Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Investor Presentation (July 2016)
42 slides from Customers Bancorp's investor presentation, Jul 20, 2016
Slide 1: Investor Presentation July 2016
Highly Focused, Low Risk, Above Average Growth Bank Holding Company Investor PresentationJuly, 2016NYSE: CUBI Member FDIC
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
Slide 3: Forward-Looking Statements (continued)
* Forward-Looking Statements timely development and acceptance of new banking products and services and perceived overall value of these products and services by users;changes in consumer spending, borrowing and saving habits;technological changes;our ability to increase market share and control exp
Slide 4: Business bank and digital consumer bank overview
A $9.7 billion asset business bank serving privately held businesses A digital consumer bank, set up as a division of Customers Bank, serving millennials, middle income families and underbanked throughout the United States Member FDIC
Slide 5: Investment Proposition
* Investment Proposition Strong Organic Growth, Well Capitalized, Branch Lite Bank in Attractive Markets$9.7 billion asset bank with only 21 sales officesWell capitalized at 10.4% total risk based capital (estimated), 7.2% tier 1 leverage, and 5.7% tangible common equity to average tangible assetsTa
Slide 6: Banking Industry Trends
* Banking Industry Trends……How Do We Deal with These Issues Impediments to Growth External Forces Role of traditional bank branches changing very rapidlyMobile banking fastest growing channelBanks of all sizes revisiting their business strategies, revenue generation models and cost structuresTechnol
Slide 7: What is Our Business Model
* Innovator / disruptor / not branch dependentDifferentiated / Unique modelTechnology savvyProduct dominance What is Our Business Model Credit Improving – Though Banks Face a Number of Operational Headwinds Credit Quality Improved over past 5 years; some pressure emergingQuality Asset Generation Rem
Slide 8: Our Competitive Advantage: A Highly Experienced Management Team
* Our Competitive Advantage: A Highly Experienced Management Team
Slide 9: Customers Bank Executing On Our Unique High Performing Banking Model
* Customers Bank Executing On Our Unique High Performing Banking Model
Slide 10: Disciplined Model for Increasing Shareholder Value
* Disciplined Model for Increasing Shareholder Value Strong organic revenue growth + scalable infrastructure = sustainable double digit EPS = growth and increased shareholder valueA very robust risk management driven business strategyBuild tangible book value per share each quarter via earningsAny b
Slide 11: Execution Timeline
* Execution Timeline We invested in and took control of a $270 million asset Customers Bank (FKA New Century Bank)Identified existing credit problems, adequately reserved and recapitalized the bankActively worked out very extensive loan problemsRecruited experienced management team Enhanced credit a
Slide 12: Banking Strategy – Customers Bank
* Very Experienced Teams Exceptional Service Risk Based Incentive Compensation Banking Strategy – Customers Bank Business Banking Focus - ~95% of revenues come from business segmentsLoan and deposit business through these well diversified segments:Banking Privately Held Businesses – 42% of portfolio
Slide 13: Organic Growth of Deposits with Controlled Costs
* Results in: Organic Growth of Deposits with Controlled Costs Source: Company data. Total Deposit Growth ($mm) Average DDA Growth ($mm) Cost of Deposits Total Deposits per Branch ($mm) Customers’ strategies of single point of contact and recruiting known teams in target markets produce rapid deposi
Slide 14: Lending Strategy
* Lending Strategy High Growth with Strong Credit QualityContinuous recruitment and retention of high quality teamsCentralized credit committee approval for all loansLoans are stress tested for higher rates and a slower economyInsignificant delinquencies on loans originated since new management team
Slide 15: Build an Outstanding Loan Quality Portfolio
* NPL Source: SNL Financial, Company documents. Peer data consists of Northeast and Mid-Atlantic banks and thrifts with assets between $3.5 billion and $10.0 billion. Industry data includes all FDIC insured banks. Peer and Industry data as of June 30, 2016 Build an Outstanding Loan Quality Portfolio
Slide 16: C&I & Owner Occupied CRE Banking Strategy
* C&I & Owner Occupied CRE Banking Strategy Private & Commercial BankingTarget companies with up to $100 million annual revenuesVery experienced teamsFour new teams with 14 professionals added in 2015, including a new business line Equipment Finance TeamSingle point of contactNE, NY, PA & NJ markets
Slide 17: Multi-Family Banking Strategy
* Multi-Family Banking Strategy Banking High Net Worth Families Multi-Family Loan and Deposit Growth ($mm) Focus on families that have income producing real estate in their portfoliosPrivate banking approachFocus Markets: New York & Philadelphia MSAsAverage Loan Size: $5.0 – $7.0 millionRemote banki
Slide 18: Build Efficient Operations
* Staff Expense Ratio Build Efficient Operations Source: SNL Financial, Company documents. Peer data consists of Northeast and Mid-Atlantic banks and thrifts with assets between $3.5 billion and $10.0 billion. Industry data includes all FDIC insured banks. Peer and Industry data as of June 30, 2016.
