Slide 1: A Digital-Forward Super-Community Bank: Investor Presentation Q4 2022 / FY 2022
Let’s take on tomorrow. “A Digital-Forward Super-Community Bank“ Investor Presentation: Q4 2022 / FY 2022 January 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements customers bancorp 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 sta
Slide 3: Customers Bancorp Snapshot
Customers Bancorp Snapshot customers bancorp Let’s take on tomorrow. A forward thinking super-community bank focused on superior Customers Bancorp, Inc. customer service through high-tech, high-touch model NYSE: CUBI Community Banking West Reading, Headquarters PA Regional C&I, Investment CRE, Multi
Slide 4: Community Banking: Single point of contact model delivers best in class customer service
Community Banking: Single point of contact model delivers best in class customers bancorp customer service with branch-lite footprint Let’s take on tomorrow. Community Banking-Loans Q4’22, percent 4% Regional C&I 9% 25% Investment CRE Multifamily Mortgages SBA 38% ©2023 CUSTOMERS BANK / ALL RIGHTS R
Slide 5: Corporate & Specialty Banking: Highly experienced, specialized teams
Corporate & Specialty Banking: Highly experienced, specialized teams customers bancorp serving corporate clients through diversified product offering Let’s take on tomorrow. Corporate & Specialty Banking-Loans Corporate & Specialty Banking-Loans 2018-2022, $ billions Q4’22, percent1% 1% 6% Fund Fina
Slide 6: Digital Banking: Strong growth in lending and fees
Digital Banking: Strong growth in lending and fees while attracting customers bancorp significant deposits Let’s take on tomorrow. Digital Banking – Loans ex PPP1 API-enabled Digital Solutions 2019-2022, $ billions $1.4 Digital Onboarding $1.2 ERP Integrations API Enabled FX Customer Facing API Libr
Slide 7: Continued organic growth while maintaining low credit risk profile
Customers Bank has demonstrated continued organic customers bancorp growth while maintaining low credit risk profile Let’s take on tomorrow. Total Assets Total Loans PPP $ billions $ billions 26% annual growth in total 21% $20.9 17% deposits $19.6 $18.4 $1.0 $3.3 $15.8 $15.8 $4.6 $14.6 $1.0 $8.4 bil
Slide 8: Dramatic increase in profitability and margins
Customers Bank growth has come with a customers bancorp dramatic increase in profitability and margins Let’s take on tomorrow. NII EPS PPP $ millions per share 25% $685 38% $8.91 $624 $59 $6.51 $261 $5.79 $1.12 $404 $3.74 $55 $565 NII ex PPP1 has more than ©2023 CUSTOMERS BANK / ALL RIGHTS RESERVED
Slide 9: Highlights – GAAP
Highlights – GAAP customers bancorp Let’s take on tomorrow. Q4’22 FY’22 Q4’22 (vs. Q4’21) Highlights Profitability Balance Sheet Credit Diluted EPS 2.67% $20.9B 0.15% vs. 4.14% +7% -10 bps $0.77 $6.51 ©2023 CUSTOMERS BANK / ALL RIGHTS RESERVED NIM Total Assets NPA Ratio Net income1 0.55% $15.8B $30.
Slide 10: Highlights – Adjusted/Core
Highlights – Adjusted/Core customers bancorp Let’s take on tomorrow. Q4’22 FY’22 Q4’22 (vs. Q4’21)1 Highlights Profitability Balance Sheet Credit Core EPS ex PPP1,2,3 2.87% $19.9B 0.15% vs. 3.12% +22% -10 bps $1.37 $5.65 ©2023 CUSTOMERS BANK / ALL RIGHTS RESERVED NIM1,2 Core Assets1,2 NPA Ratio4 +28
Slide 11: Strong core bank loan growth driven by low credit risk verticals
Strong core bank loan growth driven by low credit risk Corporate & customers bancorp Specialty Banking vertical Let’s take on tomorrow. Loans ex PPP-HFI1 $ billions Community Banking2 Corporate & Specialty Banking3 • HFI loan growth ex PPP1: Digital Banking4 +$0.3B (2%) QoQ, +$3.2B (28%) YoY • Net g
Slide 12: Significant deposit growth while increasing share of DDAs
Significant deposit growth while increasing share of DDAs customers bancorp Let’s take on tomorrow. Deposits $ billions DDA Non-DDA1 • Total deposit growth: +$1.4B YoY, 8% YoY • Proportion of DDAs has increased from 27% in 2018 to ©2023 CUSTOMERS BANK / ALL RIGHTS RESERVED 57% in 2022 and is well ab
Slide 13: Upside from reinvestment of lower yielding assets
Continued upside from reinvestment of lower yielding assets into higher customers bancorp yielding assets Let’s take on tomorrow. Interest earning assets ex PPP1 $ billions Cash & other2 Investment securities Loans ex PPP1 • $1.5 billion cash flows from Spot yields AFS and PPP to be reinvested (Q4’2
Slide 14: Continued growth in core bank NII
Continued growth in core bank NII customers bancorp Let’s take on tomorrow. NII ex PPP1 NIM ex PPP1 $ millions percent $563 3.20% 3.16% 3.16% +33% 3.10% +22% 2.96% $424 3.00% 2.90% ©2023 CUSTOMERS BANK / ALL RIGHTS RESERVED $349 2.75% 2.80% $277 2.70% $258 2.58% 0.00% 2018 2019 2020 2021 2022 2018 2
Slide 15: Material improvement in efficiency ratio and operating leverage
Material improvement in efficiency ratio and strong positive operating customers bancorp leverage Let’s take on tomorrow. Core non-interest expense1,2 Core efficiency ratio1,2 $ millions percent 400 65% 63% 350 60% ©2023 CUSTOMERS BANK / ALL RIGHTS RESERVED +9% $302 300 55% -20% 250 $214 50% 200 45%
