Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - Customers Bancorp, Inc. | a4q17pressrelease.htm |
| 8-K - 8-K - Customers Bancorp, Inc. | a8k123117.htm |
Highly Focused, Above Average Growth
Bank Holding Company
Investor Presentation
January, 2018
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 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;
• risks relating to BankMobile, including:
• material variances in the adoption rate of BankMobile's services by new students
• 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;
Business bank with a unique private banking service model; $10 billion in assets and growing
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 Washington DC along Interstate 95, and Chicago
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 (~1.1%) and ROTCE (>12%)
Strong Credit Quality & Low Interest Rate Risk
Unwavering underwriting standards
Loan portfolio performance consistently better than industry and peers
Attractive Valuation
January 19, 2018 share price of $30.38, 11.0x street estimated 2018 EPS of $2.75 and
1.39x tangible book value(1)
December 31, 2017 tangible book value(1) of $21.90, up 67% since December 2012 with a CAGR of 11%
(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
• At December 31, 2017, Customers substantially achieved all capital targets
• Targets: 7.0% TCE, 9.0% Tier 1 Leverage, 9.0% CET1, 11% Tier 1 Risk Based, and 13% Total Risk Based
• Grow and Successfully Divest BankMobile in 2018
• Announced on October 19, 2017 plans to spin-off BankMobile to shareholders and then merge BankMobile into
Flagship Community Bank in Mid-2018
• Customers expects Flagship to file an application with the FDIC for its acquisition of BankMobile’s deposits
shortly. Once approvals of the transaction and documents are received from the FDIC and SEC as appropriate,
Customers will announce the record date for the distribution of BankMobile Technologies, Inc. shares.
• CUBI shareholders will receive a majority ownership interest in newly issued, publicly traded, common equity in
Flagship. The distribution is expected to be tax-free to Customers and its shareholders.
• Improve financial performance
• We target: an ROAA of ~1.1%; ROTCE >12%, FTE NIM of 2.80% to 3.00%, 15% CAGR in EPS, and bank
segment efficiency in the low 40%s
• Priorities include strong risk management, core deposit growth, a wider NIM, positive operating leverage, and
carefully managed credit risk.
7
2018 Outlook
Community Business Banking: targeting diluted EPS of $2.75 to $3.00
• This is our core franchise which will remain after the spin-off and merger of BankMobile
is complete in mid-2018
• 12% to 15% growth in total assets
• FTE net interest margin between 2.70% to 2.80%
• Efficiency ratio in the mid to high 40%s
• Fee income of approximately $35 million to $40 million
• Effective tax rate of approximately 24%
• Q1 earnings are seasonally impacted by lower average balances in the mortgage
warehouse business, a shorter day count, and an increase in compensation expense
BankMobile:
• Divestiture of BankMobile on schedule, expected to be completed in mid-2018
• BankMobile’s business is seasonal, and the full year earnings impact of BankMobile on
Customers‘ results of operations will depend on the exact time of divestiture
• BankMobile's segment results will likely range between a slight profit and a $4.5 million
loss per quarter until its divestiture (assumes approximately a 2.5% spread earned on
BankMobile’s low cost deposits)
8
Q4 2017 and 2017 Consolidated Results
• Q4 2017 Net Income to Common Shareholders of $18.0
million, and Diluted Earnings Per Common Share of $0.55.
Results include a deferred tax asset re-measurement charge of
$5.5 million ($0.17 per diluted share) and a $7.3 million benefit
from exercise of employee stock options and vesting of restricted
stock ($0.23 per diluted share).
• 2017 Net Income to Common Shareholders of $64.4 million,
and Diluted Earnings Per Common Share of $1.97. Results
include the fourth quarter income tax impacts noted above,
impairment charges for its equity investment in Religare
Enterprises Ltd., totaling $12.9 million ($0.40 per diluted share),
and securities gains of $8.8 million ($0.17 per diluted share.)
• Q4 2017 Tangible Book Value Per Common Share (a non-GAAP
measure) of $21.90 Up 7% from Q4 2016;Tangible Common
Equity to Tangible Assets (a non-GAAP Measure) was 7.00% at
December 31, 2017 compared to 6.63% at December 31, 2016.
