Customers Bancorp, Inc.

Previous wording

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 and nine months ended September 30, 2025. 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’ 2024 Form 10-K.

Current wording

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, 2026. 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’ 2025 Form 10-K.

Previous wording

Impact of Macroeconomic and Banking Industry Uncertainties and Military Conflicts

Current wording

Impact of Macroeconomic and Banking Industry Uncertainties, Tariffs, and Military Conflicts

Previous wording

At its September 2025 meeting, the Federal Reserve enacted a 25 basis point reduction in the federal funds rate. In addition, on October 29, 2025, the Federal Reserve announced an additional rate cut of 25 basis points. Although inflation remains slightly elevated and above the Federal Reserve’s stated 2% target and is not anticipated to fall below that threshold until 2028, it cited the weakening labor market as the key consideration for adopting a less restrictive monetary position. The Federal Reserve has stated that they would assess incoming data, the evolving outlook and the balance of risks in further lowering the federal funds rate. Significant uncertainties exist as to the extent and timing of future rate cuts and their effects on the economic conditions.

Current wording

The Federal Reserve kept the target range for the federal funds rate unchanged at its January, March and April 2026 meetings. At its March 2026 meeting, the Federal Reserve stated that job gains have remained low and the unemployment rate has been little changed in recent months, and that inflation remains somewhat elevated. Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the U.S. economy are uncertain. The Federal Reserve indicated it will carefully assess incoming data, the evolving outlook and the balance of risks in considering the extent and timing of additional adjustments to the target range for the federal funds rate. Significant uncertainties exist as to the extent and timing of future rate cuts and their effects on economic conditions.

Previous wording

Significant uncertainties as to future economic conditions continue to exist, including risks of higher inflation, changes in U.S. trade policies including the imposition of tariffs and retaliatory tariffs on its trading partners, elevated liquidity risk to the U.S. banking system and the exposure to the U.S. commercial real estate market, particularly to the regional banks, disruptions to global supply chain and labor markets and higher oil and commodity prices exacerbated by the military conflicts between Russia and Ukraine and in the Middle East. Customers has maintained higher levels of liquidity, reserves for credit losses on loans and leases and off-balance sheet credit exposures and strong capital ratios, and shifted the mix of its loan portfolio towards low credit risk commercial loans with floating or adjustable interest rates during the period of high interest rates. As interest rates begin to decline, Customers has been reducing the Bank’s asset sensitivity through derivative hedging and investment securities portfolio rebalancing. Customers remains focused on growing its non-interest bearing and lower-cost interest-bearing deposits. The Bank’s debt securities available for sale and held to maturity are available to be pledged as collateral to the FRB and FHLB for additional liquidity. The Bank had approximately $5.7 billion in immediate available liquidity from the FRB and FHLB and cash on hand of $4.2 billion as of September 30, 2025. The Bank’s estimated FDIC insured deposits represented approximately 57% of our deposits (inclusive of accrued interest) as of September 30, 2025. When including collateralized and affiliate deposits as FDIC insured, this number increased to 67% of our deposits as of September 30, 2025. Customers continues to monitor closely the impact of uncertainties affecting the macroeconomic conditions, the U.S. banking system, particularly regional banks, the military conflicts between Russia and Ukraine and in the Middle East, as well as any effects that may result from the federal government’s responses including future rate and regulatory actions; however, the extent to which inflation, interest rates and other macroeconomic and industry factors, the geopolitical conflicts and developments in the U.S. banking system will impact Customers’ operations and financial results during the remainder of 2025 is highly uncertain.

Current wording

Significant uncertainties as to future economic conditions continue to exist, including risks of higher inflation, changes in U.S. trade policies including the imposition of tariffs and retaliatory tariffs on its trading partners, elevated liquidity risk to the U.S. banking system and the exposure to the U.S. commercial real estate market, particularly to the regional banks, disruptions to global supply chain and labor markets and higher oil and commodity prices exacerbated by the military conflicts between Russia and Ukraine and in the Middle East. Customers has maintained higher levels of liquidity, reserves for credit losses on loans and leases and off-balance sheet credit exposures and strong capital ratios, and shifted the mix of its loan portfolio towards low credit risk commercial loans with floating or adjustable interest rates during the period of high interest rates. As interest rates begin to decline, Customers has been reducing the Bank’s asset sensitivity through derivative hedging and investment securities portfolio rebalancing. Customers remains focused on growing its non-interest bearing and lower-cost interest-bearing deposits. The Bank’s debt securities available for sale and held to maturity are available to be pledged as collateral to the FRB and FHLB for additional liquidity. The Bank had approximately $6.3 billion in immediate available liquidity from the FRB and FHLB and cash on hand of $4.8 billion as of March 31, 2026. The Bank’s estimated FDIC insured deposits represented approximately 57% of our deposits (inclusive of accrued interest) as of March 31, 2026. When including collateralized and affiliate deposits as FDIC insured, this number increased to 66% of our deposits as of March 31, 2026. Customers continues to monitor closely the impact of uncertainties affecting the macroeconomic conditions, the U.S. banking system, particularly regional banks, the military conflicts between Russia and Ukraine and in the Middle East, as well as any effects that may result from the federal government’s responses including future rate and regulatory actions; however, the extent to which inflation, interest rates and other macroeconomic and industry factors, the geopolitical conflicts and developments in the U.S. banking system will impact Customers’ operations and financial results during the remainder of 2026 is highly uncertain.

