10-K 1 cubi-20231231.htm 10-K cubi-20231231
00014888132023FYFALSEhttp://fasb.org/us-gaap/2023#InterestReceivablehttp://fasb.org/us-gaap/2023#InterestReceivablehttp://fasb.org/us-gaap/2023#InterestReceivablehttp://fasb.org/us-gaap/2023#InterestReceivablehttp://fasb.org/us-gaap/2023#InterestReceivablehttp://fasb.org/us-gaap/2023#InterestReceivableP1Yhttp://fasb.org/us-gaap/2023#OtherAssetshttp://fasb.org/us-gaap/2023#OtherAssetshttp://fasb.org/us-gaap/2023#OtherLiabilitieshttp://fasb.org/us-gaap/2023#OtherLiabilitiesP3YP5YP3YP3YP3YP3Yhttp://fasb.org/us-gaap/2023#OtherAssetshttp://fasb.org/us-gaap/2023#AccountsPayableAndOtherAccruedLiabilitieshttp://fasb.org/us-gaap/2023#OtherAssetshttp://fasb.org/us-gaap/2023#AccountsPayableAndOtherAccruedLiabilitieshttp://fasb.org/us-gaap/2023#InterestIncomeExpenseNethttp://fasb.org/us-gaap/2023#InterestIncomeExpenseNethttp://fasb.org/us-gaap/2023#InterestIncomeExpenseNethttp://fasb.org/us-gaap/2023#InterestIncomeExpenseNethttp://fasb.org/us-gaap/2023#InterestIncomeExpenseNethttp://fasb.org/us-gaap/2023#InterestIncomeExpenseNethttp://fasb.org/us-gaap/2023#InterestIncomeExpenseNethttp://fasb.org/us-gaap/2023#InterestIncomeExpenseNethttp://fasb.org/us-gaap/2023#InterestIncomeExpenseNethttp://fasb.org/us-gaap/2023#UnrealizedGainLossOnDerivativeshttp://fasb.org/us-gaap/2023#UnrealizedGainLossOnDerivativeshttp://fasb.org/us-gaap/2023#UnrealizedGainLossOnDerivativeshttp://fasb.org/us-gaap/2023#InterestExpensehttp://fasb.org/us-gaap/2023#InterestExpensehttp://fasb.org/us-gaap/2023#InterestExpensehttp://fasb.org/us-gaap/2023#GainLossOnDiscontinuationOfCashFlowHedgeDueToForecastedTransactionProbableOfNotOccurringNethttp://fasb.org/us-gaap/2023#GainLossOnDiscontinuationOfCashFlowHedgeDueToForecastedTransactionProbableOfNotOccurringNethttp://fasb.org/us-gaap/2023#GainLossOnDiscontinuationOfCashFlowHedgeDueToForecastedTransactionProbableOfNotOccurringNet00014888132023-01-012023-12-310001488813us-gaap:CommonStockMember2023-01-012023-12-310001488813us-gaap:SeriesEPreferredStockMember2023-01-012023-12-310001488813us-gaap:SeriesFPreferredStockMember2023-01-012023-12-310001488813us-gaap:SubordinatedDebtMember2023-01-012023-12-3100014888132023-06-30iso4217:USD00014888132024-02-26xbrli:shares00014888132023-12-3100014888132022-12-31iso4217:USDxbrli:shares00014888132022-01-012022-12-3100014888132021-01-012021-12-310001488813cubi:BMTechnologiesIncMemberus-gaap:DiscontinuedOperationsDisposedOfBySaleMember2022-01-012022-12-310001488813cubi:BMTechnologiesIncMemberus-gaap:DiscontinuedOperationsDisposedOfBySaleMember2021-01-012021-12-310001488813us-gaap:PreferredStockMember2020-12-310001488813us-gaap:CommonStockMember2020-12-310001488813us-gaap:AdditionalPaidInCapitalMember2020-12-310001488813us-gaap:RetainedEarningsMember2020-12-310001488813us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001488813us-gaap:TreasuryStockCommonMember2020-12-3100014888132020-12-310001488813us-gaap:RetainedEarningsMember2021-01-012021-12-310001488813us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-12-310001488813us-gaap:PreferredStockMember2021-01-012021-12-310001488813us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310001488813us-gaap:CommonStockMember2021-01-012021-12-310001488813us-gaap:TreasuryStockCommonMember2021-01-012021-12-310001488813us-gaap:PreferredStockMember2021-12-310001488813us-gaap:CommonStockMember2021-12-310001488813us-gaap:AdditionalPaidInCapitalMember2021-12-310001488813us-gaap:RetainedEarningsMember2021-12-310001488813us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001488813us-gaap:TreasuryStockCommonMember2021-12-3100014888132021-12-310001488813us-gaap:RetainedEarningsMember2022-01-012022-12-310001488813us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-12-310001488813us-gaap:AdditionalPaidInCapitalMember2022-01-012022-12-310001488813us-gaap:CommonStockMember2022-01-012022-12-310001488813us-gaap:TreasuryStockCommonMember2022-01-012022-12-310001488813us-gaap:PreferredStockMember2022-12-310001488813us-gaap:CommonStockMember2022-12-310001488813us-gaap:AdditionalPaidInCapitalMember2022-12-310001488813us-gaap:RetainedEarningsMember2022-12-310001488813us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001488813us-gaap:TreasuryStockCommonMember2022-12-310001488813us-gaap:RetainedEarningsMember2023-01-012023-12-310001488813us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-12-310001488813us-gaap:AdditionalPaidInCapitalMember2023-01-012023-12-310001488813us-gaap:CommonStockMember2023-01-012023-12-310001488813us-gaap:TreasuryStockCommonMember2023-01-012023-12-310001488813us-gaap:PreferredStockMember2023-12-310001488813us-gaap:CommonStockMember2023-12-310001488813us-gaap:AdditionalPaidInCapitalMember2023-12-310001488813us-gaap:RetainedEarningsMember2023-12-310001488813us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001488813us-gaap:TreasuryStockCommonMember2023-12-310001488813us-gaap:SeriesCPreferredStockMember2022-01-012022-12-310001488813us-gaap:SeriesDPreferredStockMember2022-01-012022-12-310001488813us-gaap:SeriesCPreferredStockMember2021-01-012021-12-310001488813us-gaap:SeriesDPreferredStockMember2021-01-012021-12-310001488813us-gaap:SeriesEPreferredStockMember2021-01-012021-12-310001488813us-gaap:SeriesFPreferredStockMember2021-01-012021-12-31cubi:branchxbrli:pure0001488813us-gaap:SegmentDiscontinuedOperationsMembercubi:BankMobileTechnologiesIncMember2021-01-042021-01-040001488813us-gaap:SegmentDiscontinuedOperationsMembercubi:BankMobileTechnologiesIncMember2021-05-012021-05-310001488813cubi:BMTechnologiesIncMemberus-gaap:DiscontinuedOperationsDisposedOfBySaleMember2023-01-012023-12-310001488813us-gaap:StockCompensationPlanMember2023-01-012023-12-310001488813us-gaap:StockCompensationPlanMember2022-01-012022-12-310001488813us-gaap:StockCompensationPlanMember2021-01-012021-12-310001488813us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-12-310001488813us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310001488813us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-01-012021-12-310001488813us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-12-310001488813us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-12-310001488813us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310001488813us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-01-012022-12-310001488813us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-12-310001488813us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-12-310001488813us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-12-310001488813us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-01-012023-12-310001488813us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-01-012023-12-310001488813us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-12-310001488813us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMember2023-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMember2023-12-310001488813us-gaap:CollateralizedLoanObligationsMember2023-12-310001488813us-gaap:CommercialMortgageBackedSecuritiesMember2023-12-310001488813us-gaap:CorporateNoteSecuritiesMember2023-12-310001488813us-gaap:CollateralizedMortgageObligationsMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMember2022-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMember2022-12-310001488813us-gaap:CollateralizedLoanObligationsMember2022-12-310001488813us-gaap:CommercialMortgageBackedSecuritiesMember2022-12-310001488813us-gaap:CorporateNoteSecuritiesMember2022-12-310001488813us-gaap:CollateralizedMortgageObligationsMember2022-12-31cubi:securitycubi:corporateNote0001488813us-gaap:AssetBackedSecuritiesMember2021-12-310001488813us-gaap:CorporateNoteSecuritiesMember2021-12-310001488813us-gaap:AssetBackedSecuritiesMember2023-01-012023-12-310001488813us-gaap:CorporateNoteSecuritiesMember2023-01-012023-12-310001488813us-gaap:AssetBackedSecuritiesMember2022-01-012022-12-310001488813us-gaap:CorporateNoteSecuritiesMember2022-01-012022-12-310001488813us-gaap:AssetPledgedAsCollateralMember2023-12-310001488813cubi:NotRatedMemberus-gaap:AssetBackedSecuritiesMember2023-12-310001488813us-gaap:ResidentialMortgageBackedSecuritiesMember2023-12-310001488813cubi:AgencyGuaranteedCommercialMortgageBackedSecuritiesMember2023-12-310001488813cubi:AgencyGuaranteedCommercialCollateralizedMortgageObligationsMember2023-12-310001488813us-gaap:ResidentialMortgageBackedSecuritiesMember2022-12-310001488813cubi:AgencyGuaranteedCommercialMortgageBackedSecuritiesMember2022-12-310001488813cubi:AgencyGuaranteedCommercialCollateralizedMortgageObligationsMember2022-12-3100014888132022-06-012022-06-3000014888132022-09-302022-09-300001488813us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2022-12-310001488813cubi:PersonalAndOtherInstallmentLoansMembercubi:ConsumerLoanHeldForSaleMember2023-06-302023-06-300001488813cubi:OtherInstallmentLoansMembercubi:ConsumerLoanHeldForSaleMember2023-06-302023-06-300001488813us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMembercubi:CreditRatingAAARatingMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMembercubi:CreditRatingAARatingMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMembercubi:CreditRatingARatingMember2023-12-310001488813cubi:CreditRatingAAARatingMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2023-12-310001488813us-gaap:ResidentialMortgageBackedSecuritiesMembercubi:CreditRatingAARatingMember2023-12-310001488813us-gaap:ResidentialMortgageBackedSecuritiesMembercubi:CreditRatingARatingMember2023-12-310001488813cubi:NotRatedMemberus-gaap:ResidentialMortgageBackedSecuritiesMember2023-12-310001488813cubi:CreditRatingAAARatingMembercubi:AgencyGuaranteedCommercialMortgageBackedSecuritiesMember2023-12-310001488813cubi:AgencyGuaranteedCommercialMortgageBackedSecuritiesMembercubi:CreditRatingAARatingMember2023-12-310001488813cubi:AgencyGuaranteedCommercialMortgageBackedSecuritiesMembercubi:CreditRatingARatingMember2023-12-310001488813cubi:NotRatedMembercubi:AgencyGuaranteedCommercialMortgageBackedSecuritiesMember2023-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMembercubi:CreditRatingAAARatingMember2023-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMembercubi:CreditRatingAARatingMember2023-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMembercubi:CreditRatingARatingMember2023-12-310001488813cubi:NotRatedMembercubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMember2023-12-310001488813cubi:CreditRatingAAARatingMembercubi:AgencyGuaranteedCommercialCollateralizedMortgageObligationsMember2023-12-310001488813cubi:AgencyGuaranteedCommercialCollateralizedMortgageObligationsMembercubi:CreditRatingAARatingMember2023-12-310001488813cubi:CreditRatingARatingMembercubi:AgencyGuaranteedCommercialCollateralizedMortgageObligationsMember2023-12-310001488813cubi:NotRatedMembercubi:AgencyGuaranteedCommercialCollateralizedMortgageObligationsMember2023-12-310001488813cubi:CreditRatingAAARatingMemberus-gaap:CollateralizedMortgageObligationsMember2023-12-310001488813us-gaap:CollateralizedMortgageObligationsMembercubi:CreditRatingAARatingMember2023-12-310001488813cubi:CreditRatingARatingMemberus-gaap:CollateralizedMortgageObligationsMember2023-12-310001488813cubi:NotRatedMemberus-gaap:CollateralizedMortgageObligationsMember2023-12-310001488813cubi:CreditRatingAAARatingMember2023-12-310001488813cubi:CreditRatingAARatingMember2023-12-310001488813cubi:CreditRatingARatingMember2023-12-310001488813cubi:NotRatedMember2023-12-310001488813us-gaap:AssetPledgedAsCollateralMember2022-12-310001488813us-gaap:NonperformingFinancingReceivableMember2023-12-310001488813us-gaap:NonperformingFinancingReceivableMember2022-12-310001488813cubi:PersonalAndOtherInstallmentLoansMembercubi:ConsumerLoanHeldForSaleMember2023-01-012023-12-310001488813us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2023-01-012023-12-310001488813us-gaap:CommercialBorrowerMembercubi:SpecialtyLendingMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:SpecialtyLendingMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:OtherCommercialAndIndustrialMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:OtherCommercialAndIndustrialMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:ConstructionPortfolioSegmentMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:ConstructionPortfolioSegmentMember2022-12-310001488813us-gaap:CommercialBorrowerMember2023-12-310001488813us-gaap:CommercialBorrowerMember2022-12-310001488813us-gaap:ConsumerBorrowerMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001488813us-gaap:ConsumerBorrowerMemberus-gaap:ResidentialPortfolioSegmentMember2022-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:ConsumerBorrowerMember2023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:ConsumerBorrowerMember2022-12-310001488813us-gaap:ConsumerBorrowerMembercubi:PersonalInstallmentLoansPortfolioSegmentMember2023-12-310001488813us-gaap:ConsumerBorrowerMembercubi:PersonalInstallmentLoansPortfolioSegmentMember2022-12-310001488813us-gaap:ConsumerBorrowerMembercubi:OtherInstallmentLoansPortfolioSegmentMember2023-12-310001488813us-gaap:ConsumerBorrowerMembercubi:OtherInstallmentLoansPortfolioSegmentMember2022-12-310001488813us-gaap:ConsumerBorrowerMember2023-12-310001488813us-gaap:ConsumerBorrowerMember2022-12-310001488813us-gaap:FinanceLeasesPortfolioSegmentMemberus-gaap:CommercialBorrowerMember2023-12-310001488813us-gaap:FinanceLeasesPortfolioSegmentMemberus-gaap:CommercialBorrowerMember2022-12-310001488813cubi:CollateralDependentLoanMembercubi:CommercialandIndustrialMemberus-gaap:CommercialRealEstateMember2023-12-310001488813cubi:CollateralDependentLoanMembercubi:CommercialandIndustrialMemberus-gaap:CommercialRealEstateMember2022-12-310001488813cubi:SmallBusinessAdministrationSBACARESActPaycheckProtectionProgramMember2023-12-310001488813cubi:SmallBusinessAdministrationSBACARESActPaycheckProtectionProgramMember2022-12-310001488813cubi:SmallBusinessAdministrationSBACARESActPaycheckProtectionProgramMember2023-01-012023-12-310001488813cubi:SmallBusinessAdministrationSBACARESActPaycheckProtectionProgramMember2022-01-012022-12-310001488813cubi:SmallBusinessAdministrationSBACARESActPaycheckProtectionProgramMember2021-01-012021-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:FinancialAssetPastDueMember2023-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:MultifamilyPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:MultifamilyPortfolioSegmentMember2023-12-310001488813cubi:MultifamilyPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813cubi:MultifamilyPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2023-12-310001488813cubi:MultifamilyPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001488813cubi:MultifamilyPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2023-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2023-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:ConstructionPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:ConstructionPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMembercubi:ConstructionPortfolioSegmentMember2023-12-310001488813us-gaap:FinancialAssetPastDueMembercubi:ConstructionPortfolioSegmentMember2023-12-310001488813us-gaap:FinancialAssetNotPastDueMembercubi:ConstructionPortfolioSegmentMember2023-12-310001488813cubi:ConstructionPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2023-12-310001488813us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2023-12-310001488813us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001488813us-gaap:ResidentialPortfolioSegmentMember2023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:InstallmentLoansPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:InstallmentLoansPortfolioSegmentMember2023-12-310001488813cubi:InstallmentLoansPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813us-gaap:FinancialAssetPastDueMembercubi:InstallmentLoansPortfolioSegmentMember2023-12-310001488813cubi:InstallmentLoansPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001488813cubi:InstallmentLoansPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-310001488813us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813us-gaap:FinancialAssetPastDueMember2023-12-310001488813us-gaap:FinancialAssetNotPastDueMember2023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2022-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2022-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:FinancialAssetPastDueMember2022-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:FinancialAssetNotPastDueMember2022-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2022-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:MultifamilyPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:MultifamilyPortfolioSegmentMember2022-12-310001488813cubi:MultifamilyPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001488813cubi:MultifamilyPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2022-12-310001488813cubi:MultifamilyPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-12-310001488813cubi:MultifamilyPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2022-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2022-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2022-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2022-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:ConstructionPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:ConstructionPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMembercubi:ConstructionPortfolioSegmentMember2022-12-310001488813us-gaap:FinancialAssetPastDueMembercubi:ConstructionPortfolioSegmentMember2022-12-310001488813us-gaap:FinancialAssetNotPastDueMembercubi:ConstructionPortfolioSegmentMember2022-12-310001488813cubi:ConstructionPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ResidentialPortfolioSegmentMember2022-12-310001488813us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001488813us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2022-12-310001488813us-gaap:ResidentialPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-12-310001488813us-gaap:ResidentialPortfolioSegmentMember2022-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2022-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:FinancingReceivables60To89DaysPastDueMember2022-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2022-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:InstallmentLoansPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:InstallmentLoansPortfolioSegmentMember2022-12-310001488813cubi:InstallmentLoansPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001488813us-gaap:FinancialAssetPastDueMembercubi:InstallmentLoansPortfolioSegmentMember2022-12-310001488813cubi:InstallmentLoansPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2022-12-310001488813cubi:InstallmentLoansPortfolioSegmentMember2022-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMember2022-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMember2022-12-310001488813us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001488813us-gaap:FinancialAssetPastDueMember2022-12-310001488813us-gaap:FinancialAssetNotPastDueMember2022-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:SmallBusinessAdministrationSBACARESActPaycheckProtectionProgramMember2023-12-310001488813cubi:SmallBusinessAdministrationSBACARESActPaycheckProtectionProgramMembercubi:FinancialAssetGreaterThan60DaysPastDueMember2023-12-310001488813us-gaap:FinancialAssetNotPastDueMembercubi:SmallBusinessAdministrationSBACARESActPaycheckProtectionProgramMember2022-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:SmallBusinessAdministrationSBACARESActPaycheckProtectionProgramMember2022-12-310001488813cubi:SmallBusinessAdministrationSBACARESActPaycheckProtectionProgramMembercubi:FinancialAssetEqualToOrGreaterThan60DaysPastDueMember2022-12-3100014888132023-12-312023-12-3100014888132022-12-312022-12-310001488813cubi:SpecialtyLendingMembercubi:FDICMember2023-06-152023-06-150001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2020-12-310001488813cubi:MultifamilyPortfolioSegmentMember2020-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2020-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2020-12-310001488813cubi:ConstructionPortfolioSegmentMember2020-12-310001488813us-gaap:ResidentialPortfolioSegmentMember2020-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMember2020-12-310001488813cubi:InstallmentLoansPortfolioSegmentMember2020-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2021-01-012021-12-310001488813cubi:MultifamilyPortfolioSegmentMember2021-01-012021-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2021-01-012021-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2021-01-012021-12-310001488813cubi:ConstructionPortfolioSegmentMember2021-01-012021-12-310001488813us-gaap:ResidentialPortfolioSegmentMember2021-01-012021-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMember2021-01-012021-12-310001488813cubi:InstallmentLoansPortfolioSegmentMember2021-01-012021-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2021-12-310001488813cubi:MultifamilyPortfolioSegmentMember2021-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2021-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2021-12-310001488813cubi:ConstructionPortfolioSegmentMember2021-12-310001488813us-gaap:ResidentialPortfolioSegmentMember2021-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMember2021-12-310001488813cubi:InstallmentLoansPortfolioSegmentMember2021-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2022-01-012022-12-310001488813cubi:MultifamilyPortfolioSegmentMember2022-01-012022-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2022-01-012022-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2022-01-012022-12-310001488813cubi:ConstructionPortfolioSegmentMember2022-01-012022-12-310001488813us-gaap:ResidentialPortfolioSegmentMember2022-01-012022-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMember2022-01-012022-12-310001488813cubi:InstallmentLoansPortfolioSegmentMember2022-01-012022-12-310001488813cubi:MultifamilyPortfolioSegmentMember2023-01-012023-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-01-012023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2023-01-012023-12-310001488813cubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2023-01-012023-12-310001488813cubi:ConstructionPortfolioSegmentMember2023-01-012023-12-310001488813us-gaap:ResidentialPortfolioSegmentMember2023-01-012023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMember2023-01-012023-12-310001488813cubi:InstallmentLoansPortfolioSegmentMember2023-01-012023-12-3100014888132023-06-152023-06-150001488813us-gaap:CommercialBorrowerMembercubi:SpecialtyLendingMember2023-06-152023-06-150001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMembercubi:LoansOriginatedUnderSmallBusinessAdministrationSBACARESActPaycheckProtectionProgramSubsequentlyDeterminedIneligibleForForgivenessMember2022-01-012022-12-310001488813us-gaap:ExtendedMaturityMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-01-012023-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:PaymentDeferralMember2023-01-012023-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:PrincipalForgivenessMember2023-01-012023-12-310001488813cubi:InterestRateReductionAndTermExtensionMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-01-012023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:ExtendedMaturityMember2023-01-012023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:PaymentDeferralMember2023-01-012023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:PrincipalForgivenessMember2023-01-012023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMembercubi:InterestRateReductionAndTermExtensionMember2023-01-012023-12-310001488813us-gaap:ResidentialRealEstateMemberus-gaap:ExtendedMaturityMember2023-01-012023-12-310001488813us-gaap:ResidentialRealEstateMemberus-gaap:PaymentDeferralMember2023-01-012023-12-310001488813us-gaap:ResidentialRealEstateMemberus-gaap:PrincipalForgivenessMember2023-01-012023-12-310001488813us-gaap:ResidentialRealEstateMembercubi:InterestRateReductionAndTermExtensionMember2023-01-012023-12-310001488813us-gaap:ResidentialRealEstateMember2023-01-012023-12-310001488813cubi:ManufacturedHousingMemberus-gaap:ExtendedMaturityMember2023-01-012023-12-310001488813cubi:ManufacturedHousingMemberus-gaap:PaymentDeferralMember2023-01-012023-12-310001488813cubi:ManufacturedHousingMemberus-gaap:PrincipalForgivenessMember2023-01-012023-12-310001488813cubi:ManufacturedHousingMembercubi:InterestRateReductionAndTermExtensionMember2023-01-012023-12-310001488813cubi:ManufacturedHousingMember2023-01-012023-12-310001488813us-gaap:ExtendedMaturityMembercubi:PersonalInstallmentLoansPortfolioSegmentMember2023-01-012023-12-310001488813cubi:PersonalInstallmentLoansPortfolioSegmentMemberus-gaap:PaymentDeferralMember2023-01-012023-12-310001488813cubi:PersonalInstallmentLoansPortfolioSegmentMemberus-gaap:PrincipalForgivenessMember2023-01-012023-12-310001488813cubi:InterestRateReductionAndTermExtensionMembercubi:PersonalInstallmentLoansPortfolioSegmentMember2023-01-012023-12-310001488813cubi:PersonalInstallmentLoansPortfolioSegmentMember2023-01-012023-12-310001488813us-gaap:ExtendedMaturityMember2023-01-012023-12-310001488813us-gaap:PaymentDeferralMember2023-01-012023-12-310001488813us-gaap:PrincipalForgivenessMember2023-01-012023-12-310001488813cubi:InterestRateReductionAndTermExtensionMember2023-01-012023-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-10-012023-12-310001488813us-gaap:ExtendedMaturityMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-10-012023-12-310001488813cubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:PaymentDeferralMember2023-10-012023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2023-10-012023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:ExtendedMaturityMember2023-10-012023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:PaymentDeferralMember2023-10-012023-12-310001488813us-gaap:ResidentialRealEstateMember2023-10-012023-12-310001488813us-gaap:ResidentialRealEstateMemberus-gaap:ExtendedMaturityMember2023-10-012023-12-310001488813us-gaap:ResidentialRealEstateMemberus-gaap:PaymentDeferralMember2023-10-012023-12-310001488813cubi:ManufacturedHousingMember2023-10-012023-12-310001488813cubi:ManufacturedHousingMemberus-gaap:ExtendedMaturityMember2023-10-012023-12-310001488813cubi:ManufacturedHousingMemberus-gaap:PaymentDeferralMember2023-10-012023-12-310001488813cubi:PersonalInstallmentLoansPortfolioSegmentMember2023-10-012023-12-310001488813us-gaap:ExtendedMaturityMembercubi:PersonalInstallmentLoansPortfolioSegmentMember2023-10-012023-12-310001488813cubi:PersonalInstallmentLoansPortfolioSegmentMemberus-gaap:PaymentDeferralMember2023-10-012023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:ResidentialRealEstateMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ResidentialRealEstateMember2023-12-310001488813us-gaap:ResidentialRealEstateMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813us-gaap:ResidentialRealEstateMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001488813us-gaap:ResidentialRealEstateMember2023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:ManufacturedHousingMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:ManufacturedHousingMember2023-12-310001488813cubi:ManufacturedHousingMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813cubi:ManufacturedHousingMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001488813cubi:ManufacturedHousingMember2023-12-310001488813us-gaap:FinancingReceivables30To59DaysPastDueMembercubi:PersonalInstallmentLoansPortfolioSegmentMember2023-12-310001488813us-gaap:FinancingReceivables60To89DaysPastDueMembercubi:PersonalInstallmentLoansPortfolioSegmentMember2023-12-310001488813cubi:PersonalInstallmentLoansPortfolioSegmentMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2023-12-310001488813cubi:PersonalInstallmentLoansPortfolioSegmentMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001488813cubi:PersonalInstallmentLoansPortfolioSegmentMember2023-12-310001488813cubi:TroubledDebtRestructuringsMember2022-01-012022-12-310001488813us-gaap:ConsumerLoanMember2022-12-310001488813us-gaap:CommercialRealEstatePortfolioSegmentMember2022-12-310001488813us-gaap:PrincipalForgivenessMember2022-01-012022-12-31cubi:loan0001488813us-gaap:PrincipalForgivenessMember2021-01-012021-12-310001488813us-gaap:ContractualInterestRateReductionMember2022-01-012022-12-310001488813us-gaap:ContractualInterestRateReductionMember2021-01-012021-12-310001488813cubi:OtherModificationsMember2022-01-012022-12-310001488813cubi:OtherModificationsMember2021-01-012021-12-31cubi:commitment0001488813us-gaap:ResidentialRealEstateMember2022-01-012022-12-310001488813us-gaap:ResidentialRealEstateMember2021-01-012021-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:PassMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:SpecialMentionMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:SubstandardMember2023-12-310001488813us-gaap:CommercialBorrowerMemberus-gaap:DoubtfulMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2023-01-012023-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMemberus-gaap:PassMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMemberus-gaap:SpecialMentionMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMemberus-gaap:SubstandardMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMemberus-gaap:DoubtfulMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMember2023-01-012023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:PassMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:SpecialMentionMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:SubstandardMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:DoubtfulMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMember2023-01-012023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:PassMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:SpecialMentionMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:SubstandardMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:DoubtfulMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMember2023-01-012023-12-310001488813us-gaap:CommercialBorrowerMemberus-gaap:PassMembercubi:ConstructionPortfolioSegmentMember2023-12-310001488813us-gaap:CommercialBorrowerMemberus-gaap:SpecialMentionMembercubi:ConstructionPortfolioSegmentMember2023-12-310001488813us-gaap:CommercialBorrowerMemberus-gaap:SubstandardMembercubi:ConstructionPortfolioSegmentMember2023-12-310001488813us-gaap:CommercialBorrowerMemberus-gaap:DoubtfulMembercubi:ConstructionPortfolioSegmentMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:ConstructionPortfolioSegmentMember2023-01-012023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialLoansAndLeasesMember2023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialLoansAndLeasesMember2023-01-012023-12-310001488813us-gaap:ConsumerBorrowerMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:PerformingFinancingReceivableMember2023-12-310001488813us-gaap:ConsumerBorrowerMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2023-12-310001488813us-gaap:ConsumerBorrowerMemberus-gaap:ResidentialPortfolioSegmentMember2023-01-012023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:ConsumerBorrowerMemberus-gaap:PerformingFinancingReceivableMember2023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:ConsumerBorrowerMemberus-gaap:NonperformingFinancingReceivableMember2023-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:ConsumerBorrowerMember2023-01-012023-12-310001488813us-gaap:ConsumerBorrowerMembercubi:InstallmentLoansPortfolioSegmentMemberus-gaap:PerformingFinancingReceivableMember2023-12-310001488813us-gaap:ConsumerBorrowerMembercubi:InstallmentLoansPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2023-12-310001488813us-gaap:ConsumerBorrowerMembercubi:InstallmentLoansPortfolioSegmentMember2023-12-310001488813us-gaap:ConsumerBorrowerMembercubi:InstallmentLoansPortfolioSegmentMember2023-01-012023-12-310001488813us-gaap:ConsumerLoanMemberus-gaap:ConsumerBorrowerMember2023-12-310001488813us-gaap:ConsumerLoanMemberus-gaap:ConsumerBorrowerMember2023-01-012023-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:PassMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:SpecialMentionMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMemberus-gaap:SubstandardMember2022-12-310001488813us-gaap:CommercialBorrowerMemberus-gaap:DoubtfulMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialAndIndustrialExcludingCommercialRealEstateOwnerOccupiedMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMemberus-gaap:PassMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMemberus-gaap:SpecialMentionMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMemberus-gaap:SubstandardMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:MultifamilyPortfolioSegmentMemberus-gaap:DoubtfulMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:PassMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:SpecialMentionMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:SubstandardMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateOwnerOccupiedPortfolioSegmentMemberus-gaap:DoubtfulMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:PassMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:SpecialMentionMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:SubstandardMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialRealEstateNonOwnerOccupiedPortfolioSegmentMemberus-gaap:DoubtfulMember2022-12-310001488813us-gaap:CommercialBorrowerMemberus-gaap:PassMembercubi:ConstructionPortfolioSegmentMember2022-12-310001488813us-gaap:CommercialBorrowerMemberus-gaap:SpecialMentionMembercubi:ConstructionPortfolioSegmentMember2022-12-310001488813us-gaap:CommercialBorrowerMemberus-gaap:SubstandardMembercubi:ConstructionPortfolioSegmentMember2022-12-310001488813us-gaap:CommercialBorrowerMemberus-gaap:DoubtfulMembercubi:ConstructionPortfolioSegmentMember2022-12-310001488813us-gaap:CommercialBorrowerMembercubi:CommercialLoansAndLeasesMember2022-12-310001488813us-gaap:ConsumerBorrowerMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001488813us-gaap:ConsumerBorrowerMemberus-gaap:ResidentialPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:ConsumerBorrowerMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001488813cubi:ManufacturedHousingPortfolioSegmentMemberus-gaap:ConsumerBorrowerMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001488813us-gaap:ConsumerBorrowerMembercubi:InstallmentLoansPortfolioSegmentMemberus-gaap:PerformingFinancingReceivableMember2022-12-310001488813us-gaap:ConsumerBorrowerMembercubi:InstallmentLoansPortfolioSegmentMemberus-gaap:NonperformingFinancingReceivableMember2022-12-310001488813us-gaap:ConsumerBorrowerMembercubi:InstallmentLoansPortfolioSegmentMember2022-12-310001488813us-gaap:ConsumerLoanMemberus-gaap:ConsumerBorrowerMember2022-12-310001488813cubi:SpecialtyLendingMember2023-01-012023-12-310001488813cubi:SpecialtyLendingMember2022-01-012022-12-310001488813cubi:SpecialtyLendingMember2021-01-012021-12-310001488813cubi:CommercialandIndustrialMember2023-01-012023-12-310001488813cubi:CommercialandIndustrialMember2022-01-012022-12-310001488813cubi:CommercialandIndustrialMember2021-01-012021-12-310001488813cubi:CommercialRealEstateOwnerOccupiedMember2023-01-012023-12-310001488813cubi:CommercialRealEstateOwnerOccupiedMember2022-01-012022-12-310001488813cubi:CommercialRealEstateOwnerOccupiedMember2021-01-012021-12-310001488813cubi:LoansReceivablePaycheckProtectionProgramMember2023-01-012023-12-310001488813cubi:LoansReceivablePaycheckProtectionProgramMember2022-01-012022-12-310001488813cubi:LoansReceivablePaycheckProtectionProgramMember2021-01-012021-12-310001488813cubi:PersonalInstallmentLoansPortfolioSegmentMember2022-01-012022-12-310001488813cubi:PersonalInstallmentLoansPortfolioSegmentMember2021-01-012021-12-310001488813cubi:OtherInstallmentLoansPortfolioSegmentMember2023-01-012023-12-310001488813cubi:OtherInstallmentLoansPortfolioSegmentMember2022-01-012022-12-310001488813cubi:OtherInstallmentLoansPortfolioSegmentMember2021-01-012021-12-310001488813cubi:LoansHeldForInvestmentMembercubi:SpecialtyLendingMember2023-01-012023-12-310001488813cubi:SpecialtyLendingMemberus-gaap:UnfundedLoanCommitmentMember2023-01-012023-12-310001488813srt:MinimumMember2023-12-310001488813srt:MaximumMember2023-12-310001488813srt:MinimumMemberus-gaap:EquipmentMember2023-12-310001488813srt:MaximumMemberus-gaap:EquipmentMember2023-12-310001488813srt:MinimumMemberus-gaap:LeaseholdImprovementsMember2023-12-310001488813srt:MaximumMemberus-gaap:LeaseholdImprovementsMember2023-12-310001488813us-gaap:LeaseholdImprovementsMember2023-12-310001488813us-gaap:LeaseholdImprovementsMember2022-12-310001488813srt:MinimumMembercubi:FurnitureFixturesAndEquipmentMember2023-12-310001488813srt:MaximumMembercubi:FurnitureFixturesAndEquipmentMember2023-12-310001488813cubi:FurnitureFixturesAndEquipmentMember2023-12-310001488813cubi:FurnitureFixturesAndEquipmentMember2022-12-310001488813srt:MinimumMembercubi:InformationTechnologyEquipmentAndSoftwareMember2023-12-310001488813srt:MaximumMembercubi:InformationTechnologyEquipmentAndSoftwareMember2023-12-310001488813cubi:InformationTechnologyEquipmentAndSoftwareMember2023-12-310001488813cubi:InformationTechnologyEquipmentAndSoftwareMember2022-12-310001488813srt:MinimumMemberus-gaap:AutomobilesMember2023-12-310001488813srt:MaximumMemberus-gaap:AutomobilesMember2023-12-310001488813us-gaap:AutomobilesMember2023-12-310001488813us-gaap:AutomobilesMember2022-12-310001488813us-gaap:FederalHomeLoanBankAdvancesMember2023-12-310001488813us-gaap:FederalHomeLoanBankAdvancesMember2022-12-310001488813us-gaap:FederalReserveBankAdvancesMember2023-01-012023-12-310001488813us-gaap:FederalReserveBankAdvancesMember2022-01-012022-12-310001488813us-gaap:FederalReserveBankAdvancesMember2021-01-012021-12-310001488813us-gaap:FederalReserveBankAdvancesMember2023-12-310001488813us-gaap:FederalReserveBankAdvancesMember2022-12-310001488813us-gaap:FederalReserveBankAdvancesMember2021-12-310001488813us-gaap:FederalHomeLoanBankAdvancesMember2023-01-012023-12-310001488813us-gaap:FederalHomeLoanBankAdvancesMember2022-01-012022-12-310001488813us-gaap:FederalHomeLoanBankAdvancesMember2021-01-012021-12-310001488813us-gaap:FederalHomeLoanBankAdvancesMember2021-12-310001488813us-gaap:FederalFundsPurchasedMember2023-01-012023-12-310001488813us-gaap:FederalFundsPurchasedMember2022-01-012022-12-310001488813us-gaap:FederalFundsPurchasedMember2021-01-012021-12-310001488813us-gaap:FederalFundsPurchasedMember2023-12-310001488813us-gaap:FederalFundsPurchasedMember2022-12-310001488813us-gaap:FederalFundsPurchasedMember2021-12-310001488813cubi:FHLBAdvanceDueJune2024Member2023-12-310001488813cubi:FHLBAdvanceDueJune2027Member2023-12-310001488813us-gaap:FederalHomeLoanBankAdvancesMember2023-12-310001488813cubi:QualifyingAssetsPledgedAsCollateralMember2023-12-310001488813cubi:QualifyingAssetsPledgedAsCollateralMember2022-12-310001488813cubi:BankTermFundingProgramMember2023-12-310001488813us-gaap:SeniorNotesMembercubi:MaturingAugust2031Member2023-12-310001488813us-gaap:SeniorNotesMembercubi:MaturingAugust2031Member2022-12-310001488813us-gaap:SeniorNotesMembercubi:MaturingAugust2031Member2023-01-012023-12-310001488813us-gaap:SeniorNotesMembercubi:MaturingSeptember2024Member2023-12-310001488813us-gaap:SeniorNotesMembercubi:MaturingSeptember2024Member2022-12-310001488813us-gaap:SeniorNotesMembercubi:MaturingSeptember2024Member2023-01-012023-12-310001488813us-gaap:SeniorNotesMember2023-12-310001488813us-gaap:SeniorNotesMember2022-12-310001488813us-gaap:SeniorSubordinatedNotesMembercubi:MaturingDecember2034Member2023-12-310001488813us-gaap:SeniorSubordinatedNotesMembercubi:MaturingDecember2034Member2022-12-310001488813us-gaap:SeniorSubordinatedNotesMembercubi:MaturingDecember2034Member2023-01-012023-12-310001488813us-gaap:SeniorSubordinatedNotesMembercubi:MaturingJune2029Member2023-12-310001488813us-gaap:SeniorSubordinatedNotesMembercubi:MaturingJune2029Member2022-12-310001488813us-gaap:SeniorSubordinatedNotesMembercubi:MaturingJune2029Member2023-01-012023-12-310001488813us-gaap:SeniorSubordinatedNotesMember2023-12-310001488813us-gaap:SeniorSubordinatedNotesMember2022-12-310001488813us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembercubi:MaturingAugust2031Memberus-gaap:SeniorNotesMember2023-01-012023-12-310001488813cubi:LondonInterbankOfferedRateLIBOR1Memberus-gaap:SeniorSubordinatedNotesMembercubi:MaturingJune2029Member2023-01-012023-12-3100014888132021-08-25cubi:series0001488813cubi:SeriesCAndDPreferredStockMember2021-09-152021-09-150001488813cubi:SeriesCAndDPreferredStockMember2021-09-150001488813cubi:SeriesCAndDPreferredStockMember2022-12-310001488813cubi:SeriesCAndDPreferredStockMember2023-12-310001488813cubi:SeriesCAndDPreferredStockMember2021-12-310001488813us-gaap:SeriesEPreferredStockMember2023-12-310001488813us-gaap:SeriesEPreferredStockMember2022-12-310001488813us-gaap:SeriesEPreferredStockMembercubi:LondonInterbankOfferedRateLIBOR1Member2023-01-012023-12-310001488813us-gaap:SeriesFPreferredStockMember2023-12-310001488813us-gaap:SeriesFPreferredStockMember2022-12-310001488813cubi:LondonInterbankOfferedRateLIBOR1Memberus-gaap:SeriesFPreferredStockMember2023-01-012023-12-310001488813us-gaap:SeriesEPreferredStockMembercubi:LondonInterbankOfferedRateLIBOR1Member2021-06-152021-06-150001488813us-gaap:SeriesEPreferredStockMember2021-06-150001488813cubi:LondonInterbankOfferedRateLIBOR1Memberus-gaap:SeriesFPreferredStockMember2021-12-152021-12-150001488813us-gaap:SeriesFPreferredStockMember2021-12-150001488813cubi:SeriesEAndFPreferredStockMember2023-12-310001488813cubi:BoardOfDirectorsChairmanAndChiefExecutiveOfficerMember2023-01-012023-12-31cubi:year0001488813cubi:BoardOfDirectorsChairmanAndChiefExecutiveOfficerMember2023-12-31cubi:SERP_retirement_age0001488813cubi:BoardOfDirectorsChairmanAndChiefExecutiveOfficerMember2022-12-310001488813cubi:SeniorExecutivesMember2023-01-012023-12-310001488813cubi:SeniorExecutivesMember2023-12-310001488813cubi:SeniorExecutivesMember2022-12-310001488813cubi:TwoThousandTenPlanMember2023-01-012023-12-310001488813cubi:TwoThousandAndNineteenPlanMember2023-01-012023-12-310001488813cubi:TwoThousandAndNineteenPlanMember2022-01-012022-12-310001488813cubi:TwoThousandFourPlanMember2023-01-012023-12-310001488813us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-12-310001488813us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-12-310001488813srt:MinimumMembercubi:BonusRecognitionAndRetentionProgramMember2011-01-012011-01-010001488813srt:MaximumMembercubi:BonusRecognitionAndRetentionProgramMember2011-01-012011-01-010001488813cubi:BonusRecognitionAndRetentionProgramMember2011-01-012011-01-010001488813cubi:BonusRecognitionAndRetentionProgramMember2023-01-012023-12-310001488813cubi:BonusRecognitionAndRetentionProgramMember2023-12-310001488813cubi:BMTechnologiesIncMember2021-01-012021-12-310001488813cubi:EmployeeStockPurchasePlanMember2023-01-012023-12-310001488813cubi:EmployeeStockPurchasePlanMember2022-01-012022-12-310001488813cubi:EmployeeStockPurchasePlanMember2021-01-012021-12-310001488813srt:MinimumMemberus-gaap:StockOptionMember2023-01-012023-12-310001488813srt:MaximumMemberus-gaap:StockOptionMember2023-01-012023-12-310001488813us-gaap:StockOptionMember2023-01-012023-12-310001488813us-gaap:StockOptionMember2022-01-012022-12-310001488813us-gaap:StockOptionMember2021-01-012021-12-310001488813us-gaap:StockOptionMember2022-12-310001488813us-gaap:StockOptionMember2023-12-310001488813cubi:NonVestedOptionsMember2022-12-310001488813cubi:NonVestedOptionsMember2023-01-012023-12-310001488813cubi:VestedOptionsMemberMember2023-01-012023-12-310001488813cubi:NonVestedOptionsMember2023-12-310001488813cubi:A2004And2019PlanMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-12-310001488813cubi:A2004And2019PlanMembercubi:WaterfallMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-12-310001488813cubi:A2004And2019PlanMembercubi:CliffMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-12-310001488813us-gaap:RestrictedStockUnitsRSUMember2022-12-310001488813us-gaap:RestrictedStockUnitsRSUMember2023-12-310001488813srt:DirectorMember2023-01-012023-12-310001488813us-gaap:DomesticCountryMember2023-12-310001488813us-gaap:StateAndLocalJurisdictionMember2023-12-310001488813srt:MinimumMember2022-01-012022-12-310001488813srt:MinimumMember2023-01-012023-12-310001488813srt:MinimumMember2021-01-012021-12-310001488813srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-12-310001488813srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2023-12-310001488813cubi:CustomersBankMember2023-12-310001488813cubi:CustomersBankMember2022-12-310001488813us-gaap:FairValueInputsLevel1Member2023-12-310001488813us-gaap:FairValueInputsLevel2Member2023-12-310001488813us-gaap:FairValueInputsLevel3Member2023-12-310001488813us-gaap:FairValueInputsLevel1Member2022-12-310001488813us-gaap:FairValueInputsLevel2Member2022-12-310001488813us-gaap:FairValueInputsLevel3Member2022-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310001488813us-gaap:FairValueInputsLevel2Membercubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:CollateralizedLoanObligationsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:CollateralizedLoanObligationsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:CollateralizedLoanObligationsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:CollateralizedLoanObligationsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommercialMortgageBackedSecuritiesMember2023-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2023-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2023-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2023-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CorporateNoteSecuritiesMember2023-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateNoteSecuritiesMember2023-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateNoteSecuritiesMember2023-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateNoteSecuritiesMember2023-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CollateralizedMortgageObligationsMemberus-gaap:FairValueInputsLevel1Member2023-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CollateralizedMortgageObligationsMember2023-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CollateralizedMortgageObligationsMember2023-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CollateralizedMortgageObligationsMember2023-12-310001488813us-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Membercubi:LoansHeldForSaleFairValueMember2023-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMembercubi:LoansHeldForSaleFairValueMember2023-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMembercubi:LoansHeldForSaleFairValueMember2023-12-310001488813us-gaap:FairValueMeasurementsRecurringMembercubi:LoansHeldForSaleFairValueMember2023-12-310001488813cubi:LoansReceivableFairValueMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310001488813us-gaap:FairValueInputsLevel2Membercubi:LoansReceivableFairValueMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:FairValueInputsLevel3Membercubi:LoansReceivableFairValueMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813cubi:LoansReceivableFairValueMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:FairValueMeasurementsNonrecurringMembercubi:CollateralDependentLoanMemberus-gaap:FairValueInputsLevel1Member2023-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMembercubi:CollateralDependentLoanMember2023-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMembercubi:CollateralDependentLoanMember2023-12-310001488813us-gaap:FairValueMeasurementsNonrecurringMembercubi:CollateralDependentLoanMember2023-12-310001488813us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2023-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2023-12-310001488813us-gaap:FairValueMeasurementsNonrecurringMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001488813us-gaap:FairValueInputsLevel2Membercubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813cubi:AgencyGuaranteedResidentialCollateralizedMortgageObligationsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:CollateralizedLoanObligationsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:CollateralizedLoanObligationsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:CollateralizedLoanObligationsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:CollateralizedLoanObligationsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommercialMortgageBackedSecuritiesMember2022-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2022-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2022-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialMortgageBackedSecuritiesMember2022-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CorporateNoteSecuritiesMember2022-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateNoteSecuritiesMember2022-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateNoteSecuritiesMember2022-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateNoteSecuritiesMember2022-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CollateralizedMortgageObligationsMemberus-gaap:FairValueInputsLevel1Member2022-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CollateralizedMortgageObligationsMember2022-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CollateralizedMortgageObligationsMember2022-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CollateralizedMortgageObligationsMember2022-12-310001488813us-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:DerivativeMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Membercubi:LoansHeldForSaleFairValueMember2022-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMembercubi:LoansHeldForSaleFairValueMember2022-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMembercubi:LoansHeldForSaleFairValueMember2022-12-310001488813us-gaap:FairValueMeasurementsRecurringMembercubi:LoansHeldForSaleFairValueMember2022-12-310001488813cubi:LoansReceivableFairValueMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001488813us-gaap:FairValueInputsLevel2Membercubi:LoansReceivableFairValueMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:FairValueInputsLevel3Membercubi:LoansReceivableFairValueMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813cubi:LoansReceivableFairValueMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:FairValueMeasurementsNonrecurringMembercubi:CollateralDependentLoanMemberus-gaap:FairValueInputsLevel1Member2022-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMembercubi:CollateralDependentLoanMember2022-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMembercubi:CollateralDependentLoanMember2022-12-310001488813us-gaap:FairValueMeasurementsNonrecurringMembercubi:CollateralDependentLoanMember2022-12-310001488813us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001488813us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-12-310001488813us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-12-310001488813us-gaap:FairValueMeasurementsNonrecurringMember2022-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-01-012023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-01-012022-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-01-012021-12-310001488813us-gaap:FairValueInputsLevel3Membercubi:OtherInstallmentLoansMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001488813us-gaap:FairValueInputsLevel3Membercubi:OtherInstallmentLoansMemberus-gaap:FairValueMeasurementsRecurringMember2023-10-012023-12-310001488813us-gaap:FairValueInputsLevel3Membercubi:OtherInstallmentLoansMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2023-12-310001488813srt:MinimumMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Member2023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Membersrt:MaximumMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Membersrt:WeightedAverageMember2023-12-310001488813srt:MinimumMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Membercubi:MeasurementInputAnnualizedLossRateMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Membersrt:MaximumMembercubi:MeasurementInputAnnualizedLossRateMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Membercubi:MeasurementInputAnnualizedLossRateMembersrt:WeightedAverageMember2023-12-310001488813us-gaap:MeasurementInputPrepaymentRateMembersrt:MinimumMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2023-12-310001488813us-gaap:MeasurementInputPrepaymentRateMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Membersrt:MaximumMember2023-12-310001488813us-gaap:MeasurementInputPrepaymentRateMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Membersrt:WeightedAverageMember2023-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2022-12-310001488813srt:MinimumMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Member2022-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Membersrt:MaximumMember2022-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:MeasurementInputDiscountRateMemberus-gaap:FairValueInputsLevel3Membersrt:WeightedAverageMember2022-12-310001488813srt:MinimumMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Membercubi:MeasurementInputAnnualizedLossRateMember2022-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Membersrt:MaximumMembercubi:MeasurementInputAnnualizedLossRateMember2022-12-310001488813us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Membercubi:MeasurementInputAnnualizedLossRateMembersrt:WeightedAverageMember2022-12-310001488813us-gaap:MeasurementInputPrepaymentRateMembersrt:MinimumMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2022-12-310001488813us-gaap:MeasurementInputPrepaymentRateMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Membersrt:MaximumMember2022-12-310001488813us-gaap:MeasurementInputPrepaymentRateMemberus-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Membersrt:WeightedAverageMember2022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2021-01-012021-12-31cubi:contract0001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2021-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2021-01-012021-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2023-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2023-12-31cubi:position0001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateContractMemberus-gaap:FairValueHedgingMember2023-01-012023-12-31cubi:derivative0001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2023-01-012023-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMembercubi:TerminatedInterestRateSwapMemberus-gaap:FairValueHedgingMember2023-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-01-012022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMembercubi:TerminatedInterestRateSwapMemberus-gaap:FairValueHedgingMember2022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2021-01-012021-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMembercubi:TerminatedInterestRateSwapMemberus-gaap:FairValueHedgingMember2021-12-310001488813us-gaap:DebtSecuritiesMember2023-12-310001488813us-gaap:DebtSecuritiesMember2022-12-310001488813us-gaap:DepositsMember2023-12-310001488813us-gaap:DepositsMember2022-12-310001488813us-gaap:FederalHomeLoanBankAdvancesMember2023-12-310001488813us-gaap:FederalHomeLoanBankAdvancesMember2022-12-310001488813us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2023-12-31cubi:Swap0001488813us-gaap:InterestRateCapMemberus-gaap:NondesignatedMember2023-12-310001488813us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2022-12-310001488813us-gaap:InterestRateCapMemberus-gaap:NondesignatedMember2022-12-310001488813srt:MinimumMemberus-gaap:NondesignatedMember2023-12-310001488813srt:MaximumMemberus-gaap:NondesignatedMember2023-12-310001488813us-gaap:OtherAssetsMemberus-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2023-12-310001488813us-gaap:OtherLiabilitiesMemberus-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2023-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherLiabilitiesMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-12-310001488813us-gaap:OtherAssetsMemberus-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2022-12-310001488813us-gaap:OtherLiabilitiesMemberus-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2022-01-012022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateSwapMember2023-01-012023-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:DebtSecuritiesMember2021-01-012021-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:DebtSecuritiesMember2022-01-012022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:DebtSecuritiesMember2023-01-012023-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:FederalHomeLoanBankAdvancesMemberus-gaap:FairValueHedgingMember2023-01-012023-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:FederalHomeLoanBankAdvancesMemberus-gaap:FairValueHedgingMember2021-01-012021-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:FederalHomeLoanBankAdvancesMemberus-gaap:FairValueHedgingMember2022-01-012022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMember2023-01-012023-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMember2022-01-012022-12-310001488813us-gaap:DesignatedAsHedgingInstrumentMember2021-01-012021-12-310001488813us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2022-01-012022-12-310001488813us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2021-01-012021-12-310001488813us-gaap:InterestRateSwapMemberus-gaap:NondesignatedMember2023-01-012023-12-310001488813us-gaap:InterestRateSwapMember2023-01-012023-12-310001488813us-gaap:InterestRateSwapMember2022-01-012022-12-310001488813us-gaap:InterestRateSwapMember2021-01-012021-12-310001488813us-gaap:InterestRateContractMember2023-12-310001488813us-gaap:InterestRateContractMember2022-12-310001488813cubi:SpecialtysCafeBakeryIncMatterMember2020-10-282020-10-280001488813srt:ParentCompanyMember2023-12-310001488813srt:ParentCompanyMember2022-12-310001488813srt:GuarantorSubsidiariesMember2023-12-310001488813srt:GuarantorSubsidiariesMember2022-12-310001488813srt:ParentCompanyMember2023-01-012023-12-310001488813srt:ParentCompanyMember2022-01-012022-12-310001488813srt:ParentCompanyMember2021-01-012021-12-310001488813srt:ParentCompanyMember2021-12-310001488813srt:ParentCompanyMember2020-12-3100014888132023-10-012023-12-31