• Non-Performing Loans to Total Loans only 0.30% and Reserves
for Loan Losses 146% of Non-Performing Loans
• Intentional reduction in the size of the balance sheet boosted
capital ratios, but also had an impact on earnings.
• Compared to the prior year period, the reduction in Q4 2017
adjusted EPS reflected greater losses at BankMobile, higher
community business banking segment expenses and a lower
effective tax rate.
(1) Adjusted EPS is a non-GAAP measure; refer to reconciliation at end of this document
Source: Company data. Total may not equal sum of parts due to rounding
GAAP vs. Adjusted EPS(1)
$0.51
$0.67
$0.62
$0.13
$0.55
$0.74
$0.59
$0.58
$0.48
$0.55
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
4Q16 1Q17 2Q17 3Q17 4Q17
EP
S
GAAP EPS Adjusted EPS
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
GAAP EPS $0.51 $0.67 $0.62 $0.13 $0.55
Religare Impairment $0.23 ($0.05) $0.05 $0.40 $0.00
D&A Catchup $0.00 ($0.03) ($0.03) $0.05 $0.00
Securities Gains $0.00 $0.00 ($0.06) ($0.10) ($0.00)
Adjusted EPS $0.74 $0.59 $0.58 $0.48 $0.55
9
Q4 2017 Highlights: Community Business Banking Segment
Community Business Banking segment Q4 2017 profits of $22.2 million
($0.68 per diluted share) and 2017 profits of $77.6 million ($2.38 per diluted
share)
• Adjusted to exclude Religare losses and securities gains on sales of
investment securities, Community Business Banking segment profits
• $22.0 million ($0.68 per diluted share) in Q4 2017
• $84.9 million ($2.60 per diluted share) in 2017
• Q4 2017 Total Loans Up 5% YOY to $8.7 Billion, including 19% growth in
C&I (excluding commercial loans to mortgage companies)
• Total Deposits declined 7% YOY to $6.4 Billion, largely given declines in
brokered CDs. Non-interest bearing DDAs increased 28%.
• Community Business Banking segment efficiency ratio of 45% for the year
Community Business Bank Segment GAAP vs. Adjusted EPS(1)
Community Business Banking Segment Income Statement ($ in 000s)
(1) A Non-GAAP measure, see reconciliation at the end of this presentation
$0.59
$0.63
$0.73
$0.34
$0.68
$0.82
$0.58
$0.72 $0.64 $0.68
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
4Q16 1Q17 2Q17 3Q17 4Q17
EP
S
Bank Segment Reported Bank Segment Adj
Q4 2016 Q4 2017 Q2 2017 Q3 2017 Q4 2017
Bank Segment Reported $0.59 $0.63 $0.73 $0.34 $0.68
Securities Gains $0.00 $0.00 -$0.06 -$0.10 $0.00
Religare $0.23 -$0.05 $0.05 $0.40 $0.00
Bank Segment Adj $0.82 $0.58 $0.72 $0.64 $0.68
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
Net interest income $61,668 $58,176 $65,879 $65,335 $65,103
Provision for loan losses ($359) $3,050 $535 $1,874 $179
Securities Gains / Impairment ($7,262) ($1,703) $301 ($3,000) $268
Other Non-interest income $8,183 $7,130 $6,670 $7,190 $7,932
Non-interest expense $30,141 $30,147 $30,567 $33,990 $33,900
Income before income tax expense $32,807 $30,406 $41,748 $33,661 $39,224
Income tax expense $10,710 $6,116 $14,493 $18,999 $13,369
Net income $22,097 $24,290 $27,255 $14,662 $25,855
Preferred stock dividends $3,615 $3,615 $3,615 $3,615 $3,615
Net income available to common $18,482 $20,675 $23,640 $11,047 $22,240
10
2017 Q4 Organic Loan Growth
Q4 2017 Total Loans Up 5% YOY to $8.7 Billion
• 19% growth in C&I (excluding commercial loans to mortgage companies)
• Customers' loans subject to regulatory CRE concentration guidelines had 3 year cumulative growth of
88% in 2017, a deceleration from 222% in 2016.
Adjusted for sales, YOY loan growth would have been 9%.
