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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

☒Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 20212022

☐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)
cubi-20210331_g1.jpg
cubi-20220331_g1.jpg

(Exact name of registrant as specified in its charter)
Customers Bancorp, Inc.

Pennsylvania 27-2290659
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
701 Reading Avenue
West Reading, PA 19611
(Address of principal executive offices)
(610) 933-2000
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
 

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 C, par value $1.00 per share		CUBI/PCNew York Stock Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual
Preferred Stock, Series D, par value $1.00 per share		CUBI/PDNew 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 (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. (Check one):
Large accelerated fileroxAccelerated Filerx☐
Non-accelerated filer
o 
Smaller Reporting Company☐
Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  ☐    No  x




________________________________________ 
On April 30, 2021, 32,266,264May 6, 2022, 32,981,204 shares of Voting Common Stock were outstanding.

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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
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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 Unaudited Consolidated Financial Statements and the Notes to the Unaudited Consolidated Financial Statements.
ACLAllowance for credit losses
AFSAvailable for sale
ASCAccounting Standards Codification
AOCIAccumulated other comprehensive income (loss)
ASUAccounting Standards Update
ATMAutomated teller machine
BancorpCustomers Bancorp, Inc.
BankCustomers Bank
BBB spreadBBB rated corporate bond spreads to U.S. Treasury securities
BMTBankMobile Technologies, Inc.
BM TechnologiesBM Technologies, Inc.
BOLIBank-owned life insurance
CAAThe Consolidated Appropriations Act, 2021
CARES ActCoronavirus Aid, Relief and Economic Security Act
CBITTM
Customers Bank Instant Token
CCFCustomers Commercial Finance, LLC
CECLCurrent expected credit losslosses
CommissionU.S. Securities and Exchange Commission
CompanyCustomers Bancorp, Inc. and subsidiaries
COVID-19Coronavirus 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
Customers BancorpCustomers Bancorp, Inc.
DCFDiscounted cash flow
DepartmentPennsylvania Department of Banking and Securities
Disbursement BusinessOne Account Student Checking and Refund Management Disbursement Services Business
EDU.S. Department of Education
EPSEarnings per share
ERISAThe Employee Retirement Income Security Act of 1974
EVEEconomic value of equity
Exchange ActSecurities Exchange Act of 1934
FDICFederal Deposit Insurance Corporation
Fed FundsFederal Reserve Board's Effective Federal Funds Rate
Federal Reserve BoardBoard of Governors of the Federal Reserve System
FHAFederal Housing Administration
FHLBFederal Home Loan Bank
FICOFair, Isaac and Company
FintechThird-Party Financial Technology
FMVFair Market Value
FPRDFinal Program Review Determination
FRBFederal Reserve Bank of Philadelphia
GDPGross domestic product
GNMAGovernment National Mortgage Association
Higher OneHigher One Holdings, Inc.
HTMHeld to maturity
Interest-only GNMA securitiesInterest-only classes of Ginnie Mae guaranteed home equity conversation mortgage-backed securities
IRSInternal Revenue Service
LIBORLondon Interbank Offered Rate
LPOLimited Purpose Office
MFACMegalith Financial Acquisition Corp.
MMDAMoney market deposit accounts
NIMNet interest margin, tax equivalent
NMNot meaningful
NPANon-performing asset
NPLNon-performing loan
NYSENew York Stock Exchange
OCIOther comprehensive income (loss)
OREOOther real estate owned
PCDPurchased Credit-Deteriorated
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PCIPurchased Credit-Impaired
PPPPaycheck Protection Program
PPPLFFRB Paycheck Protection Program Liquidity Facility
PUTPurchase Upon Termination
Rate ShocksInterest rates rising or falling immediately
ROURight-of-use
SBAU.S. Small Business Administration
SBA loansLoans originated pursuant to the rules and regulations of the SBA
SECU.S. 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
TDRTroubled debt restructuring
TRACTerminal Rental Adjustment Clause
UCCUniform Commercial Code
U.S. GAAPAccounting principles generally accepted in the United States of America
VIEVariable interest entity
VOEVoting interest entity


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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET — UNAUDITED
(amounts in thousands, except share and per share data)
March 31,
2021		December 31,
2020
ASSETS
Cash and due from banks$3,123 $78,090 
Interest earning deposits512,241 615,264 
Cash and cash equivalents515,364 693,354 
Investment securities, at fair value1,441,904 1,210,285 
Loans held for sale (includes $1,205 and $5,509, respectively, at fair value)46,106 79,086 
Loans receivable, mortgage warehouse, at fair value3,407,622 3,616,432 
Loans receivable, PPP5,178,089 4,561,365 
Loans and leases receivable7,536,489 7,575,368 
Allowance for credit losses on loans and leases(128,736)(144,176)
Total loans and leases receivable, net of allowance for credit losses on loans and leases15,993,464 15,608,989 
FHLB, Federal Reserve Bank, and other restricted stock69,420 71,368 
Accrued interest receivable83,186 80,412 
Bank premises and equipment, net10,943 11,225 
Bank-owned life insurance281,923 280,067 
Goodwill and other intangibles3,911 3,969 
Other assets371,439 338,438 
Assets of discontinued operations0 62,055 
Total assets$18,817,660 $18,439,248 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand, non-interest bearing$2,687,628 $2,356,998 
Interest bearing9,784,812 8,952,931 
Total deposits12,472,440 11,309,929 
Federal funds purchased365,000 250,000 
FHLB advances850,000 850,000 
Other borrowings124,138 124,037 
Subordinated debt181,464 181,394 
FRB PPP liquidity facility3,284,156 4,415,016 
Accrued interest payable and other liabilities351,741 152,082 
Liabilities of discontinued operations0 39,704 
Total liabilities17,628,939 17,322,162 
Commitments and contingencies (NOTE 14)00
Shareholders’ equity:
Preferred stock, par value $1.00 per share; liquidation preference $25.00 per share; 100,000,000 shares authorized, 9,000,000 shares issued and outstanding as of
March 31, 2021 and December 31, 2020
217,471 217,471 
Common stock, par value $1.00 per share; 200,000,000 shares authorized; 33,519,381 and 32,985,707 shares issued as of March 31, 2021 and December 31, 2020; 32,238,762 and 31,705,088 shares outstanding as of March 31, 2021 and December 31, 202033,519 32,986 
Additional paid in capital515,318 455,592 
Retained earnings438,802 438,581 
Accumulated other comprehensive income (loss), net5,391 (5,764)
Treasury stock, at cost (1,280,619 shares as of March 31, 2021 and December 31, 2020)(21,780)(21,780)
Total shareholders’ equity1,188,721 1,117,086 
Total liabilities and shareholders’ equity$18,817,660 $18,439,248 
March 31,
2022		December 31,
2021
ASSETS
Cash and due from banks$55,515 $35,238 
Interest earning deposits219,085 482,794 
Cash and cash equivalents274,600 518,032 
Investment securities, at fair value (includes allowance for credit losses of $728 at March 31, 2022)4,169,853 3,817,150 
Loans held for sale (includes $2,496 and $15,747, respectively, at fair value)3,003 16,254 
Loans receivable, mortgage warehouse, at fair value1,755,758 2,284,325 
Loans receivable, PPP2,195,902 3,250,008 
Loans and leases receivable10,118,855 9,018,298 
Allowance for credit losses on loans and leases(145,847)(137,804)
Total loans and leases receivable, net of allowance for credit losses on loans and leases13,924,668 14,414,827 
FHLB, Federal Reserve Bank, and other restricted stock54,553 64,584 
Accrued interest receivable94,669 92,239 
Bank premises and equipment, net8,233 8,890 
Bank-owned life insurance332,239 333,705 
Goodwill and other intangibles3,678 3,736 
Other assets298,212 305,611 
Total assets$19,163,708 $19,575,028 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Demand, non-interest bearing$4,594,428 $4,459,790 
Interest bearing11,821,132 12,318,134 
Total deposits16,415,560 16,777,924 
Federal funds purchased700,000 75,000 
FHLB advances— 700,000 
Other borrowings223,230 223,086 
Subordinated debt181,742 181,673 
Accrued interest payable and other liabilities265,770 251,128 
Total liabilities17,786,302 18,208,811 
Commitments and contingencies (NOTE 15)00
Shareholders’ equity:
Preferred stock, par value $1.00 per share; liquidation preference $25.00 per share; 100,000,000 shares authorized, 5,700,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021137,794 137,794 
Common stock, par value $1.00 per share; 200,000,000 shares authorized; 34,881,580 and 34,721,675 shares issued as of March 31, 2022 and December 31, 2021; 32,957,847 and 32,913,267 shares outstanding as of March 31, 2022 and December 31, 202134,882 34,722 
Additional paid in capital542,402 542,391 
Retained earnings780,628 705,732 
Accumulated other comprehensive income (loss), net(62,548)(4,980)
Treasury stock, at cost (1,923,732 and 1,808,408 shares as of March 31, 2022 and December 31, 2021)(55,752)(49,442)
Total shareholders’ equity1,377,406 1,366,217 
Total liabilities and shareholders’ equity$19,163,708 $19,575,028 
See accompanying notes to the unaudited consolidated financial statements.
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) — UNAUDITED
(amounts in thousands, except per share data)
Three Months Ended
March 31,
 20212020
Interest income:
Loans and leases$152,117 $116,080 
Investment securities7,979 4,977 
Other1,019 4,286 
Total interest income161,115 125,343 
Interest expense:
Deposits15,658 34,353 
FHLB advances5,192 5,390 
Subordinated debt2,689 2,689 
FRB PPP liquidity facility, federal funds purchased and other borrowings4,845 1,590 
Total interest expense28,384 44,022 
Net interest income132,731 81,321 
Provision (benefit) for credit losses on loans and leases(2,919)31,786 
Net interest income after provision (benefit) for credit losses on loans and leases135,650 49,535 
Non-interest income:
Interchange and card revenue85 270 
Deposit fees863 551 
Commercial lease income5,205 4,268 
Bank-owned life insurance1,679 1,762 
Mortgage warehouse transactional fees4,247 1,952 
Gain (loss) on sale of SBA and other loans1,575 11 
Mortgage banking income463 296 
Gain (loss) on sale of investment securities23,566 3,974 
Unrealized gain (loss) on investment securities974 (1,378)
Unrealized gain (loss) on derivatives2,537 (1,146)
Loss on cash flow hedge derivative terminations(24,467)0 
Other1,741 600 
Total non-interest income18,468 11,160 
Non-interest expense:
Salaries and employee benefits23,971 20,523 
Technology, communication and bank operations19,988 10,539 
Professional services6,289 3,544 
Occupancy2,621 2,613 
Commercial lease depreciation4,291 3,427 
FDIC assessments, non-income taxes and regulatory fees2,719 2,867 
Merger and acquisition related expenses418 0 
Loan workout(261)366 
Advertising and promotion561 1,424 
Other1,330 3,664 
Total non-interest expense61,927 48,967 
Income before income tax expense92,191 11,728 
Income tax expense17,560 3,274 
Net income from continuing operations74,631 8,454 
Loss from discontinued operations before income taxes(20,354)(6,722)
Income tax expense (benefit) from discontinued operations17,682 (1,368)
Net loss from discontinued operations(38,036)(5,354)
Net income36,595 3,100 
Preferred stock dividends3,391 3,615 
Net income (loss) available to common shareholders$33,204 $(515)
(continued)
Three Months Ended
March 31,
 20222021
Interest income:
Loans and leases$157,175 $152,117 
Investment securities20,295 7,979 
Other6,006 1,019 
Total interest income183,476 161,115 
Interest expense:
Deposits13,712 15,658 
FHLB advances— 5,192 
Subordinated debt2,689 2,689 
FRB PPP liquidity facility, federal funds purchased and other borrowings2,376 4,845 
Total interest expense18,777 28,384 
Net interest income164,699 132,731 
Provision (benefit) for credit losses15,997 (2,919)
Net interest income after provision (benefit) for credit losses148,702 135,650 
Non-interest income:
Interchange and card revenue76 85 
Deposit fees940 863 
Commercial lease income5,895 5,205 
Bank-owned life insurance8,326 1,679 
Mortgage warehouse transactional fees2,015 4,247 
Gain (loss) on sale of SBA and other loans1,507 1,575 
Loan fees2,545 1,436 
Mortgage banking income481 463 
Gain (loss) on sale of investment securities(1,063)23,566 
Unrealized gain (loss) on investment securities(276)974 
Unrealized gain (loss) on derivatives964 2,537 
Loss on cash flow hedge derivative terminations— (24,467)
Other(212)305 
Total non-interest income21,198 18,468 
Non-interest expense:
Salaries and employee benefits26,607 23,971 
Technology, communication and bank operations24,068 19,988 
Professional services6,956 5,877 
Occupancy3,050 2,621 
Commercial lease depreciation4,942 4,291 
FDIC assessments, non-income taxes and regulatory fees2,383 2,719 
Loan servicing2,371 437 
Advertising and promotion315 561 
Merger and acquisition related expenses— 418 
Loan workout(38)(261)
Other3,153 1,305 
Total non-interest expense73,807 61,927 
Income before income tax expense96,093 92,191 
Income tax expense19,332 17,560 
Net income from continuing operations$76,761 $74,631 
(continued)
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Three Months Ended
March 31,
20212020
Basic earnings (loss) per common share from continuing operations$2.23 $0.15 
Basic earnings (loss) per common share1.04 (0.02)
Diluted earnings (loss) per common share from continuing operations2.17 0.15 
Diluted earnings (loss) per common share1.01 (0.02)
Three Months Ended
March 31,
20222021
Loss from discontinued operations before income taxes$— $(20,354)
Income tax expense from discontinued operations— 17,682 
Net loss from discontinued operations— (38,036)
Net income76,761 36,595 
Preferred stock dividends1,865 3,391 
Net income available to common shareholders$74,896 $33,204 
Basic earnings per common share from continuing operations$2.27 $2.23 
Basic earnings per common share2.27 1.04 
Diluted earnings per common share from continuing operations2.18 2.17 
Diluted earnings per common share2.18 1.01 
See accompanying notes to the unaudited consolidated financial statements.
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) — UNAUDITED
(amounts in thousands)
 Three Months Ended
March 31,
 20212020
Net income$36,595 $3,100 
Unrealized gains (losses) on available for sale debt securities:
Unrealized gains (losses) arising during the period400 (9,098)
Income tax effect(104)2,366 
Reclassification adjustments for (gains) losses included in net income(23,566)(3,974)
Income tax effect6,127 1,033 
Net unrealized gains (losses) on available for sale debt securities(17,143)(9,673)
Unrealized gains (losses) on cash flow hedges:
Unrealized gains (losses) arising during the period12,315 (27,697)
Income tax effect(3,202)7,351 
Reclassification adjustment for (gains) losses included in net income25,926 1,478 
Income tax effect(6,741)(384)
Net unrealized gains (losses) on cash flow hedges28,298 (19,252)
Other comprehensive income (loss), net of income tax effect11,155 (28,925)
Comprehensive income (loss)$47,750 $(25,825)
 Three Months Ended
March 31,
 20222021
Net income$76,761 $36,595 
Unrealized gains (losses) on available for sale debt securities:
Unrealized gains (losses) arising during the period(78,858)400 
Income tax effect20,503 (104)
Reclassification adjustments for (gains) losses included in net income1,063 (23,566)
Income tax effect(276)6,127 
Net unrealized gains (losses) on available for sale debt securities(57,568)(17,143)
Unrealized gains (losses) on cash flow hedges:
Unrealized gains (losses) arising during the period— 12,315 
Income tax effect— (3,202)
Reclassification adjustment for (gains) losses included in net income— 25,926 
Income tax effect— (6,741)
Net unrealized gains (losses) on cash flow hedges— 28,298 
Other comprehensive income (loss), net of income tax effect(57,568)11,155 
Comprehensive income (loss)$19,193 $47,750 
See accompanying notes to the unaudited consolidated financial statements.
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY — UNAUDITED
(amounts in thousands, except shares outstanding data)
Three Months Ended March 31, 2021
Preferred StockCommon Stock
Shares of
Preferred
Stock
Outstanding		Preferred
Stock		Shares of
Common
Stock
Outstanding		Common
Stock		Additional
Paid in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Total
Balance, December 31, 20209,000,000 $217,471 31,705,088 $32,986 $455,592 $438,581 $(5,764)$(21,780)$1,117,086 
Net income— — — — — 36,595 — — 36,595 
Other comprehensive income (loss)— — — — — — 11,155 — 11,155 
Preferred stock dividends (1)
— — — — — (3,391)— — (3,391)
Sale of non-controlling interest in BMT (2)
— — — — 31,893 — — — 31,893 
Distribution of investment in BM Technologies (3)
— — — — — (32,983)— — (32,983)
Restricted stock awards to certain BMT team members (4)
— — — — 19,592 — — — 19,592 
Share-based compensation expense— — — — 3,609 — — — 3,609 
Issuance of common stock under share-based compensation arrangements— — 533,674 533 4,632 — — — 5,165 
Balance, March 31, 20219,000,000 $217,471 32,238,762 $33,519 $515,318 $438,802 $5,391 $(21,780)$1,188,721 
Three Months Ended March 31, 2020
Preferred StockCommon Stock
Shares of
Preferred
Stock
Outstanding		Preferred StockShares of
Common
Stock
Outstanding		Common
Stock		Additional
Paid in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Total
Balance, December 31, 20199,000,000 $217,471 31,336,791 $32,617 $444,218 $381,519 $(1,250)$(21,780)$1,052,795 
Cumulative effect from change in accounting principle - CECL— — — — — (61,475)— — (61,475)
Net income— — — — — 3,100 — — 3,100 
Other comprehensive income (loss)— — — — — — (28,925)— (28,925)
Preferred stock dividends(1)
— — — — — (3,615)— — (3,615)
Share-based compensation expense— — — — 3,228 — — — 3,228 
Issuance of common stock under share-based compensation arrangements— — 133,235 134 (606)— — — (472)
Balance, March 31, 20209,000,000 $217,471 31,470,026 $32,751 $446,840 $319,529 $(30,175)$(21,780)$964,636 
Three Months Ended March 31, 2022
Preferred StockCommon Stock
Shares of
Preferred
Stock
Outstanding		Preferred
Stock		Shares of
Common
Stock
Outstanding		Common
Stock		Additional
Paid in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Total
Balance, December 31, 20215,700,000 $137,794 32,913,267 $34,722 $542,391 $705,732 $(4,980)$(49,442)$1,366,217 
Net income— — — — — 76,761 — — 76,761 
Other comprehensive income (loss)— — — — — — (57,568)— (57,568)
Preferred stock dividends (1)
— — — — — (1,865)— — (1,865)
Share-based compensation expense— — — — 3,703 — — — 3,703 
Issuance of common stock under share-based compensation arrangements— — 159,904 160 (3,692)— — — (3,532)
Repurchase of common shares— — (115,324)— — — — (6,310)(6,310)
Balance, March 31, 20225,700,000 $137,794 32,957,847 $34,882 $542,402 $780,628 $(62,548)$(55,752)$1,377,406 
Three Months Ended March 31, 2021
Preferred StockCommon Stock
Shares of
Preferred
Stock
Outstanding		Preferred StockShares of
Common
Stock
Outstanding		Common
Stock		Additional
Paid in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Total
Balance, December 31, 20209,000,000 $217,471 31,705,088 $32,986 $455,592 $438,581 $(5,764)$(21,780)$1,117,086 
Net income— — — — — 36,595 — — 36,595 
Other comprehensive income (loss)— — — — — — 11,155 — 11,155 
Preferred stock dividends (1)
— — — — — (3,391)— — (3,391)
Sale of non-controlling interest in BMT (2)
— — — — 31,893 — — — 31,893 
Distribution of investment in BM Technologies (3)
— — — — — (32,983)— — (32,983)
Restricted stock awards to certain BMT team members (4)
— — — — 19,592 — — — 19,592 
Share-based compensation expense— — — — 3,609 — — — 3,609 
Issuance of common stock under share-based compensation arrangements— — 533,674 533 4,632 — — — 5,165 
Balance, March 31, 20219,000,000 $217,471 32,238,762 $33,519 $515,318 $438,802 $5,391 $(21,780)$1,188,721 
(1)Dividends per share of $0.333922 and $0.310297 per share were declared on Series E and F preferred stock for the three months ended March 31, 2022. Dividends per share of $0.34478125, $0.40625, $0.403125, and $0.375 per share were declared on Series C, D, E, and F preferred stock for the three months ended March 31, 2021. Dividends per share of $0.4375, $0.40625, $0.403125, and $0.375 per share were declared on Series C, D, E, and F preferred stock for the three months ended March 31, 2020.
(2)Refer to NOTE 3 – DISCONTINUED OPERATIONS for additional information about the sale of non-controlling interest in BMT including the reverse recapitalization of MFAC.
(3)Immediately after the closing of the BMT divestiture, Customers distributed all of its remaining investment in BM Technologies' common stock to its shareholders as special dividends, equivalent to 0.15389 of BM Technologies common stock for each share of Customers common stock. Refer to NOTE 3 – DISCONTINUED OPERATIONS.
(4)At the closing of the BMT divestiture, certain team members of BMT received restricted stock awards in BM Technologies' common stock. Refer to NOTE 3 – DISCONTINUED OPERATIONS.

See accompanying notes to the unaudited consolidated financial statements.
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(amounts in thousands)
 Three Months Ended
March 31,
 20212020
Cash Flows from Operating Activities
Net income from continuing operations$74,631 $8,454 
Adjustments to reconcile net income to net cash provided by (used in) continuing operating activities:
Provision (benefit) for credit losses on loans and leases(2,919)31,786 
Depreciation and amortization5,321 7,038 
Share-based compensation expense3,082 3,463 
Deferred taxes(6,198)(22,287)
Net amortization (accretion) of investment securities premiums and discounts(14)251 
Unrealized (gain) loss on investment securities(974)1,378 
(Gain) loss on sale of investment securities(23,566)(3,974)
Unrealized (gain) loss on derivatives(2,537)1,146 
Loss on cash flow hedge derivative terminations24,467 0 
Settlement of terminated cash flow hedge derivatives(27,156)0 
Fair value adjustment on loans held for sale(1,115)0 
(Gain) loss on sale of SBA and other loans(2,071)(170)
Origination of loans held for sale(12,323)(7,046)
Proceeds from the sale of loans held for sale17,122 7,948 
Amortization (accretion) of fair value discounts and premiums(345)(378)
Earnings on investment in bank-owned life insurance(1,679)(1,762)
(Increase) decrease in accrued interest receivable and other assets20,979 (98,985)
Increase (decrease) in accrued interest payable and other liabilities135,679 38,206 
Net Cash Provided By (Used In) Continuing Operating Activities200,384 (34,932)
Cash Flows from Investing Activities
Proceeds from maturities, calls and principal repayments of investment securities62,348 24,079 
Proceeds from sales of investment securities available for sale353,915 0 
Purchases of investment securities available for sale(589,874)(158,782)
Origination of mortgage warehouse loans(16,998,093)(9,791,820)
Proceeds from repayments of mortgage warehouse loans17,211,909 9,520,758 
Net (increase) decrease in loans and leases, excluding mortgage warehouse loans(486,158)174,971 
Proceeds from sales of loans and leases39,534 0 
Purchase of loans(117,036)(193,363)
Net proceeds from sale of (purchases of) FHLB, Federal Reserve Bank, and other restricted stock1,948 (2,926)
Purchases of bank premises and equipment(298)(89)
Purchases of leased assets under lessor operating leases(4,849)(6,384)
Net Cash Used In Continuing Investing Activities(526,654)(433,556)
Cash Flows from Financing Activities
Net increase (decrease) in deposits1,162,511 (235,293)
Net increase (decrease) in short-term borrowed funds from the FRB0 175,000 
Net increase (decrease) in short-term borrowed funds from the FHLB0 410,000 
Net increase (decrease) in federal funds purchased115,000 167,000 
Net increase (decrease) in borrowed funds from FRB PPP liquidity facility(1,130,860)0 
Preferred stock dividends paid(3,401)(3,615)
Payments of employee taxes withheld from share-based awards(1,988)(932)
Proceeds from issuance of common stock6,684 225 
Proceeds from sale of non-controlling interest in BMT23,125 0 
Net Cash Provided By Continuing Financing Activities171,071 512,385 
Net Increase (Decrease) in Cash and Cash Equivalents From Continuing Operations(155,199)43,897 
(continued)
Three Months Ended
March 31,
20212020
Discontinued Operations:
Net Cash Used In Operating Activities$(22,791)$(232)
Net Cash Provided By Investing Activities0 62 
Net Increase (Decrease) in Cash and Cash Equivalents From Discontinued Operations(22,791)(170)
Net Increase (Decrease) in Cash and Cash Equivalents(177,990)43,727 
Cash and Cash Equivalents – Beginning693,354 212,505 
Cash and Cash Equivalents – Ending$515,364 $256,232 
Non-cash Operating and Investing Activities:
Transfer of loans to other real estate owned$0 $31 
Distribution of investment in BM Technologies common stock32,983 0 
Transfer of loans held for investment to held for sale44,258 0 
Unsettled sales of investment securities0 104,469 
Unsettled purchases of investment securities56,620 97,247 
 Three Months Ended
March 31,
 20222021
Cash Flows from Operating Activities
Net income from continuing operations$76,761 $74,631 
Adjustments to reconcile net income to net cash provided by (used in) by continuing operating activities:
Provision (benefit) for credit losses15,997 (2,919)
Depreciation and amortization6,055 5,321 
Share-based compensation expense3,718 3,082 
Deferred taxes(22,810)(6,198)
Net amortization (accretion) of investment securities premiums and discounts918 (14)
Unrealized (gain) loss on investment securities276 (974)
(Gain) loss on sale of investment securities1,063 (23,566)
Unrealized (gain) loss on derivatives(964)(2,537)
Loss on cash flow hedge derivative terminations— 24,467 
Settlement of terminated cash flow hedge derivatives— (27,156)
Fair value adjustment on loans held for sale— (1,115)
(Gain) loss on sale of loans(2,070)(2,071)
Origination of loans held for sale(10,999)(12,323)
Proceeds from the sale of loans held for sale24,813 17,122 
Amortization (accretion) of loan net deferred fees, discounts and premiums(27,907)(345)
Earnings on investment in bank-owned life insurance(8,326)(1,679)
(Increase) decrease in accrued interest receivable and other assets66,855 20,979 
Increase (decrease) in accrued interest payable and other liabilities(6,440)135,679 
Net Cash Provided By (Used In) Continuing Operating Activities116,940 200,384 
Cash Flows from Investing Activities
Proceeds from maturities, calls and principal repayments of investment securities224,809 62,348 
Proceeds from sales of investment securities available for sale155,954 353,915 
Purchases of investment securities available for sale(814,246)(589,874)
Origination of mortgage warehouse loans(7,938,526)(16,998,093)
Proceeds from repayments of mortgage warehouse loans8,475,173 17,211,909 
Net (increase) decrease in loans and leases, excluding mortgage warehouse loans159,706 (486,158)
Proceeds from sales of loans and leases14,281 39,534 
Purchase of loans(206,330)(117,036)
Proceeds from bank-owned life insurance5,850 — 
Net proceeds from sale of FHLB, Federal Reserve Bank, and other restricted stock15,205 1,948 
Purchases of bank premises and equipment(274)(298)
Purchases of leased assets under lessor operating leases(2,930)(4,849)
Net Cash Provided By (Used In) Continuing Investing Activities88,672 (526,654)
Cash Flows from Financing Activities
Net increase (decrease) in deposits(362,364)1,162,511 
Net increase (decrease) in short-term borrowed funds from the FHLB(700,000)— 
Net increase (decrease) in federal funds purchased625,000 115,000 
Net increase (decrease) in borrowed funds from FRB PPP liquidity facility— (1,130,860)
Preferred stock dividends paid(1,823)(3,401)
Purchase of treasury stock(6,310)— 
Payments of employee taxes withheld from share-based awards(3,755)(1,988)
Proceeds from issuance of common stock208 6,684 
Proceeds from sale of non-controlling interest in BMT— 23,125 
Net Cash Provided By (Used In) Continuing Financing Activities(449,044)171,071 
Net Increase (Decrease) in Cash and Cash Equivalents From Continuing Operations$(243,432)$(155,199)
Discontinued Operations:
Net Cash Used In Operating Activities$— $(22,791)
Net Increase (Decrease) in Cash and Cash Equivalents From Discontinued Operations— (22,791)
Net Increase (Decrease) in Cash and Cash Equivalents(243,432)(177,990)
Cash and Cash Equivalents – Beginning518,032 693,354 
Cash and Cash Equivalents – Ending$274,600 $515,364 
(continued)
Three Months Ended
March 31,
20222021
Non-cash Investing and Financing Activities:
Distribution of investment in BM Technologies common stock$— $32,983 
Transfer of loans held for investment to held for sale— 44,258 
Unsettled purchases of investment securities— 56,620 
See accompanying notes to the unaudited consolidated financial statements.
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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
NOTE 1 — DESCRIPTION OF THE BUSINESS
Customers Bancorp, Inc. (“Customers Bancorp”) is a bank holding company engaged in banking activities through its wholly owned subsidiary, Customers Bank ("the Bank”), collectively referred to as “Customers” herein.
Customers Bancorp and its wholly owned subsidiaries, the Bank, and non-bank subsidiaries, serve residents and businesses in Southeastern Pennsylvania (Bucks, Berks, Chester, Philadelphia and Delaware Counties); Harrisburg, Pennsylvania (Dauphin County); Rye Brook, New York (Westchester County); Hamilton, New Jersey (Mercer County); Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire (Rockingham County); Manhattan and Melville, New York; Washington, D.C.; Chicago, Illinois; Dallas, Texas; Orlando, Florida; Wilmington, North Carolina; and nationally for certain loan and deposit products. The Bank has 12 full-service branches and provides commercial banking products, primarily loans and deposits. In addition, Customers Bank also administratively supports loan and other financial products, including equipment finance leases, to customers through its limited-purpose offices in Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire; Manhattan and Melville, New York; Philadelphia and Lancaster, Pennsylvania; Chicago, Illinois,Illinois; Dallas, TexasTexas; Orlando, Florida and Orlando, Florida.Wilmington, North Carolina; and other locations. The Bank also serves specialty niche businesses nationwide, including its commercial loans to mortgage banking businesses, commercial equipment financing, SBA lending, specialty lending and consumer loans through relationships with fintech companies.
The Bank is subject to regulation of the Pennsylvania Department of Banking and Securities and the Federal Reserve Bank and is periodically examined by those regulatory authorities. Customers Bancorp has made certain equity investments through its wholly owned subsidiaries CB Green Ventures Pte Ltd. and CUBI India Ventures Pte Ltd.
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Basis of Presentation
The interim unaudited consolidated financial statements have been prepared in conformity with U.S. GAAP and pursuant to the rules and regulations of the SEC. These interim unaudited consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the financial position and the results of operations and cash flows of Customers Bancorp and subsidiaries for the interim periods presented. Certain information and footnote disclosures normally included in the annual consolidated financial statements have been omitted from these interim unaudited consolidated financial statements as permitted by SEC rules and regulations. The December 31, 20202021 consolidated balance sheet presented in this report has been derived from Customers Bancorp’s audited 20202021 consolidated financial statements. Management believes that the disclosures are adequate to present fairly the consolidated financial statements as of the dates and for the periods presented. These interim unaudited consolidated financial statements should be read in conjunction with the 20202021 consolidated financial statements of Customers Bancorp and subsidiaries included in Customers' Annual Report on Form 10-K for the year ended December 31, 20202021 filed with the SEC on March 1, 2021February 28, 2022 (the "2020"2021 Form 10-K"). The 20202021 Form 10-K describes Customers Bancorp’s significant accounting policies, which include its policies on Principles of Consolidation; Cash and Cash Equivalents and Statements of Cash Flows; Restrictions on Cash and Amounts due from Banks; Business Combinations; Investment Securities; Loan Accounting Framework; Loans Held for Sale and Loans at Fair Value; Loans Receivable - Mortgage Warehouse, at Fair Value; Loans Receivable, PPP; Loans and Leases Receivable; PCD Loans and Leases; ACL; Goodwill and Other Intangible Assets; FHLB, Federal Reserve Bank, and Other Restricted Stock; OREO; BOLI; Bank Premises and Equipment; Lessor and Lessee Operating Leases; Treasury Stock; Income Taxes; Share-Based Compensation; Transfer of Financial Assets; Derivative Instruments and Hedging; Comprehensive Income (Loss); EPS; and Loss Contingencies. There have been no material changes to Customers Bancorp's significant accounting policies noted above for the three months ended March 31, 2021.2022.
On January 4, 2021, Customers Bancorp completed the previously announced divestiture of BankMobile Technologies, Inc., the technology arm of its BankMobile segment, to MFAC Merger Sub Inc., an indirect wholly-owned subsidiary of MFAC pursuant to an Agreement and Plan of Merger, dated August 6, 2020, by and among MFAC, MFAC Merger Sub Inc., BMT, Customers Bank, the sole stockholder of BMT, and Customers Bancorp, the parent bank holding company of Customers Bank (as amended on November 2, 2020 and December 8, 2020).January 4, 2021. Following the completion of the divestiture of BMT, BankMobile's serviced deposits and loans and the related net interest income have been combined with Customers’ financial condition and the results of operations as a single reportable segment. BMT's historical financial results for periods prior to the divestiture are reflected in Customers’ consolidated financial statements as discontinued operations. The assets and liabilities of BMT have been presented as "Assets of discontinued operations" and "Liabilities of discontinued operations" on the consolidated balance sheet at December 31, 2020. BMT's operating results and associated cash flows have been presented as "Discontinued operations" within the accompanying consolidated financial statements and prior period amounts have been reclassified to conform with the current period presentation. See – DISCONTINUED OPERATIONS for additional information.
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have been reclassified to conform with the current period presentation. See NOTE 3 – DISCONTINUED OPERATIONS for additional information.
Accounting and Reporting Considerations related to COVID-19
On March 27, 2020, the CARES Act was signed into law and contained substantial tax and spending provisions intended to address the impact of the COVID-19 pandemic and stimulate the economy. The CARES Act includes the SBA's PPP designed to aid small-and medium-sized businesses through federally guaranteed loans distributed through banks. Customers is a participant in the PPP. Section 4013 of the CARES Act also gives entities temporary relief from the accounting and disclosure requirements for TDRs under ASC 310-40 in certain situations. On December 27, 2020, the CAA was signed into law, which extended and expanded various relief provisions of the CARES Act.
Accounting for PPP Loans
In April 2020, Customers began originating loans to qualified small businesses under the PPP administered by the SBA. The PPP loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent the proceeds are used for payroll and other permitted purposes in accordance with the requirements of the PPP. These loans carry a fixed rate of 1.00% and terms of two or five years, if not forgiven, in whole or in part. Payments are deferred for the first six months of the loan. The loans are 100% guaranteed by the SBA. The SBA pays the originating bank a processing fee ranging from 1% to 5% based on the size of the loan. On December 27, 2020, the CAA was signed into law, including Division N, Title III, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, which providesprovided $284 billion in additional funding for the SBA's PPP for small businesses affected by the COVID-19 pandemic. 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 second round of PPP loans have the same general loan terms as the first round, and a processing fee of up to $2,500 per loan of less than $50,000, and 1% to 3% for loans greater than $50,000. Customers classified the PPP loans as held for investment and these loans are carried at amortized cost and interest income is recognized using the interest method. The origination fees, net of direct origination costs, are deferred and recognized as an adjustment to the yield of the related loans over their contractual life using the interest method. As PPP is newly created, Customers does not have historical prepayment data to accurately estimate principal prepayments and therefore has elected to not estimate prepayments as a policy election. No ACL has been recognized for PPP loans as these loans are 100% guaranteed by the SBA. See NOTE 8 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES for additional information.
Loan Modifications
As mentioned above, Section 4013 of the CARES Act, as amended by the CAA, givesgave entities temporary relief from the accounting and disclosure requirements for TDRs. In addition, on April 7, 2020, certain regulatory banking agencies issued an interagency statement that offersoffered practical expedients for evaluating whether loan modifications in response to the COVID-19 pandemic arewere TDRs. To qualify for TDR accounting and disclosure relief under the CARES Act, as amended by the CAA, the applicable loan must not have been more than 30 days past due as of December 31, 2019, and the modification must be executed during the period beginning on March 1, 2020, and ending on the earlier of January 1, 2022, or the date that is 60 days after the termination date of the national emergency declared by the president on March 13, 2020, under the National Emergencies Act related to the outbreak of COVID-19. The CARES Act applies to modifications made as a result of COVID-19 including: forbearance agreements, interest rate modifications, repayment plans, and other arrangements to defer or delay payment of principal or interest. The interagency statement does not require the modification to be completed within a certain time period if it is related to COVID-19 and can be provided to borrowers either individually or as part of a loan modification program. Moreover, the interagency statement applies to short-term modifications (e.g. not more than six months deferral) including payment deferrals, fee waivers, extensions of repayment terms, or other insignificant payment delays as a result of COVID-19.
Customers applied Section 4013 of the CARES Act and the interagency statement in connection with applicable modifications. For modifications that qualifyqualified under either the CARES Act or the interagency statement, TDR accounting and reporting iswas suspended. These modifications generally involveinvolved principal and/or interest payment deferrals for a period of 90 days at a time and cancould be extended to six months or longer for modifications that qualified under the Section 4013 of the CARES Act, as amended, if requested by the borrower as long as the reason iswas still related to COVID-19. These modified loans wouldwere not also be reported as past due or nonaccrual during the deferral period. See NOTE 8 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES for additional information.
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Recently Issued Accounting Standards

Presented below are recently issued accounting standards that Customers has adopted.adopted as well as those that the FASB has issued but are not yet effective.

Accounting Standards Adopted in 2022
StandardSummary of GuidanceEffects on Financial Statements
ASU 2020-04,2020-06,
Reference Rate Reform (Topic 848)Debt - Facilitation of the Effects of Reference Rate Reform on Financial ReportingDebt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity

Issued MarchAugust 2020
• Provides optional guidance for a limited period of time to ease the potential burden insimplified accounting for (or derecognizing the effects of) reference rate reform on financial reporting. Specifically, the amendments provide optional expedients and exceptionsconvertible debt instruments by eliminating separation models in ASC 470-20 for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. These relate only to those contracts, hedging relationships, and other transactions that reference LIBORconvertible debt instruments with a cash conversion feature, or another reference rate expectedbeneficial conversion feature.
• Removes the requirements to consider whether a contract would be settled in registered shares, to consider whether collateral is required to be discontinued because of reference rate reform.posted and to assess shareholders rights upon conversion.
• Effective as of March 12,for fiscal years beginning after December 15, 2021, including interim periods within those
fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and can be adopted anytime during the period of January 1, 2020 through December 31, 2022.including interim periods within those fiscal years.
• Customers adopted this guidance during adoption period for certain optional expedients.
on January 1, 2022.
• The adoption of this guidance did not have a materialany impact on Customers' financial condition, results of operations and consolidated financial statements.
• As of March 31, 2021, Customers has not yet elected to apply optional expedients for
certain contract modifications. However, we plan to elect additional optional expedients in the future.
ASU 2021-01,2021-05,
Reference Rate ReformLeases (Topic 848)842): Lessors - ScopeCertain Leases with Variable Lease Payments

Issued JanuaryJuly 2021
• Clarifies that certain optional expedients and exceptions in Topic 848Provides updates for contract modifications and hedge accounting apply to derivatives thatfor leases with variable lease payments under ASC 842.
• Allows for variable lease payments which are affected1) not driven by the discounting transition, including derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform.
and 2) not dependent upon an estimate to be included within consideration or the investment in a lease at the inception of a sales-type or direct financing lease.
• Effective as of March 12, 2020for fiscal years beginning after December
15, 2021 and can be adopted anytime during the period of January 1, 2020 through December 31, 2022.
interim periods within those fiscal years. Early adoption is permitted.
• Customers adopted this guidance during adoption period for certain optional expedients.
on January 1, 2022.
• The adoption of this guidance did not have a materialany impact on Customers' financial condition, results of operations and consolidated financial statements.
• As of March 31, 2021, Customers has not yet elected to apply optional expedients for
certain contract modifications. We plan to elect additional optional expedients in the future.
Accounting Standards Issued But Not Yet Adopted
StandardSummary of GuidanceEffects on Financial Statements
ASU 2022-02,
Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

Issued March 2022
• Eliminates the accounting guidance for TDRs by
creditors, and applies the loan refinancing and restructuring guidance when a borrower is experiencing financial difficulty to determine whether a modification results in a new loan or a continuation of an existing loan.
• Provides enhanced disclosure requirements for certain loan refinancing and restructurings and disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of ASC 326.
• Effective for fiscal years beginning after December 15, 2022, including interim periods within those
fiscal years. Early adoption is permitted, including adoption in any interim period, provided the amendments are adopted as of the beginning of the fiscal year that includes the interim period of adoption. Early adoption is permitted separately for the amendments to TDRs and vintage disclosures.
• TDR and vintage disclosures are to be adopted prospectively. An entity may adopt TDR recognition and measurement guidance prospectively or elect to use a modified retrospective transition method, with a cumulative effect adjustment to retained earnings at the beginning of the period of adoption.
• Customers expects this guidance will result in additional disclosures related to gross write-offs by vintage year and expansive disclosures for certain loan modifications to borrowers experiencing financial difficulty.
• Customers intends to adopt this guidance during adoption period and is currently evaluating the expected impact of this guidance on its financial condition, results of operations and consolidated financial statements.
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NOTE 3 – DISCONTINUED OPERATIONS
On January 4, 2021, Customers Bancorp completed the previously announced divestiture of BMT, the technology arm of its BankMobile segment, to MFAC Merger Sub Inc., an indirect wholly-owned subsidiary of MFAC, pursuant to an Agreement and Plan of Merger, dated August 6, 2020, by and among MFAC, MFAC Merger Sub Inc., BMT, Customers Bank, the sole stockholder of BMT, and Customers Bancorp, the parent bank holding company for Customers Bank (as amended on November 2, 2020 and December 8, 2020). Following the completion of the divestiture of BMT, BankMobile's serviced deposits and loans and the related net interest income have been combined with Customers' financial condition and the results of operations as a single reportable segment.
Upon closing of the divestiture, Customers received cash consideration of $23.1 million upon closing of the divestiture and $3.7 million of additional cash consideration in May 2021. Upon closing of the divestiture, the holders of Customers Bancorp's common stock who held their shares as of the close of business on December 18, 2020 became entitled to receive an aggregate of 4,876,387 shares of BM Technologies' common stock. Customers distributed 0.15389 shares of BM Technologies common stock for each share of Customers Bancorp's common stock held as of the close of business on December 18, 2020 as special dividends. Certain team members of BMT also received 1,348,748 restricted shares of BM Technologies' common stock in the form of severance payments. The total stock consideration from the divestiture that were distributed to holders of Customers Bancorp's common stock and certain BMT team members represented 52% of the outstanding common stock of BM Technologies at the closing date of the divestiture.
The sale of BMT was accounted for as a sale of non-controlling interest and the merger between BMT and MFAC was accounted for as a reverse recapitalization as BMT was considered to be the accounting acquirer. Upon closing of the transaction, Customers had no remaining investment in BM Technologies.
BMT's historical financial results for periods prior to the divestiture are reflected in Customers Bancorp’s consolidated financial statements as discontinued operations. The assets and liabilities of BMT have been presented as "Assets of discontinued operations" and "Liabilities of discontinued operations" on the consolidated balance sheet at December 31, 2020. BMT's operating results and associated cash flows have been presented as "Discontinued operations" within the accompanying consolidated financial statements and prior period amounts have been reclassified to conform with the current period presentation.