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________________________
FORM 10-K
________________________________________
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     .
001-35542
(Commission File Number)
 
Capture.jpg

(Exact name of registrant as specified in its charter)
Customers Bancorp, Inc.
Pennsylvania27-2290659
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
701 Reading Avenue
West Reading, PA 19611
(Address of principal executive offices)
(610) 933-2000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolsName of Each Exchange on which Registered
Voting Common Stock, par value $1.00 per shareCUBINew York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual
Preferred Stock, Series E, par value $1.00 per share
CUBI/PENew York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual
Preferred Stock, Series F, par value $1.00 per share
CUBI/PFNew York Stock Exchange
5.375% Subordinated Notes due 2034CUBBNew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
________________________________________ 


Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x   No  ¨
Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
x
Accelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No  x
The aggregate market value of common stock held by non-affiliates of the registrant was approximately $877,518,697 as of June 30, 2023, based upon the closing price quoted on the New York Stock Exchange for such date. Shares of common stock held by each executive officer and director have been excluded because such persons may under certain circumstances be deemed to be affiliates. This determination of executive officer or affiliate status is not necessarily a conclusive determination for other purposes.
On February 26, 2024, 31,484,886 shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement to be delivered to shareholders in connection with the 2024 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report.




INDEX
  PAGE
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.

2


FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, as well as other written or oral communications made from time to time by us, contains forward-looking information within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are statements other than statements of fact and tend to relate to future events or future predictions, including events or predictions relating to future financial performance, and are generally identifiable by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “plan,” “intend,” or “anticipate” or the negative thereof or comparable terminology. Forward-looking statements reflect numerous assumptions, estimates and forecasts as to future events. No assurance can be given that the assumptions, estimates and forecasts underlying such forward-looking statements will accurately reflect future conditions, or that any guidance, goals, targets or projected results will be realized. The assumptions, estimates and forecasts underlying such forward-looking statements involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions, which may not be realized and which are inherently subject to significant business, economic, competitive and regulatory uncertainties and known and unknown risks, including the risks described under “Risk Factors” in this Annual Report on Form 10-K, as such factors may be updated from time to time in our filings with the SEC, including our Quarterly Reports on Form 10-Q. Our actual results may differ materially from those reflected in the forward-looking statements.
In addition to the risks described in the “Risk Factors” section of this Annual Report on Form 10-K and the other reports we file with the SEC, important factors to consider and evaluate with respect to such forward-looking statements include:
a prolonged downturn in the economy, particularly in the geographic areas in which we do business, or an unexpected decline in real estate values within our market areas;
the impact of forbearances or deferrals we are required to provide or that we agree to as a result of borrower requests and/or government actions, including, but not limited to our potential inability to fully recover deferred payments from the borrower or the collateral;
inflation, interest rate, securities market and monetary fluctuations;
continued volatility in the credit and equity markets and its effect on the general economy;
our ability to attract and retain deposits and other sources of liquidity;
our ability to raise additional funding in the capital markets, if necessary, to fund our operations and business plan;
changes in the financial performance and/or condition of our borrowers or depositors;
changes in the level of non-performing and classified assets and charge-offs, which may require us to increase our allowance for credit losses, charge off loans and leases and incur elevated collection and carrying costs related to such non-performing assets;
changes in estimates of our future loss reserve requirements under CECL based upon our periodic review thereof under relevant regulatory and accounting requirements;
potential claims, damages, penalties, fines and reputational damage arising from litigation and regulatory and government actions relating to our participation in and execution of government programs related to the COVID-19 pandemic or as a result of our action in response to, or failure to implement or effectively implement, applicable federal, state and local laws, rules or executive orders requiring that we grant forbearances or not act to collect amounts due under our loans;
the effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, Financial Accounting Standards Board and other accounting standard setters;
changes in external competitive market factors that might impact our results of operations;
changes in laws and regulations, including, without limitation, changes in capital requirements under Basel III;
the extensive federal and state regulation, supervision and examination governing almost every aspect of our operations and potential expenses associated with complying with such regulations;
the effects of heightened regulatory requirements applicable to banks with assets in excess of $10 billion;
changes in our business strategy or an inability to execute our strategy due to the occurrence of unanticipated events;
3


local, regional and national economic conditions and events and the impact they may have on us and our borrowers and depositors;
costs and effects of legal and regulatory oversight and legal developments, including the results of regulatory examinations and the outcome of regulatory or other governmental inquiries and proceedings, such as fines, restrictions on our business activities or reputational damage;
any failure of ours to comply with anti-money laundering and anti-terrorism financing laws;
our ability to identify borrowers and make loans at terms that are favorable to us;
our ability to attract and retain qualified personnel;
timely development and acceptance of new banking products and services and perceived overall value of these products and services by users;
our ability to execute our digital distribution strategy;
changes in consumer spending, borrowing and saving habits;
technological changes, including acceptance and success of CBIT, a blockchain-based instant B2B payments platform, which is subject to a variety of factors that are difficult to evaluate;
our ability to successfully implement our growth strategy, control expenses and maintain liquidity;
costs and effects of system failures or cybersecurity incidents or other breaches of our network security and the network security of our third-party service providers and our borrowers and depositors;
our ability to engage third-party service providers and the ability of our third-party service providers to adequately perform their services;
the businesses of Customers Bank and any acquisition targets or merger partners and subsidiaries not being integrated successfully or such integration being more difficult, time-consuming or costly than expected;
material differences in the actual financial results of merger and acquisition activities compared with our expectations, such as with respect to the full realization of anticipated cost savings and revenue enhancements within the expected time frame;
regulatory limits on our ability to receive dividends from our subsidiaries and pay dividends to our shareholders;
our ability to manage the risks of change in our loan mix;
our ability to manage the risks inherent in our consumer loan and mortgage portfolios;
shareholder and analyst ratings and sentiment, and the effects they may have on the price at which our securities trade;
our ability to identify potential candidates for, and consummate, acquisition or investment transactions;
constraints on our ability to consummate an attractive acquisition or investment transaction because of significant competition for those opportunities;
the impact of COVID-19 and its variants on the U.S. and global economies, including business disruptions, reductions in employment and an increase in business failures, specifically among our borrowers and depositors;
our ability to manage servicing, processing forgiveness, and guarantee submissions of PPP loans; and
any reputation, credit, interest rate, market, operational, litigation, legal, liquidity, regulatory and compliance risk resulting from developments related to any of the risks discussed above.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. We do not undertake any obligation to release publicly or otherwise provide any revisions to these forward-looking statements we may make, including any forward-looking statements, to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable law.
4


GLOSSARY OF ABBREVIATIONS AND ACRONYMS
The following list of abbreviations and acronyms may be used throughout this Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements.
2004 Plan2012 Amendment and Restatement of the Customers Bancorp, Inc. Amended and Restated 2004 Incentive Equity and Deferred Compensation Plan
2010 Plan2010 Stock Option Plan
2019 Plan2019 Stock Incentive Plan
ACLAllowance for Credit Losses
AFSAvailable for sale
AI
Artificial Intelligence
AOCIAccumulated Other Comprehensive Income (Loss)
ARRCAlternative Reference Rates Committee
ASCAccounting Standards Codification
ASUAccounting Standards Update
ATMAutomated Teller Machine
B2BBusiness-to-business
BancorpCustomers Bancorp, Inc.
BankCustomers Bank
BBB spreadBBB rated corporate bond spreads to U.S. Treasury securities
BHC ActBank Holding Company Act of 1956, as Amended
BMTBankMobile Technologies, Inc.
BM TechnologiesBM Technologies, Inc.
BOLIBank-Owned Life Insurance
BRRPBonus Recognition and Retention Program
BTFPBank Term Funding Program
CAAConsolidated Appropriations Act, 2021
CARES Act
Coronavirus Aid, Relief and Economic Security Act
CBCAChange in Bank Control Act
CBITTM
Customers Bank Instant Token
CCFCustomers Commercial Finance, LLC
CECLCurrent Expected Credit Losses
CEOChief Executive Officer
CFOChief Financial Officer
CFPBConsumer Financial Protection Bureau
CISO
Chief Information Security Officer
CodeU.S. Internal Revenue Code of 1986, as Amended
CODM
Chief operating decision maker
CommissionUnited States Securities and Exchange Commission
CompanyCustomers Bancorp, Inc. and subsidiaries
COSOCommittee of Sponsoring Organizations of the Treadway Commission
COVID-19
Coronavirus Disease 2019
CPIConsumer Price Index
CRACommunity Reinvestment Act
CUBISymbol for Customers Bancorp, Inc. common stock traded on the NYSE
CustomersCustomers Bancorp, Inc. and Customers Bank, collectively
5


