Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Q1 2019 Earnings Presentation
37 slides from Customers Bancorp's earnings presentation, Apr 24, 2019
Slide 1: Executing On Our Unique Higher Performing Banking Model Q1 2019 Investor Presentation
Executing On Our Unique Higher Performing Banking Model Q1 2019 Investor Presentation Member FDIC April, 2019 NYSE: CUBI
Slide 2: Investment Proposition
Investment Proposition Highly Focused, Innovative, Relationship Banking Based Commercial Bank Business bank with a unique private banking service model; approximately $10 billion in assets Highly skilled teams targeting privately held businesses and high net worth families Strong Organic Growth, Wel
Slide 3: Customers Bank Business Banking
Customers Bank Business Banking 3
Slide 4: Customers' Single Point of Contact Model
Customers’ Single Point of Contact Model Private Banking High Tech / Service High Touch Model Excellence in Branch Lite Service Experienced Strong Asset Leadership Quality Unique Private Customer Banking Model Superior Risk Centric Management Approach to Winning Model Relationship driven but never d
Slide 5: Banking Strategy – Customers Bank
Banking Strategy – Customers Bank Very Experienced Teams Exceptional Service Risk Based Incentive Compensation Business Banking Focus - ~95% of Customers Bank Business Banking Segment revenues are from commercial business units 5
Slide 6: Banking Strategy – Our Footprint
Banking Strategy – Our Footprint Customers Bank Business Banking Branches and Loan Production Offices 6
Slide 7: BankMobile: One of America's Fastest Growing Digital Banks for Consumers
BankMobile One of America’s Fastest Growing Digital Banks for Consumers 7
Slide 8: BankMobile – Critical Success Factors
BankMobile – Critical Success Factors 1. Unique and exponentially better customer acquisition strategy 2. Customer engagement and customer for life profitability strategy Critical success factors 3. Unique technology, contractual relationships, and Durbin create barriers to entry 4. Long-term profit
Slide 9: BankMobile – Banking as a Service (BaaS)
BankMobile – Banking as a Service (BaaS) Besides student disbursements, our biggest focus over the last two years has been the development of “Banking as a Service” model • Developing own proprietary technology, some patented T-Mobile • 250 team members, with over 40% entirely focused on technology
Slide 10: BankMobile – Student Business Segment
BankMobile – Student Business Segment Acquisition and Customer for Life Strategy 10
Slide 11: Customers Bancorp, Inc. Strategic Priorities
Customers Bancorp, Inc. Strategic Priorities 11
Slide 12: Strategic Priorities
Strategic Priorities 1) Create shareholder value through improved profitability • We target an ROAA of approximately 1.25% in the next 2-3 years • We target a double digit ROTCE in the next 2-3 years • We target a NIM of 2.75%+ by year-end 2019 2) Focus and grow core banking operations • We expect t
Slide 13: Opportunity to Call Outstanding Preferred Shares
Opportunity to Call Outstanding Preferred Shares As capital builds, we will evaluate the best uses for our excess capital, which may include calling our preferred equity, as it becomes callable summarized below: Preferred Amount Out Date Callable Current Rate Annual Cost Annual cost per Class ($000s
Slide 14: Strategic Priorities: Improving Profitability
Strategic Priorities: Improving Profitability We target an ROAA of approximately 1.25% in 2- ROAA Trajectory 3 years. We can get there through: • Achieving a 2.75% NIM • Eliminating BankMobile losses • Other profitability improvements • Improving efficiency • Growth in fee income • BankMobile profit
Slide 15: Strategic Priorities: Improving our Mix
Strategic Priorities: Improving our Mix Projected Balance Sheet Mix Shifts 2019 YTD Ending Balance Sheet ($ in millions) Dec 2017 Dec 2018 Mar 2019 Change Targeted Balance Sheet Shifts From December 2018 through December 2019 Interest Earning Deposits 126 44 76 31 Investment Securities 471 665 678 1
Slide 16: 2019 Deposits: Growth In The Right Areas
2019 Deposits: Growth In The Right Areas Deposit Growth 9.0 8.0 $2.4 7.0 $1.6 $2.1 $1.7 6.0 $1.9 5.0 4.0 $3.9 $3.7 $3.4 $3.5 $3.5 3.0 Deposits ($ in Billions)Deposits in ($ 2.0 $2.2 $2.2 1.0 $1.8 $1.7 $1.9 Growth - Mar 2018 Jun 2018 Sep 2018 Dec 2018 Mar 2019 QoQ YoY CD's $1.9 B $2.1 B $2.4 B $1.7 B
Slide 17: Q1 2019 Loans
Q1 2019 Loans Loan Growth $12 4.48% 4.35% 4.38% 4.37% 4.5% 4.10% $10 4.0% $0.6 $0.3 $0.9 $0.6 $0.7 3.5% $8 $1.9 B $2.0 B 3.0% $1.6 B $1.5 B $1.5 B 2.5% $6 $1.6 $1.8 $1.8 $1.9 $2.0 2.0% Yield Loanson Loans ($ in Billions) $4 1.5% $3.6 $3.5 $3.5 $3.3 $3.2 1.0% $2 0.5% $1.3 $1.2 $1.3 $1.2 $1.2 Growth $
Slide 18: Outstanding Credit Quality
Outstanding Credit Quality Credit metrics remain better than peers NPLs to Total Loans Net Charge Offs / Average Total Loans 2.06% 2.25% 0.48% 0.45% 0.47% 0.45% 0.50% 0.42% 1.70% 1.70% 1.75% 0.40% 1.30% 1.18% 1.25% 1.11% 0.30% 0.92% 0.85% 0.19% 0.80% 0.74% 0.20% 0.16% 0.15% 0.18% 0.75% 0.15% 0.30% 0
Slide 19: Superior Operating Efficiency and Costs
Superior Operating Efficiency and Costs Our Customers Bank Business Banking Segment operating costs(2), as a percentage of average assets, are at least 100 bps lower than peers and approximately 150 bps lower than the industry Total Operating Costs as a % of Average Assets (1) (1) Source: S&P Global
Slide 20: Outlook 2019
Outlook 2019: • On track to earn at least $2.21 of EPS in 2019 • Net Interest Income • Net Interest Margin: Expansion through 2019 to 2.75%+ by Q4 2019, with a full-year net interest margin above 2.70% • Loans and Deposits: Average earning assets will be roughly equal to 2018 average earning assets.
