Slide 1: Highly Focused, Low Risk, Above Average Growth
Highly Focused, Low Risk, Above Average Growth Bank Holding Company Investor Presentation Member FDIC April, 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 • 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; • ch
Slide 4: Forward-Looking Statements
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 chang
Slide 5: Investment Proposition
Investment Proposition Customers Bank’s BankMobile Division is Classified as Held for Sale in all Customers’ Consolidated Financial Statements released since January 2017, Including the January and April Earnings Releases and the Form 10K as of, and for the Period Ending December 31, 2016. Amounts I
Slide 6: Q1 2017 Highlights
Q1 2017 Highlights • Q1 2017 Net Income to Common Shareholders of $22.1 million Up 31.0% Over Q1 2016 • Q1 2017 Diluted Earnings Per Common Share of $0.67, Up 15.5% from Q1 2016 • Q1 2017 Net Income to Common Shareholders from Continuing Operations was $23.3 million Up 29.3% Over Q1 2016 • Q1 2017 D
Slide 7: Investment Proposition
Investment Proposition Highly Focused, Innovative, Relationship Banking Based Commercial Bank Providing; Strong Organic Growth, Well Capitalized, Branch Lite Bank in Attractive Markets Highly skilled teams targeting privately held businesses and high net worth families Robust risk management driven
Slide 8: Customers Business Model
Customers Business Model Unique “Single Point High Tech / of Contact” High Touch Model Product Branch Lite Dominance Experienced Strong Asset Leadership Quality Customers Bank = High Growth Innovator / Relationships / Superior Disruptor & Innovation Performer Approach to Winning Model Relationship d
Slide 9: 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 the following businesses: Consumer & • Banking Privately Held Businesses – Commercial C&I loans are Residential 6% 37% of the portfolio • M
Slide 10: 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 11: Performance Trend
Performance Trend $80 Net Income & Earnings Per Share $2.31 $70 $1.96 $60 $1.57 $1.55 $50 $1.30 $40 $30 $0.67 $20 $0.35 $10 $0 2011 2012 2013 2014 2015 2016 Q1 2017 Net Income Available to Common Shareholders Fully Diluted EPS CUBI KBW Regional Bank Source: SNL Financial Note: Chart begins 2/21/2012
Slide 12: Customers Bank
Customers Bank Executing On Our Unique High Performing Banking Model 12
Slide 13: Results in: Organic Growth of Deposits with Controlled Costs
Results in: Organic Growth of Deposits with Controlled Costs Customers’ strategies of single point of contact and recruiting known teams in target markets produce rapid deposit growth with low total cost Total Deposit Growth ($mm) Average DDA Growth ($mm) $1,600 CAGR: 55% $8.0 CAGR: 34% $1.3 $1.5 $3
Slide 14: 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 15: 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% 1.70% 1.44% 0.60% 0.48% 0.48% 0.45% 1.50% 1.09% 0.42% 0.91% 0.89% 0.40% 0.28% 1.00% 0.72% 0.60% 0.15% 0.19% 0
Slide 16: 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 $4.5 $4.0 LOAN CAGR: 32% § NE, NY, PA & NJ markets $3.5 $4.0 $3.5 $3.9
Slide 17: Multi-Family Banking Strategy
Multi-Family Banking Strategy Banking High Net Worth Families § Focus on families that have income producing real estate in their portfolios Multi-Family Loan and Deposit Growth ($mm) § Private banking approach $4.0 § Focus Markets: New York & Philadelphia $3.4 $3.2 MSAs $2.9 $3.0 § Average Loan Siz
Slide 18: Build Efficient Operations
Build Efficient Operations Staff Expense Ratio Occupancy Expense Ratio 0.50% 2.00% 1.71% 1.74% 1.71% 1.73% 1.73% 0.37% 0.38% 0.38% 0.36% 1.45% 1.45% 1.43% 1.38% 1.36% 0.30% 0.39% 0.39% 0.40% 0.38% 1.03% 1.03% 0.22% 0.19% 0.35% 0.83% 0.78% 0.75% 0.15% 0.12% 1.00% 0.68% 0.11% 0.11% 0.00% 0.00% 2012 20
Slide 19: Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth
Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth Net Interest Income ($mm) (1) Net Interest Income Simulation (1)(2) 1Q '17 vs. 1Q '16 3.50% Estimated Increase in Net Interest Income over Growth 8% 3.00% the Next Twelve Months $300.0 CAGR: 42% 3.00% $249.5 Q4 2.50
Slide 20: 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 Efficiency Ratio(1) CAGR: -11% 90% 78% 80% 70% 59% 60% 55% 56% 48% 47% 50% 43% 40% 30% 20% 10% 0% 2011 2012 2013 2014 2015 2016 2017 Total R
Slide 21: Building Customers Bank to Provide Superior Returns to Investors
Building Customers Bank to Provide Superior Returns to Investors Tangible BV per Share (1) Recent Performance Results $24.00 $22.00 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 CAGR: 12% $20.00 ROA 0.9% 0.8% 0.9% 0.8% 1.1% $18.00 $16.00 ROCE 13.2% 13.1% 13.2% 10.5% 13.8% $14.00 $12.00 NIM 2.88% 2.83% 2.8
Slide 22: Community Business Banking and BankMobile Business Segments
Customers Bank Community Business Banking and BankMobile Business Segments 22
Slide 23: 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 24: 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 25: Segment Financial Performance Results
Segment Financial Performance Results Q1 2017 BankMobile Incl Combined BMT Customers Community (Discontinuing Bancorp Inc & Business Banking Operations) Subs Interest Income $ 78.83 $ 4.26 $ 83.09 Interest Expense $ 20.66 $ 0.02 $ 20.68 Net-interest income $ 58.18 $ 4.24 $ 62.42 Provision for loan l
Slide 26: Other BankMobile Results
Other BankMobile Results • Opened over 282,000 new checking accounts since June 16, 2016. • Funds received from educational institutions and processed to students totaled $3.71 billion during Q1, 2017. • 34% of Title IV funds received by students at colleges to which BankMobile provided disbursement
Slide 27: 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 27
Slide 28: Appendix
Appendix Customers €= Bancorp, Inc.
