Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Q3 2018 Earnings Presentation
28 slides from Customers Bancorp's earnings presentation, Oct 25, 2018
Slide 1: Executing On Our Unique Higher Performing Banking Model
Executing On Our Unique Higher Performing Banking Model Q3 Earnings Call Investor Presentation October, 2018 Member FDIC NYSE: CUBI
Slide 2: Strategic Priorities
Strategic Priorities 1) Create shareholder value through improved profitability • We target an ROAA of 1.25% in the next 3-5 years • We target a double digit ROTCE in the next 3 years • We target a NIM of 2.75%+ in the next 12-18 months 2) Focus and grow core banking operations • We expect to grow o
Slide 3: Strategic Priorities: Improving Profitability
Strategic Priorities: Improving Profitability NIM Trajectory Profitability 2.75%+ • We expect to reach our NIM target of 2.75%+ by the end of 2019 2.47% • We target an ROA of 1.25% in 3-5 years, double digit ROTCE. We can get there with a: • 2.75% NIM • 52% efficiency • growth in fee income. Q3 '18
Slide 4: Investment Proposition
Investment Proposition Highly Focused, Innovative, Relationship Banking Based Commercial Bank Business bank with a unique private banking service model; approximately $10 billion in assets Highly skilled teams targeting privately held businesses and high net worth families Strong Organic Growth, Wel
Slide 5: Customers Bancorp, Inc. Q3'18 Financial Results
Customers Bancorp, Inc. Q3’18 Financial Results 5
Slide 6: Q3 2018 Key Financial Results
Q3 2018 Key Financial Results Community Business Banking Consolidated Segment Valuation (3) GAAP Diluted Earnings Per Share (EPS) $0.07 $0.26 Oct 24 Price $18.60 "Adjusted" Diluted Earnings Per Share (EPS) (1) $0.62 $0.73 P/E 2018 8.2x YOY Change 29% 15% P/E 2019 8.2x (2) GAAP Net Income Available t
Slide 7: Q3 2018 Consolidated Results
Q3 2018 Consolidated Results GAAP vs. Adjusted EPS(1) $0.70 Q3 2018 Net Income to Common Shareholders of $0.64 $0.64 $0.64 $2.4 million, and Diluted Earnings Per Common $0.60 $0.62 $0.62 Share of $0.07. $0.55 $0.56 $0.50 • 29% year-over-year growth in adjusted earnings $0.48 per share(1) $0.40 • $0.
Slide 8: Q3 2018 Highlights: Community Business Banking Segment
Q3 2018 Highlights: Community Business Banking Segment Community Business Banking Segment GAAP vs. Adjusted EPS(1) $0.80 $0.70 $0.72$0.73 $0.73 Community Business Banking segment Q3 2018 profits of $8.3 $0.68$0.68 $0.67$0.67 $0.60 $0.64 million (or $0.26 per diluted share); adjusted segment profits
Slide 9: Q3 2018 Deposits: Growth Accelerated in Q3'18
Q3 2018 Deposits: Growth Accelerated in Q3’18 YTD Deposit Growth $9.0 $8.5 Billions $8.0 $7.3 $7.0 YTD Growth: $6.8 $2.4 $7.0 Time: +26% We are improving our funding mix as we $2.1 replace higher cost funding with lower cost $6.0 $1.9 $1.9 core deposits from BankMobile, our Digital Direct Bank, and
Slide 10: Q3 2018 NIM
Q3 2018 NIM Net Interest Income FTE NIM(1) narrowed 15 bps sequentially to 2.47% $68.0 $68.3 $67.3 $65.0 $64.0 • 6 bps NIM benefit from asset yields 4.18% 3.97% 3.97% 4.24% • -4 bps headwind from reduction in prepayment 3.77% income 2.79% 2.67% • +11 bps benefit from increase in asset yields 2.62% 2
Slide 11: Loan Repricing Characteristics
Loan Repricing Characteristics Loan Repricing by Segment, at September 30, 2018 • 84% of our C&I loans, including loans to mortgage companies, 40% of our CRE loans, and 13% of our Multifamily loans reprice within 1 year • C&I loans (including those to mortgage companies) make up 38% of our total loa
Slide 12: Q3 2018 Loans
Q3 2018 Loans Loan Growth $12 5.0% 4.38% 4.26% 4.5% 3.98% $10 3.88% 3.81% 3.76% 4.0% $0.3 $0.6 $0.3 3.5% $8 $0.4 3.0% $3.4 $0.4 $3.5 $6 $3.4 2.5% $2.9 2.0% $4 $2.1 Loans on Yield Loans ($ in Billions) $0.3 1.5% $3.6 $3.5 $2.9 $3.2 $1.3 1.0% $2 $2.3 $1.1 0.5% $0.9 $1.0 $1.3 $1.3 $1.3 $0 $0.6 0.0% 201
Slide 13: Outstanding Credit Quality
Outstanding Credit Quality Credit metrics remain better than peers NPL Net Charge Offs 3.00% 0.80% 2.64% 0.68% 0.70% 2.50% 2.06% 0.60% 2.00% 0.48% 1.70% 1.70% 0.50% 0.45% 0.47% 0.45% 1.48% 0.42% 1.50% 1.30% 0.40% 1.18% 1.21% 0.30% 0.92% 0.30% 1.00% 0.85% 0.80% 0.78% 0.21% 0.60% 0.19% 0.20% 0.16% 0.5
