Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Q3 2021 Earnings Presentation
33 slides from Customers Bancorp's earnings presentation, Oct 28, 2021
Slide 1: High Tech Forward-Thinking Bank Supported by High Touch
High Tech Forward-Thinking Bank Supported by High Touch Investor Presentation Q3 2021 NYSE: CUBI
Slide 2: Forward-Looking Statements
Forward-Looking Statements In addition to historical information, this presentation may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to
Slide 3: Customers Bancorp Snapshot
Customers Bancorp Snapshot New Line of Business or Geography in 2021 Customers Bancorp NYSE: CUBI Headquarters West Reading, PA Offices1 37 FTE Employees 623 Lines of Business Market Capitalization2 $1.5B As of 10/20/21 Community Banking Specialty Banking Digital Banking • C&I • Warehouse Lending Co
Slide 4: 3Q 2021 Highlights: Exceptional Profitability & Growth
3Q 2021 Highlights: Exceptional Profitability & Growth Core EPS1 3Q 2021 Performance (vs. 3Q 2020) $3.36 Profitability Balance Sheet Credit & Capital 3.24% $14.2B 0.27% vs. 2.86% in 3Q 2020 +2.5% -7 bps Core Earnings1 NIM1,2 Core Assets1,2 NPA Ratio $113.9M 2.35% $10.6B 1.65% vs. 0.93% in 3Q 2020 -9
Slide 5: Strategic Priorities
Strategic Priorities Commercial Consumer Digital Geographic Expansion Direct Originations Customers Bank Instant Token (“CBIT”) • New teams covering the Carolinas, bringing total • Crossed over $1B in direct Customers Bank • 24/7/365 payment solution geographic expansion to 4 YTD 2021 personal loans
Slide 6: Paycheck Protection Program: Loans and Fees
Paycheck Protection Program: Loans and Fees PPP Loan Balances1 Fee Income Recognized1 $7.0 $ in billions $100.0 $ in millions $101.6 $6.0 $80.0 $5.0 $1.9 $4.1 $4.0 $60.0 $3.5 $3.0 $40.0 $4.8 $5.0 $4.6 $2.0 $3.2 $20.0 $26.7 $25.8 $1.0 $2.2 $1.5 $17.0 $4.3 $11.9 $0.0 $0.0 2Q '20 3Q '20 4Q '20 1Q '21 2
Slide 7: Customers Bank Instant Token (CBIT) Timeline
Customers Bank Instant Token (CBIT) Timeline1 Jan-Jun Jul-Sep Sep Oct Nov/Dec Opportunity Analysis Product Testing and Digital Asset Customers Beta Launch Full Launch CUBI Formulated use cases and built Client Curation Began banking Digital Asset Fully functional platform Fully functional API connec
Slide 8: Balance Sheet: Loan Growth & Mix
Balance Sheet: Loan Growth & Mix Loan Growth 3Q 2021 Loan Mix1 $ in Billions CAGR(excl. PPP) = 8.0% (1)(2) 13% $15.8 $15.5 31% $4.6 $5.0 $10.1 $1.8 25% $8.5 $1.4 $2.4 $3.7 $2.6 $3.3 $2.3 $1.9 13% $1.6 $1.5 $1.6 $0.7 $1.4 $1.3 $1.3 $1.2 18% $2.4 $2.9 $3.3 $1.9 3 2018 2019 2020 3Q '21 Core C&I Investm
Slide 9: Balance Sheet: Deposit Growth & Mix
Balance Sheet: Deposit Growth & Mix Deposit Growth 3Q 2021 Deposit Mix $ in Billions $17.0 3% CAGR = 37% (1) $0.6 8% $1.3 29% $11.3 $5.1 $0.7 Total DDA 59% $8.6 $1.3 30% of Deposits $7.1 $1.7 $4.6 $5.0 $1.7 $0.9 $0.4 $3.5 $3.1 $2.4 30% $5.0 $0.8 $1.2 $2.4 $1.1 $1.3 Noninterest Bearing DDAs Interest
Slide 10: Income Statement: Growth in Net Interest Income & Margin
Income Statement: Growth in Net Interest Income & Margin Net Interest Income Loan Yield & Deposit Cost $ in Millions $107.8 $102.9 $97.7 $98.0 4.3% 4.4% 4.4% 4.1% 4.1% $87.5 3.3% 3.2% 3.0% 3.0% 2.9% 0.7% 0.6% 0.5% 0.5% 0.4% 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21 1,3 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21 Lo
Slide 11: Credit: Credit Quality and Reserves Remain Strong
