Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — SPAC Merger (December 2020)
47 slides from Customers Bancorp's SPAC merger presentation, Dec 11, 2020
Slide 1: BM Technologies: Proposed Divestiture and Combination of BankMobile and Megalith
BM Technologies, Inc. created by the Business Combination of BankMobile Technologies & Megalith Financial Acquisition A Banking - as - a - Service pioneer, enabling non - banks to build financial services for their customers Proposed Divestiture and Combination of BankMobile Technologies & Megalith
Slide 2: Disclaimer
2 | Disclaimer This presentation (the “Presentation”) contemplates the purchase by Megalith Financial Acquisition (“MFAC”) of BankMobile Tec hno logies, Inc. (“BankMobile” or the “Company”) from Customers Bank, by which BankMobile will become a subsidiary of MFAC (“the Transaction”). BankMobile is N
Slide 3: Table of Contents
Table of Contents I. Introduction II. Transaction Summary III. BankMobile Overview IV. Financial Information V. Appendix
Slide 4: Management Presenting
4 | Management Presenting Luvleen Sidhu CEO and Co - Founder Bob Ramsey Chief Financial Officer Industry Experience 20+ Years Industry Experience 9+ Years FinTech Woman of the Year (1) • Luvleen Sidhu is the Chief Executive Officer and Co - Founder of BankMobile • After graduating from Harvard and W
Slide 5: Q3 2020 Update and Other Key Developments
5 | Other Key Developments Q3 2020 Update Higher Ed Business Adapts to COVID Q3 Financial Overview Continued focus on Operating Leverage Strong Growth • Q3 pro forma core revenue of $18.2mm, represents 19.5% YoY growth (1) • Q3 pro forma core EBITDA of $3.6mm (1) • YTD pro forma core EBITDA of $2.0m
Slide 6: Where Does BankMobile Technologies Stand Today?
6 | Where Does BankMobile Technologies Stand Today? Delivering Full - Featured Digital Banking Platform to Large Scale Non - Bank Partners x Customer - centric approach x Provides an affordable, easy - to - use product x Simplifies banking for the consumer x Creates customers for life with full suit
Slide 7: Consumers Are Recalibrating Their Banking Needs
7 | Consumers Are Recalibrating Their Banking Needs New Digital Options, Remote Necessities and Poor Customer Experiences Are Driving Change 1) Accenture Consumer Retail Banking Survey Summary, July 2017 2) PWC Consumer Banking Survey, 2019 3) Forbes, “Consumers Shelled Out $1B in Monthly Bank Maint
Slide 8: Non-Banks Want to Engage Customers via Financial Services
8 | Non - Banks Want to Engage Customers via Financial Services Higher - Ed, Retailers and Large Employers All Have Untapped Financial Use Cases Higher - Ed Institutions Higher - Ed institutions send tens of billions in payments each year to students, creating administrative complexity and resulting
Slide 9: BankMobile Solves Multiple Parties' Pain Points in One Solution
9 | BankMobile Solves Multiple Parties’ Pain Points in One Solution Resulting in High - Volume, Low - Cost Customer Acquisition B2B2C Approach Examples of BankMobile Solutions within 3 Verticals x Distribute financial aid refunds and other disbursements x Eliminate administrative burden and complexi
Slide 10: BankMobile Evolving into a Premier Brand
10 | BankMobile Evolving into a Premier Brand Fast Growing Digital Banking Technology Platforms 2020+: Rapid Expansion 2015 - 2017: Early Days x BankMobile founded in 2015 to “digitize” the traditional banking experience Product Higher - Ed x Acquired Higher One’s Student Checking and Refund Disburs
Slide 11: Transaction Structure
11 | ▪ Customers has entered into a definitive agreement to divest BankMobile Technologies Transaction Structure (1) ▪ Transaction valued at an implied post - money enterprise value of $140mm (2) , which equates to 1.3x multiple on 2021E Revenue of $104.0mm (3) 6.5x multiple on 2021E EBITDA of $21.5
Slide 12: Transaction Background: Why BankMobile Technologies Is Being Divested