• $132 million multi-family loans with a weighted average yield of 3.32%
• $192 million residential mortgages with a weighted average yield of 3.73%
Source: Company data
Loans ($ in 000s)
December 31, March 31, June 30, September 30, December 31,
2016 2017 2017 2017 2017
Commercial:
Multi-family $3,215 $3,438 $3,550 $3,769 $3,647 -$123 -3% $432 13%
Mortgage warehouse 2,171 1,739 2,159 2,013 1,845 -168 -8% -326 -15%
Commercial & industrial 1,328 1,337 1,449 1,550 1,583 32 2% 255 19%
Non-owner occupied CRE 1,194 1,231 1,216 1,238 1,219 -19 -2% 25 2%
Construction 65 75 61 73 85 12 17% 21 32%
Total commercial loans 7,973 7,821 8,436 8,643 8,378 -$265 -3% $405 5%
Consumer:
Residential 194 364 447 437 236 -$201 -46% $42 22%
Manufactured housing 102 99 96 93 90 -3 -3% -12 -11%
Other consumer 3 3 4 4 4 0 -7% 0 2%
Total consumer loans 299 466 547 534 330 -204 -38% 30 10%
Deferred (fees) and unamortized (discounts), net 0 -3 -2 -2 0
Total loans $8,272 $8,284 $8,980 $9,175 $8,708 -$467 -5% $436 5%
Growth
QOQ YOY
11
2017 Q4 NIM: +17 bps sequentially; -5 bps from Q4 2016
NIM Trends:
• FTE NIM(1) expanded17 bps sequentially to 2.79%, due largely to favorable mix shift in
assets and liabilities given planned balance sheet reductions, and a rebound
prepayments.
• NIM narrowed 5 bps from the year ago period, primarily reflecting greater increases in
funding costs than asset yields, which included 4 bps from debt issued in June 2017
($100M at 3.95% contractual rate and 4.00% effective interest rate).
Source: Company data
Outlook: 2.70% to 2.80% in 2018
• The NIM outlook reflects continued pressure on liability costs from rising short term
rates, mitigated by favorable asset mix shift.
• In Q4 2017 Customers increased loan pricing and sold certain lower yielding assets.
• In Q4 2017 Customers sold $98 million of securities with a weighted average
yield of 2.91%, and in January 2018 purchased $506 million of securities with a
weighted average yield of 3.32%.
• In Q4 2017 the Customers sold $132 million of multi-family loans with a weighted
average yield of 3.32%, and the yield in the multi-family pipeline is currently
3.84%.
• Customers is increasing its focus on core deposit gathering to mitigate the pressures of
a rising rate environment
(1) The fully taxable equivalent net interest margin (FTE NIM) is a non-GAAP measure.
12
Q4 2017 Highlights: BankMobile Segment
Source: Company data
BankMobile segment loss of $4.2 million (-$0.13 per diluted
share) in Q4 2017
• BankMobile processed over $9.5 billion of student loan
disbursements in 2017.
• BankMobile deposits averaged $558 million in Q4 2017, a 2%
increase over Q4 2016 levels.
• Operating expenses only increased 6% over the prior year,
despite significant investment in technology to support expected
White Label partnerships.
• A new unsecured consumer loan product was recently launched,
which is the first of five new consumer credit products that will
be made available to BankMobile customers this year in an effort
to deepen relationships and create “customers for life.”
