Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Q4 2021 Earnings Presentation
37 slides from Customers Bancorp's earnings presentation, Jan 25, 2022
Slide 1: Let’s take on tomorrow. Investor Presentation Q4 2021 / FY 2021
Let’s take on tomorrow. “A Digital-Forward Super-Community Bank“ Investor Presentation: Q4 2021 / FY 2021 January 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 Customers Bancorp, Inc. NYSE: CUBI West Reading, Headquarters PA Offices1 39 New Lines of ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED Business or FTE Employees 641 Geographies in 2021 Market Capitalization2 $2.0B Lines of Business As of 01/21/22 Total Assets $19.6B Communit
Slide 4: Our vision for growth has remained a part of our story since the beginning
Our vision for growth has remained a part of our story since the beginning WHERE WE STARTED WHERE WE ARE 2009 2021 • Growth story remains committed to ~$20B Assets maintaining best in class credit quality ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED • A Digital-Forward Super- ~$17B Community Bank Depo
Slide 5: Highlights - GAAP
Highlights - GAAP Q4’21 | FY’21 Q4’21 Performance (vs. Q4’20) Highlights Profitability Balance Sheet Credit Diluted EPS 4.14% $19.6B 0.25% $2.87 | $8.91 vs. 2.78% NIM +6% Total Assets -14 bps NPA Ratio ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED +87% +153% Net Income1 2.08% $14.6B 1.12% vs. 1.23% -8%
Slide 6: Highlights - Core
Highlights - Core Q4’21 | FY’21 Q4’21 Performance (vs. Q4’20) Highlights Profitability Balance Sheet Credit Diluted EPS1 3.12% $16.3B 0.25% $2.92 | $10.20 vs. 3.04% NIM1,2 +18% Core Assets1,2 -14 bps NPA Ratio ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED +83% +187% Net Income1 2.11% $11.3B 1.53% vs. 1
Slide 7: Business Line Accomplishments and Strategic Priorities
Business Line Accomplishments and Strategic Priorities Community Specialty Digital 2021 ACCOMPLISHMENTS Geographic Expansion Specialty Lending Expansion o Completed successful tech reorganization o Added teams in Texas, Florida, Carolinas, and o Launched new verticals: o Completed corporate rebrandi
Slide 8: Recruiting top talent
Recruiting top talent Let’s take on tomorrow.
Slide 9: A Blockchain-based, instant payments platform generating $1.9B in low to no-cost deposits
A Blockchain-based, instant payments platform generating $1.9B in low to no-cost deposits Introducing: Customers Bank Instant Token (CBIT™) Overview An Instant Payments Tool to Serve Diverse Potential o Limited to 25 client initial launch Commercial Clients in 2022 and Beyond o API connected platfor
Slide 10: Paycheck Protection Program: Loans and Fees
Paycheck Protection Program: Loans and Fees PPP loans1 Rounds 1 & 2 Round 3 Fee income recognized from PPP1 $ billions $ millions $6.3 $102 $5.2 $5.0 $2.2 $4.6 $72 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $1.5 $3.2 $3.3 $0.7 $4.1 $27 $26 $3.5 $2.6 $17 $1.9 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q4’20 Q1’21
Slide 11: Balance Sheet: Loan Growth & Mix
Balance Sheet: Loan Growth & Mix Loans ex PPP1 Loan mix ex PPP1 $ billions percent Core C&I2 Consumer Core C&I2 Multifamily Mortgage warehouse Investment CRE Mortgage warehouse Investment CRE Consumer Multifamily 81 % Commercial Loans +10% $11.3 $11.3 $10.1 +39% ©2022 CUSTOMERS BANK / ALL RIGHTS RES
Slide 12: Balance Sheet: Deposit Growth & Mix
Balance Sheet: Deposit Growth & Mix Deposits Non interest bearing deposits Funding cost $ billions Interest bearing deposits percent Cost of interest bearing deposits Total deposit costs Spot cost of deposits +33% +48% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $16.8 0.80% 0.76% $4.5 0.70% +89% $11.
