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Leases
 12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases LEASES
Lessee
Customers has operating leases for its branches, certain limited purpose offices ("LPOs"), and administrative offices, with remaining lease terms ranging between four months and seven years. These operating leases comprise substantially all of Customers' obligations in which Customers is the lessee. These lease agreements typically consist of initial lease terms ranging between one and ten years, with options to renew the leases or extend the term up to ten years at Customers' sole discretion. Some operating leases include variable lease payments that are based on an index or rate, such as the Consumer Price Index ("CPI"). Variable lease payments are not included in the liability or ROU 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 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)ClassificationDecember 31, 2022December 31, 2021
ASSETS
Operating lease ROU assetsOther assets$16,133 $12,677 
LIABILITIES
Operating lease liabilitiesOther liabilities$19,046 $14,524 
The following table summarizes operating lease cost and its corresponding income statement location for the periods presented:
For the Years Ended December 31,
(amounts in thousands)Classification202220212020
Operating lease cost (1)(2)
Occupancy expenses$4,758 $4,545 $5,298 
(1)    There were no variable lease costs for the years ended December 31, 2022, 2021 and 2020, and sublease income for operating leases was immaterial.
(2)    Excludes operating leases of BMT included in loss from discontinued operations.
Maturities of non-cancelable operating lease liabilities were as follows at December 31, 2022:
(amounts in thousands)December 31, 2022
2023$5,350 
20244,358 
20253,291 
20262,465 
20271,941 
Thereafter3,075 
Total minimum payments20,480 
Less: interest1,434 
Present value of lease liabilities$19,046 
Customers does not have leases where it is involved with the construction or design of an underlying asset. Customers has a signed lease that has not yet commenced as of December 31, 2022 with future minimum lease payments of $4.2 million. Cash paid pursuant to operating lease liabilities was $5.0 million, $4.9 million and $4.8 million for the years ended December 31, 2022, 2021 and 2020, respectively, and 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 December 31, 2022 and 2021:
December 31, 2022December 31, 2021
Weighted average remaining lease term (years)
Operating leases5.1 years3.9 years
Weighted average discount rate
Operating leases2.85 %2.74 %
Equipment Lessor
CCF is a wholly-owned subsidiary of Customers Bank and is referred to as the Equipment Finance Group. The Equipment Finance Group goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets. The Equipment Finance Group is primarily focused on serving the following segments: transportation, construction (includes crane and utility), marine, franchise, general manufacturing (includes machine tool), helicopter/fixed wing, solar, packaging, plastics and food processing. Lease terms typically range from 24 months to 120 months. The Equipment Finance Group offers the following lease products: Loans, Capital Lease, Purchase Upon Termination ("PUT"), Terminal Rental Adjustment Clause ("TRAC"), Split-TRAC, and Fair Market Value ("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 ACL 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 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.
The following table summarizes lease receivables and investment in operating leases and their corresponding balance sheet location at December 31, 2022 and 2021:
(amounts in thousands)ClassificationDecember 31, 2022December 31, 2021
ASSETS
Direct financing leases
Lease receivablesLoans and leases receivable$140,182 $134,855 
Guaranteed residual assetsLoans and leases receivable12,370 11,397 
Unguaranteed residual assetsLoans and leases receivable7,555 5,665 
Deferred initial direct costsLoans and leases receivable667 448 
Unearned incomeLoans and leases receivable(3,404)(5,383)
Net investment in direct financing leases$157,370 $146,982 
Operating leases
Investment in operating leasesOther assets$248,454 $158,135 
Accumulated depreciationOther assets(52,585)(40,749)
Deferred initial direct costsOther assets1,461 872 
Net investment in operating leases197,330 118,258 
Total lease assets$354,700 $265,240 
Maturities of operating and direct financing lease receivables were as follows at December 31, 2022:
(amounts in thousands)Operating leasesDirect financing leases
2023$35,386 $38,653 
202431,887 32,796 
202528,564 24,613 
202624,177 18,775 
202716,233 14,954 
Thereafter13,104 11,563 
Total lease payments$149,351 141,354 
Less: interest1,172 
Present value of lease receivables$140,182 
Leases LEASES
Lessee
Customers has operating leases for its branches, certain limited purpose offices ("LPOs"), and administrative offices, with remaining lease terms ranging between four months and seven years. These operating leases comprise substantially all of Customers' obligations in which Customers is the lessee. These lease agreements typically consist of initial lease terms ranging between one and ten years, with options to renew the leases or extend the term up to ten years at Customers' sole discretion. Some operating leases include variable lease payments that are based on an index or rate, such as the Consumer Price Index ("CPI"). Variable lease payments are not included in the liability or ROU 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 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)ClassificationDecember 31, 2022December 31, 2021
ASSETS
Operating lease ROU assetsOther assets$16,133 $12,677 
LIABILITIES
Operating lease liabilitiesOther liabilities$19,046 $14,524 
The following table summarizes operating lease cost and its corresponding income statement location for the periods presented:
For the Years Ended December 31,
(amounts in thousands)Classification202220212020
Operating lease cost (1)(2)
Occupancy expenses$4,758 $4,545 $5,298 
(1)    There were no variable lease costs for the years ended December 31, 2022, 2021 and 2020, and sublease income for operating leases was immaterial.
