Slide 1: Highly Focused, Low Risk, Above Average Growth
Highly Focused, Low Risk, Above Average Growth Bank Holding Company Member FDIC Investor Presentation November, 2017 NYSE: CUBI
Slide 2: 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 3: Forward-Looking Statements
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; • ch
Slide 4: Forward-Looking Statements
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 chang
Slide 5: Investment Proposition
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 driven
Slide 6: Top Strategic Priorities
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 2018
Slide 7: Capital Plan: Internal Targets are Within Sight
Capital Plan: Internal Targets are Within Sight Planned reduction in balance sheet size boosts capital ratios ~30 bps to 50 bps Ratio Regulatory Internal Consolidated Customers Capital Target Bancorp Bank Sub Requirement(1) 2017 Q3 2017 Q3 Tier 1 Leverage >=5.00% >=9.00% 8.36% 9.43% Tier 1 Risk Base
Slide 8: BankMobile Spin-off / Merger
BankMobile Spin-off / Merger KeyKey Steps Steps in Spin-off / Merger CUBI Shareholders Flagship Shareholders New Investors 2 3 Flagship Raises CUBI Equity Flagship 4 Customers Bank 1 BankMobile Technologies (BMT) Event Target Date Sign a revised purchase and sale agreement with Flagship Community Ba
Slide 9: Why a Spin-off / Merger is the Best Option
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 char
Slide 10: Q3 2017 Highlights
Q3 2017 Highlights • 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 Adjusted Diluted Earnings Per Common Share of $0.61. Adjusted earnings are non-G
Slide 11: Q3 2017 Highlights: Community Business Banking Segment
Q3 2017 Highlights: Community Business Banking Segment Community Business Bank Segment EPS Community Business Banking segment profits of $11.0 million ($0.34 per $1.00 diluted share) $0.81 $0.78 $0.74 • Adjusted Community Business Banking segment profits of $24.0 million $0.80 $0.67 $0.58 $0.05 ($0.
Slide 12: NIM Walk: 16 bps Compression in Q3, but Expect Expansion in Q4
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 debt issued in June 2017 ($100M at 3.95% contractual rate and 4.00% effectiv
Slide 13: Q3 2017 Highlights: BankMobile Segment
Q3 2017 Highlights: BankMobile Segment Bank Mobile Segment EPS BankMobile segment loss of $6.9 million (-$0.21 per diluted $0.10 share) $0.04 • The decision to spin/merge BankMobile resulted in $4.2 million $0.05 of catch-up depreciation and amortization of expenses $‐ • Excluding this item, the Ban
Slide 14: Target Year-End Assets Below $10 Billion
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 / Merger
Slide 15: Customers Bank
Customers Bank Executing On Our Unique High Performing Banking Model 15
Slide 16: Customers Business Model
Customers Business Model Unique “Single Point High Tech / of Contact” High Touch Model Product Branch Lite Dominance Experienced Strong Asset Leadership Quality Customers Bank = High Growth Innovator / Relationships / Superior Disruptor & Innovation Performer Approach to Winning Model Relationship d
Slide 17: Banking Strategy – Community Business Banking
Banking Strategy – Community Business Banking Very Experienced Teams Exceptional Service Risk Based Incentive Compensation Community Business Bank is Focused on the following businesses: Consumer & Residential • Banking Privately Held Businesses – Commercial C&I loans are 6% 39% of the portfolio Com
Slide 18: Our Competitive Advantage: A Highly Experienced Management Team
Our Competitive Advantage: A Highly Experienced Management Team Years of Banking Name Title Experience Background Jay S. Sidhu Chairman & CEO 41 Chairman and CEO of Sovereign Bank & Sovereign Bancorp, Inc. EVP, Commercial Middle Market, Regional President and Managing Director of Corporate Richard A
Slide 19: Performance Trend
Performance Trend $80 Net Income & Earnings Per Share $2.31 $70 $1.96 $60 $1.57 $1.55 $50 $1.42 $1.30 $40 $30 $20 $0.35 $10 $0 2011 2012 2013 2014 2015 2016 Ytd 2017 Net Income Available to Common Shareholders Fully Diluted EPS 250% 200% CUBI 162% 150% 123% 100% KBW Regional 50% Bank 0% Feb‐12 Feb‐1
Slide 20: Results in: Organic Growth of Deposits with Controlled Costs
Results in: Organic Growth of Deposits with Controlled Costs Customers’ strategies of single point of contact and recruiting known teams in target markets produce rapid deposit growth with low total cost Total Deposit Growth ($mm) Average DDA Growth ($mm) $1,600 CAGR: 51% $8.0 CAGR: 31% $353 $1.3 $1
