherewithal of the guarantor, the guarantor’s reputation, and the guarantor’s willingness and desire to work with the Bank. The Bank then conducts a review of the strength of a guarantee on a frequency established as the circumstances and conditions of the borrower warrant. The Bank records charge-offs for residential real estate, consumer, and manufactured housing loans after 120 days of delinquency or sooner when cash flows are determined to be insufficient for repayment. The Bank may also charge-off these loans below the net appraised valuation if the Bank holds a junior mortgage position in a piece of collateral whereby the risk to acquiring control of the property through the purchase of the senior mortgage position is deemed to potentially increase the risk of loss upon liquidation due to the amount of time to ultimately market the property and the volatile market conditions. In such cases, the Bank may abandon its junior mortgage and charge-off the loan balance in full. Estimates of cash flows expected to be collected for purchased credit impaired loans are updated each reporting period. If the Bank estimates decreases in expected cash flows to be collected after acquisition, the Bank charges the provision for loan losses and establishes an allowance for loan losses. Credit Quality Factors Commercial and industrial, multi-family, commercial real estate, residential real estate and construction loans are each assigned a numerical rating of risk based on an internal risk rating system. The risk rating indicates management's estimate of the credit quality and the rating is assigned at loan origination and reviewed on a periodic or “as needed” basis. Consumer and manufactured housing loans are evaluated based on the payment activity of the loan. Risk ratings are not established for home equity loans, consumer loans, manufactured housing loans, 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 on aggregate payment history (through the monitoring of delinquency levels and trends). For additional information about credit quality factor ratings refer to “NOTE 8 – “LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES.” Impaired Loans A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. The fair value of the collateral is measured based on the value of the collateral securing the loans, less estimated costs to sell. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the Bank's collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Bank using observable market data. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivable collateral are based on financial statement balances or aging reports. Goodwill Goodwill represents the excess of cost over the identifiable net assets of businesses acquired. Goodwill is recognized as an asset and is reviewed for impairment annually as of October 31 and between annual tests when events and circumstances indicate that impairment may have occurred. Impairment is a condition that exists when the carrying amount of goodwill exceeds its implied fair value. A qualitative factor test can be performed to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If the results of the qualitative review indicate that it is unlikely (less than 50% probability) that the carrying value of the reporting unit exceeds its fair value, no further evaluation needs to be performed. As part of its qualitative assessment, Customers reviewed regional and national trends in current and expected economic conditions, examining indicators such as GDP growth, interest rates and unemployment rates. Customers also considered its own historical performance, expectations of future performance and other trends specific to the banking industry. Based on its qualitative assessment, Customers determined that there was no impairment on the goodwill balance. There was $3.7 million of goodwill at December 31, 2015 and 2014. FHLB, Federal Reserve Bank, and other restricted stock FHLB, Federal Reserve Bank, and other restricted stock represents required investment in the capital stock of the Federal Home Loan Bank (“FHLB”), the Federal Reserve Bank and Atlantic Central Bankers Bank and is carried at cost. Total restricted stock as of December 31, 2015 and 2014 was $90.8 million and $82.0 million, respectively, which included $78.9 million and $71.6 million, respectively of FHLB stock. Other Real Estate Owned Real estate properties acquired through, or in lieu of, loan foreclosure are initially recorded at fair value less estimated costs to sell at the date of foreclosure, establishing a new cost basis. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower of its carrying amount or fair value less estimated costs to sell. Revenue and expenses from operations and changes in the valuation allowance are included in earnings. Certain other real estate owned that was acquired from USA Bank and ISN Bank or through the foreclosure of loans of those banks is subject to loss sharing agreements with the FDIC. As of December 31, 2015 and 2014, other real estate owned subject to Loss Sharing Agreements with the FDIC was $0.5 million and $9.4 million, respectively. FDIC Loss Sharing Receivable and Clawback Liability The FDIC loss sharing receivable is measured separately from the related covered assets because it is not contractually embedded in the assets and is not transferable if the assets are sold. The FDIC loss sharing receivable was initially recorded at fair value, based on the discounted value of expected future cash flows under the loss share agreements. The difference between the present value and the undiscounted cash flows the Bank expects to collect from the FDIC is accreted into interest income over the life of the FDIC loss sharing receivable. The FDIC loss sharing receivable is reviewed quarterly and adjusted for changes in expected cash flows based on recent performance and expectations for future performance of the covered portfolio. These adjustments are measured on the same basis as the related covered loans and covered other real estate owned. Increases in estimated cash flows on the covered assets will reduce the FDIC loss sharing receivable and decreases in estimated cash flows on the covered assets will increase the FDIC loss sharing receivable. Increases to the FDIC loss sharing receivable resulting from reduced cash flow estimates on the covered loans are recorded as a reduction to the provision for loan losses and decreases to the FDIC loss sharing receivable are recorded either as an increase to the provision for loan losses (to the extent an increase in the FDIC receivable balance was previously recorded as a reduction to the provision for loan losses) or recognized over the life of the loss share agreements. Decreases in the valuations of covered other real estate owned are recorded net of the FDIC receivable balance resulting from the valuation allowance as an increase to other real estate owned expense (a component of non-interest expense). The FDIC loss sharing receivable balance will be reduced through a charge to the provision for loan losses, with no offsetting reduction to the allowance for loan losses, as the period to submit losses under the FDIC loss sharing agreements approaches expiration and the estimated losses in the covered loans have not yet emerged or been realized in a final disposition event. The period to submit losses under the FDIC loss sharing agreements for non-single family loans expired in third quarter 2015. The period to submit losses under the FDIC loss sharing agreements for single family loans expires in third quarter 2017. The final maturity of the FDIC loss sharing agreements occurs in third quarter 2020. As part of the FDIC loss sharing agreements, the Bank also assumed a potential liability to be paid within 45 days subsequent to the maturity or termination of the loss sharing agreements that is contingent upon actual losses incurred over the life of the agreements relative to expected losses and the consideration paid upon acquisition of the failed institutions. Due to cash received on the covered assets in excess of the original expectations of the FDIC, the Bank anticipates that it will be required to pay the FDIC at the end of its loss sharing agreements. As of December 31, 2015, a clawback liability of $2.3 million has been recorded. To the extent actual losses on the covered assets are less than estimated losses, the clawback liability will increase. To the extent actual losses on the covered assets are more than the estimated losses, the clawback liability will decrease. The Bank presents the FDIC loss sharing receivable balance, net of the estimated clawback liability on the consolidated balance sheet. As of December 31, 2015, the Bank expected to collect $0.2 million from the FDIC for estimated losses and reimbursement of external costs, such as legal fees, real estate taxes and appraisal expenses, and estimated the clawback liability due to the FDIC in 2020 at $2.3 million. The net amount of $2.1 million is included in "Accrued interest payable and other liabilities" in the accompanying consolidated balance sheet. Bank-Owned Life Insurance Bank-owned life insurance policies insure the lives of officers of the Bank, and name the Bank as beneficiary. Non-interest income is generated tax-free (subject to certain limitations) from the increase in value of the policies’ underlying investments made by the insurance company. The Bank is capitalizing on the ability to partially offset costs associated with employee compensation and benefit programs with the bank-owned life insurance. Bank Premises and Equipment Bank premises and equipment are recorded at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the term of the lease or estimated useful life, unless extension of the lease term is reasonably assured. Treasury Stock Common stock purchased for treasury is recorded at cost. Income Taxes Customers accounts for income taxes under the liability method of accounting for income taxes. The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. Customers determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. A tax position is recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the term upon examination includes resolution of the related appeals or litigation process. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. In assessing the realizability of federal or state deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and prudent, feasible and permissible as well as available tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible as well as available tax planning strategies, management believes it is more likely than not that Customers will realize the benefits of these deferred tax assets. Share-Based Compensation Customers Bancorp has four active share-based compensation plans. Share-based compensation accounting guidance requires that the compensation cost relating to share-based-payment transactions be recognized in earnings. The cost is measured based on the grant-date fair value of the equity instruments issued. The Black-Scholes model is used to estimate the fair value of stock options, while the market price of Customers Bancorp’s common stock at the date of grant is used for restricted stock awards. Compensation cost for all share-based awards is calculated and recognized over the employees’ service period, generally defined as the vesting period. For performance based awards, compensation cost is recognized over the vesting period as long as it remains probable that the performance conditions will be met. If the service or performance conditions are not met, Customers reverses previously recorded compensation expense upon forfeiture. In 2014, the shareholders of the Bancorp approved an employee stock purchase plan. Because the purchase price under the plan is 85% of (a 15% discount to the market price) the fair market value of a share of common stock on the first day of each quarterly subscription period, the plan is considered to be a compensatory plan under current accounting guidance. Therefore, the entire amount of the discount is recognizable compensation expense. Derivative Instruments and Hedging ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, Customers records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether Customers has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. Customers may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or Customers elects not to apply hedge accounting. Prior to first quarter 2014, none of Customers financial derivatives were designated in qualifying hedge relationships in accordance with the applicable accounting guidance. As such, all changes in fair value of the financial derivatives were recognized directly in earnings. In March 2014, Customers entered into a $150.0 million notional balance forward starting pay fixed interest rate swap to hedge the variable cash flows associated with the forecasted issuance of debt. Customers documented and designated this swap as a cash flow hedge. The effective portion of changes in the fair value of financial 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. The ineffective portion of the change in fair value of the financial derivatives is recognized directly in earnings. Amounts reported in accumulated other comprehensive income related to financial derivatives will be reclassified to interest expense as interest payments are made on Customers' variable-rate debt. Customers purchased credit derivatives with a current notional balance of $19.3 million to hedge the performance risk of one of its counterparties during first quarter 2014. These derivatives were not designated in hedge relationships for accounting purposes and are being recorded at their fair value, with fair value changes recorded directly in earnings. In accordance with the FASB’s fair value measurement guidance, Customers made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. Comprehensive Income Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income includes changes in unrealized gains and losses on securities available for sale arising during the period and reclassification adjustments for realized gains and losses on securities available for sale included in net income. Unrealized gains and losses on securities available for sale include a component for unrealized changes in foreign currency exchange rates relating to the Bancorp’s investment in certain foreign equity securities. Other comprehensive income also includes the effective portion of changes in fair value of financial derivatives designated and qualifying as cash flow hedges. Cash flow hedge amounts classified as comprehensive income are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Earnings per Share Basic earnings per share represents net income divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes all potentially dilutive common shares outstanding during the period. Potential common shares that may be issued related to outstanding stock options, restricted stock units, and warrants are determined using the treasury stock method. Segment Information Customers has one reportable segment, “Community Banking.” All of Customers' activities are interrelated, and each activity is dependent and assessed based on how each of the activities supports the others. For example, lending is dependent upon the ability of Customers to fund itself with deposits and borrowings while managing interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of Customers as one segment or unit. Recently Issued Accounting Standards and Updates In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, 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 a lessess. From the lessor's perspective, the new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor doesn’t convey risks and rewards or control, an operating lease results. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. 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 the pending adoption of the new standard on its consolidated financial statements. In January 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-01, Financial Instruments - Overall. 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 businesses 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 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 fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition or results of operations. In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2015-17, Income Taxes. The amendments in this ASU, which will align the presentation of deferred income tax assets and liabilities with International Financial Reporting Standards (IFRS), require that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. The amendments in this ASU apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this ASU. For public business entities, the amendments in this ASU are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition or results of operations. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the guidance in this ASU eliminates the requirement to retrospectively account for those adjustments and requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The guidance in this ASU is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years and should be applied prospectively to adjustment to provisional amounts that occur after the effective date of this ASU. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In April 2015 and August 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs and ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements- Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, respectively. The guidance in these ASUs is intended to simplify presentation of debt issuance costs, and requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability consistent with debt discounts and is applicable on a retrospective basis. The guidance in these ASUs is effective for interim and annual periods beginning after December 15, 2015. The adoption of these ASUs did not have a significant impact on Customers' financial condition or results of operations. In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. The guidance in this ASU is intended to amend the update, which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendments in this ASU affect the following areas:
The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2015. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20)Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The guidance in this ASU was issued as part of the FASB's initiative to reduce complexity in accounting standards and eliminates from GAAP the concept of extraordinary items. The guidance in this update is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Subtopic 815-10): Determining Whether the Host contract in a Hybrid Financial Instrument in the Form of a Share is More Akin to Debt or to Equity. The guidance in this ASU requires entities that issue or invest in a hybrid financial instrument to separate an embedded derivative feature from a host contract and account for the feature as a derivative. In the case of derivatives embedded in a hybrid financial instrument that is issued in the form of a share, that criterion requires evaluating whether the nature of the host contract is more akin to debt or to equity and whether the economic characteristics and risks of the embedded derivative feature are clearly and closely related to the host contract. If the host contract is akin to equity, then equity-like features (for example, a conversion option) are considered clearly and closely related to the host contract and, thus, would not be separated from the host contract. If the host contract is akin to debt, then equity-like features are not considered clearly and closely related to the host contract. In the latter case, an entity may be required to separate the equity-like embedded derivative feature from the debt host contract if certain other criteria in Subtopic 815-15 are met. Similarly, debt-like embedded derivative features may require separate accounting from an equity-like host contract. The guidance in this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In August 2014, the FASB issued ASU 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. The guidance in this ASU affects creditors that hold government-guaranteed mortgage loans, including those guaranteed by the FHA and the VA. It requires that a mortgage loan be derecognized and a separate other receivable be recognized upon foreclosure if the following conditions are met:
Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The guidance in this ASU was effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The guidance may be applied using a prospective transition method in which a reporting entity applies the guidance to foreclosures that occur after the date of adoption, or a modified retrospective transition using a cumulative-effect adjustment (through a reclassification to a separate other receivable) as of the beginning of the annual period of adoption. Prior periods should not be adjusted. A reporting entity must apply the same method of transition as elected under ASU 2014-04. The adoption of this ASU did not have a significant impact on Customers' financial condition or results of operations. In August 2014, the FASB issued ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. The guidance in this ASU applies to a reporting entity that is required to consolidate a collateralized financing entity under the Variable Interest Entities guidance when: (1) the reporting entity measures all of the financial assets and the financial liabilities of that consolidated collateralized financing entity at fair value in the consolidated financial statements based on other Codification Topics; and (2) the changes in the fair values of those financial assets and financial liabilities are reflected in earnings. The guidance in this ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation. The guidance in this ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period is treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite period, the remaining unrecognized cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. As indicated in the definition of vest, the stated vesting period (which includes the period in which the performance target could be achieved) may differ from the requisite service period. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2015. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU establishes a comprehensive revenue recognition standard for virtually all industries following U.S. GAAP, including those that previously followed industry-specific guidance such as the real estate and construction industries. The revenue standard’s core principal is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this, the standard requires five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) identify the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies the performance obligation. Three basic transition methods are available - full retrospective, retrospective with certain practical expedients, and a cumulative effect approach. Under the cumulative effect alternative, an entity would apply the new revenue standard only to contracts that are incomplete under legacy U.S. GAAP at the date of initial application and recognize the cumulative effect of the new standard as an adjustment to the opening balance of retained earnings. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The guidance in this ASU is now effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Customers does not expect this ASU to have a significant impact on its financial condition or results of operations. |
Earnings Per Share |
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Earnings Per Share | EARNINGS PER SHARE The following are the components and results of the Bancorp’s earnings per share ("EPS") calculation for the periods presented.
