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| 8-K - 8-K - Customers Bancorp, Inc. | cubi8k110617.htm |
Highly Focused, Low Risk, Above Average Growth
Bank Holding Company
Investor Presentation
November, 2017
NYSE: CUBI
Member FDIC
2
Forward-Looking Statements
This presentation, as well as other written or oral communications made from time to time by us, contains forward-looking information within the meaning of the
safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements relate to future events or future predictions, including events
or predictions relating to future financial performance, and are generally identifiable by the use of forward-looking terminology such as “believe,” “expect,” “may,”
“will,” “should,” “plan,” “intend,” or “anticipate” or the negative thereof or comparable terminology. Forward- looking statements in this presentation include,
among other matters, guidance for our financial performance, and our financial performance targets. Forward-looking statements reflect numerous assumptions,
estimates and forecasts as to future events. No assurance can be given that the assumptions, estimates and forecasts underlying such forward-looking statements
will accurately reflect future conditions, or that any guidance, goals, targets or projected results will be realized. The assumptions, estimates and forecasts
underlying such forward-looking statements involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market
conditions and future business decisions, which may not be realized and which are inherently subject to significant business, economic, competitive and regulatory
uncertainties and known and unknown risks, including the risks described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31,
2016 and subsequent Quarterly Reports on Form 10-Q, as such factors may be updated from time to time in our filings with the SEC. Our actual results may differ
materially from those reflected in the forward-looking statements.
In addition to the risks described under “Risk Factors” in our filings with the SEC, important factors to consider and evaluate with respect to our forward-looking
statements include:
• changes in external competitive market factors that might impact our results of operations;
• changes in laws and regulations, including without limitation changes in capital requirements under Basel III;
• changes in our business strategy or an inability to execute our strategy due to the occurrence of unanticipated events;
• our ability to identify potential candidates for, and consummate, acquisition or investment transactions;
• the timing of acquisition, investment or disposition transactions;
• constraints on our ability to consummate an attractive acquisition or investment transaction because of significant competition for these opportunities;
• local, regional and national economic conditions and events and the impact they may have on us and our customers;
• costs and effects of regulatory and legal developments, including the results of regulatory examinations and the outcome of regulatory or other governmental
inquiries and proceedings, such as fines or restrictions on our business activities;
• our ability to attract deposits and other sources of liquidity;
• changes in the financial performance and/or condition of our borrowers;
• changes in the level of non-performing and classified assets and charge-offs;
• changes in estimates of future loan loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements;
• inflation, interest rate, securities market and monetary fluctuations;
3
Forward-Looking Statements
• timely development and acceptance of new banking products and services and perceived overall value of these products and services by users, including the
products and services being developed and introduced to the market by the BankMobile division of Customers Bank;
• changes in consumer spending, borrowing and saving habits;
• technological changes;
• our ability to increase market share and control expenses;
• continued volatility in the credit and equity markets and its effect on the general economy;
• effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight
Board, the Financial Accounting Standards Board and other accounting standard setters;
• the businesses of Customers Bank and any acquisition targets or merger partners and subsidiaries not integrating successfully or such integration being more
difficult, time-consuming or costly than expected;
• material differences in the actual financial results of merger and acquisition activities compared with our expectations, such as with respect to the full realization
of anticipated cost savings and revenue enhancements within the expected time frame;
• our ability to successfully implement our growth strategy, control expenses and maintain liquidity;
• Customers Bank's ability to pay dividends to Customers Bancorp;
• risks related to our proposed spin-off of BankMobile and merger of BankMobile into Flagship Bank, including:
• our ability to reach a definitive agreement with Flagship Bank with respect to the proposed spin-off and merger;
• our ability to successfully complete the transactions and the timing of completion;
• the ability of Customers and Flagship Bank to meet all of the conditions to completion of the proposed transactions;
• the impact of an announcement of the proposed spin-off and merger on the value of our securities, our business and our relationship with
employees and customers;
• the effect on Customers' business if Customers is unable to manage assets below $10 billion as measured at year-end;
• risks relating to BankMobile, including:
• that integration of the Higher One Disbursement business with BankMobile may be less successful, more difficult, time-consuming or costly than
expected, and that BankMobile may be unable to realize anticipated cost savings and revenue enhancements within the expected time frame or
at all;
• material variances in the adoption rate of BankMobile's services by new students and/or the usage rate of BankMobile's services by current
student customers compared to our expectations;
4
Forward-Looking Statements
• the levels of usage of other BankMobile student customers following graduation of additional product and service offerings of BankMobile or
Customers Bank, including mortgages and consumer loans, and the mix of products and services used;
• our ability to implement changes to BankMobile's product and service offerings under current and future regulations and governmental policies;
• our ability to effectively manage revenue and expense fluctuations that may occur with respect to BankMobile's student-oriented business
activities, which result from seasonal factors related to the higher-education academic year;
• our ability to implement our strategy regarding BankMobile, including with respect to our intent to spin-off and merge or otherwise dispose of the
BankMobile business in the future, depending upon market conditions and opportunities; and
• BankMobile's ability to successfully implement its growth strategy and control expenses.
You are cautioned not to place undue reliance on any forward-looking statements we make, which speak only as of the date they are made. We do not undertake
any obligation to release publicly or otherwise provide any revisions to any forward-looking statements we may make, including any forward-looking financial
information, to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events, except as may be required
under applicable law.
This presentation shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any
sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any
such jurisdiction.