Slide 21: Lending Strategy
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 manag
Slide 22: Build an Outstanding Loan Quality Portfolio
Build an Outstanding Loan Quality Portfolio Asset Quality Indicators Continue to be Strong NPL Charge Offs 3.50% 3.33% 1.20% 1.09% 3.00% 2.64% 1.00% 2.50% 2.06% 1.83% 0.80% 0.68% 2.00% 1.70% 1.70% 1.44% 1.42% 0.60% 0.48% 0.48% 0.45% 0.45% 1.50% 1.09% 0.42% 0.91% 0.89% 0.88% 0.40% 0.28% 1.00% 0.72% 0
Slide 23: C&I & Owner Occupied CRE Banking Strategy
C&I & Owner Occupied CRE Banking Strategy Banking Privately Held Business Private & Commercial Banking Target companies with up to $100 million annual Commercial Loan and Deposit Growth ($mm) revenues $4.5 Single point of contact $4.0 LOAN CAGR: 26% NE, NY, PA & NJ markets $3.5 $4.0 $3.6 $4.0
Slide 24: Multi-Family Banking Strategy
Multi‐Family Banking Strategy Banking High Net Worth Families Focus on families that have income producing real estate in their portfolios Multi-Family Loan and Deposit Growth ($mm) Private banking approach $4.0 $3.8 Focus Markets: New York & Philadelphia $3.2 $2.9 MSAs $3.0 $2.3 Average Loa
Slide 25: Community Banking Segment Building Efficient Operations
Community Banking Segment Building Efficient Operations Staff Expense Ratio Occupancy Expense Ratio 0.50% 2.00% 1.71% 1.74% 1.71% 1.73% 1.73% 1.69% 0.37% 0.38% 0.37% 0.36% 1.45% 1.45% 0.32% 0.27% 1.43% 1.38% 1.36% 1.38% 0.39% 0.39% 0.40% 0.38% 1.03% 1.03% 0.25% 0.22% 0.35% 0.36% 0.83% 0.78% 0.75% 0.
Slide 26: Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth
Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth Net Interest Income ($mm) (1) Net Interest Income Simulation (1)(2) 3Q '17 vs. 3Q '16 3.50% Estimated Increase in Net Interest Income over Growth 3.00% the Next Twelve Months 5% $300.0 CAGR: 40% 3.01% $249.5 Q4 2.50
Slide 27: Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth
Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth • Strategy execution has produced superior growth in revenues and earnings Efficiency Ratio(1) CAGR: ‐4% 90% 78% 80% 70% 61% 59% 57% 57% 60% 55% 51% 50% 40% 30% 20% 10% 0% 2011 2012 2013 2014 2015 2016 YTD 2017 Core
Slide 28: Building Customers Bank to Provide Superior Returns to Investors
Building Customers Bank to Provide Superior Returns to Investors Tangible BV per Share (1) Recent Performance Results $24.00 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 $22.00 CAGR: 12% $20.00 ROA 0.9% 0.8% 1.1% 0.9% 0.3% $18.00 $16.00 ROCE 13.2% 10.5% 13.8% 11.8% 2.3% $14.00 NIM 2.83% 2.84% 2.73% 2.78%
Slide 29: Contacts
Contacts Company: Robert Wahlman, CFO Tel: 610‐743‐8074 rwahlman@customersbank.com Jay Sidhu Chairman & CEO Tel: 610‐301‐6476 jsidhu@customersbank.com Bob Ramsey Director of IR and Strategic Planning Tel: 484‐926‐7118 rramsey@customersbank.com 29
Slide 30: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited Tangible Book Value per Common Share ($ 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)
Slide 31: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited 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) (16,9
Slide 32: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited 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
Slide 33: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited 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 $
Slide 34: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited 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 inc
Slide 35: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited 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 fo
Slide 36: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited 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
Slide 37: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited 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-inter
Slide 38: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited 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 ta
Slide 39: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited 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
Slide 40: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non‐GAAP Measures ‐ Unaudited 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