Previous wording

The ACL is established in accordance with our ACL policy. The ACL Committee, which includes the President, Chief Financial Officer, Chief Accounting Officer, Chief Banking 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 judgments and the related disclosures are reviewed by Customers’ Audit Committee of the Board of Directors.

Current wording

The ACL is established in accordance with our ACL policy. The ACL Committee, which includes the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Chief Banking 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 judgments and the related disclosures are reviewed by Customers’ Audit Committee of the Board of Directors.

Previous wording

The net increase in our estimated ACL as of September 30, 2025 as compared to December 31, 2024 resulted primarily from higher loan balances held for investment. The provision for credit losses on loans and leases was $19.8 million and $59.7 million for the three and nine months ended September 30, 2025, respectively, for an ending ACL balance of $158.7 million ($151.8 million for loans and leases and $6.9 million for unfunded lending-related commitments) as of September 30, 2025.

Current wording

The net increase in our estimated ACL as of March 31, 2026 as compared to December 31, 2025 resulted primarily from a slight deterioration in macroeconomic forecasts and an increase in loan balances held for investment. The provision for credit losses on loans and leases was $18.6 million for the three months ended March 31, 2026 for an ending ACL balance of $170.4 million ($161.0 million for loans and leases and $9.4 million for unfunded lending-related commitments) as of March 31, 2026.

Previous wording

To determine the ACL as of September 30, 2025, Customers utilized Moody’s September 2025 Baseline forecast to generate its modeled expected losses and considered Moody’s other alternative economic forecast scenarios to qualitatively adjust the modeled ACL by loan portfolio in order to reflect management’s reasonable expectations of current and future economic conditions. The Baseline forecast at September 2025 assumed slight improvement in macroeconomic forecasts from the second quarter 2025 forecasts of macroeconomic conditions used by Customers; the Federal Reserve Board lowering interest rates in September and December 2025 and gradually reducing the policy rate to its neutral level by late 2026; the effective tariff rate is expected to rise from just over 2% at the start of the year to an average of 15% through early next year, before slowly falling late in the decade; the military conflict between Russia and Ukraine continues but the impact on energy, agriculture and other commodity markets is modest; while there is always a threat that the turmoil in the Middle East disrupts energy and financial markets, that threat has abated somewhat; the CPI rising 2.8% in 2025 and 3.4% in 2026; and the unemployment rate rising to 4.2% in 2025 and 4.6% in 2026 as the outlook for the job market remains weak from the global trade war. Customers continues to monitor the impact of the military conflicts between Russia and Ukraine and in the Middle East, high tariffs, inflation, and monetary and fiscal policy measures including the federal government shutdown on the U.S. economy and, if pace of the expected economic growth is worse than expected, further meaningful provisions for credit losses could be required.

Current wording

To determine the ACL as of March 31, 2026, Customers utilized Moody’s March 2026 Baseline forecast to generate its modeled expected losses and considered Moody’s other alternative economic forecast scenarios to qualitatively adjust the modeled ACL by loan portfolio in order to reflect management’s reasonable expectations of current and future economic conditions. The Baseline forecast at March 2026 assumed slight deterioration in macroeconomic forecasts from the fourth quarter 2025 forecasts of macroeconomic conditions used by Customers; the Federal Reserve Board lowering interest rates by a quarter point in June and September as the policymakers will wait on further data to evaluate threats to the Federal Reserves’ mandate, including the fragile U.S. labor market, higher oil prices from the military conflict in the Middle East, restrictive tariff and migration policies; the economic impact of the military conflict in the Middle East is expected to be short-lived, while additional fiscal stimulus and the rebound from the federal government shutdown boosting growth in the near term; the Supreme Court ruling on the tariffs under the International Emergency Economic Powers Act not materially changing the outlook on tariffs, as prior sectoral tariffs remain unaffected and other laws will be used to impose tariffs similar to those declared illegal moving forward; the CPI rising 3.1% in 2026 and 2.7% in 2027; and the unemployment rate rising to 4.5% in 2026 and 2027. Customers continues to monitor the impact of the military conflicts between Russia and Ukraine and in the Middle East, high tariffs, inflation, and monetary and fiscal policy measures on the U.S. economy and, if pace of the expected economic growth is worse than expected, further meaningful provisions for credit losses could be required.