Customers BancorpCustomers Bancorp, Inc.
DCFDiscounted cash flow
DepartmentPennsylvania Department of Banking and Securities
DIFDeposit Insurance Fund
Disbursement BusinessOneAccount Student Checking and Refund Management Disbursement Services Business
Dodd-Frank ActDodd-Frank Wall Street Reform and Consumer Protection Act of 2010
DOJUnited States Department of Justice
ECOAEqual Credit Opportunity Act
EGRRCPAThe Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018
EPSEarnings Per Share
ESGEnvironmental, Social and Governance commitments
ESPPEmployee Stock Purchase Plan
EVEEconomic Value of Equity
Exchange ActSecurities Exchange Act of 1934
FASBFinancial Accounting Standards Board
FCAThe United Kingdom Financial Conduct Authority
FDICFederal Deposit Insurance Corporation
Fed Funds
Federal Reserve Board’s Effective Federal Funds Rate
Federal Reserve,
Federal Reserve Board
Board of Governors of the Federal Reserve System
FFIEC
Federal Financial Institutions Examination Council
FHAFederal Housing Administration
FHLBFederal Home Loan Bank
FICOFair, Isaac and Company
FintechThird-Party Financial Technology
FMVFair Market Value
FRBFederal Reserve Bank of Philadelphia
FTC ActFederal Trade Commission Act
GDPGross Domestic Product
GDPR
General Data Protection Regulation in the European Union
GLBAGramm-Leach-Bliley Act of 1999
Higher OneHigher One Holdings, Inc.
HMDAHome Mortgage Disclosure Act
HTMHeld to maturity
HUDU.S. Department of Housing and Urban Development
InsidersDirectors, Officers, Employees and 10%-or-Greater Shareholders
Interstate ActRiegle-Neal Interstate Banking and Branching Efficiency Act of 1994
Interstate MOUMemorandum of Understanding between Banking Regulators in the States of New Jersey, New York and Pennsylvania
IRSInternal Revenue Service
LIBORLondon Interbank Offered Rate
LPOLimited Purpose Office
MalwareUnauthorized Software
MFACMegalith Financial Acquisition Corp.
MMDAMoney Market Deposit Accounts
MMLFMoney Market Mutual Fund Liquidity Facility
MOUMemorandum of Understanding
6


NIMNet interest margin, tax equivalent
NMNot Meaningful
NPANon-Performing Asset
NPI
Non-Public Personal Information
NPLNon-Performing Loan
NYSENew York Stock Exchange
OCCOffice of the Comptroller of the Currency
OCIOther Comprehensive Income (Loss)
OFACOffice of Foreign Assets Control
OREOOther Real Estate Owned
PATRIOT ActProviding Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
PCAOBPublic Company Accounting Oversight Board (United States)
PCDPurchased Credit-Deteriorated
PCIPurchased Credit-Impaired
PII
Personal Identifiable Information
PPPPaycheck Protection Program
PPPLFFRB Paycheck Protection Program Liquidity Facility
PUTPurchase Upon Termination
Rate ShocksInterest rates rising or falling immediately
RESPAReal Estate Settlement Procedures Act
ROURight-Of-Use
SABSEC Staff Accounting Bulletin
SAGSpecial Assets Group
SBAU.S. Small Business Administration
SBA loansLoans originated pursuant to the rules and regulations of the SBA
SECUnited States Securities and Exchange Commission
Securities ActSecurities Act of 1933, as Amended
Series C Preferred StockFixed-to-floating rate non-cumulative perpetual preferred stock, Series C
Series D Preferred StockFixed-to-floating rate non-cumulative perpetual preferred stock, Series D
Series E Preferred StockFixed-to-floating rate non-cumulative perpetual preferred stock, Series E
Series F Preferred StockFixed-to-floating rate non-cumulative perpetual preferred stock, Series F
SERPSupplemental Executive Retirement Plan
Share Repurchase ProgramShare repurchase program authorized by the Board of Directors of Customers Bancorp in 2021
SOFRSecured Overnight Financing Rate
Tax Act2017 Tax Cuts and Jobs Act
TDRTroubled Debt Restructuring
TILATruth in Lending Act
TRACTerminal Rental Adjustment Clause
UDAAPUnfair, Deceptive or Abusive Acts and Practices
UDAPUnfair or Deceptive Act or Practice
U.S. GAAPAccounting Principles Generally Accepted in the United States of America
VAUnited States Department of Veterans Affairs
VIEVariable Interest Entity
VOEVoting Interest Entity

7


CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PART I
Item 1.        Business
Customers Bancorp is a bank holding company engaged in banking activities through its wholly owned subsidiary, Customers Bank, collectively referred to as “Customers” herein. Customers is a forward-thinking bank with strong risk management that provides commercial and consumer customers the stability and trust inherent in working with an established and regulated financial institution. The Bank has diversified lending activities that build overall franchise value and a high-tech, high-touch branch-light strategy that serves its customers through a single-point-of-contact private banking strategy with a focus on community banking businesses, including commercial and industrial and commercial real estate loans (to borrowers in Pennsylvania, New Jersey, New York City, New England and other geographies), multifamily lending, SBA lending and residential mortgage lending. The Bank also serves specialty businesses nationwide, including its specialty lending, commercial loans to mortgage companies and commercial equipment financing. The Bank offers digital banking to commercial and consumer businesses nationwide, including Banking-as-a-Service to fintech companies, payments and treasury services to businesses, and consumer loans through relationships with fintech companies.
Business Summary
Customers Bancorp and its wholly owned subsidiary, Customers Bank, provide banking products, primarily loans and deposits, to businesses and consumers through its branches, limited production offices and administrative offices in Berks County and Southeastern Pennsylvania (Bucks, Chester and Philadelphia Counties); New York (Westchester and Suffolk Counties, and Manhattan); Hamilton, New Jersey; Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire; Chicago, Illinois; Dallas, Texas; Wilmington, North Carolina; and other locations. The Bank has a diversified lending business consisting of geographically in-market community banking offerings such as commercial and industrial loans, commercial real estate loans, multifamily loans and residential mortgage loans. In addition, on a national level, the Bank also provides financing to specialty banking businesses such as specialty lending, commercial loans to mortgage companies, commercial equipment financing and SBA lending. The Bank also offers digital banking to commercial and consumer businesses nationwide, including Banking-as-a-Service to fintech companies, payments and treasury services to businesses, and consumer loans through relationships with fintech companies. The Bank’s specialty lending includes fund finance, real estate specialty finance, technology and venture, healthcare and financial institutions group. Customers’ fund finance provides secured and variable rate financing to private debt funds and private equity funds and cash management services to the alternative investment industry. Customers’ technology and venture capital banking group services the venture-backed growth industry from seed-stage through late-stage. At December 31, 2023, Customers had total assets of $21.3 billion, including total loans and leases, net of the ACL of $13.1 billion, total deposits of $17.9 billion and shareholders’ equity of $1.6 billion.
Customers differentiates itself through its superior technology capabilities combined with a unique single-point-of-contact business strategy executed by very experienced management teams. Customers’ strategic plan is to become a leading regional bank holding company through organic core loan and deposit growth and opportunistic value-added acquisitions. Customers identifies itself as a forward-thinking bank with strong risk management and differentiates itself from its competitors through its focus on state-of-the-art technology and exceptional customer service. Customers’ environmental, social and governance, or ESG practices, emphasize its unwavering commitment to its team members, customers, shareholders, and communities in which we live and work. The primary customers of the Bank are privately held businesses, business customers, large corporate clients, not-for-profit organizations and consumers.
The Bank’s lending activities are primarily funded by deposits from its branch-light business model, which seeks higher deposit levels per branch than a typical bank, combined with lower branch operating expenses, without sacrificing exceptional customer service, and its digital bank deposit offerings. Customers may create franchise value through a disciplined approach to acquisitions, both in terms of identifying opportunities and structuring transactions. Enterprise risk management is at the core of the strategies Customers employs.
8


The management team of Customers consists of experienced banking executives led by its Chairman and CEO, Jay Sidhu, who joined Customers in June 2009. Mr. Sidhu brings over 40 years of banking experience, including 20 years as the CEO and Chairman of Sovereign Bancorp. Many other management team members have significant experience helping build and lead other banking organizations. Combined, the Customers management team has significant experience in building a banking organization, completing and integrating mergers and acquisitions and developing valuable community and business relationships in its core markets. On July 1 2021, Samvir (“Sam”) Sidhu was named as the President and Chief Executive Officer of Customers Bank and the President of Customers Bancorp. Mr. Sam Sidhu joined Customers in 2020 as the Vice Chair and Chief Operating Officer of Customers Bank and the Head of Corporate Development of Customers Bancorp. Mr. Sam Sidhu, son of Mr. Jay Sidhu, was the founder and chief executive of Megalith Financial Corp. LLC, a NYSE-listed financial technology-based special purpose acquisition company. Prior to launching Megalith Financial Corp. LLC, Mr. Sam Sidhu worked at Providence Equity Partners and at Goldman Sachs. Under Mr. Sam Sidhu’s leadership, Customers Bank partnered with several leading fintech companies to establish a technology enabled hybrid banking model, allowing Customers to outperform larger lenders’ efforts to support small businesses during the COVID-19 pandemic through the SBA’s PPP loans.
Background and History
Customers Bancorp was incorporated in Pennsylvania in April 2010 to facilitate a reorganization into a bank holding company structure pursuant to which the Bank became a wholly owned subsidiary of Customers Bancorp (the “Reorganization”) on September 17, 2011. Customers Bancorp’s corporate headquarters are located at 701 Reading Avenue, West Reading, PA 19611. The main telephone number is (610) 933-2000.
The deposits of the Bank are insured by the FDIC. The Bank’s home office is located at 40 General Warren Boulevard, Malvern, PA 19355. The main telephone number is (610) 933-2000.
Executive Summary
Customers’ Markets
Market Criteria
Customers looks to grow organically as well as through selective acquisitions opportunistically in its current and prospective markets. Customers believes that there is significant opportunity to both enhance its presence in its current markets and enter new complementary markets that meet its objectives. Customers focuses on markets that it believes are characterized by some or all of the following:
Attractive deposit bases;
Population density;
Concentration of business activity;
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.
9


Current Markets
Customers’ target market has been broadly defined as extending from Washington, D.C. to Boston, Massachusetts roughly following Interstate 95. In 2021, Customers expanded its target market to include Texas, Florida, North Carolina and other geographies. In 2022, Customers completed the consolidation of five branches into other existing locations in Southern Pennsylvania, as well as the relocation of a branch in Berks County, Pennsylvania into the Bancorp headquarters and the relocation of the Bank headquarters. In 2023, Customers recruited team members that originated a Venture Banking loan portfolio purchased from the FDIC to service the venture-backed growth industry from seed-stage through late-stage. The newly recruited team gives clients access to the capital to grow from innovation to maturity and leverage a customized, best-in-class tech platform to support their growth. The team has long-standing relationships with these clients offering them premier end-to-end financial services meeting their needs. The addition of these team members created venture banking client coverage in Austin, the Bay Area, Boston, Southern California, Chicago, Denver, Raleigh/Durham, and Washington, D.C. As of December 31, 2023, Customers had bank branches or LPOs serving businesses and consumers in the following locations:
MarketOfficesType
Berks County, PA2Branch/LPO
Boston, MA1LPO
Chicago, IL1LPO
Dallas, TX1LPO
Hamilton, NJ
1Branch/LPO
New York, NY1LPO
Philadelphia-Southeastern, PA4Branch/LPO
Portsmouth, NH1LPO
Providence, RI1LPO
Suffolk County, NY
1LPO
Westchester County, NY
1Branch/LPO
Wilmington, NC1LPO
In addition to the above locations, Customers had 41 other locations with executive and administrative offices and LPOs serving mortgage companies and small businesses in the Northeast and Mid-Atlantic regions, as well as the expanded markets throughout the United States as of December 31, 2023.
Customers believes its expanded target market has highly attractive demographic, economic and competitive dynamics that are consistent with its objectives and favorable to executing its organic core loan and deposit growth and opportunistic acquisition strategies. Customers believes that digital delivery without geographic limitations is the future of retail banking.
Prospective Markets
The organic core loan and deposit growth strategy of Customers focuses on expanding market share in its existing and contiguous markets by generating deposits, loan and fee-based services through its high-tech/high-touch single-point-of-contact personalized service supported by state-of-the-art technology for its commercial, consumer, not-for-profit and specialized lending markets. While Customers has not acquired any banks since 2011, its bank acquisition strategy is focused on opportunistic acquisitions and team lift-outs that further Customers’ objectives and meet its critical success factors. As Customers evaluates potential acquisition and asset purchase opportunities and team lift-outs, it believes that there are banking institutions that continue to face credit challenges, capital constraints and liquidity issues and that lack the scale and management expertise to manage the regulatory burden.
10


Competitive Strengths
Experienced and respected management team. An integral element of Customers’ business strategy is to capitalize on and leverage the prior experience of its executive management team. The management team is led by Chairman and CEO, Jay Sidhu, who is the former CEO and Chairman of Sovereign Bancorp. During his tenure at Sovereign, Mr. Sidhu 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, Head of Middle Market and Community Banking; and Lyle Cunningham, Chief Lending Officer and Head of Corporate and Specialty Banking; have over 30 years of experience. In addition, the banking to mortgage companies group, which primarily includes commercial loans (warehouse facilities) to residential mortgage originators is led by Glenn Hedde, President of Warehouse Lending, who brings 30 years of experience in this sector. This team has significant experience in successfully building a banking organization as well as building valuable community and business relationships in our core markets. Customers continues to hire new talent and promote from within the organization to lead its various product offering initiatives.
Digital-forward super community bank. On July 1, 2021, Mr. Sam Sidhu became the President and Chief Executive Officer of Customers Bank. Under Mr. Sam Sidhu’s leadership, Customers Bank partnered with several leading fintech companies to establish a technology enabled hybrid banking model, allowing Customers to outperform larger lenders’ efforts to support small businesses during the COVID-19 pandemic through the SBA’s PPP loans. As a result, the executive management team undertook a complete rebranding to reposition Customers as a digital-forward super community bank that provides commercial and consumer customers the stability and trust inherent in working with an established and regulated financial institution. Fueled by a digital-forward, super community bank hybrid business model, and the Bank’s recent successes, Customers Bank launched other new commercial financial product lines and opened additional offices in key metro markets around the country.
Unique asset and deposit generation strategies. Customers focuses on local market lending combined with relatively low-risk specialty lending verticals as we expand into new markets across the country. Local market asset generation provides various types of business lending products (i.e., commercial and industrial loans) and consumer lending products, such as mortgage loans and home equity loans. Customers has also established a multifamily and commercial real estate product line that has been primarily focused on the Mid-Atlantic region, particularly New York City. The strategy is to focus on obtaining deposits and refinancing existing loans with other banks, recruiting and retaining strong teams, conservative underwriting standards and minimizing costs. Through the multifamily and commercial real estate products, Customers primarily earns interest income and generates commercial deposits. Customers also maintains specialty lending businesses, commercial loans to mortgage originators and installment loans originated directly or with third-party fintech companies. Customers has significantly expanded its lending and deposit gathering activities through its specialty lending verticals including fund finance (capital call lines and lender finance), real estate specialty finance, technology and venture, healthcare and financial institutions group. Customers’ commercial loans to mortgage originators is a national business where Customers provides liquidity to non-depository mortgage companies to fund their mortgage pipelines and meet other business needs. Through the loans to mortgage companies, Customers earns interest and fee income and generates core deposits. Customers’ installment loan business is a national business in which Customers originates directly or purchases installment loans through arrangements with third-party fintech companies. Customers also has digital, online savings banking products that generate core deposits nationally. Through the installment loans and digital, online savings banking products, Customers earns interest and generates core deposits. The digital-forward, super community bank hybrid business model enables Customers to earn interest income and generate core deposits.
Attractive low-credit risk profile. Customers has sought to maintain high asset quality and moderate credit risk by using conservative underwriting standards, maintaining a diversified loan portfolio, and participating in lending verticals where historical loss rates are extremely low. Customers is selective with its consumer installment loan portfolios by focusing on prime borrowers (defined as borrowers with a FICO score of 660 or above at origination) combined with a risk-adjusted pricing model and early identification of potential problem assets. The Bank is transitioning its consumer installment lending business from a held-for-investment to a held-for-sale strategy to further reduce credit risk. Customers has also formed a Special Assets Group (“SAG”) to manage classified and NPAs. As of December 31, 2023, only $27.1 million, or 0.21%, of the Bank’s total loan portfolio was non-performing.
Superior community banking model. Customers expects to drive organic core loan and deposit growth by employing its single-point-of-contact strategy, which provide 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 and mobile banking, 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.
11


Acquisition expertise. The depth of Customers’ management team and their experience 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. Over the last several years, Customers’ inorganic growth strategy has been primarily focused on hiring highly experienced and seasoned bankers, generally from larger financial institutions, to lead the built-out of lending and deposit gather verticals aligned with their specific expertise. This strategy was most recently employed through the onboarding of a Venture Banking team that had previously originated and serviced loans acquired from the FDIC. Customers will continue to pursue these team lift-out strategies as well as considered more traditional forms of bank acquisitions when the opportunities present themselves.
Customers believes its ability to operate efficiently is enhanced by its centralized risk-management structure, its access to attractive labor and real estate costs in its markets, and an infrastructure that is unencumbered by legacy systems. Furthermore, Customers anticipates additional expense synergies from the integration of its acquisitions, which it believes will enhance its financial performance.
Segments
On January 4, 2021, Customers Bancorp completed the divestiture of BankMobile Technologies, Inc., a wholly-owned subsidiary of Customers Bank and a component of BankMobile, through a merger with Megalith Financial Acquisition Corp. In connection with the closing of the divestiture, MFAC changed its name to “BM Technologies, Inc.” All of BankMobile’s serviced deposits and loans including the related net interest income remained with Customers Bank after the completion of the divestiture. Following the completion of the divestiture of BMT, BankMobile’s serviced deposits and loans and the related net interest income were combined with Customers’ financial condition and results of operations as a single reportable segment. In December 2023, Customers successfully transferred a substantial portion of the serviced deposits to another banking institution. Refer to “NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION” and “NOTE 3 – DISCONTINUED OPERATIONS” to Customers’ audited consolidated financial statements.
Products
Customers offers a broad range of traditional loan and deposit banking products and financial services, and non-traditional products and services such as CBITTM, to its commercial and consumer customers. Customers offers an array of lending products to cater to its customers’ needs, including specialty loans, commercial mortgage warehouse loans, multifamily and commercial real estate loans, business banking, small business loans, equipment financing, residential mortgage loans and installment loans. Customers also offers traditional deposit products, including commercial and consumer checking accounts, non-interest-bearing and interest-bearing demand accounts, MMDA, savings accounts, time deposit accounts and cash management services.
Lending Activities
Customers focuses its lending efforts on the following lending areas:
Commercial Lending – Customers’ primary focus is on business banking (i.e., commercial and industrial lending), including small and middle market business banking (including SBA loans), specialty lending, commercial loans to mortgage companies, multifamily and commercial real estate lending and commercial equipment financing, and
Consumer Lending – local-market mortgage and home equity lending and the origination and purchase of installment loans through arrangements with third-party fintech companies and other marketplace lenders.
Commercial Lending
Customers’ commercial lending activities are divided into six groups: business banking; small and middle market business banking; specialty banking; multifamily and commercial real estate lending; mortgage banking lending; and SBA lending. This grouping is designed to allow for greater resource deployment, higher standards of risk management, stronger asset quality, lower interest-rate risk and higher productivity levels.
The commercial lending group, including commercial and industrial loans, owner occupied commercial real estate loans and specialty lending, focus on building business relationships that provide a complete offering of financial services customized to the present and future needs of each business customer.
12


The small and middle market business banking platform originates loans, including SBA loans, through the branch network sales force and a team of dedicated relationship managers. The support administration of this platform is centralized, including technology, risk management, product management, marketing, performance tracking and overall strategy. Credit and sales training has been established for Customers’ sales force, ensuring that it has small business experts in place providing appropriate financial solutions to the small business owners in its communities. The division approach focuses on industries that offer high asset quality and are deposit rich to drive profitability.
Customers’ specialty banking includes commercial equipment finance, healthcare lending, real estate specialty finance, fund finance, technology and venture capital banking and financial institutions group. Customers’ lender finance vertical within fund finance provides variable rate loans secured by diverse collateral pools to private debt funds. Customers’ capital call lines vertical within fund finance provides variable rate loans secured by collateral pools and limited partnership commitments from institutional investors in private equity funds and cash management services to the alternative investment industry. Customers’ technology and venture capital banking group services the venture-backed growth industry from seed-stage through late-stage.
In 2023, Customers acquired $631.0 million of a venture banking loan portfolio at a discount from the FDIC. Customers has also recruited team members that originated these loans to service the venture-backed growth industry from seed-stage through late-stage. The newly recruited team gives clients access to the capital to grow from innovation to maturity and leverage a customized, best-in-class tech platform to support their growth. The team has long-standing relationships with these clients offering them premier end-to-end financial services meeting their needs. The addition of these team members created venture banking client coverage in Austin, the Bay Area, Boston, Southern California, Chicago, Denver, Raleigh/Durham, and Washington, D.C. The technology and life sciences portfolio has been combined with Customers’ existing technology and venture capital banking vertical. The portfolio of capital call loans to venture capital firms has been combined with Customers’ existing capital call lines vertical within fund finance.
Also in 2023, Customers sold $670 million of short-term syndicated capital call lines of credit within specialty lending consisting of $280.7 million of loans held for investment and $389.3 million of unfunded loan commitments. The Bank exited completely from these non-strategic, short-term syndicated capital call lines of credit, which did not provide any deposit relationships.
The goal of commercial loans to mortgage banking businesses is to provide liquidity to mortgage companies. The loans are predominately short-term facilities used by mortgage companies to fund their pipelines from closing of individual mortgage loans until their sale into the secondary market. Most of the individual mortgage loans that collateralize our commercial loans to mortgage companies are insured or guaranteed by the U.S. Government through one of its programs, such as FHA, VA, or they are conventional loans eligible for sale to Fannie Mae and Freddie Mac. During the years ended December 31, 2023 and 2022, Customers Bank funded $20.1 billion and $29.0 billion of mortgage loans, respectively, to mortgage originators via warehouse facilities. The commercial loans to mortgage companies are reported as loans receivable, mortgage warehouse, at fair value on the consolidated balance sheet.
Customers’ commercial equipment financing group goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets. The commercial equipment financing group is primarily focused on serving the following industries: transportation, construction (including crane and utility), marine, franchise, general manufacturing (including machine tool), helicopter/fixed wing, solar, packaging, plastics and food processing. As of December 31, 2023 and 2022, Customers had $547.0 million and $560.3 million, respectively, of equipment finance loans outstanding. As of December 31, 2023 and 2022, Customers had $205.7 million and $157.4 million, respectively, of equipment finance leases outstanding. As of December 31, 2023 and 2022, Customers had $205.7 million and $197.3 million, respectively, of operating leases entered into under this program, net of accumulated depreciation of $77.7 million and $52.6 million, respectively.
The goal of Customers’ multifamily and commercial real estate lending group is to manage a portfolio of high-quality multifamily and commercial real estate loans within Customers’ covered markets while cross-selling other products and services. These lending activities primarily target the refinancing of loans with other banks using conservative underwriting standards and provide purchase money for new acquisitions by borrowers. The primary collateral for these loans is a first-lien mortgage on the commercial real estate or multifamily property, plus an assignment of all leases related to such property. Customers had $2.1 billion and $2.2 billion of multifamily loans outstanding as of December 31, 2023 and 2022, respectively.
As of December 31, 2023 and 2022, Customers Bank had $11.5 billion and $13.5 billion, respectively, in commercial loans outstanding, composing approximately 86.8% and 85.8%, respectively, of its total loan portfolio, which includes loans held for sale, loans receivable, mortgage warehouse, at fair value and loans receivable, PPP. During the years ended December 31, 2023 and 2022, the Bank originated $2.9 billion and $7.0 billion, respectively, of commercial and industrial loans and leases, exclusive of multifamily loan originations, loans to mortgage originators via warehouse facilities and PPP loans.
13


Paycheck Protection Program
On March 27, 2020, the CARES Act was signed into law. It contained substantial tax and spending provisions intended to address the impact of the COVID-19 pandemic. The CARES Act included the SBA’s PPP, a nearly $350 billion program designed to aid small- and medium-sized businesses through federally guaranteed loans distributed through banks. These loans were intended to guarantee an eight-week or 24-week period of payroll and other costs to help those businesses remain viable and allow their workers to pay their bills. On December 27, 2020, the CAA was signed into law, which provided $284 billion in additional funding for the SBA’s PPP for small businesses affected by the COVID-19 pandemic. The CAA provided small businesses who received an initial PPP loan and experienced a 25% reduction in gross receipts to request a second PPP loan of up to $2.0 million. On March 11, 2021, the American Rescue Plan Act of 2021 was enacted expanding eligibility for first and second round of PPP loans and revising the exclusions from payroll costs for purposes of loan forgiveness. The PPP ended on May 31, 2021. Customers has helped thousands of small businesses by funding over $10 billion in PPP loans directly or through partnerships and purchases. Customers had $74.7 million and $998.2 million of PPP loans outstanding as of December 31, 2023 and 2022, respectively, which are fully guaranteed by the SBA, provided that the SBA’s eligibility criteria are met, and earn a fixed interest rate of 1.00%. Customers substantially completed processing forgiveness and guarantee claims for the PPP in early 2023.
Consumer Lending
Customers originates and purchases installment loans to be held for investment or to be held for sale through arrangements with third-party fintech companies. Customers performs extensive due-diligence procedures on existing and potential fintech partners and only originates and purchases loans that meet its defined credit parameters, which includes but is not limited to minimum FICO scores and debt to income ratios. As part of its due-diligence process, Customers reviews loan level data, historical performance of the asset and distribution of credit and loss information. Customers does not originate or purchase installment loans to be held for investment that are considered sub-prime at the time of origination, which Customers considers to be those with FICO scores below 660.
In 2023, Customers sold $556.7 million of consumer installment loans that were classified as held for sale, inclusive of other installment loans transferred from held for investment to held for sale, accrued interest and unamortized deferred loan origination costs, to two third-party sponsored VIEs. Customers provided financing to the purchasers for a portion of the sales price in the form of $436.8 million of asset-backed securities while $115.1 million of the remaining sales proceeds were paid in cash.
As of December 31, 2023 and 2022, Customers had $1.7 billion and $2.2 billion, respectively, in consumer loans outstanding (including consumer loans held for investment and held for sale), comprising 13.2% and 14.2%, respectively, of Customers’ total loan portfolio. During the years ended December 31, 2023 and 2022, Customers purchased $101.0 million and $481.0 million of consumer loans held for investment, respectively. During the years ended December 31, 2023 and 2022, Customers purchased $25.0 million and $200.0 million of consumer loans held for sale, respectively.
Customers also provides home equity and residential mortgage loans to customers. Underwriting standards for home equity lending are conservative, and lending is offered to solidify customer relationships and grow relationship revenues in the long term. This lending is important in Customers’ efforts to grow total relationship revenues for its consumer households. These areas also support Customers’ commitment to lower-and-moderate-income families in its market area.
Customers Bank has a community outreach program in Philadelphia to finance homeownership in urban communities. As part of this program, Customers is offering an “Affordable Mortgage Product.” This community outreach program is penetrating the underserved population, especially in low-and moderate income neighborhoods. The program includes homebuyer seminars that prepare potential homebuyers for homeownership by teaching money management and budgeting skills, including the financial responsibilities that come with having a mortgage and owning a home. The “Affordable Mortgage Product” is offered throughout Customers’ assessment areas.
Private Banking
Customers has a Private Banking model for its commercial clients in the major markets within its geographic footprint. This unique model provides unparalleled service to customers through an in-market team of experienced private bankers. Acting as a single-point-of-contact for all the banking needs of Customers’ commercial clients, these private bankers deliver the whole bank – not only to its clients, but to their families, their management teams and their employees, as well. With a world-class suite of sophisticated cash management products, these private bankers deliver on Customers’ “high-tech, high-touch” strategy and provide real value to its mid-market commercial clients.
14


Deposit Products and Other Funding Sources
Customers offers a variety of deposit products to its customers, including checking accounts, savings accounts, MMDA and other deposit accounts, including fixed-rate, fixed-maturity retail time deposits ranging in terms from 30 days to five years, individual retirement accounts, and non-retail time deposits consisting of jumbo certificates greater than or equal to $100,000. Customers also focuses on specialty businesses as a source of lower-cost core deposits, including property management and mortgage banking businesses, title and escrow funds, health savings accounts, and Section 1031 of the IRS exchange deposits. Using its “high-tech, high-touch” model, Customers has experienced strong growth in core deposits. Customers also utilizes wholesale deposit products, money market accounts and certificates of deposits obtained through listing services and borrowings from the FRB and FHLB as a source of funding.
In 2021, Customers Bank launched CBITTM on the TassatPayTM blockchain-based instant B2B payments platform, which serves a growing array of B2B clients who want the benefit of instant payments, including key over-the-counter desks, exchanges, liquidity providers, market makers, funds, and other B2B verticals. CBIT may only be created by, transferred to and redeemed by commercial customers of Customers Bank on the instant B2B payments platform by maintaining U.S. dollars in deposit accounts at Customers Bank. CBIT is not listed or traded on any digital currency exchange. As of December 31, 2023 and 2022, Customers Bank held $2.8 billion and $2.3 billion of deposits from customers participating in CBIT, respectively. The CBIT instant payments platform provides a closed-system for intrabank commercial transactions and is not intended to be a trading platform for tokens or digital assets. CBIT tokens are used only in connection with the CBIT instant payments platform and are not securities for purposes of applicable securities laws. There are no scenarios in which the transaction or redemption value of one CBIT would not be equal to one U.S. dollar. Each CBIT is minted with precisely one U.S. dollar equivalent, and those dollars are held in a non-interest bearing omnibus deposit account until the CBIT is burned or redeemed. The number of CBIT outstanding in the CBIT instant payments platform is always equal to the U.S. dollars held in the omnibus deposit account at Customers Bank and is reported as a deposit liability on the consolidated balance sheet. The deposits from customers participating in CBIT include the omnibus deposit account established for the CBIT instant payments platform, which had an outstanding balance of $826.9 million and $23 thousand at December 31, 2023 and 2022, respectively.
Financial Products and Services
In addition to traditional banking activities, Customers provides other financial services to its customers, including: mobile phone banking, internet banking, wire transfers, electronic bill payment, lock box services, remote deposit capture services, courier services, merchant processing services, cash vault, controlled disbursements, positive pay and cash management services (including account reconciliation, collections and sweep accounts).
Competition
Customers competes with other financial institutions for deposit and loan business. Competitors include other commercial banks, savings banks, savings and loan associations, insurance companies, securities brokerage firms, credit unions, finance companies, private credit funds, fintech companies, mutual funds, money market funds and certain government agencies. Financial institutions compete principally on the quality of the services rendered, interest rates offered on deposit products, interest rates charged on loans, fees and service charges, the convenience of banking office locations and hours of operation and, in the consideration of larger commercial borrowers, lending limits.
Many competitors are significantly larger than Customers and have significantly greater financial resources, personnel and locations from which to conduct business. In addition, Customers is subject to regulation, while certain of its competitors are not. Non-regulated companies face relatively few barriers to entry into the financial services industry. Customers’ larger competitors enjoy greater name recognition and greater resources to finance wide ranging advertising campaigns. Customers competes for business principally on the basis of high-quality, personal service to customers, customer access to Customers’ decision makers and competitive interest and fee structure. Customers also strives to provide maximum convenience of access to services by employing innovative delivery vehicles such as internet and digital banking, and the convenience of our single-point-of-contact business model.
Customers’ current market is primarily served by large national and regional banks, with a few larger institutions capturing a significant portion of deposit market share. Customers’ large competitors primarily utilize expensive, branch-based models to sell products to consumers and small businesses, which requires Customers’ larger competitors to price their products with wider margins and charge more fees to justify their higher expense base. While maintaining physical branch locations remains an important component of Customers’ strategy, Customers utilizes an operating model with fewer and less expensive locations, thereby lowering overhead costs and allowing for greater pricing flexibility.
15