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The following summarized financial information related to BMT has been segregated from continuing operations and reported as discontinued operations for the periods presented.
Three Months Ended
March 31,
(amounts in thousands)20212020
Discontinued operations:
Non-interest income$0 $16,072 
Non-interest expense20,354 22,794 
Loss from discontinued operations before income taxes(20,354)(6,722)
Income tax expense (benefit)17,682 (1,368)
Net loss from discontinued operations$(38,036)$(5,354)
The assets and liabilities of discontinued operations on the consolidated balance sheet as of December 31, 2020 were as follows:
Three Months Ended
March 31,
(amounts in thousands)20222021
Discontinued operations:
Non-interest income$— $— 
Non-interest expense— 20,354 
Loss from discontinued operations before income taxes— (20,354)
Income tax expense (benefit)— 17,682 
Net loss from discontinued operations$— $(38,036)
(amounts in thousands)December 31,
2020
Carrying amounts of assets included as part of discontinued operations:
Cash and cash equivalents$2,989 
Premises and equipment, net401 
Goodwill and other intangibles10,329 
Other assets48,336 
Total assets of discontinued operations$62,055 
Carrying amounts of liabilities included as part of discontinued operations:
Borrowings from Customers Bank$
21,000 
Accrued interest payable and other liabilities18,704 
Total liabilities of discontinued operations$
39,704 
In connection with the divestiture, Customers has also 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. Customers incurred expenses of $17.8 million and $13.7 million, respectively, to BM Technologies under the deposit servicing agreement, included within the technology, communication and bank operations expense in the income from continuing operations during the three months ended March 31, 2022 and 2021.

 Customers held $2.2 billion and $1.8 billion of deposits serviced by BM Technologies as of March 31, 2022 and December 31, 2021, respectively. The loan agreement with BM Technologies was terminated early in November 2021. The transition services agreement with BM Technologies, as amended, expired on March 31, 2022.
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NOTE 4 — EARNINGS (LOSS) PER SHARE
The following are the components and results of Customers' earnings (loss) per common share calculations for the periods presented.
 Three Months Ended
March 31,
(amounts in thousands, except share and per share data)20212020
Net income from continuing operations available to common shareholders$71,240 $4,839 
Net loss from discontinued operations(38,036)(5,354)
Net income available to common shareholders$33,204 $(515)
Weighted-average number of common shares outstanding – basic31,883,946 31,391,151 
Share-based compensation plans957,765 0 
Weighted-average number of common shares – diluted32,841,711 31,391,151 
Basic earnings (loss) per common share from continuing operations$2.23 $0.15 
Basic earnings (loss) per common share from discontinued operations(1.19)(0.17)
Basic earnings (loss) per common share1.04 (0.02)
Diluted earnings (loss) per common share from continuing operations$2.17 $0.15 
Diluted earnings (loss) per common share from discontinued operations(1.16)(0.17)
Diluted earnings (loss) per common share1.01 (0.02)

 Three Months Ended
March 31,
(amounts in thousands, except share and per share data)20222021
Net income from continuing operations available to common shareholders$74,896 $71,240 
Net loss from discontinued operations— (38,036)
Net income available to common shareholders$74,896 $33,204 
Weighted-average number of common shares outstanding – basic32,957,033 31,883,946 
Share-based compensation plans1,370,032 957,765 
Weighted-average number of common shares – diluted34,327,065 32,841,711 
Basic earnings (loss) per common share from continuing operations$2.27 $2.23 
Basic earnings (loss) per common share from discontinued operations— (1.19)
Basic earnings (loss) per common share2.27 1.04 
Diluted earnings (loss) per common share from continuing operations$2.18 $2.17 
Diluted earnings (loss) per common share from discontinued operations— (1.16)
Diluted earnings (loss) per common share2.18 1.01 
The following are securities that could potentially dilute basic earnings per common share in future periods that were not included in the computation of diluted earnings per common share because either the performance conditions for certain of the share-based compensation awards have not been met or to do so would have been anti-dilutive for the periods presented.
 Three Months Ended
March 31,
 20212020
Share-based compensation awards277,725 6,718,131 
 Three Months Ended
March 31,
 20222021
Anti-dilutive securities:
Share-based compensation awards— 277,725 

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NOTE 5 — CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT
The following tables present the changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 20212022 and 2020.2021. Amounts in parentheses indicate reductions to AOCI.
 Three Months Ended March 31, 2022
(amounts in thousands)
Unrealized Gains (Losses) on Available for Sale Securities (1)
Unrealized Gains (Losses) on Cash Flow Hedges (2)
Total
Balance - December 31, 2021$(4,980)$— $(4,980)
Unrealized gains (losses) arising during period, before tax(78,858)— (78,858)
Income tax effect20,503 — 20,503 
Other comprehensive income (loss) before reclassifications(58,355)— (58,355)
Reclassification adjustments for (gains) losses included in net income, before tax1,063 — 1,063 
Income tax effect(276)— (276)
Amounts reclassified from accumulated other comprehensive income (loss) to net income787 — 787 
Net current-period other comprehensive income (loss)(57,568)— (57,568)
Balance - March 31, 2022$(62,548)$— $(62,548)
Three Months Ended March 31, 2021
(amounts in thousands)
Unrealized Gains (Losses) on Available for Sale Securities (1)
Unrealized Gains (Losses) on Cash Flow Hedges (2)
Total
Balance - December 31, 2020$23,312 $(29,076)$(5,764)
Unrealized gains (losses) arising during period, before tax400 12,315 12,715 
Income tax effect(104)(3,202)(3,306)
Other comprehensive income (loss) before reclassifications296 9,113 9,409 
Reclassification adjustments for (gains) losses included in net income, before tax(23,566)25,926 2,360 
Income tax effect6,127 (6,741)(614)
Amounts reclassified from accumulated other comprehensive income (loss) to net income(17,439)19,185 1,746 
Net current-period other comprehensive income (loss)(17,143)28,298 11,155 
Balance - March 31, 2021$6,169 $(778)$5,391 

(1)Reclassification amounts for AFS debt securities are reported as gain (loss) on sale of investment securities on the consolidated statements of income.
15
Table(2)Reclassification amounts for cash flow hedges are reported as interest expense for the applicable hedged items or loss on cash flow hedge derivative terminations on the consolidated statements of Contentsincome.

Three Months Ended March 31, 2020
(amounts in thousands)
Unrealized Gains (Losses) on Available for Sale Securities (1)
Unrealized Gains (Losses) on Cash Flow Hedges (2)
Total
Balance - December 31, 2019$14,287 $(15,537)$(1,250)
Unrealized gains (losses) arising during period, before tax(9,098)(27,697)(36,795)
Income tax effect2,366 7,351 9,717 
Other comprehensive income (loss) before reclassifications(6,732)(20,346)(27,078)
Reclassification adjustments for losses (gains) included in net income, before tax(3,974)1,478 (2,496)
Income tax effect1,033 (384)649 
Amounts reclassified from accumulated other comprehensive income (loss) to net income(2,941)1,094 (1,847)
Net current-period other comprehensive income (loss)(9,673)(19,252)(28,925)
Balance - March 31, 2020$4,614 $(34,789)$(30,175)

16
(1)Reclassification amounts for AFS debt securities are reported as gain or loss on saleTable of investment securities on the consolidated statements of income.Contents
(2)Reclassification amounts for cash flow hedges are reported as interest expense for the applicable hedged items or loss on cash flow hedge derivative terminations on the consolidated statements of income.
NOTE 6 — INVESTMENT SECURITIES
The amortized cost and approximate fair value of investment securities as of March 31, 20212022 and December 31, 20202021 are summarized in the tables below:as follows:
 
March 31, 2022 (1)
(amounts in thousands)Amortized CostAllowance for Credit LossesGross Unrealized GainsGross Unrealized LossesFair Value
Available for sale debt securities:
Asset-backed securities$351,847 $(728)$87 $(7,587)$343,619 
Agency-guaranteed residential mortgage-backed securities9,242 — — (973)8,269 
Agency-guaranteed commercial mortgage-backed securities2,140 — — (95)2,045 
Agency-guaranteed residential collateralized mortgage obligations618,998 — 833 (16,428)603,403 
Agency-guaranteed commercial collateralized mortgage obligations172,410 — — (9,811)162,599 
Collateralized loan obligations1,010,938 — — (6,576)1,004,362 
Commercial mortgage-backed securities148,993 — — (1,368)147,625 
Corporate notes (2)
607,230 — 1,376 (14,856)593,750 
Private label collateralized mortgage obligations1,302,400 — — (31,993)1,270,407 
State and political subdivision debt securities (3)
8,531 — — (581)7,950 
Available for sale debt securities$4,232,729 $(728)$2,296 $(90,268)4,144,029 
Equity securities (4)
25,824 
Total investment securities, at fair value$4,169,853 
 
March 31, 2021 (1)
(amounts in thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available for sale debt securities:
Asset-backed securities$381,525 $5,717 $(249)$386,993 
U.S. government agencies securities20,000 53 0 20,053 
Agency-guaranteed mortgage-backed securities37,933 9 (308)37,634 
Agency-guaranteed collateralized mortgage obligations211,226 365 (487)211,104 
Collateralized loan obligations162,998 139 (43)163,094 
Commercial mortgage-backed securities13,059 0 0 13,059 
Corporate notes (2)
255,126 3,422 (624)257,924 
Private label collateralized mortgage obligations329,367 1,277 (1,955)328,689 
State and political subdivision debt securities (3)
18,481 46 0 18,527 
Available for sale debt securities$1,429,715 $11,028 $(3,666)1,437,077 
Equity securities (4)
4,827 
Total investment securities, at fair value$1,441,904 
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December 31, 2020 (1)
December 31, 2021 (1)
(amounts in thousands)(amounts in thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value(amounts in thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Available for sale debt securities:Available for sale debt securities:Available for sale debt securities:
Asset-backed securitiesAsset-backed securities$372,640 $4,515 $(10)$377,145 Asset-backed securities$297,291 $253 $(119)$297,425 
U.S. government agencies securities20,000 34 0 20,034 
Agency-guaranteed mortgage-backed securities61,178 1,913 0 63,091 
Agency-guaranteed collateralized mortgage obligations160,950 916 (99)161,767 
Agency-guaranteed residential mortgage-backed securitiesAgency-guaranteed residential mortgage-backed securities9,865 — (312)9,553 
Agency-guaranteed commercial mortgage-backed securitiesAgency-guaranteed commercial mortgage-backed securities2,162 — (10)2,152 
Agency-guaranteed residential collateralized mortgage obligationsAgency-guaranteed residential collateralized mortgage obligations199,091 154 (2,315)196,930 
Agency-guaranteed commercial collateralized mortgage obligationsAgency-guaranteed commercial collateralized mortgage obligations242,668 53 (3,877)238,844 
Collateralized loan obligationsCollateralized loan obligations32,367 0 0 32,367 Collateralized loan obligations1,067,770 247 (1,215)1,066,802 
Commercial mortgage-backed securitiesCommercial mortgage-backed securities149,054 53 (180)148,927 
Corporate notes (2)
Corporate notes (2)
372,764 24,144 (164)396,744 
Corporate notes (2)
575,273 6,334 (1,561)580,046 
Private label collateralized mortgage obligationsPrivate label collateralized mortgage obligations136,943 423 (374)136,992 Private label collateralized mortgage obligations1,248,142 333 (6,010)1,242,465 
State and political subdivision debt securities (3)
State and political subdivision debt securities (3)
17,346 945 0 18,291 
State and political subdivision debt securities (3)
8,535 — (104)8,431 
Available for sale debt securitiesAvailable for sale debt securities$1,174,188 $32,890 $(647)1,206,431 Available for sale debt securities$3,799,851 $7,427 $(15,703)3,791,575 
Equity securities (4)
Equity securities (4)
3,854 
Equity securities (4)
25,575 
Total investment securities, at fair valueTotal investment securities, at fair value$1,210,285 Total investment securities, at fair value$3,817,150 
(1)Accrued interest on AFS debt securities totaled $4.3$14.3 million and $4.2$11.0 million at March 31, 20212022 and December 31, 2020,2021, respectively, and is included in accrued interest receivable on the consolidated balance sheet.
(2)Includes corporate securities issued by domestic bank holding companies.
(3)Includes both taxable and non-taxable municipal securities.
(4)Includes perpetual preferred stock issued by domestic banks and domestic bank holding companies and equity securities issued by fintech companies, without a
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readily determinable fair value, and CRA-qualified mutual fund shares at March 31, 2022 and December 31, 2021. No impairments or measurement adjustments have been recorded on the equity securities without a readily determinable fair value since acquisition.

In June 2021, Customers sold all of the outstanding shares in CB Green Ventures Pte Ltd. and CUBI India Ventures Pte Ltd., which held the equity securities issued by a foreign entity.

entity, for $3.8 million, and recognized $2.8 million in loss on sale of foreign subsidiaries within non-interest income on the consolidated statement of income. During the three months ended March 31, 2021, and 2020, Customers recognized unrealized gains of $1.0 million and unrealized losses of $1.4 million, respectively, on its equity securities. These unrealized gains and losses are reported as unrealized gain (loss) on investment securities within non-interest income on the consolidated statements of income.
Customers' transactions with unconsolidated VIEs include sales of consumer installment loans and investments in the securities issued by the VIEs. Customers is not the primary beneficiary of the VIEs because Customers has no right to make decisions that will most significantly affect the economic performance of the VIEs. Customers' continuing involvement with the unconsolidated VIEs is not significant. Customers' continuing involvement is not considered to be significant where Customers only invests in securities issued by the VIE and was not involved in the design of the VIE or where Customers has transferred financial assets to the VIE for only cash consideration. Customers' investments in the securities issued by the VIEs are classified as AFS debt securities on the consolidated balance sheets, and represent Customers' maximum exposure to loss.
Proceeds from the sale of AFS securities were $156.0 million and $353.9 million for the three months ended March 31, 2021. Proceeds2022 and 2021, respectively. Gross realized gains and realized losses from the sale of AFS debt securities duringwere $2.0 million and $1.0 million for the three months ended March 31, 2020 were received in April 2020. Realized2022, respectively. Gross realized gains from the sale of AFS debt securities were $23.6 million and $4.0 million for the three months ended March 31, 2021 and 2020, respectively.2021. These gains (losses) were determined using the specific identification method and were reported as gain (loss) on sale of investment securities within non-interest income on the consolidated statements of income.

The following table showspresents debt securities by stated maturity. Debt securities backed by mortgages and other assets have expected maturities that differ from contractual maturities because borrowers have the right to call or prepay and, therefore, these debt securities are classified separately with no specific maturity date:
 March 31, 2021
(amounts in thousands)Amortized
Cost		Fair
Value
Due in one year or less$0 $0 
Due after one year through five years140,681 141,641 
Due after five years through ten years142,991 144,893 
Due after ten years9,935 9,970 
Asset-backed securities381,525 386,993 
Collateralized loan obligations162,998 163,094 
Commercial mortgage-backed securities13,059 13,059 
Agency-guaranteed mortgage-backed securities37,933 37,634 
Private label collateralized mortgage obligations329,367 328,689 
Agency-guaranteed collateralized mortgage obligations211,226 211,104 
Total debt securities$1,429,715 $1,437,077 

 March 31, 2022
(amounts in thousands)Amortized
Cost		Fair
Value
Due in one year or less$4,992 $4,999 
Due after one year through five years419,539 409,141 
Due after five years through ten years191,230 187,560 
Asset-backed securities351,847 343,619 
Collateralized loan obligations1,010,938 1,004,362 
Commercial mortgage-backed securities148,993 147,625 
Agency-guaranteed residential mortgage-backed securities9,242 8,269 
Agency-guaranteed commercial mortgage-backed securities2,140 2,045 
Agency-guaranteed residential collateralized mortgage obligations618,998 603,403 
Agency-guaranteed commercial collateralized mortgage obligations172,410 162,599 
Private label collateralized mortgage obligations1,302,400 1,270,407 
Total debt securities$4,232,729 $4,144,029 
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Gross unrealized losses and fair value of Customers' AFS debt securities for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2022 and December 31, 2021 were as follows:
 March 31, 2021
 Less Than 12 Months12 Months or MoreTotal
(amounts in thousands)Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Available for sale debt securities:
Asset-backed securities$90,064 $(249)$0 $0 $90,064 $(249)
Agency-guaranteed mortgage-backed securities10,377 (308)0 0 10,377 (308)
Agency-guaranteed collateralized mortgage obligations55,825 (487)0 0 55,825 (487)
Collateralized loan obligations55,703 (43)0 0 55,703 (43)
Corporate notes48,905 (624)0 0 48,905 (624)
Private label collateralized mortgage obligations108,417 (1,955)0 0 108,417 (1,955)
Total$369,291 $(3,666)$0 $0 $369,291 $(3,666)
 March 31, 2022
 Less Than 12 Months12 Months or MoreTotal
(amounts in thousands)Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Available for sale debt securities:
Asset-backed securities$199,725 $(3,832)$— $— $199,725 $(3,832)
Agency-guaranteed residential mortgage-backed securities— — 8,269 (973)8,269 (973)
Agency-guaranteed commercial mortgage-backed securities2,045 (95)— — 2,045 (95)
Agency-guaranteed residential collateralized mortgage obligations434,524 (16,428)— — 434,524 (16,428)
Agency-guaranteed commercial collateralized mortgage obligations95,995 (3,764)66,605 (6,047)162,600 (9,811)
Collateralized loan obligations934,954 (6,457)25,510 (119)960,464 (6,576)
Commercial mortgage-backed securities129,365 (1,368)— — 129,365 (1,368)
Corporate notes393,997 (13,972)14,115 (884)408,112 (14,856)
Private label collateralized mortgage obligations856,760 (27,386)42,196 (4,607)898,956 (31,993)
State and political subdivision debt securities7,950 (581)— — 7,950 (581)
Total$3,055,315 $(73,883)$156,695 $(12,630)$3,212,010 $(86,513)

 December 31, 2021
 Less Than 12 Months12 Months or MoreTotal
(amounts in thousands)Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Available for sale debt securities:
Asset-backed securities$54,753 $(119)$— $— $54,753 $(119)
Agency-guaranteed residential mortgage-backed securities9,554 (312)— — 9,554 (312)
Agency-guaranteed commercial mortgage-backed securities2,152 (10)— — 2,152 (10)
Agency-guaranteed residential collateralized mortgage obligations173,492 (2,315)— — 173,492 (2,315)
Agency-guaranteed commercial collateralized mortgage obligations118,334 (3,877)— — 118,334 (3,877)
Collateralized loan obligations715,250 (1,215)— — 715,250 (1,215)
Commercial mortgage-backed securities122,597 (180)— — 122,597 (180)
Corporate notes188,100 (1,561)— — 188,100 (1,561)
Private label collateralized mortgage obligations632,091 (5,874)6,818 (136)638,909 (6,010)
State and political subdivision debt securities8,430 (104)— — 8,430 (104)
Total$2,024,753 $(15,567)$6,818 $(136)$2,031,571 $(15,703)
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At March 31, 2021,2022, there were 30160 AFS debt securities with unrealized losses in the less-than-twelve-monthless-than-twelve-months category and 015 AFS debt securities with unrealized lossesloss in the twelve-month-or-moretwelve-months-or-more category. TheExcept for the 4 asset-backed securities where there was a deterioration in future estimated cash flows as further discussed below, the unrealized losses were principally due to changes in market interest rates that resulted in a negative impact on the respective securities' fair value. All amounts related to these securitiesvalue and are expected to be recovered when market prices recover or at maturity. Customers does not intend to sell any of the 30175 securities, and it is not more likely than not that Customers will be required to sell any of the 30175 securities before recovery of the amortized cost basis. At December 31, 2020,2021, there were 16117 AFS debt securities in an unrealized loss position.

Customers recorded an allowance for credit losses on 4 asset-backed securities where there was a deterioration in future estimated cash flows during the three months ended March 31, 2022. A discounted cash flow approach is used to determine the amount of the allowance. The cash flows expected to be collected, after considering expected prepayments, are discounted at the original effective interest rate. The amount of the allowance is limited to the difference between the amortized cost basis of the security and its estimated fair value. The following table presents the activity in the allowance for credit losses on AFS debt securities, by major security type:
Asset-backed securities
(amounts in thousands)Three Months Ended March 31, 2022
Balance at January 1,$— 
Credit losses on securities for which credit losses were not previously recorded728 
Balance at March 31,$728 
At March 31, 20212022 and December 31, 2020,2021, Customers Bank had pledged investment securities aggregating $17.6$16.9 million and $18.8$11.3 million in fair value, respectively, as collateral primarily for an unused line of credit with another financial institution. These counterparties do not have the ability to sell or repledge these securities.
At March 31, 20212022 and December 31, 2020,2021, no securities holding of any one issuer, other than the U.S. government and its agencies, amounted to greater than 10% of shareholders' equity.
NOTE 7 – LOANS HELD FOR SALE
The composition of loans held for sale as of March 31, 20212022 and December 31, 20202021 was as follows:
(amounts in thousands)March 31, 2021December 31, 2020
Commercial loans:
Multi-family loans, at lower of cost or fair value$19,251 $0 
Commercial and industrial loans, at lower of cost or fair value0 55,683 
Commercial real estate non-owner occupied loans, at lower of cost or fair value0 17,251 
Total commercial loans held for sale19,251 72,934 
Consumer loans:
Home equity conversion mortgages, at lower of cost or fair value643 643 
Residential mortgage loans, at fair value1,205 5,509 
Installment loans, at lower of cost or fair value25,007 0 
Total consumer loans held for sale26,855 6,152 
Loans held for sale$46,106 $79,086 

(amounts in thousands)March 31, 2022December 31, 2021
Consumer loans:
Home equity conversion mortgages, at lower of cost or fair value$507 $507 
Residential mortgage loans, at fair value2,496 15,747 
Total consumer loans held for sale3,003 16,254 
Loans held for sale$3,003 $16,254 
Total loans held for sale as of March 31, 20212022 and December 31, 20202021 included NPLs of $0.6 million and $18.5 million, respectively.$0.5 million.

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NOTE 8 — LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES
The following table presents loans and leases receivable as of March 31, 20212022 and December 31, 2020.2021.
(amounts in thousands)(amounts in thousands)March 31, 2021December 31, 2020(amounts in thousands)March 31, 2022December 31, 2021
Loans and leases receivable, mortgage warehouse, at fair valueLoans and leases receivable, mortgage warehouse, at fair value$3,407,622 $3,616,432 Loans and leases receivable, mortgage warehouse, at fair value$1,755,758 $2,284,325 
Loans receivable, PPPLoans receivable, PPP5,178,089 4,561,365 Loans receivable, PPP2,195,902 3,250,008 
Loans receivable:
Loans and leases receivable:Loans and leases receivable:
Commercial:Commercial:Commercial:
Multi-familyMulti-family1,640,278 1,761,301 Multi-family1,705,027 1,486,308 
Commercial and industrial (1)
Commercial and industrial (1)
2,220,652 2,289,441 
Commercial and industrial (1)
3,995,802 3,424,783 
Commercial real estate owner occupiedCommercial real estate owner occupied590,093 572,338 Commercial real estate owner occupied701,893 654,922 
Commercial real estate non-owner occupiedCommercial real estate non-owner occupied1,194,832 1,196,564 Commercial real estate non-owner occupied1,140,311 1,121,238 
ConstructionConstruction156,837 140,905 Construction161,024 198,981 
Total commercial loans and leases receivableTotal commercial loans and leases receivable5,802,692 5,960,549 Total commercial loans and leases receivable7,704,057 6,886,232 
Consumer:Consumer:Consumer:
Residential real estateResidential real estate293,805 317,170 Residential real estate466,423 334,730 
Manufactured housingManufactured housing59,977 62,243 Manufactured housing50,669 52,861 
InstallmentInstallment1,380,015 1,235,406 Installment1,897,706 1,744,475 
Total consumer loans receivableTotal consumer loans receivable1,733,797 1,614,819 Total consumer loans receivable2,414,798 2,132,066 
Loans and leases receivable (2)
7,536,489 7,575,368 
Loans and leases receivableLoans and leases receivable10,118,855 9,018,298 
Allowance for credit losses on loans and leasesAllowance for credit losses on loans and leases(128,736)(144,176)Allowance for credit losses on loans and leases(145,847)(137,804)
Total loans and leases receivable, net of allowance for credit losses on loans and leases$15,993,464 $15,608,989 
Total loans and leases receivable, net of allowance for credit losses on loans and leases (2)
Total loans and leases receivable, net of allowance for credit losses on loans and leases (2)
$13,924,668 $14,414,827 
(1)Includes direct finance equipment leases of $107.1$150.7 million and $108.0$146.5 million at March 31, 20212022 and December 31, 2020,2021, respectively.
(2)Includes deferred (fees) costs and unamortized (discounts) premiums, net of $(133.2)$(22.8) million and $(54.6)$(52.0) million at March 31, 20212022 and December 31, 2020,2021, respectively.
Customers' total loans and leases receivable portfolio includes loans receivable which are reported at fair value based on an election made to account for these loans at fair value and loans and leases receivable which are predominately reported at their outstanding unpaid principal balance, net of charge-offs and deferred costs and fees and unamortized premiums and discounts and are evaluated for impairment. The total amount of accrued interest recorded for total loans was $79.3$80.7 million and $76.6$81.6 million at March 31, 20212022 and December 31, 2020,2021, respectively, and is presented in accrued interest receivable in the consolidated balance sheet. At March 31, 2022 and December 31, 2021, there were $38.8$31.8 million and $38.9 million of individually evaluated loans that were collateral-dependent.collateral-dependent, respectively. Substantially all individually evaluated loans are collateral-dependent and consisted primarily of commercial and industrial, commercial real estate, and residential real estate loans. Collateral-dependent commercial and industrial loans were secured by accounts receivable, inventory and equipment; collateral-dependent commercial real estate loans were secured by commercial real estate assets; and residential real estate loans were secured by residential real estate assets.
Loans receivable, PPP
On March 27, 2020, the CARES Act was signed into law and created funding for a new product called the PPP. The PPP is administered by the SBA and is intended to assist organizations with payroll related expenses. Customers had $5.2 billion of PPP loans outstanding as of March 31, 2021, which are fully guaranteed by the SBA and earn a fixed interest rate of 1.00%. Customers recognized interest income, including origination fees, of $38.8 million for the three months ended March 31, 2021. There was 0 interest income recognized, including origination fees, for the three months ended March 31, 2020.
PPP loans include an embedded credit enhancement from the SBA, which guarantees 100% of the principal and interest owed by the borrower. As a result, the PPP loans do not have an ACL and are therefore excluded from ACL-related disclosures.
Loans receivable, mortgage warehouse, at fair value
Mortgage warehouse loans consist of commercial loans to mortgage companies. These mortgage warehouse lending transactions are subject to master repurchase agreements. As a result of the contractual provisions, for accounting purposes, control of the underlying mortgage loan has not transferred and the rewards and risks of the mortgage loans are not assumed by Customers. The mortgage
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warehouse loans are designated as loans held for investment and reported at fair value based on an election made to account for the loans at fair value. Pursuant to the agreements, Customers funds the pipelines for these mortgage lenders by sending payments directly to the closing agents for funded mortgage loans and receives proceeds directly from third party investors when the underlying mortgage loans are sold into the secondary market. The fair value of the mortgage warehouse loans is estimated as the amount of cash initially advanced to fund the mortgage, plus accrued interest and fees, as specified in the respective agreements. The interest rates on these loans are variable, and the lending transactions are short-term, with an average life under 30 days from purchase to sale. The primary goal of these lending transactions is to provide liquidity to mortgage companies.
At March 31, 20212022 and December 31, 2020,2021, all of Customers' commercial mortgage warehouse loans were current in terms of payment. As these loans are reported at their fair value, they do not have an ACL and are therefore excluded from ACL-related disclosures.
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Loans receivable, PPP
Customers had $2.2 billion and $3.3 billion of PPP loans outstanding as of March 31, 2022 and December 31, 2021, respectively, which are fully guaranteed by the SBA and earn a fixed interest rate of 1.00%. Customers recognized interest income, including origination fees, of $36.9 million and $38.8 million for the three months ended March 31, 2022 and 2021, respectively.
PPP loans include an embedded credit enhancement from the SBA, which guarantees 100% of the principal and interest owed by the borrower provided that the SBA's eligibility criteria are met. As a result, the eligible PPP loans do not have an ACL and are therefore excluded from ACL-related disclosures.
Loans and leases receivable
The following tables summarize loans and leases receivable by loan and lease type and performance status as of March 31, 20212022 and December 31, 2020:2021:
March 31, 2021 March 31, 2022
(amounts in thousands)(amounts in thousands)
30-59 Days past due (1)
60-89 Days past due (1)
90 Days or more past due (1)
Total past due (1)
Loans and leases not past due (2)
Total loans and leases (3)
(amounts in thousands)
30-59 Days past due (1)
60-89 Days past due (1)
90 Days or more past due (1)
Total past due (1)
Loans and leases not past due (2)
Total loans and leases (3)
Multi-familyMulti-family$8,480 $1,245 $16,703 $26,428 $1,613,850 $1,640,278 Multi-family$10,690 $— $16,181 $26,871 $1,678,156 $1,705,027 
Commercial and industrialCommercial and industrial2,086 4,732 2,705 9,523 2,211,129 2,220,652 Commercial and industrial2,591 92 5,432 8,115 3,987,687 3,995,802 
Commercial real estate owner occupiedCommercial real estate owner occupied1,920 0 2,219 4,139 585,954 590,093 Commercial real estate owner occupied2,935 — 1,046 3,981 697,912 701,893 
Commercial real estate non-owner occupiedCommercial real estate non-owner occupied2,169 0 2,356 4,525 1,190,307 1,194,832 Commercial real estate non-owner occupied— — 1,302 1,302 1,139,009 1,140,311 
ConstructionConstruction0 0 0 0 156,837 156,837 Construction— — — — 161,024 161,024 
Residential real estateResidential real estate2,514 235 1,324 4,073 289,732 293,805 Residential real estate5,151 446 4,808 10,405 456,018 466,423 
Manufactured housingManufactured housing1,403 871 1,917 4,191 55,786 59,977 Manufactured housing975 280 4,488 5,743 44,926 50,669 
InstallmentInstallment5,492 2,125 78 7,695 1,372,320 1,380,015 Installment7,974 4,868 4,865 17,707 1,879,999 1,897,706 
TotalTotal$24,064 $9,208 $27,302 $60,574 $7,475,915 $7,536,489 Total$30,316 $5,686 $38,122 $74,124 $10,044,731 $10,118,855 

December 31, 2020 December 31, 2021
(amounts in thousands)(amounts in thousands)
30-59 Days past due (1)
60-89 Days past due (1)
90 Days or more past due (1)
Total past due (1)
Loans and leases not past due (2)
Total loans and leases (3)
(amounts in thousands)
30-59 Days past due (1)
60-89 Days past due (1)
90 Days or more past due (1)
Total past due (1)
Loans and leases not past due (2)
Total loans and leases (3)
Multi-familyMulti-family$4,193 $5,224 $14,907 $24,324 $1,736,977 $1,761,301 Multi-family$1,682 $2,707 $18,235 $22,624 $1,463,684 $1,486,308 
Commercial and industrialCommercial and industrial2,257 1,274 3,079 6,610 2,282,831 2,289,441 Commercial and industrial2,093 95 5,929 8,117 3,416,666 3,424,783 
Commercial real estate owner occupiedCommercial real estate owner occupied864 1,324 2,370 4,558 567,780 572,338 Commercial real estate owner occupied287 — 1,304 1,591 653,331 654,922 
Commercial real estate non-owner occupiedCommercial real estate non-owner occupied0 60 2,356 2,416 1,194,148 1,196,564 Commercial real estate non-owner occupied— — 2,815 2,815 1,118,423 1,121,238 
ConstructionConstruction0 0 0 0 140,905 140,905 Construction— — — — 198,981 198,981 
Residential real estateResidential real estate6,640 1,827 1,856 10,323 306,847 317,170 Residential real estate4,655 789 4,390 9,834 324,896 334,730 
Manufactured housingManufactured housing1,518 673 1,951 4,142 58,101 62,243 Manufactured housing2,308 768 4,949 8,025 44,836 52,861 
InstallmentInstallment6,161 3,430 81 9,672 1,225,734 1,235,406 Installment7,349 4,295 3,783 15,427 1,729,048 1,744,475 
TotalTotal$21,633 $13,812 $26,600 $62,045 $7,513,323 $7,575,368 Total$18,374 $8,654 $41,405 $68,433 $8,949,865 $9,018,298 
(1)Includes past due loans and leases that are accruing interest because collection is considered probable.
(2)Loans and leases where next payment due is less than 30 days from the report date. The March 31, 2021 and December 31, 2020 tables exclude PPP loans of $5.2$2.2 billion, of which $37.8 million were 30-59 days past due and $4.6 billion, respectively, which are all current$88.3 million were 60 days or more past due as of March 31, 20212022, and PPP loans of $3.3 billion, of which $6.3 million were 30-59 days past due and $21.8 million were 60 days or more past due as of December 31, 2020.2021. Claims for guarantee payments are submitted to the SBA for eligible PPP loans more than 60 days past due.
(3)Includes PCD loans of $12.5$9.4 million and $13.4$9.9 million at March 31, 20212022 and December 31, 2020,2021, respectively.




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Nonaccrual Loans and Leases
The following table presents the amortized cost of loans and leases held for investment on nonaccrual status.
 