Previous wording

As of December 31, 2024, the ACL ending balance was $141.7 million ($136.8 million for loans and leases and $4.9 million for unfunded lending-related commitments). To determine the ACL as of December 31, 2024, Customers utilized the Moody’s December 2024 Baseline forecast to generate its modeled expected losses and considered Moody’s other alternative economic forecast scenarios to qualitatively adjust the modeled ACL by loan portfolio in order to reflect management’s reasonable expectations of current and future economic conditions. The Baseline forecast at December 31, 2024 assumed slight improvements in macroeconomic forecasts compared to the macroeconomic forecasts used by Customers in 2023; the Federal Reserve Board lowering interest rates twice in 2025 and gradually reducing the policy rate to its neutral level by late 2026, as slower progress in reducing inflation and additional inflationary pressures from the new administration’s fiscal, tariff and immigration plans suggest a slower pace of normalization than previously expected; failures of several regional banks in the first half of 2023 and recent issues around other banks are not symptomatic of a broader problem in the U.S. financial system and policymakers’ aggressive response will ensure that the failures do not weaken the financial system or further undermine economic growth; the military conflict between Russia and Ukraine continuing for the foreseeable future but its impact on energy, agriculture and other commodity markets and the global economy has largely faded; the war in Israel not spreading to other parts of the Middle East and disrupting global energy markets and global shipping; the CPI rising 2.3% in 2025 and 2.8% in 2026; and the unemployment rate rising to 4.1% in 2025 and 2026.

Current wording

As of December 31, 2025, the ACL ending balance was $164.7 million ($155.7 million for loans and leases and $9.0 million for unfunded lending-related commitments). To determine the ACL as of December 31, 2025, Customers utilized the Moody’s December 2025 Baseline forecast to generate its modeled expected losses and considered Moody’s other alternative economic forecast scenarios to qualitatively adjust the modeled ACL by loan portfolio in order to reflect management’s reasonable expectations of current and future economic conditions. The Baseline forecast at December 31, 2025 assumed slight improvements in macroeconomic forecasts compared to the macroeconomic forecasts used by Customers in 2024; the Federal Reserve Board lowering interest rates in December 2025 and and three more times, a quarter point each time as prompted by a soft economy and a struggling job market, in early 2026, and gradually bringing the policy rate to its neutral level by late 2028; policymakers anticipating that the recent acceleration in inflation will prove temporary, as it is largely due to a one-time price increase caused by the higher tariffs; the military conflict between Russia and Ukraine continuing but its fallout on energy, agriculture and other commodity markets is modest; a threat that the turmoil in Middle East disrupting global energy and financial markets has abated somewhat; the CPI rising 3.2% in 2026 and 2.6% in 2027; and the unemployment rate rising to 4.7% in 2026 and 2027.

Previous wording

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’ modeling 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 impact of the current administration’s tariffs and deportations on the economy being significantly worse than expected causing inflation to rise; rising inflation causes the Federal Reserve Board to raise the Fed Funds; elevated interest rates weakening credit-sensitive spending more than anticipated and business and consumer confidence to decline; military conflict between Russia and Ukraine persisting longer than expected; the conflict in Israel widening; the combination of tariffs, rising inflation, deportations, political tensions, still-elevated interest rates and reduced credit availability causing the economy to fall into recession in the third quarter of 2025; real GDP declining cumulatively by 2.6% from the third quarter of 2025 through the second quarter of 2026; declines in European economies and retaliatory tariffs hurting U.S. exports; and unemployment beginning to increase significantly in the fourth quarter of 2025 and peaking in the fourth quarter of 2026. Under this scenario, as an example, the unemployment rate is estimated at 4.7% and 8.0% in 2025 and 2026, respectively. These numbers represent a 0.5% and 3.4% higher unemployment estimate than the Baseline scenario projection of 4.2% and 4.6% for the same time periods, respectively. To demonstrate the sensitivity to key economic parameters, management calculated the difference between a 100% Baseline weighting and a 100% adverse scenario weighting for modeled results. This would result in an incremental quantitative impact to the ACL of approximately $88 million at September 30, 2025. This resulting difference is not intended to represent an expected increase in ACL levels since (i) Customers may 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.