The following is a summary of securities that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS 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 years ended December 31, 2015 and 2014.
(1) All amounts are net of tax. Amounts in parentheses indicate reductions to accumulated other comprehensive income. (2) Includes immaterial gains or losses on foreign currency items for the year ended December 31, 2014. (3) Reclassification amounts are reported as gain or loss on sale of investment securities on the Consolidated Statements of Income. |
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 are summarized as follows:
The following table shows proceeds from the sale of available-for-sale investment securities, gross gains, and gross losses on those sales of securities:
These gains and losses were determined using the specific identification method and were included in non-interest income. The following table shows debt investment securities by stated maturity. Investment securities backed by mortgages have expected maturities that differ from contractual maturities because borrowers have the right to call or prepay, and are, therefore, 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 were as follows:
At December 31, 2015, there were twenty-six available-for-sale investment securities in the less-than-twelve-month category and sixteen 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. The unrealized losses on the equity securities reflect decreases in market price and adverse changes in foreign currency exchange rates. Customers evaluated the financial condition and capital strength of the issuer of these securities and concluded that the decline in fair value was temporary and estimated the value could reasonably recover by way of increases in market price or positive changes in foreign currency exchange rates. Customers intends to hold these securities for the foreseeable future, and does not intend to sell the securities before the price recovers. Customers considers it more likely than not that it will not be required to sell the securities. Accordingly, Customers concluded that the securities are not other-than-temporarily impaired as of December 31, 2015. At December 31, 2015 and 2014, Customers Bank had pledged investment securities aggregating $299.8 million and $376.9 million 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 December 31, 2015 and 2014 was as follows:
Effective September 30, 2015, Customers transferred $30.4 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 transferred these loans at their carrying value, which was lower than the estimated fair value at the time of transfer. Effective September 30, 2014, Customers transferred $164.7 million of multi-family loans from loans receivable to held for sale because Customers was actively marketing these loans and no longer had the intent to retain these loans in its portfolio. Effective December 31, 2014, Customers transferred $18.8 million of these loans back to loans receivable because Customers no longer had the intent to sell these loans. Customers transferred these loans at their amortized cost, 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 Because the period to submit losses for non-single family loans covered under the FDIC loss sharing agreements expired in third quarter 2015, and the balance of covered loans at December 31, 2015 and 2014 was insignificant to Customers' total loan portfolio, the disaggregation between covered and non-covered loans is no longer presented in the disclosures that follow. Additional disaggregation of the commercial real estate loan portfolio between owner occupied and non-owner occupied is presented. Prior period amounts have been reclassified to conform with the current period presentation. The following table presents loans receivable as of December 31, 2015 and 2014.
The following tables summarize loans receivable by loan type and performance status as of December 31, 2015 and 2014:
Allowance for Loan Losses and the FDIC Loss Sharing Receivable and Clawback Liability Losses incurred on covered loans are eligible for partial reimbursement by the FDIC. Subsequent to the purchase date, the expected cash flows on the covered loans are subject to evaluation. Decreases in the present value of expected cash flows on the covered loans are 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 is increased reflecting an estimated future collection from the FDIC, which is recorded as a reduction to the provision for loan losses. If the expected cash flows on the covered loans increase such that a previously recorded impairment can be reversed, the Bank records 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 of the FDIC loss sharing receivable, when there are no previously recorded impairments, are 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 are recorded net of the estimated FDIC receivable as an increase to other real estate owned expense (a component of non-interest expense). The FDIC loss sharing receivable balance will be reduced through a charge to the provision for loan losses, with no offsetting reduction to the allowance for loan losses, as the period to submit losses under the FDIC loss sharing arrangements approaches expiration and the estimated losses in the covered loans have not yet emerged or been realized in a final disposition event. The period to submit losses under the FDIC loss sharing arrangements for non-single family loans expired in third quarter 2015. The period to submit losses under the FDIC loss sharing arrangements for single family loans expires in third quarter 2017. The final maturity of the FDIC loss sharing arrangements occurs in third quarter 2020. As of December 2015 and 2014, loans covered under loss sharing agreements with the FDIC were $13.8 million and $42.2 million, respectively. As part of the FDIC loss sharing arrangements, Customers also assumed a liability to be paid within 45 days subsequent to the maturity or termination of the loss sharing arrangements that is contingent upon actual losses incurred over the life of the arrangements relative to expected losses and the consideration paid upon acquisition of the failed institutions. Due to cash received on the covered assets in excess of the original expectations of the FDIC, the Bank anticipates that it will be required to pay the FDIC at the end of its loss sharing arrangements. As of December 31, 2015, a clawback liability of $2.3 million has been recorded. To the extent actual losses on the covered assets are less than estimated losses, the clawback liability will increase. To the extent actual losses on the covered assets are more than the estimated losses, the clawback liability will decrease. As of December 31, 2015, Customers expects to collect $0.2 million from the FDIC for estimated losses and reimbursement of external costs, such as legal fees, real estate taxes and appraisal expenses, and estimated the clawback liability due to the FDIC in 2020 at $2.3 million. The net amount of $2.1 million is included in "Accrued interest payable and other liabilities" in the accompanying consolidated balance sheet. The following table presents changes in the allowance for loans losses and the FDIC loss sharing receivable, including the effect of the estimated clawback liability for the years ended December 31, 2015, 2014 and 2013.
(a) Recorded as a reduction to Other Real Estate Owned expense (a component of non-interest expense). (b) Includes external costs, such as legal fees, real estate taxes and appraisal expenses, that qualify for reimbursement under loss share arrangements. 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 loans that are individually evaluated for impairment as of December 31, 2015 and 2014 and the average recorded investment and interest income recognized for the years ended December 31, 2015 and 2014. Purchased-credit-impaired loans are considered to be performing and are not included in the tables below.
Troubled Debt Restructurings At December 31, 2015, 2014 and 2013 there were $11.4 million, $5.0 million, $4.6 million respectively, in loans categorized 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 the borrower 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 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 is an analysis of loans modified in a troubled debt restructuring by type of concession for the years ended December 31, 2015, 2014 and 2013. 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 years ended December 31, 2015, 2014 and 2013.
As of December 31, 2015, 2014, 2013, there were no commitments to lend additional funds to debtors whose terms have been modified in TDRs. For the years ended December 31, 2015, 2014 and 2013, the recorded investment of loans determined to be TDRs was $7.5 million, $1.1 million and $1.2 million respectively, both before and after restructuring. During the year ending December 31, 2015, thirty-six TDR loans defaulted with a recorded investment of $2.5 million. During the year ending December 31, 2014, six TDR loans defaulted with a recorded investment of $0.4 million. During the year ended December 31, 2013, five TDR loans defaulted with a recorded investment of $0.4 million. For the year ended 2015, $1.8 million of the $2.5 million defaulted loans are subject to a cash reserve. 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 credit losses. There were three specific allowances resulting from TDR modifications during 2015, totaling $0.2 million for 2 commercial and industrial loans, and $0.1 million for one commercial real estate non-owner occupied loan. There were no specific allowances resulting from TDR modifications during 2014 or 2013. Credit Quality Indicators Commercial and industrial, commercial real estate, multi-family, residential real estate and construction loans are based on an internally assigned risk rating system which are assigned at loan origination and reviewed on a periodic or “as needed” basis. Other consumer and manufactured housing loans are evaluated based on the payment activity of the loan. To facilitate the monitoring of credit quality within commercial and industrial, commercial real estate, construction, multi-family and residential real estate loans, and for purposes of analyzing historical loss rates used in the determination of the allowance for loan losses for the respective 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. Certain consumer loans are not assigned a risk rating. 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 managing the 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 borrower has 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; have little industry risk; and 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, bust 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 Doubtful ratings are assigned 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 loans, 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 nonperforming. The following table presents the credit ratings as of December 31, 2015 and 2014 for the loans receivable portfolio.
As of December 31, 2015, the Bank had $1.2 million of residential real estate held in other real estate owned. As of December 31, 2015, the Bank initiated foreclosure proceedings on $0.6 million in loans secured by residential real estate. During second quarter 2015, the Bank refined its methodology for estimating the general allowance for loan losses. Previously, the general allowance for the portion of the loan portfolio originated after December 31, 2009 ("Post 2009 loan portfolio") was based generally on qualitative factors due to insufficient historical loss data on the portfolio. During second quarter 2015, the Bank began using objectively verifiable industry and peer loss data to estimate probable incurred losses as of the balance sheet date for the Post 2009 loan portfolio until sufficient internal loss history is available. The same methodology was also adopted for the portion of the loan portfolio originated on or before December 31, 2009 ("Legacy loan portfolio") that had no loss history over the past two years. The changes in the allowance for loan losses for the years ended December 31, 2015 and 2014 and the loans and allowance for loan losses by loan class based on impairment evaluation method are 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.
The manufactured housing portfolio was 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 December 31, 2015 and 2014, funds available for reimbursement, if necessary, were $1.2 million and $3.0 million, respectively. Each quarter, these funds are evaluated to determine if they would be sufficient to absorb probable losses within the manufactured housing portfolio. The changes in accretable yield related to purchased-credit-impaired loans for the three and nine months ended September 30, 2015 and 2014 were as follows: The changes in accretable yield related to purchased-credit-impaired loans for the years ended December 31, 2015, 2014 and 2013 were as follows:
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Bank Premises and Equipment |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank Premises and Equipment | BANK PREMISES AND EQUIPMENT The components of bank premises and equipment as of December 31, 2015 and 2014 were as follows:
Future minimum rental commitments under non-cancelable leases were as follows:
Rent expense was approximately $3.8 million, $3.3 million and $2.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. Customers' leases are for land and branch or office space. A majority of the leases provide for the payment of taxes, maintenance, insurance and certain other expenses applicable to the leased premises. Many of the leases contain extension provisions and escalation clauses. These leases are generally renewable and may, in certain cases, contain renewal provisions and options to expand and contract space and terminate the leases at predetermined contractual dates. In addition, escalation clauses may exist, which are tied to a predetermined rate or may change based on a specified percentage increase or the Consumer Price Index. |
Deposits |
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Deposits | DEPOSITS The components of deposits at December 31, 2015 and 2014 were as follows:
Time deposits scheduled maturities at December 31, 2015 were as follows:
The aggregate amount of demand deposit overdrafts that were reclassified as loans were $0.6 million at December 31, 2015, compared to $0.8 million as of December 31, 2014. Time deposits greater than $250,000 totaled $920.5 million and $365.4 million at December 31, 2015 and 2014, respectively. Included in the savings balances above were $815.7 million and $632.7 million of brokered money market deposits as of December 31, 2015 and 2014, respectively. Also, included in time, other balances above were $612.8 million and $483.2 million of brokered time deposits, respectively, as of December 31, 2015 and 2014. |
Borrowings |
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Borrowings | BORROWINGS Short-term debt Short-term debt at December 31, 2015 and 2014 was as follows:
The following is a summary of additional information relating to Customers' short-term debt:
At December 31, 2015 and 2014, the Bank had aggregate availability under federal funds lines totaling $175 million and $95.0 million, respectively. Long-term debt FHLB advances The contractual maturities of long-term advances from the FHLB were as follows:
Of the $260 million of long-term advances enumerated above, $250.0 million are fixed rate. The Bank had a total maximum borrowing capacity with the Federal Home Loan Bank of $3.7 billion and with the Federal Reserve Bank of Philadelphia of $59.2 million at December 31, 2015. The Bank had a total borrowing capacity with the Federal Home Loan Bank of $3.2 billion and with the Federal Reserve Bank of Philadelphia of $62.7 million at December 31, 2014. Amounts can be borrowed as short-term or long-term. As of December 31, 2015, advances under these arrangements were secured by certain assets, which included a blanket lien on securities of $257.1 million and qualifying loans of Customers Bank of $3.5 billion. Senior notes On June 26, 2014, the Bancorp closed a private placement transaction in which it issued $25.0 million of 4.625% senior notes due 2019. Interest is paid semi-annually in arrears in June and December. In July and August 2013, the Bancorp issued $63.3 million in aggregate principal amount of senior notes due 2018. The notes bear interest at 6.375% per year which is payable on March 15, June 15, September 15, and December 15. The notes are unsecured obligations of the Bancorp and rank equally with all of its secured and unsecured senior indebtedness. Subordinated debt On June 26, 2014, the Bank closed a private placement transaction in which it issued $110.0 million of fixed-to-floating rate subordinated notes due 2029. The subordinated notes bear interest at an annual fixed rate of 6.125% until June 26, 2024, and interest is paid semiannually. From June 26, 2024, the subordinated notes will bear an annual interest rate equal to three-month LIBOR plus 344.3 basis points until maturity on June 26, 2029. The Bank has the ability to call the subordinated notes, in whole or in part, at a redemption price equal to 100% of the principal balance at certain times on or after June 26, 2024. The subordinated notes qualify as Tier 2 capital for regulatory capital purposes. |
Shareholders' Equity |
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Equity [Abstract] | |
Shareholders' Equity | SHAREHOLDERS’ EQUITY On May 18, 2015, Customers Bancorp issued 2,300,000 shares of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per share, with a liquidation preference of $25.00 per share. Customers Bancorp will pay dividends on the Series C Preferred Stock only when, as, and if declared by the board of directors or a duly authorized committee of the board and to the extent that it has lawfully available funds to pay dividends. Dividends on the Series C Preferred Stock will accrue and be payable quarterly in arrears, on the 15th day of March, June, September, and December of each year, commencing on September 15, 2015, at a fixed rate per annum equal to 7.00% from the original issue date to, but excluding, June 15, 2020, and thereafter at a floating rate per annum equal to three-month LIBOR on the related dividend determination date plus a spread of 5.30% per annum. Dividends on the Series C Preferred Stock will not be cumulative. If Customers Bancorp's board of directors or a duly authorized committee of the board does not declare a dividend on the Series C Preferred Stock in respect of a dividend period, then no dividend shall be deemed to have accrued for such dividend period, be payable on the applicable dividend payment date, or be cumulative, and Customers Bancorp will have no obligation to pay any dividend for that dividend period, whether or not the board of directors or a duly authorized committee of the board declares a dividend on the Series C Preferred Stock for any future dividend period. The Series C Preferred Stock has no stated maturity, is not subject to any mandatory redemption, sinking fund or other similar provisions and will remain outstanding unless redeemed at Customers Bancorp's option. Customers Bancorp may redeem the Series C Preferred Stock at its option, at a redemption price equal to $25.00 per share, plus any declared and unpaid dividends (without regard to any undeclared dividends), (i) in whole or in part, from time to time, on any dividend payment date on or after June 15, 2020 or (ii) in whole but not in part, within 90 days following the occurrence of a regulatory capital treatment event. Any redemption of the Series C Preferred Stock is subject to prior approval of the Board of Governors of the Federal Reserve System. The Series C Preferred Stock qualifies as Tier 1 capital under regulatory capital guidelines. Except in limited circumstances, the Series C Preferred Stock does not have any voting rights. On August 24, 2015, Customers Bancorp's board of directors declared a cash dividend on its Series C Preferred Stock of $0.56875 per share. The dividend was paid on September 15, 2015 to shareholders of record on August 31, 2015. On November 17, 2015, Customers Bancorp's board of directors declared a cash dividend on its Series C Preferred Stock of $0.4375 per share. The dividend was paid on December 15, 2015 to shareholders of record on November 30, 2015. In May 2014, the Bancorp announced that its Board of Directors had declared a 10% stock dividend to all shareholders of record as of May 27, 2014. This special dividend was paid on June 30, 2014 in the form of an aggregate of 2,429,375 additional shares. In November 2013, the Bancorp announced that its Board of Directors had authorized a stock repurchase plan in which it could acquire up to 5% of its current outstanding shares at prices not to exceed a 20% premium over the current book value. The repurchase program may be suspended, modified or discontinued at any time, and the Bancorp has no obligation to repurchase any amount of its common stock under the program. There was no stock repurchased during 2015 or 2014. At December 31, 2015, there were warrants outstanding to purchase 627,673 shares of the Bancorp’s common stock. At December 31, 2014, there were warrants outstanding to purchase 635,274 shares of the Bancorp’s common stock. The purchase prices at December 31, 2015 and 2014 ranged from $9.55 per share to $73.01 per share. |