March 31, 2021 (1)
December 31, 2020 (1)
(amounts in thousands)Nonaccrual loans with no related allowanceNonaccrual loans with related allowanceTotal nonaccrual loansNonaccrual loans with no related allowanceNonaccrual loans with related allowanceTotal nonaccrual loans
Multi-family$20,530 $0 $20,530 $18,800 $2,928 $21,728 
Commercial and industrial7,282 262 7,544 6,384 2,069 8,453 
Commercial real estate owner occupied3,242 0 3,242 3,411 0 3,411 
Commercial real estate non-owner occupied2,259 97 2,356 2,356 0 2,356 
Residential real estate9,353 0 9,353 9,911 0 9,911 
Manufactured housing0 2,871 2,871 0 2,969 2,969 
Installment0 2,185 2,185 0 3,211 3,211 
Total$42,666 $5,415 $48,081 $40,862 $11,177 $52,039 
 
March 31, 2022 (1)
December 31, 2021 (1)
(amounts in thousands)Nonaccrual loans with no related allowanceNonaccrual loans with related allowanceTotal nonaccrual loansNonaccrual loans with no related allowanceNonaccrual loans with related allowanceTotal nonaccrual loans
Multi-family$17,869 $— $17,869 $22,654 $— $22,654 
Commercial and industrial5,490 — 5,490 5,837 259 6,096 
Commercial real estate owner occupied2,191 — 2,191 2,475 — 2,475 
Commercial real estate non-owner occupied1,302 — 1,302 2,815 — 2,815 
Residential real estate8,124 — 8,124 7,727 — 7,727 
Manufactured housing— 3,430 3,430 — 3,563 3,563 
Installment— 4,865 4,865 — 3,783 3,783 
Total$34,976 $8,295 $43,271 $41,508 $7,605 $49,113 
(1) Presented at amortized cost basis.
Interest income recognized on nonaccrual loans was insignificant for the three months ended March 31, 20212022 and 2020.2021. Accrued interest of $16 thousand and $1.2 million was reversed when the loans went to nonaccrual status was insignificant during the three months ended March 31, 20212022 and 2020,2021, respectively.
Allowance for credit losses on loans and leases
The changes in the ACL on loans and leases for the three months ended March 31, 2022 and 2021, and 2020the loans and leases and ACL by loan and lease type are presented in the tables below.
Three Months Ended March 31, 2021Multi-familyCommercial and industrialCommercial real estate owner occupiedCommercial real estate non-owner occupiedConstructionResidential real estateManufactured housingInstallmentTotal
(amounts in thousands)(amounts in thousands)(amounts in thousands)Multi-familyCommercial and industrialCommercial real estate owner occupiedCommercial real estate non-owner occupiedConstructionResidential real estateManufactured housingInstallmentTotal
Ending Balance,
December 31, 2020		$12,620 $12,239 $9,512 $19,452 $5,871 $3,977 $5,190 $75,315 $144,176 
Three Months Ended March 31, 2022Three Months Ended March 31, 2022
Ending balance, December 31, 2021Ending balance, December 31, 2021$4,477 $12,702 $3,213 $6,210 $692 $2,383 $4,278 $103,849 $137,804 
Charge-offsCharge-offs(1,132)(635)(142)0 0 (50)0 (12,687)(14,646)Charge-offs— (301)— — — (4)— (8,865)(9,170)
RecoveriesRecoveries0 260 8 10 5 10 0 1,832 2,125 Recoveries337 360 7 8 113 6 — 1,113 1,944 
Provision (benefit) for credit losses(3,462)(4,361)(3,443)(7,841)(1,773)(728)(390)19,079 (2,919)
Provision (benefit) for credit losses on loans and leasesProvision (benefit) for credit losses on loans and leases2,623 (1,996)621 (263)134 2,300 64 11,786 15,269 
Ending balance, March 31, 2022Ending balance, March 31, 2022$7,437 $10,765 $3,841 $5,955 $939 $4,685 $4,342 $107,883 $145,847 
Three Months Ended March 31, 2021Three Months Ended March 31, 2021
Ending balance, at December 31, 2020Ending balance, at December 31, 2020$12,620 $12,239 $9,512 $19,452 $5,871 $3,977 $5,190 $75,315 $144,176 
Charge-offsCharge-offs(1,132)(635)(142)— — (50)— (12,687)(14,646)
RecoveriesRecoveries— 260 8 10 5 10 — 1,832 2,125 
Provision (benefit) for credit losses on loans and leasesProvision (benefit) for credit losses on loans and leases(3,462)(4,361)(3,443)(7,841)(1,773)(728)(390)19,079 (2,919)
Ending Balance,
March 31, 2021		Ending Balance,
March 31, 2021		$8,026 $7,503 $5,935 $11,621 $4,103 $3,209 $4,800 $83,539 $128,736 Ending Balance, March 31, 2021$8,026 $7,503 $5,935 $11,621 $4,103 $3,209 $4,800 $83,539 $128,736 

Three Months Ended March 31, 2020Multi-familyCommercial and industrialCommercial real estate owner occupiedCommercial real estate non-owner occupiedConstructionResidential real estateManufactured housingInstallmentTotal
(amounts in thousands)
Ending Balance,
December 31, 2019		$6,157 $15,556 $2,235 $6,243 $1,262 $3,218 $1,060 $20,648 $56,379 
Cumulative effect of change in accounting principle2,171 759 5,773 7,918 (98)1,518 3,802 57,986 79,829 
Charge-offs0 (97)0 (12,797)0 0 0 (6,246)(19,140)
Recoveries0 54 3 0 3 29 0 340 429 
Provision (benefit) for credit losses422 2,534 516 17,166 767 (585)125 10,841 31,786 
Ending Balance,
March 31, 2020		$8,750 $18,806 $8,527 $18,530 $1,934 $4,180 $4,987 $83,569 $149,283 

At March 31, 2021,2022, the ACL on loans and leases was $128.7$145.8 million, a decreasean increase of $15.5$8.0 million from the December 31, 20202021 balance of $144.2$137.8 million. The decrease resulted primarily from a decrease in provision for credit losses from continuing improvement in macroeconomic forecasts. The increase in ACL for the installment portfolio is mainly duethree months ended March 31, 2022 was primarily attributable to the loan growth in the loan portfolio growth.
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Troubled Debt Restructurings
At March 31, 20212022 and December 31, 2020,2021, there were $16.0$16.6 million and $16.1$16.5 million, respectively, in loans reported as TDRs. TDRs are reported as impaired loans in the quarter of their restructuring and are evaluated to determine whether they should be placed on non-accrualnon-
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accrual status. In subsequent quarters, a TDR may be returned to accrual status if it satisfies a minimum performance requirement of six months, however, it will remain classified as impaired. Generally, the Bank requires sustained performance for nine months before returning a TDR to accrual status. Customers had 0no lease receivables that had been restructured as a TDR as of March 31, 20212022 and December 31, 2020,2021, respectively.
TheSection 4013 of the CARES Act, as amended by the CAA, gave entities temporary relief from the accounting and disclosure requirements for TDRs. In addition, on April 7, 2020, certain regulatory banking agencies recently issued guidance stating certainan interagency statement that offered practical expedients for evaluating whether loan modifications in response to borrowers experiencing financial distress as a result of the economic impacts created by COVID-19 may not be required to be treated as TDRs under U.S. GAAP.pandemic were TDRs. For COVID-19 related loan modifications which met the loan modification criteria under either the CARES Act or the criteria specified by the regulatory agencies, Customers elected to suspend TDR accounting for such loan modifications. AtThere were no commercial deferments related to COVID-19 at March 31, 2021, commercial2022 and consumerDecember 31, 2021. Consumer deferments related to COVID-19 were $176.1$3.3 million and $13.0$6.1 million at March 31, 2022 and December 31, 2021, respectively.
The following table presents loans modified in a TDR by type of concession for the three months ended March 31, 20212022 and 2020.2021. There were 0no modifications that involved forgiveness of debt for the three months ended March 31, 20212022 and 2020.2021.
Three Months Ended March 31,Three Months Ended March 31,
20212020 20222021
(dollars in thousands)(dollars in thousands)Number of loansRecorded investmentNumber of loansRecorded investment(dollars in thousands)Number of loansRecorded investmentNumber of loansRecorded investment
Extensions of maturity0 $0 4 $245 
Interest-rate reductionsInterest-rate reductions8 184 12 530 Interest-rate reductions10 $346 8 $184 
Other (1)
Other (1)
20 541 0 0 
Other (1)
32 451 20 541 
TotalTotal28 $725 16 $775 Total42 $797 28 $725 
(1) Other includes covenant modifications, forbearance, loans discharged under Chapter 7 bankruptcy, or other concessions.
As of March 31, 20212022 and December 31, 2020,2021, there were 0no commitments to lend additional funds to debtors whose loans have been modified in TDRs.
The following table presents, by loan type, the number of loans modified in TDRs and the related recorded investment, for which there was a payment default within twelve months following the modification:
March 31, 2021March 31, 2020March 31, 2022March 31, 2021
(dollars in thousands)(dollars in thousands)Number of loansRecorded investmentNumber of loansRecorded investment(dollars in thousands)Number of loansRecorded investmentNumber of loansRecorded investment
Manufactured housingManufactured housing3 $48 0 $0 Manufactured housing1 $49 3 $48 
Commercial real estate owner occupied0 0 1 8 
Residential real estateResidential real estate1 56 5 684 Residential real estate— — 1 56 
InstallmentInstallment16 250 0 0 Installment23 276 16 250 
Total loansTotal loans20 $354 6 $692 Total loans24 $325 20 $354 
Loans modified in TDRs are evaluated for impairment. The nature and extent of impairment of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of ACL.
Purchased Credit-Deteriorated Loans
Customers adopted ASC 326 Financial Instruments - Credit Losses ("ASC 326") using the prospective transition approach for financial assets purchased with credit deterioration that were previously classified as PCI and accounted for under ASC 310-30. In accordance with the standard, Customers did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. As of March 31, 2021, the amortized cost basis of PCD assets amounted to $12.5 million.
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Credit Quality Indicators
The ACL represents management's estimate of expected losses in Customers' loans and leases receivable portfolio, excluding commercial mortgage warehouse loans reported at fair value pursuant to a fair value option election and PPP loans receivable. Multi-family, commercial and industrial, owner occupied commercial real estate, non-owner occupied commercial real estate, and construction loans are rated based on an internally assigned risk rating system which is assigned at the time of loan origination and reviewed on a periodic, or on an “as needed” basis. Residential real estate loans, manufactured housing and installment loans are evaluated based on the payment activity of the loan.
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To facilitate the monitoring of credit quality within the multi-family, commercial and industrial, owner occupied commercial real estate, non-owner occupied commercial real estate, and construction loan portfolios, and as an input in the ACL lifetime loss rate model for the commercial and industrial loan portfolio, the Bank utilizes the following categories of risk ratings: pass/satisfactory (includes risk rating 1 through 6), special mention, substandard, doubtful, and loss. The risk rating categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. Pass/satisfactoryPass ratings, which are assigned to those borrowers who do not have identified potential or well-defined weaknesses and for whom there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on a quarterly basis during the month preceding the end of the calendar quarter. While assigning risk ratings involves judgment, the risk-rating process allows management to identify riskier credits in a timely manner and allocate the appropriate resources to manage those loans and leases. The 20202021 Form 10-K describes Customers Bancorp’s risk rating grades.
Risk ratings are not established for certain consumer loans, including residential real estate, home equity, manufactured housing, and installment loans, mainly because these portfolios consist of a larger number of homogeneous loans with smaller balances. Instead, these portfolios are evaluated for risk mainly based upon aggregate payment history through the monitoring of delinquency levels and trends and are classified as performing and non-performing. The following tables present the credit ratings of loans and leases receivable as of March 31, 20212022 and December 31, 2020.

2021.
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Term Loans Amortized Cost Basis by Origination Year as of March 31, 2021
(amounts in thousands)20212020201920182017PriorRevolving loans amortized cost basisRevolving loans converted to termTotal
Multi-family loans:
Pass$90,497 $130,496 $22,678 $275,379 $418,365 $565,953 $0 $0 $1,503,368 
Special mention0 0 0 0 20,279 36,870 0 0 57,149 
Substandard0 0 0 0 50,078 29,683 0 0 79,761 
Doubtful0 0 0 0 000 0 0 
Total multi-family loans$90,497 $130,496 $22,678 $275,379 $488,722 $632,506 $0 $0 $1,640,278 
Commercial and industrial loans and leases:
Pass$274,698 $448,597 $335,492 $139,864 $109,093 $112,621 $692,981 $0 $2,113,346 
Special mention16,935 13,200 1,044 563 33 258 16,342 0 48,375 
Substandard0 10,856 6,619 18,049 7,148 7,752 8,507 0 58,931 
Doubtful0 0 0 0 0 00 0 0 
Total commercial and industrial loans and leases$291,633 $472,653 $343,155 $158,476 $116,274 $120,631 $717,830 $0 $2,220,652 
Commercial real estate owner occupied loans:
Pass$33,144 $82,661 $167,487 $71,146 $61,561 $133,469 $672 $0 $550,140 
Special mention0 0 4,286 0 11,010 292 0 0 15,588 
Substandard0 0 2,848 9,538 240 11,739 0 0 24,365 
Doubtful0 0 0 0 0 0 0 0 0 
Total commercial real estate owner occupied loans$33,144 $82,661 $174,621 $80,684 $72,811 $145,500 $672 $0 $590,093 
Commercial real estate non-owner occupied:
Pass$11,186 $120,080 $94,136 $95,355 $120,861 $423,438 $14,019 $0 $879,075 
Special mention0 61,994 11,285 996 99,671 53,340 0 0 227,286 
Substandard0 0 0 17,741 20,611 50,119 0 0 88,471 
Doubtful0 0 0 00 0 0 0 0 
Total commercial real estate non-owner occupied loans$11,186 $182,074 $105,421 $114,092 $241,143 $526,897 $14,019 $0 $1,194,832 
Construction:
Pass$971 $28,168 $110,973 $4,921 $0 $9,627 $667 $0 $155,327 
Special mention0 1,510 0 0 0 0 0 0 1,510 
Substandard0 0 0 0 0 0 0 0 0 
Doubtful0 0 0 0 0 0 0 0 0 
Total construction loans$971 $29,678 $110,973 $4,921 $0 $9,627 $667 $0 $156,837 
Total commercial loans and leases receivable$427,431 $897,562 $756,848 $633,552 $918,950 $1,435,161 $733,188 $0 $5,802,692 
Residential real estate loans:
Performing$2,573 $11,110 $14,660 $12,060 $7,379 $105,969 $131,018 $0 $284,769 
Non-performing0 0 98 906 780 4,785 2,467 0 9,036 
Total residential real estate loans$2,573 $11,110 $14,758 $12,966 $8,159 $110,754 $133,485 $0 $293,805 
Manufactured housing loans:
Performing$0 $0 $300 $443 $77 $54,394 $0 $0 $55,214 
Non-performing0 0 0 0 0 4,763 0 0 4,763 
Total manufactured housing loans$0 $0 $300 $443 $77 $59,157 $0 $0 $59,977 
Installment loans:
Performing$204,365 $476,856 $599,887 $91,009 $3,633 $1,249 $0 $0 $1,376,999 
Non-performing0 341 2,117 437 33 88 0 0 3,016 
Total installment loans$204,365 $477,197 $602,004 $91,446 $3,666 $1,337 $0 $0 $1,380,015 
Total consumer loans$206,938 $488,307 $617,062 $104,855 $11,902 $171,248 $133,485 $0 $1,733,797 
Loans and leases receivable$634,369 $1,385,869 $1,373,910 $738,407 $930,852 $1,606,409 $866,673 $0 $7,536,489 





Term Loans Amortized Cost Basis by Origination Year as of
March 31, 2022
(amounts in thousands)20222021202020192018PriorRevolving loans amortized cost basisRevolving loans converted to termTotal
Multi-family loans:
Pass$385,034 $400,699 $132,732 $22,884 $126,850 $520,645 $— $— $1,588,844 
Special mention— 1,523 — 05,033 49,200 — — 55,756 
Substandard— — — — — 60,427 — — 60,427 
Doubtful— — — — — — — — — 
Total multi-family loans$385,034 $402,222 $132,732 $22,884 $131,883 $630,272 $— $— $1,705,027 
Commercial and industrial loans and leases:
Pass$1,008,340 $627,255 $284,982 $224,881 $57,750 $136,853 $1,578,024 $— $3,918,085 
Special mention— — 57 156 — 36,223 2,524 — 38,960 
Substandard020,400 4,901 4,565 86 1,464 7,341 — 38,757 
Doubtful— — — — — — — — — 
Total commercial and industrial loans and leases$1,008,340 $647,655 $289,940 $229,602 $57,836 $174,540 $1,587,889 $�� $3,995,802 
Commercial real estate owner occupied loans:
Pass$60,055 $210,933 $59,025 $122,135 $60,968 $150,564 $672 $— $664,352 
Special mention— — — 3,010 — 2,302 — — 5,312 
Substandard— — — 3,495 9,635 19,099 — — 32,229 
Doubtful— — — — — — — — — 
Total commercial real estate owner occupied loans$60,055 $210,933 $59,025 $128,640 $70,603 $171,965 $672 $— $701,893 
Commercial real estate non-owner occupied:
Pass$73,544 $135,995 $147,873 $76,351 $65,061 $443,165 $— $— $941,989 
Special mention— — 21,572 — 953 6,069 — — 28,594 
Substandard— — — 29,184 38,409 102,135 — — 169,728 
Doubtful— — — — — — — — — 
Total commercial real estate non-owner occupied loans$73,544 $135,995 $169,445 $105,535 $104,423 $551,369 $— $— $1,140,311 
Construction:
Pass$11,779 $70,404 $13,894 $49,175 $4,791 $9,321 $1,660 $— $161,024 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Total construction loans$11,779 $70,404 $13,894 $49,175 $4,791 $9,321 $1,660 $— $161,024 
Total commercial loans and leases receivable$1,538,752 $1,467,209 $665,036 $535,836 $369,536 $1,537,467 $1,590,221 $— $7,704,057 
Residential real estate loans:
Performing$8,713 $178,623 $12,064 $31,045 $17,126 $127,537 $84,904 $— $460,012 
Non-performing— — — 329 1,138 4,009 935 — 6,411 
Total residential real estate loans$8,713 $178,623 $12,064 $31,374 $18,264 $131,546 $85,839 $— $466,423 
Manufactured housing loans:
Performing$— $— $— $248 $291 $46,315 $— $— $46,854 
Non-performing— — — — — 3,815 — — 3,815 
Total manufactured housing loans$— $— $— $248 $291 $50,130 $— $— $50,669 
Installment loans:
Performing$311,579 $883,638 $325,741 $265,764 $25,590 $2,082 $78,600 $— $1,892,994 
Non-performing— 1,834 1,065 1,534 83 115 81 — 4,712 
Total installment loans$311,579 $885,472 $326,806 $267,298 $25,673 $2,197 $78,681 $— $1,897,706 
Total consumer loans$320,292 $1,064,095 $338,870 $298,920 $44,228 $183,873 $164,520 $— $2,414,798 
Loans and leases receivable$1,859,044 $2,531,304 $1,003,906 $834,756 $413,764 $1,721,340 $1,754,741 $— $10,118,855 

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Term Loans Amortized Cost Basis by Origination Year as of December 31, 2020Term Loans Amortized Cost Basis by Origination Year as of December 31, 2021
(amounts in thousands)(amounts in thousands)20202019201820172016PriorRevolving loans amortized cost basisRevolving loans converted to termTotal(amounts in thousands)20212020201920182017PriorRevolving loans amortized cost basisRevolving loans converted to termTotal
Multi-family loans:Multi-family loans:Multi-family loans:
PassPass$150,835 $23,716 $299,319 $535,510 $227,296 $420,809 $0 $0 $1,657,485 Pass$403,075 $133,452 $23,068 $209,070 $282,663 $316,491 $— $— $1,367,819 
Special mentionSpecial mention0 0 0 20,901 10,394 26,708 0 0 58,003 Special mention— — — 9,936 18,489 28,776 — — 57,201 
SubstandardSubstandard0 0 0 34,197 8,256 3,360 0 0 45,813 Substandard— — — — 38,216 23,072 — — 61,288 
DoubtfulDoubtful0 0 0 0 0 0 0 0 0 Doubtful— — — — — — — — — 
Total multi-family loansTotal multi-family loans$150,835 $23,716 $299,319 $590,608 $245,946 $450,877 $0 $0 $1,761,301 Total multi-family loans$403,075 $133,452 $23,068 $219,006 $339,368 $368,339 $— $— $1,486,308 
Commercial and industrial loans and leases:Commercial and industrial loans and leases:Commercial and industrial loans and leases:
PassPass$729,270 $373,050 $141,943 $116,793 $45,367 $71,502 $717,007 $0 $2,194,932 Pass$974,016 $337,045 $266,677 $86,691 $55,536 $89,860 $1,484,287 $— $3,294,112 
Special mentionSpecial mention13,200 1,117 436 113 516 21 17,524 0 32,927 Special mention476 1,408 3,325 4,904 36,252 92 14,662 — 61,119 
SubstandardSubstandard9,968 6,890 19,065 5,901 8,318 2,722 8,718 0 61,582 Substandard18,786 10,257 9,543 11,586 5,682 6,764 6,934 — 69,552 
DoubtfulDoubtful0 0 0 0 0 0 0 0 0 Doubtful— — — — — — — — — 
Total commercial and industrial loans and leasesTotal commercial and industrial loans and leases$752,438 $381,057 $161,444 $122,807 $54,201 $74,245 $743,249 $0 $2,289,441 Total commercial and industrial loans and leases$993,278 $348,710 $279,545 $103,181 $97,470 $96,716 $1,505,883 $— $3,424,783 
Commercial real estate owner occupied loans:Commercial real estate owner occupied loans:Commercial real estate owner occupied loans:
PassPass$82,343 $168,977 $72,615 $70,642 $46,510 $91,798 $741 $0 $533,626 Pass$213,102 $59,348 $124,626 $60,993 $58,073 $99,219 $672 $— $616,033 
Special mentionSpecial mention0 4,464 0 9,056 0 555 0 0 14,075 Special mention— — 2,876 318 2,044 572 — — 5,810 
SubstandardSubstandard0 2,848 9,499 342 2,231 9,717 0 0 24,637 Substandard— — 3,750 9,682 8,824 10,823 — — 33,079 
DoubtfulDoubtful0 0 0 0 0 0 0 0 0 Doubtful— — — — — — — — — 
Total commercial real estate owner occupied loansTotal commercial real estate owner occupied loans$82,343 $176,289 $82,114 $80,040 $48,741 $102,070 $741 $0 $572,338 Total commercial real estate owner occupied loans$213,102 $59,348 $131,252 $70,993 $68,941 $110,614 $672 $— $654,922 
Commercial real estate non-owner occupied:Commercial real estate non-owner occupied:Commercial real estate non-owner occupied:
PassPass$143,231 $105,430 $97,882 $157,835 $155,168 $313,559 $0 $0 $973,105 Pass$136,897 $149,898 $95,504 $66,040 $153,509 $310,435 $— $— $912,283 
Special mentionSpecial mention39,994 0 0 66,745 24,218 14,613 0 0 145,570 Special mention— 21,694 11,113 9,373 43,215 20,540 — — 105,935 
SubstandardSubstandard0 0 17,741 20,611 366 39,171 0 0 77,889 Substandard— — — 35,846 20,516 46,658 — — 103,020 
DoubtfulDoubtful0 0 00 0 0 0 0 0 Doubtful— — — — — — — — — 
Total commercial real estate non-owner occupied loansTotal commercial real estate non-owner occupied loans$183,225 $105,430 $115,623 $245,191 $179,752 $367,343 $0 $0 $1,196,564 Total commercial real estate non-owner occupied loans$136,897 $171,592 $106,617 $111,259 $217,240 $377,633 $— $— $1,121,238 
Construction:Construction:Construction:
PassPass$19,932 $105,466 $4,954 $0 $9,700 $0 $853 $0 $140,905 Pass$57,105 $49,199 $77,622 $4,828 $— $9,414 $813 $— $198,981 
Special mentionSpecial mention0 0 0 0 0 0 0 0 0 Special mention— — — — — — — — — 
SubstandardSubstandard0 0 0 0 0 0 0 0 0 Substandard— — — — — — — — — 
DoubtfulDoubtful0 0 0 0 0 0 0 0 0 Doubtful— — — — — — — — — 
Total construction loansTotal construction loans$19,932 $105,466 $4,954 $0 $9,700 $0 $853 $0 $140,905 Total construction loans$57,105 $49,199 $77,622 $4,828 $— $9,414 $813 $— $198,981 
Total commercial loans and leases receivableTotal commercial loans and leases receivable$1,188,773 $791,958 $663,454 $1,038,646 $538,340 $994,535 $744,843 $0 $5,960,549 Total commercial loans and leases receivable$1,803,457 $762,301 $618,104 $509,267 $723,019 $962,716 $1,507,368 $— $6,886,232 
Residential real estate loans:Residential real estate loans:Residential real estate loans:
PerformingPerforming$6,708 $13,617 $6,810 $10,850 $38,143 $69,496 $161,576 $0 $307,200 Performing$107,854 $8,251 $21,096 $11,389 $6,707 $84,035 $87,438 $— $326,770 
Non-performingNon-performing0 0 160 785 1,350 4,395 3,280 0 9,970 Non-performing— — 335 1,015 669 3,587 2,354 — 7,960 
Total residential real estate loansTotal residential real estate loans$6,708 $13,617 $6,970 $11,635 $39,493 $73,891 $164,856 $0 $317,170 Total residential real estate loans$107,854 $8,251 $21,431 $12,404 $7,376 $87,622 $89,792 $— $334,730 
Manufactured housing loans:Manufactured housing loans:Manufactured housing loans:
PerformingPerforming$0 $295 $609 $76 $41 $56,837 $0 $0 $57,858 Performing$— $— $253 $299 $73 $47,537 $— $— 48,162 
Non-performingNon-performing0 0 0 0 0 4,385 0 0 4,385 Non-performing— — — — — 4,699 — — 4,699 
Total manufactured housing loansTotal manufactured housing loans$0 $295 $609 $76 $41 $61,222 $0 $0 $62,243 Total manufactured housing loans$— $— $253 $299 $73 $52,236 $— $— $52,861 
Installment loans:Installment loans:Installment loans:
PerformingPerforming$319,453 $791,235 $114,988 $4,736 $514 $1,204 $0 $0 $1,232,130 Performing$973,525 $390,788 $341,582 $31,481 $1,601 $1,016 $25 $— $1,740,018 
Non-performingNon-performing305 2,326 485 41 2 117 0 0 3,276 Non-performing1,162 1,002 2,074 156 2 61 — — 4,457 
Total installment loansTotal installment loans$319,758 $793,561 $115,473 $4,777 $516 $1,321 $0 $0 $1,235,406 Total installment loans$974,687 $391,790 $343,656 $31,637 $1,603 $1,077 $25 $— $1,744,475 
Total consumer loansTotal consumer loans$326,466 $807,473 $123,052 $16,488 $40,050 $136,434 $164,856 $0 $1,614,819 Total consumer loans$1,082,541 $400,041 $365,340 $44,340 $9,052 $140,935 $89,817 $— $2,132,066 
Loans and leases receivableLoans and leases receivable$1,515,239 $1,599,431 $786,506 $1,055,134 $578,390 $1,130,969 $909,699 $0 $7,575,368 Loans and leases receivable$2,885,998 $1,162,342 $983,444 $553,607 $732,071 $1,103,651 $1,597,185 $— $9,018,298 


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Loan Purchases and Sales
Purchases and sales of loans were as follows for the three months ended March 31, 20212022 and 2020:
Three Months Ended March 31,
(amounts in thousands)20212020
Purchases (1)
Residential real estate$0 $495 
Installment (2)
115,849 191,761 
Total$115,849 $192,256 
Sales (3)
Commercial and industrial$18,931 $0 
Commercial real estate owner occupied2,237 0 
Commercial real estate non-owner occupied18,366 0 
Installment0 1,822 
Total$39,534 $1,822 
2021:
Three Months Ended March 31,
(amounts in thousands)20222021
Purchases (1)
Residential real estate$146,874 $— 
Installment (2)
59,456 115,849 
Total$206,330 $115,849 
Sales (3)
Commercial and industrial$8,840 $18,931 
Commercial real estate owner occupied5,441 2,237 
Commercial real estate non-owner occupied— 18,366 
Total$14,281 $39,534 
(1)Amounts reported in the above table are the unpaid principal balance at time of purchase. The purchase price was 101.0%98.1% and 100.6%101.0% of loans outstanding for the three months ended March 31, 20212022 and 2020,2021, respectively.
(2)Installment loan purchases for the three months ended March 31, 20212022 and 20202021 consist of third-party originated unsecured consumer loans. None of the loans are considered sub-prime at the time of origination. Customers considers sub-prime borrowers to be those with FICO scores below 660.
(3)Amounts reported in the above table are the unpaid principal balance at time of sale. For the quartersthree months ended March 31, 20212022 and 2020,2021, loan sales resulted in net gains of $2.1 million and $1.6 million, respectively, included in gain (loss) on sale of SBA and $11 thousand, respectively.other loans and mortgage banking income in the consolidated statements of income.
Loans Pledged as Collateral
Customers has pledged eligible real estate and commercial and industrial loans including PPP loans as collateral for borrowings from the FHLB and FRB in the amount of $6.8$3.6 billion and $8.5$3.7 billion at March 31, 20212022 and December 31, 2020,2021, respectively. No PPP loans of $3.3 billion and $4.6 billion were pledged to the FRB in accordance with borrowing from the PPPLF at March 31, 20212022 and December 31, 2020, respectively.2021.

NOTE 9 — LEASES
Lessee
Customers has operating leases for its branches, certain LPOs, and administrative offices, with remaining lease terms ranging between 53 months and 68 years. These operating leases comprise substantially all of Customers' obligations in which Customers is the lessee. Most lease agreements consist of initial lease terms ranging between 1 and 5 years, with options to renew the leases or extend the term up to 15 years at Customers' sole discretion. Some operating leases include variable lease payments that are based on an index or rate, such as the CPI. Variable lease payments are not included in the liability or right of useROU asset and are recognized in the period in which the obligation for those payments are incurred. Customers' operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. Pursuant to these agreements, Customers does not have any commitments that would meet the definition of a finance lease.
As most of Customers' operating leases do not provide an implicit rate, Customers utilized its incremental borrowing rate based on the information available at either the adoption of ASC 842, Leases or the commencement date of the lease, whichever was later, when determining the present value of lease payments.
The following table summarizes operating lease ROU assets and operating lease liabilities and their corresponding balance sheet location:
(amounts in thousands)ClassificationMarch 31, 2021December 31, 2020
ASSETS
Operating lease ROU assets (1)
Other assets$15,442 $16,578 
LIABILITIES
Operating lease liabilities (1)
Other liabilities$16,829 $18,005 
(1) Excludes operating leases of BMT included in assets and liabilities of discontinued operations.
(amounts in thousands)ClassificationMarch 31, 2022December 31, 2021
ASSETS
Operating lease ROU assetsOther assets$12,364 $12,677 
LIABILITIES
Operating lease liabilitiesOther liabilities$14,003 $14,524 
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The following table summarizes operating lease cost and its corresponding income statement location for the periods presented:
Three Months Ended March 31,
(amounts in thousands)Classification20212020
Operating lease cost (1)(2)
Occupancy expenses$1,117 $1,205 
Three Months Ended March 31,
(amounts in thousands)Classification20222021
Operating lease cost (1)
Occupancy expenses$998 $1,117 
(1) There were 0no variable lease costs for the three months ended March 31, 20212022 and 2020,2021, and sublease income for operating leases is immaterial.
(2) Excludes operating lease costs of BMT included in loss from discontinued operations in the consolidated statement of income.
Maturities of non-cancelable operating lease liabilities were as follows at March 31, 2021:
(amounts in thousands)March 31, 2021
2021$3,477 
20224,509 
20234,031 
20242,957 
20251,887 
Thereafter1,465 
Total minimum payments18,326 
Less: interest1,497 
Present value of lease liabilities$16,829 
2022:
(amounts in thousands)March 31, 2022
2022$3,238 
20234,018 
20242,991 
20252,060 
20261,125 
Thereafter1,791 
Total minimum payments15,223 
Less: interest1,220 
Present value of lease liabilities$14,003 
Customers does not have leases where it is involved with the construction or design of an underlying asset. Customers has no legally binding minimuma signed lease payments for leases signed butthat has not yet commenced as of March 31, 2021.2022 with future minimum lease payments of $7.1 million. Cash paid pursuant to the operating lease liability was $1.1$1.2 million and $1.3$1.1 million for the three months ended March 31, 20212022 and 2020,2021, respectively. These payments were reported as cash flows used in operating activities in the statement of cash flows.
The following table summarizes the weighted average remaining lease term and discount rate for Customers' operating leases at March 31, 20212022 and December 31, 2020:
(amounts in thousands)March 31, 2021December 31, 2020
Weighted average remaining lease term (years)
Operating leases (1)
4.5 years4.7 years
Weighted average discount rate
Operating leases (1)
2.89 %2.90 %
(1) Excludes operating leases of BMT included in assets and liabilities of discontinued operations.2021:
March 31, 2022December 31, 2021
Weighted average remaining lease term (years)
Operating leases 4.7 years3.9 years
Weighted average discount rate
Operating leases2.82 %2.74 %
Equipment Lessor
CCF is a wholly-owned subsidiary of Customers Bank and is referred to as the Equipment Finance Group. CCF goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets. CCF is primarily focused on originating equipment operatingserving the following segments: transportation, construction (includes crane and direct finance equipment leases for a broad range of asset classes. It services vendors, dealers, independent finance companies, bank-owned leasing companiesutility), marine, franchise, general manufacturing (includes machine tool), helicopter/fixed wing, solar, packaging, plastics and strategic direct customers in the plastics, packaging, machine tool, construction, transportation and franchise markets. Lease termsfood processing. Terms typically range from 24 months to 120 months. CCF offers the following lease products: Loans, Capital Lease, Purchase Upon Termination,PUT, TRAC, Split-TRAC, and FMV. Direct finance equipment leases are included in commercial and industrial loans and leases receivable.
The estimated residual values for direct finance and operating leases are established by utilizing internally developed analyses, external studies, and/or third-party appraisals to establish a residual position. For the direct finance leases, only Customers' Split-TRAC leases have residual risk and the unguaranteed portions are typically nominal. Expected credit losses on direct financing leases and the related estimated residual values are included in the allowance for credit lossesACL on loans and leases.
Leased assets under operating leases are carried at amortized cost net of accumulated depreciation and any impairment charges and are presented in other assets. The depreciation expense of the leased assets is recognized on a straight-line basis over the contractual term of the leases up to the expected residual value. The expected residual value and, accordingly, the monthly depreciation expense, may change throughout the term of the lease. Operating lease rental income for leased assets is recognized in commercial lease income on a straight-line basis over the lease term. Customers periodically reviews its operating leased assets for impairment. An impairment loss is recognized if the carrying amount of the operating leased asset exceeds its fair value and is not recoverable. The carrying amount of
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operating leased assets is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the lease payments and the estimated residual value upon the eventual disposition of the equipment.
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The following table summarizes lease receivables and investment in operating leases and their corresponding balance sheet location at March 31, 20212022 and December 31, 2020:
(amounts in thousands)ClassificationMarch 31, 2021December 31, 2020
ASSETS
Direct financing leases
Lease receivablesLoans and leases receivable$104,230 $104,982 
Guaranteed residual assetsLoans and leases receivable9,452 12,988 
Unguaranteed residual assetsLoans and leases receivable3,807 1,229 
Deferred initial direct costsLoans and leases receivable528 560 
Unearned incomeLoans and leases receivable(10,433)(11,175)
Net investment in direct financing leases$107,584 $108,584 
Operating leases
Investment in operating leasesOther assets$136,754 $131,791 
Accumulated depreciationOther assets(33,204)(28,919)
Deferred initial direct costsOther assets1,113 996 
Net investment in operating leases104,663 103,868 
Total lease assets$212,247 $212,452 

2021:
(amounts in thousands)ClassificationMarch 31, 2022December 31, 2021
ASSETS
Direct financing leases
Lease receivablesLoans and leases receivable$139,203 $134,855 
Guaranteed residual assetsLoans and leases receivable11,631 11,397 
Unguaranteed residual assetsLoans and leases receivable5,820 5,665 
Deferred initial direct costsLoans and leases receivable623 448 
Unearned incomeLoans and leases receivable(5,917)(5,383)
Net investment in direct financing leases$151,360 $146,982 
Operating leases
Investment in operating leasesOther assets$159,177 $158,135 
Accumulated depreciationOther assets(43,802)(40,749)
Deferred initial direct costsOther assets809 872 
Net investment in operating leases116,184 118,258 
Total lease assets$267,544 $265,240 
COVID-19 Impact on Leases

Customers granted concessions to lessees as a result of the business impact of the COVID-19 pandemic. Customers had no finance or operating leases with payment deferments at March 31, 2022. At MarchDecember 31, 2021, the book valuevalues of finance and operating leases with payment deferments were $29.3$22.8 million and $14.5$7.4 million, respectively. The concessions did not have a material impact on interest income from leases for the three months ended March 31, 2022 and 2021. Additionally, Customers did not receive any concessions on its operating leases in which Customers is the lessee.
NOTE 10 - BORROWINGS
Short-term debt
Short-term debt at March 31, 2022 and December 31, 2021 was as follows:
 March 31, 2022December 31, 2021
(dollars in thousands)AmountRateAmountRate
FHLB advances$— — %$700,000 0.26 %
Federal funds purchased700,000 0.40 %75,000 0.05 %
Total short-term debt$700,000 $775,000 
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The following is a summary of additional information relating to Customers' short-term debt:
(dollars in thousands)
March 31, 2022 (1)
December 31, 2021 (2)
FHLB advances
Maximum outstanding at any month end$— $850,000 
Average balance during the period127,778 264,704 
Weighted-average interest rate during the period0.32 %2.35 %
Federal funds purchased
Maximum outstanding at any month end700,000 365,000 
Average balance during the period88,611 22,110 
Weighted-average interest rate during the period0.33 %0.07 %
(1)    For the three months ended March 31, 2022.
(2)    For the year ended December 31, 2021.
At March 31, 2022 and December 31, 2021, Customers Bank had aggregate availability under federal funds lines totaling $0.7 billion and $1.3 billion, respectively.
Long-term debt
FHLB and FRB advances

NOTE 10 - BORROWINGS
Short-term debt
Short-term debtThere were no long-term advances outstanding with the FHLB or FRB at March 31, 20212022 and December 31, 2020 was as follows:
 March 31, 2021December 31, 2020
(dollars in thousands)AmountRateAmountRate
FHLB advances$850,000 1.21 %$850,000 1.19 %
Federal funds purchased365,000 0.05 %250,000 0.09 %
Total short-term debt$1,215,000 $1,100,000 
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The following is a summary of additional information relating to Customers' short-term debt:
(dollars in thousands)March 31, 2021December 31, 2020
FHLB advances
Maximum outstanding at any month end$850,000 $910,000 
Average balance during the period850,000 809,788 
Weighted-average interest rate during the period2.48 %2.31 %
Federal funds purchased
Maximum outstanding at any month end365,000 842,000 
Average balance during the period16,333 239,481 
Weighted-average interest rate during the period0.07 %0.19 %
At March 31, 2021 and December 31, 2020, Customers Bank had aggregate availability under federal funds lines totaling $1.1 billion and $924.0 million, respectively.
Long-term debt
FHLB and FRB advances
Long-term FHLB and FRB advances at March 31, 2021 and December 31, 2020 were as follows:
March 31, 2021December 31, 2020
(dollars in thousands)AmountRateAmountRate
FRB PPP Liquidity Facility advances$3,284,156 0.35 %$4,415,016 0.35 %
Total long-term FHLB and FRB advances$3,284,156 $4,415,016 
2021.
Beginning in second quarter 2020, Customers began participating in the PPPLF, in which Federal Reserve Banks extend non-recourse loans to institutions that are eligible to make PPP loans. Only PPP loans that are guaranteed by the SBA under the PPP, with respect to both principal and interest that are originated or purchased by an eligible institution, may be pledged as collateral to the Federal Reserve Banks. During the three months ended September 30, 2021, Customers repaid the PPPLF advances. No new advances are available from the PPPLF after July 30, 2021.
The maximum borrowing capacity with the FHLB and FRB at March 31, 20212022 and December 31, 20202021 was as follows:
(amounts in thousands)March 31, 2021December 31, 2020
Total maximum borrowing capacity with the FHLB$2,492,783 $2,729,516 
Total maximum borrowing capacity with the FRB (1)
183,124 223,299 
Qualifying loans serving as collateral against FHLB and FRB advances (1)
3,258,271 3,363,364 
(amounts in thousands)March 31, 2022December 31, 2021
Total maximum borrowing capacity with the FHLB$3,337,211 $2,973,635 
Total maximum borrowing capacity with the FRB (1)
214,908 183,052 
Qualifying loans serving as collateral against FHLB and FRB advances (1)
4,218,252 3,594,339 
(1)    Amounts reported in the above table exclude borrowings under the PPPLF, which are limited to the face valueunpaid principal balance of the loans originated under the PPP. At March 31, 2021, Customers had $3.3 billion ofno borrowings under the PPPLF with a borrowing capacity of up to $5.2 billion, which is the face value of the qualifying loans Customers has originatedat March 31, 2022 and outstanding under the PPP. At December 31, 2020, Customers had $4.4 billion of borrowings under the PPPLF.2021.
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Senior and Subordinated Debt
Long-term senior notes and subordinated debt at March 31, 20212022 and December 31, 20202021 were as follows:
March 31, 2021December 31, 2020March 31, 2022December 31, 2021
(dollars in thousands)(dollars in thousands)(dollars in thousands)
Issued byIssued byRankingAmountAmountRateIssued AmountDate IssuedMaturityPriceIssued byRankingCarrying AmountCarrying AmountRateIssued AmountDate IssuedMaturityPrice
Customers BancorpCustomers Bancorp
Senior (1)
$99,844 $98,642 2.875 %$100,000 August 2021August 2031100.000 %
Customers BancorpCustomers BancorpSenior$24,581 $24,552 4.500 %$25,000 September 2019September 2024100.000 %Customers BancorpSenior24,702 24,672 4.500 %25,000 September 2019September 2024100.000 %
Customers BancorpCustomers BancorpSenior99,557 99,485 3.950 %100,000 June 2017June 202299.775 %Customers BancorpSenior98,684 99,772 3.950 %100,000 June 2017June 202299.775 %
Total other borrowingsTotal other borrowings$124,138 $124,037 Total other borrowings$223,230 $223,086 
Customers BancorpCustomers Bancorp
Subordinated (1)(2)
$72,267 $72,222 5.375 %$74,750 December 2019December 2034100.000 %Customers Bancorp
Subordinated (2)(3)
$72,448 $72,403 5.375 %$74,750 December 2019December 2034100.000 %
Customers BankCustomers Bank
Subordinated (1)(3)
109,197 109,172 6.125 %110,000 June 2014June 2029100.000 %Customers Bank
Subordinated (2)(4)
109,294 109,270 6.125 %110,000 June 2014June 2029100.000 %
Total subordinated debtTotal subordinated debt$181,464 $181,394 Total subordinated debt$181,742 $181,673 
(1)The senior notes will bear an annual fixed rate of 2.875% until August 15, 2026. From August 15, 2026 until maturity, the notes will bear an annual interest rate equal to a benchmark rate, which is expected to be the three-month term SOFR, plus 235 basis points. Customers Bancorp has the ability to call the senior notes, in whole, or in part, at a redemption price equal to 100% of the principal balance at certain times on or after August 15, 2026.
(2)The subordinated notes qualify as Tier 2 capital for regulatory capital purposes.
(2)(3)Customers Bancorp has the ability to call the subordinated notes, in whole, or in part, at a redemption price equal to 100% of the principal balance at certain times on or after December 30, 2029.
(3)(4)The subordinated notes will bear an annual fixed rate of 6.125% until June 26, 2024. From June 26, 2024 until maturity, the notes will bear an annual interest rate equal to the three-month LIBOR plus 344.3 basis points. Customers Bank has the ability to call the subordinated notes, in whole, or in part, at a redemption price equal to 100% of the principal balance at certain times on or after June 26, 2024.
NOTE 11 — SHAREHOLDERS’ EQUITY
Common Stock
On August 25, 2021, the Board of Directors of Customers Bancorp authorized the Share Repurchase Program to repurchase up to 3,235,326 shares of the Company's common stock (representing 10% of the Company’s outstanding shares of common stock on June 30, 2021). The term of the Share Repurchase Program will extend for one year from September 27, 2021, unless earlier terminated. Purchases of shares under the Share Repurchase Program may be executed through open market purchases, privately negotiated transactions, through the use of Rule 10b5-1 plans, or otherwise. The exact number of shares, timing for such purchases, and the price and terms at and on which such purchases are to be made will be at the discretion of the Company and will comply with all applicable regulatory limitations. Customers Bancorp purchased 115,324 shares of its common stock for $6.3 million under the Share Repurchase Program on various dates during the three months ended March 31, 2022.
Preferred Stock
As of March 31, 2022, Customers Bancorp has 2 series of preferred stock outstanding. On September 15, 2021, Customers redeemed all of the outstanding shares of Series C and Series D Preferred Stock for an aggregate payment of $82.5 million, at a redemption price of $25.00 per share. The redemption price paid in excess of the carrying value of Series C and Series D Preferred Stock of $2.8 million is included as a loss on redemption of preferred stock in the consolidated statement of income for the three months ended September 30, 2021. After giving effect to the redemption, no shares of the Series C and Series D Preferred Stock remained outstanding.
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The table below summarizes Customers' issuances of preferred stock and the dividends paid per share.
(amounts in thousands except share and per share data)Shares atCarrying value atInitial Fixed RateDate at which dividend rate becomes floating and earliest redemption dateFloating rate of Three-Month LIBOR Plus:
Dividend Paid Per Share in 2022 (1)
Fixed-to-floating rate:Issue DateMarch 31, 2022December 31, 2021March 31, 2022December 31, 2021
Series EApril 28, 20162,300,0002,300,000$55,593 $55,593 6.45 %June 15, 20215.140 %$0.33 
Series FSeptember 16, 20163,400,0003,400,00082,201 82,201 6.00 %December 15, 20214.762 %$0.31 
Totals5,700,0005,700,000$137,794 $137,794 
(1) For the three months ended March 31, 2022.
On March 15, 2021, Series D Preferred Stock became floating at three-month LIBOR plus 5.09%, compared to a fixed rate of 6.50%. On June 15, 2021, the Series E Preferred Stock became floating at three-month LIBOR plus 5.14%, compared to a fixed rate of 6.45%. On December 15, 2021, the Series F Preferred Stock became floating at three-month LIBOR plus 4.762%, compared to a fixed rate of 6.00%.
NOTE 1112 — REGULATORY CAPITAL
The Bank and the Bancorp are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet the minimum capital requirements can result in certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on Customers' financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank and the Bancorp must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items, as calculated under the regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.
In first quarter 2020, U.S federal banking regulatory agencies permitted banking organizations to phase-in, for regulatory capital purposes, the day-one impact of the new CECL accounting rule on retained earnings over a period of three years. As part of its response to the impact of COVID-19, on March 31, 2020, the U.S. federal banking regulatory agencies issued an interim final rule that provided the option to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period. The interim final rule allows banking organizations to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. Customers has elected to adopt the interim final rule, which is reflected in the regulatory capital data presented below. 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 March 31, 2022, our regulatory capital ratios reflected 75%, or $46.2 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. a leverage ratio). Customers applied this regulatory guidance in the calculation of its regulatory capital ratios presented below.
Quantitative measures established by regulation to ensure capital adequacy require the Bank and the Bancorp to maintain minimum amounts and ratios (set forth in the following table) of common equity Tier 1, Tier 1, and total capital to risk-weighted assets, and Tier 1 capital to average assets (as defined in the regulations). At March 31, 20212022 and December 31, 2020,2021, the Bank and the Bancorp satisfied all capital requirements to which they were subject.
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Generally, to comply with the regulatory definition of adequately capitalized, or well capitalized, respectively, or to comply with the Basel III capital requirements, an institution must at least maintain the common equity Tier 1, Tier 1 and total risk-based capital ratios and the Tier 1 leverage ratio in excess of the related minimum ratios as set forth in the following table:
Minimum Capital Levels to be Classified as:
 ActualAdequately CapitalizedWell CapitalizedBasel III Compliant
(amounts in thousands)AmountRatioAmountRatioAmountRatioAmountRatio
As of March 31, 2021:
Common equity Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,021,018 8.774 %$523,659 4.500 %N/AN/A$814,581 7.000 %
Customers Bank$1,365,443 11.745 %$523,182 4.500 %$755,708 6.500 %$813,839 7.000 %
Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,238,489 10.643 %$698,212 6.000 %N/AN/A$989,134 8.500 %
Customers Bank$1,365,443 11.745 %$697,576 6.000 %$930,102 8.000 %$988,233 8.500 %
Total capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,447,285 12.437 %$930,949 8.000 %N/AN/A$1,221,871 10.500 %
Customers Bank$1,523,681 13.106 %$930,102 8.000 %$1,162,627 10.000 %$1,220,758 10.500 %
Tier 1 capital (to average assets)
Customers Bancorp, Inc.$1,238,489 8.478 %$584,359 4.000 %N/AN/A$584,359 4.000 %
Customers Bank$1,365,443 9.352 %$584,025 4.000 %$730,031 5.000 %$584,025 4.000 %
As of December 31, 2020:
Common equity Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$954,839 8.079 %$531,844 4.500 %N/AN/A$827,312 7.000 %
Customers Bank$1,254,082 10.615 %$531,639 4.500 %$767,923 6.500 %$826,994 7.000 %
Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,172,310 9.919 %$709,125 6.000 %N/AN/A$1,004,594 8.500 %
Customers Bank$1,254,082 10.615 %$708,852 6.000 %$945,136 8.000 %$1,004,207 8.500 %
Total capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,401,119 11.855 %$945,500 8.000 %N/AN/A$1,240,969 10.500 %
Customers Bank$1,424,791 12.060 %$945,136 8.000 %$1,181,421 10.000 %$1,240,492 10.500 %
Tier 1 capital (to average assets)
Customers Bancorp, Inc.$1,172,310 8.597 %$545,485 4.000 %N/AN/A$545,485 4.000 %
Customers Bank$1,254,082 9.208 %$544,758 4.000 %$680,947 5.000 %$544,758 4.000 %