(2)    Excludes operating leases of BMT included in loss from discontinued operations.
Maturities of non-cancelable operating lease liabilities were as follows at December 31, 2022:
(amounts in thousands)December 31, 2022
2023$5,350 
20244,358 
20253,291 
20262,465 
20271,941 
Thereafter3,075 
Total minimum payments20,480 
Less: interest1,434 
Present value of lease liabilities$19,046 
Customers does not have leases where it is involved with the construction or design of an underlying asset. Customers has a signed lease that has not yet commenced as of December 31, 2022 with future minimum lease payments of $4.2 million. Cash paid pursuant to operating lease liabilities was $5.0 million, $4.9 million and $4.8 million for the years ended December 31, 2022, 2021 and 2020, respectively, and 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 December 31, 2022 and 2021:
December 31, 2022December 31, 2021
Weighted average remaining lease term (years)
Operating leases5.1 years3.9 years
Weighted average discount rate
Operating leases2.85 %2.74 %
Equipment Lessor
CCF is a wholly-owned subsidiary of Customers Bank and is referred to as the Equipment Finance Group. The Equipment Finance Group goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets. The Equipment Finance Group is primarily focused on serving the following segments: transportation, construction (includes crane and utility), marine, franchise, general manufacturing (includes machine tool), helicopter/fixed wing, solar, packaging, plastics and food processing. Lease terms typically range from 24 months to 120 months. The Equipment Finance Group offers the following lease products: Loans, Capital Lease, Purchase Upon Termination ("PUT"), Terminal Rental Adjustment Clause ("TRAC"), Split-TRAC, and Fair Market Value ("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 ACL 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 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.
The following table summarizes lease receivables and investment in operating leases and their corresponding balance sheet location at December 31, 2022 and 2021:
(amounts in thousands)ClassificationDecember 31, 2022December 31, 2021
ASSETS
Direct financing leases
Lease receivablesLoans and leases receivable$140,182 $134,855 
Guaranteed residual assetsLoans and leases receivable12,370 11,397 
Unguaranteed residual assetsLoans and leases receivable7,555 5,665 
Deferred initial direct costsLoans and leases receivable667 448 
Unearned incomeLoans and leases receivable(3,404)(5,383)
Net investment in direct financing leases$157,370 $146,982 
Operating leases
Investment in operating leasesOther assets$248,454 $158,135 
Accumulated depreciationOther assets(52,585)(40,749)
Deferred initial direct costsOther assets1,461 872 
Net investment in operating leases197,330 118,258 
Total lease assets$354,700 $265,240 
Maturities of operating and direct financing lease receivables were as follows at December 31, 2022:
(amounts in thousands)Operating leasesDirect financing leases
2023$35,386 $38,653 
202431,887 32,796 
202528,564 24,613 
202624,177 18,775 
202716,233 14,954 
Thereafter13,104 11,563 
Total lease payments$149,351 141,354 
Less: interest1,172 
Present value of lease receivables$140,182 
Leases LEASES
Lessee
Customers has operating leases for its branches, certain limited purpose offices ("LPOs"), and administrative offices, with remaining lease terms ranging between four months and seven years. These operating leases comprise substantially all of Customers' obligations in which Customers is the lessee. These lease agreements typically consist of initial lease terms ranging between one and ten years, with options to renew the leases or extend the term up to ten years at Customers' sole discretion. Some operating leases include variable lease payments that are based on an index or rate, such as the Consumer Price Index ("CPI"). Variable lease payments are not included in the liability or ROU 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 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)ClassificationDecember 31, 2022December 31, 2021
ASSETS
Operating lease ROU assetsOther assets$16,133 $12,677 
LIABILITIES
Operating lease liabilitiesOther liabilities$19,046 $14,524 
The following table summarizes operating lease cost and its corresponding income statement location for the periods presented:
For the Years Ended December 31,
(amounts in thousands)Classification202220212020
Operating lease cost (1)(2)
Occupancy expenses$4,758 $4,545 $5,298 
(1)    There were no variable lease costs for the years ended December 31, 2022, 2021 and 2020, and sublease income for operating leases was immaterial.