Customers Bank’s CBIT on the TassatPay blockchain-based instant B2B payments platform serves a growing array of B2B clients who want the benefit of instant payments. If a competitor or another third party were to launch an alternative to CBIT (such as Federal Reserve’s FedNow Service, a virtual real time payment system for banks launched in 2023) we could lose these deposits. Even if we are otherwise able to grow and maintain our deposit base, our deposit balances may still decrease if our digital currency customers are offered more attractive returns from our competitors. There may be competitive pressures to pay higher interest rates on deposits to our digital currency customers, which could increase funding costs and compress net interest margins. Further, new technologies, such as the blockchain and tokenized payment technologies used by CBIT, could require us to spend more to modify or adapt our products to attract and retain clients or to match products and services offered by our competitors, including fintech companies.
ESG
ESG considerations are integrated across our business and incorporated into the policies and principles that govern how we operate. We continuously seek to address some of the practical challenges in balancing short-term and long-term business trade-offs to ensure that our stakeholders and shareholders prosper together. Our approach to ESG management includes promoting sound corporate governance, effective risk management and controls, investing in our team members and cultivating a diverse and inclusive workforce and flexible work environment, supporting and strengthening the communities in which we live, work and serve, and operating our business in a way that demonstrates our dedication to environmental sustainability. Giving back and leading with dignity are the cornerstones of our culture and identity. Our ESG program is managed by a dedicated management ESG committee, which reports to and is subject to the oversight of the ESG Committee of our Board of Directors.
Human Capital
Customers’ success is intrinsically linked to our ability to consistently attract, develop, and retain a diverse pool of highly qualified and engaged team members who are also committed to delivering on our corporate and cultural strategies. Customers does this by optimizing our workforce, developing our leaders and team members, and creating a safe and supportive workplace environment. In turn, 94% of our team members demonstrate their dedication by choosing to bank with us and over half of their annual incentives are received in company stock.
Team Member Profile
The following table describes the composition of the Customers workforce on December 31, 2023 and 2022:
December 31,
Team Members20232022
Full-time Team Members711 665 
Part-time Team Members
Total Team Members714 668 
Women50 %53 %
Minorities24 %17 %
Our voluntary turnover in 2023 was 8.9%.
Talent Acquisition
The demand for highly qualified candidates increases as our business grows. In the pursuit of securing top-tier talent aligned with our organizational objectives, the Talent Acquisition team has crafted a robust framework aimed at identifying, attracting, and onboarding exceptional individuals. We recruit nationally and are currently located across 32 states. Customers’ recruitment strategies encompass a diverse array of channels and tactics tailored to reach a broad spectrum of candidates. We leverage traditional (and also pursue innovative) methods, including job boards, social media platforms, and team member referrals, casting a wide net to attract candidates with the requisite skills and qualifications.
To cultivate a talent pool that sets Customers apart from its competitors and aligns with our strategic objectives, particularly in the realms of digitization and technological advancement, we undertook significant hiring initiatives in 2023. A total of 195 new team members were welcomed across various parts of our business, encompassing revenue generation, compliance, and shared services. These strategic additions not only enrich our workforce but also fortify our capabilities to thrive in an ever-evolving marketplace.
16


Our talent acquisition efforts continue to focus on attracting top talent that aligns with our diversity, equity, inclusion, and belonging initiatives, recognizing the value of a diverse workforce in driving innovation and fostering a culture of belonging. Our Talent Acquisition team partners with managers and leadership to ensure diverse pools of candidates are considered by incorporating inclusive language in job postings and posting positions to diversity job boards. Customers attracts talented individuals with a combination of competitive pay, benefits package, incentives, and reward programs.
Central to our talent acquisition philosophy is the provision of an exceptional candidate experience at every stage of the recruitment process. From the initial outreach and application submission to interviews, assessments, and final offers, we prioritize transparency, communication, and responsiveness to ensure that candidates feel valued and engaged throughout their interactions with our organization.
As our business continues to evolve, so does the way we need to attract talent to achieve future success. Customers remains committed to refining and evolving our talent acquisition practices meeting the evolving needs of our organization and the dynamic external landscape. Continual investment in technology, data analytics, employer branding, and talent pipeline development will support our efforts to attract, engage, and retain top talent, positioning us for sustained success in the marketplace.
Internship Program – Investing in Early Careers
Our Internship Program provides interns with a hands-on experience tailored to their roles, including collaborating on team projects, assisting with streamlining tasks and processes, and participating in a “Fundamentals of Banking” speaker series featuring Senior Leaders from within the organization. The 2023 session marks the second cohort since pre-pandemic programs, during which Customers implemented a competitive selection process focusing on interns from universities within our markets that are currently majoring in programs aligned with the Bank’s areas of operation.
The program’s long-term objective is to build a talent pipeline capable of seamlessly transitioning into full-time, high contributing team members upon graduation. To enrich their experience, interns participated in weekly Intern-Only check-ins, fostering skill sharing, project discussions, and relationship building.
Customers successfully converted five (5) interns into regular employment positions throughout the Bank. These interns not only gained insight into their respective fields of study within the Bank but also had to collaborate cross-functionally with their peers. Based on the positive feedback and overall success of the 2023 cohort, the program will continue to expand in 2024 to include additional business units within Customers.
Learning and Professional Development
Customers remains committed to fostering a culture of continuous learning, leveraging technology to drive initiatives that provide an engaging, personalized and varied learner experience accessible to all team members, at every stage of their career.
Team members are empowered to learn new skills, establish and meet personalized development goals, take on new roles and become better leaders. Customers’ performance management program is an interactive practice that engages team members through performance reviews, goal setting and on-going feedback from managers to their team members. We have leadership competencies in place to help advance and support an increasingly digital strategy with an emphasis on the three Q’s: Emotional Intelligence (EQ), Adaptability (AQ), Technical Skills and Knowledge (IQ).
Learning Initiatives:
Learning & Development All team members are encouraged to participate in learning and development opportunities that align with their career goals. Team members are empowered to upskill, reskill, and grow professionally by leveraging best in class digital platforms, podcasts, digital learning events and recommended articles. Additionally, in support of our team members’ educational goals, tuition assistance is available to those interested in pursuing higher education opportunities or professional certifications.
Digital Learning Platform – We continue to offer online training and access to a digital library of over 16,000 courses and a broad range of learning solutions. Team members have access to business, design, and technology courses to help them develop critical competencies and key leadership attributes. The learning platform offers a tremendous potential for managers and team members to create development plans as part of the performance review process.
17


Team Member Engagement
2023 was a year devoted to supporting team members with three assigned shared days in the office in an enhanced hybrid model to foster in-person collaboration. We continue to focus on our customers, deliver what we promise, and promote an environment where our team members feel connected, supported and valued.
Team Member Engagement Initiatives:
Award winning Wellness Program:
2023 introduced a new enhancement to our wellness platform whereby team members can participate in on-demand activities to improve their physical and mental well-being
Customers strives to create a culture of wellness by engaging and positively impacting each team member. Our robust wellness program offers a variety of challenges, workshops, webinars, and health coaching sessions.
The program focuses on overall well-being: physical, mental, emotional, and financial. The wellness program has a multi-tiered reward system in which wellness points are awarded to team members for their participation.
Over 200 team members participated in the program in 2023, with 116 successfully completing the program.
Corporate Trainer – We continue to promote Bank-sponsored personal training sessions offered both in person and virtually to all team members throughout the company. Programs include body relaxation, body muscle recovery, light pain management, and strengthening exercises. 139 team members participated in this benefit in 2023.
Day of Learning – Team members are granted up to 8 hours of paid time off to participate in an educational course, seminar, or class.
Matching Gift Program acknowledges the importance of both individual and corporate support for charitable organizations. Customers continues to match team members’ financial contributions, up to $500 annually.
Community Service Day – Team members can earn up to 8 hours paid time off for participating in a qualifying event of community service.
Team Member Referral Program – The program is a strategy and initiative that monetarily rewards team members for successfully referring highly qualified candidates for open positions. We offer three referral bonus reward levels to team members who submit qualified referrals who are subsequently hired. In 2023, 63 hires were referrals from team members, with 19 team members being eligible to receive a referral bonus.
United Way – Customers continues to encourage team members to support their local United Way Chapters which provide significant support to the communities in which they live and work. The Company continues to match team member contributions dollar for dollar. Team members who contribute at a certain level are eligible for additional paid time off.
Juneteenth – Federal holiday commemorating the emancipation of enslaved African Americans is incorporated into our Bank holidays.
Digital Feedback Tool – Team members need to be heard, included, recognized, and cared for and provided with positive leadership to promote a productive and engaging working environment. Customers utilizes a feedback software tool to foster continuous feedback by surveying our team members on a periodic basis on subject matters relating to their work environment, managers, work life balance and overall engagement.
Benefits
Customers views health care as an essential element in building and sustaining a fulfilled, successful, and rewarding work-life balance. The Company offers a variety of health, life, disability and voluntary insurance programs to protect our team members and their families. We continually evaluate our benefit packages to ensure they satisfy the needs of our team members.
18


Customers continues to actively encourage team members to prioritize their mental well-being with several tools, initiatives and resources. The Company continues to provide free of charge access to telehealth services to include general medicine, dermatological visits, nutritional counseling, mental health visits, neck and back care, among other services, to team members and their qualified dependents. Our health advocacy vendor continues to assist with services ranging from health care and insurance-related issues to providing one-on-one support for improving health and well-being. In addition to providing access to registered nurses, medical directors and benefits and claims specialists, team members also have access to an Employee Assistance Program (“EAP”). The EAP provides confidential counseling, legal, financial and referral services. EAP participants are entitled to three face-to-face consultations free of charge.
In 2023, Customers enhanced the Company-paid Life, ADD, STD and LTD benefits as well as kept team member deductions flat for the 7th year in a row. A new supplemental benefit carrier was introduced adding a hospital indemnity plan for eligible team members.
We continue to offer team members free access to a premium membership for ongoing care for their families. Resources include access to nannies, senior caregivers, transportation assistance, tutors, summer camps, special needs caregivers and more.
Customers offers a 401(k) plan whereby eligible team members may contribute an amount (percentage) of their salary (less applicable tax and benefit deductions) and the Company will provide a matching contribution. 95% of team members actively participate in the 401(k) plan. The company hosts a series of financial well-being sessions focusing on a variety of topics each year.
Financial Wellness Workshops – These workshops, hosted by our 401(k) provider, aim to improve the financial literacy of all team members, equipping them to reach their savings objectives and attain financial well-being. Topics covered included steps on how to invest, saving for the future, and money management.
Retirement Readiness Workshop – This workshop is hosted by our 401(k) Plan Investment Advisors and are target all team members who have reached at least age 50 or over to help them to begin the process of preparing for retirement. Topics covered include Medicare, when to start collecting Social Security, budgeting for and in retirement, and education on 401(k) withdrawals in retirement.
Diversity, Equity, Inclusion & Belonging
At Customers, we are committed to establishing a workplace culture which is built upon a foundation of dignity, mutual trust, integrity, and transparency. We believe that being intentional about applying the principles and practices of diversity, equity, inclusion and belonging (DEIB) is essential to achieving the level of Cultural Intelligence (CQ) necessary to move us forward. The Customers Bank Diversity Council continues to evolve and remained steadfast in its commitment to DEIB initiatives along with fresh perspectives and renewed energy in driving initiatives forward. Efforts were made to maintain momentum in pursuit of DEIB goals establishing clear objectives, measurable goals, accountability, and succession planning to sustain a robust DEIB culture into the future.
The Council also works to develop and oversee the organization’s EDIFY Initiatives which include DEIB-related education, training, resources, programs, team member engagement, etc. This includes the bank’s team member-driven emERGe Forums, which are Employee Resource Groups designed to strengthen team member engagement, support the unique needs of each group, and increase cultural awareness and understanding through allyship. Efforts were made to strengthen and foster the emERGe Forums including, Asian American Pacific Islander (AAPI), Black Excellence, HOLA! (Latino), LGBTQ+, Millennial/GenZ and the Women’s forum.
DEIB activities in 2023:
LGBTQ+ Forum represented the bank by sponsoring a table at the annual LGBTQ+ event in Reading, PA.
All forums came together to host emERGe Forum events at our Malvern and West Reading facilities which included multicultural foods, games, a photobooth and information about the forums.
Freedom Scholarship Program was created in 2020 in tribute to Juneteenth, the annual celebration of the emancipation of African American slaves in the United States. We recognize that the promise of freedom is vitally linked to the power of, and access to, quality education. The Customers Bank Freedom Scholarship Program is our way of providing financial support to dependents of eligible team members towards their educational endeavors. In 2023, a total of $100,000 was distributed among 14 of our team members’ children.
19


Management and Succession Planning
Strategic succession management starts with position-based succession planning approach and is implemented alongside our performance management process to facilitate cohesive people-centric decision-making and follow-through. This proactive approach ensures a sustainable pipeline of internal talent primed for our most senior, key executive, and critical positions, and that these individuals are intentionally developed for enhanced leadership responsibility. There is critical focus on strengthening talent in the succession pipeline, with a focus on individuals who have the required leadership, functional and technical expertise as well as a broad understanding of the bank.
The process is used to identify successors of key management positions and is aimed at continuously deepening our leadership bench of talent to ensure that strategic goals and priorities are achieved, and a plan is established for key management change.
We continue to partner with leadership to also identify high potential team members who possess the technical abilities and leadership attributes to be assessed and considered for succession.
Digital Transformation of People Operations
With the prior implementation of one of the world’s top enterprise resource planning (ERP) platforms to support Human Resources and Financial functions, we continue to tap into the potential of the system and have created detailed reporting and structured dashboards to share with our senior leaders and management board members. This platform has enabled us to effectively integrate, digitize, and improve financial and human resource administrative functions into a single unified solution.
Available Information
Customers Bancorp’s internet website address is www.customersbank.com. Information on Customers Bancorp’s website is not part of this Annual Report on Form 10-K. Investors can obtain copies of Customers Bancorp’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, on Customers Bancorp’s website (accessible under “Investors” – “SEC filings”) as soon as reasonably practicable after Customers Bancorp has filed such materials with, or furnished them to, the SEC. Customers Bancorp will also furnish a paper copy of such filings free of charge upon request. Customers Bancorp’s filings can also be accessed at the SEC’s internet website: www.sec.gov. Customers Bancorp has adopted a Code of Ethics and Business Conduct that applies to its directors and officers (including its principal executive officer, principal financial officer and principal accounting officer), which is available at www.customersbank.com/investor-relations/governance-documents. In addition, any future waivers from a provision of the Code of Ethics and Business Conduct will be posted at this internet address.
SUPERVISION AND REGULATION
GENERAL
Customers Bancorp is subject to extensive regulation, examination and supervision by the Pennsylvania Department of Banking and Securities and, as a member of the Federal Reserve System, by the Federal Reserve Board. Federal and state banking laws and regulations govern, among other things, the scope of a bank’s business, the investments a bank may make, the reserves against deposits a bank must maintain, terms of deposit accounts, loans a bank makes, the interest rates it charges and collateral it takes, the activities of a bank with respect to mergers and consolidations and the establishment of branches. The following discussion summarizes certain laws, regulations and policies to which Customers Bancorp and the Bank are subject. It does not address all applicable laws, regulations and policies that affect us currently or might affect us in the future. This discussion is qualified in its entirety by reference to the full texts of the laws, regulations and policies described.
Customers Bank has assets in excess of $10 billion, and accordingly, is subject to the supervision, examination and enforcement jurisdiction of the CFPB and is subject to higher FDIC premium assessments applicable to institutions with assets exceeding $10 billion. As a public company, we also file reports with the SEC and are subject to its regulatory authority, as well as the disclosure and regulatory requirements of the Securities Act, as amended, and the Exchange Act, as amended, with respect to our securities, financial reporting and certain governance matters. Because our securities are listed on the NYSE, we are subject to NYSE’s rules for listed companies, including rules relating to corporate governance.
20


FEDERAL BANKING LAWS
Interstate Branching. The Interstate Act, among other things, permits bank holding companies to acquire banks in any state. A bank may also merge with a bank in another state. Interstate acquisitions and mergers are subject, in general, to certain concentration limits and state entry rules relating to the age of the bank. Under the Interstate Act, the responsible federal regulatory agency is permitted to approve the acquisition of less than all of the branches of an insured bank by an out-of-state bank or bank holding company without the acquisition of an entire bank, only if the law of the state in which the branch is located permits. Under the Interstate Act, branches of state-chartered banks that operate in other states are covered by the laws of the chartering state, rather than the host state. The Dodd-Frank Act created a more permissive interstate branching regime by permitting banks to establish de novo branches in any state if a bank chartered by such state would have been permitted to establish the branch. For more information on interstate branching under Pennsylvania law, see “Pennsylvania Banking Laws – Interstate Branching” below.
Prompt Corrective Action. Federal banking law mandates certain “prompt corrective actions,” which Federal banking agencies are required to take, and certain actions which they have discretion to take, based upon the capital category into which a Federally regulated depository institution falls. Regulations have been adopted by the Federal bank regulatory agencies setting forth detailed procedures and criteria for implementing prompt corrective action in the case of any institution that is not adequately capitalized. Under the rules, an institution will be deemed to be “adequately capitalized” or better if it exceeds the minimum Federal regulatory capital requirements.  However, it will be deemed “undercapitalized” if it fails to meet the minimum capital requirements, “significantly undercapitalized” if it has a common equity tier 1 risk-based capital ratio that is less than 3.0%, or has a total risk-based capital ratio that is less than 6.0%, a Tier 1 risk-based capital ratio that is less than 4.0%, or a leverage ratio that is less than 3.0%, and “critically undercapitalized” if the institution has a ratio of tangible equity to total assets that is equal to or less than 2.0%. The rules require an undercapitalized institution to file a written capital restoration plan, along with a performance guaranty by its holding company or a third party. In addition, an undercapitalized institution becomes subject to certain restrictions including a prohibition on the payment of dividends, a limitation on asset growth and expansion, and in certain cases, a limitation on the payment of bonuses or raises to senior executive officers and a prohibition on the payment of certain “management fees” to any “controlling person.” Institutions that are classified as undercapitalized are also subject to certain additional supervisory actions, including increased reporting burdens and regulatory monitoring, a limitation on the institution’s ability to make acquisitions, open new branch offices, or engage in new lines of business, obligations to raise additional capital, restrictions on transactions with affiliates and restrictions on interest rates paid by the institution on deposits. In certain cases, bank regulatory agencies may require replacement of senior executive officers or directors or sale of the institution to a willing purchaser. If an institution is deemed to be “critically undercapitalized” and continues in that category for four quarters, the statute requires, with certain narrowly limited exceptions, that the institution be placed in receivership.
Safety and Soundness; Regulation of Bank Management. The Federal Reserve Board possesses the power to prohibit a bank from engaging in any activity that would be an unsafe and unsound banking practice and in violation of the law. Moreover, Federal law enactments have expanded the circumstances under which officers or directors of a bank may be removed by the institution’s Federal supervisory agency; restricted and further regulated lending by a bank to its executive officers, directors, principal shareholders or related interests thereof; restricted management personnel of a bank from serving as directors or in other management positions with certain depository institutions whose assets exceed a specified amount or which have an office within a specified geographic area; and restricted management personnel from borrowing from another institution that has a correspondent relationship with the bank for which they work.
Capital Rules. Federal banking agencies have issued certain “risk-based capital” guidelines, which supplemented existing capital requirements. In addition, the Federal Reserve Board imposes certain “leverage” requirements on member banks. Banking regulators have authority to require higher minimum capital ratios for an individual bank or bank holding company in view of its circumstances.
The risk-based capital guidelines require all banks and bank holding companies to maintain capital levels in compliance with “risk-based capital” ratios. In these ratios, the on-balance-sheet assets and off-balance sheet exposures are assigned a risk-weight based upon the perceived and historical risk of incurring a loss of principal from that exposure. The risk-based capital rules are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies and to minimize disincentives for holding liquid assets.
The risk-based capital rules also may consider interest-rate risk. Institutions with interest-rate risk exposure above a normal level would be required to hold extra capital in proportion to that risk. Customers currently monitors and manages its assets and liabilities for interest-rate risk, and management believes that the interest-rate risk rules which have been implemented and proposed will not materially adversely affect its operations.
21


The Federal Reserve Board’s “leverage” ratio rules require member banks which are rated the highest in the composite areas of capital, asset quality, management, earnings and liquidity to maintain a ratio of “Tier 1” capital to “adjusted total assets” of not less than 3.0%. For banks which are not the most highly rated, the minimum “leverage” ratio will range from 4.0% to 5.0%, or higher at the discretion of the Federal Reserve Board, and is required to be at a level commensurate with the nature of the level of risk of the bank’s condition and activities.
For purposes of the capital requirements, “Tier 1,” or “core,” capital is defined to include common shareholders’ equity and certain noncumulative perpetual preferred stock and related surplus. “Tier 2,” or “qualifying supplementary,” capital is defined to include a bank’s ACL up to 1.25% of risk-weighted assets, plus certain types of preferred stock and related surplus, certain “hybrid capital instruments” and certain term subordinated debt instruments.
In July 2013, the Federal Reserve approved final rules that substantially amend the regulatory risk-based capital rules applicable to the Bancorp and Customers Bank. The final rules were adopted following the issuance of proposed rules by the Federal Reserve in June 2012 and implement the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. “Basel III” refers to two consultative documents released by the Basel Committee on Banking Supervision in December 2009, the rules text released in December 2010 and loss absorbency rules issued in January 2011, which include significant changes to bank capital, leverage and liquidity requirements.
The rules include risk-based capital and leverage ratios, were phased in from 2015 to 2019, and refine the definition of what constitutes “capital” for purposes of calculating those ratios. The new minimum capital level requirements applicable to the Bancorp and Customers Bank under the final rules are:
(i) a common equity Tier 1 risk-based capital ratio of 4.5%;
(ii) a Tier 1 risk-based capital ratio of 6%;
(iii) a total risk-based capital ratio of 8% and
(iv) a Tier 1 leverage ratio of 4% for all institutions.
The final rules also establish a “capital conservation buffer” above the new regulatory minimum capital requirements.
The capital conservation buffer was phased-in over four years beginning on January 1, 2016, as follows: the maximum buffer was 0.625% of risk-weighted assets for 2016, 1.25% for 2017, 1.875% for 2018, and 2.500% for 2019 and thereafter.
Effective January 1, 2019, the minimum capital level requirements (including the capital conservation buffer) applicable to the Bancorp and Customers Bank under the final rules are:
(i) a common equity Tier 1 capital ratio of 7.0%;
(ii) a Tier 1 risk-based capital ratio of 8.5%; and
(iii) a total risk-based capital ratio of 10.5%.
Under the final rules, institutions are subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if their capital levels fall below the minimum capital level plus capital conservation buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.
Basel III provided discretion for regulators to impose an additional buffer, the “countercyclical buffer,” of up to 2.5% of common equity Tier 1 capital to take into account the macro-financial environment and periods of excessive credit growth. However, the final rules permit the countercyclical buffer to be applied only to “advanced approach banks” (i.e., banks with $250 billion or more in total assets or $10 billion or more in total foreign exposures), which currently excludes the Bancorp and the Bank. The final rules also implement revisions and clarifications consistent with Basel III regarding the various components of Tier 1 capital, including common equity, unrealized gains and losses, as well as certain instruments that will no longer qualify as Tier 1 capital, some of which will be phased out over time. However, the final rules provide that small depository institution holding companies with less than $15 billion in total assets as of December 31, 2009, (which includes the Bancorp) will be able to permanently include non-qualifying instruments that were issued and included in Tier 1 or Tier 2 capital prior to May 19, 2010, as additional Tier 1 or Tier 2 capital until they redeem such instruments or until the instruments mature.
In addition, the final rules provided for smaller banking institutions (less than $250 billion in consolidated assets) an opportunity to make a one-time election to opt out of including most elements of accumulated other comprehensive income (loss) in regulatory capital. Importantly, the opt-out excludes from regulatory capital not only unrealized gains and losses on available for sale debt securities, but also accumulated net gains and losses on cash-flow hedges and amounts attributable to defined benefit postretirement plans. The Bank selected the opt-out election in its March 31, 2015 Call Report.
22


The final rules also set forth the prompt corrective action framework, which is designed to place restrictions on insured depository institutions, including the Bank, if their capital levels begin to show signs of weakness. Under the prompt corrective action requirements, which are designed to complement the capital conservation buffer, insured depository institutions are required to meet the following increased capital level requirements in order to qualify as “well capitalized:”
(i) a common equity Tier 1 capital ratio of 6.5%;
(ii) a Tier 1 risk-based capital ratio of 8%;
(iii) a total risk-based capital ratio of 10%; and
(iv) a Tier 1 leverage ratio of 5%.
The final rules set forth certain provisions relating to the calculation of risk-weighted assets. The standardized approach final rule utilizes an increased number of credit-risk exposure categories and risk weights and also addressed:
(i) an alternative standard of creditworthiness consistent with Section 939A of the Dodd-Frank Act;
(ii) revisions to recognition of credit-risk mitigation;
(iii) rules for risk weighting of equity exposures and past-due loans;
(iv) revised capital treatment for derivatives and repo-style transactions;
(v) the option to use a formula-based approach referred to as the simplified supervisory formula approach to determine the risk weight of various securitization tranches in addition to the previous “gross-up” method (replacing the credit ratings approach for certain securitization); and
(vi) disclosure requirements for top-tier banking organizations with $50 billion or more in total assets that are not subject to the “advanced approach rules” that apply to banks with greater than $250 billion in consolidated assets.
In addition, in December 2018, the U.S. federal banking agencies finalized rules that permit bank holding companies and banks to phase-in, for regulatory capital purposes, the day-one impact of the new CECL accounting rule on retained earnings over a period of three years, with 25% of the day-one impact recognized on the adoption date (January 1, 2020 for Customers) and an additional 25% recognized annually on January 1 for the next three years.
In first quarter 2020, as part of its response to the impact of COVID-19, the U.S. federal banking regulatory agencies issued an interim final rule that provided the option to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period. The interim final rule allows banking organizations to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. Customers has elected to adopt the interim final rule. The cumulative CECL capital transition impact as of December 31, 2021 which amounted to $61.6 million will be phased in at 25% per year beginning on January 1, 2022 through December 31, 2024. As of December 31, 2023, our regulatory capital ratios reflected 50%, or $30.8 million, benefit associated with the CECL transition provisions.
In April 2020, the U.S. federal banking regulatory agencies issued an interim final rule that permits banks to exclude the impact of participating in the SBA PPP program in their regulatory capital ratios. Specifically, PPP loans are zero percent risk weighted and a bank can exclude all PPP loans pledged as collateral to the PPPLF from its average total consolidated assets for purposes of calculating the Tier 1 capital to average assets ratio (i.e. leverage ratio). Customers applied this regulatory guidance in the calculation of its regulatory capital ratios.
As of December 31, 2023 and 2022, Customers Bank and the Bancorp met all capital adequacy requirements to which they were subject. For additional information on Customers’ regulatory capital ratios, refer to “NOTE 19 – REGULATORY CAPITAL” to Customers’ audited consolidated financial statements.
Dodd-Frank Act. The Dodd-Frank Act was enacted by Congress on July 15, 2010, and was signed into law on July 21, 2010. Among many other provisions, the legislation:
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 CFPB 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;
23


permitted state attorney generals and other state enforcement authorities broader power to enforce consumer protection laws against banks;
required that the amount of any interchange fee charged by a debit card issuer with respect to a debit card transaction must be reasonable and proportional to the cost incurred by the issuer. On June 29, 2011, for banks with assets of $10 billion or greater, such as the Bank, the Federal Reserve Board set the interchange rate cap at $0.21 per transaction and 5 basis points multiplied by the value of the transaction;
gave the FDIC substantial new authority and flexibility in assessing deposit insurance premiums, which may result in increased deposit insurance premiums for Customers 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; and
prohibited banks subject to enforcement action such as a MOU from changing their charter without the approval of both their existing charter regulator and their proposed new charter regulator.
In July 2018, the Federal Reserve stated that it would no longer require bank holding companies with less than $100 billion in total consolidated assets to comply with the modified version of the liquidity coverage ratio. In addition, in October 2018, the federal bank regulators proposed to revise their liquidity requirements so that banking organizations that are not global systemically important banks and have less than $250 billion in total consolidated assets and less than $75 billion in each of off-balance-sheet exposure, nonbank assets, cross-jurisdictional activity and short-term wholesale funding would not be subject to any liquid coverage ratio or net stable funding ratio requirements.
In February 2014, the Federal Reserve adopted rules to implement certain of these enhanced prudential standards. Beginning in 2015, the rules require publicly traded bank holding companies with $10 billion or more in total consolidated assets to establish risk committees and require bank holding companies with $50 billion or more in total consolidated assets to comply with enhanced liquidity and overall risk management standards. Customers has established a risk committee and is in compliance with this requirement. In October 2018, the Federal Reserve and the other federal bank regulators proposed rules that would tailor the application of the enhanced prudential standards to bank holding companies and depository institutions pursuant to the EGRRCPA amendments, including by raising the asset threshold for application of many of these standards. For example, all publicly traded bank holding companies with $50 billion or more in total consolidated assets would be required to maintain a risk committee.
In October 2023, the Federal Reserve issued a proposal under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction. Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents. The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers.
Many of these provisions are subject to further rule making and to the discretion of regulatory bodies, including Customers Bank’s primary federal banking regulator, the Federal Reserve.
Regulatory Reform and Legislation. From time to time, various legislative and regulatory initiatives are introduced in Congress and state legislatures, as well as by regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation could change banking statutes and the operating environment of Customers in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions and other financial institutions. Customers cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations, would have on its financial condition or results of operations. A change in statutes, regulations or regulatory policies applicable to Customers or our subsidiaries could have a material effect on our business, financial condition and results of operations.
Deposit Insurance Assessments. Customers Bank’s deposits are insured by the FDIC up to the limits set forth under applicable law and are subject to deposit insurance premium assessments. The FDIC imposes a risk-based deposit premium assessment system, which was amended pursuant to the Federal Deposit Insurance Reform Act of 2005. Under this system, the amount of FDIC assessments paid by an individual insured depository institution, like Customers Bank, is based on the level of perceived risk incurred in its activities. The FDIC places a depository institution in one of four risk categories determined by reference to its capital levels and supervisory ratings. In addition, in the case of those institutions in the lowest risk category, the FDIC further determines its assessment rates based on certain specified financial ratios.
24