5
Investment Proposition
Highly Focused, Innovative, Relationship Banking Based Commercial Bank Providing;
Strong Organic Growth, Well Capitalized, Branch Lite Bank in Attractive Markets
Highly skilled teams targeting privately held businesses and high net worth families
Robust risk management driven business strategy
Target market from Boston to Philadelphia along Interstate 95
Strong Profitability, Growth & Efficient Operations
Operating efficiencies offset tighter margins and generate sustainable profitability
Community Business Banking segment operating efficiency ratio in the 40’s
Target above average ROAA (~1%) and ROTCE (>11%)
Strong Credit Quality & Low Interest Rate Risk
Unwavering underwriting standards
Loan portfolio performance consistently better than industry and peers
Attractive Valuation
Nov 3, 2017 share price of $26.61, 10.1x street estimated 2018 EPS of $2.63 and
1.21x tangible book value(1)
September 30, 2017 tangible book value(1) of $21.98, up 90% since Dec 2011 with a CAGR of 12%
(1) Non-GAAP measure calculated as GAAP total shareholders equity less preferred stock, less goodwill and other intangibles divided by common shares outstanding.
6
Top Strategic Priorities
• Strengthen Capital
• With planned balance sheet reduction and retained earnings, we should approach capital targets by year-end
2017
• 7.0% TCE, 9.0% Tier 1 Leverage, 9.5% CET1, 11% Tier 1 Risk Based, and 13% Total Risk Based
• Successful disposition of BankMobile in 2018
• Announced on October 19 plans to spin-off BankMobile to shareholders and then merge BankMobile into
Flagship Community Bank in Mid-2018
• Current CUBI shareholders will receive approximately $110 million of newly issued, publicly traded, common
equity in Flagship which equates to approximately $3.57 per share based on the current number of shares
outstanding. The distribution is expected to be tax-free.
• This plan includes strategically managing the balance sheet under $10 billion in assets at year-end to maintain
the small-issuer exemption to the Durbin Amendment through June 30, 2019
• Improve financial performance
• We target: an ROAA of ~1%; ROTCE >11%, NIM of 2.80% to 3.00%, 15% CAGR in EPS, and bank segment
efficiency in the 40%s
• Priorities include strong risk management, core deposit growth, a wider NIM, positive operating leverage, and
carefully managed credit risk.
7
Capital Plan: Internal Targets are Within Sight
Planned reduction in balance sheet size boosts capital ratios ~30 bps to 50 bps
Ratio Regulatory
Capital
Requirement(1)
Internal
Target
Consolidated
Bancorp
2017 Q3
Customers
Bank Sub
2017 Q3
Tier 1 Leverage >=5.00% >=9.00% 8.36% 9.43%
Tier 1 Risk Based >=8.50% >=11.00% 10.94% 12.34%
Total Risk Based >=10.50% >=13.00% 12.40% 14.15%
CET1 >=7.00% >=9.50% 8.28% 12.34%
TCE/TA (2) NA >=7.00% 6.47% 9.65%
Source: Company data
(1) Regulatory capital requirement is equal to the greater of the fully phased in Basel III levels required to avoid limitations on certain elective distributions, or Prompt Corrective Action
“well capitalized” floors.
(2) A Non-GAAP measure, see reconciliation at the end of this presentation
8
BankMobile Spin-off / Merger
Key Steps
CUBI
Shareholders
CUBI
Customers Bank
BankMobile
Technologies
(BMT)
1
4
32
Flagship
Shareholders New Investors
Flagship
Flagship Raises
Equity
Event Target Date
Sign a revised purchase and sale agreement with Flagship Community Bank 2017 Q4
Flagship raises new equity capital, and files an application with the FDIC to acquire BankMobile deposits 2017 Q4
Prepare SEC filings for spin-off of BankMobile Technologies (BMT) As of Sept 30, 2017
Customers has decided that it is prudent to manage total assets below $10 billion at December 31, 2017 December 31, 2017
Customers Bank dividends BMT to Customers Bancorp; Customers Bancorp dividends BMT to
Customers’ shareholders holding shares on applicable record date
Closing Date
BMT merges into Flagship Community Bank; BMT shareholders receive newly issued shares of Flagship
common stock in exchange for BMT shares
Closing Date
Deposits and associated earning assets are transferred from Customers Bank to Flagship Community
Bank
Closing Date
Flagship changes name to BankMobile and lists on a national exchange
Closing Date
Key Steps in Spin-off / Merger
9
Why a Spin-off /Merger is the Best Option
• Retention is costly. We would ideally keep BankMobile to develop further and benefit from low cost
deposits, but the Durbin amendment to the Dodd-Frank Act limits interchange income for banks with
assets over $10 billion. Customers would have to start charging significantly higher deposit fees to
offset lost revenues, which is contrary to the BankMobile model, or else stay below $10 billion in
assets. Either option makes retaining BankMobile unattractive.
• Shareholders may not receive full value in a near-term sale. An outright sale forfeits shareholders’
ability to participate in potential future BankMobile valuation increases as the model is proven. A
traditional sale would have to be to a company with an existing bank charter. Small banks can earn
maximum revenues but may lack purchasing power. Large banks with purchasing power face the
dilemma above.
• A spin-off /merger maximizes financial, strategic, and structural goals.
– In a spin-off /merger, Customers shareholders will receive ownership of over 50% of Flagship common shares
with an estimated value of $110 million, or approximately $3.57 per share based on the current number of
shares outstanding.
– We expect this common stock will be exchange traded, giving investors the ability to monetize this asset.
– Investors who chose to retain the stock may benefit from the potential upside from BankMobile’s growth and
white label partnerships.
• Already signed contract to provide white label banking services to customers of a major US retailer, which
could drive significant DDA balance growth over time.
– The transaction is expected to be tax free to Customers and shareholders.
– Strategically, the merger with Flagship allows BankMobile to continue offering its attractive, low fee banking
products to students and other low to middle income customers of BankMobile without limiting Customers’
growth potential.
