Slide 1: Highly Focused, Low Risk, Above Average Growth
Highly Focused, Low Risk, Above Average Growth Bank Holding Company Investor Presentation Member FDIC July, 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, April and July Earnings Releases, the Form 10K as of, and for the Period Ending December 31, 2016, and th
Slide 6: Q2 2017 Highlights
Q2 2017 Highlights • Q2 2017 Net Income to Common Shareholders of $20.1 million Up 15.4% Over Q2 2016 • Q2 2017 Diluted Earnings Per Common Share of $0.62, Up 5.1% from Q2 2016 • Q2 2017 Net Income from Continuing Operations to Common Shareholders was $25.3 million Up 28.5% Over Q2 2016 • Q2 2017 Di
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: • Banking Privately Held Businesses – Commercial C&I loans are Consumer & Residential 40% of the portfolio 6% Com
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 Net Income & Earnings Per Share $80 $2.31 $70 $1.96 $60 $1.57 $1.55 $50 $1.30 $1.29 $40 $30 $20 $0.35 $10 $0 2011 2012 2013 2014 2015 2016 YTD June 2017 Net Income Available to Common Shareholders Fully Diluted EPS CUBI KBW Regional Bank Source: SNL Financial Note: Chart begins 2/2
Slide 12: Customers Bank
Customers Bank Executing On Our Unique High Performing Banking Model 12
Slide 13: Results in: Organic Growth of Deposits with Controlled Costs
Results in: Organic Growth of Deposits with Controlled Costs Customers’ strategies of single point of contact and recruiting known teams in target markets produce rapid deposit growth with low total cost Total Deposit Growth ($’s billions) Average DDA Growth ($mm) $1,600 CAGR: 49% $8.0 CAGR: 33% $1.
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: Demonstrate Outstanding Loan Quality
Demonstrate Outstanding Loan Quality 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% 1.50% 0.60% 0.48% 0.48% 0.47% 0.42% 0.45% 1.50% 1.09% 0.91% 0.89% 0.90% 0.40% 0.28% 1.00% 0.72% 0.60% 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 $100 million annual Commercial Loan and Deposit Growth ($’s in billions) revenues $4.5 § Single point of contact $4.0 LOAN CAGR: 28% § NE, NY, PA & NJ markets $3.5 $4.
Slide 17: Multi-Family Banking Strategy
Multi-Family Banking Strategy Banking High Net Worth Families § Focus on families that have income producing real estate in their portfolios Multi-Family Loan and Deposit Growth ($’s in billions) § Private banking approach $4.0 $3.5 § Focus Markets: New York & Philadelphia $3.2 $2.9 MSAs $3.0 § Aver
Slide 18: Build Efficient Operations
Build Efficient Operations Staff Expense Ratio Occupancy Expense Ratio 0.50% 2.00% 1.71% 1.74% 1.71% 1.73% 1.73% 1.71% 0.37% 0.38% 0.38% 0.36% 1.45% 1.45% 0.32% 1.43% 1.38% 1.36% 1.40% 0.28% 0.39% 0.39% 0.40% 0.38% 0.37% 1.03% 1.03% 0.22% 0.19% 0.35% 0.83% 0.78% 0.75% 0.15% 0.12% 1.00% 0.67% 0.11% 0
Slide 19: Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth
Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth Net Interest Income ($mm) (1) Net Interest Income Simulation (1)(2) 2Q '17 vs. 2Q '16 2.50% Growth Estimated Increase in Net Interest Income over 9% the Next Twelve Months $300.0 CAGR: 41% 2.00% 2.22% $249.5 Q4 $250
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: -10% 90% 78% 80% 70% 59% 56% 60% 55% 48% 47% 50% 42% 40% 30% 20% 10% 0% 2011 2012 2013 2014 2015 2016 YTD June 201
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 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 $22.00 CAGR: 12% $20.00 ROA 0.85% 0.89% 0.84% 1.09% 0.93% $18.00 $16.00 ROCE 13.07% 13.21% 10.45% 13.80% 11.84% $14.00 $12.00 NIM 2.83%
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 Three months ended June 30, 2017 (dollars in thousands ) Community Business Banking BankMobile Consolidated Interest income $ 91,107 $ 2,745 $ 93,852 Interest expense 25,228 18 25,246 Net interest income 65,879 2,727 68,606 Provision for loan losses 535 — 535 No
Slide 26: Other BankMobile Results
Other BankMobile Results • Opened over 325,000 new checking accounts since June 16, 2016. • Funds received from educational institutions and processed to students totaled $1.23 billion during Q2 2017. • 33% 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) Q2 Q1 Q2 2017 2017 2016 Interest income: Loans receivable, including fees $ 67,036 $ 61,461 $ 59,013 Loans held for sale