12 | Transaction Background Why is BankMobile Technologies (“BMT”) Being Divested? Why is BMT Positioned as an Independent Company? BMT - A standalone company Benefits of Divestiture Reasons for Divestment A. BankMobile Technologies (“BMT”), a subsidiary of Customers Bank (“Customers”), will be subj
Slide 13: Business Overview
Business Overview
Slide 14: Key Investment Highlights
14 | Key Investment Highlights High - Volume, Low - Cost, Customer Acquisition Strategy 2 Our “Banking - as - a - Service” Delivers a Full - Featured Digital Banking Platform to Partners 4 Opportunity to Disrupt Massive U.S. Banking Market 1 Highly - Attractive Business Model 7 Attractive Distributi
Slide 15: Opportunity to Disrupt Massive U.S. Banking Market
15 | Opportunity to Disrupt Massive U.S. Banking Market Banks Have Consolidated, but Fragmentation Remains High 1) Source: USBL “Banks Ranked by Total Assets”, June 2019. Asset Concentration in Banking, June 2019 (1) The BankMobile Solution BankMobile is able to capture deposits for Partner Banks fr
Slide 16: High-Volume, Low-Cost Customer Acquisition Strategy
16 | $250 $350 $250 $1,500 $1,500 $400 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 Credit Cards Retail Checking Accounts Consumer Lending High - Volume, Low - Cost Customer Acquisition Strategy Implemented B2B2C Approach in the Higher - Ed and Telecom Industry 1) ARK Investment Management LLC
Slide 17: T-Mobile MONEY Partnership
17 | • BankMobile and T - Mobile partnered to launch T - Mobile MONEY in 2019 • Offers no account fees and 4% interest on balances up to $3k for T - Mobile customers • T - Mobile MONEY extended to the Sprint customers in August of 2020 • Contract was recently extended to 2023 with option to renew fo
Slide 18: Google Pay Partnership
18 | On August 3 rd 2020, BankMobile announced an execution of an agreement with Google to introduce digital bank accounts. Relationship Overview Highlights x Google Pay will provide the front - end user experience which will have some aspects unique to the higher education market from the standard
Slide 19: BankMobile Technologies Delivers a Full-Service Digital Banking Platform
19 | BankMobile Technologies Delivers a Full - Service Digital Banking Platform Key Capabilities, Products and Technology Platform BankMobile brings the whole bank to partners… … with a tailored signup and branded bank UX… … enabled by tech designed for partner integration Core Banking Systems BaaS
Slide 20: Full-Service Banking Platform for Partners' Customers
20 | continued - Deliver Full - Service Banking Platform to Partners’ Customers Attracts Customers Through Digital Channels and Provides Back - Office Support in One Solution Deposit Operations BankMobile delivers a full - service, centralized and customer - centric experience while alleviating the
Slide 21: Illustrative Competitive Landscape
21 | Complete Digital Banking Platform Illustrative Competitive Landscape Why BankMobile Wins Partnership model offering turnkey, fully branded digital banking platform. Deep experience and long history in B2B2C banking Superior service, delivering executive oversight and fully - supported implement
Slide 22: Distribution Through Market Leadership Position in Higher-Ed
22 | Distribution Through Market Leadership Position in Higher - Ed Deeply Embedded Campus Relationships Allow for Customer Acquisition and “Customer for Life” Strategy U.S. Higher - Ed Student Disbursement Market Share (1) Benefit of the Higher - Ed Business x Access to ~1 in every 3 college studen
Slide 23: Income Statement – Historical & Forecasted
23 | Income Statement – Historical & Forecasted Note: 2020 – 2022 forecasted figures incorporate additional public company cost upon consummation of the transaction. Forward lo oking financial projections assume white label business achieves significant forecasted growth. These figures are subject t