10
Q3 2017 Highlights
Source: Company data. Total may not equal sum of parts due to rounding
• Q3 2017 Net Income to Common Shareholders of $4.1 million, and Diluted Earnings Per Common Share of $0.13
• Q3 2017 Net Income to Common Shareholders adjusted for notable items of $19.7 million, and Adjusted Diluted Earnings
Per Common Share of $0.61. Adjusted earnings are non-GAAP measures
• The quarter exhibited strong credit quality, stable capital ratios, and tightly controlled community business banking segment
expenses. Profitability this quarter was negatively impacted by the change in BankMobile disposition strategy, further deterioration
in our investment in Religare Enterprises, reduction in the size of the balance sheet, and a flatter yield curve.
Q3 Adjustments:
• Shift to BankMobile spin-merge strategy triggered Q3 2017 changes of $10.4 million after tax, or $0.32 per diluted share
• Religare Enterprises, Ltd. equity investment market decline resulted in tax effective charge of $5.2 million, or $0.16 per
share. Carrying value of Religare Enterprises, Ltd shares was $2.3 million at September 30, 2017.
• Q3 2017 Tangible Book Value Per Common Share (a non-GAAP measure) of
$21.98 Up 9% from Q3 2016; Shareholders' Equity of $911 Million Increased
15.3% from September 30, 2016. Tangible Common Equity to Tangible
Assets (a Non-GAAP Measure) was 6.47% at September 30, 2017 compared
to 5.79% at September 30, 2016.
• Customers' return on average assets was 0.29% and its return on average
common equity was 2.33% in Q3 2017.
• The adjusted return on average assets, which excludes notable items was
0.86% and the adjusted return on average common equity was 11.1% (both
non-GAAP measures).
GAAP vs. Adjusted EPS
$0.63
$0.51
$0.67
$0.62
$0.13
$0.32
$0.23
$(0.05)
$0.05
$0.16
$(0.10)
$-
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
3Q16 4Q16 1Q17 2Q17 3Q17
GAAP EPS BM Strategy Change Charges Religare Impairment
$0.74
$0.61
$0.67
$0.62
11
Q3 2017 Highlights: Community Business Banking Segment
Source: Company data
EPS may not sum to total due to rounding
Community Business Banking segment profits of $11.0 million ($0.34 per
diluted share)
• Adjusted Community Business Banking segment profits of $24.0 million
($0.74 per diluted share) (1) which includes $0.10 per diluted share of
securities gains. Excluding securities gains, adjusted segment EPS
declined primarily due to a narrower NIM (including a $1.4M drop in
prepayments) higher costs, and decision to reduce balance sheet.
• Q3 2017 Total Loans Up 9.0% YOY to $9.2 Billion, including 24.2% growth
in C&I (excluding commercial loans to mortgage companies); Total
Deposits Up 2.8% to $7.6 Billion, including 18% growth in non-interest
bearing DDAs.
• Non-Performing Loans to Total Loans only 0.33% and Reserves for Loan
Losses 131% of Non-Performing Loans
• Adjusted Community Business Banking segment efficiency ratio of 47%(1)
*Includes Religare impairment, tax implications of spin/merge decision and securities gains
Community Business Bank Segment EPS
Community Business Banking Segment Income Statement
3Q16 4Q16 1Q17 2Q17 3Q17
Net-interest income $63.2 $61.7 $58.2 $65.9 $65.3
Provision for loan losses $0.2 $0.4 -$3.1 -$0.5 -$1.9
Non-interest income, excluding securities gains / impairment $11.1 $8.2 $7.1 $6.7 $7.2
Securities gains / impairment $0.0 -$7.3 -$1.7 $0.3 -$3.0 *
Non-interest expense -$36.9 -$30.5 -$30.1 -$30.6 -$34.0
Income before tax expense $37.6 $32.4 $30.4 $41.7 $33.7
Income tax expense -$15.3 -$10.6 -$6.1 -$14.5 -$19.0 *
Net income $22.4 $21.9 $24.3 $27.3 $14.7
Preferred stock dividends -$2.6 -$3.6 -$3.6 -$3.6 -$3.6
Net income available to common shareholders $19.8 $18.3 $20.7 $23.6 $11.0
(1) A Non-GAAP measure, see reconciliation at the end of this presentation
$0.67
$0.58
$0.63 $0.66
$0.24
$0.06
$0.10
$0.24
$0.23
$(0.05)
$0.05
$0.16
$(0.20)
$-
$0.20
$0.40
$0.60
$0.80
$1.00
3Q16 4Q16 1Q17 2Q17 3Q17
Religare Impairment BM Strategy Change Charges
Securities Gains Bank Segment EPS, ex. Securities Gains
$0.67
$0.81
$0.58
$0.78
$0.74
12
NIM Walk: 16 bps Compression in Q3, but Expect Expansion in Q4
In Q3:
• NIM narrowed 16 bps sequentially, due largely to a drop in prepayments, increases in
funding costs, and certain one-time items.
• NIM pressure included sub debt issued in June 2017 ($100M at 3.95% contractual rate
and 4.00% effective interest rate) and lower prepayment penalty income ($90,693 vs.
$1.4 million in 2Q).
Source: Company data
Outlook: Wider in 2017 Q4; ~2.75% in 2018
• ~+5 bps increase in 2017 Q4 from higher prepayments, based on QTD activity
• ~+5 bps increase in 2017 Q4 from September sale of $425 million of securities with a
150 bps spread
• ~+2 bps from expected sale of $325M of loans with a 200 bps spread (only partial
benefit in 2017 Q4).
13
Q3 2017 Highlights: BankMobile Segment
Source: Company data
BankMobile segment loss of $6.9 million (-$0.21 per diluted
share)
• The decision to spin/merge BankMobile resulted in $4.2 million
of catch-up depreciation and amortization of expenses
• Excluding this item, the BankMobile segment lost $4.3 million (-
$0.13 per diluted share)
• Assuming BankMobile was a stand-alone entity, it could have
invested in assets yielding approximately 4%+, vs. the
approximately 2% credit earned for use of funds as a business
segment of Customers, which would improve operating results of
the business.