On June 22, 2020, the FDIC issued a final rule that mitigates the deposit insurance assessment effects of participating in the PPP, the PPPLF and MMLF. Pursuant to the final rule, the FDIC generally removed the effect of PPP lending in calculating an institution’s deposit insurance assessment. The final rule also provides an offset to an institution’s total assessment amount for the increase in its assessment base attributable to participation in the PPP and MMLF.
In October 2022, the FDIC adopted a final rule to increase the initial base deposit insurance assessment rate schedules uniformly by two basis points beginning with the first quarterly assessment period of 2023. The increased assessment rate schedules would remain in effect unless and until the reserve ratio of the DIF meets or exceeds two percent. As a result of the new rule, the FDIC insurance costs of Customers Bank increased.
In November 2023, the FDIC issued a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank, at a quarterly rate of 3.36 basis points of an institution’s uninsured deposits in excess of $5 billion as of December 31, 2022, to be paid over eight quarterly assessment periods beginning in the first quarter of 2024. Customers recorded $3.7 million of FDIC special assessment in the consolidated statement of income for the year ended December 31, 2023. Under the final rule, the estimated loss pursuant to the systemic risk determination will be periodically adjusted, and the FDIC has retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall assessment on a one time basis. The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain.
Community Reinvestment Act. Under the Community Reinvestment Act of 1977, the record of a bank holding company and its subsidiary banks must be considered by the appropriate Federal banking agencies, including the Federal Reserve Board, in reviewing and approving or disapproving a variety of regulatory applications including approval of a branch or other deposit facility, office relocation, a merger and certain acquisitions. Federal banking agencies have demonstrated an increased readiness to deny applications based on unsatisfactory CRA performance. The Federal Reserve Board is required to assess Customers’ record to determine if it is meeting the credit needs of the community, including the low-and-moderate-income neighborhoods that it serves. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 amended the CRA to require, among other things, that the Federal Reserve Board make publicly available an evaluation of the bank’s record of meeting the credit needs of its entire community, including low-and-moderate-income neighborhoods. This evaluation includes a descriptive rating (outstanding, satisfactory, needs to improve or substantial noncompliance) and a statement describing the basis for the rating. In May 2022, the Federal Reserve, the FDIC and the OCC issued a joint proposal that would, among other things (i) expand access to credit, investment and basic banking services in low- and moderate income communities, (ii) adapt to changes in the banking industry, including internet and mobile banking, (iii) provide greater clarity, consistency and transparency in the application of the regulations and (iv) tailor performance standards to account for differences in bank size, business model, and local conditions. Customers will continue to evaluate the impact of any changes to the regulations implementing the CRA and their impact to Customers’ financial condition, results of operations, and/or liquidity, which cannot be predicted at this time.
Incentive Compensation. In June 2010, the Federal Reserve Board, OCC and FDIC issued comprehensive final guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking. The guidance, which covers all employees that have the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles that a banking organization’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management and (iii) be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.
The Federal Reserve Board will review, as part of the regular, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as Customers, that are not “large, complex banking organizations.” These reviews will be tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements. The findings of the supervisory initiatives will be included in reports of examination. Deficiencies will be incorporated into the organization’s supervisory ratings, which can affect the organization’s ability to make acquisitions and take other actions. Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization’s safety and soundness, and the organization is not taking prompt and effective measures to correct the deficiencies.
25


In addition, Section 956 of the Dodd-Frank Act required certain regulators (including the FDIC, SEC and Federal Reserve Board) to adopt requirements or guidelines prohibiting excessive compensation. In April and May 2016, the Federal Reserve, jointly with five other federal regulators, published a proposed rule in response to Section 956 of the Dodd-Frank Act, which requires implementation of regulations or guidelines to: (i) prohibit incentive-based payment arrangements that encourage inappropriate risks by certain financial institutions by providing excessive compensation or that could lead to material financial loss and (ii) require those financial institutions to disclose information concerning incentive-based compensation arrangements to the appropriate federal regulator. In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including the NYSE, to implement listing standards that require listed companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. The final rule required Customers to adopt a clawback policy within 60 days after such listing standard becomes effective, which Customers did on November 15, 2023.
Consumer Financial Protection Laws and Enforcement. The CFPB and the federal banking agencies continue to focus attention on consumer protection laws and regulations. The CFPB is responsible for promoting fairness and transparency for mortgages, credit cards, deposit accounts and installment financial products and services and for interpreting and enforcing the federal consumer financial laws that govern the provision of such products and services. Federal consumer financial laws enforced by the CFPB include, but are not limited to, the ECOA, TILA, the Truth in Savings Act, HMDA, RESPA, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act. The CFPB is also authorized to prevent any institution under its authority from engaging in an unfair, deceptive, or abusive act or practice in connection with consumer financial products and services. Customers is subject to multiple federal consumer protection statutes and regulations, including, but not limited to, those referenced above.
In particular, fair lending laws prohibit discrimination in the provision of banking services, and the enforcement of these laws has been an increasing focus for the CFPB, the HUD, and other regulators. Fair lending laws include ECOA and the Fair Housing Act, which outlaw discrimination in credit and residential real estate transactions on the basis of prohibited factors including, among others, race, color, national origin, gender, and religion. A lender may be liable for policies that result in a disparate treatment of, or have a disparate impact on, a protected class of applicants or borrowers. If a pattern or practice of lending discrimination is alleged by a regulator, then that agency may refer the matter to the DOJ for investigation. Failure to comply with these and similar statutes and regulations can result in Customers Bancorp becoming subject to formal or informal enforcement actions, the imposition of civil money penalties and consumer litigation.
The CFPB has exclusive examination and primary enforcement authority with respect to compliance with federal consumer financial protection laws and regulations by institutions under its supervision and is authorized, individually or jointly with the federal bank regulatory agencies, to conduct investigations to determine whether any person is, or has, engaged in conduct that violates such laws or regulations. The CFPB may bring an administrative enforcement proceeding or civil action in federal district court. In addition, in accordance with a MOU entered into between the CFPB and the DOJ, the two agencies have agreed to coordinate efforts related to enforcing the fair lending laws, which includes information sharing and conducting joint investigations; however, as a result of recent leadership changes at the DOJ and CFPB, as well as changes in the enforcement policies and priorities of each agency, the extent to which such coordination will continue to occur in the near term is uncertain. As an independent bureau funded by the Federal Reserve Board, the CFPB may impose requirements that are more stringent than those of the other bank regulatory agencies.
In October 2023, the CFPB proposed a new rule that would require a provider of payment accounts or products, such as a bank, to make data available to consumers upon request regarding the products or services they obtain from the provider. Any such data provider would also have to make such data available to third parties, with the consumer's express authorization and through an interface that satisfies formatting, performance and security standards, for the purpose of such third parties providing the consumer with financial products or services requested by the consumer. Data that would be required to be made available under the rule would include transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data. The proposed rule is intended to give consumers control over their financial data, including with whom it is shared, and encourage competition in the provision of consumer financial products or services. For banks with less than $50 billion in total assets, compliance would be required approximately 2.5 years after adoption of the final rule.
As an insured depository institution with total assets of more than $10 billion, the Bank is subject to the CFPB’s supervisory and enforcement authorities. The Dodd-Frank Act also permits states to adopt stricter consumer protection laws and state attorneys general to enforce consumer protection rules issued by the CFPB. As a result, the Bank operates in a stringent consumer compliance environment and may incur additional costs related to consumer protection compliance, including but not limited to potential costs associated with CFPB examinations, regulatory and enforcement actions and consumer-oriented litigation. The CFPB, other financial regulatory agencies, including the Federal Reserve, as well as the DOJ, have, over the past several years, pursued a number of enforcement actions against depository institutions with respect to compliance with fair lending laws.
26


UDAP and UDAAP. Banking regulatory agencies have increasingly used a general consumer protection statute to address “unethical” or otherwise “bad” business practices that may not necessarily fall directly under the purview of a specific banking or consumer finance law. The law of choice for enforcement against such business practices has been Section 5 of the FTC Act, which is the primary federal law that prohibits unfair or deceptive acts or practices, referred to as “UDAP,” and unfair methods of competition in or affecting commerce. “Unjustified consumer injury” is the principal focus of the FTC Act. Prior to the Dodd-Frank Act, there was little formal guidance to provide insight to the parameters for compliance with UDAP laws and regulations. However, UDAP laws and regulations have been expanded under the Dodd-Frank Act to apply to “unfair, deceptive or abusive acts or practices,” referred to as “UDAAP,” which have been delegated to the CFPB for supervision. The CFPB has published its first Supervision and Examination Manual that addresses compliance with and the examination of UDAAP.
Privacy Protection and Cybersecurity. The Bank is subject to regulations implementing the privacy protection provisions of the GLBA. These regulations require the Bank to disclose its privacy policy, including identifying with whom it shares “nonpublic personal information,” to customers at the time of establishing the customer relationship and annually thereafter. The regulations also require the Bank to provide its customers with initial and annual notices that accurately reflect its privacy policies and practices. In addition, to the extent its sharing of such information is not covered by an exception, the Bank is required to provide its customers with the ability to “opt-out” of having the Bank share their nonpublic personal information with unaffiliated third parties.
The Bank is subject to regulatory guidelines establishing standards for safeguarding customer information. These regulations implement certain provisions of the GLBA. The guidelines describe the federal bank regulatory agencies’ expectations for the creation, implementation and maintenance of an information security program, which would include administrative, technical and physical safeguards appropriate to the size and complexity of the institution and the nature and scope of its activities. The standards set forth in the guidelines are intended to ensure the security and confidentiality of customer records and information, protect against any anticipated threats or hazards to the security or integrity of such records and protect against unauthorized access to or use of such records or information that could result in substantial harm or inconvenience to any customer. These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial services. In October 2016, the federal banking agencies issued an advance notice of proposed rulemaking on enhanced cybersecurity risk-management and resilience standards that would apply to large and interconnected banking organizations and to services provided by third parties to these firms. These enhanced standards would apply only to depository institutions and depository institution holding companies with total consolidated assets of $50 billion or more. The federal banking agencies have not yet taken further action on these proposed standards. The federal banking regulators regularly issue new guidance and standards, and update existing guidance and standards, regarding cybersecurity intended to enhance cyber risk management among financial institutions. Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes. If Customers fails to observe such regulatory guidance or standards, Customers could be subject to various regulatory sanctions, including financial penalties. Under a final rule adopted by federal banking agencies in November 2021, banking organizations are required to notify their primary banking regulator within 36 hours of determining that a “computer-security incident” has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the banking organization’s ability to carry out banking operations or deliver banking products and services to a material portion of its customer base, its businesses and operations that would result in material loss, or its operations that would impact the stability of the United States. In February 2018, the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents. These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations. In addition, in December 2023, the SEC imposed rules that require disclosure of material cybersecurity incidents, as well as cybersecurity risk management, strategy and governance. Privacy and data security areas are expected to receive increased attention at the federal level. An increasing number of state laws and regulations have been enacted in recent years to implement privacy and cybersecurity standards and regulations, including data breach notification and data privacy requirements. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs that meet specified requirements. In addition, other jurisdictions in which our customers do business, such as the European Union, have adopted similar requirements. This trend of activity is expected to continue to expand, requiring continual monitoring of developments in the states and nations in which our customers are located and ongoing investments in our information systems and compliance capabilities.
BANK HOLDING COMPANY REGULATION
As a bank holding company, Customers Bancorp is also subject to additional regulation.
The BHC Act requires the Bancorp to secure the prior approval of the Federal Reserve Board before it owns or controls, directly or indirectly, more than five percent (5%) of the voting shares or substantially all of the assets of any bank. In addition, bank holding companies are required to act as a source of financial strength to each of their banking subsidiaries pursuant to which such holding company may be required to commit financial resources to support such subsidiaries in circumstances when, absent such requirements, they might not do so.
27


A bank holding company is prohibited from engaging in or acquiring direct or indirect control of more than five percent (5%) of the voting shares of any company engaged in non-banking activities unless the Federal Reserve Board, by order or regulation, has found such activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. In making this determination, the Federal Reserve Board considers whether the performance of these activities by a bank holding company would offer benefits to the public that outweigh the possible adverse effects.
Control Acquisitions. The CBCA prohibits a person or group of persons from acquiring “control” of a bank holding company unless the Federal Reserve has been notified and has not objected to the transaction. Under a rebuttable presumption established by the Federal Reserve, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as Customers Bancorp, would, under the circumstances set forth in the presumption, constitute acquisition of control of Customers Bancorp.
In addition, the CBCA prohibits any entity from acquiring 25% (the BHC Act has a lower limit for acquirers that are existing bank holding companies) or more of a bank holding company’s or bank’s voting securities, or otherwise obtaining control or a controlling influence over a bank holding company or bank without the approval of the Federal Reserve. On January 31, 2020, the Federal Reserve Board approved the issuance of a final rule (which became effective April 1, 2020) that clarifies and codifies the Federal Reserve’s standards for determining whether one company has control over another. The final rule establishes four categories of tiered presumptions of non-control that are based on the percentage of voting shares held by the investor (less than 5%, 5-9.9%, 10-14.9% and 15-24.9%) and the presence of other indicia of control. As the percentage of ownership increases, fewer indicia of control are permitted without falling outside of the presumption of non-control. These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants. Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence.
Applications under the BHC Act and the CBCA are subject to review, based upon the record of compliance of the applicant with the CRA.
The Bancorp is required to file an annual report with the Federal Reserve Board and any additional information that the Federal Reserve Board may require pursuant to the BHC Act. Further, under Section 106 of the 1970 amendments to the BHC Act and the Federal Reserve Board’s regulations, a bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit or provision of credit or provision of any property or services. The so-called “anti-tie-in” provisions state generally that a bank may not extend credit, lease, sell property or furnish any service to a customer on the condition that the customer obtains additional credit or service from the bank, or on the condition that the customer not obtain other credit or service from a competitor.
The Federal Reserve Board permits bank holding companies to engage in non-banking activities so closely related to banking or managing or controlling banks as to be a proper incident thereto. A number of activities are authorized by Federal Reserve Board regulation, while other activities require prior Federal Reserve Board approval. The types of permissible activities are subject to change by the Federal Reserve Board.
PENNSYLVANIA BANKING LAWS
Pennsylvania banks that are Federal Reserve members may establish new branch offices only after approval by the Pennsylvania Department of Banking and Securities and the Federal Reserve Board. Approval by these regulators can be subject to a variety of factors, including the convenience and needs of the community, whether the institution is sufficiently capitalized and well managed, issues of safety and soundness, the institution’s record of meeting the credit needs of its community, whether there are significant supervisory concerns with respect to the institution or affiliated organizations, and whether any financial or other business arrangement, direct or indirect, involving bank insiders involves terms and conditions more favorable to the insiders than would be available in a comparable transaction with unrelated parties.
Under the Pennsylvania Banking Code, the Bank is permitted to branch throughout Pennsylvania. Pennsylvania law also provides Pennsylvania state-chartered banks elective parity with the power of national banks, federal thrifts, and state-chartered institutions in other states as authorized by the FDIC, subject to a required notice to the Department. The Pennsylvania Banking Code also imposes restrictions on payment of dividends, as well as minimum capital requirements.
In October 2012, Pennsylvania enacted three laws known as the “Banking Law Modernization Package,” all of which became effective on December 24, 2012. The intended goal of the law, which applies to the Bank, is to modernize Pennsylvania’s banking laws and to reduce regulatory burden at the state level where possible, given the increased regulatory demands at the federal level as described below.
28


The law also permits banks to disclose formal enforcement actions initiated by the Department, clarifies that the Department has examination and enforcement authority over subsidiaries as well as affiliates of regulated banks and bolsters the Department’s enforcement authority over its regulated institutions by clarifying its ability to remove directors, officers and employees from institutions for violations of laws or orders or for any unsafe or unsound practice or breach of fiduciary duty. Changes to existing law also allow the Department to assess civil money penalties of up to $25,000 per violation.
The law also sets a new standard of care for bank officers and directors, applying the same standard that exists for non-banking corporations in Pennsylvania. The standard is one of performing duties in good faith, in a manner reasonably believed to be in the best interests of the institutions and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances. Directors may rely in good faith on information, opinions and reports provided by officers, employees, attorneys, accountants or committees of the board, and an officer may not be held liable simply because he or she served as an officer of the institution.
Interstate Branching. Federal law allows the Federal Reserve and FDIC, and the Pennsylvania Banking Code allows the Department, to approve an application by a state banking institution to acquire interstate branches. For more information on federal law, see the discussion under “Federal Banking Laws – Interstate Branching” above.
Pennsylvania banking laws authorize banks in Pennsylvania to acquire existing branches or branch de novo in other states and also permit out-of-state banks to acquire existing branches or branch de novo in Pennsylvania.
In April 2008, Banking Regulators in the States of New Jersey, New York and Pennsylvania entered into the Interstate MOU to clarify their respective roles, as home and host state regulators, regarding interstate branching activity on a regional basis pursuant to the Riegle-Neal Amendments Act of 1997. The Interstate MOU establishes the regulatory responsibilities of the respective state banking regulators regarding bank regulatory examinations and is intended to reduce the regulatory burden on state-chartered banks branching within the region by eliminating duplicative host state compliance exams.
Under the Interstate MOU, the activities of branches Customers established in New Jersey or New York would be governed by Pennsylvania state law to the same extent that federal law governs the activities of the branch of an out-of-state national bank in such host states. Issues regarding whether a particular host state law is preempted are to be determined in the first instance by the Department. In the event that the Department and the applicable host state regulator disagree regarding whether a particular host state law is pre-empted, the Department and the applicable host state regulator would use their reasonable best efforts to consider all points of view and to resolve the disagreement.
29


Item 1A.    Risk Factors
Summary of Risk Factors
Our business is subject to a number of risks and a summary of the significant risk factors is set forth below. These risks are discussed in more detail following this summary and should be read together with this summary and considered along with other information contained in this report before investing in our securities.
Risks related to the Bancorp’s banking operations:
Risks associated with our lending activities and effective management of credit risks in our loan and lease portfolio;
Risks related to maintaining an appropriate level of ACL;
Risks associated with our investment securities portfolio including market and credit risks and the uncertainties surrounding macroeconomic conditions;
Risks related to inflation, interest rates, and securities market and monetary fluctuations;
Risks related to changes in the composition of our loan portfolio including our current emphasis on commercial and industrial, commercial real estate, consumer, and mortgage warehouse lending;
Risks related to the commercial real estate market;
Risks associated with maintaining sufficient liquidity including our ability to gather, grow and retain our lower cost deposits;
Risks and uncertainties associated with the effectiveness of our business strategies, operations, and technology in managing growth and maintaining profitability;
Risks related to changes to estimates and assumptions made by management in preparing financial statements. These changes could adversely affect our business, operating results, reported assets and liabilities, financial condition and capital levels;
Risks related to changes in accounting standards and policies which can be difficult to predict and can materially impact how we record and report our financial results;
Risks related to our geographic concentration in the Northeast and Mid-Atlantic regions;
Risks related to our concentration in certain business lines or product types;
Risks related to our dependency on our executive officers and key personnel to implement our strategy and our ability to retain their services;
Risks related to significant competition from other financial institutions and financial services providers;
Risks related to CBIT, our blockchain-based instant B2B payments platform;
Risks associated with our dependency on our information technology and telecommunications systems and third-party service providers including exposures to systems failures, interruptions or breaches of security;
Risks associated with the loss of, or failure to adequately safeguard, confidential or proprietary information;
Risks associated with negative public opinion regarding us;
Risks related to the divestiture of BMT:
Risks associated with BM Technologies through our various service agreements with BM Technologies;
Risks related to macroeconomic conditions, COVID-19, climate change and geopolitical conflicts:
Risks related to worsening general business and economic conditions which could materially and adversely affect us;
Risks associated with COVID-19 and its variants including their scope, duration and severity and actions taken by governmental authorities in response to COVID-19 and its variants;
Risks related to the SBA’s PPP program and PPP loans remaining on our balance sheet;
Risks related to climate change and related legislative and regulatory initiatives on our business;
30


Risks related to the regulation of our industry:
Risks associated with the highly regulated environment in which we operate, including the effects of heightened regulatory and supervisory requirements applicable to banks with assets in excess of $10 billion;
Risks related to maintaining adequate regulatory capital to support our business strategies including the long-term impact of the new regulatory capital standards and the capital rules on U.S. banks;
Risks related to our use of third-party service providers and our other ongoing third-party business relationships, which are subject to increasing regulatory requirements and attention;
Risks associated to us being subject to numerous laws and governmental regulations and to regular examinations by our regulators of our business and compliance with laws and regulations. Our failure to comply with such laws and regulations or to adequately address any matters identified during these examinations could materially and adversely affect us;
Risks related to reviews performed by the IRS and state taxing authorities for the fiscal years that remain open for investigation and potential changes in U.S. federal, state or local tax laws;
Risks related to our securities:
Risks related to our voting common stock;
Risks related to our fixed-to-floating-rate non-cumulative perpetual preferred stock, Series E and Series F; and
Risks related to our senior notes and subordinated notes.
General risk factors
Risks Related to the Bancorp’s Banking Operations
Our business is highly susceptible to credit risk. If our ACL is insufficient to absorb losses in our loan and lease portfolio, our earnings could decrease.
Lending money is a substantial part of our business, and each loan and lease carries a certain risk that it will not be repaid in accordance with its terms or that any underlying collateral will not be sufficient to assure repayment of the full amount owed. This risk is affected by, among other things:
the financial condition and cash flows of the borrower and/or the project being financed;
whether a loan or lease is collateralized and, if so, the changes and uncertainties as to the future value of the collateral;
the discount on the loan at the time of its acquisition;
the duration of the loan or lease;
the credit history of a particular borrower; and
changes in current and future economic and industry conditions.
Our credit standards, policies and procedures are designed to reduce the risk of credit losses to a low level but may not prevent us from incurring substantial credit losses.
Additionally, for certain borrowers, we restructure originated or acquired loans if we believe the borrowers are experiencing problems servicing the debt pursuant to current terms, and we believe the borrower is likely to fully repay their restructured obligations. We are subject to legal or regulatory requirements for restructured loans. With respect to restructured loans, we grant concessions to certain borrowers experiencing financial difficulties in order to facilitate repayment of the loan by a reduction of the stated interest rate for the remaining life of the loan to lower than the current market rate for new loans with similar risk or an extension of the maturity date.
31


Management makes various assumptions and judgments about the collectibility of our loan and lease portfolio, including the creditworthiness of our borrowers and the probability of our borrowers making payments, as well as the value of real estate and other assets serving as collateral for the repayment of many of our loans and leases. Under the CECL model pursuant to ASC 326, Measurement of Credit Losses on Financial Instruments (“ASC 326”), we are required to present certain financial assets reported at amortized cost, such as loans held for investment and HTM debt securities, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. At December 31, 2023, Customers’ ACL totaled $135.3 million, which represented 1.13% of total loans and leases held for investment.
In determining the amount of the ACL, significant factors considered include loss experience in particular loan portfolio, trends and absolute levels of classified and criticized loans and leases, trends and absolute levels in delinquent loans and leases, trends in risk ratings, trends in industry and Customers’ charge-offs by particular loan portfolio and changes in current and future economic and business conditions affecting our lending areas and the national economy. If our assumptions are incorrect, our ACL may not be sufficient to cover losses inherent in our loan and lease portfolio, resulting in additions to the ACL.
Management reviews and re-estimates the ACL quarterly. Additions to our ACL as a result of management’s reviews and re-estimates could materially decrease net income. Our regulators, as an integral part of their examination process, periodically review our ACL and may lead us to increase our ACL by recognizing additional provisions for credit losses on loans and leases charged to expense, or to decrease our ACL by recognizing charge-offs, net of recoveries. Any such additional provisions for credit losses on loans and leases or net charge-offs could have a material adverse effect on our financial condition and results of operations and possibly risk-based capital.
In first quarter 2020, as part of its response to the impact of COVID-19, the U.S. federal banking regulatory agencies issued an interim final rule that provided the option to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period. The interim final rule allows banking organizations to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. We elected to adopt the interim final rule. The cumulative CECL capital transition impact as of December 31, 2021 which amounted to $61.6 million will be phased in at 25% per year beginning on January 1, 2022 through December 31, 2024. As of December 31, 2023, our regulatory capital ratios reflected 50%, or $30.8 million, benefit associated with the CECL transition provisions.
Changes in the composition of our loan portfolio may expose us to increased lending risks.
From time to time, we implement changes in the composition of our loan portfolio to emphasize and deemphasize certain types of loans, such as commercial and industrial loans, including specialty loans, loans to mortgage companies and loans to consumers. We may achieve these changes through originations or purchases or sales of loan portfolios from or to third party originators or fintech companies. Our focus will change, based on our evaluation of current and predicted market conditions and opportunities. Changes in the composition of our loan portfolio could have a significant adverse effect on our overall credit profile, which could result in a higher percentage of non-accrual loans, increased provision for loan losses, loss of future income on loans sold, sales of loans at a discount below book value and an increased level of net charge-offs, all of which could have a material and adverse effect on our financial condition and results of operations. Consumer loans are particularly affected by economic conditions, including interest rates, inflation, the rate of unemployment, housing prices, the level of consumer confidence, changes in consumer spending, and the number of personal bankruptcies. A weakening in business or economic conditions, including higher unemployment levels, higher inflation, increased interest rates or declines in home prices could adversely affect borrowers’ ability to repay their loans, which could negatively impact our credit performance.
As of December 31, 2023, Customers had $1.7 billion in consumer loans outstanding, or 13.2% of the total loan and lease portfolio, which includes loans held for sale, loans receivable, mortgage warehouse at fair value and loans receivable, PPP, compared to $2.2 billion, or 14.2% of the total loan and lease portfolio, as of December 31, 2022.
Our emphasis on commercial, commercial real estate and mortgage warehouse lending may expose us to increased lending risks.
We intend to continue emphasizing the origination of commercial loans including our specialty lending verticals. Commercial loans, including commercial real estate loans, can expose a lender to risk of non-payment and loss because repayment of the loans often depends on the successful operation of a business or property, which could be affected by factors outside of the borrower’s control, and the borrower’s cash flows. Such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one-to-four-family residential mortgage loans. In addition, we may need to increase our allowance for credit losses in the future to account for an increase in expected credit losses associated with such loans. Also, we expect that many of our commercial borrowers will have more than one loan outstanding with us. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse development with respect to a one-to-four-family residential mortgage loan.
32


We are also a lender to mortgage companies, where we provide financing to mortgage bankers by purchasing, subject to resale under a master repurchase agreement, the underlying residential mortgages on a short-term basis pending the ultimate sale of the mortgages to investors. We are subject to the risks associated with such lending, including, but not limited to, the risks of fraud, bankruptcy and possible default by the borrower, closing agents and the residential borrower on the underlying mortgage, any of which could result in credit losses. The risk of fraud associated with this type of lending includes, but is not limited to, settlement process risks, the risk of financing nonexistent loans or fictitious mortgage loan transactions, or the risk that collateral delivered is fraudulent or non-existent, creating a risk of loss of the full amount financed on the underlying residential mortgage loan, or in the settlement processes. Fraudulent transactions could have a material adverse effect on our financial condition and results of operations.
This business is subject to seasonality of the mortgage lending business, and volumes have been declining as interest rates increased. A decline in the rate of growth, volume or profitability of this business unit, or a loss of its leadership could adversely affect our results of operations and financial condition.
As of December 31, 2023, we had $11.5 billion in commercial loans outstanding, approximately 86.8% of our total loan and lease portfolio, which includes loans held for sale, loans receivable, mortgage warehouse at fair value and loans receivable, PPP, as compared to $13.5 billion, or 85.8% of the total loan and lease portfolio, as of December 31, 2022.
We are subject to risks arising from conditions in the commercial real estate market.
Commercial real estate mortgage loans generally involve a greater degree of credit risk than residential real estate mortgage loans because they typically have larger balances and are more affected by adverse conditions in the economy. Because payments on loans secured by commercial real estate often depend upon the successful operation and management of the properties and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy, ability to raise rents and find tenants able to pay such rents, or changes in government regulations. The market value of real estate can fluctuate significantly in a relatively short period of time as a result of market conditions in the geographic area in which the real estate is located, in response to factors such as economic downturns, changes in the economic health of industries heavily concentrated in a particular area and in response to changes in market interest rates, which influence capitalization rates used to value revenue-generating commercial real estate. If the value of real estate serving as collateral for loans declines materially, a significant part of the loan portfolio could become under-collateralized and losses incurred upon borrower defaults would increase. Conditions in certain areas within the real estate industry may have an effect on the values of real estate pledged as collateral for loans. The inability of purchasers of real estate to obtain financing may weaken the financial condition of borrowers who are dependent on the sale or refinancing of property to repay their loans. Changes in the economic health of certain industries can have a significant impact on other sectors or industries which are directly or indirectly associated with those industries and may impact the value of real estate in areas where such industries are concentrated. In recent years, commercial real estate markets have been particularly impacted by the economic disruption resulting from the COVID-19 pandemic. The COVID-19 pandemic has also been a catalyst for the evolution of various remote work options which could impact the long-term performance of some types of office properties within our commercial real estate portfolio. Banking regulatory agencies have expressed concerns about weaknesses in the current commercial real estate market. Failures in our risk management policies, procedures and controls could adversely affect our ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which, accordingly, could have a material adverse effect on our business, results of operations and financial condition.
Our New York State multifamily loan portfolio could be adversely impacted by changes in legislation or regulation.
On June 14, 2019, the New York State legislature passed the Housing Stability and Tenant Protection Act of 2019, impacting about one million rent regulated apartment units. Among other things, the legislation: (i) curtailed rent increases from Material Capital Improvements and Individual Apartment Improvements; (ii) all but eliminated the ability for apartments to exit rent regulation; (iii) eliminated vacancy decontrol and high-income deregulation; and (iv) repealed the 20% vacancy bonus. In total, it generally limits a landlord’s ability to increase rents on rent regulated apartments and makes it more difficult to convert rent regulated apartments to market rate apartments. As a result, the value of the collateral located in New York State securing our multifamily loans or the future net operating income of such properties could potentially become impaired. As of December 31, 2023, our total multifamily exposure in New York State was approximately $1.2 billion, of which approximately $631.4 million, or 52.9%. was provided for loans to properties with 50% or more rent-regulated units, primarily in New York City. In 2024 and 2025, there are $56.2 million, or 8.9% of these loans that will mature or have an interest rate reset.
33