Current wording

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’ modeling 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 the military conflict in the Middle East resulting in the Strait of Hormuz being closed longer than expected, and causing oil prices to rise above the Baseline scenario; impacts on the economy of the current administration’s tariffs and deportations, as well as rising oil prices worse than expected, causing inflation to rise in the second quarter of 2026; military conflict between Russia and Ukraine persisting longer than expected; the combination of rising oil prices, tariffs, rising inflation, deportations, political tensions, still-elevated interest rates and reduced credit availability causes the economy to fall into recession in the second quarter of 2026; unemployment beginning to increase significantly in the second quarter of 2026 and peaking in the second quarter of 2027. Under this scenario, as an example, the unemployment rate is estimated at 6.5% and 8.3% in 2026 and 2027, respectively. These numbers represent a 2.0% and 3.8% higher unemployment estimate than the Baseline scenario projection of 4.5% for the same time periods, respectively. To demonstrate the sensitivity to key economic parameters, management calculated the difference between a 100% Baseline weighting and a 100% adverse scenario weighting for modeled results. This would result in an incremental quantitative impact to the ACL of approximately $107 million at March 31, 2026. This resulting difference is not intended to represent an expected increase in ACL levels since (i) Customers may 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.

Previous wording

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 geopolitical instability, or risks of rising inflation including a near-term recession 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 geopolitical instability, higher tariffs, federal government shutdown and risks of rising inflation have 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.

Current wording

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 geopolitical instability, or risks of rising inflation including a near-term recession 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 geopolitical instability, higher tariffs and risks of rising inflation have 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.

Previous wording

The following table sets forth the condensed statements of income for the three and nine months ended September 30, 2025 and 2024:

Current wording

The following table sets forth the condensed statements of income for the three months ended March 31, 2026 and 2025:

Previous wording

Customers reported net income available to common shareholders of $73.7 million and $139.1 million for the three and nine months ended September 30, 2025, respectively, compared to net income available to common shareholders of $42.9 million and $143.2 million for the three and nine months ended September 30, 2024, respectively. Factors contributing to the change in net income available to common shareholders for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 were as follows:

Current wording

Customers reported net income available to common shareholders of $69.7 million for the three months ended March 31, 2026, compared to net income available to common shareholders of $9.5 million for the three months ended March 31, 2025. Factors contributing to the change in net income available to common shareholders for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 were as follows:

Previous wording

Net interest income increased $43.4 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily due to lower interest expense on deposits and an increase in interest income from higher average loan balances, interest-bearing deposits and loan purchase discount accretion. Average interest-earning assets increased by $2.5 billion for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase in interest-earning assets was primarily driven by increases in specialized lending and interest-earning deposits, partially offset by a decrease in investment securities. NIM increased by 40 basis points to 3.46% for the three months ended September 30, 2025 from 3.06% for the three months ended September 30, 2024. The NIM increase was primarily attributable to lower cost of deposits from a favorable shift in deposit mix and lower market interest rates on deposits, which drove a 58 basis point decrease in the cost of interest-bearing liabilities and higher loan purchase discount accretion for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Customers’ total cost of funds, including non-interest bearing deposits was 2.91% and 3.59% for the three months ended September 30, 2025 and 2024, respectively.

Current wording

Net interest income increased $23.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to higher average loan balances and lower interest expense on deposits. Average interest-earning assets increased by $2.4 billion for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in interest-earning assets was primarily driven by an increase in commercial and industrial specialized lending. NIM increased by 9 basis points to 3.22% for the three months ended March 31, 2026 from 3.13% for the three months ended March 31, 2025. The NIM increase was primarily attributable to lower cost of deposits from a favorable shift in deposit mix and lower market interest rates on deposits, which drove a 48 basis point decrease in the cost of interest-bearing liabilities for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Customers’ total cost of funds, including non-interest bearing deposits and borrowings was 2.61% and 2.96% for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

The $9.5 million increase in the provision for credit losses for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 included $2.0 million increase in provision for credit losses on loans and leases for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, which primarily reflects an increase in loan balances held for investment. 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 is presented as part of other non-interest expense on the consolidated statement of income. The ACL on loans and leases held for investment represented 1.03% of total loans and leases receivable at September 30, 2025, compared to 1.06% of total loans and leases receivable at September 30, 2024. Net charge-offs for the three months ended September 30, 2025 were $15.4 million, or 39 basis points of average loans and leases on an annualized basis, compared to net charge-offs of $17.0 million, or 50 basis points on an annualized basis, for the three months ended September 30, 2024. The decrease in net charge-offs for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, was primarily due to lower charge-offs for commercial and industrial loans and multifamily loans, partially offset by higher charge-offs for non-owner occupied commercial real estate loans.

