Customers Bancorp, Inc · NYSE:CUBI
Customers Bancorp — Investor Presentation (October 2016)
57 slides from Customers Bancorp's investor presentation, Oct 26, 2016
Slide 1: Investor Presentation October 2016
Highly Focused, Low Risk, Above Average Growth Bank Holding Company Investor PresentationOctober, 2016NYSE: CUBI Member FDIC
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 our ability to increase market share and control expenses;continued volatility in the credit and equity markets and its effect on the general economy;effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Publi
Slide 4: Business bank and digital consumer bank
A $9.6 billion asset business bank serving privately held businesses A digital consumer bank, set up as a division of Customers Bank, serving millennials, middle income families and underbanked throughout the United States Member FDIC
Slide 5: Investment Proposition
Investment Proposition Strong Organic Growth, Well Capitalized, Branch Lite Bank in Attractive Markets$9.6 billion asset bank with only 21 sales officesWell capitalized at 11.7% total risk based capital (estimated), 8.2% tier 1 leverage, and 5.9% tangible common equity to average tangible assets (1)
Slide 6: Banking Industry Trends
Banking Industry Trends……How Do We Deal with These Issues Impediments to Growth External Forces Role of traditional bank branches changing very rapidlyMobile banking fastest growing channelBanks of all sizes revisiting their business strategies, revenue generation models and cost structuresTechnolog
Slide 7: What is Our Business Model
Innovator / disruptor / not branch dependentDifferentiated / Unique modelTechnology savvyProduct dominance What is Our Business Model Credit Improving – Though Banks Face a Number of Operational Headwinds Credit Quality Improved over past 5 years; some pressure emergingQuality Asset Generation Remai
Slide 8: Our Approach to Developing a Winning Business Model
Our Approach to Developing a Winning Business Model Must focus on both “Relationship” or “High Touch” banking combined with “Highly Efficient” or “High Tech”. Strategy should be unique as to not be copied easilyAttract and retain best high quality talent. Business Bankers / Relationship Bankers with
Slide 9: A Highly Experienced Management Team
Our Competitive Advantage: A Highly Experienced Management Team
Slide 10: Executing On Our Unique High Performing Banking Model
Customers Bank Executing On Our Unique High Performing Banking Model
Slide 11: Disciplined Model for Superior Shareholder Value Creation
Disciplined Model for Increasing Shareholder Value Strong organic revenue growth + scalable infrastructure = sustainable double digit EPS = growth and increased shareholder valueA very robust risk management driven business strategyBuild tangible book value per share each quarter via earningsAny boo
Slide 12: Execution Timeline
Execution Timeline We invested in and took control of a $270 million asset Customers Bank (FKA New Century Bank)Identified existing credit problems, adequately reserved and recapitalized the bankActively worked out very extensive loan problemsRecruited experienced management team Enhanced credit and
Slide 13: Banking Strategy – Community Business Banking
Very Experienced Teams Exceptional Service Risk Based Incentive Compensation Banking Strategy – Community Business Banking Community Business Bank is Focused on businesses - ~95% of revenues come from businessesLoan and deposit business through these well diversified segments:Banking Privately Held
Slide 14: Organic Growth of Deposits with Controlled Costs
Results in: Organic Growth of Deposits with Controlled Costs Source: Company data. Total Deposit Growth ($mm) Average DDA Growth ($mm) Cost of Deposits Total Deposits per Branch ($mm) Customers’ strategies of single point of contact and recruiting known teams in target markets produce rapid deposit
Slide 15: Lending Strategy
Lending Strategy High Growth with Strong Credit QualityContinuous recruitment and retention of high quality teamsCentralized credit committee approval for all loansLoans are stress tested for higher rates and a slower economyInsignificant delinquencies on loans originated since new management team t
Slide 16: Build an Outstanding Loan Quality Portfolio
NPL Source: SNL Financial, Company data. Peer data consists of Northeast and Mid-Atlantic banks and thrifts with comparable size in assets and loan portfolios (excluding banks with large residential mortgage loan portfolios). Industry data includes all commercial and savings banks. Peer and Industry
Slide 17: C&I & Owner Occupied CRE Banking Strategy
C&I & Owner Occupied CRE Banking Strategy Private & Commercial BankingTarget companies with up to $100 million annual revenuesVery experienced teamsFour new teams with 14 professionals added in 2015, including a new business line Equipment Finance TeamSingle point of contactNE, NY, PA & NJ marketsSB
Slide 18: Multi-Family Banking Strategy
Multi-Family Banking Strategy Banking High Net Worth Families Multi-Family Loan and Deposit Growth ($mm) Focus on families that have income producing real estate in their portfoliosPrivate banking approachFocus Markets: New York & Philadelphia MSAsAverage Loan Size: $5.0 – $7.0 millionRemote banking
