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LEASES
 3 Months Ended
Mar. 31, 2025
Leases [Abstract]  
LEASES LEASES
Lessee
Customers has operating leases for its branches, certain LPOs, and administrative offices, with remaining lease terms ranging between one month and eleven 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 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)ClassificationMarch 31, 2025December 31, 2024
ASSETS
Operating lease ROU assetsOther assets$33,755 $35,322 
LIABILITIES
Operating lease liabilitiesOther liabilities$36,877 $37,882 
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)Classification20252024
Operating lease cost (1)
Occupancy expenses$1,949 $1,185 
(1) There were no variable lease costs for the three months ended March 31, 2025 and 2024, and sublease income for operating leases was immaterial.
Maturities of non-cancelable operating lease liabilities were as follows at March 31, 2025:
(amounts in thousands)March 31, 2025
2025$4,414 
20266,647 
20276,161 
20285,546 
20294,802 
Thereafter17,171 
Total minimum payments44,741 
Less: interest
7,864 
Present value of lease liabilities$36,877 
Customers does not have leases where it is involved with the construction or design of an underlying asset. Cash paid pursuant to the operating lease liabilities was $1.5 million and $1.4 million for the three months ended March 31, 2025 and 2024, 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, 2025 and December 31, 2024:
March 31, 2025December 31, 2024
Weighted average remaining lease term (years)
Operating leases8.1 years8.2 years
Weighted average discount rate
Operating leases4.13 %4.22 %
Equipment Lessor
Customers’ commercial equipment financing group goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets. The commercial equipment financing group is primarily focused on serving the following industries: transportation, construction (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 commercial equipment financing group offers the following products: Loans, Capital Lease, PUT, TRAC, Split-TRAC, and FMV. Customers’ commercial equipment financing group leases equipment under direct finance, sales-type or operating leases.
The estimated residual values for direct finance, sales-type 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 and sales-type leases and the related estimated residual values are included in the ACL on loans and leases.
Direct finance and sales-type equipment leases, are included in commercial and industrial loans and leases receivable and are recorded at the discounted amounts of lease payments receivable and the estimated residual value of the leased assets. Interest income on direct finance and sales-type leases is recognized over the term of the leases using the effective interest method. Any difference between the lower of the fair value of the underlying leased asset or the sum of the lease receivables and the carrying amount of the underlying leased asset would result to a gain or loss at the lease commencement date. Customers’ direct finance and sales-type lease activity primarily relates to leasing of new equipment.
Customers’ commercial equipment financing group executed leases of commercial clean vehicles that qualified for investment tax credits. Customers accounted for these leases as sales-type leases and were included in loans and leases receivable on the balance sheet. Customers did not enter into sales-type leases of commercial clean vehicles that qualified for investment tax credits during the three months ended March 31, 2025 and 2024.
Customers’ commercial equipment financing group had total interest income, including from direct financing and sales-type leases of $14.6 million and $9.5 million for the three months ended March 31, 2025 and 2024, respectively.
Leased assets under operating leases are reported 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 March 31, 2025 and December 31, 2024:
(amounts in thousands)ClassificationMarch 31, 2025December 31, 2024
ASSETS
Direct financing and sales-type leases
Lease receivablesLoans and leases receivable$257,347 $251,507 
Guaranteed residual assetsLoans and leases receivable25,979 24,045 
Unguaranteed residual assetsLoans and leases receivable11,217 10,463 
Deferred initial direct costsLoans and leases receivable1,415 1,352 
Unearned incomeLoans and leases receivable(26,711)(24,673)
Net investment in direct financing and sales-type leases
$269,247 $262,694 
Operating leases
Investment in operating leasesOther assets$321,183 $308,993 
Accumulated depreciationOther assets(98,769)(95,053)
Deferred initial direct costsOther assets1,083 978 
Net investment in operating leases223,497 214,918 
Total lease assets$492,744 $477,612 
Maturities of operating and direct financing and sales-type lease receivables were as follows at March 31, 2025:
(amounts in thousands)Operating leases
Direct financing and sales-type leases
2025$38,255 $56,794 
202652,784 64,124 
202740,258 55,477 
202863,825 36,780 
202926,839 24,778 
Thereafter34,790 19,394 
Total minimum payments$256,751 257,347 
Less: interest26,711 
Present value of lease receivables$230,636 
LEASES LEASES
Lessee
Customers has operating leases for its branches, certain LPOs, and administrative offices, with remaining lease terms ranging between one month and eleven 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 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)ClassificationMarch 31, 2025December 31, 2024
ASSETS
Operating lease ROU assetsOther assets$33,755 $35,322 
LIABILITIES
Operating lease liabilitiesOther liabilities$36,877 $37,882 
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)Classification20252024
Operating lease cost (1)
Occupancy expenses$1,949 $1,185 
(1) There were no variable lease costs for the three months ended March 31, 2025 and 2024, and sublease income for operating leases was immaterial.