Current wording

The $4.9 million decrease in the provision for credit losses for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 included $2.9 million decrease in provision for credit losses on loans and leases for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, which primarily reflects a slight improvement in certain macroeconomic forecast variables. 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 is presented as part of other non-interest expense on the consolidated statement of income. The ACL on loans and leases held for investment represented 1.04% of total loans and leases receivable at March 31, 2026 and 2025. Net charge-offs for the three months ended March 31, 2026 were $13.3 million, or 32 basis points of average loans and leases on an annualized basis, compared to net charge-offs of $17.1 million, or 48 basis points on an annualized basis, for the three months ended March 31, 2025. The decrease in net charge-offs for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to lower charge-offs for commercial and industrial loans, multifamily loans and consumer installment loans.

Previous wording

The provision for credit losses for the three months ended September 30, 2025 and 2024 also included a provision for credit losses of $6.8 million and a benefit to provision of $0.7 million, respectively, on certain debt securities available for sale. The provision for credit losses on certain debt securities available for sale was $16.0 million and $0.7 million for the nine months ended September 30, 2025 and 2024, respectively. Refer to “NOTE 5 – INVESTMENT SECURITIES” to Customers’ unaudited consolidated financial statements for additional information.

Current wording

The provision for credit losses for the three months ended March 31, 2026 and 2025 also included a provision for credit losses of $4.8 million and $6.9 million, respectively, on certain debt securities available for sale. Refer to “NOTE 5 – INVESTMENT SECURITIES” to Customers’ unaudited consolidated financial statements for additional information.

Previous wording

The $1.2 million increase in non-interest expense for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily resulted from increases of $3.2 million in professional services, $1.7 million in commercial lease depreciation, $1.4 million in occupancy, $1.0 million in salaries and employee benefits and $0.6 million in FDIC assessments, non-income taxes and regulatory fees. These increases were offset in part by decreases of $3.6 million in other non-interest expense and $3.2 million in technology, communication and bank operations for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Current wording

The $9.2 million increase in non-interest expense for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily resulted from increases of $8.6 million in salaries and employee benefits and $4.2 million in commercial lease depreciation. These increases were offset in part by a decrease of $3.5 million in FDIC assessments, non-income taxes and regulatory fees for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Previous wording

Preferred stock dividends were $2.0 million and $3.8 million for the three months ended September 30, 2025 and 2024, respectively. Preferred stock dividends were $8.6 million and $11.4 million for the nine months ended September 30, 2025 and 2024, respectively. On June 16, 2025, Customers redeemed all of the outstanding shares of Series E Preferred Stock for an aggregate payment of $57.5 million, at a redemption price of $25.00 per share. The redemption price paid in excess of the carrying value of Series E Preferred Stock of $1.9 million is included as a loss on redemption of preferred stock in the consolidated statement of income for the nine months ended September 30, 2025. After giving effect to the redemption, no shares of the Series E Preferred Stock remained outstanding. There were no changes to the amount of preferred stock outstanding during the three and nine months ended September 30, 2024. Refer to “NOTE 11 – SHAREHOLDERS’ EQUITY” to Customers’ unaudited consolidated financial statements for additional information.

Current wording

There were no preferred stock dividends for the three months ended March 31, 2026. Preferred stock dividends were $3.4 million for the three months ended March 31, 2025. On June 16, 2025 and December 15, 2025, Customers redeemed all of the outstanding shares of Series E Preferred Stock and Series F Preferred Stock, respectively, for an aggregate payment of $142.5 million, at a redemption price of $25.00 per share. After giving effect to the redemption, no shares of the Series E Preferred Stock and Series F Preferred Stock remained outstanding. There were no changes to the amount of preferred stock outstanding during the three months ended March 31, 2025. Refer to “NOTE 11 – SHAREHOLDERS’ EQUITY” to Customers’ unaudited consolidated financial statements for additional information.

Previous wording

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 and nine months ended September 30, 2025 and 2024. 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.

Current wording

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, 2026 and 2025. 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.

Previous wording

(4)Total costs of deposits (including interest bearing and non-interest-bearing) were 2.77% and 3.46% for the three months ended September 30, 2025 and 2024, respectively.

Current wording

(4)Total costs of deposits (including interest bearing and non-interest-bearing) were 2.46% and 2.82% for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

(5)Tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended September 30, 2025 and 2024, presented to approximate interest income as a taxable asset.