Employee Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS 401(k) Plan Customers Bank has a 401(k) profit sharing plan whereby eligible team members may contribute amounts up to the annual IRS statutory contribution limit. Customers Bank provides a matching contribution equal to 50% of the first 6% of the contribution made by the team member. Employer contributions for the years ended December 31, 2015, 2014, and 2013 were $1.1 million, $1.0 million, and $0.6 million, respectively. Supplemental Executive Retirement Plans Customers Bank entered into a supplemental executive retirement plan (SERP) with its Chairman and Chief Executive Officer that provides annual retirement benefits for a 15-year period upon the later of his reaching the age of 65 or when he terminates employment. The SERP is a defined-contribution type of deferred compensation arrangement that is designed to provide a target annual retirement benefit of $300,000 per year for 15 years starting at age 65, based on an assumed constant rate of return of 7% per year. The level of retirement benefit is not guaranteed by the Bank, and the ultimate retirement benefit can be less than or greater than the target. The Bank intends to fund its obligations under the SERP with the increase in cash surrender value of a life insurance policy on the life of the Chairman and Chief Executive Officer which is owned by the Bank. The present value of the amount owed as of December 31, 2015 was $3.6 million and was included in other liabilities. |
Share-Based Compensation Plans |
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Share-Based Compensation Plans | SHARE-BASED COMPENSATION PLANS Summary During 2010, the shareholders of Customers Bancorp approved the 2010 Stock Option Plan (“2010 Plan”), and during 2012, the shareholders of Customers Bancorp approved the 2012 Amendment and Restatement of the Customers Bancorp, Inc. Amended and Restated 2004 Incentive Equity and Deferred Compensation Plan (“2004 Plan”). The purpose of these plans is to promote the success and enhance the value of the Bancorp by linking the personal interests of the members of the Board of Directors and employees, officers, and executives of Customers to those of the shareholders of Customers and by providing such individuals with an incentive for outstanding performance in order to generate superior returns to shareholders of Customers. The 2010 Plan and 2004 Plan are intended to provide flexibility to Customers in its ability to motivate, attract, and retain the services of members of the Board of Directors, and employees, officers, and executives of Customers. Stock options and restricted stock units normally vest on the third or fifth anniversary of the grant date provided the grantee remains employed by Customers or continues to serve on the Board. With respect to certain stock options granted under the 2010 Plan, vested options shall be exercisable only when Customers' fully diluted tangible book value will have increased by 50% from the date of grant. Certain share-based awards provide for accelerated vesting if there is a change in control (as defined in the Plans). No stock options may be exercisable for more than 10 years from the date of grant. The 2010 and 2004 Plans are administered by the Compensation Committee of the Board of Directors. The 2010 Plan provides exclusively for the grant of stock options, some or all of which may be structured to qualify as Incentive Stock Options, to employees, officers and executives. The maximum number of shares of common stock which may be issued under the 2010 Plan is 3,666,667 shares. The 2004 Plan provides for the grant of options, some or all of which may be structured to qualify as Incentive Stock Options if granted to employees, stock appreciation rights, restricted stock, restricted stock units, and unrestricted stock to employees, officers, executives, and members of the Board of Directors. The maximum number of shares of common stock which may be issued under the 2004 Plan is 2,750,000 shares. At December 31, 2015, the aggregate number of shares of common stock available for grant under these plans was 1,812,837 shares. On January 1, 2011, Customers initiated a Bonus Recognition and Retention Program (“BRRP”). This is a restricted stock unit plan. Employees eligible to participate in the BRRP include the Chief Executive Officer and other management and highly compensated employees as determined by the Compensation Committee at its sole discretion. Under the BRRP, a participant may elect to defer not less than 25%, nor more than 50%, of his or her bonus payable with respect to each year of participation. Shares of Voting Common Stock having a value equal to the portion of the bonus deferred by a participant are allocated to an annual deferral account, and a matching amount equal to an identical number of shares of common stock is also allocated to the annual deferral account. A participant becomes 100% vested in the annual deferral account on the fifth anniversary date of the initial funding of the account, provided he or she remains continuously employed by Customers from the date of funding to the anniversary date. Vesting is accelerated in the event of involuntary termination other than for cause, retirement at or after age 65, death, termination on account of disability, or a change in control of Customers. Participants were first eligible to make elections under the BRRP with respect to their bonuses for 2011 which were payable in the first quarter of 2012. The BRRP does not provide for a specific number of shares to be reserved; by its terms, the award of restricted stock units under this plan is limited by the amount of cash bonuses paid to the participants in the plan. At December 31, 2015, restricted stock units outstanding under this plan totaled 254,821. Share-based compensation expense relating to stock options and restricted stock units is recognized on a straight-line basis over the vesting periods of the awards and is a component of salaries and employee benefits expense. Total share-based compensation expense for 2015, 2014, and 2013 was $5.7 million, $5.2 million, and $3.4 million, respectively. At December 31, 2015, there was $11.2 million of unrecognized compensation cost related to all non-vested share-based compensation awards. This cost is expected to be recognized through December 2020. In 2014, the shareholders of Customers Bancorp approved the 2014 Employee Stock Purchase Plan (the "ESPP"). The ESPP is intended to encourage team member participation in the ownership and economic progress of Customers. This plan is intended to qualify as an employee stock purchase plan within the meaning of the Internal Revenue Code and is administered by the Compensation Committee of the Board of Directors. Under the ESPP, team members may elect to purchase shares of Customers' common stock through payroll deduction. Since the purchase price under the plan is 85% of the fair market value of a share of common stock on the first day of each quarterly subscription period (a 15% discount to the market price), Customers' ESPP is considered to be a compensatory plan under current accounting guidance. Therefore, the entire amount of the discount is recognizable compensation expense. ESPP expense for 2015 and 2014 was $80.0 thousand and $12.0 thousand, respectively. Stock Options Customers estimated the fair value of each option on the date of grant using the Black-Scholes option pricing model. The risk-free interest rate was based upon the zero-coupon Treasury rates in effect on the grant date of the options. Expected volatility was based upon limited historical information because Customers' common stock has only been traded since February 2012. Expected life was management’s estimate which took into consideration the five-year vesting requirement. During 2015, options to purchase an aggregate of 596,995 shares of Customers Bancorp voting common stock were granted to certain officers and team members. The exercise price for the options granted is equal to the closing price of Customers Bancorp's voting common stock on the date of grant. The options are subject to a five-year cliff vesting and expire after ten years. In addition to the five-year service requirement, one of the following conditions must be met in order for the options to become exercisable:
Customers evaluated the likelihood that at least one of these conditions would be met over the requisite service period and determined that it was more likely than not that one of the conditions would be satisfied (based upon historical performance). Accordingly, the grant-date fair value of these awards is being recognized as expense over the five-year vesting period. The following table presents the weighted-average assumptions used and the resulting weighted-average fair value of each option granted.
The following summarizes stock option activity for the year ended December 31, 2015:
Cash received from the exercise of options during the year ended December 31, 2015 was $0.3 million with a related tax benefit of $0.2 million. A summary of the status of Customers' non-vested options at December 31, 2015 and changes during the year ended December 31, 2015 is as follows:
Restricted Stock Units The fair value of restricted stock units granted under the 2004 Plan is determined based on the market price of Customers' common stock on the date of grant. The fair value of restricted stock units granted under the BRRP is measured as of the date on which such portion of the bonus would have been paid had the deferral not been elected. In February 2012, the Compensation Committee recommended and the Board of Directors approved a restricted stock award that had two vesting requirements. The first requirement is that the recipient remains an employee or director through December 31, 2016. The second requirement is that Customers' Voting Common Stock will have traded at a price greater than $17.18 per share (adjusted for any stock splits or stock dividends) for at least five consecutive trading days during the five-year period ending December 31, 2016. This second requirement was satisfied during the fourth quarter of 2013. These criteria apply only to the 2012 restricted stock award. There were 158,581 restricted stock units granted during the year ended December 31, 2015. Of the aggregate restricted stock units granted, 84,392 were granted under the Bonus Recognition and Retention Program and are subject to five-year cliff vesting. The remaining units were granted under the Bancorp's Restated and Amended 2004 Incentive Equity and Deferred Compensation Plan and are subject to either a three-year waterfall vesting (with one third of the amount vesting annually) or a three-year cliff vesting. The table below presents the status of the restricted stock units at December 31, 2015 and changes during the year ended December 31, 2015:
Customers has a policy that permits its directors to elect to receive shares of Voting Common Stock in lieu of their cash retainers. During the year ended December 31, 2015, Customers issued 27,674 shares of Voting Common Stock with a fair value of $0.7 million to the directors as compensation for their services. The fair values were determined based on the opening price of the common stock on the day the shares were issued. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES The components of income tax expense were as follows:
Effective tax rates differ from the federal statutory rate of 35%, which is applied to income before income tax expense, due to the following:
Customers accounts for income taxes under the liability method of accounting for income taxes. The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. Customers determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. A tax position is recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation process, if any. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. At December 31, 2015 and 2014, Customers had no ASC 740-10 unrecognized tax benefits. Customers does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. Customers recognizes interest and penalties on unrecognized tax benefits in other expense. Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the carry-back period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considers the scheduled reversal of the deferred tax liabilities, the level of historical taxable income, and the projected future taxable income over the periods in which the temporary differences comprising the deferred tax assets will be deductible. Based on its assessment, management determined that no valuation allowance is necessary at December 31, 2015 and 2014. Deferred income taxes reflect temporary differences in the recognition of revenue and expenses for tax reporting and financial statement purposes, principally because certain items are recognized in different periods for financial reporting and tax return purposes. The following represents the Bancorp's deferred tax asset and liabilities as December 31, 2015 and 2014:
Customers had approximately $6.5 million of federal net operating loss carryovers at December 31, 2015, that expire in 2025 through 2031. Customers is subject to U.S. federal income tax as well as income tax in various state and local taxing jurisdictions. Generally, Customers is no longer subject to examination by federal, state and local taxing authorities for years prior to December 31, 2012. |
Transactions with Executive Officers, Directors, and Principal Shareholders |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transactions with Executive Officers, Directors, and Principal Shareholders | TRANSACTIONS WITH EXECUTIVE OFFICERS, DIRECTORS, AND PRINCIPAL SHAREHOLDERS Customers has had, and may be expected to have in the future, banking transactions in the ordinary course of business with its executive officers, directors, principal shareholders, their immediate families and affiliated companies (commonly referred to as related parties). The activity relating to loans to such persons was as follows:
At December 31, 2015, Customers Bank had an outstanding commitment to provide short-term commercial real estate financing, subject to certain terms and conditions, not to exceed $8.0 million, and an available line of credit of $1.8 million with one of its related parties. Some current directors, nominees for director and executive officers of Customers and entities or organizations in which they were executive officers or the equivalent or owners of more than 10% of the equity were customers of and had transactions with or involving Customers in the ordinary course of business during the fiscal year ended December 31, 2015. None of these transactions involved amounts in excess of 5% of the Customers' gross revenues during 2015 nor was Customers indebted to any of the foregoing persons or entities in an aggregate amount in excess of 5% of Customers' total assets at December 31, 2015. Additional transactions with such persons and entities may be expected to take place in the ordinary course of business in the future. At December 31, 2015 and 2014, the Bank had approximately $14.0 million and $11.7 million, respectively, in deposits from related parties, including directors and certain executive officers. For the years ended December 31, 2015, 2014, and 2013, Customers paid $27,300, $46,900 and $45,800 to Jaxxon Promotions, Inc., a company in which a Bancorp director owns 25% interest. |
Financial Instruments with Off-Balance-Sheet Risk |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments with Off-Balance-Sheet Risk | FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK Customers is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. Customers' exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. Customers uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. The following financial instruments were outstanding whose contract amounts represent credit risk:
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Mortgage warehouse loan commitments are agreements to purchase mortgage loans from mortgage bankers that agree to purchase the loans back in a short period of time. These commitments generally fluctuate monthly as existing loans are repurchased by the mortgage bankers and new loans are purchased by Customers. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Customers evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by Customers upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory and equipment. Outstanding letters of credit written are conditional commitments issued by Customers to guarantee the performance of a customer to a third party. The majority of these standby letters of credit expire within the next year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. Customers requires collateral supporting these letters of credit as deemed necessary. Management believes that the proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees. The current amount of the liabilities as of December 31, 2015 and 2014 for guarantees under standby letters of credit issued is not material. |
Regulatory Matters |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Matters | REGULATORY MATTERS 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 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 Bancorp to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets (as defined in the regulations). At December 31, 2015 and 2014, the Bank and Bancorp met all capital adequacy requirements to which they were subject. The Dodd-Frank Act required the FRB 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 rated 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. To be categorized as well capitalized, an institution must maintain minimum common equity Tier 1, total risk based, Tier 1 risk based and Tier 1 leveraged ratios as set forth in the following table:
The new 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 will be 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. 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. FASB ASC 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. However, many of these instruments lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. For fair value disclosure purposes, Customers utilized certain fair value measurement criteria under the FASB ASC 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:
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 December 31, 2015 and 2014: 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 included 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 included 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 FHLB, Federal Reserve Bank, and other restricted stock approximates fair value, and considers the limited marketability of such securities. These assets are included in Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans held for sale - 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 included as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans held for sale - 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 since 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 19 days from purchase to sale. These assets are included as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements. Loans held for sale - Multi-family 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, or non-binding indicative bids from brokers. 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, using 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 included 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 that are accounted for under ASC 450, Contingencies, in which the Bank has measured impairment generally based on the fair value of the loan’s collateral. 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 included 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 OREO is determined using appraisals, which may be discounted based on management’s review and changes in market conditions. 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 included 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 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 included 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 included 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 included 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 the short-term borrowings, the carrying amount is considered a reasonable estimate of fair value and is included as Level 1. Fair values of long-term 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 included 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 fixed cash receipts and the discounted expected variable cash payments. The discounted variable cash 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 included 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 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 included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Off-balance-sheet financial instruments: 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 measurements 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 Customers’ disclosures and those of other companies may not be meaningful. The estimated fair values of Customers’ financial instruments were as follows at December 31, 2015 and 2014.