The fair value of our investment securities fluctuates due to market conditions. Adverse economic performance can lead to adverse security performance and potential impairment.
As of December 31, 2023, the fair value of our available for sale investment securities portfolio was $2.4 billion. We have historically followed a conservative investment strategy, with concentrations in securities that are backed by government-sponsored enterprises. Since 2020, we have been seeking to increase yields through more aggressive strategies, which has included a greater percentage of corporate securities, non-agency mortgage-backed securities and other structured credit products. Factors beyond our control significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. These factors include, but are not limited to, rating agency actions in respect of the securities, defaults by the issuer or with respect to the underlying securities, and changes in market interest rates and continued instability in the capital markets. Any of these factors, among others, such as a change in management’s intent to sell the securities, could cause credit losses and realized and/or unrealized losses in future periods and declines in OCI, which could have a material adverse effect on us. The process for determining whether impairment of a security exists usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security.
Changes to estimates and assumptions made by management in preparing financial statements could adversely affect our business, operating results, reported assets and liabilities, financial condition and capital levels.
Changes to estimates and assumptions made by management in connection with the preparation of our consolidated financial statements could adversely affect the reported amounts of assets and liabilities and the reported amounts of income and expenses. The preparation of our consolidated financial statements requires management to make certain critical accounting estimates and assumptions that could affect the reported amounts of assets and liabilities and the reported amounts of income and expense during the reporting periods. Changes to management’s assumptions or estimates could materially and adversely affect our business, operating results, reported assets and liabilities, financial condition and capital levels.
Changes in accounting standards and policies can be difficult to predict and can materially impact how we record and report our financial results.
Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. From time to time, the FASB or the SEC changes the financial accounting and reporting standards or the policies that govern the preparation of our financial statements. These changes are at times difficult to predict and can materially impact how we record and report our financial condition and results of operations. We could be required to apply new or revised guidance retrospectively, which at times results in the revision of prior period financial statements by material amounts. The implementation of new or revised accounting guidance could have a material adverse effect on our financial results or net worth.
Our geographic concentration in the Northeast and Mid-Atlantic regions makes our business susceptible to downturns in the local economies and depressed banking markets, which could materially and adversely affect us.
We have experienced exponential growth over the last five years as a result of significant expansion in our national specialty lending verticals as well as participating in the SBA’s PPP, and expanded our franchise in new geographies such as Texas, Florida, North Carolina. In June 2023, Customers acquired a Venture Banking loan portfolio at a discount from the FDIC. Customers has also recruited team members that originated these loans to service the venture-backed growth industry from seed-stage through late-stage. The newly recruited team gives clients access to the capital to grow from innovation to maturity. The team has long-standing relationships with these clients offering them premier end-to-end financial services meeting their needs. The addition of these team members created venture banking client coverage in Austin, the Bay Area, Boston, Southern California, Chicago, Denver, Raleigh/Durham, and Washington, D.C. We intend to grow in these new markets and enter additional markets in the future. As of December 31, 2023, our loan and deposit activities remained largely based in the Northeast and Mid-Atlantic regions. As a result, our financial performance depends in part upon economic conditions in these regions. These regions have experienced deteriorating local economic conditions in the past, and a downturn in the regional real estate market could harm our financial condition and results of operations because of the geographic concentration of loans within these regions, and because a large percentage of the loans are secured by real property. If there is a decline in real estate values, the collateral value for our loans will decrease, and our probability of incurring losses will increase as the ability to recover on defaulted loans by selling the underlying real estate will be lessened. We expect our loan and deposit activities to continue expanding beyond the Northeast and Mid-Atlantic regions to service customers across the nation.
34


Additionally, we have made a significant investment in commercial real estate loans. Often in a commercial real estate transaction, repayment of the loan is dependent on the property generating sufficient rental income to service the loan. Economic conditions may affect a tenant’s ability to make rental payments on a timely basis, and cause some tenants not to renew their leases, each of which may impact the debtor’s ability to make loan payments. Further, if expenses associated with commercial properties increase dramatically, a tenant’s ability to repay, and therefore the debtor’s ability to make timely loan payments, could be adversely affected. All of these factors could increase the amount of NPLs, increase our provision for loan losses and reduce our net income.
Our loan and deposit portfolios contain concentrations in certain business lines or product types that have unique risk characteristics and may expose us to increased risks.
Our loan and deposit portfolios consist primarily of commercial and industrial loans, including specialty lending activities, multifamily lending, commercial real estate loans, and loans to mortgage companies, and related deposits, which contain material concentrations in certain business lines or product types. These loan and deposit concentrations present unique risks and involve specialized underwriting and management as they often involve large loan balances to or deposit balances from a single customer or group of related customers. Consequently, an adverse development with respect to one credit relationship, business line or product type may adversely affect us.
We depend on our executive officers and key personnel to implement our strategy and could be harmed by the loss of their services.
We believe that the implementation of our strategy will depend in large part on the skills of our executive management team, and our ability to motivate and retain these and other key personnel. Accordingly, the loss of service of one or more of our executive officers or key personnel could reduce our ability to successfully implement our growth strategy and materially and adversely affect us. We experience leadership changes in our management team from time to time, and if key or significant resignations occur, we may not be able to recruit additional qualified personnel, especially during periods of low unemployment. We believe our executive management team possesses valuable knowledge about the banking industry and that their knowledge and relationships would be very difficult to replicate. Although our CEO, CFO, and President have entered into employment agreements with us, it is possible that they may not complete the term of their employment agreement or may choose not to renew it upon expiration.
Our customers also rely on us to deliver personalized financial services. Our strategic model is dependent upon relationship managers and private bankers who act as a customer’s single point of contact to us. Many of our specialized lending verticals rely on our relationship managers’ expertise and relationships in their respective industries. The loss of the service of these individuals could undermine the confidence of our customers in our ability to provide such personalized services. We need to continue to attract and retain these individuals and to recruit other qualified individuals to ensure continued growth. In addition, competitors may recruit these individuals in light of the value of the individuals’ relationships with their customers and communities, and we may not be able to retain such relationships absent the individuals. In any case, if we are unable to attract and retain our relationship managers and private bankers and recruit individuals with appropriate skills and knowledge to support our business, our growth strategy, business, financial condition and results of operations may be adversely affected.
In addition, our ability to expand into new business lines, such as specialty lending and digital banking including our CBIT and Banking-as-a-Service offerings, are highly dependent upon our ability to attract and retain key personnel. We cannot assure you that our recruiting efforts for these positions will be successful or that they will enhance our business, results of operations or financial condition.
Our success also depends on the experience of our branch managers and lending officers and on their relationships with the customers and communities they serve. The loss of these key personnel could negatively impact our banking operations. The loss of key senior personnel, or the inability to recruit and retain qualified personnel in the future, such as those in our compliance, finance, risk and legal departments, could have a material adverse effect on us. Because many of our team members continue to work remotely on a “hybrid model”, the ability of our key personnel and other management to motivate personnel and maintain corporate culture may be adversely affected.
35


We face significant competition from other financial institutions and financial services providers, which may materially and adversely affect us.
Commercial and consumer banking is highly competitive. Changes in market interest rates and pricing decisions by our loan competitors may adversely affect demand for our loan products and the revenue realized on the sale of loans, and ultimately reduce our net income. Our markets contain a large number of community and regional banks as well as a significant presence of the country’s largest commercial banks. We compete with other state and national financial institutions, including savings and loan associations, savings banks and credit unions, for deposits and loans. In addition, we compete with financial intermediaries, such as consumer finance companies, private credit funds, mortgage banking companies, insurance companies, securities firms, mutual funds and several government agencies, as well as major retailers and fintech companies, in providing various types of loans and other financial services. Some of these competitors may have a long history of successful operations in our markets, greater ties to local businesses and more expansive banking relationships, as well as better established depositor bases. Competitors may also have greater resources and access to capital and may possess other advantages such as operating more ATMs and conducting extensive promotional and advertising campaigns or operating a more developed Internet platform. Competitors may also be subject to less restrictive regulation than we are, exhibit a greater tolerance for risk and behave more aggressively with respect to pricing in order to increase their market share.
We expect to drive organic growth by employing our single-point-of-contact strategy, which provides specific relationship managers or private bankers for all customers, and by focusing on our corporate and specialty banking verticals. Many of our competitors provide similar services, and others may replicate our model. Our competitors may have greater resources than we do and may be able to provide similar services more quickly, efficiently and extensively. To the extent others replicate our model, we could lose what we view as a competitive advantage, and our financial condition and results of operations may be adversely affected.
The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Increased competition among financial services companies due to the ongoing consolidation of certain competing financial institutions may adversely affect our ability to market our products and services. Technological advances have lowered barriers to entry and made it possible for banks to compete in our market without a retail footprint by offering competitive rates, as well as non-banks to offer products and services traditionally provided by banks. Our ability to compete successfully depends on a number of factors, including, among others:
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 team members to operate our business;
the ability to expand our market position in current and new markets;
customer access to our decision makers and customer satisfaction with our level of service;
the ability to effectively manage our enterprise risk; and
the ability to operate our business effectively and efficiently.
Failure to perform in any of these areas could significantly weaken our competitive position, which could materially and adversely affect us.
36


In addition, the financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services including internet services, cryptocurrencies and payment systems. In addition to improving the ability to serve customers, the effective use of technology increases efficiency and enables financial institutions to reduce long-term costs. These technological advancements also have made it possible for non-financial institutions, such as the “fintech companies” and market place lenders, to offer products and services that have traditionally been offered by financial institutions. The process of “disintermediation,” or removing banks from their traditional role as financial intermediaries, could result in loss of customer deposits and other sources of revenue, which could have a material adverse effect on our financial condition and results of operations. Further, in many cases fintech companies and similar non-bank financial service firms, unlike the Bank, are not subject to extensive regulation and supervision. The absence of significant oversight and regulatory compliance obligations may allow such companies to realize certain competitive advantages over us, which has resulted in increased competition for our customers’ business. Federal and state banking agencies continue to deliberate over the regulatory treatment of fintech companies, including whether the agencies are authorized to grant charters or licenses to such companies and whether it would be appropriate to do so in consideration of several regulatory and economic factors. The increased demand for, and availability of, alternative payment systems and currencies not only increases competition for such services, but has created a more complex operating environment that, in certain cases, may require additional or different controls to manage fraud, operational, legal and compliance risks.
Like other financial services institutions, our asset and liability structures are monetary in nature. Such structures are affected by a variety of factors, including changes in interest rates, which can impact the value of financial instruments held by us.
Like other financial services institutions, we have asset and liability structures that are essentially monetary in nature and are directly affected by many factors, including domestic and international economic and political conditions, broad trends in business and finance, legislation and regulation affecting the national and international business and financial communities, monetary and fiscal policies, inflation, currency values, market conditions, the availability and terms (including cost) of short-term or long-term funding and capital, the credit capacity or perceived creditworthiness of customers and counterparties and the level and volatility of trading markets. Such factors can impact customers and counterparties of a financial services institution and may impact the value of financial instruments held by a financial services institution.
Our earnings and cash flows largely depend upon the level of our net interest income, which is the difference between the interest income we earn on loans, investments and other interest earning assets, and the interest we pay on interest bearing liabilities, such as deposits and borrowings. Because different types of assets and liabilities may react differently and at different times to market interest-rate changes, changes in interest rates can increase or decrease our net interest income. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a period, an increase in interest rates would reduce net interest income. Similarly, when interest-earning assets mature or reprice more quickly, and because the magnitude of repricing of interest-earning assets is often greater than interest-bearing liabilities, falling interest rates would reduce net interest income.
Accordingly, changes in the level of market interest rates affect our net yield on interest-earning assets and liabilities, loan and investment securities portfolios and our overall financial results. Changes in interest rates may also have a significant impact on borrower behaviors and any future loan origination revenues. Changes in interest rates also have a significant impact on the carrying value of a significant percentage of the assets, both loans and investment securities, on our balance sheet. We have incurred debt and may incur additional debt in the future, and that debt may also be sensitive to interest rates and any increase in interest rates could materially and adversely affect us. Interest rates are highly sensitive to many factors beyond our control, including general economic conditions and policies of various governmental and regulatory agencies, particularly the Federal Reserve. Adverse changes in the Federal Reserve’s interest-rate policies or other changes in monetary policies and economic conditions could materially and adversely affect us.
Acceptance and success of CBIT, our blockchain-based instant B2B payments platform, is subject to a variety of factors that are difficult to evaluate.
Customers Bank’s CBIT on the TassatPay blockchain-based instant B2B payments platform serves a growing array of B2B clients who want the benefit of instant payments, including key over-the-counter desks, exchanges, liquidity providers, market makers, funds, and other B2B verticals. CBIT may only be created by, transferred to and redeemed by commercial customers of Customers Bank on the TassatPay instant B2B payments platform. CBIT is not listed or traded on any digital currency exchange. As of December 31, 2023 and 2022, Customers Bank held $2.8 billion and $2.3 billion of deposits from customers participating in CBIT, respectively. These customers are primarily concentrated in the digital currency industry, which has experienced significant disruptions and bankruptcies of FTX and other participants in the digital currency industry in 2022. Customers Bank has no loans to any customers in the digital currency industry. However, continued disruptions in the digital currency industry could have adverse effects on Customers’ business, reputation, financial condition and results of operations.
37


The CBIT instant payments platform provides a closed-system for intrabank commercial transactions and is not intended to be a trading platform for tokens or digital assets. CBIT tokens are used only in connection with the CBIT instant payments platform and are not securities for purposes of applicable securities laws. There are no scenarios in which the transaction or redemption value of one CBIT would not be equal to one U.S. dollar. Each CBIT is minted with precisely one U.S. dollar equivalent, and those dollars are held in a non-interest bearing omnibus deposit account until the CBIT is burned or redeemed. The number of CBIT outstanding in the CBIT instant payments platform is always equal to the U.S. dollars held in the omnibus deposit account at Customers Bank and is reported as a deposit liability in the consolidated balance sheet. The deposits from customers participating in CBIT include the omnibus deposit account established for the CBIT instant payments platform, which had an outstanding balance of $826.9 million and $23 thousand at December 31, 2023 and 2022, respectively.
The financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services including internet services, cryptocurrencies and payment systems. In addition to improving the ability to serve clients, the effective use of technology increases efficiency and enables financial institutions to reduce long-term costs. These technological advancements also have made it possible for non-financial institutions, such as “fintech companies” and market place lenders, to offer products and services that have traditionally been offered by financial institutions. Federal and state banking agencies continue to deliberate over the regulatory treatment of fintech companies, including whether the agencies are authorized to grant charters or licenses to such companies and whether it would be appropriate to do so in consideration of several regulatory and economic factors. The increased demand for, and availability of, alternative payment systems and currencies not only increases competition for such services, but has created a more complex operating environment that, in certain cases, may require additional or different controls to manage fraud, operational, legal and compliance risks.
New technologies, such as the blockchain and tokenized payment technologies used by CBIT, could require us to spend more to modify or adapt our products to attract and retain clients or to match products and services offered by our competitors, including fintech companies. New technologies also expose us to additional operational, financial, and regulatory risks. Because many of our competitors have substantially greater resources to invest in technological improvements than we do, or, at present, operate in a less-burdensome regulatory environment, these institutions could pose a significant competitive threat to us.
As noted above, our commercial customers utilizing CBIT are currently concentrated in the digital currency industry. The digital currency industry includes a diverse set of businesses that use digital currencies for different purposes and provide services to others who use digital currencies, including the technologies underlying digital currencies, such as blockchain, and the services associated with digital currencies and blockchain. This is a new and rapidly evolving industry, and the viability and future growth of the industry and adoption of digital currencies and the underlying technology is subject to a high degree of uncertainty, including based upon the adoption of the technology, regulation of the industry, and price volatility, among other factors. Adverse events or publicity in the digital currency industry creates reputational risk for us. Because the sector is relatively new, additional risks may emerge which are not yet known or quantifiable.
Digital currencies and tokenized payment platforms, including those utilizing proprietary, non-public tokens such as CBIT, have only recently become selectively accepted as a form of payment by business. Other factors affecting the further development and acceptance of the digital currency and tokenized payment industry, such as CBIT, include, but are not limited to:
the adoption and use of digital currencies, including adoption and use as a substitute for fiat currency or for other uses, which may be adversely impacted by continued price volatility;
the use of digital currencies, or the perception of such use, to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware or other scams by our customers;
heightened risks to digital currency businesses, such as digital currency exchanges, of hacking, malware attacks, and other cyber-security risks, which can lead to significant losses;
developments in digital currency trading markets, including decreasing price volatility of digital currencies, resulting in narrowing spreads for digital currency trading and diminishing arbitrage opportunities across digital currency exchanges, or increased price volatility, which could negatively impact our customers and therefore our deposits, either of which in turn may reduce the benefits of CBIT and negatively impact our business; and
the maintenance and development of the software protocol of the digital currency networks.
If any of these factors, or other factors, slows development of the digital currency industry, it could adversely affect our instant B2B payments initiative and the businesses of the customers upon which it relies, and therefore have a material adverse effect on our business, financial condition and results of operations.
38


If conditions in digital currency markets change such that certain trading strategies currently employed by our institutional investor customers become less profitable, the benefits of CBIT and our instant B2B payments initiative may be diminished, resulting in a decrease in our deposit balances and adversely impacting our growth strategy. In addition, if a competitor or another third party were to launch an alternative to CBIT (such as Federal Reserve’s FedNow Service, a virtual real time payment system for banks launched in 2023), we could lose non-interest bearing deposits and our business, financial condition, results of operations and growth strategy could be adversely impacted. Further, we may be unable to attract and retain experienced employees, which could adversely affect our growth. The further development and acceptance of digital currencies and blockchain technology are subject to a variety of factors that are difficult to evaluate, as discussed above. The slowing or stopping of the development or acceptance of digital currency networks and blockchain technology may adversely affect our ability to continue to grow and capitalize on our strategy to service the digital assets industry.
Our future growth may be adversely impacted if we are unable to retain and grow this strong, low-to-no cost deposit base. At times we face competitive pressures to pay higher interest rates on deposits to our digital currency customers, which could increase funding costs and compress net interest margins. Further, even if we are otherwise able to grow and maintain our non-interest bearing deposit base, our deposit balances may still decrease if our digital currency customers are offered more attractive returns from our competitors. If our digital currency customers withdraw deposits, we would lose a low-cost source of funds which would likely increase our funding costs and reduce our net interest income and net interest margin. These factors could have material effect on our business, financial condition and results of operations.
Our computer systems and network infrastructure and those of our third-party service providers, including CBIT and the instant payments platform on which it operates, could be vulnerable to hardware and cybersecurity issues. Our operations are dependent upon our and our third-party service providers’ ability to protect computer equipment upon which these technologies operate against damage from fire, power loss, telecommunications failure or a similar catastrophic event. We could also experience a breach by intentional or negligent conduct on the part of our or a third-party service provider’s team members or other internal sources. Any damage or failure that causes an interruption in our operations could have a material adverse effect on our financial condition and results of operations. We could also become the target of various cyberattacks as a result of our focus on the digital currency industry.
The technology underlying CBIT and the instant payments platform on which it operates may not function properly, which may have a material impact on Customers’ operations and financial condition. This same risk exists on our other technology and processing systems, such as data processing, loan servicing and deposit processing systems that are outsourced to third-party service providers. The importance of CBIT to Customers’ operations means that any technological problems in its functionality may have a material adverse effect on Customers’ operations, business model and growth strategy.
Many of our larger competitors have substantially greater resources to invest in technological improvements. Third parties upon which we rely for the technology underlying CBIT may not be able to develop, on a cost-effective basis, systems that will enable us to keep pace with such developments. As a result, our larger competitors may be able to offer additional or superior products compared to those that we will be able to provide, which would put us at a competitive disadvantage. We may lose customers seeking new technology-driven products and services to the extent we are unable to provide such products and services. The ability to keep pace with technological change is important and the failure to do so could adversely affect our business, financial condition and results of operations.
39


We are dependent on our information technology and telecommunications systems and third-party service providers, and systems failures, interruptions or breaches of security, or the failure of our third-party service providers to adequately perform their services, could have a material adverse effect on us.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party servicers. We outsource many of our major technology and business process functions, such as data processing, loan servicing and deposit processing systems to third-party service providers. If we do not effectively select, implement and monitor our outsourcing relationships, or if the third-party service providers do not adequately perform their services or are unable to continue to provide services to us as a result of their own operational or technological limitations or financial or other difficulties, our operations may be materially and adversely affected. While we select third-party service providers carefully, we do not control their operations and at times they encounter difficulties, including disruptions in communications, failures to handle current or increased transaction volumes, cyberattacks, security breaches, data corruption or similar events, during which our ability to operate effectively is adversely affected. Certain of our third-party service providers have experienced performance issues, financial difficulties (including bankruptcy) and staff shortages, and others will in the future. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on us. In addition, the termination of third-party software licenses or service agreements on which any of our information technology and telecommunications systems are based, or other disruption in our relationships with third-party service providers, could adversely affect our operations, and securing replacement licenses and/or engaging alternative third-party service providers and integrating the related technology and services into our systems could result in increased costs and operational difficulties.
We continue to evaluate and implement upgrades and changes to our information technology systems, some of which are significant. Upgrades involve replacing existing systems with successor systems, making changes to existing systems or acquiring new systems with new functionality. We are aware of inherent risks associated with replacing these systems, including accurately capturing data and system disruptions, and believe we are taking appropriate action to mitigate the risks through testing, training, and staging implementation, as well as ensuring appropriate commercial contracts are in place with third-party service providers supplying or supporting our information technology initiatives. However, there can be no assurances that we will successfully launch these systems as planned or that they will be implemented without disruptions to our operations. Information technology system disruptions, if not anticipated and appropriately mitigated, or failure to successfully implement new or upgraded systems, could have a material adverse effect on our results of operations. Also, we may have to make a significant investment to repair or replace these systems and could suffer loss of critical data and interruptions or delays in our operations. These risks are heightened where upgrades and changes are made to information technology systems that are integrated with third party systems.
In addition, we provide our customers with the ability to bank remotely, including online, over the Internet, through apps and over the telephone. The secure transmission of confidential information over the Internet and other remote channels is a critical element of remote banking. Our network could be vulnerable to unauthorized access, computer viruses, phishing schemes and other security breaches. We spend significant capital and other resources to protect against the threat of security breaches and computer viruses or to alleviate problems caused by security breaches or viruses, and we expect these expenditures to continue in the future. To the extent that our activities or the activities of our customers involve the storage and transmission of confidential information, security breaches and viruses could expose us to claims, regulatory scrutiny, litigation and other possible liabilities. Any inability to prevent security breaches or computer viruses could also cause existing customers to lose confidence in our systems and could materially and adversely affect us.
Additionally, financial products and services have become increasingly technology-driven. Our ability to meet the needs of our customers competitively and in a cost-efficient manner is dependent on the ability to keep pace with technological advances, including recent developments in AI, and to invest in new technology as it becomes available. Certain competitors may have greater resources to invest in technology and may be better equipped to market new technology-driven products and services. The ability to keep pace with technological change is important, and the failure to do so could have a material adverse impact on our business and therefore on our financial condition and results of operations.
40


Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of artificial intelligence could adversely affect our business, results of operations, and financial condition.
Our business increasingly relies on AI, machine learning and automated decision making to improve our services and our customer’s experience. The regulatory framework around the development and use of these emerging technologies is rapidly evolving, and many federal, state and foreign government bodies and agencies have introduced and/or are currently considering additional laws and regulations. As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their requirements may have on our business.
Any of the foregoing, together with developing guidance and/or decisions in this area, may affect our use of AI and our ability to provide and improve our services, require additional compliance measures and changes to our operations and processes, and result in increased compliance costs and potential increases in civil claims against us. Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI, machine learning and automated decision making could adversely affect our business, results of operations, and financial condition.
Loss of, or failure to adequately safeguard, confidential or proprietary information may adversely affect our operations, net income or reputation.
We regularly collect, process, transmit and store significant amounts of confidential information regarding our customers, team members and others. This information is necessary for the conduct of our business activities, including the ongoing maintenance of deposit, loan and other account relationships for our customers, and receiving instructions and affecting transactions for those customers and other users of our products and services. In addition to confidential information regarding our customers, team members and others, we compile, process, transmit and store proprietary, non-public information concerning our own business, operations, plans and strategies. In some cases, this confidential or proprietary information is collected, compiled, processed, transmitted or stored by third parties on our behalf.
Information security risks have increased in recent years because of the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber-attacks. A failure in or breach of our operational or information security systems or those of our third-party service providers, as a result of cyber-attacks or information security breaches or due to team member error, malfeasance or other disruptions could adversely affect our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and/or cause losses. As a result, cyber security and the continued development and enhancement of the controls and processes designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us.
If this confidential or proprietary information were to be mishandled, misused or lost, we could be exposed to significant regulatory consequences, reputational damage, civil litigation and financial loss. Mishandling, misuse or loss of this confidential or proprietary information could occur, for example, if the confidential or proprietary information were intentionally or erroneously provided to parties who were not permitted to have the information, either by fault of the systems or our team members or the systems or employees of third parties which have collected, compiled, processed, transmitted or stored the information on our behalf, where the information is intercepted or otherwise inappropriately taken by third parties or where there is a failure or breach of the network, communications or information systems which are used to collect, compile, process, transmit or store the information.
Although we employ a variety of physical, procedural and technological safeguards to protect this confidential and proprietary information from mishandling, misuse or loss, these safeguards do not provide absolute assurance that mishandling, misuse or loss of the information will not occur, or that if mishandling, misuse or loss of the information did occur, those events would be promptly detected and addressed. Such inadvertent disclosures have occurred and are likely to occur in the future. Any disclosures of confidential or proprietary information, whether intentional or unintentional, subject us to liability for damages, including expenses of credit monitoring for those effected, and reputational damage. Additionally, as information security risks and cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate any information security vulnerabilities.
41


Breaches of security measures, computer viruses or malware, fraudulent activity and infrastructure failures could materially and adversely affect our reputation or harm our business, including the unauthorized access to or disclosure of data relating to third-party serviced deposit account holders.
The encryption software and the other technologies we use to provide security for storage, processing and transmission of confidential customer and other information are not always effective to protect against data-security breaches. The risk of unauthorized circumvention of our security measures has been heightened by advances in computer capabilities and the increasing sophistication of hackers. Companies that process and transmit cardholder information have been specifically and increasingly targeted by sophisticated criminal organizations in an effort to obtain the information and utilize it for fraudulent transactions.
Unauthorized access to our computer systems or those of our third-party service providers, could result in the theft or publication of the information or the deletion or modification of sensitive records, and could cause interruptions in our operations. Any inability to prevent security breaches could damage our relationships with our customers, cause a decrease in transactions by individual cardholders, expose us to liability for unauthorized purchases and subject us to network fines. These claims also could result in protracted and costly litigation. If unsuccessful in defending that litigation, we might be forced to pay damages and/or change our business practices. Further, a significant data-security breach could lead to additional regulation, which could impose new and costly compliance obligations. Any material increase in our costs resulting from litigation or additional regulatory burdens being imposed upon us or litigation could have a material adverse effect on our operating revenues and profitability.
In addition, our account holders disclose certain “personally identifiable” information, including contact information, identification numbers and the amount of credit balances, which they expect we will maintain in confidence. It is possible that hackers, customers or team members acting unlawfully or contrary to our policies or other individuals, could improperly access our or our third-party service providers’ systems and obtain or disclose data about our customers. Further, because customer data may also be collected, stored or processed by third-party service providers, it is possible that these third-party service providers could intentionally, negligently or otherwise disclose data about our clients or customers.
We rely to a large extent upon sophisticated information technology systems, databases and infrastructure, and take reasonable steps to protect them. However, due to their size, complexity, content and integration with or reliance on third-party systems, they are vulnerable to breakdown, malicious intrusion, natural disaster and random attack, all of which pose a risk of exposure of sensitive data to unauthorized persons or to the public.
Our information systems have been, and will continue to be, subject to cybersecurity breaches, which lead to fraudulent activity that can result in identity theft, losses on the part of our banking customers, additional security costs, negative publicity and damage to our reputation and brand. In addition, our customers or team members are the targets of scams that result in the release of sufficient information concerning themselves or their accounts to allow others unauthorized access to their accounts or our systems (e.g., “phishing” and “smishing”). Claims for compensatory or other damages may be brought against us as a result of a breach of our systems or fraudulent activity. If we are unsuccessful in defending against any resulting claims against us, we may be forced to pay damages, which could materially and adversely affect our financial condition and results of operations. Because many of our team members continue to work remotely on a “hybrid model”, the risk of cybersecurity breaches is increased.
Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
Further, computer viruses, ransomware or malware could infiltrate our systems, thus disrupting our delivery of services and making our applications unavailable. Although we utilize several preventative and detective security controls in our network, they may be ineffective in preventing computer viruses, ransomware or malware that could damage our relationships with our merchant customers, cause a decrease in transactions by individual cardholders, or cause us to be in non-compliance with applicable network rules and regulations.
In addition, our team members, systems and customers are regularly targets of fraudulent activity. A significant incident of fraud or an increase in fraud levels generally involving our products could result in reputational damage to us, which could reduce the use of our products and services. Additionally, significant fraudulent activity related to a specific product offering may lead us to limit or discontinue such product. Such incidents could also lead to a large financial loss as a result of the protection for unauthorized purchases we provide to certain customers for uncollectible account holder overdrafts and any other losses due to fraud or theft. Such incidents of fraud could also lead to regulatory intervention, which could increase our compliance costs. Compliance with the various complex laws and regulations is costly and time consuming, and failure to comply could have a material adverse effect on our business. Additionally, increased regulatory requirements on our services may increase our costs, which could materially and adversely affect our business, financial condition and results of operations. Accordingly, account data breaches and related fraudulent activity could have a material adverse effect on our future growth prospects, business, financial condition and results of operations.
42


A disruption to our systems or infrastructure could damage our reputation, expose us to legal liability, cause us to lose customers and revenue, result in the unintentional disclosure of confidential information or require us to expend significant efforts and resources or incur significant expense to eliminate these problems and address related data and security concerns. The harm to our business could be even greater if such an event occurs during a period of disproportionately heavy demand for our products or services or traffic on our systems or networks.
Negative public opinion regarding us could adversely affect our business, results of operations, and financial condition.
Reputational harm, including as a result of our actual or alleged conduct or public opinion of the financial services industry generally, could adversely affect our business, results of operations, and financial condition. Reputation risk, or the risk to our business, earnings and capital from negative public opinion, is inherent in our business and is expected to increase as our size, profile and product offerings in the financial services industry grows. Negative publicity or reputational harm can result from actual or alleged conduct in a number of areas, including legal and regulatory compliance, lending practices, corporate governance, litigation, inadequate protection of customer data, illegal or unauthorized acts taken by third parties that supply products or services to us, the behavior of our team members, the customers with whom we have chosen to do business, the industries in which we operate, corporate initiatives (such as those related to diversity, equity and inclusion or ESG) and negative publicity for other financial institutions. Damage to our reputation could adversely impact our ability to attract new, or maintain existing, loan and deposit customers, team members and business relationships, and could result in the imposition of new regulatory requirements, operational restrictions, enhanced supervision and/or civil money penalties. Further, negative public opinion can expose us to litigation and regulatory action and delay and impede our efforts to raise capital or implement our growth strategy. The proliferation and increasing influence of social media websites, as well as the personal use of social media by our team members and others, also may increase the risk that negative, inappropriate or unauthorized information may be posted or released publicly that could harm our reputation, adversely affect our stock price or the public’s perception of our stability or viability, or have other negative consequences. Although we have policies and procedures in place intended to detect and prevent conduct by team members and third-party service providers that could potentially harm customers or our reputation, there is no assurance that such policies and procedures will be fully effective in preventing such conduct. Any damage to our reputation could have a material adverse effect on our business, results of operations, and financial condition.
Increasing, complex and evolving regulatory, stakeholder, and other third party expectations on ESG matters could adversely affect our reputation, our access to capital and the market price of our securities.
Customers is subject to a variety of risks arising from ESG matters as governmental and regulatory bodies, investors, customers, team members and other stakeholders and third parties have been increasingly focused on ESG matters. ESG matters include, among other things, climate risk, hiring practices, the diversity of our work force, and racial and social justice issues involving our personnel, customers and third parties with whom we otherwise do business. Risks arising from ESG matters may adversely affect, among other things, our reputation and the market price of our securities.
Further, we may be exposed to negative publicity based on the identity and activities of those to whom we lend and with which we otherwise do business and the public’s view of the approach and performance of our customers and business partners with respect to ESG matters. Any such negative publicity could arise from adverse news coverage in traditional media and could also spread through the use of social media platforms. Customers’ relationships and reputation with its existing and prospective customers and third parties with which we do business could be damaged if we were to become the subject of any such negative publicity. This, in turn, could have an adverse effect on our ability to attract and retain customers and team members and could have a negative impact on the market price for securities.
Investors have begun to consider the steps taken and resources allocated by financial institutions and other commercial organizations to address ESG matters when making investment and operational decisions. Certain investors are beginning to incorporate the business risks of climate change and the adequacy of companies’ responses to the risks posed by climate change and other ESG matters into their investment theses. Additionally, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Unfavorable ratings of Customers may adversely affect investor sentiment towards the Company or the market price of our securities.
Further, as we continue to focus on developing ESG practices, and as investor and other stakeholder expectations, voluntary and regulatory ESG disclosure standards and policies continue to evolve, we have expanded and expect to further expand our public disclosures in these areas. Such disclosures may reflect aspirational goals, targets, and other expectations and assumptions, which are necessarily uncertain and may not be realized. Failure to realize (or timely achieve progress on) such aspirational goals and targets could adversely affect our third party ESG ratings, our reputation or otherwise adversely affect us.
43


