Customers Bancorp, Inc · NYSE:CUBI

Customers Bancorp — Q2 2022 Earnings Presentation

39 slides from Customers Bancorp's earnings presentation, Jul 28, 2022

  1. Slide 1: Let's take on tomorrow. Investor Presentation Q2 2022

    Let’s take on tomorrow. “A Digital-Forward Super-Community Bank“ Investor Presentation: Q2 2022 July 2022

  2. 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

  3. Slide 3: Customers Bancorp Snapshot

    Customers Bancorp Snapshot A Digital-Forward Super-Community Bank Customers Bancorp, Inc. NYSE: CUBI West Reading, Headquarters PA Offices1 39 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED FTE Employees 692 New Lines of Market Lines of Business Business Capitalization2 $1.2B As of 07/22/2022 Community

  4. Slide 4: Highlights - GAAP

    Highlights - GAAP Q2’22 (vs. Q2’21) Q2’22 (vs. Q2’21) Highlights Profitability Balance Sheet Credit Diluted EPS 3.38% $20.3B 0.14% $1.68 vs. 2.98% NIM +3% Total Assets -10 bps NPA Ratio3 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED -2% Net Income1 1.17% $15.7B 1.14% $56.5M vs. 1.27% ROAA -8% Total Loa

  5. Slide 5: Highlights – Adjusted/Core

    Highlights – Adjusted/Core Q2’22 (vs. Q2’21) Q2’22 (vs. Q2’21) Highlights Profitability Balance Sheet Credit Core EPS1 Core EPS ex PPP1,2 3.32% $18.7B 0.14% $1.77 | $1.38 vs. 3.30% NIM1,2 +40% Core Assets1,2 -10 bps NPA Ratio ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED +0% +32% Core Earnings1 1.23% $

  6. Slide 6: 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

  7. Slide 7: Tech-Enabled Banking: Commercial Treasury Services, Payments and BaaS

    Tech-Enabled Banking: Commercial Treasury Services, Payments and BaaS CUBI’s proprietary We are reinventing banking through a cloud-based offering of 24/7 API enabled fully tech-led product suite integrated Treasury, Payments and BaaS offerings will drive: Financial Fund Tech & Venture BaaS Digital

  8. Slide 8: Loan growth of $2.2B in Q2 driven by low-risk variable rate lending verticals

    Loan growth of $2.2B in Q2 driven by low-risk variable rate lending verticals Core Loan growth composition ex PPP1 Specialty Lending C&I provides multiple solutions (Fund Finance, $ billions, Q2’22 Lender Finance facilities) to fund clients (Private Equity, Venture Capital, Credit) to gain bigger sh

  9. Slide 9: Blockchain-based instant payments platform generating $2.1B in low-cost deposits

    A Blockchain-based, instant payments platform generating $2.1B in low-cost deposits Introducing: Customers Bank Instant Token (CBIT™) Overview An Instant Payments Tool to Serve Diverse Potential Commercial Clients in 2022 and Beyond o API connected platform with customers o Onboarded 90 new customer

  10. Slide 10: Balance Sheet: Loan and Deposit Growth & Mix

    Balance Sheet: Loan and Deposit Growth & Mix Loans ex PPP1 Deposits $ billions $ billions Non-interest bearing deposits Community C&I Multifamily Interest bearing deposits Specialty C&I Consumer2 Investment CRE Mortgage Banking Lending +21% +12% +19% $16.8 $16.4 $16.9 ©2022 CUSTOMERS BANK / ALL RIGH

  11. Slide 11: Interest Rate Sensitive Earning Asset Mix

    Interest Rate Sensitive Earning Asset Mix Interest earning assets mix1 Loan mix ex PPP2 Q2’22, percent percent Community C&I Multifamily Specialty C&I Consumer3 12% Investment CRE Mortgage Banking Lending 14% 11% 23% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 55% 17% 34% 1% 9% 14% 10% Floating Loans

  12. Slide 12: Income Statement: Growth in Net Interest Income & Margin

    Income Statement: Growth in Net Interest Income & Margin NII ex PPP1 Loan yield1 and Deposit cost $ millions percent Loan yield1 Deposit cost +42% +12% $145.9 5.00% 4.56% 4.36% $130.1 $115.0 4.00% ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $103.0 $107.9 3.00% +3.89% +4.02% 2.00% 1.00% 0.54% 0.47% 0.

