Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Q1 2024 Earnings Presentation
42 slides from Customers Bancorp's earnings presentation, Apr 26, 2024
Slide 1: Investor Presentation: Q1 2024
Let’s take on tomorrow. Investor Presentation: Q1 2024 “A Forward-Thinking Bank with Strong Risk Management“ April 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements Let’s take on tomorrow. 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 st
Slide 3: A Forward-Thinking Bank with Strong Risk Management
A Forward-Thinking Bank with Strong Risk Management Let’s take on tomorrow. Track Record and Exceptional 5-year track record Recent Strategic Successful deposit transformation with strong balance sheet in 2023 Moves Significant tailwinds in 2024 with 10 new very experienced banking teams from legacy
Slide 4: Our Priorities Remain Unchanged
Our Priorities Remain Unchanged Let’s take on tomorrow. Selectively pursue disciplined growth by focusing on holistic and strategic relationships that create franchise value Focus on further strengthening our balance sheet, improving Let’s take on tomorrow. liquidity, capital ratios and margins ©202
Slide 5: Demonstrated Sustainable Organic Growth Increasing Revenue, EPS and TBVPS
1.0 TRACK RECORD AND RECENT STRATEGIC MOVES Demonstrated Sustainable Organic Growth Increasing Revenue, EPS and TBVPS at 15%+ CAGR Over the Last Five Years Let’s take on tomorrow. Total Revenue Diluted EPS $ millions per share 19% $758 33% $7.32 $317 $1.78 2018 2023 2018 2023 ©2024 CUSTOMERS BANCORP
Slide 6: Substantial Momentum Following the Banking Events of March 2023
1.0 TRACK RECORD AND RECENT STRATEGIC MOVES Customers has Substantial Momentum Following the Banking Events of March 2023 Let’s take on tomorrow. Initiative Description Strategic Priority Acquired Small $500 billion of dislocated deposits from disrupted banks in 2023 0.8% Transform Fraction of $4.2
Slide 7: Positive Momentum Continues in 2024 with Hiring of Experienced Banking Teams
1.0 TRACK RECORD AND RECENT STRATEGIC MOVES Positive Momentum Continues in 2024 with Hiring of Experienced Banking Teams Let’s take on tomorrow. 10 business banking teams joined in April Situation Overview Deep client relationships in New York metro and selected markets in California and Nevada Team
Slide 8: Financial Highlights - GAAP
2.0 Q1’24 EARNINGS REVIEW Financial Highlights - GAAP Let’s take on tomorrow. Q1’24 Q1’24 (vs. Q4’23) Highlights Profitability Balance Sheet Credit Diluted EPS 3.10% $21.3B 0.17% $1.40 vs. 3.31% +0% +4 bps ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED NIM Total Assets NPA Ratio Net Income 0.94
Slide 9: Financial Highlights – Core/Adjusted
2.0 Q1’24 EARNINGS REVIEW Financial Highlights – Core/Adjusted Let’s take on tomorrow. Q1’24 Q1’24 (vs. Q4’23) Highlights Profitability Balance Sheet Credit Core EPS1,3 Adjusted Core EPS1,2,3 3.10% $21.3B 0.17% $1.42 $1.68 vs. 3.31% +0% +4 bps ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED NIM
Slide 10: Successfully Executing on Deposit Franchise Transformation
3.0 STRENGH OF THE FRANCHISE Successfully Executing on Deposit Franchise Transformation Let’s take on tomorrow. Total Deposits • Four consecutive quarters with ~$1.0 billion of business $ billions unit deposit1,3 growth • $1.2 billion of business unit deposit1,3 growth paid down $1.2 billion in whol
Slide 11: Deposit Transformation Phase I: Wholesale Funding Remix Nearly Complete
3.0 STRENGH OF THE FRANCHISE Deposit Transformation Phase I: Wholesale Funding1 Remix Nearly Complete Let’s take on tomorrow. Business Unit Deposits2,3 Wholesale CDs $ billions $ billions $16.1 $5.3 $14.9 +$4.2 $11.9 +36% -$3.5 $3.0 -66% $1.8 ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED Q1’23
Slide 12: Deposit Transformation Phase II: Business Unit Deposit Remix Initiated
3.0 STRENGH OF THE FRANCHISE Deposit Transformation Phase II: Business Unit Deposit Remix Initiated Let’s take on tomorrow. Total Deposits Deposit Cost ILLUSTRATIVE IMPACT OF DEPOSIT REMIX $ billions Q1’24, percent Annualized NII Benefit $ millions $18.0 3.45% Reduction in Rate of Remixed Deposits $
Slide 13: Strategic Portfolio Remix Complete with Specialized C&I Leading Growth
3.0 STRENGH OF THE FRANCHISE Strategic Portfolio Remix Complete with Specialized C&I Our Leading Growth Driver Let’s take on tomorrow. Loans - HFI Loans – HFI1 Growth QoQ $ billions $ millions • Actionable loan pipeline to deploy robust liquidity at Growth QoQ ~300 basis points additional spread led
Slide 14: Net Interest Income and Margin Expected to Improve in 2024
