Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Q2 2024 Earnings Presentation
37 slides from Customers Bancorp's earnings presentation, Jul 26, 2024
Slide 1: Investor Presentation: Q2 2024
Let’s take on tomorrow. Investor Presentation: Q2 2024 July 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: Key Highlights
Key Highlights Let’s take on tomorrow. Q2’24 Earnings Review GAAP EPS of $1.66 and Core EPS1 of $1.49 exceeds consensus estimates $0.6 billion of lower-cost deposit growth from commercial clients used to pay down $0.5 Deposit Remix billion of higher-cost consumer deposits; wholesale CDs reduced by $
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: What Makes Customers Bank Unique?
What Makes Customers Bank Unique? Let’s take on tomorrow. Ranked #1 among banks with $10 billion to $50 billion in assets CULTURE Client Centric Entrepreneurial Consistent Recruiter Focus Culture Banking of Top Talent Entrepreneurs ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED FOCUS Target Top
Slide 6: Financial Highlights - GAAP
1.0 Q2’24 EARNINGS REVIEW Financial Highlights - GAAP Let’s take on tomorrow. Q2’24 Q2’24 (vs. Q1’24) Highlights Profitability Balance Sheet Credit Diluted EPS 3.29% $20.9B 0.23% $1.66 vs. 3.10% -2% +6 bps ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED NIM Total Assets NPA Ratio Net Income 1.11
Slide 7: Financial Highlights – Core
1.0 Q2’24 EARNINGS REVIEW Financial Highlights – Core Let’s take on tomorrow. Q2’24 Q2’24 (vs. Q1’24) Highlights Profitability Balance Sheet Credit Core EPS1,2 3.29% $20.9B 0.23% $1.49 vs. 3.10% -2% +6 bps ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED NIM Total Assets NPA Ratio Core Net Income
Slide 8: Successfully Executing on Deposit Franchise Transformation
2.0 DEPOST REMIX Successfully Executing on Deposit Franchise Transformation Let’s take on tomorrow. Total Deposits $ billions • Gross deposit inflows of $0.6 billion from commercial clients used to paydown $0.5 billion of higher-cost (~5.0%) consumer deposits $18.0 $18.2 $17.9 $18.0 • Excess cash us
Slide 9: Deposit Remix Strategy Resulting in Declining Cost of Deposits
2.0 DEPOSIT REMIX Deposit Remix Strategy Resulting in Declining Cost of Deposits With Substantial Momentum on New Banking Teams Let’s take on tomorrow. Total Deposits New Banking Teams Update $ billions • ~$900 million of lower-cost deposits from banking teams hired since Q1’231 $18.0 3.45% $17.7 3.
Slide 10: Corporate and Specialized Verticals Driving Loan Growth
3.0 LOAN GROWTH Corporate and Specialized Verticals Driving Loan Growth Let’s take on tomorrow. Loans - HFI Loans – HFI Growth QoQ $ billions $ billions • Continued opportunity to deploy liquidity at ~300 basis points additional spread led by our Corporate & Specialized verticals with holistic relat
Slide 11: Net Interest Margin Expected to Continue to Improve Throughout 2024
4.0 MARGIN EXPANSION AND INDUSTRY LEADING EFFICIENCY Net Interest Margin Expected to Continue to Improve Throughout 2024 Let’s take on tomorrow. Net Interest Income • 19 basis point margin expansion in Q2’24 driven by $ millions both asset and liability mix improvements $165.3 $160.4 $167.7 +$7.3 •
Slide 12: Customers Operates with Industry-Leading Efficiency
4.0 MARGIN EXPANSION AND INDUSTRY LEADING EFFICIENCY Customers Operates with Industry-Leading Efficiency Let’s take on tomorrow. Core Non-Interest Expense1 Core Non-Interest Expense1 / Average Assets $ millions percent • Revenues from new banking teams expected to exceed • CUBI’s core non-interest e
Slide 13: Tangible Book Value Per Share Exceeds $50
5.0 TANGIBLE BOOK VALUE GROWTH Tangible Book Value Per Share Exceeds $50 Let’s take on tomorrow. AOCI Tangible Book Value1 per share • Tangible book value1 has more than doubled over the $54.85 last five years ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED $4.15 • 5-year+ CAGR in TBV1 of 15%2 1
Slide 14: Robust Capital Levels Provides Customers With Significant Flexibility
6.0 STRONG CAPITAL AND LIQUIDITY Robust Capital Levels Provides Customers With Significant Flexibility Let’s take on tomorrow. Q2’23 Q3’23 Q4’23 Q1’24 Q2’241 CET1 Risk-Based Capital percent +250 bps 12.6% 12.8% 12.2% 10.3% 11.3% ` • Achieved ~7.5% TCE/TA3 target Total Risk-Based Capital • TCE/TA3 in
Slide 15: Robust Liquidity Position with Approximately 193% Coverage of Uninsured Deposits
6.0 STRONG CAPITAL AND LIQUIDITY Robust Liquidity Position with Approximately 193% Coverage of Uninsured Deposits Let’s take on tomorrow. Immediately Available Liquidity Loans-HFI to Deposits $ billions Q2’24, percent $8.9 $8.3 89% $3.7 $3.0 75% $1.1 $1.0 $4.1 $4.3 ©2024 CUSTOMERS BANCORP, INC. / AL
Slide 16: Credit Metrics Remains Healthy
7.0 MAINTAINING SUPERIOR CREDIT QUALITY Credit Metrics Remains Healthy Let’s take on tomorrow. Q2’23 Q3’23 Q4’23 Q1’24 Q2’24 NPAs % of Total Assets NPAs % of Total Assets percent Q2’24, percent 0.43% 0.23% 0.13% 0.14% 0.13% 0.17% 0.23% CUBI Regional Bank Peers1 Commercial NCOs CRE % of Loans-HFI per
Slide 17: Concluding Perspectives
Concluding Perspectives Let’s take on tomorrow. EPS Beat GAAP EPS of $1.66 and Core EPS1 of $1.49 exceeds consensus estimates 11% annualized loan growth contrasting with industry trends Loan Growth Loans originated at ~300 bps spread to cash/securities Net interest margin increased 19 bps QoQ and on
Slide 18: Analyst Coverage
