Customers Bancorp, Inc · NYSE:CUBI

Customers Bancorp — Investor Presentation (January 2018)

39 slides from Customers Bancorp's investor presentation, Jan 24, 2018

  1. Slide 1: Highly Focused, Above Average Growth Bank Holding Company Investor Presentation

    Highly Focused, Above Average Growth Bank Holding Company Investor Presentation January, 2018 NYSE: CUBI Member FDIC

  2. Slide 2: Forward-Looking Statements

    2 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

  3. Slide 3: Forward-Looking Statements

    3 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; •

  4. Slide 4: Forward-Looking Statements

    4 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 cha

  5. Slide 5: Investment Proposition

    5 Investment Proposition Highly Focused, Innovative, Relationship Banking Based Commercial Bank Providing; Business bank with a unique private banking service model; $10 billion in assets and growing Strong Organic Growth, Well Capitalized, Branch Lite Bank in Attractive Markets Highly skilled teams

  6. Slide 6: Top Strategic Priorities

    6 Top Strategic Priorities • Strengthen Capital • At December 31, 2017, Customers substantially achieved all capital targets • Targets: 7.0% TCE, 9.0% Tier 1 Leverage, 9.0% CET1, 11% Tier 1 Risk Based, and 13% Total Risk Based • Grow and Successfully Divest BankMobile in 2018 • Announced on October

  7. Slide 7: 2018 Outlook

    7 2018 Outlook Community Business Banking: targeting diluted EPS of $2.75 to $3.00 • This is our core franchise which will remain after the spin-off and merger of BankMobile is complete in mid-2018 • 12% to 15% growth in total assets • FTE net interest margin between 2.70% to 2.80% • Efficiency rati

  8. Slide 8: Q4 2017 and 2017 Consolidated Results

    8 Q4 2017 and 2017 Consolidated Results • Q4 2017 Net Income to Common Shareholders of $18.0 million, and Diluted Earnings Per Common Share of $0.55. Results include a deferred tax asset re-measurement charge of $5.5 million ($0.17 per diluted share) and a $7.3 million benefit from exercise of emplo

  9. Slide 9: Q4 2017 Highlights: Community Business Banking Segment

    9 Q4 2017 Highlights: Community Business Banking Segment Community Business Banking segment Q4 2017 profits of $22.2 million ($0.68 per diluted share) and 2017 profits of $77.6 million ($2.38 per diluted share) • Adjusted to exclude Religare losses and securities gains on sales of investment securit

  10. Slide 10: 2017 Q4 Organic Loan Growth

    10 2017 Q4 Organic Loan Growth Q4 2017 Total Loans Up 5% YOY to $8.7 Billion • 19% growth in C&I (excluding commercial loans to mortgage companies) • Customers' loans subject to regulatory CRE concentration guidelines had 3 year cumulative growth of 88% in 2017, a deceleration from 222% in 2016. Adj

  11. Slide 11: 2017 Q4 NIM: +17 bps sequentially

    11 2017 Q4 NIM: +17 bps sequentially; -5 bps from Q4 2016 NIM Trends: • FTE NIM(1) expanded17 bps sequentially to 2.79%, due largely to favorable mix shift in assets and liabilities given planned balance sheet reductions, and a rebound prepayments. • NIM narrowed 5 bps from the year ago period, prim

  12. Slide 12: Q4 2017 Highlights: BankMobile Segment

    12 Q4 2017 Highlights: BankMobile Segment Source: Company data BankMobile segment loss of $4.2 million (-$0.13 per diluted share) in Q4 2017 • BankMobile processed over $9.5 billion of student loan disbursements in 2017. • BankMobile deposits averaged $558 million in Q4 2017, a 2% increase over Q4 2

  13. Slide 13: BankMobile Segment Expanded Financials

    13 BankMobile Segment Expanded Financials Source: Company data BankMobile Segment Income Statement ($ in 000s) Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Interest income $3 $3 $4 $10 $15 $7 $7 $10 Interest expense $7 $7 $7 $17 $20 $18 $16 $15 Fund Transfer Pricing $1,723 $1,306