3.0 STRENGH OF THE FRANCHISE Net Interest Income and Net Interest Margin Expected to Improve in 2024 Let’s take on tomorrow. Net Interest Income • Selective in pace of loan growth in Q1’24 prioritizing $ millions holistic relationships $172.5 $149.9 $160.4 • NIM in Q1’24 impacted by − $1 billion exi
Slide 15: Customers Operates with Industry-Leading Efficiency
3.0 STRENGH OF THE FRANCHISE Customers Operates with Industry-Leading Efficiency Let’s take on tomorrow. Core Non-Interest Expense1 Core Non-Interest Expense1 / Average Assets $ millions percent • Disciplined expense management resulting in flat core • CUBI’s core non-interest expense1 as percent of
Slide 16: Robust Liquidity Position with Greater than 220% Coverage of Uninsured Deposits
4.0 STRONG CAPITAL AND LIQUIDITY Robust Liquidity Position with Greater than 220% Coverage of Uninsured Deposits Let’s take on tomorrow. Immediately Available Liquidity Loans-HFI to Deposits $ billions Q1’24, percent $8.5 $8.9 +$0.4 91% $3.8 $3.7 72% $1.1 $1.2 $4.1 ©2024 CUSTOMERS BANCORP, INC. / AL
Slide 17: Tangible Book Value Per Share Has More Than Doubled Over Five Years
4.0 STRONG CAPITAL AND LIQUIDITY Tangible Book Value Per Share has More Than Doubled Over the Last Five Years Let’s take on tomorrow. AOCI Tangible Book Value1 per share • 5-year+ CAGR in TBV1 has been 15%2 despite AOCI $53.38 headwinds compared to 4% for regional bank peers3 ©2024 CUSTOMERS BANCORP
Slide 18: Robust Capital Levels Provide Significant Flexibility
4.0 STRONG CAPITAL AND LIQUIDITY Robust Capital Levels Provides Customers With Significant Flexibility Let’s take on tomorrow. Q1’23 Q2’23 Q3’23 Q4’23 Q1’241 CET1 Risk-Based Capital percent 12.2% 12.5% 10.3% 11.3% ` • Strong opportunity to 9.6% deploy risk-based capital into loans Total Risk-Based C
Slide 19: Credit Metrics Remain Benign
5.0 MAINTAINING SUPERIOR CREDIT QUALITY Credit Metrics Remains Benign Let’s take on tomorrow. Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 NPAs as Percent of Total Assets percent 0.15% 0.13% 0.14% 0.13% 0.17% • Commercial NCOs declined by 18% QoQ Commercial NCOs • Office CRE represents only ~1% percent of HFI loan
Slide 20: 2024 Management Outlook
6.0 MANAGEMENT OUTLOOK 2024 Management Outlook Let’s take on tomorrow. Metrics Prior Outlook – FY 2024 Current Outlook ROAA 1.15% – 1.25% By Q4’24 Efficiency Ratio Mid – 40s ~50% by Q4’24 Net Interest Margin 3.20% – 3.40% High-end of range by Q4’24 ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED
Slide 21: Concluding Perspectives
Concluding Perspectives Let’s take on tomorrow. New banking teams well-positioned to take market share Business and Opportunity to replace higher-cost deposits with more granular, stable and lower-cost Commercial deposits Banking Teams Highly experienced banking teams with deep client relationships
Slide 22: Analyst Coverage
ANALYST COVERAGE B.Riley Securities, Inc. Maxim Group Inc. Hal Goetsch Michael Diana D.A. Davidson Companies Piper Sandler Companies Peter Winter Frank Schiraldi Hovde Group Raymond James David Bishop Steve Moss Jefferies Group LLC Stephens Inc. Casey Haire Matt Breese Keefe, Bruyette & Woods Inc. W
Slide 23: Appendix
APPENDIX SSeeeaeeeSeoee®s SSSeeeaeeeSeoee®& SSeSeeeeeSeoees& SSeEeeeaeeaeaeeeoeoees SSeeaee2eSseeneen28eG
Slide 24: Customers Bancorp Overview
Customers Bancorp Overview A Forward-Thinking Bank with Strong Risk Management Let’s take on tomorrow. Customers Bancorp, Inc. Portsmouth NYSE: CUBI Boston Corporate & Specialized Banking Providence NYC Community Banking West Reading, PA Bay Chicago Headquarters PA Area Denver Washington, D.C. Ralei
Slide 25: Commercial Real Estate Exposure Lower than Peers
Commercial Real Estate Exposure Lower than Peers Let’s take on tomorrow. CRE % of Loans-HFI % of Loans-HFI percent Q1’24, percent Multifamily ($2.1 billion) 45% 8% Average Size $6.4 million LTV4 64.1% ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED C&I3 DSCR 1.51x 27% 54% 1% 30% 9% 27% Office CR
Slide 26: Healthy Credit Metrics Within Multifamily Portfolio
Disciplined Underwriting Has Resulted in Healthy Credit Metrics Within Our Multifamily Portfolio Let’s take on tomorrow. • Limited near-term maturities/rate resets through 2026 • Strong LTV and DSCR metrics with limited interest only exposure • Debt Service Coverage Ratios conservatively calculated
Slide 27: Consumer Installment Loans – Portfolio Credit Metrics
Consumer Installment Loans – Portfolio Credit Metrics Let’s take on tomorrow. Weighted average life of ~2.2 years FICO Score1 Deb t to Income Ratio1 Borrower Income Average FICO Score1 ~737 Average DTI1 ~20% Average Borrower Income ~$107k 660-679 700-749 0-9.99% 40 – 49.99% <$50K >$100K 680-699 750+
Slide 28: Securities Portfolio Generating Attractive Returns