Current wording

(5)Tax-equivalent basis, using an estimated marginal tax rate of 21% for the three months ended March 31, 2026 and 26% for three months ended March 31, 2025, presented to approximate interest income as a taxable asset.

Previous wording

Net interest income increased $59.5 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily due to lower interest expense on deposits and an increase in interest income from higher average loan balances and loan purchase discount accretion, partially offset by a decrease in interest income from investment securities and interest-bearing deposits. Average interest-earning assets increased by $1.5 billion, primarily related to an increase in specialized lending and interest-earning deposits, partially offset by a decrease in investment securities.

Current wording

Net interest income increased $23.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to higher average loan balances and lower interest expense on deposits. Average interest-earning assets increased by $2.4 billion, primarily related to an increase in commercial and industrial specialized lending.

Previous wording

The NIM increased by 40 basis points to 3.46% for the three months ended September 30, 2025 from 3.06% for the three months ended September 30, 2024 resulting primarily from lower cost of deposits from a favorable shift in deposit mix and lower market interest rates on deposits and higher loan purchase discount accretion. The cost of interest-bearing liabilities decreased 58 basis points for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Customers’ total cost of funds, including non-interest bearing deposits was 2.91% and 3.59% for the three months ended September 30, 2025 and 2024, respectively.

Current wording

The NIM increased by 9 basis points to 3.22% for the three months ended March 31, 2026 from 3.13% for the three months ended March 31, 2025 resulting primarily from lower cost of deposits from a favorable shift in deposit mix and lower market interest rates on deposits. The cost of interest-bearing liabilities decreased 48 basis points for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Customers’ total cost of funds, including non-interest bearing deposits and borrowings was 2.61% and 2.96% for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

The provision for credit losses is a charge to earnings to maintain the ACL at a level consistent with management’s assessment of expected lifetime losses in the loan and lease portfolio, lending-related commitments and investment securities at the balance sheet date. Customers recorded a provision for credit losses on loans and leases during the three months ended September 30, 2025, which resulted primarily from an increase in loan balances held for investment. Customers recorded a provision for credit losses of $19.8 million for loans and leases and a benefit to provision of $0.8 million for lending-related commitments, respectively, for the three months ended September 30, 2025. Customers recorded a provision for credit losses of $17.8 million for loans and leases and $0.6 million for lending-related commitments, respectively, for the three months ended September 30, 2024. Net charge-offs for the three months ended September 30, 2025 were $15.4 million, or 39 basis points of average loans and leases on an annualized basis, compared to net charge-offs of $17.0 million, or 50 basis points of average loans and leases on an annualized basis, for the three months ended September 30, 2024. The decrease in net charge-offs for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, was primarily due to lower charge-offs for commercial and industrial loans and multifamily loans, partially offset by higher charge-offs for non-owner occupied commercial real estate loans.

Current wording

The provision for credit losses is a charge to earnings to maintain the ACL at a level consistent with management’s assessment of expected lifetime losses in the loan and lease portfolio, lending-related commitments and investment securities at the balance sheet date. Customers recorded a provision for credit losses of $18.6 million for loans and leases and $0.4 million for lending-related commitments, respectively, for the three months ended March 31, 2026. Customers recorded a provision for credit losses of $21.4 million for loans and leases and $1.2 million for lending-related commitments, respectively, for the three months ended March 31, 2025. The decrease in provision for credit losses for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily reflects a slight improvement in certain macroeconomic forecast variables. Net charge-offs for the three months ended March 31, 2026 were $13.3 million, or 32 basis points of average loans and leases on an annualized basis, compared to net charge-offs of $17.1 million, or 48 basis points of average loans and leases on an annualized basis, for the three months ended March 31, 2025. The decrease in net charge-offs for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to lower charge-offs for commercial and industrial loans, multifamily loans and consumer installment loans.

Previous wording

The provision for credit losses for the three months ended September 30, 2025 and 2024 also included a provision for credit losses of $6.8 million and a benefit to provision of $0.7 million, respectively, on certain debt securities available for sale. The provision for credit losses on certain debt securities available for sale was $16.0 million and $0.7 million for the nine months ended September 30, 2025 and 2024, respectively. Refer to “NOTE 5 – INVESTMENT SECURITIES” to Customers’ unaudited consolidated financial statements for additional information.

Current wording

The provision for credit losses for the three months ended March 31, 2026 and 2025 also included a provision for credit losses of $4.8 million and $6.9 million, respectively, on certain debt securities available for sale. Refer to “NOTE 5 – INVESTMENT SECURITIES” to Customers’ unaudited consolidated financial statements for additional information.