Bank Mobile Segment GAAP vs. Adjusted EPS(1)
BankMobile Segment Income Statement ($ in 000s)
-$0.07
$0.04
-$0.11
-$0.21
-$0.13
-$0.07
$0.02
-$0.14
-$0.16
-$0.13
-$0.25
-$0.20
-$0.15
-$0.10
-$0.05
$0.00
$0.05
$0.10
4Q16 1Q17 2Q17 3Q17 4Q17
EP
S
BankMobile Reported BankMobile Adjusted
$(0.0
Q4 2016 Q4 2017 Q2 2017 Q3 2017 Q4 2017
BankMobile Reported -$0.07 $0.04 -$0.11 -$0.21 -$0.13
D&A Catchup $0.00 -$0.03 -$0.03 $0.05 $0.00
BankMobile Adjusted -$0.07 $0.02 -$0.14 -$0.16 -$0.13
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
Net interest income $2,460 $4,242 $2,727 $2,684 $3,197
Provision for loan losses $546 $0 $0 $478 $652
Non-interest income $14,210 $17,327 $11,419 $13,836 $11,540
Non-interest expense $19,783 $19,219 $19,845 $27,050 $20,888
Income before income tax expense ($3,659) $2,350 ($5,699) ($11,008) ($6,803)
Income tax expense $1,390 $893 ($2,166) ($4,100) ($2,563)
Net income available to common ($2,269) $1,457 ($3,533) ($6,908) ($4,240)
(1) A Non-GAAP measure, see reconciliation at the end of this presentation
13
BankMobile Segment Expanded Financials
Source: Company data
BankMobile Segment Income Statement ($ in 000s)
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
Interest income $3 $3 $4 $10 $15 $7 $7 $10
Interest expense $7 $7 $7 $17 $20 $18 $16 $15
Fund Transfer Pricing $1,723 $1,306 $1,381 $2,466 $4,247 $2,738 $2,693 $3,202
Net interest income $1,718 $1,301 $1,377 $2,460 $4,242 $2,727 $2,684 $3,197
Provision for loan losses -$1 $0 $250 $546 $0 $0 $478 $652
Deposit Fees $1 $509 $3,916 $2,500 $2,803 $1,875 $2,338 $1,833
Card Revenue $226 $1,730 $11,387 $10,719 $13,308 $8,521 $9,355 $9,542
Other Fees $0 $164 $1,062 $991 $1,216 $1,023 $2,142 $165
Total non-interest income $227 $2,403 $16,365 $14,210 $17,327 $11,419 $13,836 $11,540
Compensation & Benefits $866 $1,708 $5,419 $5,595 $4,949 $6,965 $6,154 $5,909
Occupancy $59 $67 $71 $70 $109 $104 $297 $321
Technology $286 $1,448 $5,847 $6,585 $6,617 $6,386 $11,740 $9,796
Outside services $251 $886 $4,264 $4,267 $4,519 $3,310 $3,871 $3,366
Other non-interest expenses $573 $1,989 $4,322 $3,266 $3,026 $3,081 $4,988 $1,495
Total Non-interest expense $2,034 $6,099 $19,922 $19,783 $19,219 $19,845 $27,050 $20,888
Income before income tax expense -$88 -$2,394 -$2,431 -$3,659 $2,350 -$5,699 -$11,008 -$6,803
Income tax expense -$33 -$910 -$924 -$1,390 $893 -$2,166 -$4,100 -$2,563
Net income available to common -$54 -$1,484 -$1,507 -$2,269 $1,457 -$3,533 -$6,908 -$4,240
End of Period Deposits $337 $240 $533 $457 $708 $453 $781 $400
Average Deposits $351 $286 $332 $548 $794 $532 $531 $558
14
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
Customers announced spin-off of BankMobile and merger of BankMobile into Flagship Community Bank 2017 Q4
Flagship files application with FDIC January 2018
Customers files with SEC for spin-off of BankMobile Technologies (BMT) – after 2017 financials audit March 2018
Flagship files registration statement for capital raise through an IPO – after 2017 financials audit March / April 2018
Customers announces record date – after appropriate regulatory approvals 2018 Q2
Flagship completes IPO Mid-2018, just prior to close
1) BMT is spun-out to Customers’ shareholders, 2) BMT merges into Flagship Community Bank in a tax-
free exchange for newly issued shares of Flagship common stock, 3) Deposits and associated earning
assets are transferred from Customers Bank to Flagship, 4) Flagship changes name to BankMobile and
lists on a national exchange
Mid-2018 / Closing Date
Key Steps in Spin-off / Merger
15
Capital Plan: Internal Targets are Within Sight
The Q4 2017 reduction in balance sheet size boosted capital ratios at least 50 bps
Ratio Regulatory
Capital
Requirement(1)