Slide 24: Key Performance Indicators
24 | $1.1bn $1.4 bn Q3' 19 YTD Q3' 20 YTD $666mm $944mm Q3' 19 Q3' 20 $1.8bn $2.1bn Q3' 19 YTD Q3' 20 YTD $597M $741mm Q3' 19 Q3' 20 Demonstrating Strong Performance Across Key Metrics Key Performance Indicators – Metrics of Company Success Note: Q3 2020 financials are still preliminary 1) Managemen
Slide 25: Higher-Ed Disbursement and Revenue Opportunities
25 | Federal & Private Colleges & Universities Loan or Grant : $10,000 Refund: $1,500 $260 Billion Total Aid and Non - Federal Loans for 2018 & 2019 (1) Disbursement Tuition : $ 8 ,500 BankMobile Revenue Opportunities Higher - Ed Partners • Subscription Fees from Higher - Ed Clients • Transaction Fe
Slide 26: Higher-Ed Business Unit Value Creation
26 | Higher - Ed Business Unit Value Creation Subscription and Other Fees Low - Cost Consumer Deposits Manage Disbursement Process Card Usage Drives Interchange Fees Paid by Merchant, Customer Pays Some Account and Usage Fees (e.g., ATM, Card Re - Issue, etc.) Account Holder Bank Partners Higher - E
Slide 27: New Business Verticals Performance
27 | New Business Verticals Performance Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 New Business Total BMT Higher Ed Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 New Business Total BMT Higher Ed EOP Serviced Deposit Balance
Slide 28: White-Label BaaS Market Opportunity
28 | White - Label BaaS Market Opportunity Key Market Attributes of Target Partners Established Brand Equity Immense, Captive Customer Base Diverse Marketing Channels Numerous Natural Checkout Moments Strong Customer Loyalty Ability to leverage market - trusted image in co - branded marketing materi
Slide 29: Competitive Advantage
29 | Competitive Economics Deep Experience Launched Partnership with T - Mobile via TMM Proven Service & Delivery Model ~2.0 Million Accounts Competitive Advantage Large Banks Unable to Compete on Interchange Alone Small Banks Unable Invest Adequate $ to Build BaaS Platform Regulators Wary of Allowi
Slide 30: Experienced Management Team
30 | Experienced Management Team Vision and Experience to Execute ~24 Years Average Industry Experience Management Team By the Numbers 254 FTEs (2) 1) 2019 LendIt Fintech Industry Awards 2) As of 10/1/2020 Luvleen Sidhu CEO and Co - Founder Bob Ramsey Chief Financial Officer Industry Experience 20+
Slide 31: Tremendous Platform Growth Opportunity
CONFIDENTIAL 31 | Tremendous Platform Growth Opportunity Multiple Levers to Accelerate Growth Expand Student Adoption and Create Long - Term Customer Relationships by Expanding Access to Credit Products Continue to Add New White - Label Partners Strategic M&A Expand Distribution Channels and Product
Slide 32: Financial Information
Financial. Information 29,240.68 ia
Slide 33: Income Statement – Pro Forma Core Historical & Forecasted
33 | Income Statement – Pro Forma Core Historical & Forecasted Note: 2020 – 2022 forecasted figures incorporate additional public company cost upon consummation of the transaction. Forward lo oking financial projections assume white label business achieves significant forecasted growth. These figure
Slide 34: Financial Summary
34 | Financial Summary Source: Company management Note: Q3’20 financial metrics are preliminary and subject to change Note: Refer to Reconciliation to Pro Forma Core Financials on page 45; Growth rates over 150% deemed not meaningful – “NM” Pro Forma Core Financial Metrics • Interchange and card rev
Slide 35: FY 2020 Update
35 | FY 2020 Update Source: Company management Note: Q3’20 financial metrics are preliminary and subject to change COVID Impact of Updated Financials Revenue Growth Returned to Expected Levels After Pandemic Related Slowdown in Early 2020 YoY Change in Pro Forma Core Revenues 2020 projections were e
Slide 36: Cost Controls and Revenue Growth Drive Operating Leverage