*Operating expenses include notable items of approximately $4.2 million due to change in BankMobile disposition
strategy.
Bank Mobile Segment EPS
BankMobile Segment Income Statement
3Q16 4Q16 1Q17 2Q17 3Q17
Net-interest income $1.4 $2.5 $4.2 $2.7 $2.7
Provision for loan losses -$0.3 -$0.5 $0.0 $0.0 -$0.5
Non-interest income $16.4 $14.2 $17.3 $11.4 $13.8
Non-interest expense -$19.4 -$19.4 -$19.2 -$19.8 -$27.1
Income before tax -$1.9 -$3.3 $2.4 -$5.7 -$11.0
Income tax benefit (expense) $0.7 $1.3 -$0.9 $2.2 $4.1
Net income -$1.2 -$2.0 $1.5 -$3.5 -$6.9
$(0.21)
$(0.04)
$(0.06)
$0.04
$(0.11)
$(0.13)
$(0.25)
$(0.20)
$(0.15)
$(0.10)
$(0.05)
$-
$0.05
$0.10
3Q16 4Q16 1Q17 2Q17 3Q17
GAAP BankMobile Segment EPS Catch-up and One Time Costs
14
Target Year-End Assets Below $10 Billion
By staying under $10 billion in assets at December 31, 2017, we can continue to meet the small issuer
exemption rules of the Durbin Amendment, ensuring BankMobile’s interchange revenue is not impacted
until July 1, 2019 in the event that the Spin-off / Merger is not completed before June 30, 2018.
• We plan to reduce end of period assets by approximately $500 million in 2017 Q4
• Reflecting the mortgage warehouse business seasonality, December 31, 2017 outstanding
loan balances are expected to be approximately $200 million to $300 million lower than
September 30, 2017
• We have reached agreements to sell approximately $250 million of residential mortgages and
$75 million of multifamily loans before December 31, and may consider additional loan sales
• We expect to grow C&I lending $50 million to $60 million in Q4 and limit multi-family growth
• Sales from our $580 million investment securities portfolio will be executed as necessary to
ensure we hit our goals
• In 2018, we expect to resume balance sheet growth, and expect to end the year with approximately
$11 billion in assets; with mortgage warehouse seasonality we could reach that level by mid-year.
15
Customers Bank
Executing On Our Unique High Performing
Banking Model
16
Customers
Bank =
Relationships
& Innovation
Innovator /
Disruptor
Experienced
Leadership
Branch Lite
Unique
“Single Point
of Contact”
Model
High Tech /
High Touch
Product
Dominance
Strong Asset
Quality
High Growth
/ Superior
Performer
Customers Business Model
Approach to Winning Model
Relationship driven but never deviate from following critical success factors
• Only focus on very strong credit quality niches
• Very strong risk management culture
• Operate at lower efficiency ratio than peers to deliver sustainable strong profitability and growth
• Always attract and retain top quality talent
• Culture of innovation and continuous improvement
17
Very Experienced Teams Exceptional Service Risk Based Incentive Compensation
Banking Strategy – Community Business Banking
Community Business Bank is Focused on the following businesses:
• Banking Privately Held Businesses – Commercial C&I loans are
39% of the portfolio
• Manufacturing, service, technology, wholesale,
equipment financing, private mid size mortgage
companies
• Banking High Net Worth Families – Multi Family loans are 41% of
the portfolio; New York and regional multi family lending
• Selected Commercial Real Estate loans are only 14% of portfolio
Non-Owner Occupied
CRE
14%
Commerical - Mortgage
Warehouse
22%
Commercial - C&I, Owner
Occupied
17%
Multi Family loans
41%
Consumer &
Residential
6%
Commercial
39%
18
Our Competitive Advantage: A Highly Experienced Management Team
Name Title
Years of Banking
Experience Background
Jay S. Sidhu Chairman & CEO 41 Chairman and CEO of Sovereign Bank & Sovereign Bancorp, Inc.
Richard A. Ehst President & COO 49 EVP, Commercial Middle Market, Regional President and Managing Director of Corporate Communications at Sovereign Bank
Robert E. Wahlman,
CPA
Chief Financial Officer 36 CFO of Merrill Lynch Banks and Doral Financial; various roles at Bank One, US GAO and KPMG.