Minimum Capital Levels to be Classified as:
 ActualAdequately CapitalizedWell CapitalizedBasel III Compliant
(dollars in thousands)AmountRatioAmountRatioAmountRatioAmountRatio
As of March 31, 2022:
Common equity Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,344,684 9.893 %$611,629 4.500 %N/AN/A$951,423 7.000 %
Customers Bank$1,573,796 11.598 %$610,658 4.500 %$882,062 6.500 %$949,913 7.000 %
Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,482,477 10.907 %$815,505 6.000 %N/AN/A$1,155,299 8.500 %
Customers Bank$1,573,796 11.598 %$814,211 6.000 %$1,085,615 8.000 %$1,153,466 8.500 %
Total capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,749,655 12.873 %$1,087,340 8.000 %N/AN/A$1,427,134 10.500 %
Customers Bank$1,768,525 13.032 %$1,085,615 8.000 %$1,357,019 10.000 %$1,424,870 10.500 %
Tier 1 capital (to average assets)
Customers Bancorp, Inc.$1,482,477 7.723 %$767,836 4.000 %N/AN/A$767,836 4.000 %
Customers Bank$1,573,796 8.211 %$766,712 4.000 %$958,391 5.000 %$766,712 4.000 %
As of December 31, 2021:
Common equity Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,291,270 9.981 %$582,179 4.500 %N/AN/A$905,611 7.000 %
Customers Bank$1,526,583 11.825 %$580,943 4.500 %$839,140 6.500 %$903,689 7.000 %
Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,429,063 11.046 %$776,238 6.000 %N/AN/A$1,099,671 8.500 %
Customers Bank$1,526,583 11.825 %$774,591 6.000 %$1,032,788 8.000 %$1,097,337 8.500 %
Total capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,667,395 12.888 %$1,034,984 8.000 %N/AN/A$1,358,417 10.500 %
Customers Bank$1,692,512 13.110 %$1,032,788 8.000 %$1,290,985 10.000 %$1,355,534 10.500 %
Tier 1 capital (to average assets)
Customers Bancorp, Inc.$1,429,063 7.413 %$771,084 4.000 %N/AN/A$771,084 4.000 %
Customers Bank$1,526,583 7.925 %$770,528 4.000 %$963,160 5.000 %$770,528 4.000 %
The Basel III Capital Rules require that we maintain a 2.500% capital conservation buffer with respect to each of CET1,common equity Tier 1, Tier 1 and total capital to risk-weighted assets, which provides for capital levels that exceed the minimum risk-based capital adequacy requirements. A financial institution with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers.
NOTE 1213 — DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Customers uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. ASC 825, Financial Instruments, requires disclosure of the estimated fair value of an entity’s assets and liabilities considered to be financial instruments. For Customers, as for most financial institutions, the majority of its assets and liabilities are considered to be financial instruments. Many of these instruments lack an available trading market as characterized by a willing buyer and a willing seller engaging in an exchange transaction. For fair value disclosure purposes, Customers utilized certain fair value measurement criteria under ASC 820, Fair Value Measurements and Disclosures ("ASC 820"), as explained below.
In accordance with ASC 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for Customers' various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.  Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.
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The fair value guidance provides a consistent definition of fair value, focusing on an exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.
The fair value guidance also establishes a fair value hierarchy and describes the following three levels used to classify fair value measurements.
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Prices or valuation techniques that require adjustments to inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The following methods and assumptions were used to estimate the fair values of Customers' financial instruments as of March 31, 20212022 and December 31, 2020:2021:
Financial Instruments Recorded at Fair Value on a Recurring Basis
Investment securities:
The fair values of equity securities with a readily determinable fair value, AFS debt securities and debt securities reported at fair value based on a fair value option election are determined by obtaining quoted market prices on nationally recognized and foreign securities exchanges (Level 1), quoted prices in markets that are not active (Level 2), matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices, or internally and externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3).
When quoted market prices are not available, Customers employs an independent pricing service that utilizes matrix pricing to calculate fair value. Such fair value measurements consider observable data such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayments speeds, credit information, and respective terms and conditions for debt instruments. Management maintains procedures to monitor the pricing service's results and has an established process to challenge their valuations, or methodologies, that appear unusual or unexpected.
Customers also utilizes internally and externally developed models that use unobservable inputs due to limited or no market activity of the instrument. These models use unobservable inputs that are inherently judgmental and reflect our best estimates of the assumptions a market participant would use to calculate fair value. Certain unobservable inputs in isolation may have either a directionally consistent or opposite impact on the fair value of the instrument for a given change in that input. When multiple inputs are used within the valuation techniques, a change in one input in a certain direction may be offset by an opposite change from another input. These assets are classified as Level 1, 2 or 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.
Loans held for sale - Residential mortgage loans (fair value option):
Customers generally estimates the fair values of residential mortgage loans held for sale based on commitments on hand from investors within the secondary market for loans with similar characteristics. These assets are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements.
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Loans receivable - Commercial mortgage warehouse loans (fair value option):
The fair value of commercial mortgage warehouse loans is the amount of cash initially advanced to fund the mortgage, plus accrued interest and fees, as specified in the respective agreements. The loan is used by mortgage companies as short-term bridge financing between the funding of the mortgage loans and the finalization of the sale of the loans to an investor. Changes in fair value are not generally expected to be recognized because at inception of the transaction the underlying mortgage loans have already been sold to an approved investor. Additionally, the interest rate is variable, and the transaction is short-term, with an average life of under 30 days from purchase to sale. These assets are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements.
Derivatives (assets and liabilities):
The fair values of interest rate swaps, interest rate caps and credit derivatives are determined using models that incorporate readily observable market data into a market standard methodology. This methodology nets the discounted future cash receipts and the discounted expected cash payments. The discounted variable cash receipts and payments are based on expectations of future interest rates derived from observable market interest rate curves. In addition, fair value is adjusted for the effect of nonperformance risk by incorporating credit valuation adjustments for Customers and its counterparties. These assets and liabilities are classified as Level 2 fair values, based upon the lowest level of input that is significant to the fair value measurements.
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The fair values of the residential mortgage loan commitments are derived from the estimated fair values that can be generated when the underlying mortgage loan is sold in the secondary market. Customers generally uses commitments on hand from third party investors to estimate an exit price and adjusts for the probability of the commitment being exercised based on Customers' internal experience (i.e., pull-through rate). These assets and liabilities are classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.
Derivative assets and liabilities are presented in "Other assets" and "Accrued interest payable and other liabilities" on the consolidated balance sheet.
The following information should not be interpreted as an estimate of Customers' fair value in its entirety because fair value calculations are only provided for a limited portion of Customers' assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making these estimates, comparisons between Customers' disclosures and those of other companies may not be meaningful.
Financial Instruments Recorded at Fair Value on a Nonrecurring Basis
Collateral-dependent loans:
Collateral-dependent loans are those loans that are accounted for under ASC 326,Financial Instruments - Credit Losses ("ASC 326"), in which the Bank has measured impairment generally based on the fair value of the loan’s collateral or DCF analysis. Fair value is generally determined based upon independent third-party appraisals of the properties that collateralize the loans, DCF based upon the expected proceeds, sales agreements or letters of intent with third parties. These assets are generally classified as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.
Other real estate owned:
The following information should not be interpreted as an estimate of Customers' fair value of OREO is determined by using appraisals, which may be discounted based on management’s review and changes in market conditions or sales agreements with third parties. All appraisals must be performed in accordance with the Uniform Standards of Professional Appraisal Practice. Appraisals are certified to the Bank and performed by appraisers on the Bank’s approved list of appraisers. Evaluations are completed by a person independent of management. The content of the appraisal depends on the complexity of the property. Appraisals are completed on a “retail value” and an “as is value”. These assets are classified as Level 3 fair values, based upon the lowest level of input that is significant to theits entirety because fair value measurements.

calculations are only provided for a limited portion of Customers' assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making these estimates, comparisons between Customers' disclosures and those of other companies may not be meaningful.
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The estimated fair values of Customers' financial instruments at March 31, 20212022 and December 31, 20202021 were as follows.
   Fair Value Measurements at March 31, 2021
(amounts in thousands)Carrying AmountEstimated Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Assets:
Cash and cash equivalents$515,364 $515,364 $515,364 $0 $0 
Debt securities, available for sale1,437,077 1,437,077 0 1,437,077 0 
Equity securities4,827 4,827 4,827 0 0 
Loans held for sale46,106 46,106 0 45,463 643 
Total loans and leases receivable, net of allowance for credit losses on loans and leases15,993,464 16,487,438 0 3,407,622 13,079,816 
FHLB, Federal Reserve Bank and other restricted stock69,420 69,420 0 69,420 0 
Derivatives36,502 36,502 0 36,306 196 
Liabilities:
Deposits$12,472,440 $12,473,798 $11,806,559 $667,239 $0 
FRB PPP Liquidity Facility3,284,156 3,284,156 0 3,284,156 0 
Federal funds purchased365,000 365,000 365,000 0 0 
FHLB advances850,000 850,787 0 850,787 0 
Other borrowings124,138 135,571 0 135,571 0 
Subordinated debt181,464 197,080 0 197,080 0 
Derivatives37,536 37,536 0 37,536 0 
   Fair Value Measurements at March 31, 2022
(amounts in thousands)Carrying AmountEstimated Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Assets:
Cash and cash equivalents$274,600 $274,600 $274,600 $— $— 
Debt securities, available for sale4,144,029 4,144,029 — 4,022,176 121,853 
Loans held for sale3,003 3,003 — 2,496 507 
Total loans and leases receivable, net of allowance for credit losses on loans and leases13,924,668 13,571,137 — 1,755,758 11,815,379 
FHLB, Federal Reserve Bank and other restricted stock46,040 46,040 — 46,040 — 
Derivatives21,954 21,954 — 21,805 149 
Liabilities:
Deposits$16,415,560 $16,343,932 $15,969,368 $374,564 $— 
Federal funds purchased700,000 700,000 700,000 — — 
Other borrowings223,230 219,130 — 219,130 — 
Subordinated debt181,742 196,482 — 196,482 — 
Derivatives18,370 18,370 — 18,370 — 

  Fair Value Measurements at December 31, 2020   Fair Value Measurements at December 31, 2021
(amounts in thousands)(amounts in thousands)Carrying AmountEstimated Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		(amounts in thousands)Carrying AmountEstimated Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Assets:Assets:Assets:
Cash and cash equivalentsCash and cash equivalents$693,354 $693,354 $693,354 $0 $0 Cash and cash equivalents$518,032 $518,032 $518,032 $— $— 
Debt securities, available for saleDebt securities, available for sale1,206,431 1,206,431 0 1,206,431 0 Debt securities, available for sale3,791,575 3,791,575 — 3,648,690 142,885 
Equity securities3,854 3,854 3,854 0 0 
Loans held for saleLoans held for sale79,086 79,086 0 78,443 643 Loans held for sale16,254 16,254 — 15,747 507 
Total loans and leases receivable, net of allowance for credit losses on loans and leasesTotal loans and leases receivable, net of allowance for credit losses on loans and leases15,608,989 16,222,202 0 3,616,432 12,605,770 Total loans and leases receivable, net of allowance for credit losses on loans and leases14,414,827 14,207,811 — 2,284,325 11,923,486 
FHLB, Federal Reserve Bank and other restricted stockFHLB, Federal Reserve Bank and other restricted stock71,368 71,368 0 71,368 0 FHLB, Federal Reserve Bank and other restricted stock64,584 64,584 — 64,584 — 
DerivativesDerivatives54,223 54,223 0 54,023 200 Derivatives27,295 27,295 — 27,116 179 
Liabilities:Liabilities:Liabilities:
DepositsDeposits$11,309,929 $11,312,494 $10,657,998 $654,496 $0 Deposits$16,777,924 $16,777,236 $16,270,586 $506,650 $— 
FRB PPP Liquidity Facility4,415,016 4,415,016 0 4,415,016 0 
Federal funds purchasedFederal funds purchased250,000 250,000 250,000 0 0 Federal funds purchased75,000 75,000 75,000 — — 
FHLB advancesFHLB advances850,000 852,442 0 852,442 0 FHLB advances700,000 700,000 — 700,000 — 
Other borrowingsOther borrowings124,037 129,120 0 129,120 0 Other borrowings223,086 226,585 — 226,585 — 
Subordinated debtSubordinated debt181,394 193,119 0 193,119 0 Subordinated debt181,673 204,782 — 204,782 — 
DerivativesDerivatives98,164 98,164 0 98,164 0 Derivatives26,544 26,544 — 26,544 — 

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For financial assets and liabilities measured at fair value on a recurring and nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 20212022 and December 31, 20202021 were as follows:
 March 31, 2021
 Fair Value Measurements at the End of the Reporting Period Using
(amounts in thousands)Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total
Measured at Fair Value on a Recurring Basis:
Assets
Available for sale debt securities:
Asset-backed securities$0 $386,993 $0 $386,993 
U.S. government agencies securities0 20,053 0 20,053 
Agency-guaranteed mortgage-backed securities0 37,634 0 37,634 
Agency-guaranteed collateralized mortgage obligations0 211,104 0 211,104 
Commercial mortgage-backed securities0 13,059 0 13,059 
Collateralized loan obligations0 163,094 0 163,094 
Corporate notes0 257,924 0 257,924 
Private label collateralized mortgage obligations0 328,689 0 328,689 
State and political subdivision debt securities0 18,527 0 18,527 
Equity securities4,827 0 0 4,827 
Derivatives0 36,306 196 36,502 
Loans held for sale – fair value option0 1,205 0 1,205 
Loans receivable, mortgage warehouse – fair value option0 3,407,622 0 3,407,622 
Total assets – recurring fair value measurements$4,827 $4,882,210 $196 $4,887,233 
Liabilities
Derivatives $0 $37,536 $0 $37,536 
Measured at Fair Value on a Nonrecurring Basis:
Assets
Loans held for sale$0 $44,258 $0 $44,258 
Collateral-dependent loans0 0 7,331 7,331 
Other real estate owned0 0 35 35 
Total assets – nonrecurring fair value measurements$0 $44,258 $7,366 $51,624 

 March 31, 2022
 Fair Value Measurements at the End of the Reporting Period Using
(amounts in thousands)Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total
Measured at Fair Value on a Recurring Basis:
Assets
Available for sale debt securities:
Asset-backed securities$— $221,766 $121,853 $343,619 
Agency-guaranteed residential mortgage-backed securities— 8,269 — 8,269 
Agency-guaranteed commercial mortgage-backed securities— 2,045 — 2,045 
Agency-guaranteed residential collateralized mortgage obligations— 603,403 — 603,403 
Agency-guaranteed commercial collateralized mortgage obligations— 162,599 — 162,599 
Collateralized loan obligations— 1,004,362 — 1,004,362 
Commercial mortgage-backed securities— 147,625 — 147,625 
Corporate notes— 593,750 — 593,750 
Private label collateralized mortgage obligations— 1,270,407 — 1,270,407 
State and political subdivision debt securities— 7,950 — 7,950 
Derivatives— 21,805 149 21,954 
Loans held for sale – fair value option— 2,496 — 2,496 
Loans receivable, mortgage warehouse – fair value option— 1,755,758 — 1,755,758 
Total assets – recurring fair value measurements$— $5,802,235 $122,002 $5,924,237 
Liabilities
Derivatives $— $18,370 $— $18,370 
Measured at Fair Value on a Nonrecurring Basis:
Assets
Collateral-dependent loans$— $— $2,485 $2,485 
Total assets – nonrecurring fair value measurements$— $— $2,485 $2,485 
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December 31, 2020 December 31, 2021
Fair Value Measurements at the End of the Reporting Period Using Fair Value Measurements at the End of the Reporting Period Using
(amounts in thousands)(amounts in thousands)Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total(amounts in thousands)Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total
Measured at Fair Value on a Recurring Basis:Measured at Fair Value on a Recurring Basis:Measured at Fair Value on a Recurring Basis:
AssetsAssetsAssets
Available for sale debt securities:Available for sale debt securities:Available for sale debt securities:
Asset-backed securitiesAsset-backed securities$0 $377,145 $0 $377,145 Asset-backed securities$— $154,540 $142,885 $297,425 
U.S. government agencies securities0 20,034 0 20,034 
Agency-guaranteed mortgage–backed securities0 63,091 0 63,091 
Agency-guaranteed collateralized mortgage obligations0 161,767 0 161,767 
Agency-guaranteed residential mortgage–backed securitiesAgency-guaranteed residential mortgage–backed securities— 9,553 — 9,553 
Agency-guaranteed commercial mortgage–backed securitiesAgency-guaranteed commercial mortgage–backed securities— 2,152 — 2,152 
Agency-guaranteed residential collateralized mortgage obligationsAgency-guaranteed residential collateralized mortgage obligations— 196,930 — 196,930 
Agency-guaranteed commercial collateralized mortgage obligationsAgency-guaranteed commercial collateralized mortgage obligations— 238,844 — 238,844 
Collateralized loan obligationsCollateralized loan obligations0 32,367 0 32,367 Collateralized loan obligations— 1,066,802 — 1,066,802 
Commercial mortgage-backed securitiesCommercial mortgage-backed securities— 148,927 — 148,927 
Corporate notesCorporate notes0 396,744 0 396,744 Corporate notes— 580,046 — 580,046 
Private label collateralized mortgage obligationsPrivate label collateralized mortgage obligations0 136,992 0 136,992 Private label collateralized mortgage obligations— 1,242,465 — 1,242,465 
State and political subdivision debt securitiesState and political subdivision debt securities0 18,291 0 18,291 State and political subdivision debt securities— 8,431 — 8,431 
Equity securities3,854 0 0 3,854 
DerivativesDerivatives0 54,023 200 54,223 Derivatives— 27,116 179 27,295 
Loans held for sale – fair value optionLoans held for sale – fair value option0 5,509 0 5,509 Loans held for sale – fair value option— 15,747 — 15,747 
Loans receivable, mortgage warehouse – fair value optionLoans receivable, mortgage warehouse – fair value option0 3,616,432 0 3,616,432 Loans receivable, mortgage warehouse – fair value option— 2,284,325 — 2,284,325 
Total assets – recurring fair value measurementsTotal assets – recurring fair value measurements$3,854 $4,882,395 $200 $4,886,449 Total assets – recurring fair value measurements$— $5,975,878 $143,064 $6,118,942 
LiabilitiesLiabilitiesLiabilities
DerivativesDerivatives$0 $98,164 $0 $98,164 Derivatives$— $26,544 $— $26,544 
Measured at Fair Value on a Nonrecurring Basis:Measured at Fair Value on a Nonrecurring Basis:Measured at Fair Value on a Nonrecurring Basis:
AssetsAssetsAssets
Loans held for sale$0 $55,683 $0 $55,683 
Collateral-dependent loansCollateral-dependent loans0 17,251 3,867 21,118 Collateral-dependent loans$— $— $5,121 $5,121 
Other real estate owned0 0 35 35 
Total assets – nonrecurring fair value measurementsTotal assets – nonrecurring fair value measurements$0 $72,934 $3,902 $76,836 Total assets – nonrecurring fair value measurements$— $— $5,121 $5,121 

The changes in residential mortgage loan commitments (Level 3 assets) measured at fair value on a recurring basis for the three months ended March 31, 20212022 and 20202021 are summarized in the tables below. Additional information about residential mortgage loan commitments can be found in NOTE 13 -14 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES.
Residential Mortgage Loan Commitments
Three Months Ended March 31,
(amounts in thousands)20212020
Balance at December 31$200 $79 
Issuances196 215 
Settlements(200)(79)
Balance at March 31$196 $215 

Residential Mortgage Loan Commitments
Three Months Ended March 31,
(amounts in thousands)20222021
Balance at January 1,$179 $200 
Issuances149 196 
Settlements(179)(200)
Balance at March 31,$149 $196 
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The changes in asset-backed securities (Level 3 assets) measured at fair value on a recurring basis for the three months ended March 31, 2022 are summarized in the tables below.
Asset-backed securities
(amounts in thousands)Three Months Ended March 31, 2022
Balance at January 1,$142,885 
Principal payments(16,349)
Credit losses(728)
Change in fair value recognized in OCI(3,955)
Balance at March 31,$
121,853 
There were no transfers between levels during the three months ended March 31, 20212022 and 2020.
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2021.
The following table summarizes financial assets and financial liabilities measured at fair value as of March 31, 20212022 and December 31, 20202021 on a recurring and nonrecurring basis for which Customers utilized Level 3 inputs to measure fair value. The unobservable Level 3 inputs noted below contain a level of uncertainty that may differ from what is realized in an immediate settlement of the assets. Therefore, Customers may realize a value higher or lower than the current estimated fair value of the assets.
Quantitative Information about Level 3 Fair Value Measurements
(amounts in thousands)Fair Value
Estimate		Valuation TechniqueUnobservable Input
Range 
(Weighted Average) (4)
March 31, 20212022    
Asset-backed securities$121,853 Discounted cash flowDiscount rate


Annualized loss rate


Constant prepayment rate
4% - 6%
(4%)

7% - 8%
(8%)

16% - 30%
(19%)
Collateral-dependent loans – real estate$6,7781,809 
Collateral appraisal (1)
Liquidation expenses (2)
8%5% - 20%5%
(12%(5%)
Collateral-dependent loans – commercial and industrial553676 
Collateral appraisal (1)


Business asset valuation (3)
Liquidation expenses (2)

Business asset valuation adjustments (4)
7%8% - 8%26%
(8%(13%)

40%25% - 40%27%
(40%(26%)
Residential mortgage loan commitments196149 Adjusted market bidPull-through rate
81%69% - 81%88%
(81%(82%)

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Quantitative Information about Level 3 Fair Value Measurements
(amounts in thousands)Fair Value
Estimate		Valuation TechniqueUnobservable Input
Range 
(Weighted Average) (4)
December 31, 2021
Asset-backed securities$142,885 Discounted cash flowDiscount rate


Annualized loss rate


Constant prepayment rate
4% - 5%
(5%)

4% - 4%
(4%)

17% - 33%
(19%)
Collateral-dependent loans – real estate4,170 
Collateral appraisal (1)
Liquidation expenses (2)
8% - 8%
(8%)
Collateral-dependent loans – commercial and industrial951 
Collateral appraisal (1)


Business asset valuation (3)

Liquidation expenses (2)

Business asset valuation adjustments (4)
8% - 26%
(12%)

20% - 20%
(20%)
Residential mortgage loan commitments179 Adjusted market bidPull-through rate
76% - 89%
(85%)
(1)Obtained from approved independent appraisers. Appraisals are current and in compliance with credit policy. Customers does not generally discount appraisals.
Fair value is also estimated based on sale agreements or letters of intent with third parties.
(2)Appraisals are adjusted by management for liquidation expenses. The range and weighted average of liquidation expense adjustments are presented as a percentage of the appraisal.
(3)Business asset valuation obtained from independent party.
(4)Business asset valuations may be adjusted by management for qualitative factors including economic conditions and the condition of the business assets. The range and weighted average of the business asset adjustments are presented as a percent of the business asset valuation.
Quantitative Information about Level 3 Fair Value Measurements
(amounts in thousands)Fair Value
Estimate		Valuation TechniqueUnobservable Input
Range 
(Weighted Average) (4)
December 31, 2020
Collateral-dependent loans – real estate$2,928 
Collateral appraisal (1)
Liquidation expenses (2)
8% - 8%
(8%)
Collateral-dependent loans – commercial and industrial939 
Collateral appraisal (1)


Business asset valuation (3)

Liquidation expenses (2)

Business asset valuation adjustments (4)
7% - 8%
(8%)

60% - 60%
(60%)
Other real estate owned35 
Collateral appraisal (1)
Liquidation expenses (2)
8% - 9%
(9%)
Residential mortgage loan commitments200 Adjusted market bidPull-through rate
78% - 78%
(78%)
(1)Obtained from approved independent appraisers. Appraisals are current and in compliance with credit policy. Customers does not generally discount appraisals.
(2)Appraisals are adjusted by management for liquidation expenses. The range and weighted average of liquidation expense adjustments are presented as a percentage of the appraisal.
(3)Business asset valuation obtained from independent party.
(4)Business asset valuations may be adjusted by management for qualitative factors including economic conditions and the condition of the business assets. The range and weighted average of the business asset adjustments are presented as a percent of the business asset valuation.


NOTE 1314 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Risk Management Objectives of Using Derivatives
Customers is exposed to certain risks arising from both its business operations and economic conditions. Customers manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources, and durations of its assets and liabilities. Specifically, Customers enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. Customers’ derivative financial instruments are used to manage differences in the amount, timing, and duration of Customers’ known or expected cash receipts and its known or expected cash payments principally related to certain borrowings and deposits. Customers also has interest-rate derivatives resulting from a servicean accommodation provided to certain qualifying customers, and therefore, they are not used to manage Customers’ interest-rate risk in assets or liabilities. Customers manages a matched book with respect to its derivative instruments used in this customer service in order to minimize its net risk exposure resulting from such transactions.
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Cash Flow Hedges of Interest-Rate Risk
Customers’ objectives in using interest-rate derivatives are to add stability to interest expense and to manage exposure to interest rate movements. To accomplish this objective, Customers primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for Customers making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The changes in the fair value of derivatives designated and qualifying as cash flow hedges are recorded in accumulated other comprehensive income (loss)AOCI and subsequently reclassified into earnings in the period that the hedged item affects earnings. To date, such derivatives were used to hedge the variable cash flows associated with the forecasted issuances of debt and a certain variable-rate deposit relationship. At December 31, 2020, Customers had 5 outstanding interest rate derivatives with notional amounts totaling $1.1 billion that were designated as cash flow hedges of interest rate risk.
Customers discontinues cash flow hedge accounting if it is probable the forecasted hedged transactions will not occur in the initially identified time period. At such time, the associated gains and losses deferred in accumulated other comprehensive income (loss)AOCI are reclassified immediately into earnings and any subsequent changes in the fair value of such derivatives are recognized directly in earnings. InDuring the three months ended March 31, 2021, Customers terminated 4 interest rate derivatives with notional amounts totaling $850 million that were designated as cash flow hedges of interest-rate risk associated with 3-month FHLB advances, and reclassified $25.9 million of the realized losses and accrued interest from AOCI to current earnings because the hedged forecasted transactions were determined to be no longer probable of occurring.
At March 31, 2021, Customers had 1 outstanding interest rate derivative with notional amount of $225.0 million that was designated as cash flow hedge of interest rate risk. Customers is hedginghedged its exposure to the variability in future cash flows for a variable-rate deposit, relationship over a maximum periodwhich matured in June 2021.
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Table of 24 months (excluding forecasted transactions related to the payment of variableContents
At March 31, 2022 and December 31, 2021, Customers had no interest on existing financial instruments). The outstandingrate derivative designated as cash flow hedge at March 31, 2021 expires in June 2021. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified tohedges of interest expense as interest payments are made on Customers' variable-rate debt and a variable-rate deposit relationship. Customers expects to reclassify $1.1 million of losses from accumulated other comprehensive income (loss) to interest expense during the next 12 months.rate risk.
Fair Value Hedges of Benchmark Interest-Rate Risk
Customers is exposed to changes in the fair value of certain of its fixed rate AFS debt securities due to changes in the benchmark interest rate. Customers uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate such as the Fed Funds Effective Swap Rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for Customers receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.
At March 31, 2021,2022, Customers had 1714 outstanding interest rate derivatives with notional amounts totaling $85.5$64.0 million that were designated as fair value hedges of certain available for saleAFS debt securities. InDuring the three months ended March 31, 2022, Customers terminated 2 interest rate derivatives with notional amounts totaling $16.5 million that were designated as fair value hedges together with the sale of hedged AFS debt securities. During the three months ended March 31, 2021, Customers terminated 7 interest rate derivatives with notional amounts totaling $186.8 million that were designated as fair value hedges together with the sale of hedged available for saleAFS debt securities. At December 31, 2020,2021, Customers had 2416 outstanding interest rate derivatives with notional amounts totaling $272.3$80.5 million designated as fair value hedges.
As of March 31, 2021,2022, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges.
Amortized CostCumulative Amount of Fair Value Hedging Adjustment to Hedged Items
(amounts in thousands)March 31,December 31,March 31,December 31,
2021202020212020
Available for sale debt securities$85,500 $272,159 $976 $741 
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Amortized CostCumulative Amount of Fair Value Hedging Adjustment to Hedged Items
(amounts in thousands)March 31, 2022December 31, 2021March 31, 2022December 31, 2021
AFS debt securities$64,000 $80,500 $3,653 $1,750 
Derivatives Not Designated as Hedging Instruments
Customers executes interest rate swaps (typically the loan customers will swap a floating-rate loan for a fixed-rate loan) and interest rate caps with commercial banking customers to facilitate their respective risk management strategies. The customer interest rate swaps and interest rate caps are simultaneously offset by interest rate swaps and interest rate caps that Customers executes with a third party in order to minimize interest-rate risk exposure resulting from such transactions. As the interest rate swaps and interest rate caps associated with this program do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and caps and the offsetting third-party market swaps and caps are recognized directly in earnings. At March 31, 2021,2022, Customers had 161 interest rate swaps with an aggregate notional amount of $1.5 billion and 12 interest rate caps with an aggregated notional amount of $206.1 million related to this program. At December 31, 2020, Customers had 155153 interest rate swaps with an aggregate notional amount of $1.4 billion and 1214 interest rate caps with an aggregated notional amount of $263.2 million related to this program. At December 31, 2021, Customers had 153 interest rate swaps with an aggregate notional amount of $1.4 billion and 14 interest rate caps with an aggregate notional amount of $204.9$264.7 million related to this program.
Customers enters into residential mortgage loan commitments in connection with its consumer mortgage banking activities to fund mortgage loans at specified rates and times in the future. These commitments are short-term in nature and generally expire in 30 to 60 days. The residential mortgage loan commitments that relate to the origination of mortgage loans that will be held for sale are considered derivative instruments under applicable accounting guidance and are reported at fair value, with changes in fair value recorded directly in earnings. At March 31, 20212022 and December 31, 2020,2021, Customers had an outstanding notional balance of residential mortgage loan commitments of $8.8$6.4 million and $11.9$8.2 million, respectively.
Customers has also purchased and sold credit derivatives to either hedge or participate in the performance risk associated with some of its counterparties. These derivatives are not designated as hedging instruments and are reported at fair value, with changes in fair value reported directly in earnings. At March 31, 20212022 and December 31, 2020,2021, Customers had outstanding notional balances of credit derivatives of $173.6$129.1 million and $177.2$129.9 million, respectively.
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Fair Value of Derivative Instruments on the Balance Sheet
The following tables present the fair value of Customers' derivative financial instruments as well as their presentation on the consolidated balance sheetsheets as of March 31, 20212022 and December 31, 2020.2021.
March 31, 2021 March 31, 2022
Derivative AssetsDerivative Liabilities Derivative AssetsDerivative Liabilities
(amounts in thousands)(amounts in thousands)Balance Sheet LocationFair ValueBalance Sheet LocationFair Value(amounts in thousands)Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as cash flow hedges:
Interest rate swapsOther assets$0 Other liabilities$1,034 
Total$0 $1,034 
Derivatives designated as fair value hedges:Derivatives designated as fair value hedges:Derivatives designated as fair value hedges:
Interest rate swapsInterest rate swapsOther assets$976 Other liabilities$0 Interest rate swapsOther assets$3,653 Other liabilities$— 
TotalTotal$976 $0 Total$3,653 $— 
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:
Interest rate swapsInterest rate swapsOther assets$34,962 Other liabilities$36,154 Interest rate swapsOther assets$16,007 Other liabilities$16,158 
Interest rate capsInterest rate capsOther assets166 Other liabilities166 Interest rate capsOther assets2,090 Other liabilities2,090 
Credit contractsCredit contractsOther assets202 Other liabilities182 Credit contractsOther assets55 Other liabilities122 
Residential mortgage loan commitmentsResidential mortgage loan commitmentsOther assets196 Other liabilities0 Residential mortgage loan commitmentsOther assets149 Other liabilities— 
TotalTotal$35,526 $36,502 Total$18,301 $18,370 

December 31, 2021
Derivative AssetsDerivative Liabilities
(amounts in thousands)Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as fair value hedges:
Interest rate swapsOther assets$1,750 Other liabilities$— 
Total$1,750 $— 
Derivatives not designated as hedging instruments:
Interest rate swapsOther assets$24,747 Other liabilities$25,855 
Interest rate capsOther assets488 Other liabilities488 
Credit contractsOther assets131 Other liabilities201 
Residential mortgage loan commitmentsOther assets179 Other liabilities— 
Total$25,545 $26,544 
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December 31, 2020
Derivative AssetsDerivative Liabilities
(amounts in thousands)Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as cash flow hedges:
Interest rate swapsOther assets$196 Other liabilities$40,765 
Total$196 $40,765 
Derivatives designated as fair value hedges:
Interest rate swapsOther assets$0 Other liabilities$741 
Total$0 $741 
Derivatives not designated as hedging instruments:
Interest rate swapsOther assets$53,455 Other liabilities$56,209 
Interest rate capsOther assets46 Other liabilities46 
Credit contractsOther assets326 Other liabilities403 
Residential mortgage loan commitmentsOther assets200 Other liabilities0 
Total$54,027 $56,658 
Effect of Derivative Instruments on Net Income
The following tables presenttable presents amounts included in the consolidated statements of income related to derivatives designated as fair value hedges and derivatives not designated as hedges for the three months ended March 31, 20212022 and 2020.2021.
Amount of Income (Loss) Recognized in Earnings
Three Months Ended March 31,
(amounts in thousands)Income Statement Location20212020
Derivatives designated as fair value hedges:
Recognized on interest rate swapsNet interest income$4,907 $0 
Recognized on hedged available for sale debt securitiesNet interest income(4,907)0 
Total$0 $0 
Derivatives not designated as hedging instruments:
Interest rate swapsOther non-interest income$2,399 $(1,015)
Interest rate capsOther non-interest income0 0 
Credit contractsOther non-interest income137 (132)
Residential mortgage loan commitmentsMortgage banking income(4)137 
Total$2,532 $(1,010)

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Amount of Income (Loss) Recognized in Earnings
Three Months Ended March 31,
(amounts in thousands)Income Statement Location20222021
Derivatives designated as fair value hedges:
Recognized on interest rate swapsNet interest income$2,521 $4,907 
Recognized on hedged AFS debt securitiesNet interest income(2,521)(4,907)
Total$— $— 
Derivatives not designated as hedging instruments:
Interest rate swapsOther non-interest income$961 $2,399 
Interest rate capsOther non-interest income— — 
Credit contractsOther non-interest income3 137 
Residential mortgage loan commitmentsMortgage banking income(31)(4)
Total$933 $2,532 
Effect of Derivative Instruments on Comprehensive Income

The following table presents the effect of Customers' derivative financial instruments on comprehensive income for the three months ended March 31, 20212022 and 2020.
Amount of Gain (Loss) Recognized in OCI on Derivatives (1)
Location of Gain (Loss) Reclassified from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
Three Months Ended
March 31,
Three Months Ended
March 31,
(amounts in thousands)2021202020212020
Derivatives in cash flow hedging relationships:
Interest rate swaps$9,113 $(20,346)Interest expense$(1,459)$(1,478)
0 0 Other non-interest income(24,467)0 
Total$9,113 $(20,346)$(25,926)$(1,478)
(1) Amounts presented are net of taxes. See NOTE 5 - CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) for the total effect on other comprehensive income (loss) from derivatives designated as cash flow hedges for the periods presented.
2021.
Amount of Gain (Loss) Recognized in OCI on Derivatives (1)
Location of Gain (Loss) Reclassified from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
Three Months Ended
March 31,
Three Months Ended
March 31,
(amounts in thousands)2022202120222021
Derivatives in cash flow hedging relationships:
Interest rate swaps$— $9,113 Interest expense$— $(1,459)
00
Other non-interest income (2)
— (24,467)
00$— $(25,926)
(1) Amounts presented are net of taxes. See NOTE 5 – CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) for the total effect on other comprehensive income (loss) from derivatives designated as cash flow hedges for the periods presented.
(2)    Includes loss on cash flow hedge derivative terminations.
Credit-risk-related Contingent Features
By entering into derivative contracts, Customers is exposed to credit risk. The credit risk associated with derivatives executed with customers is the same as that involved in extending the related loans and is subject to the same standard credit policies. To mitigate the credit-risk exposure to major derivative dealer counterparties, Customers only enters into agreements with those counterparties that maintain credit ratings of high quality or with central clearing parties.
Agreements with major derivative dealer counterparties contain provisions whereby default on any of Customers' indebtedness would be considered a default on its derivative obligations. Customers also has entered into agreements that contain provisions under which the counterparty could require Customers to settle its obligations if Customers fails to maintain its status as a well/adequately capitalized institution. As of March 31, 2021,2022, the fair value of derivatives in a net liabilityasset position (which includes accrued interest but excludes any adjustment for nonperformance-risk) related to these agreements was $36.4$9.6 million. In addition, Customers, which has collateral posting thresholds with certain of these counterparties, had posted $35.0$4.1 million of cash as collateral at March 31, 2021.2022. Customers records cash posted as collateral with these counterparties, except with a central clearing party,entity, as a reduction in the outstanding balance of cash and cash equivalents and an increase in the balance of other assets.
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Disclosures about Offsetting Assets and Liabilities
The following tables present derivative instruments that are subject to enforceable master netting arrangements. Customers' interest rate swaps and interest rate caps with institutional counterparties are subject to master netting arrangements and are included in the tabletables below. Interest rate swaps and interest rate caps with commercial banking customers and residential mortgage loan commitments are not subject to master netting arrangements and are excluded from the tabletables below. Customers has not made a policy election to offset its derivative positions.
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 Gross Amounts Recognized on the Consolidated Balance SheetsGross Amounts Not Offset in the Consolidated Balance Sheet
(amounts in thousands)Financial InstrumentsCash Collateral Received/(Posted)Net Amount
March 31, 2022
Interest rate derivative assets with institutional counterparties$6,546 $— $— $6,546 
Interest rate derivative liabilities with institutional counterparties$4,115 $— $(4,115)$— 
 Gross Amounts Recognized on the Consolidated Balance SheetsGross Amounts Not Offset in the Consolidated Balance Sheet
(amounts in thousands)Financial InstrumentsCash Collateral Received/(Posted)Net Amount
March 31, 2021
Interest rate derivative assets with institutional counterparties$98 $0 $0 $98 
Interest rate derivative liabilities with institutional counterparties$35,017 $0 $(35,017)$0 