Internal
Target
Consolidated
Bancorp
2017 Q4 (Est.)
Customers
Bank Sub
2017 Q4 (Est.)
Tier 1 Leverage >=5.00% >=9.00% 8.94% 9.74%
Tier 1 Risk Based >=8.50% >=11.00% 11.67% 12.30%
Total Risk Based >=10.50% >=13.00% 13.20% 14.12%
CET1 >=7.00% >=9.00% 8.87% 12.30%
TCE/TA (2) NA >=7.00% 7.00% NA
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
16
Customers Bank
Executing On Our Unique High Performing
Banking Model
17
Unique Single
Point of
Contact Model
Customer
Centric
Experienced
Leadership
Branch Lite
Private
Banking
Source
Model
High Tech /
High Touch
Excellence in
Service
Strong Asset
Quality
Superior Risk
Management
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
18
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,
$1.3 B, 15%
Commerical -
Mortgage
Warehouse, $1.8
B, 21% Commercial - C&I,
Owner Occupied,
$1.6 B, 18%
Multi Family
loans, $3.6 B,
42%
Consumer &
Residential,
$0.3 B, 4%
Commercial,
$3.4 B, 39%
19
Our Competitive Advantage: A Highly Experienced Management Team
Name Title
Years of Banking
Experience Background
Jay S. Sidhu Chairman & CEO 42 Chairman and CEO of Sovereign Bank & Sovereign Bancorp, Inc.
Richard A. Ehst President & COO 50
EVP, Commercial Middle Market, Regional President and Managing Director of Corporate
Communications at Sovereign Bank
Robert E. Wahlman,
CPA
Chief Financial Officer 37 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
41 EVP, Managing Director of Commercial and Specialty Lending at Flagstar and Sovereign Bank.
George Maroulis
EVP, Group Director of Private &
Commercial Banking - NY Metro
26
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
34
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
41
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
31
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 27 Various positions at Sovereign including Director of Small Business Banking
Thomas Jastrem EVP, Chief Credit Officer 40 Various positions at First Union Bank and First Fidelity Bank
Robert B. White EVP, Chief Risk Officer 31 President RBW Financial Consulting; various positions at Citizens Bank and GE Capital
Mary Lou Scalese EVP, Chief Auditor 42 Chief Auditor at Sovereign Bank and Chief Risk Officer at Customers Bank
Michael A. De Tommaso,
Esquire
EVP, General Counsel and Corporate
Secretary
24 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
20
Performance Trend
Source: SNL Financial
Note: Chart reflect 5 year period through January 18, 2018
$0.35
$1.57
$1.30
$1.55
$1.96
$2.31
$1.40
$0
$10
$20
$30
$40
$50
$60
$70
$80
2011 2012 2013 2014 2015 2016 Ytd 2017
Net Income & Earnings Per Share
Net Income Available to Common Shareholders Fully Diluted EPS
117%
100%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
CUBI KBW Nasdaq Regional Bank Index
21
Results in: Organic Growth of Deposits with Controlled Costs
Source: Company data.
Total Deposits per Branch excludes BankMobile Student Deposits and Corporate / Wholesale Deposits
Total Deposit Growth ($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
$1.2 $1.1 $1.7
$2.3 $2.8 $1.9
$1.0 $1.3
$2.2
$2.8
$3.2
$3.3 $0.3 $0.5
$0.6 $0.8
$1.3
$1.6
$0.0
$2.0
$4.0
$6.0
$8.0
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
$'s in billions
CD's Money Market & Savings DDA
CAGR: 23%
$251
$500 $575 $657
$1,058 $1,081 $42
$57 $75 $127
$353 $539
$0
$400
$800
$1,200
$1,600
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
$'s in millions
Non Interest Bearing DDA Interest Bearing DDA
CAGR: 41%
0.87%
0.70% 0.66% 0.64%
0.76%
1.07%
0.25% 0.25% 0.25% 0.26%
0.51%
1.10%
0.00%
0.25%
0.50%
0.75%
1.00%
1.25%
1.50%
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
Cost of Deposits Average Fed FundsTarget Rate
$129
$152
$233
$319
$395 $388
$0
$100
$200
$300
$400
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
$'s in millions
CAGR: 25%
22
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.