Slide 34: Income Statement
Income Statement CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED - UNAUDITED (Dollars in thousands, except per share data) June 30, June 30, 2017 2016 Interest income: Loans receivable, including fees $ 128,497 $ 113,485 Loans held for sale 31,
Slide 35: Balance Sheet
Balance Sheet CUSTOMERS BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET - UNAUDITED (Dollars in thousands) June 30, December 31, June 30, 2017 2016 2016 ASSETS Cash and due from banks $ 18,503 $ 17,485 $ 26,768 Interest-earning deposits 383,187 227,224 256,029 Cash and cash equivalents 401
Slide 36: Net Interest Margin
Net Interest Margin CUSTOMERS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED) (Dollars in thousands) Three months ended June 30, March 31, June 30, 2017 2017 2016 Average Average Average Average yield or cost Average yield or cost Average yield or cost Balance
Slide 37: Net Interest Margin
Net Interest Margin CUSTOMERS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED) (Dollars in thousands) Six months ended June 30, June 30, 2017 2016 Average Average Average yield or cost Average yield or cost Balance (%) Balance (%) Assets Interest earning deposit
Slide 38: Loan Composition
Loan Composition CUSTOMERS BANCORP, INC. AND SUBSIDIARIES PERIOD END LOAN COMPOSITION (UNAUDITED) (Dollars in thousands) June 30, December 31, June 30, 2017 2016 2016 Commercial: Multi-family $ 3,550,375 $ 3,214,999 $ 3,336,083 Commercial & industrial (1) 3,607,128 3,487,668 3,464,567 Commercial rea
Slide 39: Asset Quality
Asset Quality CUSTOMERS BANCORP, INC. AND SUBSIDIARIES ASSET QUALITY - UNAUDITED (Dollars in thousands) As of June 30, 2017 As of December 31, 2016 As of June 30, 2016 Total Total Total Non Total NPLs / Reserves Non Total NPLs / Reserves Non Total NPLs / Reserves Total Accrual Credit Total to Total
Slide 40: Net Charge Offs
Net Charge Offs CUSTOMERS BANCORP, INC. AND SUBSIDIARIES NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED (Dollars in thousands) For the Quarter Ended Q2 Q1 Q2 2017 2017 2016 Originated Loans Commercial & Industrial (1) $ 1,840 $ (45) $ 41 Residential 69 31 — Other Consumer 24 — 5 Total Net Charge-offs (Rec
Slide 41: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited (dollars in thousands except per share amounts) Pre-tax Pre-provision Return on Average Assets Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016 GAAP Net Income $ 23,722 $ 25,747 $ 19,828 $ 21,207 $ 19,483 Reconciling Items: Provision for loan losses 535 3,050 1
Slide 42: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Six months ended Net Interest Margin, tax equivalent June 30, 2017 2016 Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016 GAAP Net interest income $ 131,040 $ 120,792 $ 68,616 $ 62,424 $ 64,134 $ 64,590 $ 63,161 Tax-equivalent adjustment 197 202 104 93 92 96 98
Slide 43: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Tangible Common Equity to Average Tangible Assets Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016 GAAP - Total Shareholders' Equity $ 910,289 $ 879,817 $ 855,872 $ 789,811 $ 680,552 Reconciling Items: Preferred Stock (217,471) (217,471) (217,471) (217,549) (13
Slide 44: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Tangible Book Value per Common Share Q2 2017 2016 2015 2014 2013 2012 2011 GAAP - Total Shareholders' Equity $ 910,289 $ 855,872 $ 553,902 $ 443,145 $ 386,623 $ 269,475 $ 147,748 Reconciling Items: Preferred Stock (217,471) (217,471) (55,569) — — — — G
Slide 45: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited Core Net Income Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016 Q1 2016 GAAP Net Income from continuing operations $ 28,952 $ 26,924 $ 23,337 $ 23,288 $ 21,774 $ 19,308 Preferred stock dividends 3,615 3,615 3,615 2,552 2,062 1,286 Net income from continuing op
Slide 46: Core Non-Interest Income
Core Non-Interest Income YTD June 2017 2016 2015 2014 2013 2012 2011 GAAP non-interest income $ 12,398 $ 23,165 $ 27,572 $ 25,126 $ 22,703 $ 28,958 $ 11,469 Reconciling Items: Impairment losses on investment securities 4,585 7,262 — — — — — (Gains) losses on sale of investment securities (3,183) (25