 Gross Amounts Recognized on the Consolidated Balance SheetsGross Amounts Not Offset in the Consolidated Balance Sheet
(amounts in thousands)Financial InstrumentsCash Collateral Received/(Posted)Net Amount
December 31, 2020
Interest rate derivative assets with institutional counterparties$199 $0 $0 $199 
Interest rate derivative liabilities with institutional counterparties$97,641 $0 $(97,641)$0 

 Gross Amounts Recognized on the Consolidated Balance SheetsGross Amounts Not Offset in the Consolidated Balance Sheet
(amounts in thousands)Financial InstrumentsCash Collateral Received/(Posted)Net Amount
December 31, 2021
Interest rate derivative assets with institutional counterparties$— $— $— $— 
Interest rate derivative liabilities with institutional counterparties$23,348 $— $(23,348)$— 
NOTE 1415 — LOSS CONTINGENCIES
Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the consolidated financial statements that are not currently accrued for. However, in light of the uncertainties inherent in these matters, it is possible that the ultimate resolution may have a material adverse effect on Customers’ results of operations for a particular period, and future changes in circumstances or additional information could result in accruals or resolution in excess of established accruals, which could adversely affect Customers’ results of operations, potentially materially.
Lifestyle Healthcare Group, Inc. Matter
On January 9, 2017, Lifestyle Healthcare Group, Inc., et al (“Plaintiffs”) filed a Complaint captioned Lifestyle Healthcare Group, Inc.; Fred Rappaport; Victoria Rappaport; Lifestyle Management Group, LLC Trading as Lifestyle Real Estate I, LP; Lifestyle Real Estate I GP, LLC; Daniel Muck; Lifestyle Management Group, LLC; Lifestyle Management Group, LLC Trading as Lifestyle I, LP D/B/A Lifestyle Medspa, Plaintiffs (“Lifestyle Parties”) v. Customers Bank, Robert White; Saldutti Law, LLC a/k/a Saldutti Law Group; Robert L. Saldutti, Esquire; and Michael Fuoco, Civil Action No. 01206, in the First Judicial District of Pennsylvania, Court of Common Pleas of Philadelphia. In this Complaint, the Plaintiffs generally allege wrongful use of civil proceedings and abuse of process in connection with a case filed and later dismissed in federal court, titled, Customers Bank v. Fred Rappaport, et al., U.S.D.C.E.D. Pa., No. 15-6145. On January 30, 2017, Customers Bank filed Preliminary Objections to the Complaint seeking dismissal of Plaintiff’s claims against Customers Bank and Robert White, named as co-defendants. In response to the Preliminary Objections, Lifestyle filed an Amended Complaint against Customers Bank and Robert White. Customers Bank filed Preliminary Objections to the Second Amended Complaint seeking dismissal of Plaintiff's claim against Customers Bank and Robert White, named as co-defendants. The Court dismissed certain counts and determined to allow certain other counts to proceed. On September 17, 2020, a Stipulation of Dismissal with Prejudice was filed with the Court as a result of the voluntary resolution of the matter by and between Plaintiffs and defendants, Customers Bank, Robert White and Michael Fuoco only.
United States Department of Education Matter
In third quarter 2018, Customers received a Final Program Review Determination ("FPRD") letter dated September 5, 2018 from the ED regarding a focused program review of Higher One's/Customers Bank's administration, as a third party servicer, of the programs authorized pursuant to Title IV of the Higher Education Act of 1965. The ED program review covered the award years beginning in 2013 through the FPRD issuance date, including the time period when Higher One was acting as the third party servicer prior to Customers' acquisition of the Disbursement business on June 15, 2016. The FPRD determined that, with respect to students enrolled at specified partner institutions, Higher One/Customers did not provide convenient fee-free access to ATMs or bank branch offices in such locations as required by the ED’s cash management regulations. Those regulations, which were in effect during the period covered by the program review and were revised during that period, seek, among other purposes, to ensure that students can make fee-free cash
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withdrawals. The FPRD determined that students incurred prohibited costs in accessing Title IV credit balance funds, and the FPRD classifies those costs as financial liabilities of Customers. The FPRD also requires Customers to take prospective action to increase ATM access for students at certain of its partner institutions. Customers disagreed with the FPRD and appealed the asserted financial liabilities of $6.5 million, and a request for review has been submitted to trigger an administrative process before the ED’s Office of Hearing and Appeals.
On March 26, 2020, the ED and Customers filed a Joint Motion to Dismiss with Prejudice (the "Joint Motion") with the United States Department of Education. The Joint Motion states that the ED and Customers reached an agreement that resolves the liabilities at issue in the appeal. The Joint Motion was granted on April 27, 2020. As part of the settlement, the liabilities assessed in the FPRD were reduced to $3.0 million (the "settlement amount"). Customers had previously recorded a liability in the amount of $1.0 million during third quarter 2019 and increased its liability by an additional $1.0 million in first quarter 2020. The remaining $1.0 million is expected to be funded from funds in an escrow account set-up at the time of Customers' acquisition of the Disbursement business from Higher One in 2016.
Bureau of the Fiscal Service Notice of Direct Debit (U.S. Treasury Check Reclamation)
On June 21, 2019, Customers received a Notice of Direct Debit (U.S. Treasury Check Reclamation) from the Bureau of the Fiscal Service (“Reclamation Notice”). The Reclamation Notice represented a demand to Customers for the return of funds on a U.S. Treasury check for approximately $5.4 million. Customers filed a written protest pursuant to Code of Federal Regulations, Title 31, Chapter II, Part 240, which resulted in a suspension of the direct debit by the Bureau of the Fiscal Service. On January 31, 2020, Customers received an Abandonment Notice from the Bureau of Fiscal Service instructing Customers to disregard the Notice of Direct Debit as the Bureau of Fiscal Service would not be seeking reclamation of these funds.
Specialty’s Café Bakery, Inc. Matter
On May 27, 2020, the appointed Chapter 7 Trustee for Specialty’s Café Bakery, Inc. (“Debtor”) filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code in the United StatedStates Bankruptcy Court for the Central District of California. On October 28, 2020, the Trustee, as plaintiff, filed her amended adversary complaint (“Adversary Complaint”) against Customersthe Bank and the SBA seeking to avoid and recover for the benefit of the Debtor’s estate and its creditors the payment made by the Debtor to Customersthe Bank in the amount of $8.1 million in satisfaction of a Payroll Protection ProgramPPP loan made by Customersthe Bank to the Debtor (the “PPP Loan Payment”). The Trustee seekssought to avoid and recover the entire PPP Loan Payment from the Bank under the authority provided in 11 U.S.C. §547 and §550, which together permit a trustee of a bankruptcy debtor to avoid and recover, for a more equitable distribution among all creditors, certain transfers made within ninety (90) days before the filing of the bankruptcy petition. On December 2, 2021, the Bank filed a motion for summary judgement, arguing that the Trustee had failed to establish the elements under 11 U.S.C. §547 necessary to recover the PPP Loan Payment and other affirmative defenses to any such recovery. On February 2, 2022, the United States Bankruptcy Court for the Central District of California granted the Bank’s motion for summary judgment, finding that the PPP Loan Payment was not recoverable by the Trustee. The Bank intendsTrustee has elected not to vigorously defend itselfappeal this decision and, on February 23, 2022, the case against the Trustee’s Adversary Complaint and is currently unable to reasonably determineBank was closed by the likelihoodUnited States Bankruptcy Court for the Central District of loss nor estimate a possible rangeCalifornia.
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
This report and all attachments hereto, as well as other written or oral communications made from time to time by us, may contain forward-looking information within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “project,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.’s control). Numerous competitive, economic, regulatory, legal and technological events and factors, among others, could cause Customers Bancorp, Inc.’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements, including: the adverse impact of the ongoing pandemic on the U.S. economy including the markets in which we operate, of the coronavirus outbreak, and customer behavior, the impact of a slowing U.S.that changes in the economy and increased unemploymenthave on the performance of our loan and lease portfolio, the market value of our investment securities, the continued success and acceptance of our blockchain payments system, the demand for our products and services and the availability of sources of funding; the effects of actions by the federal government, including the Board of Governors of the Federal Reserve System and other government agencies, that affect market interest rates and the money supply; actions that we and our customers take in response to these developments and the effects such actions have on our operations, products, services and customer relationships; and the effects of any changes in accounting standards or policies, including ASU 2016-13, Financial Instruments—CECL.policies. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.’s filings with the Securities and Exchange Commission, including its most recent annual
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report on Form 10-K for the year ended December 31, 2020,2021, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank, except as may be required under applicable law.
Management’s discussion and analysis represents an overview of the financial condition and results of operations, and highlights the significant changes in the financial condition and results of operations, as presented in the accompanying consolidated financial statements for Customers Bancorp, Inc. (the "Bancorp" or "Customers Bancorp"), a financial holding company, and its wholly owned subsidiaries, including Customers Bank (the "Bank"), collectively referred to as "Customers" herein. This information is intended to facilitate your understanding and assessment of significant changes and trends related to Customers' financial condition and results of operations as of and for the three months ended March 31, 2021.2022. All quarterly information in this Management’s Discussion and Analysis is unaudited. You should read this section in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Customers' 20202021 Form 10-K.
Overview
Like most financial institutions, Customers derives the majority of its income from interest it receives on its interest-earning assets, such as loans, leases and investments. Customers' primary source of funds for making these loans, leases and investments are its deposits and borrowings, on which it pays interest. Consequently, one of the key measures of Customers' success is the amount of its net interest income, or the difference between the interest income on its interest-earning assets and the interest expense on its interest-bearing liabilities, such as deposits and borrowings. Another key measure is the difference between the interest income generated by interest earning assets and the interest expense on interest-bearing liabilities, relative to the amount of average interest earning assets, which is referred to as net interest margin.
On January 4, 2021, Customers Bancorp completed the previously announced divestiture of BankMobile Technologies, Inc., the technology arm of its BankMobile segment, to MFAC Merger Sub Inc., an indirect wholly-owned subsidiary of MFAC pursuant to an Agreement and Plan of Merger, dated August 6, 2020, by and among MFAC, MFAC Merger Sub Inc., BMT, Customers Bank, the sole stockholder of BMT, and Customers Bancorp, the parent bank holding company for Customers Bank (as amended on November 2, 2020 and December 8, 2020). In connection with the closing of the divestiture, MFAC changed its name to “BM Technologies, Inc.”January 4, 2021. Following the completion of the divestiture of BMT, BankMobile's serviced deposits and loans and the related net interest income have been combined with Customers’ financial condition and the results of operations as a single reportable segment. BMT's historical financial results for periods prior to the divestiture are reflected in Customers’ consolidated financial statements as discontinued operations. The assets and liabilities of BMT have been presented as "Assets of discontinued operations" and "Liabilities of discontinued operations" on the consolidated balance sheet at December 31, 2020. BMT's operating results and associated cash flows have been presented as "Discontinued operations" within the accompanying consolidated financial statements and prior period amounts have been reclassified to conform with the current period presentation. For additional information refer to "NOTE 3 – DISCONTINUED OPERATIONS" to Customers' unaudited consolidated financial statements.
In October 2021, Customers Bank launched the Customers Bank Instant Token or 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 B2B verticals such as trading operations, real estate,
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manufacturing, and logistics. 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 non-interest bearing deposits at Customers Bank. CBIT is not listed or traded on any digital currency exchange. As of March 31, 2022, Customers Bank held $1.8 billion of deposits from customers participating in CBIT.
To further build its franchise and support the growth of its commercial lending initiatives, Customers added three new commercial verticals during 2021 within its Specialty Banking business. These three new verticals included fund finance, technology and venture capital banking and financial institutions group that provide financing to the private equity industry and cash management services to the alternative investment industry. Customers also launched a pilot digital small balance 7(a) lending within its existing SBA Lending business in third quarter 2021.
There is credit risk inherent in loans and leases requiring Customers to maintain an ACL to absorb credit losses on existing loans and leases that may become uncollectible. Customers maintains this allowance by charging a provision for credit losses on loan and lease lossesleases against its operating earnings. Customers has included a detailed discussion of this process, as well as several tables describing its ACL, in "NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION" and "NOTE 8 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES" to Customers' unaudited consolidated financial statements.
Impact of COVID-19, Geopolitical Conflict and Macroeconomic Uncertainties
In March 2020, the outbreak of COVID-19 was recognized as a pandemic by the World Health Organization. The spread of COVID-19 and its variants has created a global public health crisis that has resulted in unprecedented uncertainty, volatility and disruption in financial markets and in governmental, commercial and consumer activity in the United States and globally, including the markets that Customers serves. Governmental responses during the pandemic have included orders closing businesses not deemed essential and directing individuals to restrict their movements, observe social distancing and shelter in place. These actions, together with responses to the pandemic by businesses and individuals, have resulted in rapid decreases in commercial and consumer activity, temporary closures of many businesses that have led to a loss of revenues and a rapid increase in unemployment, material decreases in oil and gas prices and in business valuations, disrupted global supply chains, market downturns and volatility, changes in consumer behavior related to pandemic fears, related emergency response legislation including the CARES Act and an expectation thatsubsequent amendments and the Federal Reserve policy will maintainBoard maintaining a low interest rate environment forenvironment. The CARES Act included the foreseeable future.SBA's PPP, a nearly $350 billion program designed to aid small- and medium-sized businesses through federally guaranteed loans distributed through banks. 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.
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In response to the COVID-19 pandemic, Customers has taken deliberate actions to ensure that it has the necessary balance sheet strength to serve its clients and communities, including increases in liquidity and reserves supported by a strong capital position. Customers' business and consumer customers are experiencingcontinue to experience varying degrees of financial distress, which is expected to continue in the coming months.distress. In order to protect the health of its customers and team members, and to comply with applicable government directives, Customers hashad modified its business practices, including restricting team member travel, directing team members to work from homeremotely insofar as is possible and implementing its business continuity plans and protocols to the extent necessary. Customers also has made donationsSince that have resulted in more than $1 million, either directly or indirectly, to communities in its footprint for urgent basic needs and has been re-targeting existing sponsorship and grants to non-profit organizations to support COVID-19 related activities.
On March 27, 2020, the CARES Act was signed into law. It contains substantial tax and spending provisions intended to address the impact of the COVID-19 pandemic. The CARES Act includes 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 are 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 April 16, 2020, the SBA announced that all available funds had been exhausted and applications were no longer being accepted. On April 22, 2020, an additional $310 billion of funds for the PPP was signed into law. On August 8, 2020, the SBA announced that the PPP was closed and no longer accepting PPP applications from participating lenders. On December 27, 2020, the CAA was signed into law, including Division N, Title III, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, which provides $284 billion in additional funding for the SBA's PPP for small businesses affected by the COVID-19 pandemic. The CAA provides 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 January 11, 2021, the SBA reopened the PPP program to small business and non-profit organizations that did not receive a loan through the initial PPP phase. 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 ends on May 31, 2021. As of March 31, 2021,time, Customers has helped thousandslaunched the “Return to Workplace” initiative, and communicated a goal of small businesses by originating approximately $7.1 billion in PPP loans directly or through fintech partnerships.
In responsehaving more team members return to the workplace. In that communication, Customers announced the following steps along with a continuing commitment to remain empathetic and cognizant of balancing company principles, customer support, team member support and remaining vigilant in tracking and preventing COVID-19 pandemic,exposures to protect our team members and customers. Customers implemented a “ hybrid model” encouraging and tracking the movement of more team members returning to the office, released a communication requiring all team members to read, sign and acknowledge a Code of Commitment to reveal exposures to COVID-19, thereby allowing Customers to manage the possible impact with 100 percent participation of our team members. Customers has started tracking vaccination rates and less than 10 percent of our team members are not vaccinated or not planning to be vaccinated.
Customers also implemented a short-term loan modification program to provide temporary payment relief to certain of its borrowers who meetmet the program's qualifications. This program allowsallowed for a deferral of payments for a maximum of 90 days at a time. The deferred payments along with interest accrued during the deferral period are due and payable on the maturity date of the existing loan. AsOn December 27, 2020, the CAA was signed into law, which extended and expanded various relief provisions of Marchthe CARES Act including the temporary relief from the accounting and disclosure requirements for TDRs until January 1, 2022. All commercial loans previously on deferments became current by December 31, 2021 total commercial deferments declined to $176.1 million, or 1.6% of total loans and leases, excluding PPP loans, from a peak of $1.2 billion andbillion. Customers had no pending commercial loan deferment requests as of December 31, 2021. As of March 31, 2022, total consumer deferments declined to $13.0$3.3 million, from a peak of $108.0 million. As of December 31, 2021, total consumer deferments were $6.1 million, or 0.1% of total loans and leases, excluding PPP loans, from a peak of $108 million.loans. Excluding loans receivable, PPP from total loans and leases receivable is a non-GAAP measure. Management believes the use of these non-GAAP measures provides additional clarity when assessing Customers' financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. Please refer to the following reconciliation schedule. Customers had no pending commercial loan deferment requests as
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March 31,
(dollars in thousands)2021
Loans held for sale (GAAP)$46,106 
Loans receivable, mortgage warehouse, at fair value (GAAP)3,407,622 
Loans and leases receivable (GAAP)12,714,474 
Total loans and leases receivable (GAAP)16,168,202 
Less: Loans receivable, PPP5,177,985 
Total loans and leases, excluding PPP (Non-GAAP)$10,990,217 
Commercial deferments (GAAP)$176,100 
Consumer deferments (GAAP)13,000 
Total deferments (GAAP)$189,100 
Commercial deferments to total loans and leases, excluding PPP (Non-GAAP)1.6 %
Consumer deferments to total loans and leases, excluding PPP (Non-GAAP)0.1 %
Total deferments to total loans and leases, excluding PPP (Non-GAAP)1.7 %
(dollars in thousands)March 31, 2022December 31, 2021
Loans held for sale (GAAP)$3,003 $16,254 
Loans receivable, mortgage warehouse, at fair value (GAAP)1,755,758 2,284,325 
Loans and leases receivable (GAAP)12,314,757 12,268,306 
Total loans and leases receivable (GAAP)14,073,518 14,568,885 
Less: Loans receivable, PPP2,195,902 3,250,008 
Total loans and leases, excluding PPP (Non-GAAP)$11,877,616 $11,318,877 
Commercial deferments (GAAP)$— $— 
Consumer deferments (GAAP)3,262 6,060 
Total deferments (GAAP)$3,262 $6,060 
Commercial deferments to total loans and leases, excluding PPP (Non-GAAP)— %— %
Consumer deferments to total loans and leases, excluding PPP (Non-GAAP)0.0 %0.1 %
Total deferments to total loans and leases, excluding PPP (Non-GAAP)0.0 %0.1 %
The FRB hasFederal Reserve Board had taken a range of actions to support the flow of credit to households and businesses. For example, on March 15, 2020,businesses at the FRB reduced the target range for the federal funds rate to 0.00% to 0.25% and announced that it would increase its holdingsoutbreak of U.S.
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Treasury securities and agency mortgage-backed securities and begin purchasing agency commercial mortgage-backed securities.COVID-19. The FRB has also encouraged depository institutions to borrow from the discount window and has lowered the primary credit rate for such borrowing by 150 basis points while extending the term of such loans up to 90 days.Federal Reserve requirements have been reduced to zero as of March 26, 2020. The FRB has alsoBoard established or has taken steps to establish, a range of facilities and programs to support the U.S. economy and U.S. marketplace participants in response to economic disruptions associated with COVID-19, including among others, Main Street Lending facilities to purchase loan participations, under specified conditions, from banks lending to small and medium U.S. businesses and the PPPLF, which was created to bolster the effectiveness of the PPP by taking loans as collateral at face value. Customers has been participatingparticipated in some of these facilities and programs, and it may participate in some or all of these facilities or programs, including as a lender, agent, or intermediary on behalf of clients or customers at various times inprimarily the future. As of March 31, 2021,PPPLF. Customers had $3.3 billion in borrowingsfully repaid the borrowing from the PPPLF.PPPLF during the three months ended September 30, 2021. No new advances are available from the PPPLF after July 30, 2021. The U.S. economy has since strengthened despite the spread of COVID-19 variants, with higher inflation and housing values. In response, the Federal Reserve Board has begun normalizing monetary policy with its decision in late 2021 to taper its quantitative easing and raising the federal funds rate in March 2022.
Significant uncertainties as to future economic conditions continue to exist, including inflation, global supply chain issues, and higher oil and commodity prices exacerbated by the military conflict between Russia and Ukraine. Customers has taken deliberate actions in response, including maintaining higher levels of on-balance sheet liquidity, and maintaining strong capital ratios. Additionally, the economic pressures, coupled with the implementation of an expected lifetime loss methodology for determining our provision for credit losses as required by CECL have contributed to an increased provisionreserves for credit losses on loans and leases and off-balance sheet credit exposures in 2020.and strong capital ratios. Customers has also shifted the mix of its loan portfolio towards commercial loans with floating or adjustable interest rates and increased its non-interest bearing and interest-bearing demand deposits to position the Bank for future interest rate hikes. Customers continues to monitor closely the impact of COVID-19 closely,and its variants, the military conflict between Russia and Ukraine and macroeconomic uncertainties, as well as any effects that may result from the CARES Act, the CAA and the American Rescue Plan Act of 2021;federal government's responses including future rate hikes; however, the extent to which the ongoing COVID-19 pandemic, the geopolitical conflict and macroeconomic factors will impact Customers' operations and financial results during the remainder of 20212022 is highly uncertain.
New Accounting Pronouncements
For information about the impact that recently adopted or issued accounting guidance will have on us, please refer to "NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION" to Customers' unaudited consolidated financial statements.
Critical Accounting Policies and Estimates
Customers has adopted various accounting policies that govern the application of U.S. GAAP and that are consistent with general practices within the banking industry in the preparation of its consolidated financial statements. Customers' significant accounting policies are described in "NOTE 2 -– SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION" in Customers' audited consolidated financial statements included in its 20202021 Form 10-K and updated in this Form 10-Q for the quarterly period ended March 31, 20212022 in "NOTE 2 -– SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION" in Customers' unaudited consolidated financial statements.
Certain accounting policies may involve significant judgments and assumptions by Customers that have a material impact on the carrying value of certain assets. Customers considers these accounting policies to be critical accounting policies. The judgmentjudgments and assumptions used are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions management makes, actual results could differ from these judgments and estimates, which could have a material impact on the carrying values of Customers' assets.
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The critical accounting policy that is both important to the portrayal of Customers' financial condition and results of operations and requires complex, subjective judgments is the ACL. This critical accounting policy and material estimate, along with the related disclosures, are reviewed by Customers' Audit Committee of the Board of Directors.
Allowance for Credit Losses
Customers' ACL at March 31, 20212022 represents Customers' current estimate of the lifetime credit losses expected from its loan and lease portfolio and its unfunded lending-related commitments that are not unconditionally cancellable. Management estimates the ACL by projecting a lifetime loss rate conditional on a forecast of economic parameters and other qualitative adjustments, for the loans and leases' expected remaining term.
Customers uses external sources in the creation of its forecasts, including current economic conditions and forecasts for macroeconomic variables over its reasonable and supportable forecast period (e.g., GDP growth rate, unemployment rate, BBB spread, commercial real estate and home price index). After the reasonable and supportable forecast period, which ranges from two to five years, the models revert the forecasted macroeconomic variables to their historical long-term trends, without specific predictions for the economy, over the expected life of the pool, while also incorporating prepayment assumptions into its lifetime loss rates. Internal factors that impact the quarterly allowance estimate include the level of outstanding balances, portfolio performance and assigned risk ratings. Significant loan/borrower attributes utilized in the models include property type, initial loan to value, assigned risk ratings, delinquency status, origination date, maturity date, initial FICO scores, and borrower industry and state.
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The ACL may be affected materially by a variety of qualitative factors that Customers considers to reflect its current judgement of various events and risks that are not measured in our statistical procedures, including uncertainty related to the economic forecasts used in the modeledmodelled credit loss estimates, nature and volume of loan and lease portfolio, credit underwriting policy exceptions, peer comparison, industry data, and model and data limitations. The qualitative allowance for economic forecast risk is further informed by multiple alternative scenarios, as deemed applicable, to arrive at a scenario or a composite scenarioof scenarios supporting the period-end ACL balance. The evaluation process is inherently imprecise and subjective as it requires significant management judgment based on underlying factors that are susceptible to changes, sometimes materially and rapidly. Customers recognizes that this approach may not be suitable in certain economic environments such that additional analysis may be performed at management's discretion. Due in part to its subjectivity, the qualitative evaluation may be materially impacted during periods of economic uncertainty and late breaking events that could lead to revision of reserves to reflect management's best estimate of expected credit losses.
The ACL is established in accordance with our ACL policy. The ACL Committee, which includes the Bank's Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Chief Lending Officer, and Chief Credit Officer, among others, reviews the adequacy of the ACL each quarter, together with Customers' risk management team. The ACL policy, significant judgements and the related disclosures are reviewed by Customers' Audit Committee of the Board of Directors.
The net decreaseincrease in our estimated ACL as of March 31, 20212022 as compared to our December 31, 20202021 estimate was primarily attributable to the continuing improvementloan growth in macroeconomic forecasts. The increase in ACL in our installmentthe loan portfolio is mainly due to loan growth.for consumer installment, residential, multi-family and commercial and industrial loans. There was a $2.9$15.3 million benefit to (or release) the provision for credit losses on loans and leases for the three months ended March 31, 20212022, resulting in an ACL ending balance of $129.7$147.8 million ($128.7145.8 million for loans and leases and $1.0$2.0 million for unfunded lending-related commitments) as of March 31, 2021.2022.
To determine the ACL as of March 31, 2021,2022, Customers utilized the Moody's March 20212022 Baseline forecast to generate its modelled expected losses and considered Moody's other alternative economic forecast scenarios to qualitatively adjust the modelled ACL by loan portfolio in order to reflect management's reasonable expectations of current and future economic conditions. The Baseline forecast at March 20212022 assumed continued improvementdecelerating growth in forecasts of macroeconomic conditionsforecasts compared to the fourth quarter forecast2021 forecasts of macroeconomic conditions used by Customers; the impact of the Russian invasion of Ukraine on the U.S. economy would be marginal and the disruptions to oil, natural gas and other commodity markets will be limited and temporary; the COVID-19 pandemic slowly receding and becoming less disruptive to global supply chains, tourism and business travel, immigration and labor markets; the Federal Reserve maintaining aBoard raising the target range for the fed funds rate at 0.00% to 0.25% into 2023; the tapering of quantitative easing not beginning untilfour times by 25 basis points each time in 2022; and an improvingthe U.S. economy from $1.9 trillion of stimulus from the federal government enactedachieving full-employment with a 3.5% unemployment rate in March 2021 and a federal spending legislation on infrastructure and social benefits in the second half of 2021.late 2022 or early 2023. Customers continues to monitor the impact of the military conflict between Russia and Ukraine, the ongoing COVID-19 pandemic, inflation, and related policy measures on the U.S. economy and, if the depth of the recession or pace of the expected recovery is worse than expected, further meaningful provisions for credit losses could be required.
As of December 31, 2021, the ACL ending balance was $139.9 million ($137.8 million for loans and leases and $2.1 million for unfunded lending-related commitments). To determine the ACL as of December 31, 2021, Customers utilized the Moody's December 2021 Baseline forecast to generate its modelled expected losses by loan portfolio in order to reflect management's reasonable expectations of current and future economic conditions. The Baseline forecast at December 31, 2021 assumed continued improvement in forecasts of macroeconomic conditions compared to the forecasts of macroeconomic conditions used by Customers in 2020; the Federal Reserve Board has accelerated its tapering process in the fourth quarter of 2021 and the first rate hike is assumed to occur in 2022; a
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continuing U.S. economic recovery from federal spending and abatement of the COVID-19 pandemic, notwithstanding the impact of the Omicron variant; and the acceleration in consumer prices is expected to peak and moderate in the near-term as the supply chain issues subside.
One of the most significant judgments influencing the ACL is the macroeconomic forecasts from Moody's. Changes in the economic forecasts could significantly affect the estimated credit losses which could potentially lead to materially different allowance levels from one reporting period to the next. Given the dynamic relationship between macroeconomic variables within Customers' modelling framework, it is difficult to estimate the impact of a change in any one individual variable on the ACL. However, to illustrate a hypothetical sensitivity analysis, management calculated a quantitative allowance using a 100% weighting applied to an adverse scenario. This scenario includes assumptions around the military conflict between Russia and Ukraine worsening significantly and persisting longer, causing oil prices to rise more sharply than the Baseline projections, new infections, hospitalizations and COVID-19 deaths beingrising significantly aboveagain as compared to the Baseline projections, leading to a much slower re-opening ofslowing growth in consumer spending on air travel, retail and hotels, worsening supply chain issues boosting inflation, rising unemployment and the economy.U.S. economy falling into recession. Under this scenario, as an example, the unemployment rate is estimated at 7.2%5.8% and 8.2%7.6% at the end of 20212022 and 2022,2023, respectively. These numbers represent a 1.5%2.2% and 3.8%4.2% higher unemployment estimate than Baseline scenario projections of 5.7%3.6% and 4.3%3.4%, respectively for the same time periods. To demonstrate the sensitivity to key economic parameters, management calculated the difference between a 100% Baseline weighting and a 100% adverse scenario weighting for modeledmodelled results. This would result in an incremental quantitative impact to the ACL of approximately $39.0 million.$37.2 million at March 31, 2022. This resulting difference is not intended to represent an expected increase in ACL levels since (i) Customers usesmay use a weighted approach applied to multiple economic scenarios for its ACL process, (ii) the highly uncertain economic environment, (iii) the difficulty in predicting inter-relationships between macroeconomic variables used in various economic scenarios, and (iv) the sensitivity analysis does not account for any qualitative adjustments incorporated by Customers as part of its overall ACL framework.
There is no certainty that Customers' ACL will be appropriate over time to cover losses in our portfolio as economic and market conditions may ultimately differ from our reasonable and supportable forecast. Additionally, events adversely affecting specific customers, industries, or Customers' markets, such as the currentongoing COVID-19 pandemic, could severely impact our current expectations. If the credit quality of Customers' customer base materially deteriorates or the risk profile of a market, industry, or group of customers changes materially, Customers' net income and capital could be materially adversely affected which, in turn could have a material adverse effect on Customers' financial condition and results of operations. The extent to which the currentongoing COVID-19 pandemic has and will continue to negatively impact Customers' businesses, financial condition, liquidity and results will depend on future developments, which are highly uncertain and cannot be forecasted with precision at this time.
For more information, see "NOTE 8 – LOANS AND LEASES RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES" to theCustomers' unaudited consolidated financial statements.
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Results of Operations
The following table sets forth the condensed statements of income for the three months ended March 31, 20212022 and 2020:
Three Months Ended March 31,
(dollars in thousands)20212020Change% Change
Net interest income$132,731 $81,321 $51,410 63.2 %
Provision (benefit) for credit losses on loans and leases(2,919)31,786 (34,705)(109.2)%
Total non-interest income18,468 11,160 7,308 65.5 %
Total non-interest expense61,927 48,967 12,960 26.5 %
Income before income tax expense92,191 11,728 80,463 686.1 %
Income tax expense17,560 3,274 14,286 436.3 %
Net income from continuing operations74,631 8,454 66,177 782.8 %
Loss from discontinued operations before income tax expense(20,354)(6,722)(13,632)202.8 %
Income tax expense (benefit) from discontinued operations17,682 (1,368)19,050 (1,392.5)%
Net loss from discontinued operations(38,036)(5,354)(32,682)610.4 %
Net income36,595 3,100 33,495 1,080.5 %
Preferred stock dividends3,391 3,615 (224)(6.2)%
Net income available to common shareholders$33,204 $(515)$33,719 (6,547.4)%
2021:
Three Months Ended March 31,
(dollars in thousands)20222021Change% Change
Net interest income$164,699 $132,731 $31,968 24.1 %
Provision (benefit) for credit losses15,997 (2,919)18,916 (648.0)%
Total non-interest income21,198 18,468 2,730 14.8 %
Total non-interest expense73,807 61,927 11,880 19.2 %
Income before income tax expense96,093 92,191 3,902 4.2 %
Income tax expense19,332 17,560 1,772 10.1 %
Net income from continuing operations76,761 74,631 2,130 2.9 %
Loss from discontinued operations before income taxes— (20,354)20,354 (100.0)%
Income tax expense from discontinued operations— 17,682 (17,682)(100.0)%
Net loss from discontinued operations— (38,036)38,036 (100.0)%
Net income76,761 36,595 40,166 109.8 %
Preferred stock dividends1,865 3,391 (1,526)(45.0)%
Net income available to common shareholders$74,896 $33,204 $41,692 125.6 %
Customers reported net income available to common shareholders of $74.9 million for the three months ended March 31, 2022 compared to net income available to common shareholders of $33.2 million for the three months ended March 31, 2021 compared to a net loss available to common shareholders of $0.5 million for the three months ended March 31, 2020.2021. Factors contributing to the change in net income available to common shareholders for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 were as follows.
Net interest income
Net interest income increased $51.4$32.0 million for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 as average interest-earning assets increased by $7.0 billion,$628.4 million, and NIM increased by 160 basis pointpoints to 3.60% for the three months ended March 31, 2022 from 3.00% for the three months ended March 31, 2021 from 2.99% for the three months ended March 31, 2020.2021. The increase in interest earningsinterest-earning assets werewas driven by increases in origination of PPP loans, commercial loans to mortgage companies,investment securities, commercial and industrial loans investment securitiesand leases and installment loans, offset in part by decreases in multi-familyPPP loans and residential mortgages. There was alsodue to PPP loan forgiveness fromand commercial loans to mortgage companies. The shift in the first two roundsmix of interest-earning assets and PPP loan forgiveness, which accelerated the recognition of net deferred loan origination fees, that contributed to the NIM increase. The shift in the mix of interest-earning assets and interest-bearing liabilities drove a 9536 basis point declinepoints increase in the yield on interest-earning assets and contributed to the NIM increase. The NIM also increased from equity investment distributions, which are included in other interest income. The shift in the mix of interest-bearing liabilities in a 121lower interest rate environment drove a 20 basis pointpoints decline in the cost of interest-bearing liabilities for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The largest shift in the mix of interest-earning assets and interest-bearing liabilities was $5.2$2.2 billion ($4.62.6 billion average balance) of PPP loans yielding 3.41%5.66% and related PPPLF borrowings of $3.3$5.6 billion ($3.95.8 billion average balance) of interest-bearing demand deposits costing 0.54%. Non-interest bearing demand deposits was $4.6 billion ($4.9 billion average balance). PPPLF borrowings costing 0.35%. were fully repaid during the three months ended September 30, 2021. Customers' total cost of funds, including non-interest bearing deposits was 0.67%0.43% and 1.70%0.67% for the three months ended March 31, 20212022 and 2020,2021, respectively.
Provision (benefit) for credit losses on loans and leases
The $34.7$18.9 million decreaseincrease in the provision for credit losses for the three months ended March 31, 20212022 compared to the three months ended March 31, 2020,2021, primarily reflects Customers' adoption of CECLthe loan growth in the loan portfolio for consumer installment, residential, multi-family and the improvement in macroeconomic forecasts since the beginning of COVID-19 pandemic in first quarter 2020. Upon adoption of the CECL standard on January 1, 2020, the ACL for loanscommercial and leases and off-balance sheet credit exposures increased by $79.8 million and $3.4 million, respectively.industrial loans. The ACL on off-balance sheet credit exposures is presented within accrued interest payable and other liabilities in the consolidated balance sheet and the related provision (benefit) is presented as part of other non-interest expense on the consolidated income statement.statement of income. The ACL on loans and leases held for investment represented 1.7%1.44% of total loans and leases receivable, excluding PPP loans (non-GAAP measure, please refer to the non-GAAP reconciliation within Loans and Leases - Asset Quality)Credit Risk), at March 31, 2021,2022, compared to 2.0%1.71% at March 31, 2020.2021. Net charge-offs for the three months ended March 31, 20212022 were $12.5$7.2 million, or 3321 basis points of average loans and leases on an annualized basis, compared to net charge-offs of $18.7$12.5 million, or 7933 basis points on an annualized basis, for the three months ended March 31, 2020.2021. The decrease in net charge-offs for the three months ended March 31, 2021,2022, compared to the three months ended March 31, 2020,2021, was primarily due to a charge-off of $12.8 millionlower charge-offs for one commercial real estate collateral dependent loan during the three monthsconsumer installment loans.
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The provision for credit losses for the three months ended March 31, 2020, partially offset by an increase2022 also includes a provision for credit losses of $0.7 million on certain asset-backed securities included in charge-off of installment loans, coinciding with the growth of the portfolio year-over-year.our investment securities. See "NOTE 6 – INVESTMENT SECURITIES" to Customers' unaudited consolidated financial statements for additional information.
Non-interest income
The $7.3$2.7 million increase in non-interest income for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily resulted from a decrease of $24.5 million in loss on cash flow hedge derivative terminations, and increases of $19.6$6.6 million in gain on sale of investment securities, $3.7 million in unrealized gain on derivatives, $2.4 million in unrealized gain on investment securities, $2.3 million in mortgage warehouse transactional fees, $1.6 million in sale of SBA and other loans,bank-owned life insurance income, $1.1 million in other non-interest incomeloan fees and $0.9$0.7 million in commercial lease income. These increases were offset in part by $24.5decreases of $24.6 million in gain (loss) on sale of lossesinvestment securities, $2.2 million in mortgage warehouse transactional fees, $1.6 million in unrealized gain (loss) on cash flow hedge derivative terminations for the three months ended March 31, 2021.derivatives, $1.3 million in unrealized gain (loss) on investment securities, $0.5 million in other non-interest income and $0.1 million in gain (loss) on sale of SBA and other loans.
Non-interest expense
The $13.0$11.9 million increase in non-interest expense for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily resulted from increases of $9.4$4.1 million in technology, communication and bank operations, $3.4$2.6 million in salaries and employee benefits, $2.7$1.9 million in loan servicing, $1.8 million in other non-interest expense, $1.1 million in professional services $0.9and $0.7 million in commercial lease depreciation and $0.4 million in merger and acquisition related expenses.depreciation. These increases were offset in part by decreasesa decrease of $2.3$0.4 million in other non-interest expense, $0.9 million in advertisingmerger and promotion and $0.6 million in loan workoutacquisition related expenses for the three months ended March 31, 20212022 compared to the three months ended March 31, 2020.2021.
Income tax expense
Customers' effective tax rate from continuing operations was 20.1% for the three months ended March 31, 2022 compared to 19.0% for the three months ended March 31, 2021 compared to 27.9% for the three months ended March 31, 2020.2021. The decreaseincrease in the effective tax rate primarily resulted from an increase inreduced investment tax credits in 2021for 2022 and a benefit for the recording of net discrete tax benefits associated with the divestiture of BMT and the recognition of a deferred tax asset related to the outside basis difference of foreign subsidiaries included in 2021, offset in part by excess tax benefits on vesting of restricted stock units and death benefits from bank-owned life insurance policies for the three months ended March 31, 2021.2022.
Net loss from discontinued operations
On January 4, 2021, Customers Bancorp completed the previously announced divestiture of BMT, the technology arm of its BankMobile segment, to MFAC Merger Sub Inc., an indirect wholly-owned subsidiary of MFAC, pursuant to an Agreement and Plan of Merger, dated August 6, 2020, by and among Megalith, MFAC Merger Sub Inc., BMT, Customers Bank, the sole stockholder of BMT, and Customers Bancorp, the parent bank holding company for Customers Bank (as amended on November 2, 2020 and December 8, 2020). In connection with the closing of the divestiture, MFAC changed its name to “BM Technologies, Inc.”MFAC. Following the completion of the divestiture of BMT, BankMobile's serviced deposits and loans and the related net interest income have been combined with Customers' financial condition and the results of operations as a single reportable segment.
BMT's historical financial results for periods prior to the divestiture are reflected in Customers Bancorp’s consolidated financial statements as discontinued operations. The assets and liabilities of BMT have been presented as "Assets of discontinued operations" and "Liabilities of discontinued operations" on the consolidated balance sheet at December 31, 2020. BMT's operating results and associated cash flows have been presented as "Discontinued operations" within the accompanying unaudited consolidated financial statements and prior period amounts have been reclassified to conform with the current period presentation.
Customers'Customers had no loss from discontinued operations, net of income taxes wasfor the three months ended March 31, 2022 compared to $38.0 million for the three months ended March 31, 2021 comparedas the divestiture of BMT was completed on January 4, 2021. The $38.0 million decrease was primarily related to $5.4 million for the three months ended March 31, 2020. The $32.7 million increase primarily resulted from restricted stock awards of BM Technologies' common stock granted to certain team members of BMT and the effect of the divestiture being treated as a taxable asset sale for tax purposes, offset in part by a tax benefit related to the restricted stock awards.awards during the three months ended March 31, 2021. See "NOTE 3 – DISCONTINUED OPERATIONS" to theCustomers' unaudited consolidated financial statements for additional information.
Preferred stock dividends
Preferred stock dividends were $3.4$1.9 million and $3.6$3.4 million for the three months ended March 31, 2022 and 2021, respectively. On September 15, 2021, Customers redeemed all of the outstanding shares of Series C and 2020, respectively.Series D Preferred Stock for an aggregate payment of $82.5 million, at a redemption price of $25.00 per share. The redemption price paid in excess of the carrying value of Series C and Series D Preferred Stock of $2.8 million was included as a loss on redemption of preferred stock in the consolidated statement of income for the three months ended September 30, 2021. After giving effect to the redemption, no shares of the Series C and Series D Preferred Stock remained outstanding. There were no changes to the amount of preferred stock outstanding during the three months ended March 31, 20212022 and 2020. On June 15, 2020, the Series C preferred stock became floating at three-month LIBOR plus 5.300%, compared to a fixed rate of 7.00%. On March 15, 2021, the Series D preferred stock became floating at three-month LIBOR plus 5.09%, or 5.27%, compared to a fixed rate of 6.50%.

