Customers Bancorp, Inc.CUBI
Customers Bancorp, Inc. Leases Disclosure
LEASES
Lessee
Customers has operating leases for its branches, certain limited purpose offices (“LPOs”), and administrative offices, with remaining lease terms ranging between two months and ten 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 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) | Classification | December 31, 2025 | December 31, 2024 | ||||||||||||||
| ASSETS | |||||||||||||||||
| Operating lease ROU assets | $ | 34,347 | $ | 35,322 | |||||||||||||
| LIABILITIES | |||||||||||||||||
| Operating lease liabilities | $ | 41,719 | $ | 37,882 | |||||||||||||
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) | Classification | 2025 | 2024 | 2023 | |||||||||||||||||||
Operating lease cost (1) | Occupancy expenses | $ | 7,599 | $ | 6,264 | $ | 5,050 | ||||||||||||||||
(1) There were no variable lease costs for the years ended December 31, 2025, 2024 and 2023, and sublease income for operating leases was immaterial.
Maturities of non-cancelable operating lease liabilities were as follows at December 31, 2025:
| (amounts in thousands) | December 31, 2025 | ||||
| 2026 | $ | 7,438 | |||
| 2027 | 7,524 | ||||
| 2028 | 7,276 | ||||
| 2029 | 6,335 | ||||
| 2030 | 4,720 | ||||
| Thereafter | 14,629 | ||||
| Total minimum payments | 47,922 | ||||
| Less: interest | 6,203 | ||||
| Present value of lease liabilities | $ | 41,719 | |||
Customers does not have leases where it is involved with the construction or design of an underlying asset. Cash paid pursuant to operating lease liabilities was $6.2 million, $5.6 million and $5.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. These payments were reported as cash flows used in operating activities in the consolidated statement of cash flows.
The following table summarizes the weighted average remaining lease term and discount rate for Customers’ operating leases at December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Weighted average remaining lease term (years) | |||||||||||
| Operating leases | 7.4 years | 8.2 years | |||||||||
| Weighted average discount rate | |||||||||||
| Operating leases | 4.20 | % | 4.22 | % | |||||||
Equipment Lessor
Customers’ commercial equipment financing group goes to market through the following origination platforms: vendors, intermediaries, direct and capital markets. Lease terms typically range from 24 months to 120 months. 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. 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 has executed leases of commercial clean vehicles that qualified for investment tax credits in 2024. Customers accounted for these leases as sales-type leases and were included in loans and leases receivable on the balance sheet. Customers recognized a loss on sales-type leases of $14.9 million within net gain (loss) on sale of loans and leases and the corresponding investment tax credits within income tax expense in the consolidated statement of income for the year ended December 31, 2024. Customers did not enter into sales-type leases of commercial clean vehicles that qualified for investment tax credits during the year ended December 31, 2025.
Customers’ commercial equipment financing group had total interest income, including from direct financing and sales-type leases of $63.2 million, $45.7 million and $32.0 million for the years ended December 31, 2025, 2024 and 2023, 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 December 31, 2025 and 2024:
| (amounts in thousands) | Classification | December 31, 2025 | December 31, 2024 | ||||||||||||||
| ASSETS | |||||||||||||||||
Direct financing and sales-type leases | |||||||||||||||||
| Lease receivables | Loans and leases receivable | $ | 301,753 | $ | 251,507 | ||||||||||||
| Guaranteed residual assets | Loans and leases receivable | 26,859 | 24,045 | ||||||||||||||
| Unguaranteed residual assets | Loans and leases receivable | 11,788 | 10,463 | ||||||||||||||
| Deferred initial direct costs | Loans and leases receivable | 1,717 | 1,352 | ||||||||||||||
| Unearned income | Loans and leases receivable | (35,575) | (24,673) | ||||||||||||||
Net investment in direct financing and sales-type leases | $ | 306,542 | $ | 262,694 | |||||||||||||
| Operating leases | |||||||||||||||||
| Investment in operating leases | Other assets | $ | 407,987 | $ | 308,993 | ||||||||||||
| Accumulated depreciation | Other assets | (105,706) | (95,053) | ||||||||||||||
| Deferred initial direct costs | Other assets | 1,094 | 978 | ||||||||||||||
| Net investment in operating leases | 303,375 | 214,918 | |||||||||||||||
| Total lease assets | $ | 609,917 | $ | 477,612 | |||||||||||||
Maturities of operating and direct financing and sales-type lease receivables were as follows at December 31, 2025:
| (amounts in thousands) | Operating leases | Direct financing and sales-type leases | |||||||||
| 2026 | $ | 57,336 | $ | 83,877 | |||||||
| 2027 | 50,976 | 72,596 | |||||||||
| 2028 | 41,892 | 53,418 | |||||||||
| 2029 | 31,348 | 40,898 | |||||||||
| 2030 | 18,632 | 25,351 | |||||||||
| Thereafter | 10,930 | 25,613 | |||||||||
| Total lease payments | $ | 211,114 | 301,753 | ||||||||
| Less: interest | 35,575 | ||||||||||
| Present value of lease receivables | $ | 266,178 | |||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 2, 2021 | |
| 2019 | Mar 2, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.