Slide 19: Build Efficient Operations
Staff Expense Ratio Build Efficient Operations Source: SNL Financial, Company data. Peer data consists of Northeast and Mid-Atlantic banks and thrifts with comparable size in assets and loan portfolios (excluding banks with large residential mortgage loan portfolios). Industry data includes SEC repo
Slide 20: Disciplined & Profitable Growth
Deposit, Lending and Efficiency Strategies Result in Disciplined & Profitable Growth Total Revenue ($mm) Core Net Income ($mm) (1) Net Interest Income ($mm) Strategy execution has produced superior growth in revenues and earnings Income / Expense Growth ($mm) Non-GAAP measure calculated as GAAP net
Slide 21: Building Customers to Provide Superior Returns to Investors
Tangible BV per Share Building Customers to Provide Superior Returns to Investors Recent Performance Results Financial Performance Targets Earnings per Share Guidance / Valuation Multiples
Slide 22: Community Business Banking and BankMobile Business Segments
Customers BankCommunity Business Banking and BankMobile Business Segments
Slide 23: Business Segment Disclosures
Business Segment Disclosures Customers Bank acquired the Disbursements Business of Higher One, Inc. on June 15, 2016The acquired Disbursements Business was combined with Customers Bank’s existing BankMobile product line in Q2 2016Effective for the 2016 third quarter, Customers begins reporting Commu
Slide 24: Segment Financial Performance Results
Segment Financial Performance Results Comparable 2015 periods are not provided as BankMobile was not operating as a segment at that time and operations were not material.Segment results include payment by Community Business Banking to BankMobile of $1.4 million in Q3, 2016 and $4.4 million year to d
Slide 25: Other BankMobile Results
Other BankMobile Results Migrated 304,000 checking accounts previously with another Higher One, Inc. partner bank since acquisition at the customers’ election with transferred balances totaling approximately $700 million between starting balances and incoming deposits. Opened over 200,000 new checki
Slide 26: BankMobile: A Revolutionary Bank
Customers¥ Bancorp, Inc. barkmoblle A REVOLUTIONARY bankmobile ape w a} A Division of Customers Bank 26
Slide 27: BankMobile mandate in 2014
BankMobile mandate in 2014 Develop a consumer bank in alignment with the future model of banking A completely branchless experience A fintech company with a bank charter10X better customer acquisition and retention strategy than traditional playersBetter product than what exists today More affordabl
Slide 28: Middle income target market needs a banking alternative
Our middle income target market is struggling and needs a banking alternative 33% of Americans living paycheck to paycheck 47% don’t have enough to pay for a $400 emergency 20% are saving nothing 50% are saving less than 5%Paying $32B in overdraft fees a year
Slide 29: Our guiding principles
Our guiding principles Customers Bancorp, Inc. Keep it simple Best-in-class user experience and customer service are how we will win We speak with an authentic voice 10X customer acquisition and retention strategy (©2016 BankMobie a Dnision of Customers Bank. All Rights Reserved, 29
Slide 30: Traditional customer acquisition model via branches doesn't work
Traditional customer acquisition model via branches doesn’t work
Slide 31: How we are disrupting the branch network
How we are disrupting the branch network
Slide 32: Our business model versus the old business model
Our business model versus the old business model
Slide 33: BankMobile's Customer Lifecycle Ecosystem
BankMobile’s Customer Lifecycle Ecosystem BankMobile is well positioned to be its customers' primary banking relationship throughout their lives
Slide 34: Partnerships to help with life
Partnerships to help with “life”
Slide 35: Fintech partnerships to create an Amazon for Financial Services
Fintech partnerships to create an “Amazon for Financial Services”
Slide 36: Distribution partnerships and white label banking
Distribution partnerships and white label banking opportunities significant
Slide 37: BankMobile is differentiated from other neo banks
BankMobile is differentiated from other ‘neo banks’
Slide 38: BankMobile results to date
BankMobile results to date through D2C and first B2B2C partner Bankmobile today is one of the top digital banks in the U.S.~1.5 million checking accounts; ~450,000 to 500,000 new checking accounts opened each year~$60 million per year non interest income revenues ~$600 million DDA’sExpected to be pr
Slide 39: The future of banking
The future of banking A fintech company with a bank charter Use data analytics to improve the banking experience Move away from money transactions to money management Use APIs to share info and create a financial marketplaceTake part in the Internet of Things Conversational AI for human touchAdvance
Slide 40: Contacts
Contacts Company:Robert Wahlman, CFO Tel: 610-743-8074 rwahlman@customersbank.comwww.customersbank.com Jay SidhuChairman & CEOTel: 610-301-6476 jsidhu@customersbank.comwww.customersbank.com
Slide 41: Appendix
Appendix Customers = Bancorp, Inc.