Loan Growth
$0.6 $0.9 $1.0 $1.3
$1.3 $0.4
$1.1
$2.3 $2.9
$3.2 $3.6
$1.6
$1.3
$2.1
$2.9
$3.5 $3.4
$0.3
$0.3
$0.4
$0.4
$0.3
$0.3
$0
$2
$4
$6
$8
$10
Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
Non-Owner Occupied CRE Multi Family loans Commercial Consumer & Residential
CAGR: 26%
$'
s
in
B
ill
io
ns
23
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 Sept 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% 0.32%
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
24
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 $10 million
Very strong credit quality relationship business with good
fee income and deposits
~75 strong mortgage companies as clients
All outstanding loans are variable rate and classified as
held for sale
Target non-interest bearing DDA’s at 10% of outstanding
loans
Banking Privately Held Business
Commercial Loan and Deposit Growth ($mm)
Source: Company data
$1.6
$1.3
$2.1
$2.9
$3.5 $3.4
$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
2012 2013 2014 2015 2016 2017
$'s in billions Loans Deposits
LOAN CAGR: 17%
25
Multi-Family Banking Strategy
Banking High Net Worth Families
Multi-Family Loan and Deposit Growth ($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
$0.4
$1.1
$2.3
$2.9
$3.2
$3.6
$0.3 $0.3 $0.3
$0.0
$1.0
$2.0
$3.0
$4.0
2012 2013 2014 2015 2016 2017
$'s in billions Loans Deposits
26
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 September 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% 0.11%
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
$13.1 $14.0 $12.3 $13.2
$0.0
$5.0
$10.0
$15.0
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%
0.84% 0.81% 0.89% 0.91%
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% 2.14% 1.79% 1.58% 1.96% 2.10%
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
$420 $433 $414 $445
$0
$200
$400
$600
2012 2013 2014 2015 2016 Q3 2017
Industry Peer Customers Bancorp, Inc.
27
Deposit, Lending and Efficiency Strategies Result in
Disciplined & Profitable Growth
Net Interest Income ($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; non-interest income and expense Non-GAAP measure excluding securities gains and losses (including the impairment loss recognized on the Religare equity investment).
Net Interest Income Simulation (1)(2)
Adjusted Income / Expense Growth($mm) (1) (3)
$72.1
$103.9
$151.9
$196.3
$57.6 $62.4
$63.2 $68.6
$64.6
$68.0
$64.1 $68.3
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
2012 2013 2014 2015 2016 2017
CAGR: 30%
Q3
Q1
Q2
Q1
4Q '17 vs. 4Q '16
Growth
7%
Q2
Q4
$249.5
Q3
$267.3
Q4
$20 $22 $22 $28
$64 $83
$72
$103
$152
$196
$249
$267
$51 $74
$99 $115
$178
$216
2012 2013 2014 2015 2016 2017
-
50
100
150
200
250
300
350
400
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Non-interest Income Net Interest Income Operating Expenses
-0.75%
0.00%
0.34%
-0.89%
0.17%
-4.45%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
%
C
ha
ng
e
in
N
et
In
te
re
st
In
co
m
e
ov
er
12
m
on
th
s
Implied Forward Curve +100 bps ramp
+100 basis points parallel shift +200 bps ramp
+200 basis points parallel shift
28
Deposit, Lending and Efficiency Strategies Result in
Disciplined & Profitable Growth
• Strategy execution has produced superior growth in revenues and earnings
Efficiency Ratio(1)
(1) Source: Company data
(2) Non-GAAP measure calculated as GAAP net income available to common shareholders excluding securities gains and losses (including the impairment loss recognized on the Religare equity
investment), and reversal of previously deferred tax benefits associated with Religare Impairment.