For financial assets and liabilities measured at fair value on a recurring and non-recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2015 and 2014 were as follows:
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis at December 31, 2015 and 2014 were as follows:
Customers' policy is to recognize transfers between fair value levels when events or circumstances warrant transfers. There were no transfers between levels during the years ended December 31, 2015 and 2014. The following table summarizes financial assets and financial liabilities measured at fair value as of December 31, 2015 and 2014 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 fixed-rate 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 sometimes 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. During 2015 and 2014, such derivatives were used to hedge the variable cash flows associated with a forecasted issuance of debt. The ineffective portion of the change in fair value of the derivatives is to be recognized directly in earnings. During 2015 and 2014, 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 $1.7 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 December 31, 2015 and 2014, Customers had one outstanding interest rate derivative with a notional amount of $150.0 million that was designated as a cash flow hedge of interest rate risk. The hedge expires in April 2019. Derivatives Not Designated as Hedging Instruments Customers executes interest rate swaps with commercial banking customers to facilitate the customer's respective risk management strategies (typically the loan customers will swap a floating rate loan to 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 December 31, 2015, Customers had 62 interest rate swaps with an aggregate notional amount of $461.0 million related to this program. At December 31, 2014, Customers had 44 interest rate swaps with an aggregate notional amount of $251.9 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 applicable accounting guidance and are reported at fair value, with changes in fair value recorded directly to earnings. At December 31, 2015 and 2014, Customers had an outstanding notional balance of residential mortgage loan commitments of $2.8 million and $3.8 million, respectively. Customers also purchased credit derivatives to hedge the performance risk associated with one 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 December 31, 2015 and 2014, Customers had an outstanding notional balance of credit derivatives of $19.3 million and $13.4 million, respectively. Fair Value of Derivative Instruments on the Balance Sheet The following table presents the fair value of Customers’ derivative financial instruments as well as the classification on the balance sheet at December 31, 2015 and 2014.
Effect of Derivative Instruments on Comprehensive Income The following table presents the effect of Customers' derivative financial instruments on comprehensive income for the years ended December 31, 2015 and 2014.
(1) Amounts presented are net of taxes 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 December 31, 2015, 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 $14.3 million. In addition, Customers has collateral posting thresholds with certain of these counterparties and at December 31, 2015, had posted $14.3 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.
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Loss Contingency |
12 Months Ended |
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Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Loss Contingency | LOSS CONTINGENCY During the first quarter of 2013, a suspected fraud was discovered in the Bank’s held-for-sale loan portfolio. Total loans involved in this fraud initially was estimated to be $5.2 million, and management believed the range of possible loss to have been between $1.5 million and $3.2 million. Accordingly, management provided a loss contingency of $2.0 million at March 31, 2013. During the second quarter of 2013, Customers determined that an aggregate of $1.0 million of the loans were not involved in the fraud, and these loans were subsequently sold. In addition, Customers recovered $1.5 million in cash from the alleged perpetrator. Because it was determined that the remaining asset no longer met the definition of “a loan,” and because Customers is pursuing restitution through the involved parties, Customers determined this to be a receivable. As a result, the remaining aggregate of $2.7 million of loans and the related $2.0 million reserve were transferred to other assets. As of December 31, 2015, the net amount of the receivable and reserve of $0.6 million remains in other assets. |
Condensed Financial Statements of Parent Company |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Statements of Parent Company | CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY The following tables present the condensed financial statements for Customers Bancorp, Inc. (parent company only) Balance Sheets
Income and Comprehensive Income Statements
Statements of Cash Flows
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Selected Quarterly Financial Data |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (Unaudited) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) The following table presents selected quarterly data for the years ended December 31, 2015 and 2014. Quarterly data may not agree to full year results.
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Subsequent Events |
12 Months Ended |
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Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS On January 22, 2016, Customers announced the pricing of its public offering of 1,000,000 shares of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D (the "Series D Preferred Stock") at a price of $25.00 per share. Dividends on the Series D Preferred Stock will accrue and be payable quarterly in arrears, at a fixed rate per annum equal to 6.50% from the original issue date to, but excluding, March 15, 2021, and thereafter at a floating rate per annum equal to three-month LIBOR on the related dividend determination date plus a spread of 5.09% per annum. The offering closed on January 29, 2016, and was subject to customary closing conditions. Customers received net proceeds before expenses of $24.2 million from the offering, after deducting offering costs. The net proceeds will be used for general corporate purposes, which may include working capital and the funding of organic growth at Customers Bank. |
Significant Accounting Policies and Basis of Presentation (Policies) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accounting and reporting policies of Customers Bancorp, Inc. and subsidiaries are in conformity with accounting principles generally accepted in the United States of America and predominant practices of the banking industry. The preparation of financial statements requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses, credit deterioration and expected cash flows of purchased-credit-impaired loans, FDIC indemnification asset and related clawback liability, valuation of deferred tax assets, other-than-temporary impairment losses on securities, fair values of financial instruments, and annual goodwill impairment analysis. |
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Financial Statements Reclassified to Confirm to 2013 Presentation | Certain amounts reported in the 2014 and 2013 financial statements have been reclassified to conform to the 2015 presentation. These reclassifications did not significantly impact Customers financial position or results of operations. |
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Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the parent company and its wholly owned subsidiaries: Customers Bank, CB Green Ventures Pte Ltd. and CUBI India Ventures Pte Ltd. Customers Bank includes the accounts of its wholly owned subsidiary CIC, Inc. and other subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
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Cash and Cash Equivalents and Statements of Cash Flows | Cash and Cash Equivalents and Statements of Cash Flows Cash and cash equivalents include cash on hand, amounts due from banks, and interest-bearing deposits with banks with a maturity date of three months or less and are recorded at cost. The carrying value of cash and cash equivalents is a reasonable estimate of its approximate fair value. Changes in the balances of cash and cash equivalents are reported in the consolidated statements of cash flows. Cash receipts from the repayment or sale of loans are classified within the statement of cash flows based on management's original intent upon origination of the loan, as prescribed by accounting guidance related to the statement of cash flows. Cash used upon initial funding of Customers' mortgage warehousing lending transactions and proceeds received when the mortgage loans are sold into the secondary market are classified as operating activities within the statement of cash flows. |
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Restrictions on Cash and Amounts due from Banks | Restrictions on Cash and Amounts due from Banks Customers Bank is required to maintain average balances on hand or with the Federal Reserve Bank. |
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Investment Securities | Investment Securities Customers acquires securities, largely mortgage-backed securities, to effectively utilize cash and capital and to generate earnings. Security transactions are recorded as of the trade date. Securities are classified at the time of acquisition as available for sale, held to maturity, or trading, and their designation determines their accounting as follows: Available for sale: Investments securities classified as available for sale are those debt and equity securities that Customers intends to hold for an indefinite period of time but not necessarily to maturity. Investment securities available for sale are carried at fair value. Unrealized gains or losses are reported as increases or decreases in accumulated other comprehensive income, net of the related deferred tax effect. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings and recorded at the trade date. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Held to maturity: Investment securities classified as held to maturity are those debt securities that Customers has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or changes in general economic conditions. These securities are carried at cost, adjusted for the amortization of premiums and accretion of discounts, computed by a method which approximates the interest method over the terms of the securities. There are no securities classified as held to maturity as of December 31, 2015 or 2014. Trading: Investment securities classified as trading are those debt and equity securities that management intends to actively trade. These securities are carried at their current fair value, with changes in fair value reported in income. Customers does not actively trade securities. For available-for-sale and held-to-maturity securities, management periodically assesses whether the securities are other than temporarily impaired. Other-than-temporary impairment means that management believes a security’s decline in fair value below its amortized cost basis is due to factors that could include the issuer’s inability to pay interest or dividends, its potential for default, and/or other factors. When a held-to-maturity or available-for-sale debt security is assessed for other-than-temporary impairment, management has to first consider (a) whether Customers intends to sell the security, and (b) whether it is more likely than not that Customers will be required to sell the security prior to recovery of its amortized cost basis. If one of these circumstances applies to a security, an other-than-temporary impairment loss is recognized in the consolidated statements of income equal to the full amount of the decline in fair value below amortized cost. If neither of these circumstances applies to a security, but Customers does not expect to recover the entire amortized cost, an other-than-temporary impairment has occurred that must be separated into two categories: (a) the amount related to credit loss, and (b) the amount related to other factors. In assessing the level of other-than-temporary impairment attributable to credit loss, management compares the present value of cash flows expected to be collected with the amortized cost basis of the security. The portion of the total other-than-temporary impairment related to credit loss is recognized in earnings (as the difference between the fair value and the present value of the estimated cash flows), while the amount related to other factors is recognized in other comprehensive income. The total other-than-temporary impairment loss is presented in the statement of income, less the portion recognized in other comprehensive income. When a debt security becomes other-than-temporarily impaired, its amortized cost basis is reduced to reflect the portion of the total impairment related to credit loss. For marketable equity securities, the Bancorp considers the issuer’s financial condition, capital strength and near term prospects to determine whether an impairment is temporary or other-than-temporary. The Bancorp also considers the volatility of a security’s price in comparison to the market as a whole and any recoveries or declines in fair value subsequent to the balance sheet date. If management determines that the impairment is other-than-temporary, the entire amount of the impairment as of the balance sheet date is recognized in earnings even if the decision to sell the security has not been made. The fair value of the security becomes the new amortized cost basis of the investment and is not adjusted for subsequent recoveries in fair value. |
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Loan Accounting Framework | Loan Accounting Framework The accounting for a loan depends on management’s strategy for the loan, and on whether the loan was credit impaired at the date of acquisition. The Bank accounts for loans based on the following categories:
The following provides a detailed discussion of the accounting for loans in these categories: |
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Loans Held for Sale and Loans at Fair Value | Loans Held for Sale and Loans at Fair Value Loans originated or acquired by the Bank with the intent to sell in the secondary market are carried either at the lower of cost or fair value, determined in the aggregate, or at fair value, depending upon an election made at the time the loan is made. These loans are generally sold on a non-recourse basis with servicing released. Gains and losses on the sale of loans accounted for at lower of cost or fair value are recognized in earnings based on the difference between the proceeds received and the carrying amount of the loans, inclusive of deferred origination fees and costs, if any. As a result of changes in events and circumstances or developments regarding management’s view of the foreseeable future, loans not originated or acquired with the intent to sell may subsequently be designated as held for sale. These loans are transferred to the held-for-sale portfolio at the lower of amortized cost or fair value. Loans originated or acquired by the Bank with the intent to sell for which fair value accounting is elected are marked to fair value with any difference between the proceeds received and the carrying amount of the loan recognized in earnings. No fees or costs related to such loans are deferred, so they do not affect the gain or loss calculation at the time of sale. Certain mortgage warehouse lending transactions subject to master repurchase agreements are designated as held for sale and reported at fair value based on an election to account for the loans at fair value. Pursuant to these agreements, the Bank 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 repurchase event). An allowance for loan losses is not maintained on loans designated as held for sale or reported at fair value. |
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Loans Receivable | Loans Receivable Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances, net of an allowance for loan losses and any deferred fees. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans using the level-yield method without anticipating prepayments. The Bank is generally amortizing these amounts over the contractual life of the loans. The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or when management has doubts about further collectibility of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is well secured. When a loan is placed on non-accrual status, unpaid accrued interest credited to income is reversed. Interest received on non-accrual loans is applied against principal until all principal has been recovered. Thereafter, payments are recognized as interest income until all unpaid amounts have been received. Generally, loans are restored to accrual status when the obligation is brought current and has performed in accordance with the contractual terms for a minimum of six months and the ultimate collectibility of the total contractual principal and interest is no longer in doubt. Transfers of financial assets, including loan participations sold, are accounted for as sales when control over the assets has been surrendered (settlement date). Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. |
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Purchased Loans | Purchased Loans Customers believes that the varying circumstances under which it purchases loans and the diverse credit quality of loans purchased should drive the decision as to whether loans in a portfolio should be deemed to be purchased-credit-impaired loans. Therefore, loan purchases are evaluated on a case-by-case basis to determine the appropriate accounting treatment. Loans acquired that do not have evidence of credit deterioration at the purchase date are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs, and loans acquired with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. Loans that are purchased that do not have evidence of credit deterioration Purchased performing loans are initially recorded at fair value and include credit and interest rate marks associated with acquisition accounting adjustments. Purchase premiums or discounts are subsequently amortized as an adjustment to yield over the estimated contractual lives of the loans. There is no allowance for loan losses established at the acquisition date for acquired performing loans. An allowance for loan losses is recorded for any credit deterioration in these loans subsequent to acquisition. Loans that are purchased that have evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected For purchases of this type of loan, evidence of deteriorated credit quality may include past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages. The fair value of loans with evidence of credit deterioration is recorded net of a nonaccretable difference and accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is the nonaccretable difference, which is not included in the carrying amount of acquired loans. Subsequent to acquisition, estimates of cash flows expected to be collected are updated each reporting period based on updated assumptions regarding default rates, loss severities, and other factors that are reflective of current market conditions. Subsequent decreases in expected cash flows will generally result in a provision for loan losses. Subsequent increases in expected cash flows result in a reversal of the provision for loan losses to the extent of prior charges, or a reclassification of the difference from nonaccretable to accretable with a positive impact on accretion of interest income in future periods. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of those cash flows. Purchased-credit-impaired loans acquired in the same fiscal quarter may be aggregated into one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. On a quarterly basis, the Bank re-estimates the total cash flows (both principal and interest) expected to be collected over the remaining life of each pool. These estimates incorporate assumptions regarding default rates, loss severities, the amounts and timing of prepayments and other factors that reflect then-current market conditions. If the timing and/or amounts of expected cash flows on purchased-credit-impaired loans were determined not to be reasonably estimable, no interest would be accreted and the loans would be reported as non-accrual loans; however, when the timing and amounts of expected cash flows for purchased-credit-impaired loans are reasonably estimable, interest is being accreted and the loans are being reported as performing loans. |
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Loans Receivable Covered Under Loss Sharing Agreements | Loans Receivable Covered Under Loss Sharing Agreements Loans acquired in the FDIC assisted transactions in 2010 from USA Bank and ISN Bank are subject to loss sharing agreements with the FDIC and are referred to as “covered loans.” The period to submit losses under the FDIC loss sharing arrangements for non-single family loans expired in third quarter 2015. The period to submit losses under the FDIC loss sharing arrangements for single family loans expires in third quarter 2017. The final maturity of the FDIC loss sharing arrangements occurs in third quarter 2020. |
