Slide 1: Highly Focused, Low Risk, Above Average Growth
Highly Focused, Low Risk, Above Average Growth Bank Holding Company Investor Presentation Member FDIC February, 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 • our ability to increase market share and control expenses; • continued volatility in the credit and equity markets and its effect on the general economy; • effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as t
Slide 4: Investment Proposition
Investment Proposition Customers Bank’s BankMobile Division was Classified as Held for Sale in Customers Consolidated Financial Statements included in the January 2017 Earnings Release. Amounts presented are “Combined”, Including Both Continuing and Discontinued Operations, Unless Otherwise Indicate
Slide 5: Investment Proposition
Investment Proposition Strong Organic Growth, Well Capitalized, Branch Lite Bank in Attractive Markets § $9.4 billion asset bank with only 21 sales offices § Well capitalized at 12.9% total risk based capital (estimated), 9.1% tier 1 leverage, and 6.7% tangible common equity to average tangible asse
Slide 6: Investment Proposition
Investment Proposition Strong Credit Quality & Low Interest Rate Risk § 0.22% non-performing loans at December 31, 2016 § Total reserves to non-performing loans of 215.31% Attractive Valuation § December 31, 2016 share price of $35.82, 15.5x 2016 earnings § CAGR of 23% in shareholder value since Dec
Slide 7: Key Q4 2016 Decisions Affecting Reported Amounts
Key Q4 2016 Decisions Affecting Reported Amounts Classification of BankMobile as Held-For-Sale Customers announced in October 2016 of its intent to sell BankMobile in 2017. Customers believes BankMobile can be sold at a substantial gain, further strengthening the Company’s capital and balance sheet.
Slide 8: Banking Industry Trends…… How Do We Deal with These Issues
Banking Industry Trends…… How Do We Deal with These Issues External Forces Impediments to Growth • Role of traditional bank branches changing very • Traditional CRE lending very difficult to do and rapidly under regulatory scrutiny • Mobile banking fastest growing channel • Very little consumer loan
Slide 9: What is Our Business Model
What is Our Business Model Critical to Have a Winning Business Model Traditional Banks Fee Income Leaders Relationship & Innovative Banks § Heavy branch based delivery system § Diversified revenue sources § Innovator / disruptor / not branch § Strong credit quality § Cross sell strength dependent §
Slide 10: Our Approach to Developing a Winning Business Model
Our Approach to Developing a Winning Business Model 1. 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 easily 2. Attract and retain best high quality talent. Business Bankers / Relationship Banke
Slide 11: 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 12: Customers Bank
Customers Bank Executing On Our Unique High Performing Banking Model 12
Slide 13: Disciplined Model for Superior Shareholder Value Creation
Disciplined Model for Increasing Shareholder Value Disciplined Model for Superior Shareholder Value Creation § Strong organic revenue growth + scalable infrastructure = sustainable double digit EPS = growth and increased shareholder value § A very robust risk management driven business strategy § Bu
Slide 14: 5 Year Performance
5 Year Performance $80 Earnings & Tangible Book Value $70 $20.49 $18.39 $60 $16.43 $50 $14.37 $13.09 $11.54 $40 $30 $20 $1.57 $1.55 $1.96 $2.30 $10 $1.30 $0.35 $0 2011 2012 2013 2014 2015 2016 Net Income Available to Common Shareholders Fully Diluted EPS Tangible Book Value CUBI KBW Regional Bank So
Slide 15: Banking Strategy – Community Business Banking
Banking Strategy – Community Business Banking Very Experienced Teams Exceptional Service Risk Based Incentive Compensation Community Business Bank is Focused on businesses - ~95% of revenues come from businesses • Loan and deposit business through these well diversified segments: • Banking Privately