Slide 13: Income Statement: Growth in Net Interest Income & Margin
Income Statement: Growth in Net Interest Income & Margin NII ex PPP1 Loan yield and cost of funding $ millions percent Loan yield Cost of funding $115.0 5.00% +18% 4.29% 4.36% 4.42% 4.41% $107.8 4.12% $102.9 4.00% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $97.7 $98.0 3.00% +3.54% +4.05% 2.00% 1.00%
Slide 14: Liquidity and Investment Securities Mix
Liquidity and Investment Securities Mix Liquidity Investment Securities mix $ billions As of Dec 31, 2021, percent Cash and Cash equivalents Investment securities portfolio MBS & CMO ABS1 Corporates Other +50% 15% $4.3 +49% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $0.5 $2.9 48% $1.9 $2.0 $1.9 $1.0
Slide 15: Interest Rate Sensitive Earning Asset Mix
Interest Rate Sensitive Earning Asset Mix Interest earning assets mix1 Loan and deposits for US Commercial Banks2 and Q4’21, percent Industry deposits 2016-2021 11% ` 76% 75% $18.1 $16.2 70% 59% $15.0 60% +$4.8 $12.5 $13.3 $12.0 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 26% $11.5 50% 52% $10.0 40%
Slide 16: Credit: Credit Quality and Reserves Remain Strong
Credit: Credit Quality and Reserves Remain Strong NPL $ millions $71 $49 $46 $52 $50 o Due to the Bank’s history of Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 focusing on lower credit risk NCO businesses, we expect near-term $ millions Commercial NCO Consumer NCO credit outlook to remain stable ©2022 CUSTOMERS B
Slide 17: Capital: Strong Capital Position
Capital: Strong Capital Position Total risk based capital percent 12.4% 13.3% 13.6% 13.2% 11.9% o TRB capital ratio increased 139 bps Q4’20 Q1’21 Q2’21 Q3’21 Q4’21E1 over Q4’20, driven by PPP revenue and core bank earnings TCE/TA excl PPP2 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED percent 8.1% o TC
Slide 18: Key Investment Highlights
Key Investment Highlights Industry leading loan and core deposit growth Exceptional credit quality ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED Well positioned for higher interest Let’s take on tomorrow. rate environment Demonstrated technological capabilities as a high-tech, high-touch bank Attractiv
Slide 19: Analyst Coverage
ANALYST COVERAGE B. Riley Financial, Inc. Keefe, Bruyette & Woods Inc. Steve Moss Michael Perito D.A. Davidson Companies Maxim Group Inc. Russell Gunther Michael Diana Hovde Group Piper Sandler Companies Will Curtiss Frank Schiraldi Jefferies Group LLC Wedbush Securities Inc. Casey Haire Peter Winte
Slide 20: Appendix
©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 20 Appendix
Slide 21: Environmental, Social & Governance Report
Environmental, Social & Governance Report Environmental, Social & Governance (ESG) Our Communities considerations are integrated across our Use of investment and philanthropic capital to expand access to business units and incorporated into the policies economic opportunity in the communities where
Slide 22: Credit: Allowance for Credit Losses for Loans and Leases
Credit: Allowance for Credit Losses for Loans and Leases December 31, 2021 Q4 2021 Allowance for Credit Annualized Net Charge ($ in thousands) Amortized Cost Losses Lifetime Loss Rate Off Ratio Loans and Leases Receivable: Commercial: Multi-Family $ 1,486,308 $ 4,477 0.30% 0.00% Commercial and Indus
Slide 23: Liquidity
Liquidity Liquidity Sources ($000's) 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21 YOY Change Cash and Cash Equivalents $615,264 $512,241 $393,663 $1,000,885 $482,794 ($132,471) FHLB Available Borrowing Capacity $684,936 $713,673 $1,466,067 $2,031,551 $1,798,374 $1,113,438 FRB Available Borrowing Capacity $220,000
Slide 24: Consumer Installment loans
Consumer Installment loans FICO Score 1 Debt to Income ratio Borrower Income <$50K >$100K 600-699 750+ 0-9.99% 40 – 49.99% $50K -$100K 700-749 10 – 19.99% > 50% 20 – 29.99% Unknown 30 – 39.99% 22% 17% 17% 28% 29% 29% 4% 1% 11% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 27% 50% 21% 42% Geography Prof
Slide 25: Non-GAAP Reconciliation