Adjusted Community Banking Segment Net Income
Available to Common Shareholders ($mm)(1)(2) Total Revenue ($mm)
(1)
55%
59% 57%
51%
57%
62%
0%
10%
20%
30%
40%
50%
60%
70%
2012 2013 2014 2015 2016 2017
$101.0
$126.6
$177.0
$224.0
$63.1 $85.2
$71.4
$87.0
$92.1
$86.0
$79.3
$88.0
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
$400.0
2012 2013 2014 2015 2016 YTD 2017
CAGR: 28%
Q4
Q2
Q1 Q1
Q3
$305.9
Q2
$346.3
Q3
Q4
$18.0
$32.1
$39.8
$56.6
$18.9
$23.4
$20.6
$22.1
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
2012 2013 2014 2015 2016 2017
CAGR: 36%
Q1
$81.7
Q2
$85.0
Q4
Q3
29
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-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
Tangible Book Value $13.09 $14.37 $16.43 $18.39 $20.49 $21.90
Book Value $13.27 $14.51 $16.57 $18.52 $21.08 $22.42
CAGR: 11%
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
ROA 0.8% 1.1% 0.9% 0.3% 0.8%
ROCE 10.5% 13.8% 11.8% 2.3% 10.1%
FTE NIM 2.84% 2.73% 2.78% 2.62% 2.79%
Efficiency 58% 57% 58% 69% 62%
EPS $0.51 $0.67 $0.62 $0.13 $0.55
Criteria Goals
Return on Assets ~ 1.1%
Return on Tangible Common Equity 12% or greater
FTE Net Interest Margin 2.80% - 3.00%
EPS ~ 15% annual compounded growth
Efficiency Ratio (Banking Segment) In the low 40's
30
Contacts
Company:
Robert Wahlman, CFO
Tel: 610-743-8074
rwahlman@customersbank.com
Jay Sidhu
Chairman & CEO
Tel: 610-301-6476
jsidhu@customersbank.com
Bob Ramsey
Director of IR and Strategic Planning
Tel: 484-926-7118
rramsey@customersbank.com
Customers believes that the non-GAAP measurements disclosed within this
document are useful for investors, regulators, management and others to evaluate
our results of operations and financial condition relative to other financial
institutions. These non-GAAP financial measures exclude from corresponding
GAAP measures the impact of certain elements that we do not believe are
representative of our financial results, which we believe enhance an overall
understanding of our performance. Investors should consider our performance and
financial condition as reported under GAAP and all other relevant information
when assessing our performance or financial condition. Although non-GAAP
financial measures are frequently used in the evaluation of a company, they have
limitations as analytical tools and should not be considered in isolation or as a
substitute for analysis of our results of operations or financial condition as reported
under GAAP.
The following tables present reconciliations of GAAP to Non-GAAP measures
disclosed within this document.
31
Reconciliation of Non-GAAP Measures - Unaudited
32
Tangible Common Equity to Tangible Assets -
Customers Bancorp, Inc. Consolidated ($ in thousands)
2017 2016 Q4 2017 Q3 2017
GAAP - Total Shareholders' Equity 920,964$ 855,872$ 920,964$ 910,642$
Reconciling Items:
Preferred Stock (217,471) (217,471) (217,471) (217,471)
Goodwill and Other Intangibles (16,295) (17,621) (16,295) (16,604)
Tangible Common Equity 687,198$ 620,780$ 687,198$ 676,567$
GAAP - Total Assets 9,839,555$ 9,382,736$ 9,839,555$ 10,471,819$
Reconciling Items:
Goodwill and Other Intangibles (16,295) (17,621) (16,295) (16,604)
Tangible Assets 9,823,260$ 9,365,115$ 9,823,260$ 10,455,215$
Tangible Common Equity to Tangible Assets 7.00% 6.63% 7.00% 6.47%
Reconciliation of Non-GAAP Measures - Unaudited
33
Tangible Book Value per Common Share - Customers
Bancorp, Inc. Consolidated ($ in thousands, except per
share data)
2017 2016 2015 2014 2013 2012
GAAP -Total Shareholders' Equity 920,964$ 855,872$ 553,902$ 443,145$ 386,623$ 269,475$
Reconciling Items:
Preferred Stock (217,471) (217,471) (55,569) - - -
Goodwill and Other Intangibles (16,295) (17,621) (3,651) (3,664) (3,676) (3,689)
Tangible Common Equity 687,198$ 620,780$ 494,682$ 439,481$ 382,947$ 265,786$
Common shares outstanding 31,382,503 30,289,917 26,901,801 26,745,529 26,646,566 20,305,452
Tangible Book Value per Common Share 21.90$ 20.49$ 18.39$ 16.43$ 14.37$ 13.09$
Book Value per Common Share 22.42$ 21.08$ 18.52$ 16.57$ 14.51$ 13.27$
Reconciliation of Non-GAAP Measures - Unaudited
34