Previous wording

The table below presents the components of non-interest income (loss) for the three and nine months ended September 30, 2025 and 2024:

Current wording

The table below presents the components of non-interest income (loss) for the three months ended March 31, 2026 and 2025:

Previous wording

Commercial lease income represents income earned on commercial operating leases originated by Customers’ commercial equipment financing group in which Customers is the lessor. The $1.4 million increase in commercial lease income for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily resulted from the growth of Customers’ equipment finance business.

Current wording

Commercial lease income represents income earned on commercial operating leases originated by Customers’ commercial equipment financing group in which Customers is the lessor. The $4.8 million increase in commercial lease income for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily resulted from the growth of Customers’ equipment finance business.

Previous wording

The $3.4 million increase in loan fees for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily resulted from income on the settlement of certain stock warrants.

Current wording

The $3.3 million increase in loan fees for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily resulted from gains on certain stock warrants.

Previous wording

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 $0.1 million increase in bank-owned life insurance income for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily resulted from an increase in cash surrender value of the policies.

Current wording

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 $1.6 million decrease in bank-owned life insurance income for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily resulted from lower death benefits received from insurance carriers.

Previous wording

The $51.3 million increase in impairment loss on debt securities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily resulted from impairment loss recorded on certain AFS debt securities that the Bank decided to sell in order to further improve structural liquidity, reduce asset sensitivity and benefit margin during the nine months ended September 30, 2025.

Current wording

The $51.3 million decrease in impairment loss on debt securities for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily resulted from impairment loss recorded on certain AFS debt securities that the Bank decided to sell as of March 31, 2025, in order to further improve structural liquidity, enhance credit profile, reduce asset sensitivity and benefit margin.

Previous wording

The table below presents the components of non-interest expense for the three and nine months ended September 30, 2025 and 2024:

Current wording

The table below presents the components of non-interest expense for the three months ended March 31, 2026 and 2025:

Previous wording

The $1.0 million increase in salaries and employee benefits for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily resulted from an increase in average full-time equivalent team members and annual merit increases, partially offset by lower incentives.

Current wording

The $8.6 million increase in salaries and employee benefits for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily resulted from an increase in average full-time equivalent team members and higher incentives.

Previous wording

The $1.7 million increase in commercial lease depreciation for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily resulted from the growth of the operating lease arrangements originated by Customers’ commercial equipment financing group in which Customers is the lessor.

Current wording

The $4.2 million increase in commercial lease depreciation for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily resulted from the growth of the operating lease arrangements originated by Customers’ commercial equipment financing group in which Customers is the lessor.

Previous wording

The table below presents income tax expense (benefit) and the effective tax rate for the three and nine months ended September 30, 2025 and 2024:

Current wording

The table below presents income tax expense (benefit) and the effective tax rate for the three months ended March 31, 2026 and 2025:

Previous wording

The $25.3 million increase in income tax expense for the three months ended September 30, 2025, when compared to the same period in the prior year, primarily resulted from higher pre-tax income and lower estimated income tax credits for 2025 compared to 2024, including $14.3 million of investment tax credits generated from commercial clean vehicles during the three months ended September 30, 2024. These investment tax credits from commercial clean vehicle leases were the same amount as the loss on leases of commercial clean vehicles included within net gain (loss) on sale of loans and leases for the three months ended September 30, 2024. The increase in the effective tax rate for the three months ended September 30, 2025, when compared to the same period in the prior year, primarily resulted from higher pre-tax income and lower estimated income tax credits for 2025 compared to 2024, including $14.3 million of investment tax credits generated from commercial clean vehicles during the three months ended September 30, 2024.

Current wording

The $21.7 million increase in income tax expense for the three months ended March 31, 2026, when compared to the same period in the prior year, primarily resulted from higher pre-tax income and lower investment tax credits. The increase in the effective tax rate for the three months ended March 31, 2026, when compared to the same period in the prior year, primarily resulted from higher pre-tax income and lower investment tax credits.

Previous wording

Preferred stock dividends were $2.0 million and $3.8 million for the three months ended September 30, 2025 and 2024, respectively. Preferred stock dividends were $8.6 million and $11.4 million for the nine months ended September 30, 2025 and 2024, respectively. On June 16, 2025, Customers redeemed all of the outstanding shares of Series E Preferred Stock for an aggregate payment of $57.5 million, at a redemption price of $25.00 per share. The redemption price paid in excess of the carrying value of Series E Preferred Stock of $1.9 million is included as a loss on redemption of preferred stock in the consolidated statement of income for the nine months ended September 30, 2025. After giving effect to the redemption, no shares of the Series E Preferred Stock remained outstanding. There were no changes to the amount of preferred stock outstanding during the three and nine months ended September 30, 2024. Refer to “NOTE 11 – SHAREHOLDERS’ EQUITY” to Customers’ unaudited consolidated financial statements for additional information.