36 | 2019 Pro Forma 2020E 2021E 2022+ 25% Cost Controls and Revenue Growth Drive Operating Leverage Focus on Expense Control as BMT Initiatives Launch and Exit “Build” Phase OpEx Savings Rate (2) 1) Majority of savings related to reducing costs of variable services. 2020 projected savings of $10mm c
Slide 37: Pro Forma Core Revenue and Key Metrics
37 | Pro Forma Core Revenue 21% 2021E (4) • Signed Student Enrollments (“SSEs”) Source: BankMobile management 1) Preliminary Data as of the period end 9/30/2020. Non - GAAP, see slide 45 2) Represents one minus the annual SSE attrition over beginning of the year SSE count 3) Reflects last twelve - m
Slide 38: Valuation Overview of BMTX Shares Distributed to CUBI Shareholders
38 | 1.3x 6.8x 8.1x 5.3x BankMobile Bank Tech Payment Technology and Software Sol. B2B / Card Issuers & Processors 6.5x 17.7x 19.6x 15.8x BankMobile Bank Tech Payment Technology and Software Sol. B2B / Card Issuers & Processors $64 $725 $178 $400 $700 $550 $375 $667 BankMobile Chime Stash NuBank N26
Slide 39: Recognized Market Leader Positioned for Significant Growth
39 | Recognized Market Leader Premier Brand Positioned for Significant Growth Strong Financial Profile ~$66.9M 2020E Pro Forma Core Revenue 30% 2019 - 2021E Pro Forma Core Revenue CAGR Rapid Market Expansion Positioned For Significant Growth New White - Label Partner Additions Distribution Channel a
Slide 40: Appendix
Appendix
Slide 41: Key Operating Metrics Comparison Against Leading UK Digital Banks
41 | $439 $209 $460 $304 Category 1 Category 2 Category 3 Category 4 $13.0 $13.5 $13.8 $19.6 Category 1 Category 2 Category 3 Category 4 BankMobile Average Account Performance Comparison $32 $29 $27 $31 Category 1 Category 2 Category 3 Category 4 Revenue per Account (1) EOP Serviced Deposits per Acc
Slide 42: Business Model Comparables
42 | Similarities to BMT Differences to BMT “ NeoBanks ” Payments & Cards Bank - Technology Chartered, Full - Stack BaaS Business Model Comparables • Competitive product to the end consumer - digital checking and savings accounts with features that include two - day paycheck , etc • Generates the va
Slide 43: Proposed Capitalization and Ownership
43 | Share Count % of Party (millions) Total MFAC Shareholders 2.7 25.5% PIPE Investors (6) 2.8 27.2% Shares Issued to CUBI Shareholders 4.9 47.3% Total 10.4 100.0% (5) (7) Proposed Capitalization and Ownership Note: Analysis assumes $27.7 million cash held in the trust account by MFAC related to ex
Slide 44: Proposed Transaction Structure
44 | Intermediary Holding Company Proposed Transaction Structure MFAC Public shareholders have the option to: (a) continue to own, in connection with the closing, MFAC shares or (b) redeem shares for a portion of the $33.2mm in trust Megalith Financial Acquisition Corp. (“Purchaser” or “MFAC”) (NYSE
Slide 45: Preliminary Financials and Pro Forma Core Reconciliation
45 | 2019 Preliminary Financials 2020 Preliminary Financials Quarterly Financials YTD Full Year Quarterly Financials YTD ($ shown in 000s) Q1' 19 Q2' 19 Q3' 19 Q4' 19 Q3' 19 2019 Q1' 20 Q2' 20 Q3' 20 Q3' 20 Revenues $19,811 $16,995 $17,900 $17,601 $54,706 $72,307 $15,758 $15,431 $18,338 $49,527 Oper
Slide 46: Reconciliation to Non-GAAP Financial Measures
46 | Reconciliation to Non - GAAP Financial Measures Source: BankMobile management projections Note: 2021 – 2022 forecasted figures incorporate additional public company cost upon consummation of the transaction. Forward lo oking financial projections assume white label business achieves significant
Slide 47: Reconciliation to Non-GAAP Financial Measures (Continued)
47 | 2020E BankMobile Estimated Debt at Closing $40.0 Trust Cash Allocated for Debt Paydown (1) (8.8) Pro Forma Estimated Debt at Closing $31.2 Beginning BankMobile Cash $16.8 Less: BankMobile Excess Cash Used in Cash Consideration (2) (11.8) Plus: Cash Held in MFAC Trust Allocated to Balance Sheet