Slide 1: Executing On Our Unique Higher Performing Banking Model
Executing On Our Unique Higher Performing Banking Model Q4 2018 Investor Presentation January, 2019 Member FDIC NYSE: CUBI
Slide 2: 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 3: EPS: At Least $3.00 in 2020; $4.00 in 3-4 years
EPS: At Least $3.00 in 2020; $4.00 in 3-4 years • 2019 EPS: Approximately $2.21 • Stated in January that we were comfortable with the Street estimate of $2.21 for 2019. • 2019 is off to a good start, with strong growth in higher margin C&I and consumer loans, supported by corresponding increases in
Slide 4: Customers Bank Business Banking
Customers Bank Business Banking 4
Slide 5: 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 6: Banking Strategy – Customers Bank
Banking Strategy – Customers Bank Very Experienced Teams Exceptional Service Risk Based Incentive Compensation Business Banking Focus - ~95% of Customers Bank Business Banking Segment revenues are from commercial business units 6
Slide 7: Banking Strategy – Our Footprint
Banking Strategy – Our Footprint Customers Bank Business Banking Branches and Loan Production Offices 7
Slide 8: BankMobile
BankMobile One of America’s Fastest Growing Digital Banks for Consumers 8
Slide 9: BankMobile – Critical Success Factors
BankMobile – Critical Success Factors 1. Unique and exponentially better customer acquisition strategy 2. Customer engagement and customer for life profitability strategy Critical success factors 3. Unique technology, contractual relationships, and Durbin create barriers to entry 4. Long-term profit
Slide 10: BankMobile – Acquisition and Customer for Life Strategy
BankMobile – Acquisition and Customer for Life Strategy 10
Slide 11: BankMobile – Banking as a Service
BankMobile – Banking as a Service Besides student disbursements, our biggest focus over the last two years has been the development of “Banking as a Service” model • Spent significantly in R&D, technology and T-Mobile product development for White Label • Expected to be a very customer friendly prod
Slide 12: BankMobile – Long-term profitability
BankMobile – Long-term profitability § 2% or higher ROA which is significantly better than traditional banks § Uniqueness of Durbin – a significant competitive advantage that benefits our partners and our customers § High volume and low cost customer acquisition – $19 for BankMobile student business
Slide 13: Strategic Priorities
Customers Bancorp, Inc. Strategic Priorities 13
Slide 14: Strategic Priorities
Strategic Priorities 1) Create shareholder value through improved profitability • We target an ROAA of 1.25% in the next 3-4 years • We target a double digit ROTCE in the next 3-4 years • We target a NIM of 2.75%+ in the next 9-15 months 2) Focus and grow core banking operations • We expect to grow
Slide 15: Strategic Priorities: Improving Profitability
Strategic Priorities: Improving Profitability ROAA Trajectory We target an ROAA of 1.25% in 3-4 years, double digit ROTCE. We can get there through: 0.13% 1.25% 1.20% • 2.75% NIM 0.10% • Eliminating BankMobile losses 0.12% 1.00% • Other profitability improvements 0.89% • Improving efficiency 0.80% •
Slide 16: Strategic Priorities: Improving our Mix
Strategic Priorities: Improving our Mix Projected Balance Sheet Mix Shifts Ending Balance Sheet Growth ($ in millions) Dec 2017 Dec 2018 2018 Change Targeted Balance Sheet Shifts in 2019 Cash and Deposits 126 44 (82) Investment Securities 471 665 194 Multi Family Loans 3,647 3,285 (362) ~$700 millio
Slide 17: 2018 Deposits: Growth In The Right Areas
2018 Deposits: Growth In The Right Areas YTD Deposit Growth $8.0 Billions $7.1 $6.8 $7.0 YTD Growth: $1.7 Time: $6.0 We are improving our funding mix as we $1.9 -9% replace higher cost funding with lower cost $5.0 core deposits from BankMobile, our Digital Direct Bank, and core business units $4.0 $
Slide 18: Q4 2018 NIM
Q4 2018 NIM Net Interest Income FTE NIM(1) expanded 10 bps sequentially to 2.57% $68.3 $65.0 $67.3 $64.0 • 8 bps NIM benefit from asset yields $61.5 4.18% 4.24% 4.31% • -5 bps headwind from reduction in prepayment 3.97% 3.97% income 2.79% 2.67% 2.62% 2.57% • +13 bps benefit from increase in asset yi
Slide 19: Q4 2018 Loans
Q4 2018 Loans Loan Growth $12 5.0% 4.26% 4.30% 4.5% $10 3.88% 3.98% 3.76% 3.81% 4.0% $0.3 $0.3 $0.7 3.5% $8 Loans ($ in Billions) $0.4 Yield on Loans 3.0% $3.4 $6 $0.4 $3.5 2.5% $2.9 $3.3 2.0% $2.1 $4 $0.3 1.5% $3.6 $2.9 $3.2 $3.3 $1.3 1.0% $2 $2.3 $1.1 0.5% $0.9 $1.0 $1.3 $1.3 $1.2 $0.6 $0 0.0% 201
Slide 20: Loan Repricing
Loan Repricing Loan Repricing by Segment, at December 31, 2018 Millions 4,000 3,500 3,000 5% 11% 5% 2,500 26% 2,000 22% 1,500 83% 1,000 12% 22% 17% 18% 500 15% 43% 0 C&I Loans Multi-Family CRE Year 1 Year 2 Year 3 Year 4 Year 5 Remaining Portfolio • 83% of our C&I loans, including loans to mortgage
Slide 21: Outstanding Credit Quality
Outstanding Credit Quality Credit metrics remain better than peers NPLs to Total Loans Net Charge Offs / Average Total Loans 3.00% 0.80% 2.64% 0.68% 0.70% 2.50% 2.06% 0.60% 2.00% 1.70% 1.70% 0.50% 0.48% 0.47% 0.45% 0.44% 1.48% 0.42% 1.50% 1.30% 0.40% 1.18% 1.16% 0.30% 0.92% 0.85% 0.30% 1.00% 0.80% 0
Slide 22: Superior Operating Efficiency and Costs
Superior Operating Efficiency and Costs Our Customers Bank Business Banking Segment operating costs, as a percentage of average assets, are at least 100 bps lower than peers and nearly 150 bps lower than the industry Total Operating Costs as a % of Average Assets (1) 3.50% 3.26% 3.17% 3.13% 3.08% 3.