(2)    Excludes operating leases of BMT included in loss from discontinued operations.
Maturities of non-cancelable operating lease liabilities were as follows at December 31, 2022:
(amounts in thousands)December 31, 2022
2023$5,350 
20244,358 
20253,291 
20262,465 
20271,941 
Thereafter3,075 
Total minimum payments20,480 
Less: interest1,434 
Present value of lease liabilities$19,046 
Customers does not have leases where it is involved with the construction or design of an underlying asset. Customers has a signed lease that has not yet commenced as of December 31, 2022 with future minimum lease payments of $4.2 million. Cash paid pursuant to operating lease liabilities was $5.0 million, $4.9 million and $4.8 million for the years ended December 31, 2022, 2021 and 2020, respectively, and 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 December 31, 2022 and 2021:
December 31, 2022December 31, 2021
Weighted average remaining lease term (years)
Operating leases5.1 years3.9 years
Weighted average discount rate
Operating leases2.85 %2.74 %
Equipment Lessor
CCF is a wholly-owned subsidiary of Customers Bank and is referred to as the Equipment Finance Group. The Equipment Finance Group goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets. The Equipment Finance Group is primarily focused on serving the following segments: transportation, construction (includes crane and utility), marine, franchise, general manufacturing (includes machine tool), helicopter/fixed wing, solar, packaging, plastics and food processing. Lease terms typically range from 24 months to 120 months. The Equipment Finance Group offers the following lease products: Loans, Capital Lease, Purchase Upon Termination ("PUT"), Terminal Rental Adjustment Clause ("TRAC"), Split-TRAC, and Fair Market Value ("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 ACL 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 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.
The following table summarizes lease receivables and investment in operating leases and their corresponding balance sheet location at December 31, 2022 and 2021:
(amounts in thousands)ClassificationDecember 31, 2022December 31, 2021
ASSETS
Direct financing leases
Lease receivablesLoans and leases receivable$140,182 $134,855 
Guaranteed residual assetsLoans and leases receivable12,370 11,397 
Unguaranteed residual assetsLoans and leases receivable7,555 5,665 
Deferred initial direct costsLoans and leases receivable667 448 
Unearned incomeLoans and leases receivable(3,404)(5,383)
Net investment in direct financing leases$157,370 $146,982 
Operating leases
Investment in operating leasesOther assets$248,454 $158,135 
Accumulated depreciationOther assets(52,585)(40,749)
Deferred initial direct costsOther assets1,461 872 
Net investment in operating leases197,330 118,258 
Total lease assets$354,700 $265,240 
Maturities of operating and direct financing lease receivables were as follows at December 31, 2022:
(amounts in thousands)Operating leasesDirect financing leases
2023$35,386 $38,653 
202431,887 32,796 
202528,564 24,613 
202624,177 18,775 
202716,233 14,954 
Thereafter13,104 11,563 
Total lease payments$149,351 141,354 
Less: interest1,172 
Present value of lease receivables$140,182