ANALYST COVERAGE B.Riley Securities, Inc. Maxim Group LLC 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. We
Slide 19: Appendix
APPENDIX SSeeeaeeeSeoee®s SSSeeeaeeeSeoee®& SSeSeeeeeSeoees& SSeEeeeaeeaeaeeeoeoees SSeeaee2eSseeneen28eG
Slide 20: Customers Bancorp Overview
Customers Bancorp Overview Let’s take on tomorrow. Customers Bancorp, Inc. Portsmouth NYSE: CUBI Boston Corporate & Specialized Banking Providence NYC Community Banking West Reading, PA Chicago Bay Reno Denver Headquarters PA Area Washington, D.C. Raleigh/Durham Southern California Dallas Offices1 4
Slide 21: Demonstrated Sustainable Organic Growth Increasing Revenue, EPS and TBVPS
Demonstrated Sustainable Organic Growth Increasing Revenue, EPS and TBVPS at 15%+ CAGR Over the Last Five Years Let’s take on tomorrow. Total Revenue CAGR Diluted EPS CAGR F Y ’18-FY’23, percent F Y ’18-FY’23, percent 19% 33% 12% 7% ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED CUBI Top Quarti
Slide 22: 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 ~738 Average DTI1 ~20% Average Borrower Income ~$106k 660-679 700-749 0-9.99% 40 – 49.99% <$50K >$100K 680-699 750+
Slide 23: 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, Q2’24 percent, Q2’24 • Spot yield: 5.19% • Spot yield: 4.16% • Effective duration: 2.0 years • Effective duration: 3.1 yea
Slide 24: Selected 2024 Proxy Peers
Selected 2024 Proxy Peers Let’s take on tomorrow. • BankUnited • Independent • Commerce • Northwest • Community Bank System • Old National • FB Financial • Pinnacle • First Busey • Sandy Spring ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED • F.N.B. • United Community • Fulton Note: Excludes th
Slide 25: Robust Sources of Liquidity
Robust Sources of Liquidity Let’s take on tomorrow. Liquidity Sources ($000's) 2Q 24 1Q 24 QoQ Change Cash and Cash Equivalents $3,048,586 $3,701,120 ($652,534) FHLB Available Borrowing Capacity $966,409 $1,119,296 ($152,887) FRB Available Borrowing Capacity $4,283,486 $4,082,885 $200,601 ©2024 CUST
Slide 26: Allowance for Credit Losses for Loans and Leases
Allowance for Credit Losses for Loans and Leases Let’s take on tomorrow. ($ in thousands) June 30, 2024 March 31, 2023 Amortized Cost1 Allowance for Credit Losses Lifetime Loss Rate2 Amortized Cost1 Allowance for Credit Losses Lifetime Loss Rate3 Loans and Leases Receivable: Commercial: Commercial a
Slide 27: 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 28: Reconciliation of Non-GAAP Measures – 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) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Total Per share Total Per share Total Per share Total Per share Total Per share
Slide 29: Reconciliation of Non-GAAP Measures – Core ROAA
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 (dollars in thousands except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 GAAP net income $ 58,085 $ 49,726 $ 62,09
Slide 30: Reconciliation of Non-GAAP Measures – Core ROACE
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 (dollars in thousands except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 GAAP net income to common s
Slide 31: Reconciliation of Non-GAAP Measures – Core PTPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Core pre-tax pre-provision net income and ROAA and adjusted core pre-tax pre-provision net income and ROAA - Customers Bancorp (dollars in thousands except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 GAAP ne
Slide 32: Reconciliation of Non-GAAP Measures – Core efficiency ratio
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Core efficiency ratio and adjusted core efficiency ratio - Customers Bancorp (dollars in thousands except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 GAAP net interest income $ 167,653 $ 160,385 $ 172,506 $
Slide 33: Reconciliation of Non-GAAP Measures – Core non-interest expense
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Core non-Interest expense to average total assets and adjusted core non-interest expense to average total assets- Customers Bancorp (dollars in thousands except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 GA
Slide 34: Reconciliation of Non-GAAP Measures – TCE to tangible assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Tangible common equity to tangible assets - Customers Bancorp (dollars in thousands except per share data) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 GAAP total shareholders' equity $ 1,746,865 $ 1,691,617 $ 1,638,394 $ 1,
Slide 35: Reconciliation of Non-GAAP Measures – Tangible book value per share
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Tangible book value per common share - Customers Bancorp (dollars in thousands except per share data) Q2 2024 Q4 2023 Q4 2022 Q4 2021 Q4 2020 Q4 2019 Q4 2018 ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED GAAP tota
Slide 36: Reconciliation of Non-GAAP Measures – Business unit deposits
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) Let’s take on tomorrow. Business unit deposits (Total deposits, excluding wholesale CDs and BMTX student deposits) - Customers Bancorp ©2024 CUSTOMERS BANCORP, INC. / ALL RIGHTS RESERVED (Dollars in thousands, except per share data) Q2 2024 Q1
Slide 37: Reconciliation of Non-GAAP Measures – Credit loss reserve coverage
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 (dollars in thousands) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Loans and leases receivable $ 12,254,204 $ 11,936,621 $ 11,963,