Reconciliation of Non-GAAP Measures - Unaudited Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. Th
Slide 26: Core Earnings - Customers Bancorp
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Earnings - Customers Bancorp Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 ($ in thousands, not including per share amounts) USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income to common shareholders $ 98,647 $
Slide 27: Core Earnings, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Earnings, Excluding PPP - Customers Bancorp ($ in thousands, not including per Q4 Q3 Q2 Q1 Q4 share amounts) 2021 2021 2021 2021 2020 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income available to share
Slide 28: Core Return on Average Assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Return on Average Asset - Customers Bancorp ($ in thousands) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 GAAP net income $ 100,669 $ 116,042 $ 61,341 $ 36,595 $ 56,245 Reconciling items (after tax): Net loss from discontinued operations 1,585
Slide 29: Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp ($ in thousands) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 GAAP net income $ 100,669 $ 116,042 $ 61,341 $ 36,595 $ 56,245 Reconciling items: Income tax expense 12.
Slide 30: Core Return on Average Common Equity
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Return on Average Common Equity ($ in thousands) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 GAAP net income to common shareholders $ 98,647 $ 110,241 $ 58,042 $ 33,204 $ 52,831 Reconciling items (after tax): Net loss from discontinued operat
Slide 31: Tangible Equity and Tangible Book Value per Share
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Equity ($ in thousands) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 $ 1,366,217 $ 1,284,299 $ 1,250,729 $ 1,188,721 $ 1,117,086 GAAP - Total shareholders' equity Reconciling items: (1) Goodwill and other intangibles (3,736) (3,794) (3,853
Slide 32: Tangible Common Equity to Tangible Assets, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Common Equity to Tangible Assets, Excluding PPP - Customers Bancorp ($ in thousands) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 GAAP - Total shareholders' equity $ 1,366,217 $ 1,284,299 $ 1,250,729 $ 1,188,721 $ 1,117,086 Reconciling ite
Slide 33: Tangible Common Equity to Tangible Assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Common Equity to Tangible Assets - Customers Bancorp ($ in thousands) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 $ 1,366,217 $ 1,284,299 $ 1,250,729 $ 1,188,721 $ 1,117,086 GAAP - Total shareholders' equity Reconciling items: (137,794) (
Slide 34: Core Assets and Coverage of Credit Loss Reserves
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Assets ($ in thousands) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 GAAP - Total assets $ 19,575,028 $ 19,108,922 $ 19,635,108 $ 18,817,660 $ 18,439,248 Reconciling items: Loans receivable, PPP (3,250,008) (4,957,357) (6,305,056) (5,178,089)
Slide 35: Total loans and leases, excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Total loans and leases, excluding PPP ($ in thousands) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Total loans and leases $ 14,568,885 $ 15,515,537 $ 16,967,022 $ 16,168,306 $ 15,832,251 PPP loans (3,250,008) (4,957,357) (6,305,056) (5,178,089) (4
Slide 36: Net Interest Income, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Net Interest Income, Excluding PPP - Customers Bancorp ($ in thousands, except per share data) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 GAAP net interest income $ 193,694 $ 219,892 $ 138,757 $ 132,731 $ 122,946 PPP net interest income (78,647)
Slide 37: Deferments to Total loans and leases, excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Deferments to Total loans and leases, excluding PPP ($ in thousands) Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Total loans and leases $ 14,568,885 $ 15,515,537 $ 16,967,022 $ 16,168,306 $ 15,832,251 PPP loans (3,250,008) (4,957,357) (6,305,056)