Credit: Credit Quality and Reserves Remain Strong Nonperforming Loans Net Charge Offs NPA as a % Total Assets $ in millions $ in millions 0.38% 0.34% $8.4 0.27% 0.26% 0.24% $63.6 $70.5 $48.7 $46.5 $52.0 $10.9 $8.9 $8.3 $6.0 $7.0 $0.1 $1.6 $1.1 -$0.5 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 3Q 20 4Q 20 1Q 21 2Q
Slide 12: Capital: Risk Based Capital & Leverage
Capital: Risk Based Capital & Leverage Total Risk Based Capital2 TCE/TA excl. PPP1 13.3% 13.4% 12.4% 8.1% 11.3% 11.9% 7.7% 7.1% 6.4% 5.9% 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21E 3Q '20 4Q '20 1Q '21 2Q '21 3Q '21 • TRB capital ratio increased 240 basis points over 3Q20, • TCE/TA excl. PPP increased 36%
Slide 13: Tangible Book Value
Tangible Book Value Tangible Book Value Per Share1 35.2% YoY Growth TBV/Share1 $35.12 $40.00 Stock Price2 $47.20 $35.12 $27.92 $30.01 $31.82 Value Trading at 134% $25.97 Proposition of TBV Highlights • Significant potential upside based on peer trading levels 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21E 1 T
Slide 14: Key Accomplishments
Key Accomplishments Financial Performance Technology Driven Performance Capital Earnings CBIT Capital Ratio • Record quarterly earnings in excess • $1.5B in zero cost deposits already • Improved TCE/TA (ex. PPP)1 capital of $110 million, higher than any attracted ratios from 5.9% to 8.1% YoY annual
Slide 15: Contacts
Contacts Leadership Analysts Jay Sidhu B. Riley Financial - Steve Moss Chairman & CEO of Customers Bancorp, Inc and Executive Chairman of Customers Bank D.A. Davidson Company - Russell Gunther Sam Sidhu President of Customers Bancorp, Inc and President & CEO of Customers Bank Hovde Group - Will Curt
Slide 16: Appendix
Customers\-
Slide 17: Environmental, Social & Governance Report
Environmental, Social & Governance Report Our Communities Use of investment and philanthropic capital to expand access to economic Environmental, Social & Governance (ESG) opportunity in the communities where we do business has been core to Customers since its founding more than 10 years ago. consid
Slide 18: 2020 ESG Milestones
2020 ESG Milestones Customers Bank contributed nearly Just days after the death of George Customers Bank joined the Federal Customers Bank was the winner of $400,000 to help feed those most Floyd, the bank held a company- Home Loan Bank of Pittsburgh in the highly coveted 2020 Best in need during th
Slide 19: Credit: Loan and Lease Deferments
Credit: Loan and Lease Deferments 6/30/21 9/30/21 (1) Principal % of Principal % of (2) (2) ($'s in millions) Deferred Portfolio Deferred Portfolio C&I and Investment CRE: Commercial & Industrial $0.0 0.0% $0.0 0.0% SBA $3.4 3.5% $0.0 0.0% Investment CRE & Multi-Family $4.4 0.2% $0.0 0.0% Hotels $59
Slide 20: Credit: Allowance for Credit Losses for Loans and Leases
Credit: Allowance for Credit Losses for Loans and Leases 1 CECL Method September 30, 2021 Annualized Net Charge Off ($ in thousands) Amortized Cost Allowance for Credit Losses Lifetime Loss Rate Ratio Loans and Leases Receivable: Commercial Multi-Family $1,369,876 $4,397 0.32% 0.00% Commercial & Ind
Slide 21: Liquidity
Liquidity Liquidity Sources ($000's) 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 YOY Change Cash and Cash Equivalents $325,594 $615,264 $512,241 $393,663 $1,000,885 $675,291 FHLB Available Borrowing Capacity $929,508 $684,936 $713,673 $1,466,067 $2,031,551 $1,102,043 FRB Available Borrowing Capacity $215,000 $220
Slide 22: Consumer Installment Loans