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Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses is established as losses are estimated to have occurred through provisions for loan losses. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance for loan losses. The allowance for loan losses is maintained at a level considered appropriate to absorb probable incurred loan losses inherent in the loan portfolio as of the reporting date. The Bank disaggregates its loan portfolio into groups of loans with similar risk characteristics for purposes of estimating the allowance for loan losses. The Bank’s loan groups include multi-family, commercial and industrial, commercial real estate, construction, residential real estate, manufactured housing, consumer, and PCI loans. The Bank further disaggregates its residential real estate portfolio into two classes based upon certain risk characteristics; first mortgage loans and home equity loans and lines of credit. The remaining loan groups are also considered classes for purposes of monitoring and assessing credit quality based on certain risk characteristics. Additionally, within each loan group the acquired loans that are accounted for under ASC 310-10 are further segregated. The total allowance for loan losses consists of an allowance for impaired loans, a general allowance for losses, and may also include residual non-specific reserve amounts. The allowance for loan losses is maintained at a level considered adequate to provide for losses that are estimated to have been incurred. Management performs a quarterly assessment of the adequacy of the allowance for loan losses, which is based on the Bank’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. The Bank’s current methodology for determining the allowance for loan losses is based on historical loss rates, peer and industry data, current economic conditions, risk ratings, specific allocations on loans identified as impaired, and other qualitative adjustments. The impaired loan component of the allowance for loan losses relates to loans for which it is probable that the Bank will be unable to collect all contractual principal and interest due. For such loans, an allowance is established when the (i) discounted cash flows, (ii) collateral value, or (iii) the impaired loan value is lower than the carrying value of the loan. The general component of the allowance for loan losses covers groups of loans by loan class, including commercial loans not considered impaired, as well as smaller balance homogeneous loans, such as residential real estate, home equity loans, home equity lines of credit and other consumer loans. These pools of loans are evaluated for loss exposure based upon loan risk ratings and industry or Customers' historical loss rates for each of these groups of loans. After determining the appropriate historical loss rate for each group of loans, management considers those current qualitative or environmental factors that are likely to cause estimated credit losses as of the evaluation date to differ from the historical loss experience. The overall effect of these factors is recorded as an adjustment that, as appropriate, increases or decreases the historical loss rate applied to the loan group. The qualitative factors that management considers includes the following:
A residual reserve may be maintained to cover uncertainties that could affect management’s estimate of probable losses. The residual reserve amount reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. Commercial and industrial loans are underwritten after evaluating historical and projected profitability and cash flow to determine the borrower’s ability to repay their obligation as agreed. Commercial and industrial loans are made primarily based on the identified cash flow of the borrower and secondarily on the underlying collateral supporting the loan facility. Accordingly, the repayment of a commercial and industrial loan depends primarily on the creditworthiness of the borrower (and any guarantors), while liquidation of collateral is a secondary and often insufficient source of repayment. Construction loans are underwritten based upon a financial analysis of the developers and property owners and construction cost estimates, in addition to independent appraisal valuations. These loans will rely on the value associated with the project upon completion. These cost and valuation amounts used are estimates and may be inaccurate. Construction loans generally involve the disbursement of substantial funds over a short period of time with repayment substantially dependent upon the success of the completed project. Sources of repayment of these loans would be permanent financing upon completion or sales of developed property. These loans are closely monitored by onsite inspections and are considered to be of a higher risk than other real estate loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term financing, interest rate sensitivity, and governmental regulation of real property. Commercial real estate and multi-family loans are subject to the underwriting standards and processes similar to commercial and industrial loans, in addition to those underwriting standards for real estate loans. These loans are viewed primarily as cash flow dependent and secondarily as loans secured by real estate. Repayment of these loans is generally dependent upon the successful operation of the property securing the loan or the principal business conducted on the property securing the loan. In addition, the underwriting considers the amount of the principal advanced relative to the property value. Commercial real estate and multi-family loans may be adversely affected by conditions in the real estate markets or the economy in general. Management monitors and evaluates commercial real estate and multi-family loans based on cash flow estimates, collateral and risk-rating criteria. The Bank also utilizes third-party experts to provide environmental and market valuations. Substantial effort is required to underwrite, monitor and evaluate commercial real estate and multi-family loans. Residential real estate loans are secured by one to four dwelling units. This group is further divided into first mortgage and home equity loans. First mortgages are originated at a loan to value ratio of 80% or less. Home equity loans have additional risks as a result of typically being in a second position or lower in the event collateral is liquidated. Manufactured housing loans represent loans that are secured by the manufactured housing unit where the borrower may or may not own the underlying real estate and therefore have a higher risk than a residential real estate loan. Other consumer loans consist of loans to individuals originated through the Bank’s retail network and are typically unsecured or secured by personal property. Consumer loans have a greater credit risk than residential loans because of the difference in the underlying collateral, if any. The application of various federal and state bankruptcy and insolvency laws may limit the amount that can be recovered on such loans. Delinquency status and other borrower characteristics are used to monitor loans and identify credit risks, and the general reserves are established based on the expected net charge-offs, adjusted for qualitative factors. Loss rates are based on the average net charge-off history, either industry or Customers, by loan group. Historical loss rates may be adjusted for significant factors that, in management’s judgment, are necessary to reflect losses inherent in the portfolio. Factors that management considers in the analysis include the effects of the national and local economies; trends in the nature and volume of delinquencies, charge-offs and non-accrual loans; changes in loan mix; changes in risk management and loan administration; and changes in internal lending policies, credit standards and collection practices. Charge-offs on commercial and industrial, construction, multi-family and commercial real estate loans are recorded when management estimates that there are insufficient cash flows to repay the loan contractual obligation based upon financial information available and valuation of the underlying collateral. Additionally, the Bank takes into account the strength of any guarantees and the ability of the borrower to provide value related to those guarantees in determining the ultimate charge-off or reserve associated with any impaired loans. Accordingly, the Bank may charge-off a loan to a value below the net appraised value if it believes that an expeditious liquidation is desirable in the circumstance and it has legitimate offers or other indications of interest to support a value that is less than the net appraised value. Alternatively, the Bank may carry a loan at a value that is in excess of the appraised value certain circumstances, such as the Bank has a guarantee from a borrower that the Bank believes has realizable value. In evaluating the strength of any guarantee, the Bank evaluates the financial wherewithal of the guarantor, the guarantor’s reputation, and the guarantor’s willingness and desire to work with the Bank. The Bank then conducts a review of the strength of a guarantee on a frequency established as the circumstances and conditions of the borrower warrant. The Bank records charge-offs for residential real estate, consumer, and manufactured housing loans after 120 days of delinquency or sooner when cash flows are determined to be insufficient for repayment. The Bank may also charge-off these loans below the net appraised valuation if the Bank holds a junior mortgage position in a piece of collateral whereby the risk to acquiring control of the property through the purchase of the senior mortgage position is deemed to potentially increase the risk of loss upon liquidation due to the amount of time to ultimately market the property and the volatile market conditions. In such cases, the Bank may abandon its junior mortgage and charge-off the loan balance in full. Estimates of cash flows expected to be collected for purchased credit impaired loans are updated each reporting period. If the Bank estimates decreases in expected cash flows to be collected after acquisition, the Bank charges the provision for loan losses and establishes an allowance for loan losses. Credit Quality Factors Commercial and industrial, multi-family, commercial real estate, residential real estate and construction loans are each assigned a numerical rating of risk based on an internal risk rating system. The risk rating indicates management's estimate of the credit quality and the rating is assigned at loan origination and reviewed on a periodic or “as needed” basis. Consumer and manufactured housing loans are evaluated based on the payment activity of the loan. Risk ratings are not established for home equity loans, consumer loans, manufactured housing loans, 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 on aggregate payment history (through the monitoring of delinquency levels and trends). For additional information about credit quality factor ratings refer to “NOTE 8 – “LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES.” Impaired Loans A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. The fair value of the collateral is measured based on the value of the collateral securing the loans, less estimated costs to sell. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the Bank's collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Bank using observable market data. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivable collateral are based on financial statement balances or aging reports. |
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Goodwill | Goodwill Goodwill represents the excess of cost over the identifiable net assets of businesses acquired. Goodwill is recognized as an asset and is reviewed for impairment annually as of October 31 and between annual tests when events and circumstances indicate that impairment may have occurred. Impairment is a condition that exists when the carrying amount of goodwill exceeds its implied fair value. A qualitative factor test can be performed to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If the results of the qualitative review indicate that it is unlikely (less than 50% probability) that the carrying value of the reporting unit exceeds its fair value, no further evaluation needs to be performed. As part of its qualitative assessment, Customers reviewed regional and national trends in current and expected economic conditions, examining indicators such as GDP growth, interest rates and unemployment rates. Customers also considered its own historical performance, expectations of future performance and other trends specific to the banking industry. Based on its qualitative assessment, Customers determined that there was no impairment on the goodwill balance. |
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FHLB, Federal Reserve Bank, and other restricted stock | FHLB, Federal Reserve Bank, and other restricted stock FHLB, Federal Reserve Bank, and other restricted stock represents required investment in the capital stock of the Federal Home Loan Bank (“FHLB”), the Federal Reserve Bank and Atlantic Central Bankers Bank and is carried at cost. |
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Other Real Estate Owned | Other Real Estate Owned Real estate properties acquired through, or in lieu of, loan foreclosure are initially recorded at fair value less estimated costs to sell at the date of foreclosure, establishing a new cost basis. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower of its carrying amount or fair value less estimated costs to sell. Revenue and expenses from operations and changes in the valuation allowance are included in earnings. Certain other real estate owned that was acquired from USA Bank and ISN Bank or through the foreclosure of loans of those banks is subject to loss sharing agreements with the FDIC. |
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FDIC Loss Sharing Receivable and Clawback Liability | FDIC Loss Sharing Receivable and Clawback Liability The FDIC loss sharing receivable is measured separately from the related covered assets because it is not contractually embedded in the assets and is not transferable if the assets are sold. The FDIC loss sharing receivable was initially recorded at fair value, based on the discounted value of expected future cash flows under the loss share agreements. The difference between the present value and the undiscounted cash flows the Bank expects to collect from the FDIC is accreted into interest income over the life of the FDIC loss sharing receivable. The FDIC loss sharing receivable is reviewed quarterly and adjusted for changes in expected cash flows based on recent performance and expectations for future performance of the covered portfolio. These adjustments are measured on the same basis as the related covered loans and covered other real estate owned. Increases in estimated cash flows on the covered assets will reduce the FDIC loss sharing receivable and decreases in estimated cash flows on the covered assets will increase the FDIC loss sharing receivable. Increases to the FDIC loss sharing receivable resulting from reduced cash flow estimates on the covered loans are recorded as a reduction to the provision for loan losses and decreases to the FDIC loss sharing receivable are recorded either as an increase to the provision for loan losses (to the extent an increase in the FDIC receivable balance was previously recorded as a reduction to the provision for loan losses) or recognized over the life of the loss share agreements. Decreases in the valuations of covered other real estate owned are recorded net of the FDIC receivable balance resulting from the valuation allowance as an increase to other real estate owned expense (a component of non-interest expense). The FDIC loss sharing receivable balance will be reduced through a charge to the provision for loan losses, with no offsetting reduction to the allowance for loan losses, as the period to submit losses under the FDIC loss sharing agreements approaches expiration and the estimated losses in the covered loans have not yet emerged or been realized in a final disposition event. The period to submit losses under the FDIC loss sharing agreements for non-single family loans expired in third quarter 2015. The period to submit losses under the FDIC loss sharing agreements for single family loans expires in third quarter 2017. The final maturity of the FDIC loss sharing agreements occurs in third quarter 2020. As part of the FDIC loss sharing agreements, the Bank also assumed a potential liability to be paid within 45 days subsequent to the maturity or termination of the loss sharing agreements that is contingent upon actual losses incurred over the life of the agreements relative to expected losses and the consideration paid upon acquisition of the failed institutions. Due to cash received on the covered assets in excess of the original expectations of the FDIC, the Bank anticipates that it will be required to pay the FDIC at the end of its loss sharing agreements. As of December 31, 2015, a clawback liability of $2.3 million has been recorded. To the extent actual losses on the covered assets are less than estimated losses, the clawback liability will increase. To the extent actual losses on the covered assets are more than the estimated losses, the clawback liability will decrease. The Bank presents the FDIC loss sharing receivable balance, net of the estimated clawback liability on the consolidated balance sheet. |
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Bank-Owned Life Insurance | Bank-Owned Life Insurance Bank-owned life insurance policies insure the lives of officers of the Bank, and name the Bank as beneficiary. Non-interest income is generated tax-free (subject to certain limitations) from the increase in value of the policies’ underlying investments made by the insurance company. The Bank is capitalizing on the ability to partially offset costs associated with employee compensation and benefit programs with the bank-owned life insurance. |
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Bank Premises and Equipment | Bank Premises and Equipment Bank premises and equipment are recorded at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the term of the lease or estimated useful life, unless extension of the lease term is reasonably assured. |
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Treasury Stock | Treasury Stock Common stock purchased for treasury is recorded at cost. |
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Income Taxes | Income Taxes Customers accounts for income taxes under the liability method of accounting for income taxes. The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. Customers determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. A tax position is recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the term upon examination includes resolution of the related appeals or litigation process. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. In assessing the realizability of federal or state deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and prudent, feasible and permissible as well as available tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible as well as available tax planning strategies, management believes it is more likely than not that Customers will realize the benefits of these deferred tax assets. |
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Share-Based Compensation | Share-Based Compensation Customers Bancorp has four active share-based compensation plans. Share-based compensation accounting guidance requires that the compensation cost relating to share-based-payment transactions be recognized in earnings. The cost is measured based on the grant-date fair value of the equity instruments issued. The Black-Scholes model is used to estimate the fair value of stock options, while the market price of Customers Bancorp’s common stock at the date of grant is used for restricted stock awards. Compensation cost for all share-based awards is calculated and recognized over the employees’ service period, generally defined as the vesting period. For performance based awards, compensation cost is recognized over the vesting period as long as it remains probable that the performance conditions will be met. If the service or performance conditions are not met, Customers reverses previously recorded compensation expense upon forfeiture. In 2014, the shareholders of the Bancorp approved an employee stock purchase plan. Because the purchase price under the plan is 85% of (a 15% discount to the market price) the fair market value of a share of common stock on the first day of each quarterly subscription period, the plan is considered to be a compensatory plan under current accounting guidance. Therefore, the entire amount of the discount is recognizable compensation expense. |
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Derivative Instruments and Hedging | Derivative Instruments and Hedging ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. As required by ASC 815, Customers records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether Customers has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. Customers may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or Customers elects not to apply hedge accounting. Prior to first quarter 2014, none of Customers financial derivatives were designated in qualifying hedge relationships in accordance with the applicable accounting guidance. As such, all changes in fair value of the financial derivatives were recognized directly in earnings. In March 2014, Customers entered into a $150.0 million notional balance forward starting pay fixed interest rate swap to hedge the variable cash flows associated with the forecasted issuance of debt. Customers documented and designated this swap as a cash flow hedge. The effective portion of changes in the fair value of financial 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. The ineffective portion of the change in fair value of the financial derivatives is recognized directly in earnings. Amounts reported in accumulated other comprehensive income related to financial derivatives will be reclassified to interest expense as interest payments are made on Customers' variable-rate debt. Customers purchased credit derivatives with a current notional balance of $19.3 million to hedge the performance risk of one of its counterparties during first quarter 2014. These derivatives were not designated in hedge relationships for accounting purposes and are being recorded at their fair value, with fair value changes recorded directly in earnings. In accordance with the FASB’s fair value measurement guidance, Customers made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. 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 fixed-rate 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. |