Current wording

There were no preferred stock dividends for the three months ended March 31, 2026. Preferred stock dividends were $3.4 million for the three months ended March 31, 2025. On June 16, 2025 and December 15, 2025, Customers redeemed all of the outstanding shares of Series E Preferred Stock and Series F Preferred Stock, respectively, for an aggregate payment of $142.5 million, at a redemption price of $25.00 per share. After giving effect to the redemption, no shares of the Series E Preferred Stock and Series F Preferred Stock remained outstanding. There were no changes to the amount of preferred stock outstanding during the three months ended March 31, 2025. Refer to “NOTE 11 – SHAREHOLDERS’ EQUITY” to Customers’ unaudited consolidated financial statements for additional information.

Previous wording

Customers’ total assets were $24.3 billion at September 30, 2025. This represented an increase of $2.0 billion from total assets of $22.3 billion at December 31, 2024. The increase in total assets was primarily driven by increases of $1.5 billion in loans and leases receivable, $399.7 million in cash and cash equivalents, $165.9 million in loans receivable, mortgage finance, at fair value and $111.6 million in loans receivable, installment, at fair value, partially offset by decreases of $190.6 million in investment securities held to maturity, $173.9 million in loans held for sale and $8.9 million in investment securities, at fair value.

Current wording

Customers’ total assets were $25.9 billion at March 31, 2026. This represented an increase of $984.9 million from total assets of $24.9 billion at December 31, 2025. The increase in total assets was primarily driven by increases of $478.2 million in loans and leases receivable, $386.7 million in cash and cash equivalents, $145.7 million in loans receivable, mortgage finance, at fair value and $55.5 million in investment securities, at fair value, partially offset by a decrease of $65.6 million in investment securities held to maturity.

Previous wording

Total liabilities were $22.1 billion at September 30, 2025. This represented an increase of $1.7 billion from $20.5 billion at December 31, 2024. The increase in total liabilities primarily resulted from increases of $1.6 billion in total deposits and $67.1 million in FHLB advances.

Current wording

Total liabilities were $23.7 billion at March 31, 2026. This represented an increase of $956.1 million from $22.8 billion at December 31, 2025. The increase in total liabilities primarily resulted from increases of $813.9 million in total deposits, $236.6 million in FHLB advances and $70.0 million in federal funds purchased, partially offset by decreases of $109.5 million in subordinated debt and $54.9 million in accrued interest payable and other liabilities.

Previous wording

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 $58.0 million and $56.8 million at September 30, 2025 and December 31, 2024, respectively. Cash and cash due from banks balances vary from day to day, primarily due to variations in customers’ deposit activities with the Bank.

Current wording

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 $89.2 million and $62.1 million at March 31, 2026 and December 31, 2025, respectively. Cash and cash due from banks balances vary from day to day, primarily due to variations in customers’ deposit activities with the Bank.

Previous wording

Interest-earning deposits consist of cash deposited at other banks, primarily the FRB. Interest-earning deposits were $4.1 billion and $3.7 billion at September 30, 2025 and December 31, 2024, 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 optimize Customers’ net interest income, while effectively managing interest-rate risk and liquidity. The increase in interest-earning deposits since December 31, 2024 primarily resulted from higher non-interest bearing demand deposits held by the Bank.

Current wording

Interest-earning deposits consist of cash deposited at other banks, primarily the FRB. Interest-earning deposits were $4.7 billion and $4.3 billion at March 31, 2026 and December 31, 2025, 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 optimize Customers’ net interest income, while effectively managing interest-rate risk and liquidity. The increase in interest-earning deposits since December 31, 2025 primarily resulted from higher non-interest bearing demand deposits held by the Bank.

Previous wording

The investment securities portfolio is an important source of interest income and liquidity. It consists primarily of mortgage-backed securities and collateralized mortgage obligations guaranteed by agencies of the United States government, asset-backed securities, collateralized loan obligations, private label collateralized mortgage obligations, corporate notes and certain 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.

Current wording

The investment securities portfolio is an important source of interest income and liquidity. It consists primarily of mortgage-backed securities and collateralized mortgage obligations guaranteed by agencies of the United States government, asset-backed securities, private label collateralized mortgage obligations, corporate notes and certain 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.