Slide 29: Risk Management
Customers Bank Risk Management 29
Slide 30: Elements of an Effective Risk Management Program
Elements of an Effective Risk Management Program 30
Slide 31: ERM Framework at Customers Bancorp, Inc.
ERM Framework at Customers Bancorp, Inc. Well Defined ERM Plan – ERM Integration into CAMELS +++++ 31
Slide 32: Financial Statements
Customers Bancorp, Inc. Financial Statements 32
Slide 33: 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) Q1 Q4 Q1 2017 2016 2016 Interest income: Loans receivable, including fees $ 61,461 $ 59,502 $ 54,472 Loans held for sale
Slide 34: Balance Sheet
Balance Sheet CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET - UNAUDITED (Dollars in thousands) March 31, December 31, March 31, 2017 2016 2016 ASSETS Cash and due from banks $ 5,004 $ 17,485 $ 63,849 Interest-earning deposits 152,126 227,224 198,789 Cash and cash equivalents 15
Slide 35: Net Interest Margin
Net Interest Margin CUSTOMERS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED) (Dollars in thousands) Three months ended March 31, December 31, March 31, 2017 2016 2016 Average Average Average Average yield or cost Average yield or cost Average yield or cost Bal
Slide 36: Loan and Deposit Composition
Loan and Deposit Composition CUSTOMERS BANCORP, INC. AND SUBSIDIARIES PERIOD END LOAN COMPOSITION (UNAUDITED) (Dollars in thousands) March 31, December 31, March 31, 2017 2016 2016 Commercial: Multi-family $ 3,438,482 $ 3,214,999 $ 3,237,855 Mortgage warehouse 1,739,377 2,171,763 1,988,657 Commercia
Slide 37: Asset Quality
Asset Quality CUSTOMERS BANCORP, INC. AND SUBSIDIARIES ASSET QUALITY - UNAUDITED (Dollars in thousands) As of March 31, 2017 As of December 31, 2016 As of March 31, 2016 Total Total Total Non Total NPLs / Reserves Non Total NPLs / Reserves Non Total NPLs / Reserves Total Accrual Credit Total to Tota
Slide 38: Net Charge Offs
Net Charge Offs CUSTOMERS BANCORP, INC. AND SUBSIDIARIES NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED For the Quarter Ended Q1 Q4 Q1 (Dollars in thousands) 2017 2016 2016 Originated Loans Commercial & Industrial (1) $ (45) $ 2,046 $ — Residential 31 — — Other consumer — — 3 Total Net Charge-offs (Recove
Slide 39: 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 40: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Pre-tax Pre-provision Return on Average Common Equity Q1 2017 Q4 2016 Q3 2016 Q2 2016 Q1 2016 GAAP Net Income Available to Common Shareholders $ 22,132 $ 16,213 $ 18,655 $ 17,421 $ 16,898 Reconciling Items: Provision for loan losses 3,050 187 88 786 1,
Slide 41: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Tangible Common Equity to Average Tangible Assets Q1 2017 Q4 2016 Q3 2016 Q2 2016 Q1 2016 GAAP - Total Shareholders' Equity $ 879,817 $ 855,872 $ 789,811 $ 680,552 $ 599,249 Reconciling Items: Preferred Stock (217,471) (217,471) (217,549) (135,270) (79
Slide 42: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Return on Average Common Equity Excluding Impairment Charge Q1 2017 GAAP Net Income Available to Common Shareholders $ 18,635 Reconciling Items: Impairment Charge 1,703 Net Income Available to Common Shareholders Excluding Impairment Charge $ 20,338 Av