Slide 19: Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth
* Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth Core Revenue ($mm) Core Net Income ($mm) (1) Net Interest Income ($mm) Strategy execution has produced superior growth in revenues and earnings Income / Expense Growth ($mm) Core income is net income before extrao
Slide 20: Building Customers to Provide Superior Returns to Investors
* Tangible BV per Share Building Customers to Provide Superior Returns to Investors Recent Performance Results Financial Performance Targets Earnings per Share Guidance / Valuation Multiples
Slide 21: Our Approach to Developing a Winning Business Model
* Our Approach to Developing a Winning Business Model Must focus on both “Relationship” or “High Touch” banking combined with “Highly Efficient” or “High Tech”. Strategy should be unique as to not be copied easilyAttract and retain best high quality talent. Business Bankers / Relationship Bankers wi
Slide 22: BankMobile – A division of Customers Bank
Customers Bancorp, Inc. darkmcble, UTIONARY A division of Customers Bank 22
Slide 23: Startling Facts about Banks
* Startling Facts about Banks Banks each year charge about $32 billion in overdraft fees – that’s allowing or creating over 1 billion overdrafts each year….Why??Payday lenders charge consumers another $7 billion in feesThat’s more than 3x what America spends on Breast Cancer and Lung Cancer combined
Slide 24: Creating a Virtual Bank for the Future for Consumers
* No fee or very low fee banking, 25 bps higher interest savings, line of credit, 55,000 ATM’s, Personal Banker and more, all in the palm of your handMarketing Strategy Target technology dependent younger consumers; including underserved / underbanked and middle income AmericansCapitalize on retaini
Slide 25: Executive Summary of Recent Acquisition
* Executive Summary of Recent Acquisition Strategically compelling acquisition for CUBI and transformational transaction for , making it one of the top digital banks in the USBusiness to be combined with platform marking inflection point in its developmentAssume servicing of ~2mm new student checkin
Slide 26: BankMobile Business Model – Old vs. New
* BankMobile Business Model – Old vs. New Higher One acquisition coupled with existing technology enables BankMobile to convert student customers into lifetime customers
Slide 27: BankMobile's Customer Lifecycle Ecosystem
* BankMobile’s Customer Lifecycle Ecosystem BankMobile is well positioned to be its customers' primary banking relationship throughout their lives
Slide 28: Additional option value for CUBI Shareholders
* Additional option value for CUBI Shareholders created by pro forma platform Significant Value for with Embedded Upside ~2 million active deposit customers on day oneOver 500,000 new accounts per yearPotential for long-term growth rate of 15% - 20%Existing students with automatic recurring growthUn
Slide 29: Contacts
* Contacts Company:Robert Wahlman, CFO Tel: 610-743-8074 rwahlman@customersbank.comwww.customersbank.com Jay SidhuChairman & CEOTel: 610-301-6476 jsidhu@customersbank.comwww.customersbank.com
Slide 30: Appendix
Appendix Customers = Bancorp, Inc.
Slide 31: Customers Bank Risk Management
* Customers Bank Risk Management
Slide 32: Elements of an Effective Risk Management Program
* Elements of an Effective Risk Management Program
Slide 33: ERM Framework at Customers Bancorp, Inc.
* ERM Framework at Customers Bancorp, Inc. Well Defined ERM Plan – ERM Integration into CAMELS +++++
Slide 34: Customers Bancorp, Inc. Financial Statements
* Customers Bancorp, Inc. Financial Statements
Slide 35: Income Statement (Three Months)
* Income Statement CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDI
Slide 36: Income Statement (Six Months)
* Income Statement CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDI
Slide 37: Balance Sheet
Balance Sheet Customers Bancorp, Inc. CUSTOMERS BANCORP, INC. AND SUBSIDIARIES ‘CONSOLIDATED BALANCE SHEET- UNAUDITED ‘Dolan towand) June 3, December 31, June, 20 21s 2ais ASSETS. ‘Cash and duc om banks s 46767 § 53550 $ Ioterest-caring deposits 236029 211.08 Cash and cash equivalents 312,796 264,59
Slide 38: Net Interest Margin
Net Interest Margin Customers Bancorp, Inc. CUSTOMERS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEET / NET INTEREST MARGIN(UNAUDITED) (Dollars in thousands) ice mots ended porry Marcha Parry m6 me ms Average sider Averaneygeten Avera iar Balance" 66) Batance Batance Assets Inert eng depots S 2
Slide 39: Loan Composition (Six Month Average Balance)
Loan Composition Customers Bancorp, Inc. CUSTOMERS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED) (Dollars in thousands) ‘Six month ned ene, “Tone, 2016 amis cs erase ‘Avera iclhorcont —AYETAR® yur cost ee SS Baieese SS Assets Interest caring deposits S 198938
Slide 40: Loan Composition
Loan Composition Customers Bancorp, Inc. CUSTOMERS BANCORP, INC. AND SUBSIDIARIES (Dollars in thousands) June30, December 31, June 30, 2016 2015 2018 S 3336083 $2,948,696 $2,319,263 Mortgage warehouse 2321418 1,797,753 ‘Commercial & Industrial (1) 15143,149 1,068,597, ‘Commercial Real Estate Non-Own
Slide 41: Asset Quality
* Asset Quality CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CUSTOMERS BANCORP, INC. AND SUBSIDIARI
Slide 42: Net Charge Offs
Net Charge Offs Customers Bancorp, Inc. Se CUSTOMERS BANCORP, INC. AND SUBSIDIARIES NET CHAR¢ FFS/((RECOVERIES) - UNAUDITED. For the Quarter Ended Qe Qi @ (Dollars in thousands) 2016 2016 2015 Originated Loans Multi-Family s —s —s - ‘Commercial & Industrial (1) 41 - 634 ‘Commercial Real Estate- Non-
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