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Comprehensive Income | Comprehensive Income Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income includes changes in unrealized gains and losses on securities available for sale arising during the period and reclassification adjustments for realized gains and losses on securities available for sale included in net income. Unrealized gains and losses on securities available for sale include a component for unrealized changes in foreign currency exchange rates relating to the Bancorp’s investment in certain foreign equity securities. Other comprehensive income also includes the effective portion of changes in fair value of financial derivatives designated and qualifying as cash flow hedges. Cash flow hedge amounts classified as comprehensive income are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. |
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Earnings per Share | Earnings per Share Basic earnings per share represents net income divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share includes all potentially dilutive common shares outstanding during the period. Potential common shares that may be issued related to outstanding stock options, restricted stock units, and warrants are determined using the treasury stock method. |
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Segment Information | Segment Information Customers has one reportable segment, “Community Banking.” All of Customers' activities are interrelated, and each activity is dependent and assessed based on how each of the activities supports the others. For example, lending is dependent upon the ability of Customers to fund itself with deposits and borrowings while managing interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of Customers as one segment or unit. |
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Recently Issued Accounting Standards and Updates | Recently Issued Accounting Standards and Updates In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, 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 a lessess. From the lessor's perspective, the new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor doesn’t convey risks and rewards or control, an operating lease results. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. 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 the pending adoption of the new standard on its consolidated financial statements. In January 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-01, Financial Instruments - Overall. 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 businesses 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 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 fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition or results of operations. In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2015-17, Income Taxes. The amendments in this ASU, which will align the presentation of deferred income tax assets and liabilities with International Financial Reporting Standards (IFRS), require that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. The amendments in this ASU apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this ASU. For public business entities, the amendments in this ASU are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Customers does not expect the adoption of this ASU to have a significant impact on its financial condition or results of operations. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the guidance in this ASU eliminates the requirement to retrospectively account for those adjustments and requires an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The guidance in this ASU is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years and should be applied prospectively to adjustment to provisional amounts that occur after the effective date of this ASU. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In April 2015 and August 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs and ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements- Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, respectively. The guidance in these ASUs is intended to simplify presentation of debt issuance costs, and requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability consistent with debt discounts and is applicable on a retrospective basis. The guidance in these ASUs is effective for interim and annual periods beginning after December 15, 2015. The adoption of these ASUs did not have a significant impact on Customers' financial condition or results of operations. In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis. The guidance in this ASU is intended to amend the update, which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendments in this ASU affect the following areas:
The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2015. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20)Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The guidance in this ASU was issued as part of the FASB's initiative to reduce complexity in accounting standards and eliminates from GAAP the concept of extraordinary items. The guidance in this update is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Subtopic 815-10): Determining Whether the Host contract in a Hybrid Financial Instrument in the Form of a Share is More Akin to Debt or to Equity. The guidance in this ASU requires entities that issue or invest in a hybrid financial instrument to separate an embedded derivative feature from a host contract and account for the feature as a derivative. In the case of derivatives embedded in a hybrid financial instrument that is issued in the form of a share, that criterion requires evaluating whether the nature of the host contract is more akin to debt or to equity and whether the economic characteristics and risks of the embedded derivative feature are clearly and closely related to the host contract. If the host contract is akin to equity, then equity-like features (for example, a conversion option) are considered clearly and closely related to the host contract and, thus, would not be separated from the host contract. If the host contract is akin to debt, then equity-like features are not considered clearly and closely related to the host contract. In the latter case, an entity may be required to separate the equity-like embedded derivative feature from the debt host contract if certain other criteria in Subtopic 815-15 are met. Similarly, debt-like embedded derivative features may require separate accounting from an equity-like host contract. The guidance in this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In August 2014, the FASB issued ASU 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. The guidance in this ASU affects creditors that hold government-guaranteed mortgage loans, including those guaranteed by the FHA and the VA. It requires that a mortgage loan be derecognized and a separate other receivable be recognized upon foreclosure if the following conditions are met:
Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The guidance in this ASU was effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The guidance may be applied using a prospective transition method in which a reporting entity applies the guidance to foreclosures that occur after the date of adoption, or a modified retrospective transition using a cumulative-effect adjustment (through a reclassification to a separate other receivable) as of the beginning of the annual period of adoption. Prior periods should not be adjusted. A reporting entity must apply the same method of transition as elected under ASU 2014-04. The adoption of this ASU did not have a significant impact on Customers' financial condition or results of operations. In August 2014, the FASB issued ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity. The guidance in this ASU applies to a reporting entity that is required to consolidate a collateralized financing entity under the Variable Interest Entities guidance when: (1) the reporting entity measures all of the financial assets and the financial liabilities of that consolidated collateralized financing entity at fair value in the consolidated financial statements based on other Codification Topics; and (2) the changes in the fair values of those financial assets and financial liabilities are reflected in earnings. The guidance in this ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation. The guidance in this ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period is treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite period, the remaining unrecognized cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. As indicated in the definition of vest, the stated vesting period (which includes the period in which the performance target could be achieved) may differ from the requisite service period. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2015. The adoption of this ASU did not have an impact on Customers' financial condition or results of operations. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU establishes a comprehensive revenue recognition standard for virtually all industries following U.S. GAAP, including those that previously followed industry-specific guidance such as the real estate and construction industries. The revenue standard’s core principal is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this, the standard requires five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) identify the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies the performance obligation. Three basic transition methods are available - full retrospective, retrospective with certain practical expedients, and a cumulative effect approach. Under the cumulative effect alternative, an entity would apply the new revenue standard only to contracts that are incomplete under legacy U.S. GAAP at the date of initial application and recognize the cumulative effect of the new standard as an adjustment to the opening balance of retained earnings. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The guidance in this ASU is now effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Customers does not expect this ASU to have a significant impact on its financial condition or results of operations. |
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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. FASB ASC 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. However, many of these instruments lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. For fair value disclosure purposes, Customers utilized certain fair value measurement criteria under the FASB ASC 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:
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 Financing Receivable | Impaired loans: Impaired loans are those that are accounted for under ASC 450, Contingencies, in which the Bank has measured impairment generally based on the fair value of the loan’s collateral. 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 included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. |
Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Earnings Per Share | The following are the components and results of the Bancorp’s earnings per share ("EPS") calculation 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 EPS in the future that were not included in the computation of diluted EPS 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) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following tables present the changes in accumulated other comprehensive income (loss) by component for the years ended December 31, 2015 and 2014.
(1) All amounts are net of tax. Amounts in parentheses indicate reductions to accumulated other comprehensive income. (2) Includes immaterial gains or losses on foreign currency items for the year ended December 31, 2014. (3) Reclassification amounts are reported as gain or loss on sale of investment securities on the Consolidated Statements of Income. |
Investment Securities (Tables) |
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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 are summarized as follows:
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Statement of Proceeds from Sale of Available for Sale Investment Securities | The following table shows proceeds from the sale of available-for-sale investment securities, gross gains, and gross losses on those sales of securities:
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Summary of Investment Securities by Stated Maturity | The following table shows debt investment securities by stated maturity. Investment securities backed by mortgages have expected maturities that differ from contractual maturities because borrowers have the right to call or prepay, and are, therefore, 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 were as follows:
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Loans Held for Sale (Tables) |
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Composition of Loans Held for Sale | The composition of loans held for sale as of December 31, 2015 and 2014 was as follows:
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Loans Receivable and Allowance for Loan Losses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Receivable | The following table presents loans receivable as of December 31, 2015 and 2014.
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Loans Receivable by Class and Performance Status | The following tables summarize loans receivable by loan type and performance status as of December 31, 2015 and 2014:
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Schedule of Changes in Allowance for Loans Losses | The following table presents changes in the allowance for loans losses and the FDIC loss sharing receivable, including the effect of the estimated clawback liability for the years ended December 31, 2015, 2014 and 2013.
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Schedule of FDIC Loss Sharing Receivable |
(a) Recorded as a reduction to Other Real Estate Owned expense (a component of non-interest expense). (b) Includes external costs, such as legal fees, real estate taxes and appraisal expenses, that qualify for reimbursement under loss share arrangements. |
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Summary of Impaired Loans |
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Analysis of Loans Modified in Troubled Debt Restructuring by Type of Concession | The following is an analysis of loans modified in a troubled debt restructuring by type of concession for the years ended December 31, 2015, 2014 and 2013. There were no modifications that involved forgiveness of debt.
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Summary of Loans and Leases Modified in Troubled Debt Restructurings and Recorded Investments |
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Credit Quality Tables | The following table presents the credit ratings as of December 31, 2015 and 2014 for the loans receivable portfolio.
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Schedule of Allowance for Loan Losses | The changes in the allowance for loan losses for the years ended December 31, 2015 and 2014 and the loans and allowance for loan losses by loan class based on impairment evaluation method are 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.
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Changes in Accretable Discount Related to Purchased Credit Impaired Loans | The changes in accretable yield related to purchased-credit-impaired loans for the years ended December 31, 2015, 2014 and 2013 were as follows:
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Bank Premises and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Bank Premises and Equipment | The components of bank premises and equipment as of December 31, 2015 and 2014 were as follows:
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Future Minimum Rental Commitments under Non-Cancelable Leases | Future minimum rental commitments under non-cancelable leases were as follows:
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Deposits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Deposits | The components of deposits at December 31, 2015 and 2014 were as follows:
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Schedule of Time Deposit Maturities | Time deposits scheduled maturities at December 31, 2015 were as follows:
|
Borrowings (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short Term Borrowings | Short-term debt at December 31, 2015 and 2014 was as follows:
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Summary of Bancorps Short Term Borrowings | The following is a summary of additional information relating to Customers' short-term debt:
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Contractual Maturities of Long-Term Advances | The contractual maturities of long-term advances from the FHLB were as follows:
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Share-Based Compensation Plans (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Weighted-Average Assumptions Used and Resulting Weighted-Average Fair Value of Option | The following table presents the weighted-average assumptions used and the resulting weighted-average fair value of each option granted.
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Summary of Stock Option Activity | The following summarizes stock option activity for the year ended December 31, 2015:
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Summary of Non-Vested Options | A summary of the status of Customers' non-vested options at December 31, 2015 and changes during the year ended December 31, 2015 is as follows:
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Status of Restricted Stock | The table below presents the status of the restricted stock units at December 31, 2015 and changes during the year ended December 31, 2015:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Tax Expense | The components of income tax expense were as follows:
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Schedule of Income (Loss) Before Income Tax Expense (Benefit) | Effective tax rates differ from the federal statutory rate of 35%, which is applied to income before income tax expense, due to the following:
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Components of Net Deferred Tax Assets (Liabilities) | The following represents the Bancorp's deferred tax asset and liabilities as December 31, 2015 and 2014:
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Transactions with Executive Officers, Directors, and Principal Shareholders (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Activity Relating to Loans | The activity relating to loans to such persons was as follows:
|
Financial Instruments with Off-Balance-Sheet Risk (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Instruments Outstanding Contract Amounts Represent Credit Risk | The following financial instruments were outstanding whose contract amounts represent credit risk:
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Regulatory Matters (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Capital Amounts, Tier 1 Risk Based and Tier 1 Leveraged Ratios | To be categorized as well capitalized, an institution must maintain minimum common equity Tier 1, total risk based, Tier 1 risk based and Tier 1 leveraged ratios as set forth in the following table:
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Disclosures about Fair Value of Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Values of Financial Instruments | The estimated fair values of Customers’ financial instruments were as follows at December 31, 2015 and 2014.
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Summary of Financial Assets and Liabilities Measured at Fair Value on a Recurring and Non-recurring Basis | For financial assets and liabilities measured at fair value on a recurring and non-recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2015 and 2014 were as follows:
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Statement of Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis | The changes in Level 3 assets and liabilities measured at fair value on a recurring basis at December 31, 2015 and 2014 were as follows:
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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 December 31, 2015 and 2014 for which Customers utilized Level 3 inputs to measure fair value:
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Derivative Instruments and Hedging Activities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivative Financial Instruments | The following table presents the fair value of Customers’ derivative financial instruments as well as the classification on the balance sheet at December 31, 2015 and 2014.