Steve Issa
EVP, New England Market President, Chief
Lending Officer
40 EVP, Managing Director of Commercial and Specialty Lending at Flagstar and Sovereign Bank.
George Maroulis
EVP, Group Director of Private &
Commercial Banking - NY Metro
25 Group Director and SVP at Signature Bank; various positions at Citibank and Fleet/Bank of America's Global Commercial & Investment Bank
Timothy D. Romig
EVP, Group Director of Commercial
Banking - PA/NJ
33 SVP and Regional Executive for Commercial Lending (Berks and Montgomery County), VIST Financial; SVP at Keystone / M&T Bank
Ken Keiser
EVP, Director CRE and Multi-Family
Housing Lending
40 SVP and Market Manager, Mid-Atlantic CRE Lending at Sovereign Bank; SVP & Senior Real Estate Officer, Allfirst Bank / M&T Bank
Glenn Hedde
EVP, President Banking for Mortgage
Companies
30 President of Commercial Operations at Popular Warehouse Lending, LLC; various positions at GE Capital Mortgage Services and PNC Bank
James Collins EVP, Chief Administrative Officer 26 Various positions at Sovereign including Director of Small Business Banking
Thomas Jastrem EVP, Chief Credit Officer 39 Various positions at First Union Bank and First Fidelity Bank
Robert B. White EVP, Chief Risk Officer 30 President RBW Financial Consulting; various positions at Citizens Bank and GE Capital
Mary Lou Scalese EVP, Chief Auditor 41 Chief Auditor at Sovereign Bank and Chief Risk Officer at Customers Bank
Michael A. De Tommaso,
Esquire
VP, General Counsel and Corporate
Secretary
23 Former trial attorney and in-house counsel for Univest and National Penn Bank
Karen Kirchner SVP, Director Team Member Services 29 SVP, Human Resources/CoreStates Bank- various positions including Manager for HR Business Partners, Manager of Recruitment and generalist in compensation and training
19
Performance Trend
Source: SNL Financial
Note: Chart begins 2/21/2012, date of first public stock quote for CUBI
CUBI
KBW
Regional
Bank
$0.35
$1.57
$1.30
$1.55
$1.96
$2.31
$1.42
$0
$10
$20
$30
$40
$50
$60
$70
$80
2011 2012 2013 2014 2015 2016 Ytd 2017
Net Income & Earnings Per Share
Net Income Available to Common Shareholders Fully Diluted EPS
162%
123%
-50%
0%
50%
100%
150%
200%
250%
Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17
20
Results in: Organic Growth of Deposits with Controlled Costs
Source: Company data.
Total Deposits per Branch excludes BankMobile Student Deposits and Corporate / Wholesale Deposits
Total Deposit Growth ($mm) Average DDA Growth ($mm)
Cost of Deposits Total Deposits per Branch ($mm)
Customers’ strategies of single point of contact and recruiting known teams in target markets produce
rapid deposit growth with low total cost
$124 $251
$500 $575
$657
$1,058
$1,350
$34
$42
$57
$75
$127
$353
$353
$0
$400
$800
$1,200
$1,600
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sep-17
$'s in millions
Non Interest Bearing DDA Interest Bearing DDA
CAGR: 51%
1.19%
0.87%
0.70% 0.66% 0.64%
0.76%
0.97%
0.25% 0.25% 0.25% 0.25% 0.26%
0.51%
0.97%
0.00%
0.25%
0.50%
0.75%
1.00%
1.25%
1.50%
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sep-17
Cost of Deposits Average Fed FundsTarget Rate
$0.7 $1.2 $1.1
$1.7 $2.3
$2.8 $2.3$0.7
$1.0 $1.3
$2.2
$2.8
$3.2 $3.5
$0.2
$0.3
$0.5
$0.6
$0.8
$1.3 $1.8
$0.0
$2.0
$4.0
$6.0
$8.0
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sep-17
$'s in billions
CD's Money Market & Savings DDA
CAGR: 31%
$112
$129
$152
$233
$319
$395 $393
$0
$50
$100
$150
$200
$250
$300
$350
$400
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sep-17
$'s in millions
CAGR: 24%
21
Lending Strategy
High Growth with Strong Credit Quality
Continuous recruitment and retention of high quality teams
Centralized credit committee approval for all loans
Loans are stress tested for higher rates and a slower economy
Insignificant delinquencies on loans originated since new management team took over
Creation of solid foundation for future earnings
Source: Company data. Includes deferred costs and fees.
$0.5 $0.6 $0.9 $1.0 $1.3
$1.3$0.1 $0.4
$1.1
$2.3
$2.9 $3.2
$3.8
$0.9
$1.6
$1.3
$2.1
$2.9 $3.5
$3.6
$0.2
$0.3
$0.3
$0.4
$0.4
$0.3
$0.5
$0
$2
$4
$6
$8
$10
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sep-17
Non-Owner Occupied CRE Multi Family loans
Commercial Consumer & Residential
CAGR: 37%
$'
s
in
B
ill
io
ns
Loan Growth
22
NPL
Source: SNL Financial, Company data. Peer data consists of Northeast and Mid-Atlantic banks and thrifts with comparable size in assets and loan portfolios (excluding banks with large
residential mortgage loan portfolios). Industry data includes all commercial and savings banks. Peer and Industry data as of June 30, 2017.
Build an Outstanding Loan Quality Portfolio
Charge Offs
3.33%
2.64%
2.06%
1.70% 1.70%
1.42%
1.83%
1.44%
1.09% 0.91% 0.89% 0.88%0.72% 0.60%
0.20% 0.15% 0.22% 0.33%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2012 2013 2014 2015 2016 Q3 2017
Industry Peer Customers Bancorp, Inc.
1.09%
0.68%
0.48% 0.42% 0.45% 0.45%0.48%
0.28%
0.15%
0.12% 0.12%
0.07%
0.29% 0.22% 0.07%
0.19%
0.02% 0.03%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
2012 2013 2014 2015 2016 Q3 2017
Industry Peer Customers Bancorp, Inc.