Slide 23: Q4'18 Financial Highlights
Customers Bancorp, Inc. Q4’18 Financial Highlights 23
Slide 24: Q4 2018 Key Financial Results
Q4 2018 Key Financial Results Customers Bank Business Banking Consolidated Segment Valuation (2) GAAP Diluted Earnings Per Share (EPS) $0.44 $0.55 January 18 Price $20.97 Core Diluted Earnings Per Share (EPS) (1) $0.53 $0.62 P/E 2019 9.5x YOY Change -5% -8% P/E 2020 8.4x GAAP Net Income Available to
Slide 25: Q4 2018 Consolidated Results
Q4 2018 Consolidated Results GAAP vs. Core EPS(1) $0.70 Q4 2018 Net Income to Common Shareholders of $0.60 $0.64 $0.64 $0.62 $0.64 $0.62 $14.2 million, and Diluted Earnings Per Common Share of $0.44. $0.55 $0.56 $0.50 $0.53 • $0.55 of diluted EPS from the Customers Bank $0.44 Business Banking segmen
Slide 26: Q4 2018 Highlights: Customers Bank Business Banking Segment
Q4 2018 Highlights: Customers Bank Business Banking Segment Customers Bank Business Banking Segment GAAP vs. Core EPS(1) $0.80 $0.70 $0.73 $0.72$0.73 $0.68$0.68 $0.67$0.67 $0.60 $0.62 $0.50 $0.55 Customers Bank Business Banking segment Q4 2018 profits of $17.5 million (or $0.55 per diluted share); c
Slide 27: Q4 2018 Highlights: BankMobile Segment
Q4 2018 Highlights: BankMobile Segment BankMobile Segment GAAP vs. Core EPS(1) $0.00 -$0.02 BankMobile segment loss of $3.3 million (or -$0.10 per diluted -$0.04 -$0.03-$0.03 share) in Q4 2018, and core loss of $2.9 million (or -$0.09 per -$0.06 diluted share(1)) -$0.08 -$0.08 • BankMobile deposits
Slide 28: Contacts
Contacts Company: Carla Leibold, CFO Tel: 484-923-8802 cleibold@customersbank.com Jay Sidhu Chairman & CEO Tel: 610-935-8693 jsidhu@customersbank.com Bob Ramsey CFO - BankMobile Tel: 484-926-7118 rramsey@customersbank.com 28
Slide 29: Forward-Looking Statements
Forward-Looking Statements This presentation, as well as other written or oral communications made from time to time by us, contains forward-looking information within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements relate to f
Slide 30: Forward-Looking Statements (Cont.)
Forward-Looking Statements (Cont.) • timely development and acceptance of new banking products and services and perceived overall value of these products and services by users, including the products and services being developed and introduced to the market by the BankMobile division of Customers Ba
Slide 31: Forward-Looking Statements (Cont.)
Forward-Looking Statements (Cont.) • the levels of usage of other BankMobile student customers following graduation of additional product and service offerings of BankMobile or Customers Bank, including mortgages and consumer loans, and the mix of products and services used; • our ability to impleme
Slide 32: Reconciliation of Non-GAAP Measures
Customers Bancorp, Inc. Reconciliation of Non-GAAP Measures 32
Slide 33: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our results of operations and financial condition relative to other financial institutions. Present
Slide 34: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Core Earnings - Customers Bancorp, Inc. Consolidated ($ in thousands, not including per share amounts) Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income to common shareholders
Slide 35: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Core Loss - BankMobile Segment ($ in thousands, not including per share amounts) Q4 2018 Q3 2018 Q2 2018 Q1 2018 USD Per Share USD Per Share USD Per Share USD Per Share GAAP net loss to common shareholders $ (3,274) $ (0.10) $ (5,842) $ (0.18) $ (3,346
Slide 36: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Tangible Book Value per Common Share - Customers Bancorp, Inc. Consolidated ($ in thousands, except per share data) 2018 2017 2016 2015 2014 2013 GAAP -Total Shareholders' Equity $ 956,816 $ 920,964 $ 855,872 $ 553,902 $ 443,145 $ 386,623 Reconciling I
Slide 37: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Core Return on Average Assets - Core Return on Average Assets - Customers Bancorp, Inc. Consolidated ($ in thousands) Customers Bank Business Banking Segment ($ in thousands) Q4 2018 Q4 2018 GAAP net income $ 17,862 GAAP net income $ 21,136 Reconciling
Slide 38: BankMobile Segment
BankMobile Segment Appendix 38
Slide 39: 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 Q4 2018 Interest Income $0 $0 $0 $0 $0 $2 $1 $2 $1 $0 $2 $1,344 Interest Expense $4 $5 $5 $6 $6 $11 $1