Maturities of non-cancelable operating lease liabilities were as follows at March 31, 2025:
(amounts in thousands)March 31, 2025
2025$4,414 
20266,647 
20276,161 
20285,546 
20294,802 
Thereafter17,171 
Total minimum payments44,741 
Less: interest
7,864 
Present value of lease liabilities$36,877 
Customers does not have leases where it is involved with the construction or design of an underlying asset. Cash paid pursuant to the operating lease liabilities was $1.5 million and $1.4 million for the three months ended March 31, 2025 and 2024, 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, 2025 and December 31, 2024:
March 31, 2025December 31, 2024
Weighted average remaining lease term (years)
Operating leases8.1 years8.2 years
Weighted average discount rate
Operating leases4.13 %4.22 %
Equipment Lessor
Customers’ commercial equipment financing group goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets. The commercial equipment financing group is primarily focused on serving the following industries: transportation, construction (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 commercial equipment financing group offers the following products: Loans, Capital Lease, PUT, TRAC, Split-TRAC, and FMV. Customers’ commercial equipment financing group leases equipment under direct finance, sales-type or operating leases.
The estimated residual values for direct finance, sales-type 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 and sales-type leases and the related estimated residual values are included in the ACL on loans and leases.
Direct finance and sales-type equipment leases, are included in commercial and industrial loans and leases receivable and are recorded at the discounted amounts of lease payments receivable and the estimated residual value of the leased assets. Interest income on direct finance and sales-type leases is recognized over the term of the leases using the effective interest method. Any difference between the lower of the fair value of the underlying leased asset or the sum of the lease receivables and the carrying amount of the underlying leased asset would result to a gain or loss at the lease commencement date. Customers’ direct finance and sales-type lease activity primarily relates to leasing of new equipment.
Customers’ commercial equipment financing group executed leases of commercial clean vehicles that qualified for investment tax credits. Customers accounted for these leases as sales-type leases and were included in loans and leases receivable on the balance sheet. Customers did not enter into sales-type leases of commercial clean vehicles that qualified for investment tax credits during the three months ended March 31, 2025 and 2024.
Customers’ commercial equipment financing group had total interest income, including from direct financing and sales-type leases of $14.6 million and $9.5 million for the three months ended March 31, 2025 and 2024, respectively.
Leased assets under operating leases are reported 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 March 31, 2025 and December 31, 2024:
(amounts in thousands)ClassificationMarch 31, 2025December 31, 2024
ASSETS
Direct financing and sales-type leases
Lease receivablesLoans and leases receivable$257,347 $251,507 
Guaranteed residual assetsLoans and leases receivable25,979 24,045 
Unguaranteed residual assetsLoans and leases receivable11,217 10,463 
Deferred initial direct costsLoans and leases receivable1,415 1,352 
Unearned incomeLoans and leases receivable(26,711)(24,673)
Net investment in direct financing and sales-type leases
$269,247 $262,694 
Operating leases
Investment in operating leasesOther assets$321,183 $308,993 
Accumulated depreciationOther assets(98,769)(95,053)
Deferred initial direct costsOther assets1,083 978 
Net investment in operating leases223,497 214,918 
Total lease assets$492,744 $477,612 
Maturities of operating and direct financing and sales-type lease receivables were as follows at March 31, 2025:
(amounts in thousands)Operating leases
Direct financing and sales-type leases
2025$38,255 $56,794 
202652,784 64,124 
202740,258 55,477 
202863,825 36,780 
202926,839 24,778 
Thereafter34,790 19,394 
Total minimum payments$256,751 257,347 
Less: interest26,711 
Present value of lease receivables$230,636 
LEASES LEASES
Lessee
Customers has operating leases for its branches, certain LPOs, and administrative offices, with remaining lease terms ranging between one month and eleven 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 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)ClassificationMarch 31, 2025December 31, 2024
ASSETS
Operating lease ROU assetsOther assets$33,755 $35,322 
LIABILITIES
Operating lease liabilitiesOther liabilities$36,877 $37,882 
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)Classification20252024
Operating lease cost (1)
Occupancy expenses$1,949 $1,185 
(1) There were no variable lease costs for the three months ended March 31, 2025 and 2024, and sublease income for operating leases was immaterial.