Consumer Installment Loans FICO Score (1) Debt to Income Ratio Borrower Income 740 Avg FICO Portfolio average DTI is 20.8% $91K Avg Income 19.4% 0.5% 17.5% 17.4% 29.7% 28.8% 4.4% 29.1% 11.3% 27.4% 50.9% 21.4% 42.1% 0-9.99% 10 – 19.99% 20 – 29.99% 30 – 39.99% <$49,999 $50K -$99,999 >$100K 750+ 700-74
Slide 23: Consumer Installment Loans Performance
Consumer Installment Loans Performance CUBI Industry 16.0% 12.0% 8.0% 4.46% 4.0% 0.9% 0.0% 01/31/19 02/28/19 03/31/19 04/30/19 05/31/19 06/30/19 07/31/19 08/31/19 09/30/19 10/31/19 11/30/19 12/31/19 01/31/20 02/29/20 03/31/20 04/30/20 05/31/20 06/30/20 07/31/20 08/31/20 09/30/20 10/31/20 11/30/20 12
Slide 24: Detailed Financial Ratios
Detailed Financial Ratios 24
Slide 25: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. Th
Slide 26: Reconciliation of Non-GAAP Measures – Unaudited (Cont.)
Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Core Earnings - Customers Bancorp ($ in thousands, not including per share amounts) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income to common shareholders $ 110,241 $
Slide 27: Reconciliation of Non-GAAP Measures – Unaudited (Cont.)
Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Core Return on Average Asset - Customers Bancorp ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP net income $ 116,042 $ 61,341 $ 36,595 $ 56,245 $ 50,515 Reconciling items (after tax): Net loss from discontinued operations - - 38,
Slide 28: Reconciliation of Non-GAAP Measures – Unaudited (Cont.)
Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Core Return on Average Common Equity ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP net income to common shareholders $ 110,241 $ 58,042 $ 33,204 $ 52,831 $ 47,085 Reconciling items (after tax): Net loss from discontinued operati
Slide 29: Reconciliation of Non-GAAP Measures – Unaudited (Cont.)
Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Tangible Equity ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP - Total shareholders' equity $ 1,284,299 $ 1,250,729 $ 1,188,721 $ 1,117,086 $ 1,051,491 Reconciling items: (1) Goodwill and other intangibles (3,794) (3,853) (3,911)
Slide 30: Reconciliation of Non-GAAP Measures – Unaudited (Cont.)
Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Tangible Common Equity to Tangible Assets - Customers Bancorp ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP - Total shareholders' equity $ 1,284,299 $ 1,250,729 $ 1,188,721 $ 1,117,086 $ 1,051,491 Reconciling items: Preferred st
Slide 31: Reconciliation of Non-GAAP Measures – Unaudited (Cont.)
Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Core Assets ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP - Total assets $ 19,108,922 $ 19,635,108 $ 18,817,660 $ 18,439,248 $ 18,778,727 Reconciling items: Loans receivable, PPP (4,957,357) (6,305,056) (5,178,089) (4,561,365) (
Slide 32: Reconciliation of Non-GAAP Measures – Unaudited (Cont.)
Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Net Interest Margin, Tax Equivalent, Excluding PPP - Customers Bancorp ($ in thousands, except per share data) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 GAAP net interest income $ 219,892 $ 138,757 $ 132,731 $ 122,946 $ 107,439 PPP net interest i
Slide 33: Reconciliation of Non-GAAP Measures – Unaudited (Cont.)
Reconciliation of Non-GAAP Measures – Unaudited (Cont.) Deferments to Total loans and leases, excluding PPP ($ in thousands) Q3 2021 Q2 2021 Q1 2021 Q4 2020 Total loans and leases $ 15,515,537 $ 16,967,022 $ 16,168,306 $ 15,832,251 PPP loans (4,957,357) (6,305,056) (5,178,089) (4,561,365) Loans and