2021.
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On March 15, 2021, the Series D Preferred Stock became floating at three-month LIBOR plus 5.09%, compared to a fixed rate of 6.50%. On June 15, 2021, the Series E Preferred Stock became floating at three-month LIBOR plus 5.14%, compared to a fixed rate of 6.45%. On December 15, 2021, the Series F Preferred Stock became floating at three-month LIBOR plus 4.762%, compared to a fixed rate of 6.00%.

NET INTEREST INCOME
Net interest income (the difference between the interest earned on loans and leases, investments and interest-earning deposits with banks, and interest paid on deposits, borrowed funds and subordinated debt) is the primary source of Customers' earnings. The following table summarizes Customers' net interest income, related interest spread, net interest margin and the dollar amount of changes in interest income and interest expense for the major categories of interest-earning assets and interest-bearing liabilities for the three months ended March 31, 20212022 and 2020.2021. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to volume (i.e., changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

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Three Months Ended March 31,Three Months Ended March 31,Three Months Ended March 31,Three Months Ended March 31,
202120202021 vs. 2020202220212022 vs. 2021
(dollars in thousands)(dollars in thousands)Average balanceInterest income or expenseAverage yield or costAverage balanceInterest income or expenseAverage yield or costDue to rateDue to volumeTotal(dollars in thousands)Average
Balance		Interest
Income or
Expense		Average
Yield or
Cost (%)		Average
Balance		Interest
Income or
Expense		Average
Yield or
Cost (%)		Due to rateDue to volumeTotal
AssetsAssetsAssets
Interest-earning depositsInterest-earning deposits$1,177,315 $302 0.10 %$772,249 $2,860 1.49 %$(3,543)$984 $(2,559)Interest-earning deposits$826,240 $329 0.16 %$1,177,315 $302 0.10 %$133 $(106)$27 
Investment securities (1)
Investment securities (1)
1,357,558 7,979 2.35 %566,287 4,977 3.52 %(2,063)5,066 3,003 
Investment securities (1)
4,036,966 20,295 2.01 %1,357,558 7,979 2.35 %(1,279)13,595 12,316 
Loans and leases:Loans and leases:Loans and leases:
Commercial loans to mortgage companiesCommercial loans to mortgage companies3,122,098 23,791 3.09 %1,841,659 17,514 3.82 %(3,847)10,124 6,277 Commercial loans to mortgage companies1,836,647 14,006 3.09 %3,122,098 23,791 3.09 %— (9,785)(9,785)
Multi-family loansMulti-family loans1,689,174 15,848 3.80 %2,213,858 22,367 4.06 %(1,386)(5,133)(6,519)Multi-family loans1,531,846 13,766 3.64 %1,689,174 15,848 3.80 %(648)(1,434)(2,082)
Commercial and industrial loans and leases (2)
Commercial and industrial loans and leases (2)
2,848,328 27,850 3.97 %2,460,811 28,738 4.70 %(4,901)4,013 (888)
Commercial and industrial loans and leases (2)
4,124,408 36,659 3.60 %2,848,328 27,850 3.97 %(2,786)11,595 8,809 
PPP loansPPP loans4,623,213 38,832 3.41 %— — — %— 38,832 38,832 PPP loans2,641,318 36,894 5.66 %4,623,213 38,832 3.41 %19,028 (20,966)(1,938)
Non-owner occupied commercial real estate loansNon-owner occupied commercial real estate loans1,348,938 12,794 3.85 %1,335,459 14,437 4.35 %(1,777)134 (1,643)Non-owner occupied commercial real estate loans1,312,210 12,207 3.77 %1,348,938 12,794 3.85 %(254)(333)(587)
Residential mortgagesResidential mortgages373,497 3,485 3.78 %445,953 4,401 3.97 %(209)(707)(916)Residential mortgages416,417 3,680 3.58 %373,497 3,485 3.78 %(191)386 195 
Installment loansInstallment loans1,323,863 29,517 9.04 %1,259,051 28,623 9.14 %(355)1,249 894 Installment loans1,794,145 39,963 9.03 %1,323,863 29,517 9.04 %(33)10,479 10,446 
Total loans and leases (3)
Total loans and leases (3)
15,329,111 152,117 4.02 %9,556,791 116,080 4.89 %(23,473)59,510 36,037 
Total loans and leases (3)
13,656,991 157,175 4.67 %15,329,111 152,117 4.02 %22,816 (17,758)5,058 
Other interest-earning assetsOther interest-earning assets79,960 717 3.64 %81,404 1,426 7.04 %(684)(25)(709)Other interest-earning assets52,111 5,677 NM(7)79,960 717 3.64 %5,294 (334)4,960 
Total interest-earning assetsTotal interest-earning assets17,943,944 161,115 3.64 %10,976,731 125,343 4.59 %(29,984)65,756 35,772 Total interest-earning assets18,572,308 183,476 4.00 %17,943,944 161,115 3.64 %16,514 5,847 22,361 
Non-interest-earning assetsNon-interest-earning assets581,777 513,705 Non-interest-earning assets557,022 581,777 
Assets of discontinued operations— 82,970 
Total assetsTotal assets$18,525,721 $11,573,406 Total assets$19,129,330 $18,525,721 
LiabilitiesLiabilitiesLiabilities
Interest checking accountsInterest checking accounts$2,691,723 5,599 0.84 %$1,294,098 4,616 1.43 %(2,453)3,436 983 Interest checking accounts$5,769,372 7,730 0.54 %$2,691,723 5,599 0.84 %(2,527)4,658 2,131 
Money market deposit accountsMoney market deposit accounts4,435,930 6,059 0.55 %3,635,554 16,214 1.79 %(13,068)2,913 (10,155)Money market deposit accounts4,880,051 4,674 0.39 %4,435,930 6,059 0.55 %(1,926)541 (1,385)
Other savings accountsOther savings accounts1,414,350 2,400 0.69 %1,141,406 5,806 2.05 %(4,532)1,126 (3,406)Other savings accounts880,113 784 0.36 %1,414,350 2,400 0.69 %(903)(713)(1,616)
Certificates of depositCertificates of deposit666,239 1,600 0.97 %1,524,770 7,717 2.04 %(2,950)(3,167)(6,117)Certificates of deposit450,644 524 0.47 %666,239 1,600 0.97 %(661)(415)(1,076)
Total interest-bearing deposits (4)
Total interest-bearing deposits (4)
9,208,242 15,658 0.69 %7,595,828 34,353 1.82 %(24,716)6,021 (18,695)
Total interest-bearing deposits (4)
11,980,180 13,712 0.46 %9,208,242 15,658 0.69 %(5,979)4,033 (1,946)
Federal funds purchasedFederal funds purchased88,611 73 0.33 %16,333 3 0.07 %32 38 70 
FRB PPP liquidity facilityFRB PPP liquidity facility3,941,718 3,402 0.35 %— — — %— 3,402 3,402 FRB PPP liquidity facility— — — %3,941,718 3,402 0.35 %— (3,402)(3,402)
BorrowingsBorrowings1,171,826 9,324 3.23 %1,229,399 9,669 3.16 %177 (522)(345)Borrowings532,610 4,992 3.80 %1,155,493 9,321 3.27 %1,321 (5,650)(4,329)
Total interest-bearing liabilitiesTotal interest-bearing liabilities14,321,786 28,384 0.80 %8,825,227 44,022 2.01 %(34,465)18,827 (15,638)Total interest-bearing liabilities12,601,401 18,777 0.60 %14,321,786 28,384 0.80��%(6,489)(3,118)(9,607)
Non-interest-bearing deposits (4)
Non-interest-bearing deposits (4)
2,819,871 1,573,371 
Non-interest-bearing deposits (4)
4,900,983 2,819,871 
Total deposits and borrowingsTotal deposits and borrowings17,141,657 0.67 %10,398,598 1.70 %Total deposits and borrowings17,502,384 0.43 %17,141,657 0.67 %
Other non-interest-bearing liabilitiesOther non-interest-bearing liabilities247,798 96,874 Other non-interest-bearing liabilities237,131 247,798 
Liabilities of discontinued operations— 52,579 
Total liabilitiesTotal liabilities17,389,455 10,548,051 Total liabilities17,739,515 17,389,455 
Shareholders' equityShareholders' equity1,136,266 1,025,355 Shareholders' equity1,389,815 1,136,266 
Total liabilities and shareholders' equityTotal liabilities and shareholders' equity$18,525,721 $11,573,406 Total liabilities and shareholders' equity$19,129,330 $18,525,721 
Net interest incomeNet interest income132,731 81,321 $4,481 $46,929 $51,410 Net interest income164,699 132,731 $23,003 $8,965 $31,968 
Tax-equivalent adjustment (5)
Tax-equivalent adjustment (5)
292 205 
Tax-equivalent adjustment (5)
239 292 
Net interest earningsNet interest earnings$133,023 $81,526 Net interest earnings$164,938 $133,023 
Interest spreadInterest spread2.97 %2.89 %Interest spread3.57 %2.97 %
Net interest marginNet interest margin3.00 %2.98 %Net interest margin3.59 %3.00 %
Net interest margin tax equivalent (5)
Net interest margin tax equivalent (5)
3.00 %2.99 %
Net interest margin tax equivalent (5)
3.60 %3.00 %
Net interest margin tax equivalent, excluding PPP loans (6)
Net interest margin tax equivalent, excluding PPP loans (6)
2.99 %2.99 %
Net interest margin tax equivalent, excluding PPP loans (6)
3.32 %2.99 %
(1)For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(2)Includes owner occupied commercial real estate loans.
(3)Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees.
(4)Total costs of deposits (including interest bearing and non-interest-bearing) were 0.53%0.33% and 1.51%0.53% for the three months ended March 31, 20212022 and 2020,2021, respectively.
(5)Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for both the three months ended March 31, 20212022 and 2020,2021, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.
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(6)Non-GAAP tax-equivalent basis, as described in note (5) for the three months ended March 31, 20212022 and 2020,2021, excluding net interest income from PPP loans and related borrowings, along with the related PPP loan balances and PPP fees receivable from interest-earning assets. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.
(7)Not Meaningful. Average yield on other interest-earning assets for the three months ended March 31, 2022 was 44.18% primarily due to $5.2 million of equity investment distributions.
Net interest income increased $51.4$32.0 million for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 as average interest-earning assets increased by $7.0 billion,$628.4 million, primarily related to three rounds of PPP loan originations, increases in commercial loans to mortgage companies,investment securities, commercial and industrial loans investment securities, and installment loans, partially offset by a decreasedecreases in multi-familyPPP loans as thedue to PPP loan mix improved year-over-year.forgiveness and commercial loans to mortgage companies. The commercial loans to mortgage companies trend has been a function of greater refinance activity due to sharply lower interest rates, an increase in home purchase volumes and market share gains from other banks.banks since early 2020. The refinancing activity has slowed since reaching its high level in early 2021 with rising interest rates.
The NIM remained fairly constant, increasingincreased by 160 basis pointpoints to 3.60% for the three months ended March 31, 2022 from 3.00% for the three months ended March 31, 2021 from 2.99% for the three months ended March 31, 2020 resulting primarily from the Federal Reserve interest rate cuts of 225 basis points beginning in August 2019 and thePPP loan forgiveness, as well as a shift in the mix of interest-earning assets and interest-bearing liabilities in a lower interest rate environment. The shift in the mix of interest-earning assets and PPP loan forgiveness, which accelerated the recognition of net deferred loan origination fees, drove a 9536 basis point declinepoints increase in the yield on interest-earning assets and contributed to the NIM increase. The NIM also increased from equity investment distributions, which are included in other interest income. The shift in the mix of interest-bearing liabilities in a 121lower interest rate environment drove a 20 basis pointpoints decline in the cost of interest-bearing liabilities for the three months ended March 31, 20212022 compared to the three months ended March 31, 2020.2021. The largest shift in the mix of interest-earning assets and interest-bearing liabilities was $5.2$2.2 billion ($4.62.6 billion average balance) of PPP loans yielding 3.41%5.66% and related PPPLF borrowings of $3.3$5.6 billion ($3.95.8 billion average balance) of interest-bearing demand deposits costing 0.54%. Non-interest bearing demand deposits was $4.6 billion ($4.9 billion average balance). PPPLF borrowings costing 0.35%. There was also PPP loan forgiveness from were fully repaid during the first two rounds which accelerated the recognition of net deferred loan origination fees that contributed to the NIM increase.three months ended September 30, 2021. Customers' total cost of funds, including non-interest bearing deposits was 0.53%0.43% and 1.51%0.67% for the three months ended March 31, 2022 and 2021, and 2020, respectively.
Customers' net interest margin table containstables contain non-GAAP financial measures calculated using non-GAAP amounts. These measures include net interest margin tax equivalent and net interest margin tax equivalent, excluding PPP loans. Management uses these non-GAAP measures to presentcompare the current period presentation to historical periods in prior filings. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers' financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.
A reconciliation of net interest margin tax equivalent and net interest margin tax equivalent, excluding PPP loans for the three months ended March 31, 2022 and 2021 and 2020 areis set forth below.
Three Months Ended
March 31,
(dollars in thousands)20212020
Net interest income (GAAP)$132,731 $81,321 
Tax-equivalent adjustment292 205 
Net interest income tax equivalent (Non-GAAP)133,023 81,526 
Loans receivable, PPP net interest income(34,842)— 
Net interest income tax equivalent, excluding PPP loans (Non-GAAP)$98,181 $81,526 
Average total interest-earning assets (GAAP)$17,943,944 $10,976,731 
Average PPP loans(4,623,213)— 
Adjusted average total interest-earning assets (Non-GAAP)$13,320,731 $10,976,731 
Net interest margin (GAAP)3.00 %2.98 %
Net interest margin tax equivalent (Non-GAAP)3.00 %2.99 %
Net interest margin tax equivalent, excluding PPP loans (Non-GAAP)2.99 %2.99 %
Three Months Ended March 31,
(dollars in thousands)20222021
Net interest income (GAAP)$164,699 $132,731 
Tax-equivalent adjustment239 292 
Net interest income tax equivalent (Non-GAAP)164,938 133,023 
Loans receivable, PPP net interest income(34,615)(34,842)
Net interest income tax equivalent, excluding PPP loans (Non-GAAP)$130,323 $98,181 
Average total interest-earning assets (GAAP)$18,572,308 $17,943,944 
Average PPP loans(2,641,318)(4,623,213)
Adjusted average total interest-earning assets (Non-GAAP)$15,930,990 $13,320,731 
Net interest margin (GAAP)3.59 %3.00 %
Net interest margin tax equivalent (Non-GAAP)3.60 %3.00 %
Net interest margin tax equivalent, excluding PPP loans (Non-GAAP)3.32 %2.99 %

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PROVISION (BENEFIT) FOR CREDIT LOSSES ON LOANS AND LEASES
The provision (benefit) for credit losses is a charge (credit) to earnings to maintain the ACL at a level consistent with management’s assessment of expected lifetime losses in the loan and lease portfolio at the balance sheet date. During first quarter 2020, Customers adopted ASC 326. Upon adoption, the ACL for loans and leases and lending-related unfunded commitments increased by $79.8 million and $3.4 million, respectively, with the after-tax cumulative effect recorded to retained earnings. Customers recorded $31.8 million and $0.8 million ofa provision for credit losses foron loans and leases and lending-related commitments, respectively, forduring the three months ended March 31, 2020 utilizing the CECL methodology. The increase2022, which resulted primarily from the impact of reserve buildan increase in provision for the COVID-19
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pandemic,growth in loan portfolio growth,for consumer installment, residential, multi-family and net-charge-offs. Net charge-offscommercial and industrial loans. Customers recorded a provision for the three months ended March 31, 2020 were $18.7 million, or 79 basis points of averagecredit losses on loans and leases on an annualized basis, primarily due to a partial charge off of $12.8$15.3 million for one commercial real estate collateral dependent loan.
Customers recordedand a credit to provision for credit losses (a benefit) duringon lending-related commitments of $0.1 million for the three months ended March 31, 2021, which resulted primarily from continued improvement in forecasts of macroeconomic conditions.2022. Customers recorded a credit to provision for credit losses (a benefit) of $2.9 million and $1.3 million for loans and leases and lending-related commitments, respectively, for the three months ended March 31, 2021. Net charge-offs for the three months ended March 31, 20212022 were $7.2 million, or 21 basis points of average loans and leases on an annualized basis, compared to net charge-offs of $12.5 million, or 33 basis points of average loans and leases on an annualized basis, for three months ended March 31, 2021. The decrease in net charge-offs for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, was primarily due to $10.9 million oflower charge-offs for consumer installment loans consistent with the loan growth.loans. For more information about the provision and ACL and our loss experience on loans and leases, see “Credit Risk” and “Asset Quality” herein.
The provision for credit losses for the three months ended March 31, 2022 also included a provision for credit losses of $0.7 million on certain asset-backed securities included in our investment securities. See "NOTE 6 – INVESTMENT SECURITIES" to Customers' unaudited consolidated financial statements for additional information.
NON-INTEREST INCOME
The table below presents the components of non-interest income for the three months ended March 31, 20212022 and 2020.
 Three Months Ended March 31,
(dollars in thousands)20212020Change% Change
Interchange and card revenue$85 $270 $(185)(68.5)%
Deposit fees863 551 312 56.6 %
Commercial lease income5,205 4,268 937 22.0 %
Bank-owned life insurance1,679 1,762 (83)(4.7)%
Mortgage warehouse transactional fees4,247 1,952 2,295 117.6 %
Gain (loss) on sale of SBA and other loans1,575 11 1,564 14,218.2 %
Mortgage banking income463 296 167 56.4 %
Gain (loss) on sale of investment securities23,566 3,974 19,592 493.0 %
Unrealized gain (loss) on investment securities974 (1,378)2,352 (170.7)%
Unrealized gain (loss) on derivatives2,537 (1,146)3,683 (321.4)%
Loss on cash flow hedge derivative terminations(24,467)— (24,467)NM
Other1,741 600 1,141 190.2 %
Total non-interest income$18,468 $11,160 $7,308 65.5 %
2021.
 Three Months Ended March 31,
(dollars in thousands)20222021Change% Change
Interchange and card revenue$76 $85 $(9)(10.6)%
Deposit fees940 863 77 8.9 %
Commercial lease income5,895 5,205 690 13.3 %
Bank-owned life insurance8,326 1,679 6,647 395.9 %
Mortgage warehouse transactional fees2,015 4,247 (2,232)(52.6)%
Gain (loss) on sale of SBA and other loans1,507 1,575 (68)(4.3)%
Loan fees2,545 1,436 1,109 77.2 %
Mortgage banking income481 463 18 3.9 %
Gain (loss) on sale of investment securities(1,063)23,566 (24,629)(104.5)%
Unrealized gain (loss) on investment securities(276)974 (1,250)(128.3)%
Unrealized gain (loss) on derivatives964 2,537 (1,573)(62.0)%
Loss on cash flow hedge derivative terminations— (24,467)24,467 (100.0)%
Other(212)305 (517)(169.5)%
Total non-interest income$21,198 $18,468 $2,730 14.8 %
Commercial lease income
Commercial lease income represents income earned on commercial operating leases originated by Customers' Equipment Finance Group in which Customers is the lessor. The $0.9$0.7 million increase in commercial lease income for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily resulted from the continued growth of Customers' equipment finance business.
Bank-owned life insurance
Bank-owned life insurance income represents income earned on life insurance policies owned by Customers including an increase in cash surrender value of the policies and any benefits paid by insurance carriers under the policies. The $6.6 million increase in bank-owned life insurance income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 resulted from the increase in cash surrender value of the policies and death benefits paid by insurance carriers under the policies.
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Mortgage warehouse transactional fees
The $2.3$2.2 million increasedecrease in mortgage warehouse transactional fees for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily resulted from an increase ina lower refinancing activity driven bydue to higher interest rates. There can be no assurance that Customers will earn mortgage warehouse transactional fees in 2022 comparable to 2021, given the declinelower refinancing activity in marketa higher interest rates during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.rate environment.
Gain (loss) on sale of SBA and other loans
The $1.6$0.1 million increasedecrease in gain on sale of SBA and other loans for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 reflects an increasea decrease in sales of $21.2 million in SBA loans during the three months ended March 31, 20212022 compared to the three months ended March 31, 2020.2021. There can be no assurance that Customers will realize gains on the sale of loans in 2022 comparable to 2021, given the significant uncertainty in the capital markets.
Loan fees
The $1.1 million increase in loan fees for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily resulted from an increase in fees earned on unused lines of credit and other fees from commercial borrowers.
Gain (loss) on sale of investment securities
The $19.6$24.6 million increasedecrease in gain on sale of investment securities for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 reflects the gainsnet losses realized primarily from the sale of $330$156.0 million in AFS debt securities during the three months ended March 31, 2021.
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Table2022 compared to the net gains realized from the sale of Contents
$353.9 million in AFS debt securities during the three months ended March 31, 2021. There can be no assurance that Customers will realize gains on the sale of investment securities in 2022 comparable to 2021, given the significant uncertainty in the capital markets and fluctuations in our funding needs, which may impact Customers’ investment strategy.
Unrealized gain (loss) on investment securities
The $2.4$1.3 million increasedecrease in unrealized gain (loss) on investment securities for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily reflects an increasea decrease in the unrealized gain of equity securities issued by a foreign entity for the three months ended March 31,that were held by CB Green Ventures Pte Ltd. and CUBI India Ventures Pte Ltd. Customers sold all outstanding shares in CB Green Ventures Pte Ltd. and CUBI India Ventures Pte Ltd. in June 2021.
Unrealized gain (loss) on derivatives
The $3.7$1.6 million increasedecrease in unrealized gain (loss) on derivatives for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily resulted from increasesdecreases of $4.4$0.7 million in credit valuation adjustment and credit derivatives due to changes in market interest rates partially offset by $0.7and $0.8 million decrease in interest rate swap fees.
Loss on cash flow hedge derivative terminations
The $24.5 million decrease in loss on cash flow hedge derivative terminations for the three months ended March 31, 2022 compared to three months ended March 31, 2021 reflects the early terminations of derivatives designated in cash flow hedging relationships and reclassification of the realized losses from accumulated other comprehensive income to earnings during the three months ended March 31, 2021 because the hedged forecasted transactions were no longer probable of occurring.
Other non-interest income
The $1.1$0.5 million increasedecrease in other non-interest income for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily resulted from an increasea decrease in SERP income due to changes in capital markets.
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Table of $0.8 million in gain from the sales of commercial lease assets.Contents
NON-INTEREST EXPENSE
The table below presents the components of non-interest expense for the three months ended March 31, 20212022 and 2020.
 Three Months Ended March 31,
(dollars in thousands)20212020Change% Change
Salaries and employee benefits$23,971 $20,523 $3,448 16.8 %
Technology, communication and bank operations19,988 10,539 9,449 89.7 %
Professional services6,289 3,544 2,745 77.5 %
Occupancy2,621 2,613 8 0.3 %
Commercial lease depreciation4,291 3,427 864 25.2 %
FDIC assessments, non-income taxes and regulatory fees2,719 2,867 (148)(5.2)%
Merger and acquisition related expenses418 — 418 NM
Loan workout(261)366 (627)(171.3)%
Advertising and promotion561 1,424 (863)(60.6)%
Other1,330 3,664 (2,334)(63.7)%
Total non-interest expense$61,927 $48,967 $12,960 26.5 %
2021.
 Three Months Ended March 31,
(dollars in thousands)20222021Change% Change
Salaries and employee benefits$26,607 $23,971 $2,636 11.0 %
Technology, communication and bank operations24,068 19,988 4,080 20.4 %
Professional services6,956 5,877 1,079 18.4 %
Occupancy3,050 2,621 429 16.4 %
Commercial lease depreciation4,942 4,291 651 15.2 %
FDIC assessments, non-income taxes and regulatory fees2,383 2,719 (336)(12.4)%
Loan servicing2,371 437 1,934 442.6 %
Advertising and promotion315 561 (246)(43.9)%
Merger and acquisition related expenses— 418 (418)(100.0)%
Loan workout(38)(261)223 (85.4)%
Other3,153 1,305 1,848 141.6 %
Total non-interest expense$73,807 $61,927 $11,880 19.2 %
Salaries and employee benefits
The $3.4$2.6 million increase in salaries and employee benefits for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily resulted from an increase in average full-time equivalent team members needed for future growth, annual merit increases and an increase in incentive accruals tied to Customers' overall performance.
Technology, communication, and bank operations
The $9.4$4.1 million increase in technology, communication, and bank operations expense for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily resulted from increases in deposit servicing fees and interchange maintenance feesfrom higher deposits, that were paid to BM Technologies, the successor entity to BMT that was divested on January 4, 2021.
Customers incurred expenses of $17.8 million and $13.7 million to BM Technologies under the deposit servicing agreement, included within the technology, communication and bank operations expense in the income from continuing operations during the three months ended March 31, 2022 and 2021, duerespectively. The deposit service agreement is scheduled to higherexpire on December 31, 2022 and will not be renewed. As of March 31, 2022, Customers held $2.2 billion of deposits and debit card transactions.serviced by BM Technologies, which are expected to leave Customers Bank by December 31, 2022. See "NOTE 3 – DISCONTINUED OPERATIONS" to theCustomers' unaudited consolidated financial statements for additional information.
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Professional services
The $2.7$1.1 million increase in professional services for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 was primarily due to outside professional services used to support the PPP forgiveness process and our participation in PPP round 3.process.
Commercial lease depreciation
The $0.9$0.7 million increase in commercial lease depreciation for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily resulted from the continued growth of the operating lease arrangements originated by Customers' Equipment Finance Group in which Customers is the lessor.
Loan servicing
The $1.9 million increase in loan servicing for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily resulted from servicing fees paid to third party servicers associated with the participation in the latest round of PPP, the PPP forgiveness process, and the growth in consumer installment loans.
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Merger and acquisition related expenses
The $0.4 million increasedecrease in merger and acquisition related expenses for the three months ended March 31, 20212022 compared to the three months ended March 31, 2020 primarily2022 resulted from direct costs incurred in the merger of BMT and MFAC that was completed on January 4, 2021.
Loan workout
The $0.6 million decrease in loan workout for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily resulted from a recovery from a commercial relationship.
Advertising and promotion expenses
The $0.9 million decrease in advertising and promotion expenses for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily resulted from a reduction in the promotion of Customers' digital banking products and service offerings.
Other non-interest expense
The $2.3$1.8 million decreaseincrease in other non-interest expense for the three months ended March 31, 20212022 compared to the three months ended March 31, 20202021 primarily resulted from a decrease in credit or release of the reserve for unfunded commitment. A credit or release of the reserve for unfunded commitments for the three months ended March 31, 2022 was $0.1 million, compared to a credit or release of the reserve for unfunded commitments of $1.3 million during the three months ended March 31, 2021 compared to a provision or addition to the reserve for unfunded commitments of $0.8 million during the three months ended March 31, 2020.

2021.
INCOME TAXES
The table below presents income tax expense from continuing operations and the effective tax rate for the three months ended March 31, 20212022 and 2020.
Three Months Ended March 31,
(dollars in thousands)20212020Change% Change
Income before income tax expense$92,191 $11,728 $80,463 686.1 %
Income tax expense17,560 3,274 14,286 436.3 %
Effective tax rate19.05 %27.92 %
2021.
Three Months Ended March 31,
(dollars in thousands)20222021Change% Change
Income before income tax expense$96,093 $92,191 $3,902 4.2 %
Income tax expense19,332 17,560 1,772 10.1 %
Effective tax rate20.12 %19.05 %
The $14.3$1.8 million increase in income tax expense for the three months ended March 31, 2021,2022, when compared to the same period in the prior year, primarily resulted from an increase in projected pre-tax income.income for 2022. The decreaseincrease in the effective tax rate for the three months ended March 31, 2021,2022, when compared to the same period in the prior year, primarily resulted from an increase inreduced investment tax credits in 2021for 2022 and a benefit for the recording of net discrete tax benefits associated with the divestiture of BMT and the recognition of a deferred tax asset related to the outside basis difference of foreign subsidiaries.subsidiaries included in 2021, offset in part by excess tax benefits on vesting of restricted stock units and death benefits from bank-owned life insurance policies for 2022.

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NET LOSS FROM DISCONTINUED OPERATIONS
On January 4, 2021, Customers Bancorp completed the previously announced divestiture of BMT, the technology arm of its BankMobile segment, to MFAC Merger Sub Inc., an indirect wholly-owned subsidiary of MFAC, pursuant to an Agreement and Plan of Merger, dated August 6, 2020, by and among Megalith, MFAC Merger Sub Inc., BMT, Customers Bank, the sole stockholder of BMT, and Customers Bancorp, the parent bank holding company for Customers Bank (as amended on November 2, 2020 and December 8, 2020). In connection with the closing of the divestiture, MFAC changed its name to “BM Technologies, Inc.”MFAC. Following the completion of the divestiture of BMT, BankMobile's serviced deposits and loans and the related net interest income have been combined with Customers' financial condition and the results of operations as a single reportable segment.
The assets and liabilities of BMT have been presented as "Assets of discontinued operations" and "Liabilities of discontinued operations" on the consolidated balance sheet at December 31, 2020. BMT's operating results and associated cash flows have been presented as "Discontinued operations" within the accompanying unaudited consolidated financial statements and prior period amounts have been reclassified to conform with the current period presentation.
The table below presents the loss from discontinued operations, net of income taxes for the three months ended March 31, 20212022 and 2020.2021.
Three Months Ended March 31,Three Months Ended March 31,
(dollars in thousands)(dollars in thousands)20212020Change% Change(dollars in thousands)20222021Change% Change
Loss from discontinued operations before income taxesLoss from discontinued operations before income taxes$(20,354)$(6,722)$(13,632)202.8 %Loss from discontinued operations before income taxes$— $(20,354)$20,354 (100.0)%
Income tax expense (benefit) from discontinued operations17,682 (1,368)19,050 (1,392.5)%
Income tax expense from discontinued operationsIncome tax expense from discontinued operations— 17,682 (17,682)(100.0)%
Net loss from discontinued operationsNet loss from discontinued operations$(38,036)$(5,354)$(32,682)610.4 %Net loss from discontinued operations$— $(38,036)$38,036 (100.0)%
LossCustomers had no loss from discontinued operations, net of $20.4income taxes for the three months ended March 31, 2022 compared to $38.0 million for the three months ended March 31, 2021 consistedas the divestiture of BMT was completed on January 4, 2021. The $38.0 million decrease was primarily related to restricted stock awards inof BM Technologies' common stock distributed to certain team members of BMT in the form of severance payments and compensation costs for the restricted stock units of Customers Bancorp previously granted to certain team members of BMT that vested upon completion of the divestiture.
Income tax expense from discontinued operations of $17.7 million for the three months ended March 31, 2021 resulted fromand the effect of the divestiture being treated as a taxable asset sale for tax purposes, offset in part by a tax benefitsbenefit related to the restricted stock awards in BM Technologies's common stock and vestingduring the three months ended March 31, 2021.
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Table of restricted stock units of Customers Bancorp to certain team members of BMT.Contents
In connection with the divestiture, Customers has also 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. Customers incurred expenses of $17.8 million and $13.7 million to BM Technologies under the deposit servicing agreement included in technology, communication and bank operations within the income from continuing operations during the three months ended March 31, 2022 and 2021, respectively. The deposit service agreement is scheduled to expire on December 31, 2022 and will not be renewed. As of March 31, 2022, Customers held $2.2 billion of deposits serviced by BM Technologies, which are expected to leave Customers Bank by December 31, 2022. The loan agreement with BM Technologies was terminated early in November 2021. The transition services agreement with BM Technologies, as amended, expired on March 31, 2022. Refer to "NOTE 3 – DISCONTINUED OPERATIONS" to theCustomers' unaudited consolidated financial statements for additional information.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends were $3.4$1.9 million and $3.6$3.4 million for the three months ended March 31, 2022 and 2021, respectively. On September 15, 2021, Customers redeemed all of the outstanding shares of Series C and 2020, respectively.Series D Preferred Stock for an aggregate payment of $82.5 million, at a redemption price of $25.00 per share. The redemption price paid in excess of the carrying value of Series C and Series D Preferred Stock of $2.8 million was included as a loss on redemption of preferred stock in the consolidated statement of income for the three months ended September 30, 2021. After giving effect to the redemption, no shares of the Series C and Series D Preferred Stock remained outstanding. There were no changes to the amount of preferred stock outstanding during the three months ended March 31, 20212022 and 2020. On June 15, 2020, Series C preferred stock became floating at three-month LIBOR plus 5.30%, compared2021. Refer to a fixed rate of 7.00%. "NOTE 11 – SHAREHOLDERS' EQUITY" to Customers' unaudited consolidated financial statements for additional information.
On March 15, 2021, the Series D preferred stockPreferred Stock became floating at three-month LIBOR plus 5.09%, or 5.27%compared to a fixed rate of 6.50%. On June 15, 2021, the Series E Preferred Stock became floating at three-month LIBOR plus 5.14%, compared to a fixed rate of 6.50%6.45%. On December 15, 2021, the Series F Preferred Stock became floating at three-month LIBOR plus 4.762%, compared to a fixed rate of 6.00%.
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Financial Condition
General
Customers' total assets were $18.8$19.2 billion at March 31, 2021.2022. This represented a $378.4$411.3 million increasedecrease from total assets of $18.4$19.6 billion at December 31, 2020.2021. The increasedecrease in total assets was primarily driven by increases of $616.7 million in PPP loans, $231.6 million in investment securities, $33.0 million in other assets and a decrease in ACL of $15.4 million, partially offset by decreases of $208.8$1.1 billion in loans receivable, PPP, $528.6 million in loans receivable, mortgage warehouse, at fair value $178.0and $243.4 million in cash and cash equivalents, $38.9 millionpartially offset by increases of $1.1 billion in loans and leases receivable $33.0and $352.7 million in loans held for sale and $62.1 million in assets of discontinued operations. Customers completed the previously announced divestiture of BMT, the technology arm of its BankMobile segment, on January 4, 2021.
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investment securities.
Total liabilities were $17.6$17.8 billion at March 31, 2021.2022. This represented a $306.8$422.5 million increasedecrease from $17.3$18.2 billion at December 31, 2020.2021. The increasedecrease in total liabilities primarily resulted from increasesdecreases of $1.2 billion$362.4 million in total deposits $115.0and $700.0 million in FHLB advances, partially offset by increases of $625.0 million in federal funds purchased and $199.7$14.6 million in accrued interest payable and other liabilities, partially offset by decreases of $1.1 billion in the PPPLF and $39.7 million in liabilities of discontinued operations.liabilities.
The following table presents certain key condensed balance sheet data as of March 31, 20212022 and December 31, 2020:2021:

(dollars in thousands)March 31,
2021		December 31,
2020		Change% Change
Cash and cash equivalents$515,364 $693,354 $(177,990)(25.7)%
Investment securities, at fair value1,441,904 1,210,285 231,619 19.1 %
Loans held for sale46,106 79,086 (32,980)(41.7)%
Loans receivable, mortgage warehouse, at fair value3,407,622 3,616,432 (208,810)(5.8)%
Loans receivable, PPP5,178,089 4,561,365 616,724 13.5 %
Loans and leases receivable7,536,489 7,575,368 (38,879)(0.5)%
Allowance for credit losses on loan and leases(128,736)(144,176)15,440 (10.7)%
Other assets371,439 338,438 33,001 9.8 %
Assets of discontinued operations— 62,055 (62,055)(100.0)%
Total assets18,817,660 18,439,248 378,412 2.1 %
Total deposits12,472,440 11,309,929 1,162,511 10.3 %
Federal funds purchased365,000 250,000 115,000 46.0 %
FHLB advances850,000 850,000 — — %
Other borrowings124,138 124,037 101 0.1 %
Subordinated debt181,464 181,394 70 — %
FRB PPP liquidity facility3,284,156 4,415,016 (1,130,860)(25.6)%
Accrued interest payable and other liabilities351,741 152,082 199,659 131.3 %
Liabilities of discontinued operations— 39,704 (39,704)(100.0)%
Total liabilities17,628,939 17,322,162 306,777 1.8 %
Total shareholders’ equity1,188,721 1,117,086 71,635 6.4 %
Total liabilities and shareholders’ equity$18,817,660 $18,439,248 $378,412 2.1 %

(dollars in thousands)March 31,
2022		December 31,
2021		Change% Change
Cash and cash equivalents$274,600 $518,032 $(243,432)(47.0)%
Investment securities, at fair value4,169,853 3,817,150 352,703 9.2 %
Loans held for sale3,003 16,254 (13,251)(81.5)%
Loans receivable, mortgage warehouse, at fair value1,755,758 2,284,325 (528,567)(23.1)%
Loans receivable, PPP2,195,902 3,250,008 (1,054,106)(32.4)%
Loans and leases receivable10,118,855 9,018,298 1,100,557 12.2 %
Allowance for credit losses on loans and leases(145,847)(137,804)(8,043)5.8 %
Bank-owned life insurance332,239 333,705 (1,466)(0.4)%
Other assets298,212 305,611 (7,399)(2.4)%
Total assets19,163,708 19,575,028 (411,320)(2.1)%
Total deposits16,415,560 16,777,924 (362,364)(2.2)%
Federal funds purchased700,000 75,000 625,000 833.3 %
FHLB advances— 700,000 (700,000)(100.0)%
Other borrowings223,230 223,086 144 0.1 %
Subordinated debt181,742 181,673 69 — %
Accrued interest payable and other liabilities265,770 251,128 14,642 5.8 %
Total liabilities17,786,302 18,208,811 (422,509)(2.3)%
Total shareholders’ equity1,377,406 1,366,217 11,189 0.8 %
Total liabilities and shareholders’ equity$19,163,708 $19,575,028 $(411,320)(2.1)%
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks and interest-earning deposits. Cash and due from banks consists mainly of vault cash and cash items in the process of collection. Cash and due from banks were $3.1$55.5 million and $78.1$35.2 million at March 31, 20212022 and December 31, 2020,2021, respectively. Cash and due from banks balances vary from day to day, primarily due to variations in customers’ deposit activities with the Bank.
Interest-earning deposits consist of cash deposited at other banks, primarily the FRB. Interest-earning deposits were $512.2$219.1 million and $615.3$482.8 million at March 31, 20212022 and December 31, 2020,2021, respectively. The balance of interest-earning deposits varies from day to day, depending on several factors, such as fluctuations in customers' deposits with Customers, payment of checks drawn on customers' accounts and strategic investment decisions made to maximize Customers' net interest income, while effectively managing interest-rate risk and liquidity. The decrease in interest-earning deposits sincefrom December 31, 20202021 primarily resulted from lower funding needs for loan originations at March 31, 2021 as compared to December 31, 2020.recent deposits that were deployed into higher interest-earning assets.
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Investment Securities
The investment securities portfolio is an important source of interest income and liquidity. It consists primarily of mortgage-backed securities and collateralized mortgage obligations (guaranteedguaranteed by agencies of the United States government); United States government, agencies securities; asset-backed securities;securities, collateralized loan obligations;obligations, commercial mortgage-backed securities, private label collateralized mortgage obligations, and commercial mortgage-backed securities, state and political subdivision debt securities, corporate notes and marketablecertain equity securities. In addition to generating revenue, the investment portfolio is maintained to manage interest-rate risk, provide liquidity, serve as collateral for other borrowings, and diversify the credit risk of interest-earning assets. The portfolio is structured to optimize net interest income given the changes in the economic environment, liquidity position and balance sheet mix.
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At March 31, 2021,2022, investment securities totaled $1.4$4.2 billion compared to $1.2$3.8 billion at December 31, 2020.2021. The increase in investment securities primarily resulted from the purchases of asset-backed securities, collateralized loan obligations, U.S. government agency securities, agency-guaranteed collateralized mortgage obligations, private label collateralized mortgage obligations state and political subdivision debt securities, commercial mortgage-backed securities and corporate notes totaling $590$814.2 million, partially offset by the sale of $354$156.0 million of U.S. government agenciesasset-backed securities, agency-guaranteed mortgage-backed securities, corporate notes, non-agency-guaranteed collateralized mortgage obligations, collateralized loan obligations, corporate notes, and maturities, calls and principal repayments totaling $62.3$224.8 million for the three months ended March 31, 2021.2022.
For financial reporting purposes, AFS debt securities are carried at fair value. Unrealized gains and losses on AFS debt securities, other than credit losses, are included in other comprehensive income (loss) and reported as a separate component of shareholders’ equity, net of the related tax effect. Changes in the fair value of marketable equity securities with a readily determinable fair value and securities reported at fair value based on a fair value option election are recorded in non-interest income in the period in which they occur.

