Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Q3 2022 Earnings Presentation
41 slides from Customers Bancorp's earnings presentation, Oct 27, 2022
Slide 1: Let's take on tomorrow. Investor Presentation Q3 2022
Let’s take on tomorrow. “A Digital-Forward Super-Community Bank“ Investor Presentation: Q3 2022 October 2022
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 A Digital-Forward Super-Community Bank Customers Bancorp, Inc. NYSE: CUBI West Reading, Headquarters PA Offices1 39 FTE Employees 672 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED Market Capitalization $1.0B As of 10/21/2022 Lines of Business Total Assets $20.4B Community Cor
Slide 4: Highlights – GAAP
Highlights – GAAP Q3’22 Q3’22 (vs. Q3’21) Highlights Profitability Balance Sheet Credit Diluted EPS 3.16% $20.4B 0.14% $1.85 vs. 4.58% NIM +7% Total Assets -13 bps NPA Ratio3 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED Net Income1 1.24% $15.3B 0.95% $61.4M vs. 2.33% ROAA -1% Total Loans and Leases -0
Slide 5: Highlights – Adjusted/Core
Highlights – Adjusted/Core Q3’22 (vs. Q3’21) Q3’22 (vs. Q3’21) Highlights Profitability Balance Sheet Credit Core EPS1 Core EPS ex PPP1,2 3.18% $19.2B 0.14% $2.48 $2.30 vs. 3.24% NIM1,2 +36% Core Assets1,2 -13 bps NPA Ratio ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED -26% +140% Core Core Earnings Ear
Slide 6: Strategic initiatives positioning for the external environment
Strategic initiatives we have implemented to best position us for the current and future external environment CREDIT & PORTFOLIO MIX CAPITAL MARGIN o Growth focused in variable rate specialty lending1 o Managing balance sheet size by slowing outsized total o Loan portfolio remix expected to be compl
Slide 7: Tech-Enabled Banking: Commercial Treasury Services, Payments and BaaS
Tech-Enabled Banking: Commercial Treasury Services, Payments and BaaS CUBI’s proprietary We are reinventing banking through a cloud-based offering of 24/7 API enabled fully tech-led product suite integrated Treasury, Payments and BaaS offerings will drive: Fund Financial Tech & Venture BaaS Digital
Slide 8: Customers Bank Instant Token (CBIT) Overview
A Blockchain-based, instant payments platform to generate low- cost deposits Customers Bank Instant Token (CBIT™) Overview o API connected platform with customers An Instant Payments Tool to Serve Diverse Potential Commercial Clients in 2022 and Beyond o CBIT deposits stable at ~$1.9 billion over th
Slide 9: Balance Sheet: Loan Growth and Loan yield
Balance Sheet: Loan Growth and Loan yield Loans ex PPP1 Loan yield ex PPP1 $ billions percent Community C&I Multifamily Specialty C&I2 Consumer3 Investment CRE Loans to Mortgage Companies 6.00% +14% $14.1 $14.2 5.15% $11.9 $1.5 $1.6 5.00% 4.42% $11.3 $11.3 $1.4 ©2022 CUSTOMERS BANK / ALL RIGHTS RESE
Slide 10: Balance Sheet: Deposit Growth & Deposit cost
Balance Sheet: Deposit Growth & Deposit cost Deposits Non-interest bearing deposits Deposit cost percent $ billions Interest bearing deposits +27% 6.00% $16.8 $16.9 $17.5 $16.4 $3.0 5.00% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $4.5 $4.6 $4.7 $11.3 4.00% $8.6 $2.4 3.00% $7.1 $1.3 $1.1 $14.5 $12.3
Slide 11: Interest Rate Sensitive Earning Asset Mix
Interest Rate Sensitive Earning Asset Mix Interest earning assets mix1 Loan mix ex PPP2 Q3’22, percent percent Floating Loans Fixed Loans Community C&I Multifamily Floating Securities Fixed Securities Specialty C&I3 Consumer4 Cash Investment CRE Loans to Mortgage Companies 13% 12% 11% ©2022 CUSTOMER
Slide 12: Income Statement: Net interest income and margin
Income Statement: Net interest income and margin NII ex PPP1 NIM ex PPP2 percent $ millions +38% 6.00% $145.9 $149.4 $130.1 5.00% $115.0 $107.9 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 4.00% 3.24% 3.18% 3.00% 3.00% 2.00% 1.00% 0.00% Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 • Str
Slide 13: Paycheck Protection Program: Loans and Fees
Paycheck Protection Program: Loans and Fees PPP loans1 Fee income recognized from PPP1 $ billions Rounds 1 & 2 Round 3 $ millions $5.0 $102 $1.5 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $72 $3.3 $0.7 $2.2 $0.4 $1.6 $3.5 $30 $0.2 $1.2 $2.6 $0.2 $1.8 $15 $11 $1.3 $1.0 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q
Slide 14: Liquidity and Investment Securities Mix
Liquidity and Investment Securities Mix Liquidity Investment Securities AFS Mix (~50% floating rate) $ billions As of Q3’ 2022, percent Cash and Cash equivalents Investment securities AFS MBS & CMO ABS1 Corporates Other Investment securities HTM $4.3 $4.4 $0.3 $4.2 $0.5 $3.9 $0.4 18% $0.2 $0.5 $0.9