  13. Slide 13: Paycheck Protection Program: Loans and Fees

    Paycheck Protection Program: Loans and Fees PPP loans1 Fee income recognized from PPP1 $ billions $ millions Rounds 1 & 2 Round 3 $6.3 $102 $2.2 $5.0 $72 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED $1.5 $3.3 $0.7 $2.2 $4.1 $0.4 $1.6 $30 $3.5 $26 $2.6 $0.2 $15 $1.8 $1.3 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q

  14. Slide 14: Liquidity and Investment Securities Mix

    Liquidity and Investment Securities Mix Liquidity Investment Securities AFS Mix (~52% floating rate) $ billions As of Jun 30, 2022, percent Cash and Cash equivalents Investment securities AFS MBS & CMO ABS1 Corporates Other Investment securities HTM $4.3 $4.4 $0.3 $3.9 17% $0.5 $0.2 $0.5 ©2022 CUSTO

  15. Slide 15: Capital: Strong Capital Position

    Capital: Strong Capital Position Total risk-based capital percent 13.3% 13.6% 12.9% 12.9% 12.6% Q2’21 Q3’21 Q4’21 Q1’22 Q2’22E1 o Unrealized loss impact in AFS portfolio negatively impacted TCE/TA excl. PPP3 ~0.3% in Q2’22. Total cumulative impact TCE/TA excl PPP3 of ~0.7% as of Q2’22 ©2022 CUSTOMER

  16. Slide 16: Credit: Credit Quality and Reserves Remain Strong

    Credit: Credit Quality and Reserves Remain Strong NPL $ millions $46 $52 $50 $44 o Credit quality remains excellent as $28 evidenced by NPAs/Total Assets of only 0.14% at Q2’22 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 o The coverage ratio, excluding PPP loans2 was 1.28% at Q2’22 NCO $ millions Commercial NCO C

  17. Slide 17: Key Investment Highlights

    Key Investment Highlights Industry leading loan and deposit growth supported by best-in-class digital banking Exceptional credit quality Customer centric culture built around service and experience ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED Let’s take on tomorrow. Well positioned for higher interest

  18. Slide 18: 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 David Bishop Frank Schiraldi Jefferies Group LLC Stephens Inc. Casey Haire Matt Breese Wedbush S

  19. Slide 19: Appendix

    ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 19 Appendix

  20. Slide 20: 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

  21. Slide 21: 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 2022 Q2 • A Digital-Forward Super- Community Bank ~$20B Assets • Growth story remains ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED committed to maintaining best in class ~$17B credit quality D

  22. Slide 22: Environmental, Social & Governance Report

    Environmental, Social & Governance Report 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 charitable donatio

  23. Slide 23: Consumer Installment Loans

    Consumer Installment Loans Weighted average life of ~1.7 years FICO Score 1 Debt to Income ratio Borrower Income Average FICO Score1 ~729 Average DTI ~17.4% Average borrower income ~$102k 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

  24. Slide 24: CUBI Consumer Loans – Portfolio Credit trends

    CUBI Consumer Loans – Portfolio Credit trends 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 51% 50% 50% 45% 43% 42% 40% 40% 38% 39% 41% 30% 25% 30% 20% 23% 20% 17% 14% 14% 10% 10% 4%

  25. Slide 25: Consumer installment loans impairment remains well below industry levels

    CUBI Consumer installment loans impairment remains well below industry levels Impairment of consumer installment loans Percent CUBI Industry 15.0 ©2022 CUSTOMERS BANK / ALL RIGHTS RESERVED 10.0 6.4 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 06/22 • CUBI