  14. Slide 14: BankMobile Spin-off / Merger Key Steps

    14 BankMobile Spin-off / Merger Key Steps CUBI Shareholders CUBI Customers Bank BankMobile Technologies (BMT) 1 4 32 Flagship Shareholders New Investors Flagship Flagship Raises Equity Event Target Date Customers announced spin-off of BankMobile and merger of BankMobile into Flagship Community Bank

  15. Slide 15: Capital Plan: Internal Targets are Within Sight

    15 Capital Plan: Internal Targets are Within Sight The Q4 2017 reduction in balance sheet size boosted capital ratios at least 50 bps Ratio Regulatory Capital Requirement(1) Internal Target Consolidated Bancorp 2017 Q4 (Est.) Customers Bank Sub 2017 Q4 (Est.) Tier 1 Leverage >=5.00% >=9.00% 8.94% 9.

  16. Slide 16: Customers Bank Executing On Our Unique High Performing Banking Model

    16 Customers Bank Executing On Our Unique High Performing Banking Model

  17. Slide 17: Unique Single Point of Contact Model

    17 Unique Single Point of Contact Model Customer Centric Experienced Leadership Branch Lite Private Banking Source Model High Tech / High Touch Excellence in Service Strong Asset Quality Superior Risk Management Customers Business Model Approach to Winning Model Relationship driven but never deviate

  18. Slide 18: Banking Strategy – Community Business Banking

    18 Very Experienced Teams Exceptional Service Risk Based Incentive Compensation Banking Strategy – Community Business Banking Community Business Bank is Focused on the following businesses: • Banking Privately Held Businesses – Commercial C&I loans are 39% of the portfolio • Manufacturing, service,

  19. Slide 19: Our Competitive Advantage: A Highly Experienced Management Team

    19 Our Competitive Advantage: A Highly Experienced Management Team Name Title Years of Banking Experience Background Jay S. Sidhu Chairman & CEO 42 Chairman and CEO of Sovereign Bank & Sovereign Bancorp, Inc. Richard A. Ehst President & COO 50 EVP, Commercial Middle Market, Regional President and Ma

  20. Slide 20: Performance Trend

    20 Performance Trend Source: SNL Financial Note: Chart reflect 5 year period through January 18, 2018 $0.35 $1.57 $1.30 $1.55 $1.96 $2.31 $1.40 $0 $10 $20 $30 $40 $50 $60 $70 $80 2011 2012 2013 2014 2015 2016 Ytd 2017 Net Income & Earnings Per Share Net Income Available to Common Shareholders Fully

  21. Slide 21: Results in: Organic Growth of Deposits with Controlled Costs

    21 Results in: Organic Growth of Deposits with Controlled Costs Source: Company data. Total Deposits per Branch excludes BankMobile Student Deposits and Corporate / Wholesale Deposits Total Deposit Growth ($mm) Average DDA Growth ($mm) Cost of Deposits Total Deposits per Branch ($mm) Customers’ stra

  22. Slide 22: Lending Strategy High Growth with Strong Credit Quality

    22 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 ma

  23. Slide 23: Build an Outstanding Loan Quality Portfolio

    23 NPL Source: SNL Financial, Company data. Peer data consists of Northeast and Mid-Atlantic banks and thrifts with comparable size in assets and loan portfolios (excluding banks with large residential mortgage loan portfolios). Industry data includes all commercial and savings banks. Peer and Indus

  24. Slide 24: C&I & Owner Occupied CRE Banking Strategy

    24 C&I & Owner Occupied CRE Banking Strategy Private & Commercial Banking  Target companies with up to $100 million annual revenues  Single point of contact  NE, NY, PA & NJ markets  SBA loans originated by small business relationship managers Banking Mortgage Companies  Private banking focused

  25. Slide 25: Multi-Family Banking Strategy

    25 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 portfolios  Private banking approach  Focus Markets: New York & Philadelphia MSAs  Average Loan Size: $6.8 million  Remo

  26. Slide 26: Building Efficient Operations

    26 Staff Expense Ratio Community Banking Segment Building Efficient Operations Source: SNL Financial, Company data based on Community Banking Segment. Peer data consists of Northeast and Mid-Atlantic banks and thrifts with comparable size in assets and loan portfolios (excluding banks with large res