Slide 14: Superior Operating Efficiency and Costs
Superior Operating Efficiency and Costs Our Community Banking Segment operating costs, as a percentage of assets, are at least 100 bps lower than peers and at least 175 bps lower than the industry Total Operating Costs as a % of Average Assets (1) 3.50% 3.26% 3.17% 3.13% 3.18% 3.03% 3.00% 3.08% 2.87
Slide 15: Q3 2018 Highlights: BankMobile Segment
Q3 2018 Highlights: BankMobile Segment BankMobile Segment GAAP vs. Adjusted EPS(1) $0.00 BankMobile segment loss of $5.8 million (or -$0.18 per diluted -$0.03-$0.03 -$0.05 share) in Q3 2018, and adjusted loss of $3.6 million (or -$0.11 per diluted share) -$0.08 -$0.10 • BankMobile deposits averaged
Slide 16: BankMobile Segment Expanded Financials
BankMobile Segment Expanded Financials BankMobile Segment Income Statement ($ in 000s), Except Per Share Data Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Interest income $3 $3 $4 $11 $15 $7 $7 $10 $9 $9 $14 Interest expense $7 $7 $7 $17 $20 $18 $16 $15 $16
Slide 17: Customers Bank Single Point of Contact Model
Customers Bank Single Point of Contact Model 17
Slide 18: Customers' Single Point of Contact Model
Customers’ Single Point of Contact Model Private Banking High Tech / Service High Touch Model Excellence in Branch Lite Service Experienced Strong Asset Leadership Quality Unique Private Customer Banking Model Superior Risk Centric Management Approach to Winning Model Relationship driven but never d
Slide 19: Banking Strategy – Customers Bank
Banking Strategy – Customers Bank Very Experienced Teams Exceptional Service Risk Based Incentive Compensation Business Banking Focus - ~95% of Community Business Banking Segment revenues are from commercial business units 19
Slide 20: Contacts
Contacts Company: Robert Wahlman, CFO Tel: 610-743-8074 rwahlman@customersbank.com Jay Sidhu Chairman & CEO Tel: 610-935-8693 jsidhu@customersbank.com Bob Ramsey Director of IR and Strategic Planning Tel: 484-926-7118 rramsey@customersbank.com 20
Slide 21: 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 22: Forward-Looking Statements (Cont.)
Forward-Looking Statements (Cont.) • 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 Ba
Slide 23: Forward-Looking Statements (Cont.)
Forward-Looking Statements (Cont.) • 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 impleme
Slide 24: 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 results of operations and financial condition relative to other financial institutions. These n
Slide 25: Reconciliation of Non-GAAP Measures - Adjusted Net Income to Common Shareholders
Reconciliation of Non-GAAP Measures - Unaudited Adjusted Net Income to Common Shareholders - Customers Bancorp, Inc. Consolidated ($ in thousands, not including per share amounts) Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 US D Per Share US D Per Share US D Per Share US D Per Share US D Per Share GAAP
Slide 26: Reconciliation of Non-GAAP Measures - Adjusted Net Loss, BankMobile
Reconciliation of Non-GAAP Measures - Unaudited Adjusted Net Loss to Common Shareholders - BankMobile Segment ($ in thousands, not including per share amounts) Q3 2018 Q2 2018 Q1 2018 US D Per Share US D Per Share US D Per Share GAAP net loss to common shareholders $ (5,842) $ (0.18) $ (3,346) $ (0.
Slide 27: Reconciliation of Non-GAAP Measures - Tangible Book Value per Share
Reconciliation of Non-GAAP Measures - Unaudited Tangible Book Value per Common Share - Customers Bancorp, Inc. Consolidated ($ in thousands, except per share data) Q3 2018 2017 2016 2015 2014 2013 GAAP -Total Shareholders' Equity $ 954,812 $ 920,964 $ 855,872 $ 553,902 $ 443,145 $ 386,623 Reconcilin
Slide 28: Reconciliation of Non-GAAP Measures - Adjusted Return on Average Assets
Reconciliation of Non-GAAP Measures - Unaudited Adjusted Return on Average Assets - Customers Bancorp, Inc. Adjusted Return on Average Assets - Community Banking Business Consolidated ($ in thousands) Segment ($ in thousands) Q3 2018 Q3 2018 GAAP net income $ 6,029 GAAP net income $ 11,871 Reconcili