Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Investor Presentation (November 2017)
40 slides from Customers Bancorp's investor presentation, Nov 6, 2017
Slide 1: Investor Presentation November 2017
Highly Focused, Low Risk, Above Average Growth Bank Holding Company Investor Presentation November, 2017 NYSE: CUBI Member FDIC
Slide 2: Forward-Looking Statements
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
Slide 3: Forward-Looking Statements
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; •
Slide 4: Forward-Looking Statements
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 cha
Slide 5: Investment Proposition
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 drive
Slide 6: Top Strategic Priorities
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 201
Slide 7: Capital Plan: Internal Targets are Within Sight
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 Ba
Slide 8: BankMobile Spin-off / Merger Key Steps
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 ne
Slide 9: Why a Spin-off / Merger is the Best Option
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 ch
Slide 10: Q3 2017 Highlights
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 Adjust
Slide 11: Q3 2017 Highlights: Community Business Banking Segment
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 shar
Slide 12: NIM Walk: Compression in Q3, Expect Expansion in Q4
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% e
Slide 13: Q3 2017 Highlights: BankMobile Segment
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
Slide 14: Target Year-End Assets Below $10 Billion
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 / Mer
Slide 15: Customers Bank Executing On Our Unique High Performing Banking Model
15 Customers Bank Executing On Our Unique High Performing Banking Model
Slide 16: Customers Bank = Relationships & Innovation
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 Relationshi
Slide 17: Banking Strategy – Community Business Banking
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,
Slide 18: A Highly Experienced Management Team
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 Ma
Slide 19: Performance Trend
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 $80 2011 2012 2013 2014 2015 2016 Ytd 2017 Net Income & Earnings Per Share Net Income Ava
Slide 20: Organic Growth of Deposits with Controlled Costs
20 Results in: Organic Growth of Deposits with Controlled Costs Source: Company data. Total Deposits per Branch excludes BankMobile Student Deposits and Corporate / Wholesale Deposits Total Deposit Growth ($mm) Average DDA Growth ($mm) Cost of Deposits Total Deposits per Branch ($mm) Customers’ stra
Slide 21: Lending Strategy: High Growth with Strong Credit Quality
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 ma
Slide 22: Build an Outstanding Loan Quality Portfolio
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 Indus
Slide 23: C&I & Owner Occupied CRE Banking Strategy
23 C&I & Owner Occupied CRE Banking Strategy Private & Commercial Banking Target companies with up to $100 million annual revenues Single point of contact NE, NY, PA & NJ markets SBA loans originated by small business relationship managers Banking Mortgage Companies Private banking focused
Slide 24: Multi-Family Banking Strategy
24 Multi-Family Banking Strategy Banking High Net Worth Families Multi-Family Loan and Deposit Growth ($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: $6.8 million Remo
Slide 25: Building Efficient Operations
25 Staff Expense Ratio Community Banking Segment Building Efficient Operations Source: SNL Financial, Company data based on Community Banking Segment. Peer data consists of Northeast and Mid-Atlantic banks and thrifts with comparable size in assets and loan portfolios (excluding banks with large res
Slide 26: Disciplined & Profitable Growth: Net Interest Income
26 Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth Net Interest Income ($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
Slide 27: Disciplined & Profitable Growth: Efficiency and Revenue
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 excludin
Slide 28: Building Customers Bank to Provide Superior Returns
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
Slide 29: Contacts
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
Slide 30: Tangible Book Value per Common Share
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$ Commo
Slide 31: Tangible Common Equity to Tangible Assets - Consolidated Bancorp
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$ GA
Slide 32: Tangible Common Equity to Tangible Assets - Customers Bank Sub
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 I
Slide 33: Adjusted Net Income to Common Shareholders
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$
Slide 34: Adjusted Net Income - Community Banking Business Segment
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 Bankin
Slide 35: Adjusted Return on Average Assets
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 Lo
Slide 36: Adjusted Return on Average Common Equity
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 impai
Slide 37: Adjusted Non-interest Income and Expense
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$ 2
Slide 38: Core Community Banking Segment Net Income
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 strat
Slide 39: Tangible Book Value per Common Share
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 O
Slide 40: Core Community Banking Segment Net Income - 2016 Quarterly
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 Bank
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