 Customers recorded a provision for credit losses of $0.7 million on certain asset-backed securities included in our investment securities during the three months ended March 31, 2022. See "NOTE 6 – INVESTMENT SECURITIES" to Customers' unaudited consolidated financial statements for additional information.
LOANS AND LEASES
Existing lending relationships are primarily with small and middle market businesses and individual consumers primarily in Southeastern Pennsylvania (Bucks, Berks, Chester, Philadelphia and Delaware Counties); Harrisburg, Pennsylvania (Dauphin County); Rye Brook, New York (Westchester County); Hamilton, New Jersey (Mercer County); Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire (Rockingham County); Manhattan and Melville, New York; Washington, D.C.; Chicago, Illinois; Dallas, Texas; Orlando, Florida and Chicago, Illinois.Wilmington, North Carolina. The portfolio of loans to mortgage banking businesses is nationwide. The loan portfolio consists primarily of loans to support mortgage banking companies’ funding needs, multi-family/commercial real estate and commercial and industrial loans. Customers continues to focus on small and middle market business loans to grow its commercial lending efforts, particularly its commercial and industrial loan and lease portfolio and its specialty mortgage lending business. Customers also focuses its lending efforts on local-market mortgage and home equity lending and the origination and purchase of unsecured consumer loans (installment loans), including personal, student loan refinancing, and home improvement loans through arrangements with fintech companies and other market place lenders nationwide.
Commercial Lending
Customers' commercial lending is divided into fivesix groups: Business Banking, Small and Middle Market Business Banking, Specialty Banking, Multi-Family and Commercial Real Estate Lending, Mortgage Banking Lending, and Equipment Finance.SBA Lending. This grouping is designed to allow for greater resource deployment, higher standards of risk management, strong asset quality, lower interest-rate risk and higher productivity levels.
The commercial lending group focuses primarily on companies with annual revenues ranging from $1 million to $100 million, which typically have credit requirements between $0.5 million and $10 million. To further build its franchise and support the growth of its commercial lending initiatives, Customers added three new verticals during 2021 within its Specialty Banking business which included fund finance, technology and venture capital banking and financial institutions group. These three new verticals provide financing to the private equity industry and cash management services to the alternative investment industry. Prior to adding these new verticals, its Specialty Banking business included lending to mortgage banking companies, equipment finance, warehouse lending, healthcare lending and real estate specialty finance. Customers also launched a pilot digital small balance 7(a) lending within its existing SBA Lending business in third quarter 2021.
As of March 31, 2021,2022, Customers had $14.4$11.7 billion in commercial loans outstanding, totaling approximately 89.1%82.8% of its total loan and lease portfolio, which includes loans held for sale, and loans receivable, mortgage warehouse, at fair value and PPP loans, compared to commercial loans outstanding of $14.2$12.4 billion, comprising approximately 89.8%85.3% of its total loan and lease portfolio at December 31, 2020.2021. Included in the $14.4$11.7 billion and $12.4 billion in commercial loans outstanding as of March 31, 2022 and December 31, 2021, was $5.2respectively, were $2.2 billion and $3.3 billion of PPP loans.loans, respectively. The PPP loans are fully guaranteed by the SBA, provided that the SBA's eligibility criteria are met and earn a fixed interest rate of 1.00%.
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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' lending to mortgage banking businesses primarily provides financing to mortgage bankers for residential mortgage originations from loan closing until sale in the secondary market. Many providers of liquidity in this segment exited the business in 2009 during a period of market turmoil. Customers saw an opportunity to provide liquidity to this business segment at attractive spreads, generate fee income and attract escrow deposits. The underlying residential loans are taken as collateral for Customers' commercial loans to the mortgage companies. As of March 31, 20212022 and December 31, 2020,2021, commercial loans to mortgage banking businesses totaled $3.4$1.8 billion and $3.6$2.3 billion, respectively, and are reported as loans receivable, mortgage warehouse, at fair value on the consolidated balance sheet.
Customers intends to continue to deemphasizehad been deemphasizing its lower-yielding multi-family loan portfolio, and investinvesting in high credit quality higher-yielding commercial and industrial loans with the multi-family run-off. Customers began to grow the multi-family loan portfolio in late 2021. Customers' multi-family lending group continues to focusis focused on retaining a portfolio of high-quality multi-family loans within Customers' covered markets while cross-selling other products and services.markets. These lending activities primarily target the refinancing of loans with other banks using conservative underwriting standards
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and provide purchase money for new acquisitions by borrowers. The primary collateral for these loans is a first lien mortgage on the multi-family property, plus an assignment of all leases related to such property. As of March 31, 2021,2022, Customers had multi-family loans of $1.7 billion outstanding, comprising approximately 10.3%12.1% of the total loan and lease portfolio, compared to $1.8$1.5 billion, or approximately 11.1%10.2% of the total loan and lease portfolio, at December 31, 2020.2021.
The Equipment Finance Group offers equipment financinggoes to market through the following origination platforms: vendors, intermediaries, direct and leasing productscapital markets. CCF is primarily focused on serving the following segments: transportation, construction (includes crane and services for a broad range of asset classes. It services vendors, dealers, independent finance companies, bank-owned leasing companiesutility), marine, franchise, general manufacturing (includes machine tool), helicopter/fixed wing, solar, packaging, plastics and strategic direct customers in the plastics, packaging, machine tool, construction, transportation and franchise markets.food processing. As of March 31, 20212022 and December 31, 2020,2021, Customers had $304.8$406.9 million and $288.4$378.7 million, respectively, of equipment finance loans outstanding. As of March 31, 20212022 and December 31, 2020,2021, Customers had $107.1$150.7 million and $108.0$146.5 million of equipment finance leases outstanding, respectively. As of March 31, 20212022 and December 31, 2020,2021, Customers had $103.5$115.4 million and $102.9$117.4 million, respectively, of operating leases entered into under this program, net of accumulated depreciation of 33.2$43.8 million and 28.9$40.7 million, respectively.
On March 27, 2020, the CARES Act was signed into law and which created funding for a new product called the PPP. The PPP is administered by the SBA and is intended to assist organizations with payroll related expenses. Customers, directly or through fintech partnerships and acquisitions, had $5.2$2.2 billion and $4.6$3.3 billion of PPP loans outstanding as of March 31, 20212022 and December 31, 2020,2021, 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%. The average loan size of the PPP portfolio from the first two rounds is approximately $50 thousand and approximately $20 thousand from the thirdlatest round.
Consumer Lending
Customers provides unsecured consumer installment loans, residential mortgage, and home equity loans to customers.customers nationwide primarily through relationships with fintech companies. The installment loan portfolio consists largely of originated and purchased personal, student loan refinancing and home improvement loans. Customers has executed digitally over $1.3 billion in direct personal loan originations. None of the loans are considered sub-prime at the time of origination. Customers considers sub-prime borrowers to be those with FICO scores below 660. Customers has been selective in the consumer loans it has been purchasing. Home equity 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. As of March 31, 2021,2022, Customers had $1.8$2.4 billion in consumer loans outstanding, or 10.9%17.2% of the total loan and lease portfolio, compared to $1.6$2.1 billion, or 10.3%14.7% of the total loan and lease portfolio, as of December 31, 2020.2021.
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Purchases and sales of consumer loans were as follows for the three months ended March 31, 20212022 and 2020:2021:
Three Months Ended March 31,Three Months Ended March 31,
(amounts in thousands)(amounts in thousands)20212020(amounts in thousands)20222021
Purchases (1)
Purchases (1)
Purchases (1)
Residential real estateResidential real estate$—$495Residential real estate$146,874$—
Installment (2)
Installment (2)
115,849191,761
Installment (2)
59,456115,849
TotalTotal$115,849$192,256Total$206,330$115,849
Sales (3)
Sales (3)
Sales (3)
Commercial and industrial(4)Commercial and industrial(4)$18,931$—Commercial and industrial(4)$8,840$18,931
Commercial real estate owner occupied(4)Commercial real estate owner occupied(4)2,237—Commercial real estate owner occupied(4)5,4412,237
Commercial real estate non-owner occupiedCommercial real estate non-owner occupied18,366—Commercial real estate non-owner occupied—18,366
Installment—1,822
TotalTotal$39,534$1,822Total$14,281$39,534
(1)Amounts reported in the above table are the unpaid principal balance at time of purchase. The purchase price was 101.0%98.1% and 100.6%101.0% of the loans' unpaid principal balance during the three months ended March 31, 20212022 and 2020,2021, respectively.
(2)Installment loan purchases for the three months ended March 31, 20212022 and 20202021 consist of third-party originated unsecured consumer loans. None of the loans are considered sub-prime at the time of origination. Customers considers sub-prime borrowers to be those with FICO scores below 660.
(3)Amounts reported in the above table are the unpaid principal balance at time of sale. For the quartersthree months ended March 31, 20212022 and 2020,2021, loan sales resulted in net gains of $2.1 million and $1.6 million, respectively, included in gain (loss) on sale of SBA and $11 thousand, respectively.other loans and mortgage banking income in the consolidated statements of income.
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Table(4)Primarily sales of ContentsSBA loans.
Loans Held for Sale
The composition of loans held for sale as of March 31, 20212022 and December 31, 20202021 was as follows:
(amounts in thousands)March 31, 2021December 31, 2020
Commercial loans:
Multi-family loans, at lower of cost or fair value$19,251 $— 
Commercial and industrial loans, at lower of cost or fair value— 55,683 
Commercial real estate non-owner occupied loans, at lower of cost or fair value— 17,251 
Total commercial loans held for sale19,251 72,934 
Consumer loans:
Home equity conversion mortgages, at lower of cost or fair value643 643 
Residential mortgage loans, at fair value1,205 5,509 
Installment loans, at lower of cost or fair value25,007 — 
Total consumer loans held for sale26,855 6,152 
Loans held for sale$46,106 $79,086 
At March 31, 2021, loans held for sale totaled $46.1 million, or 0.29% of the total loan and lease portfolio, and $79.1 million, or 0.50% of the total loan and lease portfolio, at December 31, 2020.
(amounts in thousands)March 31, 2022December 31, 2021
Consumer loans:
Home equity conversion mortgages, at lower of cost or fair value$507 $507 
Residential mortgage loans, at fair value2,496 15,747 
Total consumer loans held for sale3,003 16,254 
Loans held for sale$3,003 $16,254 
Loans held for sale are carried on the consolidated balance sheet at either fair value (due to the election of the fair value option) or at the lower of cost or fair value. An ACL is not recorded on loans that are classified as held for sale.
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Total Loans and Leases Receivable
The composition of total loans and leases receivable (excluding loans held for sale) was as follows:
(amounts in thousands)March 31, 2021December 31, 2020
Loans and leases receivable, mortgage warehouse, at fair value$3,407,622 $3,616,432 
Loans receivable, PPP5,178,089 4,561,365 
Loans receivable:
Commercial:
Multi-family1,640,278 1,761,301 
Commercial and industrial (1)
2,220,652 2,289,441 
Commercial real estate owner occupied590,093 572,338 
Commercial real estate non-owner occupied1,194,832 1,196,564 
Construction156,837 140,905 
Total commercial loans and leases receivable5,802,692 5,960,549 
Consumer:
Residential real estate293,805 317,170 
Manufactured housing59,977 62,243 
Installment1,380,015 1,235,406 
Total consumer loans receivable1,733,797 1,614,819 
Loans and leases receivable (2)
7,536,489 7,575,368 
Allowance for credit losses on loans and leases(128,736)(144,176)
Total loans and leases receivable, net of allowance for credit losses on loans and leases$15,993,464 $15,608,989 
(amounts in thousands)March 31, 2022December 31, 2021
Loans and leases receivable, mortgage warehouse, at fair value$1,755,758 $2,284,325 
Loans receivable, PPP2,195,902 3,250,008 
Loans and leases receivable:
Commercial:
Multi-family1,705,027 1,486,308 
Commercial and industrial (1)
3,995,802 3,424,783 
Commercial real estate owner occupied701,893 654,922 
Commercial real estate non-owner occupied1,140,311 1,121,238 
Construction161,024 198,981 
Total commercial loans and leases receivable7,704,057 6,886,232 
Consumer:
Residential real estate466,423 334,730 
Manufactured housing50,669 52,861 
Installment1,897,706 1,744,475 
Total consumer loans receivable2,414,798 2,132,066 
Loans and leases receivable10,118,855 9,018,298 
Allowance for credit losses on loans and leases(145,847)(137,804)
Total loans and leases receivable, net of allowance for credit losses on loans and leases (2)
$13,924,668 $14,414,827 
(1)Includes direct finance equipment leases of $107.1$150.7 million and $108.0$146.5 million at March 31, 20212022 and December 31, 2020,2021, respectively.
(2)Includes deferred (fees) costs and unamortized (discounts) premiums, net of $(133.2)$(22.8) million and $(54.6)$(52.0) million at March 31, 20212022 and December 31, 2020,2021, respectively.
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Loans receivable, PPP
On March 27, 2020, the CARES Act was signed into law and which created funding for a new product called the PPP. The PPP is administered by the SBA and is intended to assist organizations with payroll related expenses. Customers had $5.2$2.2 billion and $4.6$3.3 billion of PPP loans outstanding as of March 31, 20212022 and December 31, 2020,2021, 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 recognized interest income, including origination fees, of $36.9 million and $38.8 million for the three months ended March 31, 2021.2022 and 2021, respectively.
Loans receivable, mortgage warehouse, at fair value
The mortgage warehouse product line primarily provides financing to mortgage companies nationwide from the time of origination of the underlying mortgage loans until the mortgage loans are sold into the secondary market. As a mortgage warehouse lender, Customers provides a form of financing to mortgage bankers by purchasing for resale the underlying residential mortgages on a short-term basis under a master repurchase agreement. These loans are reported as loans receivable, mortgage warehouse, at fair value on the consolidated balance sheets. Because these loans are reported at their fair value, they do not have an ACL and are therefore excluded from ACL-related disclosures. At March 31, 2021,2022, all of Customers' commercial mortgage warehouse loans were current in terms of payment.
Customers is subject to the risks associated with such lending, including, but not limited to, the risks of fraud, bankruptcy and default of the mortgage banker or of the underlying residential borrower, any of which could result in credit losses. Customers' mortgage warehouse lending team members monitor these mortgage originators by obtaining financial and other relevant information to reduce these risks during the lending period. Loans receivable, mortgage warehouse, at fair value totaled $3.4$1.8 billion and $3.6$2.3 billion at March 31, 20212022 and December 31, 2020,2021, respectively.
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Credit Risk
Customers manages credit risk by maintaining diversification in its loan and lease portfolio, establishing and enforcing prudent underwriting standards and collection efforts, and continuous and periodic loan and lease classification reviews. Management also considers the effect of credit risk on financial performance by reviewing quarterly and maintaining an adequate ACL. Credit losses are charged-off when they are identified, and provisions are added for current expected credit losses, to the ACL at least quarterly. The ACL is estimated at least quarterly.
The provision (benefit) for credit losses on loans and leases was $(2.9)$15.3 million and $31.8a benefit of $2.9 million for the three months ended March 31, 20212022 and 2020,2021, respectively. The ACL maintained for loans and leases receivable (excluding loans held for sale and loans receivable, mortgage warehouse, at fair value and PPP loans) was $128.7$145.8 million, or 1.71%1.44% of loans and leases receivable, excluding PPP loans, at March 31, 20212022 and $144.2$137.8 million, or 1.90%1.53% of loans and leases receivable, excluding PPP loans, at December 31, 2020.2021. Excluding loans receivable, PPP from total loans and leases receivable is a non-GAAP measure. Management believes the use of these non-GAAP measures provides additional clarity when assessing Customers' financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. Please refer to the reconciliation schedule below.
The decreaseincrease in the ACL resulted primarily from the continued improvement in macroeconomic forecasts at March 31, 2021, as compared to the impact of reserve build for the COVID-19 pandemic, mostly attributable to the commercial real estate non-owner occupied and installment portfolios, and portfolio growth at March 31, 2020. The increase inhigher ACL for the installmentloan growth in the loan portfolio is mainly due to loan growth.for consumer installment, residential, multi-family loans and commercial and industrial loans. Net charge-offs were $12.5$7.2 million for the three months ended March 31, 2021,2022, a decrease of $6.2$5.3 million compared to the same period in 2020. Commercial real estate non-owner occupied charge-offs in the three months ended March 31, 2020 were attributable to the partial charge-off of two collateral dependent loans, which are not indicative of the overall commercial real estate portfolio.2021. Installment charge-offs were attributable to unsecured consumer installment loans originated or purchased through arrangements with fintech companies and other market place lenders, which increased in the three months ended March 31, 2021 comparedlenders. Please refer to the same periodtable of changes in 2020 consistent withCustomers' ACL for annualized net-charge offs to average loans by loan type for the loan growth.periods indicated.
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A reconciliation of the coverage of ACL for loans and leases held for investment to the ACL for loans and leases held for investment, excluding PPP loans as of March 31, 2022 and December 31, 2021 and 2020 areis set forth below.
(dollars in thousands)March 31, 2022December 31, 2021
Loans and leases receivable (GAAP)$12,314,757 $12,268,306 
Less: Loans receivable, PPP2,195,902 3,250,008 
Loans and leases held for investment, excluding PPP (Non-GAAP)$10,118,855 $9,018,298 
ACL for loans and leases (GAAP)$145,847 $137,804 
Coverage of ACL for loans and leases held for investment, excluding PPP (Non-GAAP)1.44 %1.53 %
(dollars in thousands)March 31, 2021December 31, 2020
Loans and leases receivable (GAAP)$12,714,578 $12,136,733 
Less: Loans receivable, PPP5,178,089 4,561,365 
Loans and leases held for investment, excluding PPP (Non-GAAP)$7,536,489 $7,575,368 
ACL for loans and leases (GAAP)$128,736 $144,176 
Coverage of ACL for loans and leases held for investment, excluding PPP (Non-GAAP)1.71 %1.90 %
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The table below presents changes in Customers' ACL for the periods indicated.
Analysis of the Allowance for Credit Losses on Loan and Leases
 Three Months Ended March 31,
(amounts in thousands)20212020
Balance at beginning of the period$144,176 $56,379 
Cumulative effect of change in accounting principle— 79,829 
Loan and lease charge-offs (1)
Multi-family1,132 — 
Commercial and industrial635 97 
Commercial real estate owner occupied142 — 
Commercial real estate non-owner occupied— 12,797 
Residential real estate50 — 
Installment12,687 6,246 
Total charge-offs14,646 19,140 
Loan and lease recoveries (1)
Commercial and industrial260 54 
Commercial real estate owner occupied8 3 
Commercial real estate non-owner occupied10 — 
Construction5 3 
Residential real estate10 29 
Installment1,832 340 
Total recoveries2,125 429 
Total net charge-offs12,521 18,711 
Provision (benefit) for credit losses on loans and leases(2,919)31,786 
Balance at the end of the period$128,736 $149,283 
(amounts in thousands)Multi-familyCommercial and industrialCommercial real estate owner occupiedCommercial real estate non-owner occupiedConstructionResidential real estateManufactured housingInstallmentTotal
Three Months Ended March 31, 2022
Ending balance, December 31, 2021$4,477 $12,702 $3,213 $6,210 $692 $2,383 $4,278 $103,849 $137,804 
Charge-offs (1)
— (301)— — — (4)— (8,865)(9,170)
Recoveries (1)
337 360 7 8 113 6 — 1,113 1,944 
Provision (benefit) for credit losses on loans and leases2,623 (1,996)621 (263)134 2,300 64 11,786 15,269 
Ending balance, March 31, 2022$7,437 $10,765 $3,841 $5,955 $939 $4,685 $4,342 $107,883 $145,847 
Three Months Ended March 31, 2021
Ending balance, at December 31, 2020$12,620 $12,239 $9,512 $19,452 $5,871 $3,977 $5,190 $75,315 $144,176 
Charge-offs (1)
(1,132)(635)(142)— — (50)— (12,687)(14,646)
Recoveries (1)
— 260 8 10 5 10 — 1,832 2,125 
Provision (benefit) for credit losses on loans and leases(3,462)(4,361)(3,443)(7,841)(1,773)(728)(390)19,079 (2,919)
Ending Balance, March 31, 2021$8,026 $7,503 $5,935 $11,621 $4,103 $3,209 $4,800 $83,539 $128,736 
Annualized Net Charge-offs to Average Loans and Leases
Three Months Ended March 31, 20220.09 %0.01 %0.00 %0.00 %0.24 %0.00 %— %(1.75)%(0.32)%
Three Months Ended March 31, 2021(0.27)%(0.07)%(0.09)%0.00 %0.01 %(0.05)%— %(3.33)%(0.67)%
(1)Charge-offs and recoveries on PCD loans that are accounted for in pools are recognized on a net basis when the pool matures.
The ACL is based on a quarterly evaluation of the loan and lease portfolio and is maintained at a level that management considers adequate to absorb expected losses as of the balance sheet date. All commercial loans, with the exception of PPP loans and commercial mortgage warehouse loans, which are reported at fair value, are assigned internal credit-risk ratings, based upon an assessment of the borrower, the structure of the transaction and the available collateral and/or guarantees. All loans and leases are monitored regularly by the responsible officer, and the risk ratings are adjusted when considered appropriate. The risk assessment allows management to identify problem loans and leases timely. Management considers a variety of factors and recognizes the inherent risk of loss that always exists in the lending process. Management uses a disciplined methodology to estimate an appropriate level of ACL. Refer to Critical Accounting Policies and Estimates herein and "NOTE 2 -– SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION" to Customers' unaudited consolidated financial statements, also, refer to "NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES AND
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BASIS OF PRESENTATION" to Customers' audited consolidated financial statements in its 20202021 Form 10-K for further discussion on management's methodology for estimating the ACL.
Approximately 65%51% of Customers' commercial real estate, commercial and residential construction, consumer residential and commercial and industrial loan types have real estate as collateral (collectively, “the real estate portfolio”), primarily in the form of a first lien position. Current appraisals providing current value estimates of the property are received when Customers' credit group determines that the facts and circumstances have significantly changed since the date of the last appraisal, including that real estate values have deteriorated. The credit committee and loan officers review loans that are 15 or more days delinquent and all non-accrual loans on a periodic basis. In addition, loans where the loan officers have identified a “borrower of interest” are discussed to determine if additional analysis is necessary to apply the risk-rating criteria properly. The risk ratings for the real estate loan portfolio are determined based upon the current information available, including but not limited to discussions with the borrower, updated financial information, economic conditions within the geographic area and other factors that may affect the cash flow of the loan. If a loan is individually evaluated for impairment, the collateral value or discounted cash flow analysis is generally used to determine the estimated fair value of the underlying collateral, net of estimated selling costs, and compared to the outstanding loan balance to determine the amount of reserve necessary, if any. Appraisals used in this evaluation process are typically less than two years aged. For loans where real estate is not the primary source of collateral, updated financial information is obtained, including accounts receivable and inventory aging reports and
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relevant supplemental financial data to estimate the fair value of the loan, net of estimated selling costs, and compared to the outstanding loan balance to estimate the required reserve.
These impairment measurements are inherently subjective as they require material estimates, including, among others, estimates of property values in appraisals, the amounts and timing of expected future cash flows on individual loans, and general considerations for historical loss experience, economic conditions, uncertainties in estimating losses and inherent risks in the various credit portfolios, all of which require judgment and may be susceptible to significant change over time and as a result of changing economic conditions or other factors. Pursuant to ASC 326, individually assessed loans, consisting primarily of non-accrual and restructured loans, are considered in the methodology for determining the ACL. Individually assessed loans are generally evaluated based on the expected future cash flows or the fair value of the underlying collateral (less estimated costs to sell) if principal repayment is expected to come from the operation or sale of such collateral. Shortfalls in the underlying collateral value for loans or leases determined to be collateral dependent are charged off immediately. Subsequent to an appraisal or other fair value estimate, management will assess whether there was a further decline in the value of the collateral based on changes in market conditions or property use that would require additional impairment to be recorded to reflect the particular situation, thereby increasing the ACL on loans and leases.
Asset Quality
Customers segments the loan and lease receivables by loan product or other characteristic generally defining a shared characteristic with other loans or leases in the same group. Charge-offs from originated and acquired loans and leases are absorbed by the ACL. TheSection 4013 of the CARES Act, as amended by the CAA, gave entities temporary relief from the accounting and disclosure requirements for TDRs. In addition, on April 7, 2020, certain regulatory banking agencies issued guidance stating certainan interagency statement that offered practical expedients for evaluating whether loan modifications in response to borrowers experiencing financial distress as a result of the economic impacts created by COVID-19 may not be required to be treated as TDRs under U.S. GAAP.pandemic were TDRs. For COVID-19 related loan modifications which met the loan modification criteria under either the CARES Act, as amended, or the criteria specified by the regulatory agencies, Customers elected to suspend TDR accounting for such loan modifications. AtThere were no commercial deferments related to COVID-19 at March 31, 2021, commercial2022 and consumerDecember 31, 2021. Consumer deferments related to COVID-19 were $176.1$3.3 million and $13.0$6.1 million at March 31, 2022 and December 31, 2021, respectively. The schedule that follows includes both loans held for sale and loans held for investment. Customers had no pending commercial loan deferment requests as of
Asset Quality at March 31, 2021.2022
(dollars in thousands)Total Loans and LeasesCurrent30-89 Days Past Due90 Days or More Past Due and AccruingNon-accrual/NPL (a)OREO and Repossessed Assets (b)NPA (a)+(b)NPL to Loan and Lease Type (%)NPA to Loans and Leases + OREO and Repossessed Assets (%)
Loan and Lease Type 
Multi-family$1,705,027 $1,676,468 $10,690 $— $17,869 $— $17,869 1.05 %1.05 %
Commercial and industrial3,995,802 3,986,728 2,978 606 5,490 — 5,490 0.14 %0.14 %
Commercial real estate owner occupied701,893 696,835 2,867 — 2,191 — 2,191 0.31 %0.31 %
Commercial real estate non-owner occupied1,140,311 1,139,009 — — 1,302 — 1,302 0.11 %0.11 %
Construction161,024 161,024 — — — — — — %— %
Total commercial loans and leases receivable7,704,057 7,660,064 16,535 606 26,852 — 26,852 0.35 %0.35 %
Residential466,423 453,692 4,607 — 8,124 35 8,159 1.74 %1.75 %
Manufactured housing50,669 44,926 1,254 1,059 3,430 51 3,481 6.77 %6.86 %
Installment1,897,706 1,879,999 12,842 — 4,865 — 4,865 0.26 %0.26 %
Total consumer loans receivable2,414,798 2,378,617 18,703 1,059 16,419 86 16,505 0.68 %0.68 %
Loans and leases receivable (1)
10,118,855 10,038,681 35,238 1,665 43,271 86 43,357 0.43 %0.43 %
Loans receivable, PPP (2)
2,195,902 2,195,902 — — — — — — %— %
Loans receivable, mortgage warehouse, at fair value1,755,758 1,755,758 — — — — — — %— %
Total loans held for sale3,003 2,496 — — 507 — 507 16.88 %16.88 %
Total portfolio$14,073,518 $13,992,837 $35,238 $1,665 $43,778 $86 $43,864 0.31 %0.31 %

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Asset Quality at March 31, 2021
(dollars in thousands)Total Loans and LeasesCurrent30-89 Days Past Due90 Days or More Past Due and AccruingNon-accrual/NPL (a)OREO (b)NPA (a)+(b)NPL to Loan and Lease Type (%)NPA to Loans and Leases + OREO (%)
Loan and Lease Type 
Multi-family$1,640,278 $1,613,431 $6,317 $— $20,530 $— $20,530 1.25 %1.25 %
Commercial & industrial2,220,652 2,206,290 6,818 — 7,544 276 7,820 0.34 %0.35 %
Commercial real estate owner occupied590,093 584,931 1,920 — 3,242 — 3,242 0.55 %0.55 %
Commercial real estate non-owner occupied1,194,832 1,190,308 2,168 — 2,356 — 2,356 0.20 %0.20 %
Construction156,837 156,837 — — — — — — %— %
Total commercial loans and leases receivable5,802,692 5,751,797 17,223 — 33,672 276 33,948 0.58 %0.59 %
Residential293,805 282,532 1,920 — 9,353 35 9,388 3.18 %3.19 %
Manufactured housing59,977 52,915 2,274 1,917 2,871 300 3,171 4.79 %5.26 %
Installment1,380,015 1,370,213 7,617 — 2,185 — 2,185 0.16 %0.16 %
Total consumer loans receivable1,733,797 1,705,660 11,811 1,917 14,409 335 14,744 0.83 %0.85 %
Loans and leases receivable (1)
7,536,489 7,457,457 29,034 1,917 48,081 611 48,692 0.64 %0.65 %
Loans receivable, PPP5,178,089 5,178,089 — — — — — — %— %
Loans receivable, mortgage warehouse, at fair value3,407,622 3,407,622 — — — — — — %— %
Total loans held for sale46,106 45,451 12 — 643 — 643 1.39 %1.39 %
Total portfolio$16,168,306 $16,088,619 $29,046 $1,917 $48,724 $611 $49,335 0.30 %0.31 %

2022 (continued)
Asset Quality at March 31, 2021 (continued)
(dollars in thousands)(dollars in thousands)Total Loans and LeasesNon-accrual / NPLACLReserves to Loans and Leases (%)Reserves to NPLs (%)(dollars in thousands)Total Loans and LeasesNon-accrual / NPLACLReserves to Loans and Leases (%)Reserves to NPLs (%)
Loan and Lease TypeLoan and Lease TypeLoan and Lease Type
Multi-familyMulti-family$1,640,278 $20,530 $8,026 0.49 %39.09 %Multi-family$1,705,027 $17,869 $7,437 0.44 %41.62 %
Commercial & industrial2,220,652 7,544 7,503 0.34 %99.46 %
Commercial and industrialCommercial and industrial3,995,802 5,490 10,765 0.27 %196.08 %
Commercial real estate owner occupiedCommercial real estate owner occupied590,093 3,242 5,935 1.01 %183.07 %Commercial real estate owner occupied701,893 2,191 3,841 0.55 %175.31 %
Commercial real estate non-owner occupiedCommercial real estate non-owner occupied1,194,832 2,356 11,621 0.97 %493.25 %Commercial real estate non-owner occupied1,140,311 1,302 5,955 0.52 %457.37 %
ConstructionConstruction156,837 — 4,103 2.62 %— %Construction161,024 — 939 0.58 %— %
Total commercial loans and leases receivableTotal commercial loans and leases receivable5,802,692 33,672 37,188 0.64 %110.44 %Total commercial loans and leases receivable7,704,057 26,852 28,937 0.38 %107.76 %
ResidentialResidential293,805 9,353 3,209 1.09 %34.31 %Residential466,423 8,124 4,685 1.00 %57.67 %
Manufactured housingManufactured housing59,977 2,871 4,799 8.00 %167.15 %Manufactured housing50,669 3,430 4,342 8.57 %126.59 %
InstallmentInstallment1,380,015 2,185 83,540 6.05 %3,823.34 %Installment1,897,706 4,865 107,883 5.68 %2,217.53 %
Total consumer loans receivableTotal consumer loans receivable1,733,797 14,409 91,548 5.28 %635.35 %Total consumer loans receivable2,414,798 16,419 116,910 4.84 %712.04 %
Loans and leases receivable (1)
Loans and leases receivable (1)
7,536,489 48,081 128,736 1.71 %267.75 %
Loans and leases receivable (1)
10,118,855 43,271 145,847 1.44 %337.05 %
Loans receivable, PPP5,178,089 — — — %— %
Loans receivable, PPP (2)
Loans receivable, PPP (2)
2,195,902 — — — %— %
Loans receivable, mortgage warehouse, at fair valueLoans receivable, mortgage warehouse, at fair value3,407,622 — — — %— %Loans receivable, mortgage warehouse, at fair value1,755,758 — — — %— %
Total loans held for saleTotal loans held for sale46,106 643 — — %— %Total loans held for sale3,003 507 — — %— %
Total portfolioTotal portfolio$16,168,306 $48,724 $128,736 0.80 %264.21 %Total portfolio$14,073,518 $43,778 $145,847 1.04 %333.15 %
(1) Excluding loans receivable, PPP from total loans and leases receivable is a non-GAAP measure. Management believes the use of these non-GAAP measures provides additional clarity when assessing Customers' financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. Please refer to the reconciliation schedules that follow this table.

(2)    The tables exclude PPP loans of $2.2 billion, of which $37.8 million were 30-59 days past due and $88.3 million were 60 days or more past due as of March 31, 2022, and PPP loans of $3.3 billion, of which $6.3 million were 30-59 days past due and $21.8 million were 60 days or more past due as of December 31, 2021. Claims for guarantee payments are submitted to the SBA for eligible PPP loans more than 60 days past due.
Customers' asset quality table contains non-GAAP financial measures calculated using non-GAAP amounts. These measures allwhich exclude loans receivable, PPP from their calculations. Management uses these non-GAAP measures to presentcompare the current period presentation to historical periods in prior filings. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing the Customers' financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities.
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A reconciliation of total loans and leases receivable,lease portfolio, excluding loans receivable, PPP and other related amounts, at March 31, 2021, are2022, is set forth below.
(dollars in thousands)Total Loans and LeasesCurrent30-89 Days Past Due90 Days or More Past Due and AccruingNon-accrual/NPL (a)OREO and Repossessed Assets (b)NPA (a)+(b)NPL to Loan and Lease Type (%)NPA to Loans and Leases + OREO and Repossessed Assets (%)
Loans and leases receivable (GAAP)$14,073,518 $13,992,837 $35,238 $1,665 $43,778 $86 $43,864 0.31 %0.31 %
Less: Loans receivable, PPP (1)
2,195,902 2,195,902 — — — — — — %— %
Loans receivable, excluding loans receivable, PPP (Non-GAAP)$11,877,616 $11,796,935 $35,238 $1,665 $43,778 $86 $43,864 0.37 %0.37 %
(dollars in thousands)(dollars in thousands)Total Loans and LeasesCurrent30-89 Days Past Due90 Days or More Past Due and AccruingNon-accrual/NPL (a)OREO (b)NPA (a)+(b)NPL to Loan and Lease Type (%)NPA to Loans and Leases + OREO (%)(dollars in thousands)Total Loans and LeasesNon-accrual / NPLACLReserves to Loans and Leases (%)Reserves to NPLs (%)
Loans and leases receivable (GAAP)Loans and leases receivable (GAAP)$16,168,306 $16,088,619 $29,046 $1,917 $48,724 $611 $49,335 0.30 %0.31 %Loans and leases receivable (GAAP)$14,073,518 $43,778 $145,847 1.04 %333.15 %
Less: Loans receivable, PPP(1)Less: Loans receivable, PPP(1)5,178,089 5,178,089 — — — — — — %— %Less: Loans receivable, PPP(1)2,195,902 — — — %— %
Loans receivable, excluding loans receivable, PPP (Non-GAAP)Loans receivable, excluding loans receivable, PPP (Non-GAAP)$10,990,217 $10,910,530 $29,046 $1,917 $48,724 $611 $49,335 0.45 %0.45 %Loans receivable, excluding loans receivable, PPP (Non-GAAP)$11,877,616 $43,778 $145,847 1.23 %333.15 %

(dollars in thousands)Total Loans and LeasesNon-accrual / NPLACLReserves to Loans and Leases (%)Reserves to NPLs (%)
Loans and leases receivable (GAAP)$16,168,306 $48,724 $128,736 0.80 %264.21 %
Less: Loans receivable, PPP5,178,089 — — — %— %
Loans receivable, excluding loans receivable, PPP (Non-GAAP)$10,990,217 $48,724 $128,736 1.17 %264.21 %
(1)    Loans and leases receivable include PPP loans that are past due, as claims for guarantee payments are submitted to the SBA for eligible PPP loans more than 60 days past due.
The total loan and lease portfolio was $16.2$14.1 billion at March 31, 20212022 compared to $15.8$14.6 billion at December 31, 20202021, and $48.7$43.8 million, or 0.30%0.31% of loans and leases, were non-performing at March 31, 20212022 compared to $70.5$49.6 million, or 0.45%0.34% of loans and leases, at December 31, 2020.2021. The loan and lease portfolio was supported by an ACL of $128.7$145.8 million (264.21%(333.15% of NPLs and 0.80%1.04% of total loans and leases) and $144.2$137.8 million (204.48%(277.72% of NPLs and 0.91%0.95% of total loans and leases), at March 31, 20212022 and December 31, 2020,2021, respectively.
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DEPOSITS
Customers offers a variety of deposit accounts, including checking, savings, MMDA, and time deposits. Deposits are primarily obtained from Customers' geographic service area and nationwide through branchless digital banking, our white label relationship, deposit brokers, listing services and other relationships. In 2021, Customers began accepting non-interest bearing demand deposits from new customers for the TassatPay instant blockchain payments platform which launched in October 2021. Customers Bank provides blockchain-based digital payments via CBIT, which allows clients to make instant payments in U.S. dollars. 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 non-interest bearing deposits at Customers Bank. As of March 31, 2022, Customers Bank held $1.8 billion of deposits from customers participating in CBIT.
The components of deposits were as follows at the dates indicated:
(dollars in thousands)March 31, 2021December 31, 2020Change% Change
Demand, non-interest bearing$2,687,628 $2,356,998 $330,630 14.0 %
Demand, interest bearing3,228,941 2,384,691 844,250 35.4 %
Savings, including MMDA5,889,991 5,916,309 (26,318)(0.4)%
Non-time deposits11,806,560 10,657,998 1,148,562 10.8 %
Time, $100,000 and over511,250 470,923 40,327 8.6 %
Time, other154,630 181,008 (26,378)(14.6)%
Time deposits665,880 651,931 13,949 2.1 %
Total deposits$12,472,440 $11,309,929 $1,162,511 10.3 %
(dollars in thousands)March 31, 2022December 31, 2021Change% Change
Demand, non-interest bearing$4,594,428 $4,459,790 $134,638 3.0 %
Demand, interest bearing5,591,468 6,488,406 (896,938)(13.8)%
Savings, including MMDA5,783,472 5,322,390 461,082 8.7 %
Non-time deposits15,969,368 16,270,586 (301,218)(1.9)%
Time deposits446,192 507,338 (61,146)(12.1)%
Total deposits$16,415,560 $16,777,924 $(362,364)(2.2)%
Total deposits were $12.5$16.4 billion at March 31, 2021, an increase2022, a decrease of $1.2 billion,$362.4 million, or 10.3%2.2%, from $11.3$16.8 billion at December 31, 2020. Non-time2021. Interest bearing demand deposits increaseddecreased by $1.1 billion,$896.9 million or 10.8%13.8%, to $11.8$5.6 billion at March 31, 2021,2022, from $10.7$6.5 billion at December 31, 2020. This increase2021 and time deposits decreased by $61.1 million, or 12.1%, to $446.2 million at March 31, 2022, from $507.3 million at December 31, 2021. These decreases were partially offset by increases in non-interest bearing demand deposits of $134.6 million, or 3.0%, to $4.6 billion at March 31, 2022 from $4.5 billion at December 31, 2021 and savings, including MMDA of $461.1 million, or 8.7%, to $5.8 billion at March 31, 2022, from $5.3 billion at December 31, 2021. The shift in the mix of deposits primarily resulted from Customers' initiative to improve its net interest margin by expanding its sources of lower-cost funding. These efforts led to increases in non-interest bearing demand
The total amount of estimated uninsured deposits of $0.3totaled $11.4 billion and interest bearing demand deposits of $0.8 billion. Savings, including MMDA decreased $26.3 million, or 0.4%, to $5.9$12.1 billion at March 31, 2021, from $5.9 billion at2022 and December 31, 2020.2021, respectively. Time deposits increased $13.9greater than the FDIC limit of $250,000 totaled $169.3 million or 2.1%, to $665.9and $259.0 million at March 31, 2021, from $651.9 million at2022 and December 31, 2020.2021, respectively.
At March 31, 2021,2022, the Bank had $0.9 billion$141.5 million in state and municipal deposits to which it had pledged $0.9 billion$123.4 million of available borrowing capacity through the FHLB to the depositordepositors through a letter of credit arrangement.