Asset Quality Indicators Continue to be Strong
Note: Customers 2015 charge-offs includes 12 bps for a $9 million
fraudulent loan
23
C&I & Owner Occupied CRE Banking Strategy
Private & Commercial Banking
Target companies with up to $100 million annual
revenues
Single point of contact
NE, NY, PA & NJ markets
SBA loans originated by small business relationship
managers
Banking Mortgage Companies
Private banking focused on privately held mortgage
companies generally with equity of $5 to $10 million
Very strong credit quality relationship business with good
fee income and deposits
~75 strong mortgage companies as clients
All outstanding loans are variable rate and classified as
held for sale
Non-interest bearing DDA’s are about 10% of
outstanding loans
Banking Privately Held Business
Commercial Loan and Deposit Growth ($mm)
Source: Company data
$0.9
$1.6
$1.3
$2.1
$2.9
$3.5 $3.6
$0.2 $0.4
$0.5
$1.6
$2.8
$4.0 $4.0
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
2011 2012 2013 2014 2015 2016 Q3 2017
$'s in billions Loans Deposits
LOAN CAGR: 26%
24
Multi-Family Banking Strategy
Banking High Net Worth Families
Multi-Family Loan and Deposit Growth ($mm)
Focus on families that have income
producing real estate in their portfolios
Private banking approach
Focus Markets: New York & Philadelphia
MSAs
Average Loan Size: $6.8 million
Remote banking for deposits and other
relationship based loans
Portfolio grown organically from a start up
with very experienced teams hired in the
past 4 years
Strong credit quality niche
Interest rate risk managed actively
Source: Company data
$0.1
$0.4
$1.1
$2.3
$2.9
$3.2
$3.8
$0.1 $0.3 $0.3
$0.3
$0.0
$1.0
$2.0
$3.0
$4.0
2011 2012 2013 2014 2015 2016 Q3 2017
$'s in billions Loans Deposits
25
Staff Expense Ratio
Community Banking Segment Building
Efficient Operations
Source: SNL Financial, Company data based on Community Banking Segment. Peer data consists of Northeast and Mid-Atlantic banks and thrifts with comparable size in assets and
loan portfolios (excluding banks with large residential mortgage loan portfolios). Industry data includes SEC reporting banks. Peer and Industry data as of June 30, 2017.
Occupancy Expense Ratio
Total Costs as a % of Assets
Total Revenue per Employee ($000s) Assets per Employee ($mm)
0.37% 0.38% 0.37% 0.36% 0.32% 0.27%
0.39% 0.39% 0.40% 0.38% 0.35% 0.36%0.22% 0.19% 0.15% 0.12% 0.11% 0.10%
0.00%
0.25%
0.50%
2012 2013 2014 2015 2016 Q3 2017
Industry Peer Customers Bancorp, Inc.
$4.6 $4.7 $4.9 $5.3 $5.4 $5.1
$6.3 $6.5 $6.9 $7.4
$8.0 $7.8
$9.3 $9.0
$13.3
$15.1
$17.6 $18.9
$0.0
$10.0
$20.0
2012 2013 2014 2015 2016 Q3 2017
Industry Peer Customers Bancorp, Inc.
1.71% 1.74% 1.71% 1.73% 1.73% 1.69%
1.45% 1.45% 1.43% 1.38% 1.36% 1.38%
1.03% 1.03%
0.83% 0.78% 0.75% 0.68%
0.00%
1.00%
2.00%
2012 2013 2014 2015 2016 Q3 2017
Industry Peer Customers Bancorp, Inc.
3.00% 3.05% 2.98% 2.97% 2.87% 2.44%
2.76% 2.83% 2.63% 2.58% 2.45% 2.52%
2.18% 2.13% 1.75% 1.48% 1.45% 1.25%
0.00%
2.00%
4.00%
2012 2013 2014 2015 2016 Q3 2017
Industry Peer Customers Bancorp, Inc.
$187 $186 $192 $203 $206 $198
$256 $259 $271 $289 $305
$303
$402
$330
$424 $465
$529 $535
$0
$500
2012 2013 2014 2015 2016 Q3 2017
Industry Peer Customers Bancorp, Inc.
26
Deposit, Lending and Efficiency Strategies Result in
Disciplined & Profitable Growth
Net Interest Income ($mm) (1)
(1) Source: Company data
(2) NII Simulation based on ALM model data and assumes a flat balance sheet with no volume increases or decline with the desired basis points increase ramped over 12 months.
(3) Non-GAAP measure calculated as GAAP non-interest income less/plus impairment loss recognized on the equity investment and GAAP non-interest expense less/plus one time depreciation and
amortization catchup charges in 2017 3Q.
Net Interest Income Simulation (1)(2)
Adjusted Income / Expense Growth($mm) (1) (3)
$39.0
$72.1
$103.9
$151.9
$196.3
$57.6 $62.4
$63.2 $68.6
$64.6 $68.0
$64.1
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
2011 2012 2013 2014 2015 2016 2017
CAGR: 40%
Q3
Q1
Q2
Q1
3Q '17 vs. 3Q '16
Growth
5%
Q2
Q4
$249.5
Q3
$199.0
Q4
1.55%
3.01%
0.81%
1.89%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
9/30/2017 9/30/2018
+200 basis points +100 basis points
Estimated Increase in Net Interest Income over
the Next Twelve Months
$11 $29 $23 $25 $28
$64 $72 $39
$72
$103
$152
$196
$249
$199
$37 $51
$74 $99
$115
$178 $157
2011 2012 2013 2014 2015 2016 YTD 2017
-
50
100
150
200
250
300
350
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Non-interest Income Net Interest Income Operating Expenses
27
Deposit, Lending and Efficiency Strategies Result in
Disciplined & Profitable Growth
• Strategy execution has produced superior growth in revenues and earnings
Efficiency Ratio(1)
(1) Source: Company data
(2) Non-GAAP measure calculated as GAAP net income available to common shareholders excluding securities gains and losses (including the impairment loss recognized on the equity investment), and
reversal of previously deferred tax benefits associated with Religare Impairment.
Core Community Banking Segment Net Income
Available to Common Shareholders ($mm)(1)(2) Total Revenue ($mm)
(1)
78%
55%
59% 57%
51%
57%
61%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2011 2012 2013 2014 2015 2016 YTD 2017
CAGR: -4%
$50.3
$101.0
$126.6
$177.0
$224.0
$63.1 $85.2
$71.4
$87.0
$92.1
$86.0
$79.3
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
2011 2012 2013 2014 2015 2016 YTD 2017
CAGR: 40%
Q4
Q2
Q1 Q1
Q3
$305.9
Q2
$258.2
Q3
$2.1
$18.0
$32.1
$39.8
$56.6
$16.9 $18.9
$18.9
$23.4
$19.9
$20.8
$25.5
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
2011 2012 2013 2014 2015 2016 YTD 2017
CAGR: 91%
Q1
Q2
Q3
Q4
Q1
$81.2
Q2
$63.1
Q4
Q3
28
Tangible BV per Share (1)
Building Customers Bank to Provide Superior Returns
to Investors
Recent Performance Results
Financial Performance Targets
(1) Non-GAAP measure calculated as GAAP total shareholders equity less preferred stock, less goodwill and other intangibles divided by common shares outstanding.