  27. Slide 27: Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth

    27 Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth Net Interest Income ($mm) (1) (1) Source: Company data (2) NII Simulation based on ALM model data and assumes a flat balance sheet with no volume increases or decline with the desired basis points increase ramped

  28. Slide 28: Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth

    28 Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth • Strategy execution has produced superior growth in revenues and earnings Efficiency Ratio(1) (1) Source: Company data (2) Non-GAAP measure calculated as GAAP net income available to common shareholders excludin

  29. Slide 29: Building Customers Bank to Provide Superior Returns to Investors

    29 Tangible BV per Share (1) Building Customers Bank to Provide Superior Returns to Investors Recent Performance Results Financial Performance Targets (1) Non-GAAP measure calculated as GAAP total shareholders equity less preferred stock, less goodwill and other intangibles divided by common shares

  30. Slide 30: Contacts

    30 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

  31. Slide 31: Non-GAAP Measures Disclosure

    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 non-GAAP financial measures exclude from correspo

  32. Slide 32: Tangible Common Equity to Tangible Assets

    32 Tangible Common Equity to Tangible Assets - Customers Bancorp, Inc. Consolidated ($ in thousands) 2017 2016 Q4 2017 Q3 2017 GAAP - Total Shareholders' Equity 920,964$ 855,872$ 920,964$ 910,642$ Reconciling Items: Preferred Stock (217,471) (217,471) (217,471) (217,471) Goodwill and Other Intangibl

  33. Slide 33: Tangible Book Value per Common Share

    33 Tangible Book Value per Common Share - Customers Bancorp, Inc. Consolidated ($ in thousands, except per share data) 2017 2016 2015 2014 2013 2012 GAAP -Total Shareholders' Equity 920,964$ 855,872$ 553,902$ 443,145$ 386,623$ 269,475$ Reconciling Items: Preferred Stock (217,471) (217,471) (55,569)

  34. Slide 34: Adjusted Net Income to Common Shareholders - Consolidated

    34 Adjusted Net Income to Common Shareholders - Customers Bancorp, Inc. Consolidated ($ in thousands, not including per share amounts) Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income to common shareholders $ 18,000 $ 0.55

  35. Slide 35: Adjusted Net Income to Common Shareholders - Community Banking Business Segment

    35 Adjusted Net Income to Common Shareholders - Community Banking Business Segment ($ in thousands, not including per share amounts) Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income to common shareholders $ 22,240 $ 0.68 11

  36. Slide 36: Adjusted Net Income (Loss) to Common Shareholders - BankMobile Segment

    Adjusted Net Income (Loss) to Common Shareholders - BankMobile Segment ($ in thousands, not including per share amounts) Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income (loss) to common shareholders $ (4,240) $ (0.13) (6,9

  37. Slide 37: Adjusted Community Banking Business Segment Net Income Available to Common Shareholders

    37 Adjusted Community Banking Business Segment Net Income Available to Common Shareholders 2017 2016 2015 2014 2013 2012 GAAP net income available to common shareholders 77,567$ 74,500 56,596 41,855 32,910 23,818 Reconciling Items (after tax): Loss of deferred tax asset for Religare impairment 4,898

  38. Slide 38: Adjusted Non-interest Income

    38 Adjusted Non-interest Income ($ in thousands) 2017 2016 2015 2014 2013 2012 GAAP Non-interest income 78,910$ 56,370$ 27,717$ 25,126$ 22,703$ 28,958$ Reconciling Items: Religare impairment 12,934 7,262 - - - - Gains on sales of investment securities (8,800) (25) 85 (3,191) (1,274) (9,017) Adjusted

  39. Slide 39: Net Interest Margin, tax equivalent

    39 Customers Bancorp, Inc. Consolidated - Net Interest Margin, tax equivalent 2017 2016 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 GAAP Net interest income $ 267,343 $ 249,497 $ 68,300 $ 68,019 $ 68,606 $ 62,418 $ 64,128 Tax-equivalent adjustment 645 390 245 203 104 93 92 Net interest income tax equiva

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