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Effect of Derivative Instruments on Comprehensive Income | The following table presents the effect of Customers' derivative financial instruments on comprehensive income for the years ended December 31, 2015 and 2014.
(1) Amounts presented are net of taxes |
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Summary of Offsetting of Financial Assets and Derivative Assets | 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.
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Summary of Offsetting of Financial Liabilities and Derivative Liabilities |
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Condensed Financial Statements of Parent Company (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Condensed Balance Sheets of Parent Company | Balance Sheets
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Summary of Condensed Income Statements of Parent Company | Income and Comprehensive Income Statements
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Summary of Condensed Statements of Cash Flows of Parent Company | Statements of Cash Flows
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Selected Quarterly Financial Data (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | The following table presents selected quarterly data for the years ended December 31, 2015 and 2014. Quarterly data may not agree to full year results.
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Description of the Business - Narrative (Detail) |
Dec. 31, 2015
Branch
|
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of branches | 14 |
Acquisition Activity - Narrative (Detail) $ in Millions |
3 Months Ended | 24 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 01, 2018
USD ($)
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Jul. 01, 2017
USD ($)
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Jul. 01, 2016
USD ($)
employee
|
Mar. 31, 2014
USD ($)
|
Mar. 31, 2013
USD ($)
Office
|
Jul. 01, 2018
USD ($)
|
|
Capital Unit [Line Items] | ||||||
Purchase price as percentage of loans outstanding | 98.70% | |||||
Commercial loans acquired | $ 182.3 | |||||
Portion of commercial loans drawn at date of acquisition | $ 155.1 | |||||
Number of commercial lending offices assumed | Office | 2 | |||||
New England Commercial Lending Acquisition | ||||||
Capital Unit [Line Items] | ||||||
Adjustable-rate jumbo mortgage loans purchased | $ 277.9 | |||||
Purchase price as percentage of loans outstanding | 100.75% | |||||
Scenario, Forecast | Higher One, Inc's Disbursements Business | ||||||
Capital Unit [Line Items] | ||||||
Number of employees hired | employee | 225 | |||||
Payments made to Higher One, Inc. | $ 10.0 | $ 10.0 | $ 17.0 | $ 42.0 | ||
Payments under transition services agreement | $ 5.0 |
Earnings Per Share - Components of Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Earnings Per Share [Abstract] | |||||||||||
Net income available to common shareholders | $ 16,780 | $ 14,309 | $ 11,049 | $ 13,952 | $ 13,178 | $ 11,662 | $ 10,233 | $ 8,136 | $ 56,090 | $ 43,214 | $ 32,694 |
Weighted-average number of common shares outstanding – basic (shares) | 26,844,545 | 26,719,626 | 24,485,078 | ||||||||
Share-based compensation plans (shares) | 1,516,297 | 968,671 | 464,054 | ||||||||
Warrants (shares) | 324,097 | 250,707 | 198,520 | ||||||||
Weighted-average number of common shares – diluted (shares) | 28,684,939 | 27,939,004 | 25,147,652 | ||||||||
Basic earnings per share (usd per share) | $ 0.62 | $ 0.53 | $ 0.41 | $ 0.52 | $ 0.49 | $ 0.44 | $ 0.38 | $ 0.30 | $ 2.09 | $ 1.62 | $ 1.34 |
Diluted earnings per share (usd per share) | $ 0.58 | $ 0.50 | $ 0.39 | $ 0.49 | $ 0.47 | $ 0.42 | $ 0.37 | $ 0.29 | $ 1.96 | $ 1.55 | $ 1.30 |
Earnings Per Share - Antidilutive Securities (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities | 658,337 | 254,606 | 938,284 |
Share-based compensation awards | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities | 606,095 | 135,861 | 819,539 |
Warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities | 52,242 | 118,745 | 118,745 |
Investment Securities - Narrative (Detail) $ in Millions |
Dec. 31, 2015
USD ($)
Security
|
Dec. 31, 2014
USD ($)
|
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Number of available-for-sale investment securities in the less than twelve month category (security) | 26 | |
Number of available-for-sale investment securities in the twelve month or more category (security) | 16 | |
Pledged investment securities fair value | $ | $ 299.8 | $ 376.9 |
Investment Securities - Statement of Proceeds from Sale of Available for Sale Investment Securities (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Investments, Debt and Equity Securities [Abstract] | |||
Proceeds from sale of available-for-sale investment securities | $ 806 | $ 213,249 | $ 135,193 |
Gross gains | 0 | 3,191 | 1,274 |
Gross losses | (85) | 0 | 0 |
Net gains | $ (85) | $ 3,191 | $ 1,274 |
Investment Securities - Summary of Investment Securities by Stated Maturity (Detail) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Investments, Debt and Equity Securities [Abstract] | |
Amortized cost, due in one year or less | $ 0 |
Amortized cost, due after one year through five years | 0 |
Amortized cost, due after five years through ten years | 32,925 |
Amortized cost, due after ten years | 7,000 |
Mortgage-backed securities, amortized cost | 506,111 |
Amortized cost | 546,036 |
Fair value, due in one year or less | 0 |
Fair value, due after one year through five years | 0 |
Fair value, due after five years through ten years | 33,112 |
Fair value, due after ten years | 6,955 |
Mortgage-backed securities, fair value | 500,974 |
Total debt securities, fair value | $ 541,041 |
Loans Held for Sale - Composition of Loans Held for Sale (Detail) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Total commercial loans held for sale | $ 1,794,207 | $ 1,431,810 | |||
Residential mortgage loans at fair value | 2,857 | 3,649 | |||
Total loans held for sale | 1,797,064 | 1,435,459 | |||
Transfer of loans from held for sale to held for investment | $ 30,400 | 30,365 | 18,826 | $ 0 | |
Transfer of loans from held for investment to held for sale | $ 164,700 | 0 | 164,681 | $ 0 | |
Mortgage warehouse | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Mortgage warehouse loans at fair value | 1,754,950 | 1,332,019 | |||
Multi-family | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Multi-family loans at lower of cost or fair value | $ 39,257 | $ 99,791 |
Loans Receivable and Allowance for Loan Losses - Schedule of Changes in Allowance for Loans Losses (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Allowance for Loan and Lease Losses [Roll Forward] | |||
Beginning Balance | $ 30,932 | $ 23,998 | $ 25,837 |
Provision for loan losses | 16,694 | 10,058 | 5,055 |
Charge-offs | (13,412) | (4,947) | (7,338) |
Recoveries | 1,433 | 1,823 | 444 |
Ending Balance | $ 35,647 | $ 30,932 | $ 23,998 |
Loans Receivable and Allowance for Loan Losses - Schedule of FDIC Loss Sharing Receivable (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
FDIC Indemnification Asset [Roll Forward] | |||||||||||
Beginning Balance | $ 2,320 | $ 10,046 | $ 2,320 | $ 10,046 | $ 12,343 | ||||||
Increase in FDIC loss sharing receivable net of clawback liability | (3,872) | (4,689) | 2,819 | ||||||||
Increased estimated cash flows from covered OREO | 3,138 | 0 | 0 | ||||||||
Other activity, net | 248 | 2,409 | 1,610 | ||||||||
Cash receipts from FDIC | (3,917) | (5,446) | (6,726) | ||||||||
Ending Balance | $ (2,083) | $ 2,320 | (2,083) | 2,320 | 10,046 | ||||||
Provision for loan losses | 16,694 | 10,058 | 5,055 | ||||||||
Effect attributable to FDIC loss share arrangements | 3,872 | 4,689 | (2,819) | ||||||||
Provision for loan losses | $ 6,173 | $ 2,094 | $ 9,335 | $ 2,964 | $ 2,459 | $ 5,035 | $ 2,886 | $ 4,368 | $ 20,566 | $ 14,747 | $ 2,236 |
Loans Receivable and Allowance for Loan Losses - Analysis of Loans Modified in Troubled Debt Restructuring by Type of Concession (Detail) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015
USD ($)
Loan
|
Dec. 31, 2014
USD ($)
Loan
|
Dec. 31, 2013
USD ($)
Loan
|
|
Financing Receivable, Modifications [Line Items] | |||
Number of Loans | Loan | 162 | 21 | 14 |
Recorded Investment | $ | $ 7,457 | $ 1,080 | $ 1,238 |
Extended under forbearance | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Loans | Loan | 1 | 11 | 0 |
Recorded Investment | $ | $ 183 | $ 460 | $ 0 |
Interest-rate reductions | |||
Financing Receivable, Modifications [Line Items] | |||
Number of Loans | Loan | 161 | 10 | 14 |
Recorded Investment | $ | $ 7,274 | $ 620 | $ 1,238 |
Loans Receivable and Allowance for Loan Losses - Changes in Accretable Discount Related to Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | |||
Accretable yield balance, beginning of period | $ 17,606 | $ 22,557 | $ 32,174 |
Accretion to interest income | (2,299) | (3,201) | (6,213) |
Reclassification from nonaccretable difference and disposals, net | (2,360) | (1,750) | (3,404) |
Accretable yield balance, end of period | $ 12,947 | $ 17,606 | $ 22,557 |
Bank Premises and Equipment - Narrative (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Property, Plant and Equipment [Abstract] | |||
Rent expense | $ 3.8 | $ 3.3 | $ 2.5 |
Bank Premises and Equipment - Future Minimum Rental Commitments Under Non-Cancelable Leases (Detail) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Leases [Abstract] | |
2016 | $ 3,861 |
2017 | 3,662 |
2018 | 3,450 |
2019 | 2,826 |
2020 | 1,994 |
Subsequent to 2020 | 3,258 |
Total minimum payments | $ 19,051 |
Deposits - Narrative (Detail) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deposits [Abstract] | ||
Demand deposits overdrafts | $ 0.6 | $ 0.8 |
Time deposits greater than $250,000 | 920.5 | 365.4 |
Brokered money market deposits | 815.7 | 632.7 |
Brokered certificates of deposit | $ 612.8 | $ 483.2 |
Deposits - Components of Deposits (Detail) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deposits, by Component, Alternative [Abstract] | ||
Demand, non-interest bearing | $ 653,679 | $ 546,436 |
Demand, interest bearing | 127,215 | 71,202 |
Savings, including money market deposit accounts | 2,781,010 | 2,203,237 |
Time, $100,000 and over | 1,624,562 | 1,043,265 |
Time, other | 723,035 | 668,398 |
Total deposits | $ 5,909,501 | $ 4,532,538 |
Deposits - Schedule of Time Deposit Maturities (Detail) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Time Deposits, Rolling Year Maturity [Abstract] | |
2016 | $ 1,799,310 |
2017 | 312,813 |
2018 | 135,952 |
2019 | 53,591 |
2020 | 45,931 |
Total time deposits | $ 2,347,597 |
Borrowings - Short Term Borrowings (Detail) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Short-term Debt [Abstract] | ||
FHLB advances, amount | $ 1,365,300 | $ 1,298,000 |
Federal funds purchased, carrying value | 70,000 | 0 |
Total short-term borrowings, amount | $ 1,435,300 | $ 1,298,000 |
FHLB advances, rate | 0.48% | 0.29% |
Federal funds purchased, rate | 0.56% | 0.00% |
Borrowings - Summary of Bancorps Short Term Borrowings (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
FHLB Advances | |||
Short-term Debt [Line Items] | |||
Maximum outstanding at any month end | $ 1,365,300 | $ 1,383,000 | $ 769,750 |
Average balance during the year | $ 844,835 | $ 898,396 | $ 120,309 |
Weighted-average interest rate during the year | 0.60% | 0.46% | 0.55% |
Federal Funds Purchased | |||
Short-term Debt [Line Items] | |||
Maximum outstanding at any month end | $ 85,000 | $ 35,000 | $ 125,000 |
Average balance during the year | $ 41,397 | $ 13,312 | $ 32,351 |
Weighted-average interest rate during the year | 0.35% | 0.31% | 0.31% |
Borrowings - Contractual Maturities of Long-Term Advances (Detail) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
2016 | $ 0 | $ 85,000 |
2017 | 205,000 | 180,000 |
2018 | 55,000 | 55,000 |
Total long-term borrowings | $ 260,000 | $ 320,000 |
2016, rate | 0.00% | 0.59% |
2017, rate | 1.18% | 1.21% |
2018, rate | 1.61% | 1.61% |
Employee Benefit Plans - Narrative (Detail) |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
SERP_retirement_age
|
Dec. 31, 2015
USD ($)
year
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
|
Compensation and Retirement Disclosure [Abstract] | |||||||
Employers matching contribution | 50.00% | ||||||
Employees first contribution | 6.00% | ||||||
401(k) profit sharing plan, employers matching contribution amount | $ 1,100,000 | $ 1,000,000 | $ 600,000 | ||||
SERP annual retirement benefits period (years) | 15 years | ||||||
SERP retirement age | 65 | 65 | |||||
SERP target annual retirement benefit | $ 300,000 | 300,000 | $ 300,000 | $ 300,000 | $ 300,000 | ||
SERP annual rate of return | 7.00% | ||||||
SERP present value of the amount owed | $ 3,600,000 | $ 3,600,000 | $ 3,600,000 | $ 3,600,000 | $ 3,600,000 |
Share-Based Compensation Plans - Statement of Weighted-Average Assumptions Used and Resulting Weighted-Average Fair Value of Option (Detail) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Weighted-average risk-free interest rate | 1.90% | 2.16% | 1.42% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Weighted-average expected volatility | 21.18% | 18.00% | 13.77% |
Weighted-average expected life (in years) | 7 years | 7 years | 7 years |
Weighted-average fair value of each option granted | $ 6.42 | $ 4.52 | $ 3.17 |
Income Taxes - Narrative (Detail) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Taxes [Line Items] | |||
Federal income tax at statutory rate | 35.00% | 35.00% | 35.00% |
Percentage of tax position will realized or sustained upon examination | 50.00% | ||