Slide 15: Capital: Strong Capital Position
Capital: Strong Capital Position Total risk-based capital percent 13.6% 12.9% 12.9% 12.6% 12.8% Q3’21 Q4’21 Q1’22 Q2’22 Q3’22E1 CET1 risk-based capital o AOCI negatively impacted TCE/TA excl. percent PPP2 ~0.1% in Q3’22. Total cumulative 10.4% 10.0% 9.9% 9.7% 10.1% impact of ~0.8% as of Q3’22 ©2022
Slide 16: Credit: Credit Quality and Reserves Remain Strong
Credit: Credit Quality and Reserves Remain Strong NPL $ millions o Credit quality remains excellent as evidenced by NPAs/Total Assets of only 0.14% at Q3’22 $52 $50 $44 o Reserves/NPLs was 466.3% at Q3’22 $28 $28 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 o The Bank has also undertaken several steps to minimize
Slide 17: Key Investment Highlights
Key Investment Highlights Industry leading core loan growth and deposit growth supported by best-in-class digital banking Moderating growth in this environment to maintain/expand margin, improve capital ratios while maintaining profitability. On track for $6.00 or higher Core EPS in 2023. ©2022 CUST
Slide 18: Analyst Coverage
ANALYST COVERAGE B. Riley Financial, Inc. Maxim Group Inc. Michael Diana D.A. Davidson Companies Piper Sandler Companies Peter Winter Frank Schiraldi Hovde Group Stephens Inc. David Bishop Matt Breese Jefferies Group LLC Wedbush Securities Inc. Casey Haire David Chiaverini Keefe, Bruyette & Woods In
Slide 19: Appendix
©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 19 Appendix
Slide 20: The customer is at the center of everything we do
The customer is at the center of everything we do Full service Private Business Banking • Single Point of Contact for customers (SPOC) Seasoned teams led Exceptional service by SPOC RM’s through omnichannel • Technology led expansion customer experience ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED HIG
Slide 21: Our vision for growth has remained a part of our story
Our vision for growth has remained a part of our story since the beginning WHERE WE STARTED WHERE WE ARE 2009 2022 Q3 • A Digital-Forward Super- Community Bank ~$20B Assets • Growth story remains ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED committed to maintaining best in class ~$18B credit quality D
Slide 22: Environmental, Social & Governance Report
Environmental, Social & Governance Report In total, Customers Bank Pennsylvania Housing Finance The Board created the contributed over $4 million in 2021 Agency (PHFA) recognized Environmental Social & through CRA-eligible donations, Customers Bank as a top-10 Governance Committee charitable donatio
Slide 23: Consumer loan sale transaction results in significant capital build
Consumer loan sale transaction results in significant capital build and lowers the perceived risk of the portfolio Transaction Overview Collateral Q2’22 Pool Q3’22 Sold Summary Purchase of $400 million of securities Consumer installment Customers collateralized by sold loans loan sale of $500 millio
Slide 24: Consumer Installment Loans
Consumer Installment Loans Weighted average life of ~1.7 years FICO Score1 Deb t to Income ratio Borrower Income Average FICO Score1 ~736 Average DTI ~17.9% Average borrower income ~$106k 660-679 700-749 0-9.99% 40 – 49.99% <$50K >$100K 680-699 750+ 10 – 19.99% > 50% $50K -$100K 20 – 29.99% Unknown
Slide 25: CUBI Consumer Loans – Portfolio Characteristics
CUBI Consumer Loans – Portfolio Characteristics Portfolio FICO1 score trends Portfolio borrower income trends <50k 660-679 50k-99.99k 680-699 >100k 700-749 750+ 60% 60% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 50% 47% 50% 43% 42% 43% 40% 33% 40% 39% 41% 30% 41% 30% 20% 14% 19% 20% 16% 10% 14% 4% 1
Slide 26: Consumer installment loans impairment remains well below industry levels
CUBI Consumer installment loans impairment remains well below industry levels Impairment of consumer installment loans Percent CUBI Industry 15.0 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 10.0 5.0 0.0 03/19 06/19 09/19 12/19 03/20 06/20 09/20 12/20 03/21 06/21 09/21 12/21 03/22 06/22 09/22 • CUBI p
Slide 27: Credit: Allowance for Credit Losses for Loans and Leases
Credit: Allowance for Credit Losses for Loans and Leases September 30, 2022 Allowance for Credit ($ in thousands) Amortized Cost Losses Lifetime Loss Rate Loans and Leases Receivable: Commercial: Multi-Family 2,263,268 14,244 0.63% Commercial and Industrial 6,307,803 15,131 0.24% ©2022 CUSTOMERS BAN
Slide 28: Liquidity