Slide 16: Results in: Organic Growth of Deposits with Controlled Costs
Results in: Organic Growth of Deposits with Controlled Costs Customers’ strategies of single point of contact and recruiting known teams in target markets produce rapid deposit growth with low total cost Total Deposit Growth ($mm) Average DDA Growth ($mm) $800 $7,000 $852 CAGR: 41% $353 $5,500 CAGR:
Slide 17: 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 18: 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% 1.62% 1.44% 0.60% 0.48% 0.48% 1.50% 0.42% 0.42% 1.09% 0.91% 0.88% 0.40% 0.28% 1.00% 0.72% 0.60% 0.15% 0.19% 0
Slide 19: 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 § Single point of contact 5,000 § NE, NY, PA & NJ markets LOAN CAGR: 32% 4,000 $3,497 § SBA loans
Slide 20: Multi-Family Banking Strategy
Multi-Family Banking Strategy Banking High Net Worth Families § Focus on families that have income producing real estate in their portfolios Multi-Family Loan and Deposit Growth ($mm) § Private banking approach 3,500 $3,210 § Focus Markets: New York & Philadelphia $2,944 3,000 MSAs 2,500 $2,308 § Av
Slide 21: Build Efficient Operations
Build Efficient Operations Staff Expense Ratio Occupancy Expense Ratio 0.50% 2.00% 1.71% 1.74% 1.71% 1.73% 1.75% 0.38% 0.38% 0.38% 0.36% 1.45% 1.45% 1.43% 1.38% 1.37% 0.30% 0.39% 0.39% 0.40% 0.38% 1.03% 1.03% 0.35% 1.00% 0.84% 0.81% 0.75% 0.29% 0.19% 0.15% 0.12% 0.11% 0.00% 0.00% 2012 2013 2014 2015
Slide 22: Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth
Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth • Strategy execution has produced superior growth in revenues and earnings Total Revenue ($mm) (1) Net Interest Income ($mm) (1) 4Q '16 vs. 4Q '15 4Q '16 vs. 4Q '15 Growth Growth 4% 20% $249.5 $300.0 CAGR: 40% $250.
Slide 23: Building Customers to Provide Superior Returns to Investors
Building Customers to Provide Superior Returns to Investors Tangible BV per Share (1) Recent Performance Results $22.00 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 $20.00 CAGR: 12% $18.00 ROA 0.9% 0.9% 0.8% 0.9% 0.8% $16.00 $14.00 ROCE 13.5% 13.2% 13.1% 13.2% 10.5% $12.00 NIM 2.83% 2.88% 2.83% 2.83% 2.8
Slide 24: Community Business Banking and BankMobile Business Segments
Customers Bank Community Business Banking and BankMobile Business Segments 24
Slide 25: Business Segment Disclosures
Business Segment Disclosures • Customers Bank acquired the Disbursements Business of Higher One, Inc. on June 15, 2016 • The acquired Disbursements Business was combined with Customers Bank’s existing BankMobile product line in Q2 2016 • Effective for the 2016 fourth quarter and year end financial r
Slide 26: History of BankMobile
History of BankMobile • 2014 – Customers Bank began development of a consumer bank in alignment with the future model of banking – A completely branchless experience – A fin-tech company with a bank charter – 10X better customer acquisition and retention strategy than traditional players – Better pr
Slide 27: Segment Financial Performance Results
Segment Financial Performance Results Q4 2016 Year-To-Date 2016 Combined Combined BankMobile Customers BankMobile Customers Community (Discontinuing Bancorp Inc & Community (Discontinuing Bancorp Inc & Business Banking Operations) Subs Business Banking Operations) Subs Net-interest income $ 61.7 $ 2
Slide 28: Other BankMobile Results
Other BankMobile Results • Migrated 374,000 checking accounts previously with another Higher One, Inc. partner bank since acquisition at the customers’ election with transferred balances totaling approximately $700 million between starting balances and incoming deposits. • Opened over 222,000 new ch
Slide 29: Contacts
Contacts Company: Robert Wahlman, CFO Tel: 610-743-8074 rwahlman@customersbank.com www.customersbank.com Jay Sidhu Chairman & CEO Tel: 610-301-6476 jsidhu@customersbank.com www.customersbank.com 29
Slide 30: Appendix
Appendix Customers €= Bancorp, Inc.