Slide 21: Contacts
Contacts Company: Carla Leibold, CFO Tel: 484-923-8802 cleibold@customersbank.com Jay Sidhu Chairman & CEO Tel: 610-935-8693 jsidhu@customersbank.com Bob Ramsey Director of IR and Strategic Planning Tel: 484-926-7118 rramsey@customersbank.com 21
Slide 22: Appendix A: Q1 2019 Financial Highlights
Customers Bancorp, Inc. Appendix A Q1 2019 Financial Highlights 22
Slide 23: Q1 2019 Key Financial Results
Q1 2019 Key Financial Results Customers Bank Business Consolidated Banking Segment GAAP Diluted Earnings Per Share (EPS) $0.38 $0.38 YOY Change -100% -100% GAAP Net Income Available to Common ($ millions) $11.8 $12.0 Core Earnings ($ in millions)(1) $11.8 $12.0 Tangible Book Value (TBV)(1) $23.92 Re
Slide 24: Q1 2019 Consolidated Results
Q1 2019 Consolidated Results GAAP vs. Core EPS(1) $0.70 Q1 2019 Net Income to Common Shareholders of $0.64 $0.64 $11.8 million, and Diluted Earnings Per Common $0.60 $0.64 $0.62 $0.62 Share of $0.38. $0.50 $0.53 • $0.38 of diluted EPS from the Customers Bank Business Banking segment $0.40 $0.44 $0.3
Slide 25: Q1 2019 Highlights: Customers Bank Business Banking Segment
Q1 2019 Highlights: Customers Bank Business Banking Segment Customers Bank Business Banking Segment GAAP vs. Core EPS(1) Customers Bank Business Banking segment Q1 2019 profits of $12.0 million (or $0.38 per diluted share) Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Bank Segment GAAP $0.67 $0.72 $0.26 $
Slide 26: Q1 2019 Highlights: BankMobile Segment
Q1 2019 Highlights: BankMobile Segment BankMobile Segment GAAP vs. Core EPS(1) $0.00 -$0.01-$0.01 -$0.02 -$0.03-$0.03 BankMobile segment loss of $163 thousand (or -$0.01 -$0.04 per diluted share) in Q1 2019 -$0.06 • BankMobile deposits averaged $635 million in Q1 2019 -$0.08 -$0.08 -$0.09 • BankMobi
Slide 27: Appendix B: BankMobile Segment Expanded Financials
BankMobile Segment Appendix B Expanded Financials 27
Slide 28: BankMobile Segment Expanded Financials
BankMobile Segment Expanded Financials BankMobile Segment Income Statement ($ in 000s), Except Per Share Data Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Interest Income $0 $0 $0 $0 $0 $2 $1 $2 $1 $0 $2 $1,344 $2,590 Interest Expense $4 $5
Slide 29: Appendix C: Reconciliation of Non-GAAP Measures
Customers Bancorp, Inc. Appendix C Reconciliation of Non-GAAP Measures 29
Slide 30: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our results of operations and financial condition relative to other financial institutions. Present
Slide 31: Core Earnings Reconciliation
Reconciliation of Non-GAAP Measures - Unaudited Core Earnings - Customers Bancorp, Inc. Consolidated ($ in thousands, not including per share amounts) Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 US D Per Share US D Per Share US D Per Share US D Per Share US D Per Share GAAP net income to common sharehol
Slide 32: Core Loss - BankMobile Segment
Reconciliation of Non-GAAP Measures - Unaudited Core Loss - BankMobile Segment ($ in thousands, not including per share amounts) Q1 2019 US D Per Share GAAP net loss to common shareholders $ (163) $ (0.01) Reconciling items (after tax): Merger and acquisition related expenses - - Catch-up depreciati
Slide 33: Tangible Book Value per Common Share
Reconciliation of Non-GAAP Measures - Unaudited Tangible Book Value per Common Share - Customers Bancorp, Inc. Consolidated ($ in thousands, except per share data) Q1 2019 Q4 2018 Q4 2017 Q4 2016 Q4 2015 Q4 2014 Q4 2013 GAAP -Total Shareholders' Equity $ 978,373 $ 956,816 $ 920,964 $ 855,872 $ 553,9
Slide 34: Core Return on Average Assets
Reconciliation of Non-GAAP Measures - Unaudited Core Return on Average Assets - Core Return on Average Assets - Customers Bancorp, Inc. Consolidated ($ in thousands) Customers Bank Business Banking Segment ($ in thousands) Q1 2019 FY 2018 Q1 2019 GAAP net income $ 15,440 $ 71,695 GAAP net income $ 1
Slide 35: Forward-Looking Statements
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 f
Slide 36: Forward-Looking Statements (Cont.)
Forward-Looking Statements (Cont.) • 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 Ba
Slide 37: Forward-Looking Statements (Cont.)
Forward-Looking Statements (Cont.) • 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 impleme