Net operating loss carryovers | $ 6.5 | ||
Net operating loss carryovers expire period | 2025 through 2031 | ||
Minimum | |||
Income Taxes [Line Items] | |||
Percentage of tax position will realized or sustained upon examination | 50.00% |
Income Taxes - Components of Income Tax Expense (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Components of Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||||||||||
Current | $ 40,004 | $ 26,361 | $ 15,394 | ||||||||
Deferred | (10,092) | (6,187) | 2,210 | ||||||||
Total | $ 7,415 | $ 8,415 | $ 6,400 | $ 7,682 | $ 7,289 | $ 3,940 | $ 5,517 | $ 3,429 | $ 29,912 | $ 20,174 | $ 17,604 |
Income Taxes - Schedule of Income (Loss) Before Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||||||||||
Federal income tax at statutory rate, amount | $ 30,973 | $ 22,185 | $ 17,604 | ||||||||
Federal income tax at statutory rate, percentage of pretax income | 35.00% | 35.00% | 35.00% | ||||||||
State income tax, amount | $ 1,434 | $ 1,355 | $ 353 | ||||||||
State income tax, percentage of pretax income | 1.62% | 2.14% | 0.70% | ||||||||
Tax-exempt interest, net of disallowance amount | $ (277) | $ (249) | $ (148) | ||||||||
Tax-exempt interest, net of disallowance percentage of pretax income | (0.31%) | (0.39%) | (0.30%) | ||||||||
Bank-owned life insurance, amount | $ (2,422) | $ (1,296) | $ (868) | ||||||||
Bank-owned life insurance, percentage of pretax income | (2.73%) | (2.04%) | (1.73%) | ||||||||
Other, amount | $ 204 | $ (1,821) | $ 663 | ||||||||
Other, percentage of pretax income | 0.22% | (2.88%) | 1.33% | ||||||||
Total | $ 7,415 | $ 8,415 | $ 6,400 | $ 7,682 | $ 7,289 | $ 3,940 | $ 5,517 | $ 3,429 | $ 29,912 | $ 20,174 | $ 17,604 |
Effective income tax rate, percentage of pretax income | 33.80% | 31.83% | 35.00% |
Income Taxes - Components of Net Deferred Tax Assets (Liabilities) (Detail) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred tax assets: | ||
Allowance for loan losses | $ 13,248 | $ 11,555 |
Net unrealized losses on securities | 3,112 | 0 |
OREO expenses | 728 | 588 |
Non-accrual interest | 840 | 541 |
Net operating losses | 2,290 | 1,892 |
Deferred compensation | 1,337 | 1,361 |
Equity-based compensation | 5,196 | 3,751 |
Fair value adjustments on acquisitions | 428 | 0 |
Cash flow hedge | 1,679 | 681 |
Incentive compensation | 2,497 | 1,558 |
Other | 1,374 | 1,120 |
Total deferred tax assets | 32,729 | 23,047 |
Deferred tax liabilities: | ||
Fair value adjustments on acquisitions | 0 | (2,002) |
Net unrealized gains on securities | 0 | (615) |
Net deferred loan fees | (2,688) | (4,524) |
Bank premises and equipment | (875) | (1,009) |
Other | (592) | (1,140) |
Total deferred tax liabilities | (4,155) | (9,290) |
Net deferred tax asset | $ 28,574 | $ 13,757 |
Transactions with Executive Officers, Directors, and Principal Shareholders - Narrative (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Related Party Transaction [Line Items] | |||
Percentage of gross revenue | 5.00% | ||
Percentage of aggregate amount of consolidated assets | 5.00% | ||
Related party deposits | $ 14,000,000 | $ 11,700,000 | |
Director | Jaxxon Promotions, Inc. | |||
Related Party Transaction [Line Items] | |||
Amount paid to related party | $ 27,300 | $ 46,900 | $ 45,800 |
Percentage of shareholding by director | 25.00% | ||
Minimum | |||
Related Party Transaction [Line Items] | |||
Percentage of participation in equity | 10.00% | ||
Line of Credit | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Available credit line | $ 1,800,000.0 | ||
Unfunded Loan Commitment | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Commitment to provide short-term commercial real estate financing | $ 8,000,000 |
Transactions with Executive Officers, Directors, and Principal Shareholders - Schedule of Activity Relating to Loans (Detail) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Loans and Leases Receivable, Related Parties [Roll Forward] | |||
Balance – January 1 | $ 9 | $ 7,273 | $ 3,272 |
Additions | 2,218 | 5 | 9,280 |
Repayments | (2,007) | (7,269) | (5,279) |
Balance – December 31 | $ 220 | $ 9 | $ 7,273 |
Financial Instruments with Off-Balance-Sheet Risk - Schedule of Financial Instruments Outstanding Contract Amounts Represent Credit Risk (Detail) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments to fund loans | $ 537,380 | $ 231,294 |
Unfunded commitments to fund mortgage warehouse loans | 1,302,759 | 713,619 |
Unfunded commitments under lines of credit | 436,550 | 430,995 |
Letters of credit | 42,002 | 36,206 |
Other unused commitments | $ 6,360 | $ 7,685 |
Regulatory Matters - Narrative (Details) |
Dec. 31, 2015 |
Jan. 01, 2015 |
---|---|---|
Banking and Thrift [Abstract] | ||
Tier 1 capital (to risk-weighted assets), for capital adequacy purposes ratio | 6.00% | |
Tier 1 capital (to risk-weighted assets), to be well capitalized under prompt corrective action provisions ratio | 8.00% | |
Capital conservation buffer | 2.50% | |
Maximum buffer, percent of risk weighted assets for 2016 | 0.625% | |
Maximum buffer, percent of risk weighted assets for 2017 | 1.25% | |
Maximum buffer, percent of risk weighted assets for 2018 | 1.875% | |
Maximum buffer, percent of risk weighted assets for 2019 | 2.50% |
Disclosures about Fair Value of Financial Instruments - Narrative (Detail) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Jun. 26, 2014 |
Aug. 31, 2013 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Loans held for sale, average life from purchase to sale (days) | 19 days | ||
Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Senior unsecured notes aggregate amount | $ 25,000,000.0 | ||
Senior Notes Due 2018 | Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Senior unsecured notes term (years) | 5 years | ||
Senior unsecured notes aggregate amount | $ 63,300,000.0 |
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 |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at January 1, | $ 43 | $ 240 |
Issuances | 273 | 235 |
Settlements | (271) | (432) |
Balance at December 31, | $ 45 | $ 43 |
Derivative Instruments and Hedging Activities - Summary of Offsetting of Financial Assets and Derivative Assets (Detail) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Offsetting Assets [Line Items] | ||
Net Amounts of Assets Presented in the Consolidated Balance Sheet | $ 9,295 | $ 7,552 |
Interest rate swaps | ||
Offsetting Assets [Line Items] | ||
Gross Amount of Recognized Assets | 0 | 192 |
Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Net Amounts of Assets Presented in the Consolidated Balance Sheet | 0 | 192 |
Financial Instruments | 0 | 192 |
Cash Collateral Received | 0 | 0 |
Net Amount | $ 0 | $ 0 |
Derivative Instruments and Hedging Activities - Summary of Offsetting of Financial Liabilities and Derivative Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Offsetting Assets [Line Items] | ||
Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | $ 13,932 | $ 9,716 |
Interest rate swaps | ||
Offsetting Assets [Line Items] | ||
Gross Amount of Recognized Liabilities | 13,932 | 9,703 |
Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Net Amounts of Liabilities Presented in the Consolidated Balance Sheet | 13,932 | 9,703 |
Financial Instruments | 0 | 192 |
Cash Collateral Pledged | 13,932 | 9,511 |
Net Amount | $ 0 | $ 0 |
Loss Contingency - Narrative (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2013 |
Mar. 31, 2013 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Loss Contingencies [Line Items] | |||||
Loans held-for-sale involved in fraud | $ 5,200 | ||||
Range of possible loss, minimum | 1,500 | ||||
Range of possible loss, maximum | 3,200 | ||||
Loss contingency | $ 2,000 | $ 0 | $ 0 | $ 2,000 | |
Loan held for sale not involved in fraud | $ 1,000 | ||||
Loans recovered in cash from alleged perpetrator | 1,500 | ||||
Loans transferred to other assets | 2,700 | ||||
Reserve transferred to other assets | $ 2,000 | ||||
Fraud on Loans Held for Sale | Other assets | |||||
Loss Contingencies [Line Items] | |||||
Net amount of receivable and reserve remaining in other assets | $ 600 |
Condensed Financial Statements of Parent Company - Summary of Condensed Balance Sheets of Parent Company (Detail) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
Dec. 31, 2012 |
---|---|---|---|---|
ASSETS | ||||
Cash in subsidiary bank | $ 264,593 | $ 371,023 | $ 233,068 | $ 186,016 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
Other borrowings | 88,250 | 88,250 | ||
Total liabilities | 7,847,411 | 6,382,225 | ||
Shareholders’ equity | 553,902 | 443,145 | 386,623 | 269,475 |
Total liabilities and shareholders’ equity | 8,401,313 | 6,825,370 | ||
The Customer Bancorp | ||||
ASSETS | ||||
Cash in subsidiary bank | 54,567 | 16,465 | $ 13,254 | $ 44,679 |
Investment securities available for sale, at fair value | 5 | 5 | ||
Investments in and receivables due from subsidiaries | 583,875 | 509,465 | ||
Other assets | 4,190 | 6,678 | ||
Total assets | 642,637 | 532,613 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
Other borrowings | 88,250 | 88,250 | ||
Other liabilities | 485 | 1,218 | ||
Total liabilities | 88,735 | 89,468 | ||
Shareholders’ equity | 553,902 | 443,145 | ||
Total liabilities and shareholders’ equity | $ 642,637 | $ 532,613 |
Condensed Financial Statements of Parent Company - Summary of Condensed Income Statements of Parent Company (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Operating expense: | |||||||||||
Interest | $ 14,245 | $ 13,802 | $ 13,125 | $ 12,388 | $ 12,175 | $ 11,084 | $ 8,162 | $ 7,082 | $ 53,560 | $ 38,504 | $ 24,301 |
Income tax benefit | (7,415) | (8,415) | (6,400) | (7,682) | (7,289) | (3,940) | (5,517) | (3,429) | (29,912) | (20,174) | (17,604) |
Net income | 17,786 | 15,289 | 11,556 | 13,952 | 58,583 | 43,214 | 32,694 | ||||
Preferred stock dividend | 1,006 | 980 | 507 | 0 | 2,493 | 0 | 0 | ||||
Net income available to common shareholders | $ 16,780 | $ 14,309 | $ 11,049 | $ 13,952 | $ 13,178 | $ 11,662 | $ 10,233 | $ 8,136 | 56,090 | 43,214 | 32,694 |
Comprehensive income | 50,721 | 51,210 | 23,512 | ||||||||
The Customer Bancorp | |||||||||||
Operating income: | |||||||||||
Other | 18,545 | 90 | 758 | ||||||||
Total operating income | 18,545 | 90 | 758 | ||||||||
Operating expense: | |||||||||||
Interest | 5,854 | 5,251 | 1,923 | ||||||||
Other | 4,604 | 5,611 | 3,395 | ||||||||
Total operating expense | 10,458 | 10,862 | 5,318 | ||||||||
Income (loss) before taxes and undistributed income of subsidiaries | 8,087 | (10,772) | (4,560) | ||||||||
Income tax benefit | 3,516 | 3,797 | 1,596 | ||||||||
Income (loss) before undistributed income of subsidiaries | 11,603 | (6,975) | (2,964) | ||||||||
Equity in undistributed earnings of subsidiaries | 46,980 | 50,189 | 35,658 | ||||||||
Net income | 58,583 | 43,214 | 32,694 | ||||||||
Preferred stock dividend | 2,493 | 0 | 0 | ||||||||
Net income available to common shareholders | 56,090 | 43,214 | 32,694 | ||||||||
Comprehensive income | $ 50,721 | $ 51,210 | $ 23,512 |
Selected Quarterly Financial Data (Unaudited) - Schedule of Quarterly Financial Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Statement [Abstract] | |||||||||||
Interest income | $ 67,713 | $ 63,736 | $ 59,683 | $ 58,718 | $ 57,161 | $ 51,298 | $ 45,092 | $ 36,874 | $ 249,850 | $ 190,427 | $ 128,156 |
Interest expense | 14,245 | 13,802 | 13,125 | 12,388 | 12,175 | 11,084 | 8,162 | 7,082 | 53,560 | 38,504 | 24,301 |
Net interest income | 53,468 | 49,934 | 46,558 | 46,330 | 44,986 | 40,214 | 36,930 | 29,792 | 196,290 | 151,923 | 103,855 |
Provision for loan losses, net of change to FDIC receivable and clawback liability | 6,173 | 2,094 | 9,335 | 2,964 | 2,459 | 5,035 | 2,886 | 4,368 | 20,566 | 14,747 | 2,236 |
Non-interest income | 9,420 | 6,171 | 6,393 | 5,733 | 5,804 | 5,102 | 6,911 | 7,310 | 27,717 | 25,126 | 22,703 |
Non-interest expenses | 31,514 | 30,307 | 25,660 | 27,465 | 27,864 | 24,679 | 25,205 | 21,169 | 114,946 | 98,914 | 74,024 |
Income before income tax expense | 25,201 | 23,704 | 17,956 | 21,634 | 20,467 | 15,602 | 15,750 | 11,565 | 88,495 | 63,388 | 50,298 |
Provision for income taxes | 7,415 | 8,415 | 6,400 | 7,682 | 7,289 | 3,940 | 5,517 | 3,429 | 29,912 | 20,174 | 17,604 |
Net income | 17,786 | 15,289 | 11,556 | 13,952 | 58,583 | 43,214 | 32,694 | ||||
Preferred stock dividend | 1,006 | 980 | 507 | 0 | 2,493 | 0 | 0 | ||||
Net income available to common shareholders | $ 16,780 | $ 14,309 | $ 11,049 | $ 13,952 | $ 13,178 | $ 11,662 | $ 10,233 | $ 8,136 | $ 56,090 | $ 43,214 | $ 32,694 |
Earnings per common share: | |||||||||||
Basic earnings per share (usd per share) | $ 0.62 | $ 0.53 | $ 0.41 | $ 0.52 | $ 0.49 | $ 0.44 | $ 0.38 | $ 0.30 | $ 2.09 | $ 1.62 | $ 1.34 |
Diluted earnings per share (usd per share) | $ 0.58 | $ 0.50 | $ 0.39 | $ 0.49 | $ 0.47 | $ 0.42 | $ 0.37 | $ 0.29 | $ 1.96 | $ 1.55 | $ 1.30 |
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Jan. 22, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Subsequent Event [Line Items] | ||||
Preferred stock, shares authorized | 100,000,000 | 100,000,000 | ||
Net proceeds from issuance of preferred stock | $ 55,569 | $ 0 | $ 0 | |
Subsequent Event | Series D Preferred Stock | ||||
Subsequent Event [Line Items] | ||||
Preferred stock, shares authorized | 1,000,000 | |||
Preferred stock, share price (usd per share) | $ 25.00 | |||
Preferred stock, fixed dividend rate | 6.50% | |||
Net proceeds from issuance of preferred stock | $ 24,200 | |||
Subsequent Event | Series D Preferred Stock | London Interbank Offered Rate (LIBOR) | ||||
Subsequent Event [Line Items] | ||||
Preferred stock, floating dividend rate | 5.09% |
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