Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Q1 2022 Earnings Presentation
39 slides from Customers Bancorp's earnings presentation, Apr 28, 2022
Slide 1: Let's take on tomorrow – Investor Presentation Q1 2022
Let’s take on tomorrow. “A Digital-Forward Super-Community Bank“ Investor Presentation: Q1 2022 April 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 40 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED FTE Employees 665 Market Capitalization2 $1.4B Lines of Business As of 04/22/2022 Community Specialty Digital Total Assets $19.2B Banking Banking Banking
Slide 4: The customer is at the center of everything we do
The customer is at the center of everything we do Full service Private Business Banking • Single Point of Contact for customers (SPOC) Seasoned teams led Exceptional service by SPOC RM’s through omnichannel • Technology led expansion customer experience ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED HIG
Slide 5: Our vision for growth has remained part of our story
Our vision for growth has remained a part of our story since the beginning WHERE WE STARTED WHERE WE ARE 2009 2022 Q1 • A Digital-Forward Super- Community Bank ~$19B Assets • Growth story remains ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED committed to maintaining best in class ~$16B credit quality D
Slide 6: Environmental, Social & Governance Report – 2021 Milestones
Environmental, Social & Governance Report – 2021 Milestones In total, Customers Bank Pennsylvania Housing Finance The Board created the contributed over $4 million in 2021 Agency (PHFA) recognized Environmental Social & through CRA-eligible donations, Customers Bank as a top-10 Governance Committee
Slide 7: Highlights - GAAP
Highlights - GAAP Q1’22 (vs. Q1’21) Q1’22 (vs. Q1’21) Highlights Profitability Balance Sheet Credit Diluted EPS 3.59% $19.2B 0.23% $2.18 vs. 3.00% NIM +2% Total Assets -3 bps NPA Ratio ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED +116% Net Income1 1.63% $14.1B 1.18% vs. 0.80% -13% +18 bps $74.9M ROAA
Slide 8: Highlights - Adjusted
Highlights - Adjusted Q1’22 (vs. Q1’21) Q1’22 (vs. Q1’21) Highlights Profitability Balance Sheet Credit Core EPS1 Core EPS ex PPP1,2 3.32% $17.0B 0.23% $2.19 | $1.47 vs. 2.99% NIM1,2 +24% Core Assets1,2 -3 bps NPA Ratio ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED +2% +7% Core Earnings1 1.63% $11.9B 1
Slide 9: Business Line Accomplishments and Strategic Priorities
Business Line Accomplishments and Strategic Priorities Community Specialty Digital 2022 PRIORITIES Geographic expansion Specialty Lending Expansion Consumer: o Continue to recruit regional C&I teams in o Continue to recruit specialty lending teams and o Continue to index portfolio mix to direct orig
Slide 10: Blockchain-based instant payments platform: CBIT
A Blockchain-based, instant payments platform generating $2.3B1 in low cost deposits Introducing: Customers Bank Instant Token (CBIT™) Overview An Instant Payments Tool to Serve Diverse Potential o API connected platform with customers Commercial Clients in 2022 and Beyond o Onboarded 74 new custome
Slide 11: Balance Sheet: Loan Growth & Mix
Balance Sheet: Loan Growth & Mix Loan mix ex PPP1 Loans ex PPP1 percent $ billions Community C&I Multifamily Community C&I Multifamily Specialty C&I Consumer2 Specialty C&I Consumer2 Investment CRE Mortgage warehouse Investment CRE Mortgage warehouse +11% 15% 12% +5% $11.9 ©2022 CUSTOMERS BANK / ALL
Slide 12: Balance Sheet: Deposit Growth & Mix
Balance Sheet: Deposit Growth & Mix Deposits Non-interest bearing deposits Deposit costs $ billions Interest bearing deposits percent Cost of interest bearing deposits Spot cost of deposits Total deposit costs +29% $16.8 $16.4 0.69% 0.70% $4.5 $4.6 0.65% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $1
Slide 13: Income Statement: Growth in Net Interest Income & Margin
Income Statement: Growth in Net Interest Income & Margin NII ex PPP1 Loan yield1 and cost of deposits $ millions percent Loan yield Cost of deposits +33% $130.1 5.00% 4.29% 4.36% 4.42% 4.41% 4.43% $115.0 $103.0 $107.9 4.00% $97.9 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 3.00% +3.76% +4.10% 2.00% 1