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
$22.00
$24.00
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sep-17
Tangible Book Value $11.54 $13.09 $14.37 $16.43 $18.39 $20.49 $21.98
Book Value $11.84 $13.27 $14.51 $16.57 $18.52 $21.08 $22.51
CAGR: 12%
Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
ROA 0.9% 0.8% 1.1% 0.9% 0.3%
ROCE 13.2% 10.5% 13.8% 11.8% 2.3%
NIM 2.83% 2.84% 2.73% 2.78% 2.62%
Efficiency 61% 58% 57% 58% 69%
EPS $0.63 $0.51 $0.67 $0.62 $0.13
Criteria Goals
Return on Assets ~ 1%
Return on Common Equity 11% or greater
Net Interest Margin 2.80% - 3.00%
EPS ~ 15% annual compounded growth
Efficiency Ratio (Banking Segment) In the 40's
29
Contacts
Company:
Robert Wahlman, CFO
Tel: 610-743-8074
rwahlman@customersbank.com
Jay Sidhu
Chairman & CEO
Tel: 610-301-6476
jsidhu@customersbank.com
Bob Ramsey
Director of IR and Strategic Planning
Tel: 484-926-7118
rramsey@customersbank.com
30
Tangible Book Value per Common Share ($ in thousands,
excluding per share data)
Q3 2017 Q3 2016
GAAP -Total Shareholders' Equity 910,642$ 789,811$
Reconciling Items:
Preferred Stock (217,471) (217,549)
Goodwill and Other Intangibles (16,604) (16,924)
Tangible Common Equity 676,567$ 555,338$
Common shares outstanding 30,787,632 27,544,217
Tangible Book Value per Common Share 21.98$ 20.16$
Reconciliation of Non-GAAP Measures - Unaudited
31
Tangible Common Equity to Tangible Assets -
Consolidated Bancorp ($ in thousands)
Q3 2017 Q3 2016
GAAP - Total Shareholders' Equity 910,642$ 789,811$
Reconciling Items:
Preferred Stock (217,471) (217,549)
Goodwill and Other Intangibles (16,604) (16,924)
Tangible Common Equity 676,567$ 555,338$
GAAP - Total Assets 10,471,819$ 9,602,610$
Reconciling Items:
Goodwill and Other Intangibles (16,604) (16,924)
Tangible Assets 10,455,215$ 9,585,686$
Tangible Common Equity to Tangible Assets 6.47% 5.79%
Reconciliation of Non-GAAP Measures - Unaudited
32
Tangible Common Equity to Tangible Assets - Customers Bank Sub ($ in
thousands)
Q3 2017
GAAP - Total Shareholders' Equity 1,024,575$
Reconciling Items:
Goodwill and Other Intangibles (16,604)
Tangible Common Equity 1,007,971$
GAAP - Total Assets 10,465,654$
Reconciling Items:
Goodwill and Other Intangibles (16,604)
Tangible Assets 10,449,050$
Tangible Common Equity to Tangible Assets 9.65%
Reconciliation of Non-GAAP Measures - Unaudited
33
Adjusted Net Income to Common Shareholders ($ in thousands, not
including per share amounts)
Q3 2017 Q2 2017 Q1 2017 Q4 2016 Q3 2016
USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share
GAAP net income to common shareholders 4,139$ 0.13$ 20,107$ 0.62$ 22,132$ 0.67$ 16,213$ 0.51$ 18,655$ 0.63$
Adjustments for change in BankMobile strategy:
Catch-up depreciation/amortization on BankMobile Assets 2,648 0.08 - - - - - - - -
Loss of deferred tax asset for Religare impairment - periods prior to Q3 2017 4,613 0.14 - - - - - - - -
Loss of deferred tax asset for Religare impairment for Q3 2017 3,110 0.10 - - - - - - - -
Sub-total 10,371 0.32 - - - - - - - -
Religare impairment - excluding loss of deferred tax asset considered above 5,239 0.16 1,758 0.05 (1,786) (0.05) 7,262 0.23 - -
Adjusted net income to common shareholders 19,749$ 0.61$ 21,865$ 0.67$ 20,346$ 0.62$ 23,475$ 0.74$ 18,655$ 0.63$
Reconciliation of Non-GAAP Measures - Unaudited
34
Adjusted Net Income to Common Shareholders - Community Banking
Business Segment ($ in thousands, not including per share amounts)
Q3 2017 Q2 2017 Q1 2017 Q4 2016 Q3 2016
USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share
GAAP net income to common shareholders - Community Banking Business 11,047$ 0.34$ 23,640$ 0.73$ 20,675$ 0.63$ 18,253$ 0.58$ 19,809$ 0.67$
Adjustments for change in BankMobile strategy:
Loss of deferred tax asset for Religare impairment - periods prior to Q3 2017 4,613 0.14 - - - - - - - -
Loss of deferred tax asset for Religare impairment for Q3 2017 3,110 0.10 - - - - - - - -
Sub-total 7,723 0.24 - - - - - - - -
Religare impairment - excluding loss of deferred tax asset considered above 5,239$ 0.16 1,758 0.05 (1,786) (0.05) 7,262 0.23 - -
Adjusted net income to common shareholders 24,009$ 0.74$ 25,398$ 0.78$ 18,889$ 0.58$ 25,515$ 0.81$ 19,809$ 0.67$
Less: (gains) / losses on investment securities (3,263)$ (0.10) (1,973) (0.06) - - - - - -
Adjusted net income to common shareholders excluding gains/losses on investment
securities 20,746$ 0.64$ 23,425$ 0.72$ 18,889$ 0.58$ 25,515$ 0.81$ 19,809$ 0.67$