Adjusted Net Income to Common Shareholders -
Customers Bancorp, Inc. Consolidated ($ in thousands,
not including per share amounts)
Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016
USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share
GAAP net income to common shareholders $ 18,000 $ 0.55 4,139$ 0.13$ 20,107$ 0.62$ 22,132$ 0.67$ 16,213$ 0.51$
Reconciling items (after tax):
Catch-up depreciation/amortization on BankMobile Assets - - 1,765 0.05 (883) (0.03) (883) (0.03) - -
Loss of deferred tax asset for Religare impairment - - 4,898 0.15 - - - - - - g p g
considered above - - 8,036 0.25 1,758 0.05 (1,786) (0.05) 7,262 0.23
Gains on sales of investment securities (170) - (3,356) (0.10) (1,942) (0.06) - - - -
Adjusted net income to common shareholders $ 17,830 $ 0.55 $ 15,482 $ 0.48 $ 19,040 $ 0.58 $ 19,463 $ 0.59 $ 23,475 $ 0.74
Reconciliation of Non-GAAP Measures - Unaudited
35
Adjusted Net Income to Common Shareholders -
Community Banking Business Segment ($ in thousands,
not including per share amounts)
Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016
USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share
GAAP net income to common shareholders $ 22,240 $ 0.68 11,047$ 0.34$ 23,640$ 0.73$ 20,675$ 0.63$ 18,482$ 0.59$
Reconciling items (after tax):
Loss of deferred tax asset for Religare impairment - - 4,898 0.15 - - - - - -
Religare impairment - excluding loss of deferred tax asset
considered above - - 8,036 0.25 1,758 0.05 (1,786) (0.05) 7,262 0.23
Gains on sales of investment securities (170) - (3,356) (0.10) (1,942) (0.06) - - - -
Adjusted net income to common shareholders $ 22,070 $ 0.68 $ 20,625 $ 0.63 $ 23,456 $ 0.72 $ 18,889 $ 0.58 $ 25,744 $ 0.82
Reconciliation of Non-GAAP Measures - Unaudited
Adjusted Net Income (Loss) to Common Shareholders -
BankMobile Segment ($ in thousands, not including per
share amounts)
Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016
USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share
GAAP net income (loss) to common shareholders $ (4,240) $ (0.13) (6,908)$ (0.21)$ (3,533)$ (0.11)$ 1,457$ 0.04$ (2,269)$ (0.07)$
Reconciling items (after tax):
Catch-up depreciation/amortization on BankMobile Assets - - 1,765 0.06 (883) (0.03) (883) (0.03) - -
Adjusted net income to common shareholders $ (4,240) $ (0.13) $ (5,143) $ (0.16) $ (4,416) $ (0.14) $ 574 $ 0.02 $ (2,269) $ (0.07)
36
Reconciliation of Non-GAAP Measures - Unaudited
37
Adjusted Community Banking Business Segment Net
Income Available to Common Shareholders
2017 2016 2015 2014 2013 2012
GAAP net income available to common shareholders 77,567$ 74,500 56,596 41,855 32,910 23,818
Reconciling Items (after tax):
Loss of deferred tax asset for Religare impairment 4,898 - - - - -
Religare impairment 8,036 7,262 - - - -
Gains on sales of investment securities (5,597) (16) 52 (2,074) (777) (5,819)
Adjusted net income to common shareholders 84,904$ 81,746$ 56,648$ 39,781$ 32,133$ 17,999$
Reconciliation of Non-GAAP Measures - Unaudited
38
Adjusted Non-interest Income ($ in thousands)
2017 2016 2015 2014 2013 2012
GAAP Non-interest income 78,910$ 56,370$ 27,717$ 25,126$ 22,703$ 28,958$
Reconciling Items:
Religare impairment 12,934 7,262 - - - -
Gains on sales of investment securities (8,800) (25) 85 (3,191) (1,274) (9,017)
Adjusted Non-interest income 83,044$ 63,607$ 27,802$ 21,935$ 21,429$ 19,941$
Reconciliation of Non-GAAP Measures - Unaudited
39
Customers Bancorp, Inc. Consolidated - Net
Interest Margin, tax equivalent
2017 2016 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016
GAAP Net interest income $ 267,343 $ 249,497 $ 68,300 $ 68,019 $ 68,606 $ 62,418 $ 64,128
Tax-equivalent adjustment 645 390 245 203 104 93 92
Net interest income tax equivalent $ 267,988 $ 249,887 $ 68,545 $ 68,222 $ 68,710 $ 62,511 $ 64,220
Average total interest earning assets $ 9,820,762 $8,791,304 $ 9,758,987 $ 10,352,394 $ 9,893,785 $9,266,638 $ 9,011,995
Net interest margin, tax equivalent 2.73% 2.84% 2.79% 2.62% 2.78% 2.73% 2.84%
Twelve months ended
December 31,
Reconciliation of Non-GAAP Measures - Unaudited