Liquidity Liquidity Sources ($000's) 3Q 21 4Q 21 1Q 22 2Q 22 3Q 22 YOY Change Cash and Cash Equivalents $1,052,055 $518,032 $274,600 $245,178 $404,465 ($647,589) FHLB Available Borrowing Capacity $2,031,551 $1,798,374 $3,213,767 $2,924,637 $2,999,524 $967,973 FRB Available Borrowing Capacity $186,00
Slide 29: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. Th
Slide 30: Reconciliation of Non-GAAP Measures – Core Earnings
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Earnings - Customers Bancorp ($ in thousands, except per share data) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income to common shareholders $ 61,364 $ 1.85 $ 56
Slide 31: Reconciliation of Non-GAAP Measures – Core Earnings, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Earnings, Excluding PPP - Customers Bancorp ($ in thousands, not including per share amounts) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income to common sharehol
Slide 32: Reconciliation of Non-GAAP Measures – Core Return on Average Assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Return on Average Assets - Customers Bancorp ($ in thousands) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 GAAP net income $ 63,912 $ 58,650 $ 76,761 $ 100,669 $ 116,042 Reconciling items (after tax): Net loss from discontinued operations - -
Slide 33: Reconciliation of Non-GAAP Measures – Adjusted Net Income and ROAA
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp ($ in thousands) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 GAAP net income $ 63,912 $ 58,650 $ 76,761 $ 100,669 $ 116,042 Reconciling items: Income tax expense 17,
Slide 34: Reconciliation of Non-GAAP Measures – Core Return on Average Common Equity
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Return on Average Common Equity – Customers Bancorp ($ in thousands) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 GAAP net income to common shareholders $ 61,364 $ 56,519 $ 74,896 $ 98,647 $ 110,241 Reconciling items (after tax): Net loss from
Slide 35: Reconciliation of Non-GAAP Measures – Core Efficiency Ratio
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Efficiency Ratio - Customers Bancorp ($ in thousands) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 GAAP net interest income $ 159,032 $ 164,852 $ 164,699 $ 193,694 $ 219,892 GAAP non-interest income $ (9,017) $ 12,746 $ 21,198 $ 16,991 $ 25,58
Slide 36: Reconciliation of Non-GAAP Measures – Tangible Equity
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Equity – Customers Bancorp ($ in thousands) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 GAAP - Total shareholders' equity $ 1,386,931 $ 1,353,390 $ 1,377,406 $ 1,366,217 $ 1,284,299 Reconciling items: Goodwill and other intangibles (3,629
Slide 37: Reconciliation of Non-GAAP Measures – TCE to Tangible Assets, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Common Equity to Tangible Assets, Excluding PPP - Customers Bancorp ($ in thousands) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 GAAP - Total shareholders' equity $ 1,386,931 $ 1,353,390 $ 1,377,406 $ 1,366,217 $ 1,284,299 Reconciling ite
Slide 38: Reconciliation of Non-GAAP Measures – TCE to Tangible Assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Common Equity to Tangible Assets - Customers Bancorp ($ in thousands) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 GAAP - Total shareholders' equity $ 1,386,931 $ 1,353,390 $ 1,377,406 $ 1,366,217 $ 1,284,299 Reconciling items: ©2022 CUSTO
Slide 39: Reconciliation of Non-GAAP Measures – Core Loans
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Loans (Total loans and leases, excluding PPP) – Customers Bancorp ($ in thousands) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 Total loans and leases $ 15,336,688 $ 15,664,353 $ 14,073,518 $ 14,568,885 $ 15,515,537 PPP loans (1,154,632) (1,57
Slide 40: Reconciliation of Non-GAAP Measures – Tangible Assets, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible assets, excluding PPP – Customers Bancorp ($ in thousands) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 GAAP - Total assets $ 20,367,621 $ 20,251,996 $ 19,163,708 $ 19,575,028 $ 19,108,922 Reconciling items: Goodwill and other intangibles
Slide 41: Reconciliation of Non-GAAP Measures – Net Interest Income, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Net Interest Income, Excluding PPP - Customers Bancorp ($ in thousands) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 GAAP net interest income $ 159,032 $ 164,852 $ 164,699 $ 193,694 $ 219,892 PPP net interest income (9,632) (18,946) (34,615) (78,64