Increased attention to ESG matters also has caused public officials, including certain state attorneys general, treasurers, and legislators, to take various actions to impact the extent to which ESG principles are considered by private investors. For instance, certain states have enacted laws or issued directives designed to penalize financial institutions that the state believes are boycotting certain industries such as the fossil fuel and firearms industries. These developments illustrate that ESG-based investing has become a divisive political issue. Shifts in investing priorities based on ESG principles may result in adverse effects on the market price of our securities to the extent that investors that give significant weight to such principles determine that the Company has not made sufficient progress on ESG matters. Conversely, the market price of our securities may be adversely affected if a government official or agency seeks to limit the Company’s business with a certain government entity or initiates an investigation or enforcement action because of what is perceived to be the Company’s unwarranted focus on ESG matters.
Prior to our acquisition of the Disbursement Business, the Federal Reserve Board and FDIC took regulatory enforcement action against Higher One, which subjected us to regulatory inquiry and potential regulatory enforcement action, which may result in liabilities adversely affecting our business, financial conditions and/or results of operations or in reputational harm even after BMT’s divestiture.
Since August 2013 until the acquisition of the Disbursement Business, we provided deposit accounts and services to college students through Higher One, which had relationships with colleges and universities in the United States, using Higher One’s technological services. Because Higher One was not a bank, it had to partner with one or more banks to provide the deposit accounts and services to students. Higher One and one of Higher One’s former bank partners (the “predecessor bank”), announced in May 2014 that the Federal Reserve Board notified them that certain disclosures and operating processes of these entities may have violated certain laws and regulations and may result in penalties and restitution. In May 2014, the Federal Reserve also informed us, as one of Higher One’s bank partners, that it was recommending a regulatory enforcement action be initiated against us based on the same allegations.
In July 2014, the predecessor bank referenced above, which no longer is a partner with Higher One, entered into a consent order to cease and desist with the Federal Reserve Board pursuant to which it agreed to pay a total of $3.5 million in civil money penalties and an additional amount that it may be required to pay in restitution to students in the event Higher One is unable to pay the restitution obligations, if any, imposed on Higher One (“back-up restitution”). We believe that the circumstances of its relationship with Higher One and the student customers are different than the relationship between us and Higher One and the student customers.
In December 2015, Higher One entered into consent orders with both the Federal Reserve Board and the FDIC. Under the consent order with the Federal Reserve Board, Higher One agreed to pay $2.2 million in civil money penalties and $24 million in restitution to students. Under the consent order with the FDIC, Higher One agreed to pay an additional $2.2 million in civil money penalties and $31 million in restitution to students. In addition, a third partner bank, which is regulated by the FDIC, also entered into a consent order to cease and desist with the FDIC pursuant to which it agreed to pay $1.8 million in civil money penalties and an additional amount in restitution to students in the event Higher One is unable to meet its restitution obligation.
We believe that we identified key critical alleged compliance deficiencies within 30 days of first accepting deposits through our relationship with Higher One and caused such deficiencies to be remediated within approximately 120 days. In addition, we understand that the total amount of fees that Higher One collected from students who opened accounts with us during the relevant time period is substantially less than the total fees that Higher One collected from students who opened deposit accounts at the other partner banks during the relevant time period. In addition, as Higher One paid the restitution and deposited such monies to pay the required restitution, we did not expect that backup restitution would be required.
Nonetheless, as previously disclosed, we had been in discussions with the Federal Reserve Board regarding these matters from 2013 and in an effort to move forward, on December 6, 2016, we agreed to the issuance by the Federal Reserve Board of a combined Order to Cease and Desist and Order of Assessment of a Civil Money Penalty Issued Upon Consent Pursuant to the Order and agreed to a penalty of $960 thousand. We had previously set aside a reserve for the civil money penalty and made payment in 2016.
In June 2016, Customers acquired the Disbursement Business of Higher One and subsequently combined that business with BankMobile. Customers successfully launched BankMobile, America’s first mobile platform based full-service consumer bank in January 2015. On January 4, 2021, Customers completed the divestiture of BMT, a wholly-owned subsidiary of Customers Bank and a component of BankMobile, which included the Disbursement Business, through a merger with MFAC.
We remain subject to the jurisdiction and examination of the Federal Reserve Board, and further action could be taken to the extent we do not comply with the terms of the Order or if the Federal Reserve Board were to identify additional violations of applicable laws and regulations. Any further action could have a material adverse effect on our business, financial conditions and/or results of operations or our reputation.
44


We intend to engage in acquisitions of other businesses from time to time. These acquisitions may not produce revenue or earnings enhancements or cost savings at levels, or within time frames, originally anticipated and may result in unforeseen integration difficulties.
Although we currently do not have any agreements or understandings with respect to business acquisitions, we regularly evaluate opportunities to strengthen our current market position by acquiring and investing in banks and in other complementary businesses, or opening new branches, and when appropriate opportunities arise, subject to regulatory approval, we plan to engage in acquisitions of other businesses and in opening new branches. Such transactions could, individually or in the aggregate, have a material effect on our operating results and financial condition, including short and long-term liquidity. Our acquisition activities could be material to our business. For example, we could issue additional shares of Voting Common Stock in a purchase transaction, which could dilute current shareholders’ value or ownership interest. These activities could require us to use a substantial amount of cash or other liquid assets and/or incur debt. In addition, if goodwill recorded in connection with acquisitions were determined to be impaired, then we would be required to recognize a charge against our earnings, which could materially and adversely affect our results of operations during the period in which the impairment was recognized. Our acquisition activities could involve a number of additional risks, including the risks of:
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 effect on our results of operations;
losing key team members 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.
Additionally, in evaluating potential acquisition opportunities, we may seek to acquire failed banks through FDIC-assisted acquisitions. While the FDIC may, in such acquisitions, provide assistance to mitigate certain risks, such as sharing in exposure to loan losses and providing indemnification against certain liabilities, of the failed institution, we may not be able to accurately estimate our potential exposure to loan losses and other potential liabilities, or the difficulty of integration, in acquiring such institutions.
Depending on the condition of any institutions or assets that are acquired, any acquisition may, at least in the near term, materially adversely affect our capital and earnings and, if not successfully integrated following the acquisition, may continue to have such effects. We cannot assure you that we will be successful in overcoming these risks or any other problems encountered in connection with pending or potential acquisitions. Our inability to overcome these risks could have an adverse effect on levels of reported net income, return on equity and return on assets and the ability to achieve our business strategy and maintain market value.
Our acquisitions generally will require regulatory approvals, and failure to obtain them would restrict our growth.
Although we currently do not have any agreements or understandings with respect to business acquisitions, we may in the future seek to complement and expand our business by pursuing strategic acquisitions of community banking franchises and other businesses. Generally, any acquisition of target financial institutions, banking centers or other banking assets by us may require approval by, and cooperation from, a number of governmental regulatory agencies, possibly including the Federal Reserve Board, the OCC and the FDIC, as well as state banking regulators. In acting on applications, federal banking regulators consider, among other factors:
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 CRA;
the effectiveness of the applicant in combating money laundering activities; and
45


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.
Such regulators could delay or deny our application based on the above criteria or other considerations, which could restrict our growth, or the regulatory approvals may not be granted on terms that are acceptable to us. For example, we could be required to sell banking centers as a condition to receiving regulatory approvals, and such a condition may not be acceptable to us or may reduce the benefit of any acquisition.
To the extent that we are unable to increase loans through organic core loan growth, we may be unable to successfully implement our growth strategy, which could materially and adversely affect us.
In addition to growing our business through strategic acquisitions, we also intend to grow our business through organic core loan growth. While loan growth has been strong, and our loan balances have increased over the last several fiscal years, if we are unsuccessful in diversifying our loan originations, or if we do not grow the business lines, our results of operations and financial condition could be negatively impacted.
We may not be able to effectively manage our growth.
Our future operating results and financial condition depend to a large extent on our ability to successfully manage our growth. Our growth has placed, and it may continue to place, significant demands on our operations and management. Whether through additional acquisitions or organic growth, our current plan to expand our business is dependent upon our ability to:
continue to implement and improve our operational, credit underwriting and administration, financial, accounting, enterprise risk management and other internal and disclosure controls and procedures and our reporting systems and processes 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 profitably or raise capital; and
support our asset growth with adequate deposits, funding and liquidity while expanding our net interest margin and meeting our customers’ and regulators’ liquidity requirements.
We may not successfully implement improvements to, or integrate, our management information and control systems, credit underwriting and administration, internal and disclosure controls, and procedures and processes in an efficient or timely manner and may discover deficiencies in existing systems and controls. In particular, our controls and procedures must be able to accommodate an increase in loan volume in various markets and the infrastructure that comes with new banking centers and banks. Our growth strategy may divert management from our existing business and may require us to incur additional expenditures to expand our administrative and operational infrastructure and, if we are unable to effectively manage and grow our banking franchise, including to the satisfaction of our regulators, we could be materially and adversely affected. In addition, if we are unable to manage our current and future expansion in our operations, we may experience compliance, operational and regulatory problems and delays, have to slow our pace of growth or even stop our market and product expansion, or have to incur additional expenditures beyond current projections to support such growth, any one of which could materially and adversely affect us. If we experience difficulties with the development of new business activities or the integration process of acquired businesses, the anticipated benefits of any particular acquisition may not be realized fully, or at all, or may take longer to realize than expected. Additionally, we may be unable to recognize synergies, operating efficiencies, cost projections and/or expected benefits within expected time frames, or at all. We also may not be able to preserve the goodwill of an acquired financial institution. Our growth could lead to increases in our legal, audit, administrative and financial compliance costs, which could materially and adversely affect us.
46


If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses.
In order to manage the significant risks inherent in our business, we must maintain effective policies, procedures and systems that enable us to identify, monitor and control our exposure to material risks, such as credit, interest rate, capital, liquidity, operational, compliance legal and reputational risks. Our risk management methods may prove to be ineffective due to their design, implementation or the degree to which we adhere to them, or as a result of the lack of adequate, accurate or timely information or otherwise. If our risk management efforts are ineffective, we could suffer losses that could have a material adverse effect on our business, financial condition or results of operations. In addition, we could be subject to litigation, particularly from our customers, and sanctions or fines from regulators. Our techniques for managing the risks we face may not fully mitigate the risk exposure in all economic or market environments, including exposure to risks that we might fail to identify or anticipate.
We are dependent upon maintaining an effective system of internal controls to provide reasonable assurance that transactions and activities are conducted in accordance with established policies and procedures and are captured and reported in the financial statements. Failure to comply with the system of internal controls may result in events or losses which could adversely affect our operations, net income, financial condition, reputation and compliance with laws and regulations.
Our system of internal controls, including internal controls over financial reporting, is an important element of our risk management framework. Management regularly reviews and seeks to improve our internal controls, including annual review of key policies and procedures and annual review and testing of key internal controls over financial reporting. Any system of internal controls, however well designed and operated, is based in part on certain assumptions and expectations of employee conduct and can only provide reasonable, not absolute, assurance that the objectives of the internal control structure are met. Any failure or circumvention of our controls and procedures, or failure to comply with regulations related to controls and procedures, could have a material adverse effect on our operations, net income, financial condition, reputation, compliance with laws and regulations, or may result in untimely or inaccurate financial reporting.
As management continues to evaluate and work to enhance internal control over financial reporting, it may determine that additional measures are required to address control deficiencies or strengthen internal control over financial reporting. If Customers’ remediation efforts do not operate effectively or if it is unsuccessful in implementing or following its remediation efforts, this may result in untimely or inaccurate reporting of Customers’ financial results.
We may not be able to meet the cash flow requirements of our loan funding obligations, deposit withdrawals, or other business needs and fund our asset growth unless we maintain sufficient liquidity.
We must maintain sufficient liquidity to fund our balance sheet growth in order to successfully grow our revenues, make loans, and repay deposit and other liabilities as these mature or are drawn. This liquidity can be gathered in both wholesale and non-wholesale funding markets. Our asset growth over the past few years has been funded with various forms of deposits and wholesale funding, including brokered deposits, FHLB advances, FRB advances and Federal funds line borrowings. Total brokered deposits were 37% of total deposits at December 31, 2023. Our loan to deposit ratio was 74% at December 31, 2023. Wholesale funding can cost more than deposits generated from our traditional branch system and customer relationships and is subject to certain practical limits such as our liquidity policy limits, our available collateral for FHLB and FRB borrowing capacity and Federal funds line limits with our lenders. Additionally, regulators consider wholesale funding beyond certain points to be imprudent and might suggest or require that future asset growth be reduced or halted. In the absence of appropriate levels and mix of funding, we might need to reduce interest-earning asset growth through the reduction of current production, sales of loans and/or the sale of participation interests in future and current loans. This might reduce our future growth and net income.
The amount of funds loaned to us is generally dependent on the value of the eligible collateral pledged and our financial condition. These lenders could reduce the percentages loaned against various collateral categories, eliminate certain types of collateral and otherwise modify or even terminate their loan programs, if further disruptions in the capital markets occur. Further, the Federal Housing Finance Agency, the regulator of FHLB and other federal home loan banks, launched a comprehensive review of the Federal Home Loan Bank System including the mission, membership eligibility requirements, and operational efficiencies of the federal home loan banks in 2022. The Federal Housing Finance Agency issued a final report on its comprehensive review of the Federal Home Loan Bank System in November 2023. Any change to or termination of our borrowings from the FHLB or correspondent banks could have an adverse effect on our profitability and financial condition, including liquidity.
47


We may not be able to develop and retain a strong core deposit base and other low-cost, stable funding sources.
We depend on checking, savings and money market deposit account balances and other forms of customer deposits as a primary source of funding for our lending activities. We expect that our future loan growth will largely depend on our ability to retain and grow a strong, low-cost deposit base. As of December 31, 2023, $2.5 billion, or 75.3%, of our total time deposits, are scheduled to mature through December 31, 2024. We are working to transition certain of our customers to lower-cost traditional bank deposits as higher-cost funding, such as time deposits, mature and to grow our customer deposits. If interest rates continue to increase, whether due to changes in inflation, monetary policy, competition or other factors, we would expect to pay higher interest rates on deposits, which would increase our funding costs and compress our net interest margin. We may not succeed in moving our deposits to lower-yielding savings and transactions products, which could materially and adversely affect us. In addition, customers, particularly those who may maintain deposits in excess of insured limits, continue to be concerned about the extent to which their deposits are insured by the FDIC. Our customers may withdraw deposits to ensure that their deposits with us are fully insured and may place excess amounts in other institutions or make investments that are perceived as being more secure and/or higher yielding. Further, even if we are able to maintain and grow our deposit base, deposit balances can decrease when customers perceive alternative investments, such as the stock market, will provide a better risk/return tradeoff. If customers move money out of bank deposits, we could lose a relatively low-cost source of funds, increasing our funding costs and reducing our net interest income and net income.
Certain deposit balances serviced by third parties can vary over the course of the year based on the timing of deposits made into those accounts and the interest rates being offered. Additionally, any such loss of funds could result in lower loan originations and growth, which could materially and adversely affect our results of operations and financial condition, including liquidity. Customers held $307.9 million and $1.1 billion of deposits serviced by BM Technologies under a deposit servicing agreement as of December 31, 2023 and 2022, respectively. The deposit service agreement was scheduled to expire on December 31, 2022. On June 30, 2022, Customers provided a written notice to BM Technologies to terminate the deposit servicing agreement effective December 31, 2022. On November 7, 2022, Customers agreed to extend the deposit servicing agreement to the earlier of BM Technologies’ successful completion of the transfer of the serviced deposits to a new sponsor bank or June 30, 2023. On March 22, 2023, Customers agreed to extend the deposit servicing agreement with respect to student-related deposits to the earlier of BM Technologies’ successful completion of the transfer of the student-related serviced by BM Technologies to a new sponsor bank or June 30, 2024. The remaining serviced deposits in connection with an existing white label relationship, which was also renewed as of March 22, 2023, will remain at Customers Bank and continue to be serviced by BM Technologies. On August 18, 2023, the deposit servicing agreement related to the student-related deposits was further extended to the earlier of BM Technologies’ successful completion of the transfer of the student-related deposits to a new sponsor bank or April 15, 2025. On December 1, 2023, Customers had an outflow of approximately $430.0 million of student-related deposits serviced by BM Technologies to a new sponsor bank.
Competitors’ technology-driven products and services and improvements to such products and services may adversely affect our ability to generate core deposits through mobile banking.
Our organic growth strategy focuses on, among other things, expanding market share through our “high-tech” model, which includes remote account opening, remote deposit capture, mobile and digital banking. These technological advances are intended to allow us to generate additional core deposits at a lower cost than generating deposits through opening and operating branch locations. Some of our competitors may have greater resources to invest in technology, including AI, and may be better equipped to market new technology-driven products and services. This may result in limiting, reducing or otherwise adversely affecting our growth strategy in this area and our access to deposits through mobile banking. In addition, to the extent we fail to keep pace with technological changes or incur respectively large expenses to implement technological changes, our business, financial condition and results of operations may be adversely affected.
We may incur losses due to minority investments in other financial institutions or related companies.
We make and will continue to consider making additional minority investments in other financial institutions or technology companies in the financial services business, or other unrelated businesses, including for strategic reasons or to see technological improvements or advantages. If we do so, we may not be able to influence the activities of companies in which we invest and may suffer losses due to these activities.
48


Risks related to the divestiture of BMT
We continue to face the risks and challenges associated with BM Technologies following the merger of BMT with Megalith Financial Acquisition Corp.
On January 4, 2021, we completed the divestiture of BMT through the merger of BMT with MFAC. In connection with the closing of the divestiture, MFAC changed its name to “BM Technologies, Inc.” Our agreement with MFAC relating to the merger of BMT and MFAC provided that the shares issuable by MFAC in connection with the merger would be issued directly to Customers Bancorp shareholders rather than being issued to and held by us. In connection with the divestiture, we have entered into various agreements with BM Technologies, including a transition services agreement, software license agreement, deposit servicing agreement, non-competition agreement and loan agreement for periods ranging from one to ten years. The loan agreement with BM Technologies was terminated early in November 2021. The deposit service agreement was scheduled to expire on December 31, 2022. On June 30, 2022, Customers provided a written notice to BM Technologies to terminate the deposit servicing agreement effective December 31, 2022. On November 7, 2022, Customers agreed to extend the deposit servicing agreement to the earlier of BM Technologies’ successful completion of the transfer of the serviced deposits to a new sponsor bank or June 30, 2023. Customers and BM Technologies also agreed to remove Customers’ obligation under the deposit servicing agreement to pay BM Technologies the interchange maintenance fee which is the difference between the Durbin-exempt and Durbin-recalculated interchange revenues. The other terms of the deposit servicing agreement remain in effect through the new termination date. On March 22, 2023, Customers agreed to extend the deposit servicing agreement with respect to the student-related deposits to the earlier of BM Technologies’ successful completion of the transfer of the student-related deposits serviced by BM Technologies to a new sponsor bank or June 30, 2024. The remaining serviced deposits in connection with an existing white label relationship, which was also renewed on March 22, 2023, will remain at Customers Bank and continue to be serviced by BM Technologies. On August 18, 2023, the deposit servicing agreement with respect to the student-related deposits was further extended to the earlier of BM Technologies’ successful completion of the transfer of the student-related deposits to a new sponsor bank or April 15, 2025. On December 1, 2023, Customers had an outflow of approximately $430.0 million of student-related deposits serviced by BM Technologies to a new sponsor bank. The transition services agreement with BM Technologies, as amended, expired on March 31, 2022. Customers entered into a special limited agency agreement with BM Technologies, whereby Customers originated consumer installment loans referred by BM Technologies for an initial period from April 20, 2022 to December 31, 2022, and renewed annually until its termination on May 16, 2023. We are exposed to potential liabilities to the acquirer under the contractual provisions such as representation, warranties and indemnities. If we are unable to address and manage these risks, our business, financial condition and results of operations could be adversely affected.
Risks related to Macroeconomic Conditions, COVID-19, Climate Change and Geopolitical Conflicts
A continuation of recent turmoil in the financial services industry, and responsive measures to manage it, could have an adverse effect on our stock price, financial position and results of operations. In addition, if we are unable to adequately manage our liquidity, deposits, capital levels, interest rate risk or reputation risk, which have come under greater scrutiny in light of recent bank failures, it could have a material adverse effect on our stock price, financial condition and results of operations.
In March 2023, several financial services institutions failed or required outside liquidity support. The impact of this situation has led to market volatility and risk of additional stress to other financial services institutions and the financial services industry generally, in part as a result of increased lack of confidence in the financial services sector. While the U.S. Department of the Treasury, the Federal Reserve, and the FDIC have made statements regarding the safety and soundness of the banking system and taken actions, such as establishing the Bank Term Funding Program as an additional source of liquidity for banks, there is no guarantee that such actions will be successful in restoring customer confidence. As a result of these events, certain of our customers chose, and may choose in the future, to withdraw deposit amounts in favor of keeping deposits at larger financial institutions that may be perceived to be more stable, or seek to switch their existing deposits into other higher yielding alternatives, any of which could materially adversely affect our liquidity, loan funding capacity, net interest margin, capital and results of operations.
In addition, these recent events may result in potentially adverse changes to laws or regulations governing banks and bank holding companies, increased oversight by regulatory authorities and/or the imposition of restrictions on certain business activities through supervisory or enforcement activities, including higher capital or liquidity requirements, which could have a material impact on our current and planned business. The cost of resolving the recent bank failures has resulted in action by the FDIC to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank, at a quarterly rate of 3.36 basis points of an institution’s uninsured deposits in excess of $5 billion as of December 31, 2022, to be paid over eight quarterly assessment periods.
49


These recent events also have led to a greater focus by regulators and investors on liquidity of existing assets and funding sources for financial institutions, the composition of deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management. The increased influence of social media and other communication channels on the public perception of financial institutions and their operations can create reputation risk, which can adversely affect our stock price or the public’s perception of our stability or viability, even where such concerns are unwarranted. These recent developments, and the likelihood of similar events in the future, require our board of directors and management to effectively respond to these types of events. If we are unable to adequately manage our liquidity, deposits, capital levels, interest rate risk or reputation risk, it could have a material adverse effect on our stock price, financial condition, results of operations or regulatory standing.
Worsening general business and economic conditions could materially and adversely affect us.
Our business and operations are sensitive to general business and economic conditions in the United States. If the U.S. economy experiences worsening conditions such as a recession, we could be materially and adversely affected. Weak economic conditions may be characterized by deflation or stagflation, instability in debt and equity capital markets, a lack of liquidity and/or depressed prices in the secondary market for mortgage loans, increased delinquencies on loans, residential and commercial real estate price declines and lower home sales and commercial activity. Adverse changes in any of these factors could be detrimental to our business. Our business is also significantly affected by monetary and related policies of the U.S. federal government, its agencies and government-sponsored entities. Adverse changes in economic factors or U.S. government policies could have a negative effect on us.
Over the last several years, there have been several instances where there has been uncertainty regarding the ability of Congress and the President collectively to reach agreement on federal budgetary and spending matters. A period of failure to reach agreement on these matters, particularly if accompanied by an actual or threatened government shutdown, may have an adverse impact on the U.S. economy. Additionally, a prolonged government shutdown may inhibit our ability to evaluate borrower creditworthiness and originate and sell certain government-backed loans.
In addition, the U.S. economy contracted into a recession in the first half of 2020, primarily driven by the COVID-19 pandemic. The U.S. government and the Federal Reserve responded to the pandemic with unprecedented measures. The U.S. economy has since strengthened despite the spread of COVID-19 variants, with higher inflation and housing values beginning in 2021. Also, the ongoing global supply chain issues and the military conflict between Russia and Ukraine contributed to higher inflation in 2022. In response, the Federal Reserve began normalizing monetary policy with its decision in late 2021 to taper its quantitative easing and raising the federal funds rate beginning in March 2022. Inflation remains elevated, reflecting supply and demand imbalances related to COVID-19 and its variants, higher food and energy prices from the military conflict between Russia and Ukraine, and broader price pressures. Recent conflicts in Israel and surrounding areas, and the potential for further expansion of this conflict, create additional uncertainty and potential for market disruption. The Federal Reserve has raised interest rates significantly throughout 2022 and in 2023 to lower inflation. While certain factors point to improving economic conditions, including moderating inflation, uncertainty remains regarding the path of the economic recovery and the mitigating impacts of government interventions. Conditions related to inflation, global supply chains, labor market, volatile interest rates, international conflicts, changes in trade policies and other factors, such as real estate values, state and local municipal budget deficits, government spending and the U.S. national debt may, directly and indirectly, adversely affect our financial condition and results of operations.
The COVID-19 and its variants have impacted our business, and the ultimate impact on our business and financial results will depend on future developments, which are highly uncertain and cannot be predicted, including their scope, duration and severity and actions taken by governmental authorities in response to COVID-19 and its variants.
The COVID-19 and its variants have negatively impacted the global economy, disrupted global supply chains, created significant volatility and disruption in financial markets and the labor market. Furthermore, the economic impact of COVID-19 and its variants have influenced and could further influence the recognition of credit losses in our loan and lease portfolios. Similarly, because of changing economic and market conditions affecting issuers, the securities we hold may lose value. Our business operations may also be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with COVID-19 and its variants. The extent to which COVID-19 and its variants impact our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including:
50


The duration, extent, and severity of COVID-19 and its variants. Continuing spread and rise of new variants could affect significantly more households and businesses, or cause additional limitations on commercial activity, increased unemployment, increased property vacancy rates and general economic and financial instability. The continuation of the disease may also negatively impact regional economic conditions for a period of time, resulting in declines in loan demand and collateral values. The duration and severity of the disease continues to be impossible to predict, as is the potential for a seasonal or other resurgence. We may continue to see the economic effects of COVID-19 and its variants even after the national emergency and public health emergency declarations are lifted, which is expected to continue to affect our business, financial position, results of operations and prospects.
The response of governmental authorities. Many of the actions of governmental authorities, including eviction forbearance, suspension of mortgage and other loan payments and foreclosures, enacted during the outbreak of COVID-19 have ended. The end of various governmental support may have negative impacts on our customers including increased risk of delinquencies, defaults, foreclosures and losses on our loans.
The effect on our customers, counterparties, team members, and third-party service providers. COVID-19 and its associated consequences and uncertainties have affecting individuals, households, and businesses differently and unevenly. Negative impacts on our customers could result in increased risk of delinquencies, defaults, foreclosures and losses on our loans.
The effect on economies and markets. Whether the actions of governmental and nongovernmental authorities will be successful in mitigating the adverse effects of COVID-19 is unclear. National, regional, and local economies and markets could suffer disruptions that are lasting. Governmental actions are meaningfully influencing the interest-rate environment and financial-market activity and could have lasting effects on taxes and other economic factors, which could adversely affect our results of operations and financial condition.
To the extent COVID-19 and its variants continue to adversely affect the economy, and/or adversely affects our business, results of operations or financial condition, it may also have the effect of increasing the likelihood and/or magnitude of other risks described herein, including those risks related to business operations, industry/market, our securities and credit, or risks described in our other filings with the SEC.
We are a participating lender in SBA’s PPP program and have originated a significant number of loans under this program, which may result in a material amount of PPP loans remaining on our consolidated balance sheets at a very low yield for an extended period of time.
The PPP, originally established under the CARES Act and extended under the Economic Aid Act and CAA, authorized financial institutions to make federally-guaranteed loans to qualifying small businesses and non-profit organizations. These loans carry an interest rate of 1% per annum and a maturity of 2 years for loans originated prior to June 5, 2020 and 5 years for loans originated on or after June 5, 2020. The PPP provides that such loans may be forgiven if the borrowers meet certain requirements with respect to maintaining employee headcount and payroll and the use of the loan proceeds after the loan is originated. The initial phase of the PPP, after being extended multiple times by Congress, expired on August 8, 2020. However, on January 11, 2021, the SBA reopened the PPP for First Draw PPP loans to small business and non-profit organizations that did not receive a loan through the initial PPP phase. Further, on January 13, 2021, the SBA reopened the PPP for Second Draw loans to small businesses and non-profit organizations that did receive a loan through the initial PPP phase. At least $25 billion had been set aside for Second Draw PPP loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low or moderate income neighborhoods. Generally, businesses with more than 300 employees and/or less than a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020 were not eligible for Second Draw loans. Further, maximum loan amounts were increased for accommodation and food service businesses. On March 11, 2021, the American Rescue Plan Act of 2021 was enacted expanding eligibility for first and second round of PPP loans and revising the exclusions from payroll costs for purposes of loan forgiveness. The PPP ended on May 31, 2021.
As of December 31, 2023, we had PPP loans with outstanding balances of $74.7 million. Our PPP participation was very significant especially compared to the participation of similarly sized and larger competitor financial institutions. Considering our immediate response to originate PPP loans, the loans originated under this program may present potential fraud or other risks, increasing the risk that loan forgiveness may not be obtained by the borrowers and that the guaranty may not be honored and may result in increased provision expense or charge-offs. In addition, there is risk that the borrowers may not qualify for the loan forgiveness feature due to the conduct of the borrower after the loan is originated. Further, although the SBA has streamlined the loan forgiveness process for loans $150,000 or less, these factors may result in us having to hold a significant amount of these low-yield loans on our books for a significant period of time. We will continue to face increased operational demands and pressures as we monitor and service our PPP loan portfolio, process applications for loan forgiveness and pursue recourse under the SBA guarantees. We have been subjected to regulatory audits and investigations related to our PPP program and could be subject to additional litigation and further investigation and scrutiny by our regulators, Congress, the SBA, the U.S. Treasury Department and other government agencies related to our PPP participation.
51


Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact our business.
The current and anticipated effects of climate change are creating an increasing level of concern for the state of the global environment. As a result, political and social attention to the issue of climate change has increased. In recent years, governments across the world have entered into international agreements to attempt to reduce global temperatures, in part by limiting greenhouse gas emissions. The U.S. Congress, state legislatures and federal and state regulatory agencies have continued to propose and advance numerous legislative and regulatory initiatives seeking to mitigate the effects of climate change. Such initiatives are expected to continue, including potentially increasing supervisory expectations with respect to banks’ risk management practices, accounting for the effects of climate change in stress testing scenarios and systematic risk assessments, revising expectations for credit portfolio concentrations based on climate related factors, and encouraging investment by banks in climate-related initiatives and lending to communities disproportionately impacted by the effects of climate change. These agreements and measures may result in the imposition of taxes and fees, the required purchase of emission credits, and the implementation of significant operational changes and new reporting obligations, each of which may require Customers to expend significant capital and incur compliance, operating, maintenance and remediation costs. Given the lack of empirical data on the credit and other financial risks posed by climate change, it is impossible to predict how climate change may impact our financial condition and operations; however, as a banking organization, the physical effects of climate change may present certain unique risks to Customers. For example, weather disasters, shifts in local climates and other disruptions related to climate change may adversely affect the value of real properties securing our loans, which could diminish the value of our loan portfolio. Such events may also cause reductions in regional and local economic activity that may have an adverse effect on our customers, which could limit our ability to raise and invest capital in these areas and communities, each of which could have a material adverse effect on our financial condition and results of operations.
Severe weather, natural disasters, public health issues, acts of war or terrorism, and other external events could significantly impact our ability to conduct business.
Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, adversely impact our team member base, cause significant property damage, result in loss of revenue, and cause us to incur additional expenses. For example, one of our locations experienced flooding and incurred property damage in 2021 as a result. Although management has established disaster recovery policies and procedures, the occurrence of any such event could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.
Risks Related to the Regulation of Our Industry
Our business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated environment in which we operate, including the effects of heightened regulatory requirements applicable to banks with assets in excess of $10 billion.
As a bank holding company, we are subject to federal supervision and regulation. Federal regulation of the banking industry, along with tax and accounting laws, regulations, rules and standards, may limit our operations significantly and control the methods by which we conduct business, just as they limit those of other banking organizations. In addition, compliance with laws and regulations can be difficult and costly, and changes to laws and regulations can impose additional compliance costs. The Dodd-Frank Act, which imposes significant regulatory and compliance changes on financial institutions, is an example of this type of federal regulation. Many of these regulations are intended to protect depositors, customers, the public, the banking system as a whole, or the FDIC insurance funds, not shareholders. Regulatory requirements and discretion affect our lending practices, capital structure, investment practices, dividend policy and many other aspects of our business. There are laws and regulations which restrict transactions between us and our subsidiaries. These requirements may constrain our operations, and the adoption of new laws and changes to or repeal of existing laws may have a further impact on our business, financial condition, results of operations and future prospects. Also, the burden imposed by those federal and state regulations may place banks in general, including Customers Bank in particular, at a competitive disadvantage compared to their non-banking competitors. We are also subject to requirements with respect to the confidentiality of information obtained from clients concerning their identities, business and personal financial information, employment and other matters. We require our team members to agree to keep all such information confidential, and we monitor compliance. Failure to comply with confidentiality requirements could result in material liability and adversely affect our business, financial condition, results of operations and future prospects.
52


Bank holding companies and financial institutions are extensively regulated and currently face an uncertain regulatory environment. Applicable laws, regulations, interpretations, enforcement policies and accounting principles have been subject to significant changes in recent years and may be subject to significant future changes. The recent turmoil in the banking industry has increased the likelihood of additional regulation and heightened supervision. Future changes may have a material adverse effect on our business, financial condition and results of operations.
Federal and state regulatory agencies may adopt changes to their regulations or change the manner in which existing regulations are applied or interpreted. We cannot predict the substance or effect of pending or future legislation or regulation or the application of laws and regulations on us. Compliance with current and potential regulation, as well as regulatory scrutiny, may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital and limit our ability to pursue business opportunities in an efficient manner by requiring us to expend significant time, effort and resources to ensure compliance and respond to any regulatory inquiries or investigations. In addition, press coverage and other public statements that assert some form of wrongdoing by financial services companies (including press coverage and public statements that do not involve us) have and may in the future result in regulatory inquiries or investigations, which, independent of the outcome, may be time-consuming and expensive and may divert time, effort and resources from our business. Evolving regulations and guidance concerning executive compensation may also impose limitations on us that affect our ability to compete successfully for executive and management talent.
In addition, given the current economic and financial environment, regulators may elect to alter standards or the interpretation of the standards used to measure regulatory compliance or to determine the adequacy of liquidity, certain risk management or other operational practices for financial services companies in a manner that impacts our ability to implement our strategy and could affect us in substantial and unpredictable ways and could have a material adverse effect on our business, financial condition and results of operations. Furthermore, the regulatory agencies have extremely broad direction in their interpretation of the regulations and laws and their interpretation of the quality of our loan portfolio, securities portfolio and other assets. If any regulatory agency’s assessment of the quality of our assets, operations, lending practices, investment practices, capital structure or other assets of our business differs from our assessment, we may be required to take additional charges or undertake or refrain from undertaking actions that would have the effect of materially reducing our earnings, capital ratios and share price.
Because our total assets exceed $10 billion, we and our bank subsidiary are subject to increased regulatory requirements. The Dodd-Frank Act and its implementing regulations impose various additional requirements on bank holding companies with $10 billion or more in total assets. In addition, banks with $10 billion or more in total assets are primarily examined by the CFPB with respect to various federal consumer financial protection laws and regulations. As an agency with evolving regulations and practices, there is some uncertainty as to how the CFPB’s examination and regulatory authority might impact our business. Further, the possibility of future changes in the authority of the CFPB by Congress or the current administration is uncertain, and we cannot predict the impact, if any, changes to the CFPB may have on our business.
With respect to deposit-taking activities, banks with assets in excess of $10 billion are subject to two material rules. First, these institutions are subject to a deposit assessment based on a new scorecard issued by the FDIC. This scorecard considers, among other things, the bank’s CAMELS rating, results of asset-related stress testing and funding-related stress, as well as our use of core deposits, among other things. Depending on the results of the bank’s performance under that scorecard, the total base assessment rate is between 1.5 to 40 basis points. Any increase in our bank subsidiary’s deposit insurance assessments may result in an increased expense related to our use of deposits as a funding source. Additionally, banks with over $10 billion in total assets are no longer exempt from the requirements of the Federal Reserve’s rules on interchange transaction fees for debit cards. This means that, as of July 1, 2020, our bank subsidiary is limited to receiving only a “reasonable” interchange transaction fee for any debit card transactions processed using debit cards issued by our bank subsidiary to our customers. The Federal Reserve has determined that it is unreasonable for a bank with more than $10 billion in total assets to receive more than $0.21 plus 5 basis points of the transaction plus a $0.01 fraud adjustment for an interchange transaction fee for debit card transactions. This reduction in the amount of interchange fees we receive for electronic debit interchange affected our results of operations through early 2023, after which Customers and BM Technologies removed Customers’ obligation under the Deposit Servicing Agreement to pay BM Technologies the interchange maintenance fee which is the difference between the Durbin-exempt and Durbin-recalculated interchange revenues. In October 2023, the Federal Reserve proposed updates to all three components of the interchange fee cap based on the latest data reported to the Federal Reserve Board by large debit card issuers concerning transactions performed in 2021.
Our regulators may also consider our compliance with these regulatory requirements when examining our operations generally or considering any request for regulatory approval we may make, even requests for approvals on unrelated matters.
53


We operate in a highly regulated environment, and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could materially and adversely affect us.
We are subject to extensive regulation, supervision and legislation that govern almost all aspects of our operations. Intended to protect customers, depositors and the FDIC’s DIF and not our shareholders, these laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on our business activities, limit the dividends or distributions that we can pay, restrict the ability of our subsidiary bank to engage in transactions with the Bancorp, and impose certain specific accounting requirements on us that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than under generally accepted accounting principles. Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs and may make certain products impermissible or uneconomic. Our failure to comply with these laws and regulations, even if the failure follows good faith effort or reflects a difference in interpretation, could subject us to restrictions on our business activities, reputational harm, fines and other penalties, any of which could materially and adversely affect us. Further, any new laws, rules and regulations could make compliance more difficult or expensive and also materially and adversely affect us. Provisions of the Dodd-Frank Act prohibit incentive compensation arrangements that would encourage inappropriate risk taking at covered financial institutions, which includes a bank or bank holding company with $1 billion or more in assets, such as the Company. These prohibitions may adversely affect our ability to retain and attract executives and other high-performing team members or our ability to compete with companies that are not subject to such provisions.
Our use of third-party service providers and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention.
We regularly use third-party service providers as part of our business and have other ongoing business relationships with other third parties, including BM Technologies after the completion of the divestiture of BMT on January 4, 2021. These types of third-party relationships are subject to increasingly demanding regulatory requirements and attention by federal banking regulators. Regulation requires us to perform enhanced due diligence, perform ongoing monitoring and control our third-party service providers and other ongoing third-party business relationships. In certain cases, we may be required to renegotiate our agreements with these third-party service providers to meet these enhanced requirements, which could increase our costs. We expect that our regulators will hold us responsible for deficiencies in our oversight and control of our third-party relationships and in the performance of the parties with which we have these relationships. As a result, if our regulators conclude that we have not exercised adequate oversight and control over our third-party service providers or other ongoing third-party business relationships or that such third parties have not performed appropriately, we could be subject to enforcement actions, including civil money penalties or other administrative or judicial penalties or fines as well as requirements for customer remediation, any of which could have a material adverse effect on our business, reputation, financial condition or results of operations.
We are subject to numerous laws and governmental regulations and to regular examinations by our regulators of our business and compliance with laws and regulations, and our failure to comply with such laws and regulations or to adequately address any matters identified during our examinations could materially and adversely affect us.
Federal banking agencies regularly conduct comprehensive examinations of our business, including our compliance with applicable laws, regulations and policies. Examination reports and ratings (which often are not publicly available) and other aspects of this supervisory framework can materially impact the conduct, organic and acquisition growth and profitability of our business. Our regulators have extensive discretion in their supervisory and enforcement activities and may impose a variety of remedial actions, conditions or limitations on our business operations if, as a result of an examination, they determined that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we or our management were in violation of any law, regulation or policy. Examples of those actions, conditions or limitations include enjoining “unsafe or unsound” practices, requiring affirmative actions to correct any conditions resulting from any asserted violation of law, issuing administrative orders that can be judicially enforced, directing increases in our capital, assessing civil monetary penalties against our officers or directors, removing officers and directors and, if a conclusion was reached that the offending conditions cannot be corrected, or there is an imminent risk of loss to depositors, terminating our deposit insurance. Other actions, formal or informal, that may be imposed could restrict our growth, including regulatory denials to expand branches, relocate, add subsidiaries and affiliates, expand into new financial activities or merge with or purchase other financial institutions. The timing of these examinations, including the timing of the resolution of any issues identified by our regulators in the examinations and the final determination by them with respect to the imposition of any remedial actions, conditions or limitations on our business operations, is generally not within our control. We also could suffer reputational harm in the event of any perceived or actual noncompliance with certain laws and regulations. If we become subject to such regulatory actions, we could be materially and adversely affected.
54


Other litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities.
Our business is subject to increased litigation and regulatory risks as a result of a number of factors, including the highly regulated nature of the financial services industry and the focus of state and federal prosecutors on banks and the financial services industry generally. This focus has only intensified since the latest financial crisis and due to COVID-19 pandemic and related federal and state government responses, with regulators and prosecutors focusing on a variety of financial institution practices and requirements, including our origination and servicing of PPP loans and granting of deferments under the CARES Act, as amended by the CAA, and the Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus. We are regularly the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our business. Legal or regulatory actions may subject us to substantial compensatory or punitive damages, significant fines, penalties, obligations to change our business practices or other requirements resulting in increased expenses, diminished income and damage to our reputation. Our involvement in any such matters, even if the matters are ultimately determined in our favor, could also cause significant harm to our reputation and divert management attention from the operation of our business. Further, any settlement, consent order or adverse judgment in connection with any formal or informal proceeding or investigation by government agencies may result in litigation, investigations or proceedings as other litigants and government agencies begin independent reviews of the same activities. As a result, the outcome of legal and regulatory actions could be material to our business, results of operations, financial condition and cash flows, depending on, among other factors, the level of our earnings for that period and could have a material adverse effect on our business, financial condition or results of operations.
The FDIC’s restoration plan and the related increased assessment rate could materially and adversely affect us.
The FDIC insures deposits at FDIC-insured depository institutions up to applicable limits. The amount of a particular institution’s deposit insurance assessment is based on that institution’s risk classification under an FDIC risk-based assessment system. An institution’s risk classification is assigned based on its capital levels and the level of supervisory concern the institution poses to its regulators. In October 2022, FDIC issued a final rule to increase the initial base deposit insurance assessment rate by two basis points for all insured depository institutions beginning in 2023. In November 2023, FDIC issued a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank, at a quarterly rate of 3.36 basis points of an institution’s uninsured deposits in excess of $5 billion as of December 31, 2022, to be paid over eight quarterly assessment periods. Customers recorded $3.7 million of FDIC special assessment in the consolidated statement of income for the year ended December 31, 2023. We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. If there are additional bank or financial institution failures, or any special assessment is insufficient to cover a loss to the DIF, we may be required to pay even higher FDIC premiums than the recently increased levels. Any future additional assessments, increases or required prepayments in FDIC insurance premiums may materially and adversely affect us, including reducing our profitability or limiting our ability to pursue certain business opportunities.
The Federal Reserve may require us to commit capital resources to support our subsidiary bank.
As a matter of policy, the Federal Reserve, which examines us and our subsidiaries, expects a bank holding company to act as a source of financial and managerial strength to a subsidiary bank and to commit resources to support such subsidiary bank. Under the “source of strength” doctrine, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. In addition, the Dodd-Frank Act directs the federal bank regulators to require that all companies that directly or indirectly control an insured depository institution serve as a source of strength for the institution. Under this requirement, we could be required to provide financial assistance to Customers Bank or any other subsidiary banks we may own in the future should they experience financial distress.
A capital injection may be required at times when we do not have the resources to provide it, and therefore, we may be required to borrow the funds or raise additional equity capital from third parties. Any loans by a holding company to its subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of the subsidiary bank. In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s general unsecured creditors, including the holders of its indebtedness. Any financing that must be done by the holding company in order to make the required capital injection may be difficult and expensive and may not be available on attractive terms, or at all, which likely would have a material adverse effect on us.
55


We are subject to stringent capital requirements which may adversely impact return on equity, require additional capital raises, or limit the ability to pay dividends or repurchase shares.
In September 2010, the Basel Committee on Banking Supervision, announced an agreement to a strengthened set of capital requirements for internationally active banking organizations in the United States and around the world, known as Basel III. Basel III narrowed the definition of capital, introduced requirements for minimum Tier 1 common capital, increased requirements for minimum Tier 1 capital and total risk-based capital, and changed risk-weighting methodologies. Basel III was fully phased in by January 1, 2019.
In July 2013, the Federal Reserve adopted a final rule regarding new capital requirements pursuant to Basel III. These rules, which became effective on January 1, 2015, for community banks, increased the required amount of regulatory capital that we must hold, and failure to comply with the capital rules will lead to limitations on the dividend payments to us by Customers Bank and other elective distributions.
In December 2017, the Basel Committee on Banking Supervision published standards that it described as the finalization of the Basel III regulatory framework. Among other things, these standards revise the Basel Committee’s standardized approach for credit risk and provide a new standardized approach for operational risk capital. Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced-approaches institutions and not to us. The impact of any changes to the capital regulatory framework on us will depend on the manner in which it is implemented by the federal bank regulators.
We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.
The federal Bank Secrecy Act, the Uniting and Strengthening America by PATRIOT Act and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The federal Financial Crimes Enforcement Network, established by the U.S. Treasury Department to administer the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the DOJ, Drug Enforcement Administration and IRS. There is also increased scrutiny of compliance with the rules enforced by OFAC. If our policies, procedures and systems are deemed deficient or the policies, procedures and systems of the financial institutions that we have already acquired or may acquire in the future are deficient, we would be subject to liability, including fines and regulatory actions (such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans), which could materially and adversely affect us. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.
Federal, state and local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could increase our cost of doing business.
Federal, state and local laws have been adopted that are intended to eliminate certain lending practices considered “predatory.” These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property. It is our policy not to make predatory loans, but these laws create the potential for liability with respect to our lending and loan investment activities. They increase our cost of doing business and, ultimately, may prevent us from making certain loans and cause us to reduce the average percentage rate or the points and fees on loans that we do make.
Loans that we make through certain federal programs are dependent on the Federal Government’s continuation and support of these programs and on our compliance with their requirements.
We participate in various U.S. government agency guarantee programs, including PPP and other programs operated by the SBA. We are responsible for following all applicable U.S. government agency regulations, guidelines and policies whenever we originate loans as part of these guarantee programs. If we or any third-party service providers we have engaged to assist us with such programs fail to follow any applicable regulations, guidelines or policies associated with a particular guarantee program, any loans we originate as part of that program may lose the associated guarantee, exposing us to credit risk to which we would not otherwise have been exposed or underwritten as part of our origination process for U.S. government agency guaranteed loans, or result in our inability to continue originating loans under such programs. The loss of any guarantees for loans we have extended under U.S. government agency guarantee programs or the loss of our ability to participate in such programs could have a material adverse effect on our business, financial condition or results of operations.
56


We are subject to regulatory restrictions on transactions with our affiliates and related parties. Failure to comply with such regulations could materially and adversely affect us.
There are various legal restrictions on the extent to which the Company may borrow or otherwise engage in certain types of transactions with the Bank or their respective affiliates and related parties. Under the Federal Reserve Act and the Federal Reserve’s Regulation W, the Bank is subject to quantitative and qualitative limits on extensions of credit (including credit exposure arising from repurchase and reverse repurchase agreements, securities borrowing and derivative transactions), purchases of assets, and certain other transactions with the Company or its other affiliates. Additionally, transactions between the Bank, on the one hand, and the Company or its affiliates, on the other hand, are required to be on arm’s length terms. Transactions between the Bank and its affiliates must be consistent with standards of safety and soundness. The Bank has had, and may be expected to have in the future, banking and other business transactions in the ordinary course of business with affiliates of the Company and the Bank, and their respective executive officers, directors, principal shareholders, their immediate families and affiliated companies (commonly referred to as related parties). The failure of the Company or the Bank to comply with the regulatory restrictions applicable to Customers and the Bank could materially and adversely affect the Company and the Bank.
Taxes
Reviews performed by the Internal Revenue Service and state and local taxing authorities for the fiscal years that remain open for investigation may result in a change to income taxes recorded in our consolidated financial statements and adversely affect our results of operations.
We are subject to U.S. federal income tax as well as income tax of various state and local taxing authorities. Generally, Customers is no longer subject to examination by federal, state, and local taxing authorities for years prior to the year ended December 31, 2020, with the exception of New Jersey and New York City. Income tax laws and regulations are often complex and our judgments, interpretations or applications of such tax laws and regulations could be challenged by taxing authorities. Any such challenges that are not resolved in our favor could result in increased recognition of income tax expense in our consolidated financial statements as well as possible interest and penalties.
Changes in U.S. federal, state or local tax laws may negatively impact our financial performance.
We are subject to changes in tax law that could increase Customers’ effective tax rates. These tax law changes may be retroactive to previous periods and as a result could negatively affect Customers’ current and future financial performance.
A number of changes to the Code were introduced through the Tax Act, the CARES Act and the CAA, and some of the provisions are set to expire in future years. There is substantial uncertainty concerning whether those expiring provisions will be extended, or whether future legislation will further revise the Code. Also, the current administration has indicated it may propose increases to the federal corporate statutory tax rate. An increase in the federal corporate tax rate may increase our tax provision expense. We are unable to predict whether these changes, or other proposals, will ultimately be enacted.
Risks Related to Our Securities
Risks Related to Our Voting Common Stock
The trading volume in our common stock may generally be less than that of other larger financial services companies.
Although the shares of our common stock are listed on the NYSE, the trading volume in our common stock may generally be less than that of many other larger financial services companies. A public trading market having the desired characteristics of depth, liquidity and orderliness depends upon the presence in the marketplace of willing buyers and sellers of our common stock at any given time, which presence will be dependent upon the individual decisions of investors, over which we have no control. Illiquidity of the stock market, or in the trading of our common stock on the NYSE, could have a material adverse effect on the value of your shares, particularly if significant sales of our common stock, or the expectation of significant sales, were to occur.
57


We do not expect to pay cash dividends on our common stock in the near future, and our ability to pay dividends is subject to regulatory limitations.
We have not historically declared nor paid cash dividends on our common stock, and we do not expect to do so in the near future. Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, the ability to service any equity or debt obligations senior to the common stock, our planned growth in assets and other factors deemed relevant by the board of directors. We must be current in the payment of dividends to holders of our Series E and Series F Preferred Stock before any dividends can be paid on our common stock.
In addition, as a bank holding company, we are subject to general regulatory restrictions on the payment of cash and in-kind dividends. Federal bank regulatory agencies have the authority to prohibit bank holding companies from engaging in unsafe or unsound practices in conducting their business, which, depending on the financial condition and liquidity of the holding company at the time, could include the payment of dividends. Further, various federal and state statutory provisions limit the amount of dividends that our bank subsidiary can pay to us as its holding company without regulatory approval. See “Market Price of Common Stock and Dividends – Dividends on Common Stock” below for further detail regarding restrictions on our ability to pay dividends.
We may issue additional shares of our common stock in the future which could adversely affect the value or voting power of our outstanding common stock.
Actual or anticipated issuances or sales of substantial amounts of our common stock in the future could cause the value of our common stock to decline significantly and make it more difficult for us to sell equity or equity-related securities in the future at a time and on terms that we deem appropriate. The issuance of any shares of our common stock in the future also would, and the issuance of any equity-related securities could, dilute the percentage ownership interest held by shareholders prior to such issuance. Actual issuances of our common stock could also significantly dilute the voting power of the common stock.
We have also made and will continue to make grants of restricted stock units and stock options with respect to shares of our common stock to our directors and certain team members. As such shares are issued upon vesting and as such options may be exercised and the underlying shares are or become freely tradeable, the value or voting power of our common stock may be adversely affected, and our ability to sell more equity or equity-related securities could also be adversely affected.
We are not required to issue any additional equity securities to existing holders of our common stock on a preemptive basis. Therefore, additional common stock issuances, directly or through convertible or exchangeable securities, warrants or options, will generally dilute the holdings of our existing holders of common stock, and such issuances or the perception of such issuances may reduce the market price of our common stock. Our outstanding preferred stock has preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to holders of our common stock. Because our decision to issue debt or equity securities or incur other borrowings in the future will depend on market conditions and other factors beyond our control, the amount, timing, nature or success of our future capital-raising efforts is uncertain. Thus, holders of our common stock bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings will negatively affect the value of our common stock.
Future issuances of debt securities, which would rank senior to our common stock upon our liquidation, and future issuances of equity securities, which would dilute the holdings of our existing holders of common stock and may be senior to our common stock for the purposes of making distributions, periodically or upon liquidation, may negatively affect the market price of our common stock.
In the future, we may issue additional debt or equity securities or incur other borrowings. Upon our liquidation, holders of our debt securities and other loans and preferred stock will receive a distribution of our available assets before holders of our common stock. If we incur debt in the future, our future interest costs could increase and adversely affect our liquidity, cash flows and results of operations.
Provisions in our articles of incorporation and bylaws may inhibit a takeover of us, which could discourage transactions that would otherwise be in the best interests of our shareholders and could entrench management.
Provisions of our articles of incorporation and bylaws and applicable provisions of Pennsylvania law and the federal CBCA may delay, inhibit or prevent someone from gaining control of our business through a tender offer, business combination, proxy contest or some other method even though some of our shareholders might believe a change in control is desirable. They might also increase the costs of completing a transaction in which we acquire another financial services business, merge with another financial institution or sell our business to another financial institution. These increased costs could reduce the value of the shares held by our shareholders upon completion of these types of transactions.
58


Shareholders may be deemed to be acting in concert or otherwise in control of us and our bank subsidiaries, which could impose prior approval requirements and result in adverse regulatory consequences for such holders.
We are a bank holding company regulated by the Federal Reserve. Any entity (including a “group” composed of natural persons) owning 25% or more of a class of our outstanding shares of voting stock, or a lesser percentage if such holder or group otherwise exercises a “controlling influence” over us, may be subject to regulation as a “bank holding company” in accordance with the BHC Act. In addition, (i) any bank holding company or foreign bank with a U.S. presence is required to obtain the approval of the Federal Reserve under the BHC Act to acquire or retain 5% or more of a class of our outstanding shares of voting stock and (ii) any person other than a bank holding company may be required to obtain prior regulatory approval under the CBCA to acquire or retain 10% or more of our outstanding shares of voting stock. Any shareholder that is deemed to “control” the company for bank regulatory purposes would become subject to prior approval requirements and ongoing regulation and supervision. Such a holder may be required to divest amounts equal to or exceeding 5% of the voting shares of investments that may be deemed incompatible with bank holding company status, such as an investment in a company engaged in non-financial activities. Regulatory determination of “control” of a depository institution or holding company is based on all of the relevant facts and circumstances. Potential investors are advised to consult with their legal counsel regarding the applicable regulations and requirements.
Our common stock owned by holders determined by a bank regulatory agency to be acting in concert would be aggregated for purposes of determining whether those holders have control of a bank or bank holding company. Each shareholder obtaining control that is a “company” would be required to register as a bank holding company. “Acting in concert” generally means knowing participation in a joint activity or parallel action towards the common goal of acquiring control of a bank or a parent company, whether or not pursuant to an express agreement. The manner in which this definition is applied in individual circumstances can vary and cannot always be predicted with certainty. Many factors can lead to a finding of acting in concert, including where: (i) the shareholders are commonly controlled or managed; (ii) the shareholders are parties to an oral or written agreement or understanding regarding the acquisition, voting or transfer of control of voting securities of a bank or bank holding company; (iii) the shareholders each own stock in a bank and are also management officials, controlling shareholders, partners or trustees of another company or (iv) both a shareholder and a controlling shareholder, partner, trustee or management official of such shareholder own equity in the bank or bank holding company.
Our directors and executive officers can influence the outcome of shareholder votes and, in some cases, shareholders may not have the opportunity to evaluate and affect the investment decision regarding potential investment, acquisition or disposition transactions.
As of December 31, 2023, our directors and executive officers, as a group, owned a total of 2,354,917 shares of common stock and exercisable options to purchase up to an additional 625,123 shares of common stock, which potentially gives them, as a group, the ability to control approximately 9.48% of the outstanding common stock. In addition, a director of Customers Bank who is not a director or executive officer of Customers Bancorp owns an additional 1,000 shares of common stock, which if combined with the directors and executive officers of Customers Bancorp, potentially gives them, as a group, the ability to control approximately 9.48% of the outstanding common stock. We believe ownership of stock causes directors and officers to have the same interests as shareholders, but it also gives them the ability to vote as shareholders for matters that are in their personal interest, which may be contrary to the wishes of other shareholders. Shareholders will not necessarily be provided with an opportunity to evaluate the specific merits or risks of one or more potential investment, acquisition or disposition transactions. Any decision regarding a potential investment or acquisition transaction will be made by our board of directors. Except in limited circumstances as required by applicable law, consummation of an acquisition will not require the approval of holders of common stock. Accordingly, shareholders may not have an opportunity to evaluate and affect the board of directors’ decision regarding most potential investment or acquisition transactions and/or certain disposition transactions.
The FDIC’s policy statement imposing restrictions and criteria on private investors in failed bank acquisitions will apply to us and our investors.
In August 2009, the FDIC issued a policy statement imposing restrictions and criteria on private investors in failed bank acquisitions. The policy statement is broad in scope and both complex and potentially ambiguous in its application. In most cases, it would apply to an investor with more than 5% of the total voting power of an acquired depository institution or its holding company; but in certain circumstances, it could apply to investors holding fewer voting shares. The policy statement will be applied to us if we make additional failed bank acquisitions from the FDIC or if the FDIC changes its interpretation of the policy statement or determines at some future date that it should be applied because of our circumstances.
Investors subject to the policy statement could be prohibited from selling or transferring their interests for three years. They also would be required to provide the FDIC with information about the investor and all entities in the investor’s ownership chain, including information on the size of the capital fund or funds, its diversification, its return profile, its marketing documents, and its management team and business model. Investors owning 80% or more of two or more banks or savings associations would be required to pledge their proportionate interests in each institution to cross-guarantee the FDIC against losses to the DIF.
59


Under the policy statement, the FDIC also could prohibit investment through ownership structures involving multiple investment vehicles that are owned or controlled by the same parent company. Investors that directly or indirectly hold 10% or more of the equity of a bank or savings association in receivership also would not be eligible to bid to become investors in the deposit liabilities of that failed institution. In addition, an investor using ownership structures with entities that are domiciled in bank-secrecy jurisdictions would not be eligible to own a direct or indirect interest in an insured depository institution unless the investor’s parent company is subject to comprehensive consolidated supervision as recognized by the Federal Reserve, and the investor enters into certain agreements with the U.S. bank regulators regarding access to information, maintenance of records and compliance with U.S. banking laws and regulations. If the policy statement applies, we (including any failed bank we acquire) could be required to maintain a ratio of Tier 1 common equity to total assets of at least 10% for a period of three years and thereafter maintain a capital level sufficient to be well capitalized under regulatory standards during the remaining period of ownership of the investors. Bank subsidiaries also may be prohibited from extending any new credit to investors that own at least 10% of our equity.
Risks Related to Our Fixed-to-Floating-Rate Non-Cumulative Perpetual Preferred Stock, Series E and Series F
The shares of our Series E and Series F Preferred Stock are equity securities and are subordinate to our existing and future indebtedness.
The shares of Series E and Series F Preferred Stock are equity interests in Customers Bancorp and do not constitute indebtedness of Customers Bancorp or any of our subsidiaries and rank junior to all of our existing and future indebtedness and other non-equity claims with respect to assets available to satisfy claims against us, including claims in the event of our liquidation. During the year ended December 31, 2021, we redeemed all of the outstanding shares of Series C and Series D Preferred Stock. If we are forced to liquidate our assets to pay our creditors, we may not have sufficient funds to pay amounts due on any or all of the Series E and Series F Preferred Stock then outstanding.
We may not pay dividends on the shares of Series E and Series F Preferred Stock.
Dividends on the shares of Series E and Series F Preferred Stock are payable only if declared by our board of directors or a duly authorized committee of the board. As a bank holding company, we are subject to general regulatory restrictions on the payment of cash dividends. Federal bank regulatory agencies have the authority to prohibit bank holding companies from engaging in unsafe or unsound practices in conducting their business, which, depending on the financial condition and liquidity of the holding company at the time, could include the payment of dividends. Further, var