  26. Slide 26: Credit: Allowance for Credit Losses for Loans and Leases

    Credit: Allowance for Credit Losses for Loans and Leases June 30, 2022 Q2 2022 Allowance for Credit Annualized Net Charge ($ in thousands) Amortized Cost Losses Lifetime Loss Rate Off Ratio Loans and Leases Receivable: Commercial: Multi-Family 2,008,784 9,765 0.49% 0.40% Commercial and Industrial 5,

  27. Slide 27: Liquidity

    Liquidity Liquidity Sources ($000's) 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 YOY Change Cash and Cash Equivalents $430,501 $1,052,055 $518,032 $274,600 $245,178 ($185,323) FHLB Available Borrowing Capacity $1,466,067 $2,031,551 $1,798,374 $3,213,767 $2,924,637 $1,458,570 FRB Available Borrowing Capacity $197,

  28. 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

  29. Slide 29: Reconciliation of Non-GAAP Measures – Core Earnings

    Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Earnings - Customers Bancorp ($ in thousands, except per share data) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income to common shareholders $ 56,519 $ 1.68 $ 74

  30. Slide 30: Reconciliation of Non-GAAP Measures – Core Earnings, Excluding PPP

    Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Earnings, Excluding PPP - Customers Bancorp ($ in thousands, not including per share amounts) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 USD Per Share USD Per Share USD Per Share USD Per Share USD Per Share GAAP net income available to share

  31. 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) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 GAAP net income $ 58,650 $ 76,761 $ 100,669 $ 116,042 $ 61,341 Reconciling items (after tax): Net loss from discontinued operations - -

  32. 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) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 GAAP net income $ 58,650 $ 76,761 $ 100,669 $ 116,042 $ 61,341 Reconciling items: Income tax expense 18,

  33. Slide 33: Reconciliation of Non-GAAP Measures – Core ROCE

    Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Return on Average Common Equity ($ in thousands) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 GAAP net income to common shareholders $ 56,519 $ 74,896 $ 98,647 $ 110,241 $ 58,042 Reconciling items (after tax): Net loss from discontinued operat

  34. Slide 34: Reconciliation of Non-GAAP Measures – Tangible Equity

    Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Tangible Equity ($ in thousands) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 $ 1,353,390 $ 1,377,406 $ 1,366,217 $ 1,284,299 $ 1,250,729 GAAP - Total shareholders' equity Reconciling items: Goodwill and other intangibles (3,629) (3,678) (3,736) (3

  35. 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) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 GAAP - Total shareholders' equity $ 1,353,390 $ 1,377,406 $ 1,366,217 $ 1,284,299 $ 1,250,729 Reconciling ite

  36. 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) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 GAAP - Total shareholders' equity $ 1,353,390 $ 1,377,406 $ 1,366,217 $ 1,284,299 $ 1,250,729 Reconciling items: ©2022 CUSTO

  37. Slide 37: Reconciliation of Non-GAAP Measures – Core Loans

    Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Loans (Total loans and leases, excluding PPP) ($ in thousands) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 Total loans and leases $ 15,664,353 $ 14,073,518 $ 14,568,885 $ 15,515,537 $ 16,967,022 PPP loans (1,570,160) (2,195,902) (3,250,008) (

  38. Slide 38: Reconciliation of Non-GAAP Measures – Core Assets

    Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Core Assets ($ in thousands) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 GAAP - Total assets $ 20,251,996 $ 19,163,708 $ 19,575,028 $ 19,108,922 $ 19,635,108 Reconciling items: Goodwill and other intangibles (3,629) (3,678) (3,736) (3,794) (3,853)

  39. 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) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 GAAP net interest income $ 164,852 $ 164,699 $ 193,694 $ 219,892 $ 138,757 PPP net interest income (18,946) (34,615) (78,647) (112,

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