Slide 31: Risk Management
Customers Bank Risk Management 31
Slide 32: Elements of an Effective Risk Management Program
Elements of an Effective Risk Management Program 32
Slide 33: ERM Framework at Customers Bancorp, Inc.
ERM Framework at Customers Bancorp, Inc. Well Defined ERM Plan – ERM Integration into CAMELS +++++ 33
Slide 34: Financial Statements
Customers Bancorp, Inc. Financial Statements 34
Slide 35: Income Statement
Income Statement CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED - UNAUDITED (Dollars in thousands, except per share data) Q4 Q3 Q4 2016 2016 2015 Interest income: Loans receivable, including fees $ 59,502 $ 60,362 $ 50,095 Loans held for sal
Slide 36: Income Statement
Income Statement CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED- UNAUDITED (Dollars in thousands, except per share data) December 31, December 31, 2016 2015 Interest income: Loans receivable, including fees $ 233,349 $ 182,280 Loans held fo
Slide 37: Balance Sheet
Balance Sheet CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET - UNAUDITED (Dollars in thousands) December 31, December 31, 2016 2015 ASSETS Cash and due from banks $ 17,485 $ 53,550 Interest-earning deposits 227,224 211,043 Cash and cash equivalents 244,709 264,593 Investment sec
Slide 38: Net Interest Margin
Net Interest Margin CUSTOMERS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED) (Dollars in thousands) Three months ended December 31, September 30 December 31, 2016 2016 2015 Average Average Average Average yield or cost Average yield or cost Average yield or co
Slide 39: Net Interest Margin
Net Interest Margin CUSTOMERS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED) (Dollars in thousands) Twelve months ended December 31, December 31, 2016 2015 Average Average Average yield or cost Average yield or cost Balance (%) Balance (%) Assets Interest earn
Slide 40: Loan and Deposit Composition
Loan and Deposit Composition CUSTOMERS BANCORP, INC. AND SUBSIDIARIES PERIOD END LOAN COMPOSITION (UNAUDITED) (Dollars in thousands) December 31, December 31, 2016 2015 Commercial: Multi-Family $ 3,214,999 $ 2,948,696 Mortgage warehouse 2,171,763 1,797,753 Commercial & Industrial (1) 1,315,905 1,068
Slide 41: Asset Quality
Asset Quality CUSTOMERS BANCORP, INC. AND SUBSIDIARIES ASSET QUALITY - UNAUDITED (Dollars in thousands) As of December 31, 2016 As of December 31, 2015 Non Accrual Total Credit NPLs / Total Total Reserves Non Accrual Total Credit NPLs / Total Total Reserves Loan Type Total Loans /NPLs Reserves Loans
Slide 42: Net Charge Offs
Net Charge Offs CUSTOMERS BANCORP, INC. AND SUBSIDIARIES NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED For the Quarter Ended Q4 Q3 Q4 (Dollars in thousands) 2016 2016 2015 Originated Loans Commercial & Industrial (1) $ 2,046 $ 49 $ 4.558 Commercial Real Estate- Non-Owner Occupied — — — Residential — 43 —
Slide 43: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited (Dollars in thousands, except per share data) 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 rel
Slide 44: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Pre-tax Pre-provision Return on Average Common Equity 2016 2015 Q4 2016 Q3 2016 Q2 2016 Q1 2016 Q4 2015 GAAP Net Income Available to Common Shareholders $ 69,187 $ 56,090 $ 16,213 $ 18,655 $ 17,421 $ 16,898 $ 16,780 Reconciling Items: Provision for loa
Slide 45: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Tangible Common Equity to Average Tangible Assets 2016 2015 Q4 2016 Q3 2016 Q2 2016 Q1 2016 Q4 2015 GAAP - Total Shareholders' Equity $ 855,872 $ 553,902 $ 855,872 $ 789,811 $ 680,552 $ 599,240 $ 553,902 Reconciling Items: Preferred Stock (217,471) (55