Slide 14: 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 $72 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $1.5 $3.2 $3.3 $0.7 $2.2 $4.1 $0.4 $27 $30 $3.5 $26 $2.6 $1.9 $1.8 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q
Slide 15: Liquidity and Investment Securities Mix
Liquidity and Investment Securities Mix Liquidity Investment Securities mix $ billions As of Mar 31, 2022, percent Cash and Cash equivalents Investment securities portfolio MBS & CMO ABS1 Corporates Other 14% $4.3 $4.4 $0.2 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $0.5 $2.9 $1.0 53% $2.0 $1.9 $4.2
Slide 16: 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 14% $20.0 76% 77% 75% 80% $18.0 $18.1 $16.1 70% 60% 61% $15.0 $13.3 60% +$4.8 $12.0 $12.5 19% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $1
Slide 17: Capital: Strong Capital Position
Capital: Strong Capital Position Total risk based capital o TRB capital ratio increased 44 bps percent over Q1’21, driven by PPP revenue 12.4% 13.3% 13.6% 12.9% 12.9% and core bank earnings o TCE/TA excl. PPP2 increased 19 bps compared to Q1’21 due to increase Q1’21 Q2’21 Q3’21 Q4’21 Q1’22E1 in core
Slide 18: Credit: Credit Quality and Reserves Remain Strong
Credit: Credit Quality and Reserves Remain Strong NPL o Due to the Bank’s history of $ millions focusing on lower credit risk $49 $46 $52 $50 businesses, we expect near-term $44 credit outlook to remain stable o Credit quality remains excellent Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 as evidenced by NPAs/Tota
Slide 19: Consumer Installment Loans
Consumer Installment Loans FICO Score1 Deb t to Income ratio Borrower Income Average FICO Score1 ~730 Average DTI ~16.5% Average borrower income ~$101k 660-679 700-749 0-9.99% 40 – 49.99% <$50K >$100K 680-699 750+ 10 – 19.99% > 50% $50K -$100K 20 – 29.99% Unknown 30 – 39.99% 1% 12% 17% 27% 22% 5% 23
Slide 20: Consumer installment loans impairment remains well below industry levels
CUBI Consumer installment loans impairment remains well below industry levels Impairment of consumer loans Percent Industry CUBI 15.0 10.0 6.3 5.0 1.5 0.0 03/19 06/19 09/19 12/19 03/20 06/20 09/20 12/20 03/21 06/21 09/21 12/21 03/22 Note: Customers Bancorp’s impairment percentages are considered 1 d
Slide 21: CUBI's annualized net losses lower than tier 1 and tier 2 lenders
CUBI’s annualized net losses remain significantly lower than tier 1 and tier 2 lenders Annualized net losses Percent CUBI Tier 1 Lenders1 Tier 2 Lenders1 15.0 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 10.0 7.0% 5.0 4.5% 1.6% 0.0 03/20 06/20 09/20 12/20 03/21 06/21 09/21 12/21 03/22 1. Reflects the
Slide 22: Key Investment Highlights
Key Investment Highlights Demonstrated technological capabilities as a high- tech, high-touch bank Industry leading loan growth supported by best in class digital banking Exceptional credit quality ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED Let’s take on tomorrow. Customer centric culture built arou
Slide 23: Analyst Coverage
ANALYST COVERAGE B. Riley Financial, Inc. Keefe, Bruyette & Woods Inc. Steve Moss Michael Perito D.A. Davidson Companies Maxim Group Inc. Russell Gunther Michael Diana Hovde Group Piper Sandler Companies Will Curtiss Frank Schiraldi Jefferies Group LLC Stephens Inc. Casey Haire Matt Breese Wedbush S
Slide 24: Appendix
©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 24 Appendix
Slide 25: Credit: Allowance for Credit Losses for Loans and Leases
Credit: Allowance for Credit Losses for Loans and Leases March 31, 2022 Q1 2022 Allowance for Credit Annualized Net Charge ($ in thousands) Amortized Cost Losses Lifetime Loss Rate Off Ratio Loans and Leases Receivable: Commercial: Multi-Family 1,705,027 7,437 0.44% 0.08% Commercial and Industrial 3
Slide 26: CUBI Consumer Loans – Increase in Direct Installment Loans
CUBI Consumer Loans – Increase in Direct Installment Loans Portfolio characteristics shift without impact to net losses Portfolio FICO score trends Portfolio borrower income trends <50k 660-679 50k-99.99k 680-699 >100k 700-749 750+ 60% 60% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 50% 50% 50% 46% 4
Slide 27: Liquidity