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FHLB ADVANCES AND OTHER BORROWINGS
Borrowed funds from various sources are generally used to supplement deposit growth and meet other operating needs. Customers' borrowings include short-term and long-term advances from the FHLB, FRB, including from the PPPLF, federal funds purchased, senior unsecured notes and subordinated debt. Subordinated debt is also considered as Tier 2 capital for certain regulatory calculations.
Short-term debt
Short-term debt at March 31, 20212022 and December 31, 20202021 was as follows:
March 31, 2021December 31, 2020 March 31, 2022December 31, 2021
(dollars in thousands)(dollars in thousands)AmountRateAmountRate(dollars in thousands)AmountRateAmountRate
FHLB advancesFHLB advances$850,000 1.21 %$850,000 1.19 %FHLB advances$— — %$700,000 0.26 %
Federal funds purchasedFederal funds purchased365,000 0.05 %250,000 0.09 %Federal funds purchased700,000 0.40 %75,000 0.05 %
Total short-term debtTotal short-term debt$1,215,000 $1,100,000 Total short-term debt$700,000 $775,000 
Long-term debt
FHLB and FRB Advances
Long-termThere were no long-term advances outstanding with the FHLB andor FRB advances at March 31, 20212022 and December 31, 2020, was as follows:2021.
March 31, 2021December 31, 2020
(dollars in thousands)AmountRateAmountRate
FRB PPP Liquidity Facility advances$3,284,156 0.35 %$4,415,016 0.35 %
Total long-term FHLB and FRB advances$3,284,156 $4,415,016 
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Beginning in second quarter 2020, Customers began participating in the PPPLF, in which Federal Reserve Banks extend non-recourse loans to institutions that are eligible to make PPP loans. Only PPP loans that are guaranteed by the SBA under the PPP, with respect to both principal and interest that are originated or purchased by an eligible institution, may pledgebe pledged as collateral to the Federal Reserve Banks. During the three months ended September 30, 2021, Customers repaid the PPPLF advances. No new advances are available from the PPPLF after July 30, 2021.
The maximum borrowing capacity with the FHLB and FRB at March 31, 20212022 and December 31, 20202021 was as follows:
(dollars in thousands)March 31, 2021December 31, 2020
Total maximum borrowing capacity with the FHLB$2,492,783 $2,729,516 
Total maximum borrowing capacity with the FRB (1)
183,124 223,299 
Qualifying loans serving as collateral against FHLB and FRB advances (1)
3,258,271 3,363,364 
(dollars in thousands)March 31, 2022December 31, 2021
Total maximum borrowing capacity with the FHLB$3,337,211 $2,973,635 
Total maximum borrowing capacity with the FRB (1)
214,908 183,052 
Qualifying loans serving as collateral against FHLB and FRB advances (1)
4,218,252 3,594,339 
(1) Amounts reported in the above table exclude borrowings under the PPPLF, which are limited to the face valueunpaid principal balance of the loans originated under the PPP. At March 31, 2021, Customers had $3.3 billion ofno borrowings under the PPPLF with a borrowing capacity of up to $5.2 billion, which is the remaining face value (following forgiveness) of the qualifying loans Customers has originated under the PPP. Atat March 31, 2022 and December 31, 2020, Customers had $4.4 billion of borrowings under the PPPLF.
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2021.
Senior Notes and Subordinated Debt
Long-term senior notes and subordinated debt at March 31, 20212022 and December 31, 20202021 were as follows:
March 31, 2021December 31, 2020March 31, 2022December 31, 2021
(dollars in thousands)(dollars in thousands)(dollars in thousands)
Issued byIssued byRankingAmountAmountRateIssued AmountDate IssuedMaturityPriceIssued byRankingCarrying AmountCarrying AmountRateIssued AmountDate IssuedMaturityPrice
Customers BancorpCustomers Bancorp
Senior (1)
$99,844 $98,642 2.875 %$100,000 August 2021August 2031100.000 %
Customers BancorpCustomers BancorpSenior$24,581 $24,552 4.500 %$25,000 September 2019September 2024100.000 %Customers BancorpSenior24,702 24,672 4.500 %25,000 September 2019September 2024100.000 %
Customers BancorpCustomers BancorpSenior99,557 99,485 3.950 %100,000 June 2017June 202299.775 %Customers BancorpSenior98,684 99,772 3.950 %100,000 June 2017June 202299.775 %
Total other borrowingsTotal other borrowings$124,138 $124,037 Total other borrowings$223,230 $223,086 
Customers BancorpCustomers Bancorp
Subordinated (1)(2)
$72,267 $72,222 5.375 %$74,750 December 2019December 2034100.000 %Customers Bancorp
Subordinated (2)(3)
$72,448 $72,403 5.375 %$74,750 December 2019December 2034100.000 %
Customers BankCustomers Bank
Subordinated (1)(3)
109,197 109,172 6.125 %110,000 June 2014June 2029100.000 %Customers Bank
Subordinated (2)(4)
109,294 109,270 6.125 %110,000 June 2014June 2029100.000 %
Total subordinated debtTotal subordinated debt$181,464 $181,394 Total subordinated debt$181,742 $181,673 
(1)The senior notes will bear an annual fixed rate of 2.875% until August 15, 2026. From August 15, 2026 until maturity, the notes will bear an annual interest rate equal to a benchmark rate, which is expected to be the three-month term SOFR, plus 235 basis points. Customers Bancorp has the ability to call the senior notes, in whole, or in part, at a redemption price equal to 100% of the principal balance at certain times on or after August 15, 2026.
(2)The subordinated notes qualify as Tier 2 capital for regulatory capital purposes.
(2)(3)Customers Bancorp has the ability to call the subordinated notes, in whole, or in part, at a redemption price equal to 100% of the principal balance at certain times on or after December 30, 2029.
(3)(4)The subordinated notes will bear an annual fixed rate of 6.125% until June 26, 2024. From June 26, 2024 until maturity, the notes will bear an annual interest rate equal to the three-month LIBOR plus 344.3 basis points. Customers Bank has the ability to call the subordinated notes, in whole, or in part, at a redemption price equal to 100% of the principal balance at certain times on or after June 26, 2024.

SHAREHOLDERS' EQUITY
The components of shareholders' equity were as follows at the dates indicated:
(dollars in thousands)March 31, 2022December 31, 2021Change% Change
Preferred stock$137,794 $137,794 $— — %
Common stock34,882 34,722 160 0.5 %
Additional paid in capital542,402 542,391 11 — %
Retained earnings780,628 705,732 74,896 10.6 %
Accumulated other comprehensive income (loss), net(62,548)(4,980)(57,568)1,156.0 %
Treasury stock(55,752)(49,442)(6,310)12.8 %
Total shareholders' equity$1,377,406 $1,366,217 $11,189 0.8 %
(dollars in thousands)March 31, 2021December 31, 2020Change% Change
Preferred stock$217,471 $217,471 $— — %
Common stock33,519 32,986 533 1.6 %
Additional paid in capital515,318 455,592 59,726 13.1 %
Retained earnings438,802 438,581 221 0.1 %
Accumulated other comprehensive income (loss), net5,391 (5,764)11,155 (193.5)%
Treasury stock(21,780)(21,780)— — %
Total shareholders' equity$1,188,721 $1,117,086 $71,635 6.4 %
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Shareholders’ equity increased $71.6$11.2 million, or 6.4%0.8%, to $1.2$1.4 billion at March 31, 20212022 when compared to shareholders' equity of $1.1$1.4 billion at December 31, 2020.2021. The increase primarily resulted from increasesan increase of $59.7$74.9 million in additional paid in capital, $11.2retained earnings, partially offset by a decrease of $57.6 million in accumulated other comprehensive loss,income (loss), net and $0.2an increase of $6.3 million in retained earnings.treasury stock.
The increase in common stock and additional paid in capital resulted from the sale of BMT that was accounted for as a sale of non-controlling interest and the merger between BMT and MFAC was accounted for as a reverse recapitalization of $31.9 million, merger related expense of $19.6 million in the form of restricted stock awards in BM Technologies' common stock to certain team members of BMT and $8.2 million from the share-based compensation expense and issuance of common stock under share-based compensation arrangements for the three months ended March 31, 2021.2022.
The increase in retained earnings resulted from net income of $76.8 million, partially offset by preferred stock dividends of $1.9 million for the three months ended March 31, 2022.
The decrease in accumulated other comprehensive income (loss), net primarily resulted from an increasea decrease of $12.3 million and income tax effect of $3.2$78.9 million in the fair value of cash flow hedgesAFS debt securities and income tax effect of $20.5 million due to changes in market interest rates, andpartially offset by reclassification of $23.6$1.1 million in gainsnet losses and income tax effect of $6.1$0.3 million resulting from the sales of AFS debt securities during the three months ended March 31, 2022.
On August 25, 2021, partially offset by reclassificationthe Board of $25.9Directors of Customers Bancorp authorized the Share Repurchase Program to repurchase up to 3,235,326 shares of the Company's common stock (representing 10% of the Company’s outstanding shares of common stock on June 30, 2021). The term of the Share Repurchase Program will extend for one year from September 27, 2021, unless earlier terminated. Purchases of shares under the Share Repurchase Program may be executed through open market purchases, privately negotiated transactions, through the use of Rule 10b5-1 plans, or otherwise. The exact number of shares, timing for such purchases, and the price and terms at and on which such purchases are to be made will be at the discretion of the Company and will comply with all applicable regulatory limitations. Customers Bancorp purchased 115,324 shares of its common stock for $6.3 million in unrealized losses and income tax effect of $6.7 million resulting frompursuant to the termination of derivatives designated as cash flow hedges of forecasted transactions that are deemed no longer probable of occurringShare Repurchase Program during the three months ended March 31, 2021.2022. Refer to "NOTE 11 – SHAREHOLDERS' EQUITY" to Customers' unaudited consolidated financial statements for additional information on the repurchase of common shares.
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The increase in retained earnings resulted from net income of $36.6 million, offset by $3.4 million in preferred stock dividends and $33.0 million million of special dividends in connection with the divestiture of BMT. Upon closing of the divestiture, Customers received cash consideration of $23.1 million and holders of Customers common stock who held their Customers shares as of the close of business on December 18, 2020 became entitled to receive an aggregate of 4,876,387 shares of BM Technologies' common stock. Customers distributed 0.15389 shares of BM Technologies common stock for each share of Customers common stock held as of the close of business on December 18, 2020 as special dividends. No fractional shares of BMT common stock were issued; fractional share otherwise issuable were rounded to the nearest whole share.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity for a financial institution is a measure of that institution’s ability to meet depositors’ needs for funds, to satisfy or fund loan and lease commitments, and for other operating purposes. Ensuring adequate liquidity is an objective of the asset/liability management process. Customers coordinates its management of liquidity with its interest rate sensitivity and capital position, and strives to maintain a strong liquidity position.position that is sufficient to meet Customers' short-term and long-term needs, commitments and contractual obligations.
Customers is involved with financial instruments and other commitments with off-balance sheet risks. Financial instruments with off-balance sheet risks are incurred in the normal course of business to meet the financing needs of the Bank's customers. These financial instruments include commitments to extend credit, including unused portions of lines of credit, and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized on the consolidated balance sheet.
With commitments to extend credit, exposure to credit loss in the event of non-performance by the other party to the financial instrument is represented by the contractual amount of those instruments. The same credit policies are used in making commitments and conditional obligations as for on-balance sheet instruments. Because they involve credit risk similar to extending a loan and lease, these financial instruments are subject to the Bank’s credit policy and other underwriting standards.
Customers recognized a credit to provision for credit losses (a benefit) on unfunded lending-related commitments of $0.1 million during the three months ended March 31, 2022 resulting in an ACL of $2.0 million as of March 31, 2022. Customers had an ACL on unfunded lending-related commitments of $2.1 million as of December 31, 2021.
Customers' contractual obligations and other commitments representing required and potential cash outflows include operating leases, demand deposits, time deposits, federal funds purchased, short-term advances from FHLB, unsecured senior notes, subordinated debt, loan and other commitments as of March 31, 2022. See "NOTE 9 – LEASES" and "NOTE 10 – BORROWINGS" to Customers' unaudited consolidated financial statements for additional information.
Customers' investment portfolio provides periodic cash flows through regular maturities and amortization and can be used as collateral to secure additional funding. Customers' principal sources of funds are deposits, borrowings, principal and interest payments on loans and leases, other funds from operations, and proceeds from common and preferred stock issuances. Borrowing arrangements are maintained with the FHLB and the FRB to meet short-term liquidity needs. Longer-term borrowing arrangements are also maintained with the FHLB and FRB. As of March 31, 2021,2022, Customers' borrowing capacity with the FHLB was $2.5$3.3 billion, of which $0.9 billion was utilized in borrowings and $0.9 billion$123.4 million of available capacity was utilized to collateralize state and municipal deposits. As of December 31, 2020,2021, Customers' borrowing capacity with the FHLB was $2.7$3.0 billion, of which $0.9 billion$700.0 million was utilized in borrowings and $1.2 billion$475.3 million of available capacity was utilized to collateralize state and municipal deposits. As of March 31, 20212022 and December 31, 2020,2021, Customers' borrowing capacity with the FRB was $214.9 million and $183.1 million, and $223.3 million, respectively.
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Beginning in second quarter 2020, Customers began participating in the PPPLF, in which Federal Reserve Banks extend non-recourse loans to institutions that are eligible to make PPP loans. Only PPP loans that are guaranteed by the SBA under the PPP, with respect to both principal and interest that are originated or purchased by an eligible institution, may be pledged as collateral to the Federal Reserve Banks. As of March 31, 2022, Customers had $2.2 billion of PPP loans outstanding, which are eligible for forgiveness by the federal government. As of March 31, 2022 and December 31, 2021, Customers had $3.3 billion inno borrowings under the PPPLF. No new advances are available from the PPPLF after July 30, 2021.
On January 4,In October 2021, Customers Bancorp completedBank launched CBIT on the previously announced divestitureTassatPay blockchain-based instant B2B payments platform, which serves a growing array of BMT. BMT's operating resultsB2B clients who want the benefit of instant payments: including key over-the-counter desks, exchanges, liquidity providers, market makers, funds, and associated cash flows have been presentedB2B verticals such as "Discontinued operations" withintrading operations, real estate, manufacturing, and logistics. CBIT may only be created by, transferred to and redeemed by commercial customers of Customers Bank on the consolidated financial statementsinstant B2B payments platform by maintaining U.S. dollars in non-interest bearing deposits at Customers Bank. CBIT is not listed or traded on any digital currency exchange. As of March 31, 2022 and prior period amounts have been reclassified to conform with the current period presentation. December 31, 2021, Customers Bank held $1.8 billion and $1.9 billion of deposits from customers participating in CBIT, respectively.
The table below summarizes Customers' cash flows from continuing operations for the three months ended March 31, 20212022 and 2020:2021:
Three Months Ended
March 31,		Three Months Ended March 31,
(amounts in thousands)20212020Change% Change
(dollars in thousands)(dollars in thousands)20222021Change% Change
Net cash provided by (used in) continuing operating activitiesNet cash provided by (used in) continuing operating activities$200,384 $(34,932)$235,316 (673.6)%Net cash provided by (used in) continuing operating activities$116,940 $200,384 $(83,444)(41.6)%
Net cash provided by (used in) continuing investing activitiesNet cash provided by (used in) continuing investing activities(526,654)(433,556)(93,098)21.5 %Net cash provided by (used in) continuing investing activities88,672 (526,654)615,326 (116.8)%
Net cash provided by (used in) continuing financing activitiesNet cash provided by (used in) continuing financing activities171,071 512,385 (341,314)(66.6)%Net cash provided by (used in) continuing financing activities(449,044)171,071 (620,115)(362.5)%
Net increase (decrease) in cash and cash equivalents from continuing operationsNet increase (decrease) in cash and cash equivalents from continuing operations$(155,199)$43,897 $(199,096)(453.6)%Net increase (decrease) in cash and cash equivalents from continuing operations$(243,432)$(155,199)$(88,233)56.9 %
Cash flows provided by (used in) continuing operating activities
Cash provided by continuing operating activities of $116.9 million for the three months ended March 31, 2022 resulted from net income from continuing operations of $76.8 million and a decrease in accrued interest receivable and other assets of $66.9 million, partially offset by a decrease in accrued interest payable and other liabilities of $6.4 million and net non-cash operating adjustments of $20.2 million.
Cash provided by continuing operating activities of $200.4 million for the three months ended March 31, 2021 resulted from an increase in accrued interest payable and other liabilities of $135.7 million, net income from continuing operations of $74.6 million, a decrease of $21.0 million in accrued interest receivable and other assets, partially offset by net non-cash operating adjustments of $30.9 million.
Cash used inflows provided by (used in) continuing operatinginvesting activities
Cash provided by continuing investing activities of $34.9$88.7 million for the three months ended March 31, 20202022 primarily resulted from an increasepurchases of $99.0investment securities available for sale of $814.2 million in accrued interest receivable and other assets,purchases of loans of $206.3 million, partially offset by an increaseproceeds from net repayments of mortgage warehouse loans of $536.6 million, proceeds from maturities, calls, and principal repayments of investment securities of $224.8 million, proceeds from sales of investment securities available for sale of $156.0 million, a net decrease in accrued interest payableloans and other liabilitiesleases, excluding mortgage warehouse loans of $38.2$159.7 million net non-cash operating adjustmentsprimarily from PPP loan forgiveness, proceeds from sales of $17.4loans and leases of $14.3 million, and net incomeproceeds from continuing operationssale of $8.5FHLB, FRB, and other restricted stock of $15.2 million.
Cash flows provided by (used in) continuing investing activities
Cash used in continuing investing activities of $526.7 million for the three months ended March 31, 2021 primarily resulted from a net increase in loans and leases, excluding mortgage warehouse loans of $486.2 million primarily fromrelated to PPP loan originations, purchases of loans of $117.0 million and purchases of investment securities available for sale of $589.9 million and purchases of loans of $117.0 million, partially offset by proceeds from net
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investment securities available for sale of $353.9 million, proceeds from net repayments of mortgage warehouse loans of $213.8 million, proceeds from maturities, calls and principal repayments of investment securities of $62.3 million and proceeds from sales of loans and leases of $39.5 million, proceeds from sales of investment securities of $353.9 million and proceeds from maturities, calls, and principal repayments on investment securities of $62.3 million.
Cash used in continuing investing activities of $433.6 million for the three months ended March 31, 2020 primarily resulted from net originations of mortgage warehouse loans of $271.1 million, purchases of loans of $193.4 million, and purchases of investment securities available for sale of $158.8 million, partially offset by a decrease in loans and leases, excluding mortgage warehouse loans of $175.0 million.
Cash flows provided by (used in) continuing financing activities
Cash used in continuing financing activities of $449.0 million for the three months ended March 31, 2022 primarily resulted from a net decrease in short-term borrowed funds from the FHLB of $700.0 million, a net decrease in deposits of $362.4 million and purchases of treasury stock of $6.3 million, partially offset by a net increase in federal funds purchased of $625.0 million.
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Cash provided by continuing financing activities of $171.1 million for the three months ended March 31, 2021 primarily resulted from net increases in deposits of $1.2 billion and $115$115.0 million in federal funds purchased, partially offset by a net decrease in borrowed funds from the PPPLF of $1.1 billion primarily from the forgiveness of PPP loans from the first two rounds.
Cash provided by continuing financing activities of $512.4 million for the three months ended March 31, 2020 primarily resulted from net increase in short-term borrowed funds from the FHLB of $410.0 million, net increase in short-term borrowed funds from the FRB of $175.0 million, and federal funds purchased of $167.0 million, partially offset by a decrease in deposits of $235.3 million, and preferred stock dividends paid of $3.6 million.
Cash flows from discontinued operations
Customers Bancorp completed the divestiture of BMT on January 4, 2021. BMT's operating results and associated cash flows have been presented as "Discontinued operations" within the consolidated financial statements and prior period amounts have been reclassified to conform with the current period presentation. In connection with the divestiture, Customers 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 deposit service agreement is scheduled to expire on December 31, 2022 and will not be renewed. As of March 31, 2022, Customers held $2.2 billion of deposits serviced by BM Technologies, which are expected to leave Customers Bank by December 31, 2022. The loan agreement with BM Technologies was terminated early in November 2021. For additional information refer to "NOTE 3 – DISCONTINUED OPERATIONS" to Customers' unaudited consolidated financial statements.
The table below summarizes Customers' cash flows from discontinued operations for the three months ended March 31, 20212022 and 2020:
Three Months Ended
March 31,
(amounts in thousands)20212020Change% Change
Net cash provided by (used in) discontinued operating activities$(22,791)$(232)$(22,559)9,723.7 %
Net cash provided by (used in) discontinued investing activities— 62 (62)(100.0)%
Net increase (decrease) in cash and cash equivalents from discontinued operations$(22,791)$(170)$(22,621)13,306.5 %

2021:
Three Months Ended March 31,
(dollars in thousands)20222021Change% Change
Net cash provided by (used in) discontinued operating activities$— $(22,791)$22,791 (100.0)%
Net increase (decrease) in cash and cash equivalents from discontinued operations$— $(22,791)$22,791 (100.0)%
Cash flows provided by (used in) discontinued operating activities
Cash used in discontinued operating activities of $22.8 million for the three months ended March 31, 2021 resulted from a net loss of $38.0 million and a decrease in accrued interest payable and other liabilities of $40.7 million, offset in part by non-cash operating activities of $20.3 million and a decrease in other assets of $35.6 million.
In connection with the divestiture, Customers has also 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. For additional information refer to "NOTE 3 – DISCONTINUED OPERATIONS" to Customers' unaudited consolidated financial statements.
CAPITAL ADEQUACY
The Bank and Customersthe Bancorp are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on Customers' financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank and the Bancorp must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items, as calculated under the regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.
In first quarter 2020, U.S federal banking regulatory agencies permitted banking organizations to phase-in, for regulatory capital purposes, the day-one impact of the new CECL accounting rule on retained earnings over a period of three years. As part of its response to the impact of COVID-19, on March 31, 2020, the U.S. federal banking regulatory agencies issued an interim final rule that provided the option to temporarily delay certain effects of CECL on regulatory capital for two years, followed by a three-year transition period. The interim final rule allows banking organizations to delay for two years 100% of the day-one impact of adopting CECL and 25% of the cumulative change in the reported allowance for credit losses since adopting CECL. Customers has elected to adopt the interim final rule, which is reflected in the regulatory capital data presented below.
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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 March 31, 2022, our regulatory capital ratios reflected 75%, or $46.2 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 presented below.
Quantitative measures established by regulation to ensure capital adequacy require the Bank and the Bancorp to maintain minimum amounts and ratios (set forth in the following table) of common equity Tier 1, Tier 1, and total capital to risk-weighted assets, and Tier 1
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capital to average assets (as defined in the regulations). At March 31, 20212022 and December 31, 2020,2021, the Bank and the Bancorp met all capital adequacy requirements to which they were subject.
Generally, to comply with the regulatory definition of adequately capitalized, or well capitalized, respectively, or to comply with the Basel III capital requirements, an institution must at least maintain the common equity Tier 1, Tier 1, and total risk-based capital ratios and the Tier 1 leverage ratio in excess of the related minimum ratios set forth in the following table:
Minimum Capital Levels to be Classified as:
 ActualAdequately CapitalizedWell CapitalizedBasel III Compliant
(dollars in thousands)AmountRatioAmountRatioAmountRatioAmountRatio
As of March 31, 2021:
Common equity Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,021,018 8.774 %$523,659 4.500 %N/AN/A$814,581 7.000 %
Customers Bank$1,365,443 11.745 %$523,182 4.500 %$755,708 6.500 %$813,839 7.000 %
Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,238,489 10.643 %$698,212 6.000 %N/AN/A$989,134 8.500 %
Customers Bank$1,365,443 11.745 %$697,576 6.000 %$930,102 8.000 %$988,233 8.500 %
Total capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,447,285 12.437 %$930,949 8.000 %N/AN/A$1,221,871 10.500 %
Customers Bank$1,523,681 13.106 %$930,102 8.000 %$1,162,627 10.000 %$1,220,758 10.500 %
Tier 1 capital (to average assets)
Customers Bancorp, Inc.$1,238,489 8.478 %$584,359 4.000 %N/AN/A$584,359 4.000 %
Customers Bank$1,365,443 9.352 %$584,025 4.000 %$730,031 5.000 %$584,025 4.000 %
As of December 31, 2020:
Common equity Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$954,839 8.079 %$531,844 4.500 %N/AN/A$827,312 7.000 %
Customers Bank$1,254,082 10.615 %$531,639 4.500 %$767,923 6.500 %$826,994 7.000 %
Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,172,310 9.919 %$709,125 6.000 %N/AN/A$1,004,594 8.500 %
Customers Bank$1,254,082 10.615 %$708,852 6.000 %$945,136 8.000 %$1,004,207 8.500 %
Total capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,401,119 11.855 %$945,500 8.000 %N/AN/A$1,240,969 10.500 %
Customers Bank$1,424,791 12.060 %$945,136 8.000 %$1,181,421 10.000 %$1,240,492 10.500 %
Tier 1 capital (to average assets)
Customers Bancorp, Inc.$1,172,310 8.597 %$545,485 4.000 %N/AN/A$545,485 4.000 %
Customers Bank$1,254,082 9.208 %$544,758 4.000 %$680,947 5.000 %$544,758 4.000 %
Minimum Capital Levels to be Classified as:
 ActualAdequately CapitalizedWell CapitalizedBasel III Compliant
(dollars in thousands)AmountRatioAmountRatioAmountRatioAmountRatio
As of March 31, 2022:
Common equity Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,344,684 9.893 %$611,629 4.500 %N/AN/A$951,423 7.000 %
Customers Bank$1,573,796 11.598 %$610,658 4.500 %$882,062 6.500 %$949,913 7.000 %
Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,482,477 10.907 %$815,505 6.000 %N/AN/A$1,155,299 8.500 %
Customers Bank$1,573,796 11.598 %$814,211 6.000 %$1,085,615 8.000 %$1,153,466 8.500 %
Total capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,749,655 12.873 %$1,087,340 8.000 %N/AN/A$1,427,134 10.500 %
Customers Bank$1,768,525 13.032 %$1,085,615 8.000 %$1,357,019 10.000 %$1,424,870 10.500 %
Tier 1 capital (to average assets)
Customers Bancorp, Inc.$1,482,477 7.723 %$767,836 4.000 %N/AN/A$767,836 4.000 %
Customers Bank$1,573,796 8.211 %$766,712 4.000 %$958,391 5.000 %$766,712 4.000 %
As of December 31, 2021:
Common equity Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,291,270 9.981 %$582,179 4.500 %N/AN/A$905,611 7.000 %
Customers Bank$1,526,583 11.825 %$580,943 4.500 %$839,140 6.500 %$903,689 7.000 %
Tier 1 capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,429,063 11.046 %$776,238 6.000 %N/AN/A$1,099,671 8.500 %
Customers Bank$1,526,583 11.825 %$774,591 6.000 %$1,032,788 8.000 %$1,097,337 8.500 %
Total capital (to risk-weighted assets)
Customers Bancorp, Inc.$1,667,395 12.888 %$1,034,984 8.000 %N/AN/A$1,358,417 10.500 %
Customers Bank$1,692,512 13.110 %$1,032,788 8.000 %$1,290,985 10.000 %$1,355,534 10.500 %
Tier 1 capital (to average assets)
Customers Bancorp, Inc.$1,429,063 7.413 %$771,084 4.000 %N/AN/A$771,084 4.000 %
Customers Bank$1,526,583 7.925 %$770,528 4.000 %$963,160 5.000 %$770,528 4.000 %
The capital ratios above reflect the capital requirements under "Basel III" adopted effective first quarter 2015 and theBasel III Capital Rules require that we maintain a 2.500% capital conservation buffer phased in beginning Januarywith respect to each of common equity Tier 1, 2016. FailureTier 1 and total capital to maintainrisk-weighted assets, which provides for capital levels that exceed the requiredminimum risk-based capital adequacy requirements. A financial institution with a capital conservation buffer will result inof less than the required amount is subject to limitations on capital distributions, including dividend payments and onstock repurchases, and certain discretionary bonusesbonus payments to executive officers. As of March 31, 2021,2022, the Bank and Customersthe Bancorp were in compliance with the Basel III requirements. See "NOTE 1112 – REGULATORY CAPITAL" to Customers' unaudited consolidated financial statements for additional discussion regarding regulatory capital requirements.
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OFF-BALANCE SHEET ARRANGEMENTS
Customers is involved with financial instruments and other commitments with off-balance sheet risks. Financial instruments with off-balance sheet risks are incurred in the normal course of business to meet the financing needs of the Bank's customers. These financial instruments include commitments to extend credit, including unused portions of lines of credit, and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized on the balance sheet.
With commitments to extend credit, exposure to credit loss in the event of non-performance by the other party to the financial instrument is represented by the contractual amount of those instruments. The same credit policies are used in making commitments and conditional obligations as for on-balance sheet instruments. Because they involve credit risk similar to extending a loan and lease, these financial instruments are subject to the Bank’s credit policy and other underwriting standards.
As of March 31, 2021 and December 31, 2020, the following off-balance sheet commitments, financial instruments and other arrangements were outstanding:
(amounts in thousands)March 31, 2021December 31, 2020
Commitments to fund loans and leases$342,327 $262,153 
Unfunded commitments to fund mortgage warehouse loans2,156,029 1,933,067 
Unfunded commitments under lines of credit and credit cards1,196,988 1,009,031 
Letters of credit30,512 27,166 
Other unused commitments1,061 1,842 
Commitments to fund loans and leases, unfunded commitments to fund mortgage warehouse loans, unfunded commitments under lines of credit, letters of credit, and credit cards are agreements to extend credit to or for the benefit of a customer in the ordinary course of the Bank's business.
Commitments to fund loans and leases and unfunded commitments under lines of credit may be obligations of the Bank as long as there is no violation of any condition established in the contract. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if the Bank deems it necessary upon extension of credit, is based upon management’s credit evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory and equipment.
Mortgage warehouse loan commitments are agreements to fund the pipelines of mortgage banking businesses from closing of individual mortgage loans until their sale into the secondary market. Most of the individual mortgage loans are insured or guaranteed by the U.S. government through one of its programs such as FHA, VA, or are conventional loans eligible for sale to Fannie Mae and Freddie Mac. These commitments generally fluctuate monthly based on changes in interest rates, refinance activity, new home sales and laws and regulation.
Outstanding letters of credit written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Letters of credit may obligate the Bank to fund draws under those letters of credit whether or not a customer continues to meet the conditions of the extension of credit. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan and lease facilities to customers.
Customers recognized a credit or credit loss benefit on unfunded commitments of $1.3 million during the three months ended March 31, 2021 resulting in an ACL of $1.0 million as of March 31, 2021.
Effect of Government Monetary Policies
Our earnings are and will be affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies. An important function of the Federal Reserve Board is to regulate the money supply and interest rates. Among the instruments used to implement those objectives are open market operations in United States government securities and changes in reserve requirements against member bank deposits. These instruments are used in varying combinations to influence overall
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growth and distribution of bank loans and leases, investments, and deposits, and their use may also affect rates charged on loans and leases or paid for deposits.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Sensitivity
The largest component of Customers' net income is net interest income, and the majority of its financial instruments are interest rate sensitive assets and liabilities with various term structures and maturities. One of the primary objectives of management is to optimize net interest income while minimizing interest rate risk. Interest rate risk is derived from timing differences in the repricing of assets and liabilities, loan prepayments, deposit withdrawals and differences in lending and funding rates. Customers' asset/liability committee actively seeks to monitor and control the mix of interest rate sensitive assets and interest rate sensitive liabilities.
Customers uses two complementary methods to analyze and measure interest rate sensitivity as part of the overall management of interest rate risk; they are income scenario modeling and estimates of EVE. The combination of these two methods provides a reasonably comprehensive summary of the levels of interest rate risk of Customers' exposure to time factors and changes in interest rate environments.
Income scenario modeling is used to measure interest rate sensitivity and manage interest rate risk. Income scenario considers not only the impact of changing market interest rates upon forecasted net interest income but also other factors such as yield-curveyield curve relationships, the volume and mix of assets and liabilities, customer preferences and general market conditions.
Through the use of income scenario modeling, Customers has estimated the net interest income for the twelve months ending March 31, 20222023 and December 31, 2021,2022, based upon the assets, liabilities and off-balance sheet financial instruments in existence at March 31, 20212022 and December 31, 2020.2021. Customers has also estimated changes to that estimated net interest income based upon interest rates rising or falling immediately (“rate shocks”). For upward rate shocks modeling a rising rate environment at March 31, 2021,2022, current market interest rates were increased immediately by 100, 200, and 300 basis points. For downward rate shocks modeling a fallingIn the current interest rate environment, current marketparticularly for short term rates, were only decreased immediately bythe Down 100 to Down 300 basis pointspoint scenarios are not shown due to the limitationsunrealistic and/or negative yield nature of the current low interest rate environment that renders the Down 200 and Down 300 rate shocks impractical. The downward rate shocks modeled will be revisited in the future if necessary and will be contingent upon additional Federal Reserve interest rate hikes.results. The following table reflects the estimated percentage change in estimated net interest income for the twelve months ending March 31, 20222023 and December 31, 2021,2022, resulting from changes in interest rates.
Net change in net interest income
% Change
Rate ShocksMarch 31, 2022December 31, 2021
Up 3%7.1%16.0%
Up 2%5.1%10.8%
Up 1%2.9%5.7%
% Change
Rate ShocksMarch 31, 2021December 31, 2020
Up 3%1.5%(2.7)%
Up 2%1.4%(1.6)%
Up 1%0.8%(0.8)%
Down 1%(0.1)%1.4%
The net changes in net interest income in all scenarios are within Customers Bank's interest rate risk policy guidelines.
EVE estimates the discounted present value of asset and liability cash flows. Discount rates are based upon market prices for comparable assets and liabilities. Upward and downward rate shocks are used to measure volatility of EVE in relation to a constant rate environment. For upward rate shocks modeling a rising rate environment at March 31, 2021,2022, current market interest rates were only increased immediately by 100, 200, and 300 basis points. For downward rate shocks modeling a falling rate environment, current market rates were decreased immediately by 100 basis points dueDue to the limitations of the current low interest rate environment, that renders the Down 100, 200 and Down 300 basis point rate shocks impractical.are deemed impractical and not presented below. The downward rate shocks modeled will be revisited in the future if necessary and will be contingent upon additional Federal Reserve interest rate hikes. This method of measurement primarily evaluates the longer term repricing risks and options in Customers Bank’s balance sheet. The following table reflects the estimated EVE at risk and the ratio of EVE to EVE adjusted assets at March 31, 20212022 and December 31, 2020,2021, resulting from shocks to interest rates.
From base
Rate ShocksMarch 31, 2021December 31, 2020
Up 3%(4.0)%(18.9)%
Up 2%(0.8)%(12.2)%
Up 1%0.5%(6.1)%
Down 1%(9.4)%(4.2)%
The net changes in EVE in all scenarios are within Customers Bank's interest rate risk policy guidelines.
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From Base
Rate ShocksMarch 31, 2022December 31, 2021
Up 3%14.0%100.7%
Up 2%13.8%79.8%
Up 1%9.4%51.5%
Management believes that the assumptions and combination of methods utilized in evaluating estimated net interest income are reasonable. However, the interest rate sensitivity of our assets, liabilities and off-balance sheet financial instruments, as well as the estimated effect of changes in interest rates on estimated net interest income, could vary substantially if different assumptions are used or actual experience differs from the assumptions used in the model.
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Item 4. Controls and Procedures
(a) Management's Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, Customers Bancorp carried out an evaluation, under the supervision and with the participation of Customers Bancorp’s management, including Customers Bancorp’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Customers Bancorp’s disclosure controls and procedures as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Customers Bancorp’s disclosure controls and procedures were effective as of March 31, 2021.2022.
(b) Changes in Internal Control Over Financial Reporting. During the quarter ended March 31, 2021,2022, there have been no changes in Customers Bancorp's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Customers Bancorp's internal control over financial reporting.
The emergence of the COVID-19 pandemic during first quarter 2020 necessitated the execution of several Customers Bancorp contingency plans. Beginning in March 2020, and continuing through this filing date, Customers Bancorp had a substantial number of its team members working remotely under such contingency plans. Since that time, Customers has launched the “Return to Workplace” initiative, and communicated a goal of having more team members return to the workplace. In that communication, Customers announced the following action steps along with a continuing commitment to remain empathetic and cognizant of balancing company principles, customer support, team members support and remaining vigilant on tracking and preventing COVID-19 exposures to protect our team members and customers. Customers implemented a “ hybrid model” encouraging and tracking the movement of more team members returning to the office, released a communication requiring all team members to read, sign and acknowledge a Code of Commitment to reveal exposures to COVID-19, thereby allowing Customers to manage the possible impact with 100 percent participation of our team members. Customers has started tracking vaccination rates and less than 10 percent of our team members are not vaccinated or not planning to be vaccinated. The execution of thesethe contingency plans havedid not materially affected, or are reasonably likely to materially affect Customers' internal control over financial reporting.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings
For information on Customers' legal proceedings, refer to “NOTE 1415 – LOSS CONTINGENCIES” to the unaudited consolidated financial statements.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in “Risk Factors” included within the 20202021 Form 10-K. There are no material changes from the risk factors included within the 20202021 Form 10-K. The risks described within the 20202021 Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently believe to be immaterial also may materially adversely affect our business, financial condition and/or operating results. See “Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Cautionary Note Regarding Forward-Looking Statements.”
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
On August 25, 2021, the Board of Directors of Customers Bancorp did not purchase anyauthorized the Share Repurchase Program to repurchase up to 3,235,326 shares of itsthe Company's common stock (representing 10% of the Company’s outstanding shares of common stock on June 30, 2021). The term of the Share Repurchase Program will extend for one year from September 27, 2021, unless earlier terminated. Purchases of shares under the Share Repurchase Program may be executed through open market purchases, privately negotiated transactions, through the use of Rule 10b5-1 plans, or otherwise. The exact number of shares, timing for such purchases, and the price and terms at and on which such purchases are to be made will be at the discretion of the Company and will comply with all applicable regulatory limitations. The common shares repurchased during the three months ended March 31, 20212022 pursuant to an existing stock repurchase plan.the Share Repurchase Program were as follows:
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares purchased as part of publicly announced plans or programsMaximum Number of Shares that may yet be purchased under the plans or programs
January 1 - January 31, 202266,255 $56.11 66,255 2,641,282 
February 1 - February 28, 2022— — — 2,641,282 
March 1 - March 31, 202249,069 52.85 49,069 2,592,213 
Total115,324 $54.72 115,324 2,592,213 
Dividends on Common Stock
Customers Bancorp historically has not paid any cash dividends on its shares of common stock and does not expect to do so in the foreseeable future.
Any future determination relating to our dividend policy will be made at the discretion of Customers Bancorp’s boardBoard of directorsDirectors and will depend on a number of factors, including earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, ability to service any equity or debt obligations senior to our common stock, including obligations to pay dividends to the holders of Customers Bancorp's issued and outstanding shares of preferred stock and other factors deemed relevant by the Board of Directors.
In addition, as a bank holding company, Customers Bancorp is 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, various federal and state statutory provisions limit the amount of dividends that bank subsidiaries can pay to their parent holding company without regulatory approval. Generally, subsidiaries are prohibited from paying dividends when doing so would cause them to fall below the regulatory minimum capital levels, and limits exist on paying dividends in excess of net income for specified periods.
Beginning January 1, 2015, the ability to pay dividends and the amounts that can be paid will be limited to the extent the Bank's capital ratios do not exceed the minimum required levels plus 250 basis points, as these requirements were phased in through January 1, 2019.
Special Dividends of BM Technologies, Inc. Common Stock
On January 4, 2021, Customers Bancorp completed the previously announced divestiture of BankMobile Technologies, Inc., a wholly owned subsidiary of Customers Bank, to MFAC Merger Sub Inc., an indirect wholly-owned subsidiary of Megalith Financial Acquisition Corp., pursuant to an Agreement and Plan of Merger, dated August 6, 2020, as amended, by and among MFAC, MFAC Merger Sub Inc., BMT, Customers Bank and Customers Bancorp. In connection with the closing of the divestiture, MFAC changed its name to “BM Technologies, Inc.” and began trading on the NYSE under the ticker symbol "BMTX".
Upon closing of the divestiture, Customers received cash consideration of $23.1 million and holders of Customers common stock who held their Customers shares as of the close of business on December 18, 2020 received an aggregate of 4,876,387 shares of BM Technologies' common stock in the form of a special dividend. Each holder of Customers common stock was entitled to receive 0.15389 shares of BM Technologies' common stock for each share of Customers common stock held as of the close of business on December 18, 2020. No fractional shares of BM Technologies' common stock were issued; fractional share otherwise issuable were rounded to the nearest whole share. Certain team members of BMT also received 1,348,748 shares of BM Technologies' common stock in the form of severance payments.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information

NoneNone.
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Item 6. Exhibits
Exhibit No.Description
2.1
2.2
*
2.3
2.4
3.1
3.2
3.3
3.4
3.5
3.63.
3.7
3.86
3.93.7
4.1
4.2
10.1
10.1
10.2
10.3
10.4
10.5
31.1
31.2
32.1
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32.2
101
The following financial statements from the Customers’ AnnualQuarterly Report on Form 10-Q as of and for the yearquarterly period ended March 31, 2021,2022, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements.
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document.
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.
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101.DEFXBRL Taxonomy Extension Definitions Linkbase Document.
101.LABXBRL Taxonomy Extension Label Linkbase Document.
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.
* Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished to the SEC upon its request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Customers Bancorp, Inc.
May 10, 20219, 2022By: /s/ Jay S. Sidhu
Name: Jay S. Sidhu
Title: Chairman and Chief Executive Officer
(Principal Executive Officer)
May 10, 20219, 2022By: /s/ Carla A. Leibold
Name: Carla A. Leibold
Title: Chief Financial Officer
(Principal Financial Officer)

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