Maturities of non-cancelable operating lease liabilities were as follows at March 31, 2025:
(amounts in thousands)March 31, 2025
2025$4,414 
20266,647 
20276,161 
20285,546 
20294,802 
Thereafter17,171 
Total minimum payments44,741 
Less: interest
7,864 
Present value of lease liabilities$36,877 
Customers does not have leases where it is involved with the construction or design of an underlying asset. Cash paid pursuant to the operating lease liabilities was $1.5 million and $1.4 million for the three months ended March 31, 2025 and 2024, 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, 2025 and December 31, 2024:
March 31, 2025December 31, 2024
Weighted average remaining lease term (years)
Operating leases8.1 years8.2 years
Weighted average discount rate
Operating leases4.13 %4.22 %
Equipment Lessor
Customers’ commercial equipment financing group goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets. The commercial equipment financing group is primarily focused on serving the following industries: transportation, construction (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 commercial equipment financing group offers the following products: Loans, Capital Lease, PUT, TRAC, Split-TRAC, and FMV. Customers’ commercial equipment financing group leases equipment under direct finance, sales-type or operating leases.
The estimated residual values for direct finance, sales-type 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 and sales-type leases and the related estimated residual values are included in the ACL on loans and leases.
Direct finance and sales-type equipment leases, are included in commercial and industrial loans and leases receivable and are recorded at the discounted amounts of lease payments receivable and the estimated residual value of the leased assets. Interest income on direct finance and sales-type leases is recognized over the term of the leases using the effective interest method. Any difference between the lower of the fair value of the underlying leased asset or the sum of the lease receivables and the carrying amount of the underlying leased asset would result to a gain or loss at the lease commencement date. Customers’ direct finance and sales-type lease activity primarily relates to leasing of new equipment.
Customers’ commercial equipment financing group executed leases of commercial clean vehicles that qualified for investment tax credits. Customers accounted for these leases as sales-type leases and were included in loans and leases receivable on the balance sheet. Customers did not enter into sales-type leases of commercial clean vehicles that qualified for investment tax credits during the three months ended March 31, 2025 and 2024.
Customers’ commercial equipment financing group had total interest income, including from direct financing and sales-type leases of $14.6 million and $9.5 million for the three months ended March 31, 2025 and 2024, respectively.
Leased assets under operating leases are reported 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 March 31, 2025 and December 31, 2024:
(amounts in thousands)ClassificationMarch 31, 2025December 31, 2024
ASSETS
Direct financing and sales-type leases
Lease receivablesLoans and leases receivable$257,347 $251,507 
Guaranteed residual assetsLoans and leases receivable25,979 24,045 
Unguaranteed residual assetsLoans and leases receivable11,217 10,463 
Deferred initial direct costsLoans and leases receivable1,415 1,352 
Unearned incomeLoans and leases receivable(26,711)(24,673)
Net investment in direct financing and sales-type leases
$269,247 $262,694 
Operating leases
Investment in operating leasesOther assets$321,183 $308,993 
Accumulated depreciationOther assets(98,769)(95,053)
Deferred initial direct costsOther assets1,083 978 
Net investment in operating leases223,497 214,918 
Total lease assets$492,744 $477,612 
Maturities of operating and direct financing and sales-type lease receivables were as follows at March 31, 2025:
(amounts in thousands)Operating leases
Direct financing and sales-type leases
2025$38,255 $56,794 
202652,784 64,124 
202740,258 55,477 
202863,825 36,780 
202926,839 24,778 
Thereafter34,790 19,394 
Total minimum payments$256,751 257,347 
Less: interest26,711 
Present value of lease receivables$230,636