Reconciliation of Non-GAAP Measures - Unaudited
35
Adjusted Return on Average Assets ($ in thousands)
Q3 2017
GAAP Net Income 7,754$
Reconciling Items (after tax):
Adjustments for change in BankMobile strategy:
Catch-up depreciation/amortization on BankMobile Assets 2,648
Loss of deferred tax asset for Religare impairment - prior periods 4,613
Loss of deferred tax asset for Religare impairment - current period 3,110
Sub-total 10,371
Religare impairment - current period (excluding loss of deferred tax asset considered
above) 5,239$
Adjusted Net Income 23,364$
Average Total Assets 10,742,191$
Adjusted Return on Average Assets 0.86%
Reconciliation of Non-GAAP Measures - Unaudited
36
Adjusted Return on Average Common Equity ($ in thousands)
Q3 2017
GAAP Net Income to Common Shareholders 4,139$
Reconciling Items (after tax):
Adjustments for change in BankMobile strategy:
Catch-up depreciation/amortization on BankMobile Assets 2,648
Loss of deferred tax asset for Religare impairment - prior periods 4,613
Loss of deferred tax asset for Religare impairment - current period 3,110
Sub-total 10,371
Religare impairment - current period (excluding loss of deferred tax asset considered
above) 5,239$
Adjusted Net Income to Common Shareholders 19,749$
Average Total Common Shareholders' Equity 705,020$
Adjusted Return on Average Common Equity 11.1%
Reconciliation of Non-GAAP Measures - Unaudited
37
Adjusted Non-interest income ($ in thousands)
Q3 2017 2016 2015 2014 2013 2012 2011
GAAP Non-interest income 59,170$ 56,370$ 27,717$ 25,126$ 22,703$ 28,958$ 11,469$
Reconciling Items:
Religare impairment 12,934 7,262 - - - - -
Adjusted Non-interest income 72,104$ 63,632$ 27,717$ 25,126$ 22,703$ 28,958$ 11,469$
Adjusted Non-interest expense ($ in thousands)
Q3 2017 2016 2015 2014 2013 2012 2011
GAAP Non-interest expense 160,818$ 178,231$ 114,946$ 98,914$ 74,024$ 50,651$ 36,886$
Reconciling Items:
Catch-up depreciation/amortization on BankMobile Assets (4,220) - - - - - -
Adjusted Non-interest expense 156,598$ 178,231$ 114,946$ 98,914$ 74,024$ 50,651$ 36,886$
Reconciliation of Non-GAAP Measures - Unaudited
38
Core Community Banking Business Segment Net Income Available to
Common Shareholders
Q3 2017 YTD 2016 2015 2014 2013 2012 2011
GAAP Net Income Available to Common Shareholders 55,386$ 73,990 56,596 41,855 32,910 23,818 3,990
Reconciling Items (after tax):
Adjustments for change in BankMobile strategy:
Loss of deferred tax asset for Religare impairment 7,723 - - - - - -
Sub-total 7,723 - - - - - -
Religare impairment 5,211$ 7,262$ -$ -$ -$ -$ -$
Adjusted net income to common shareholders 68,320$ 81,252$ 56,596$ 41,855$ 32,910$ 23,818$ 3,990$
Less: (gains) / losses on investment securities (5,205) (15) 52 (2,074) (777) (5,819) (1,850)
Adjusted net income to common shareholders excluding gains/losses on investment
securities 63,115$ 81,237$ 56,648$ 39,781$ 32,133$ 17,999$ 2,140$
Reconciliation of Non-GAAP Measures - Unaudited
39
Tangible Book Value per Common Share ($ in thousands, except per share
data)
Q3 2017 2016 2015 2014 2013 2012 2011
GAAP -Total Shareholders' Equity 910,642$ 855,872$ 553,902$ 443,145$ 386,623$ 269,475$ 147,748$
Reconciling Items:
Preferred Stock (217,471) (217,471) (55,569) - - - -
Goodwill and Other Intangibles (16,604) (17,621) (3,651) (3,664) (3,676) (3,689) (3,705)
Tangible Common Equity 676,567$ 620,780$ 494,682$ 439,481$ 382,947$ 265,786$ 144,043$
Common shares outstanding 30,787,632 30,289,917 26,901,801 26,745,529 26,646,566 20,305,452 12,482,451
Tangible Book Value per Common Share 21.98$ 20.49$ 18.39$ 16.43$ 14.37$ 13.09$ 11.54$
Book Value per Common Share 22.51$ 21.08$ 18.52$ 16.57$ 14.51$ 13.27$ 11.84$
Reconciliation of Non-GAAP Measures - Unaudited
40
Core Community Banking Business Segment Net Income Available to
Common Shareholders - 2016 Quarterly Only ($ in thousands)
Q4 2016 Q3 2016 Q2 2016 Q1 2016
GAAP Net Income Available to Common Shareholders 18,253$ 19,809$ 18,903$ 16,954$
Reconciling Items (after tax):
Adjustments for change in BankMobile strategy:
Loss of deferred tax asset for Religare impairment - - - -
Sub-total - - - -
Religare impairment 7,262$ -$ -$ -$
Adjusted net income to common shareholders 25,515$ 19,809$ 18,903$ 16,954$
Less: (gains) / losses on investment securities - (15) - -
Adjusted net income to common shareholders excluding gains/losses on investment
securities 25,515$ 19,794$ 18,903$ 16,954$
Reconciliation of Non-GAAP Measures - Unaudited