Slide 42: Customers Bank Risk Management
Customers Bank Risk Management
Slide 43: Elements of an Effective Risk Management Program
Elements of an Effective Risk Management Program
Slide 44: ERM Framework at Customers Bancorp, Inc.
ERM Framework at Customers Bancorp, Inc. Well Defined ERM Plan – ERM Integration into CAMELS +++++
Slide 45: Customers Bancorp, Inc. Financial Statements
Customers Bancorp, Inc. Financial Statements
Slide 46: Income Statement
Income Statement Customers Bancorp, Inc. (ols hm pe ser tt) ame dig 5 wes 9008
Slide 47: Income Statement
Income Statement Customers Bancorp, Inc. (Doles one cir shred) spent, september 38, ree age 5 mses ras “ea ertinome Bassi Te A tr eco 47
Slide 48: Balance Sheet
Balance Sheet Customers Bancorp, Inc. CUSTOMERS BANCORP, INC. AND SUBSIDIARIES (CONSOLIDATED BALANCE SHEET. UNAUDITED Doers ewe) September 38, December, September, s wean s sass anars nase auoes 302924 265.58 24593 Sams seas 2.402208 Limit ‘016995 Sasa 1 ee 579,098 SAN nat 50341 2,100 99 DIC on shar
Slide 49: Net Interest Margin
Net Interest Margin Customers Bancorp, Inc. (CUSTOMERS BANCORP, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEET / NET INTEREST MARGIN(UNAUDITED) (Dollars in thousands) September, ene 30, September 38, rn “Aveo “aeerage Aree yiclforemt AYERS yictforemnt —AYEREE yiedor ent Bewee S atee SS alae Acts Intere
Slide 50: Net Interest Margin
Net Interest Margin Customers Bancorp, Inc. CUSTOMERS BANCORP, INC. ANDSUBSIDIARIES AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED) (Dollars in thousands) September 38, September Avecmge yitdertod AYER yk fat Bae) _Batenee To) Assets Interest caring deposits S 219 053% —$ 295.485 0.26% Inves
Slide 51: Loan and Deposit Composition
Loan and Deposit Composition
Slide 52: Asset Quality
Asset Quality CUSTOMERS BANCORP, INC. AND SUBSIDIARIES ASSET QUALITY - UNAUDITED (Dollars in thousands) As of September 30, 2016 As of December 31, 2015 As of September 30, 2015 Total Loans Non Accrual /NPLs Total Credit Reserves NPLs / Total Loans Total Reserves to Total NPLs Total Loans Non Accrua
Slide 53: Net Charge Offs
Net Charge Offs Customers Bancorp, Inc. CUSTOMERS BANCORP, INC. AND SUBSIDIARIES NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED For the Quarter Ended @ Q @ (Dollars in thousands) 2016 2016 2015, Originated Loans Commercial & Industrial (1) $ 49 $ 41 $5324 ‘Commercial Real Estate- Non- ‘Owner Occupied - -
Slide 54: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited
Slide 55: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited
Slide 56: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited
Slide 57: Reconciliation of Non-GAAP Measures - Unaudited
Reconciliation of Non-GAAP Measures - Unaudited
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