Liquidity Liquidity Sources ($000's) 1Q 21 2Q 21 3Q 21 4Q 21 1Q 22 YOY Change Cash and Cash Equivalents $512,241 $393,663 $1,000,885 $482,794 $219,085 ($293,156) FHLB Available Borrowing Capacity $713,673 $1,466,067 $2,031,551 $1,798,374 $3,213,767 $2,500,094 FRB Available Borrowing Capacity $180,00
Slide 28: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. Th
Slide 29: Reconciliation of Non-GAAP Measures – Core Earnings
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Earnings- Customers Bancorp Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 ($ 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 $ 74,896 $
Slide 30: Reconciliation of Non-GAAP Measures – Core Earnings, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Earnings, Excluding PPP - Customers Bancorp Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 ($ 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 available to share
Slide 31: Reconciliation of Non-GAAP Measures – Core Return on Average Assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Return on Average Assets - Customers Bancorp ($ in thousands) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 GAAP net income $ 76,761 $ 100,669 $ 116,042 $ 61,341 $ 36,595 Reconciling items (after tax): Net loss from discontinued operations - 1,
Slide 32: Reconciliation of Non-GAAP Measures – Adjusted Net Income and ROAA
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp ($ in thousands) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 GAAP net income $ 76,761 $ 100,669 $ 116,042 $ 61,341 $ 36,595 Reconciling items: Income tax expense 19,
Slide 33: Reconciliation of Non-GAAP Measures – Core Return on Average Common Equity
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Return on Average Common Equity ($ in thousands) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 GAAP net income to common shareholders $ 74,896 $ 98,647 $ 110,241 $ 58,042 $ 33,204 Reconciling items (after tax): Net loss from discontinued operat
Slide 34: Reconciliation of Non-GAAP Measures – Tangible Equity
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Equity ($ in thousands) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 GAAP - Total shareholders' equity $ 1,377,406 $ 1,366,217 $ 1,284,299 $ 1,250,729 $ 1,188,721 Reconciling items: Goodwill and other intangibles (3,678) (3,736) (3,794) (3
Slide 35: Reconciliation of Non-GAAP Measures – TCE to Tangible Assets, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Common Equity to Tangible Assets, Excluding PPP - Customers Bancorp ($ in thousands) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 GAAP - Total shareholders' equity $ 1,377,406 $ 1,366,217 $ 1,284,299 $ 1,250,729 $ 1,188,721 Reconciling ite
Slide 36: Reconciliation of Non-GAAP Measures – TCE to Tangible Assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Common Equity to Tangible Assets - Customers Bancorp ($ in thousands) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 GAAP - Total shareholders' equity $ 1,377,406 $ 1,366,217 $ 1,284,299 $ 1,250,729 $ 1,188,721 Reconciling items: ©2022 CUSTO
Slide 37: Reconciliation of Non-GAAP Measures – Total Loans and Leases, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Total loans and leases, excluding PPP ($ in thousands) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Total loans and leases $ 14,073,518 $ 14,568,885 $ 15,515,537 $ 16,967,022 $ 16,168,306 PPP loans (2,195,902) (3,250,008) (4,957,357) (6,305,056) (5
Slide 38: Reconciliation of Non-GAAP Measures – Core Assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Assets ($ in thousands) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 GAAP - Total assets $ 19,163,708 $ 19,575,028 $ 19,108,922 $ 19,635,108 $ 18,817,660 Reconciling items: Goodwill and other intangibles (3,678) (3,736) (3,794) (3,853) (3,911)
Slide 39: Reconciliation of Non-GAAP Measures – Net Interest Income, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Net Interest Income, Excluding PPP - Customers Bancorp ($ in thousands) Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 GAAP net interest income $ 164,699 $ 193,694 $ 219,892 $ 138,757 $ 132,731 PPP net interest income (34,615) (78,647) (112,005) (35,