Securities Portfolio Generating Attractive Returns with Minimal Credit and Duration Risk Let’s take on tomorrow. Investment Securities – AFS Investment Securities – HTM percent, Q1’24 percent, Q1’24 • Spot yield: 5.33% • Spot yield: 4.26% • Effective duration: 1.7 years • Effective duration: 3.0 yea
Slide 29: Selected 2024 Proxy Peers
Selected 2024 Proxy Peers Let’s take on tomorrow. • Atlantic Union • Fulton • BankUnited • Independent • Commerce • Northwest • Community Bank System • Old National • FB Financial • Pinnacle ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED • First Busey • Provident • F.N.B. • Sandy Spring Note: E
Slide 30: Robust Sources of Liquidity
Robust Sources of Liquidity Let’s take on tomorrow. Liquidity Sources ($000's) 1Q 24 1Q 23 YOY Change Cash and Cash Equivalents $3,701,120 $2,046,685 $1,654,435 FHLB Available Borrowing Capacity $1,119,296 $860,578 $258,718 FRB Available Borrowing Capacity $4,082,885 $6,516,922 ($2,434,037) ©2024 CU
Slide 31: Allowance for Credit Losses for Loans and Leases
Allowance for Credit Losses for Loans and Leases Let’s take on tomorrow. ($ in thousands) March 31, 2024 December 31, 2023 Allowance for Credit Allowance for Credit Amortized Cost1 Lifetime Loss Rate2 Amortized Cost1 Lifetime Loss Rate3 Losses Losses Loans and Leases Receivable: Commercial: Commerci
Slide 32: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Let’s take on tomorrow. 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 fi
Slide 33: Core earnings and Adjusted core earnings
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Core earnings and Adjusted core earnings- Customers Bancorp ($ in thousands except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Total Per share Total Per share Total Per share Total Per share Total Per share
Slide 34: Core and Adjusted core return on average assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Core return on average assets and Adjusted core return on average assets - Customers Bancorp ($ in thousands except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 GAAP net income $ 49,726 $ 62,092 $ 86,756 $ 47
Slide 35: Core and Adjusted core return on average common equity
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Core return on average common equity and Adjusted core return on average common equity – Customers Bancorp ($ in thousands) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 GAAP net income to common shareholders $ 45,926 $ 58,22
Slide 36: Core pre-tax pre-provision net income and ROAA
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Core pre-tax pre-provision net income and ROAA; Adjusted core pre-provision net income and ROAA - Customers Bancorp ($ in thousands, except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 GAAP net income $ 49,72
Slide 37: Core and Adjusted core efficiency ratio
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Core efficiency ratio: Adjusted core efficiency ratio - Customers Bancorp ($ in thousands, except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 GAAP net interest income $ 160,385 $ 172,506 $ 199,773 $ 165,271
Slide 38: Core non-interest expense to average assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Core non-interest expense to average assets; Adjusted core non-interest expense to average assets - Customers Bancorp ($ in thousands except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 ©2024 CUSTOMERS BANCOR
Slide 39: Tangible common equity to tangible assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Tangible common equity to tangible assets - Customers Bancorp ($ in thousands except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 GAAP total shareholders' equity $ 1,691,617 $ 1,638,394 $ 1,561,607 $ 1,456,65
Slide 40: Tangible book value per common share
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Tangible book value per common share - Customers Bancorp ($ in thousands except per share data) Q1 2024 Q4 2023 Q4 2022 Q4 2021 Q4 2020 Q4 2019 Q4 2018 ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED GAAP total shar
Slide 41: Business Unit Deposits
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Business Unit Deposits (formerly, Core Deposits, Total Deposits, excluding Wholesale CDs and BMTX student deposits) - Customers Bancorp ($ in thousands) ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED Q1 2024 Q4 202
Slide 42: Coverage of credit loss reserves for loans and leases HFI
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Coverage of credit loss reserves for loans and leases HFI, excluding PPP - Customers Bancorp ($ in thousands except per share data) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Loans and leases receivable $ 11,936,621 $ 11,9