Slide 16: Strong capital position
Strong capital position customers bancorp Let’s take on tomorrow. Total risk-based capital percent 12.9% 12.9% 12.6% 12.5% 12.0% Q4’21 Q1’22 Q2’22 Q3’22 Q4’221 • Total risk-based capital and CET1 risk-based capital within the operating range and well CET1 risk-based capital above the regulatory ©202
Slide 17: Consistent growth in tangible book value
Consistent growth in tangible book value customers bancorp Let’s take on tomorrow. Tangible book value1 AOCI P er share • Tangible book value1 has $43.87 increased by 14% CAGR since ©2023 CUSTOMERS BANK / ALL RIGHTS RESERVED 2018 or ~1.7x compared to $4.90 1.02x for Mid-Cap Banks2 • Tangible book va
Slide 18: ~70% of loan book in low-to-no credit risk verticals
~70% of loan book and 90% of loan growth in low-to-no credit risk verticals customers bancorp Let’s take on tomorrow. Low-to-no Credit Risk Loan Portfolio ~70% of loan book and 90% of loan growth in 2022 ($3.1 Q4’22, $ billions billion out of total $3.5 billion) was in low-to-no risk credit risk ver
Slide 19: Credit quality remains strong and reserves are over 400% of NPLs
Credit quality remains strong and reserves are over 400% of NPLs customers bancorp Let’s take on tomorrow. NPL $ millions $50 $44 $28 $28 $31 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Commercial NCO percent 0.01% 0.05% 0.22% 0.08%1,3 • Reserves/NPLs was 426.0% at -0.02% Q4’22 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 ©2023
Slide 20: 2023 Outlook
2023 Outlook customers bancorp Let’s take on tomorrow. Metrics 2022 Outlook for FY 2023 Loans ex PPP1 $14.8 billion Low-mid single digits growth Flattish with focus on reducing high-cost Deposits $18.2 billion deposits NIM ex PPP1 3.16% 2.85-3.05% Core non interest ©2023 CUSTOMERS BANK / ALL RIGHTS
Slide 21: Key Investment Highlights
customers Key Investment Highlights bancorp Let’s take on tomorrow. 1 Well positioned to manage the risks of dynamic environment o Moderating growth in this environment to maintain/expand margin, improve capital ratios while maintaining profitability o Selective in growing loans, emphasizing growth
Slide 22: Analyst Coverage
ANALYST COVERAGE B. Riley Financial, Inc. Maxim Group Inc. Michael Diana D.A. Davidson Companies Piper Sandler Companies Peter Winter Frank Schiraldi Hovde Group Stephens Inc. David Bishop Matt Breese Jefferies Group LLC Wedbush Securities Inc. Casey Haire David Chiaverini Keefe, Bruyette & Woods In
Slide 23: Liquidity
Liquidity customers bancorp Let’s take on tomorrow. Liquidity Sources ($000's) 4Q 22 3Q 22 2Q 22 1Q 22 4Q 21 YOY Change Cash and Cash Equivalents $455,807 $404,465 $245,178 $274,600 $518,032 ($62,225) FHLB Available Borrowing Capacity $2,265,499 $2,999,524 $2,924,637 $3,213,767 $1,798,374 $467,124 F
Slide 24: Credit: Allowance for Credit Losses for Loans and Leases
Credit: Allowance for Credit Losses for Loans and Leases customers bancorp Let’s take on tomorrow. December 31, 2022 Allowance for Credit ($ in thousands) Amortized Cost Losses Lifetime Loss Rate Loans and Leases Receivable: Commercial: Multifamily $ 2,213,019 $ 14,541 0.66% Commercial and Industria
Slide 25: Consumer Installment Loans
Consumer Installment Loans customers bancorp Let’s take on tomorrow. Weighted average life of ~1.7 years FICO Score1 Deb t to Income ratio Borrower Income Average FICO Score1 ~740 Average DTI ~19.0% Average borrower income ~$107k 660-679 700-749 0-9.99% 40 – 49.99% <$50K >$100K 680-699 750+ 10 – 19.
Slide 26: CUBI Consumer Loans – Portfolio Characteristics
CUBI Consumer Loans – Portfolio Characteristics customers bancorp Let’s take on tomorrow. Portfolio FICO1 score trends Portfolio borrower income trends <50k 660-679 50k-99.99k 680-699 >100k 700-749 750+ 60% 60% ©2023 CUSTOMERS BANK / ALL RIGHTS RESERVED 50% 45% 50% 43% 42% 43% 40% 36% 40% 39% 41% 30
Slide 27: Consumer installment loans impairment remains well below industry levels
CUBI Consumer installment loans impairment remains well below industry customers bancorp levels and underwriting Let’s take on tomorrow. Impairment of consumer installment loans Percent CUBI Industry 15.0 ©2023 CUSTOMERS BANK / ALL RIGHTS RESERVED 10.0 5.0 0.0 03/19 06/19 09/19 12/19 03/20 06/20 09/
Slide 28: Non-GAAP Reconciliation – Unaudited
Reconciliation of Non-GAAP Measures - Unaudited customers bancorp Let’s take on tomorrow. Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition re
Slide 29: Core Earnings, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Core Earnings, Excluding PPP - Customers Bancorp ($ in thousands, not including per share amounts) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Twelve Months Ended December 31, Per Per Per Per Per Per Per U
Slide 30: Core Return on Average Assets, excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Core Return on Average Assets, excluding PPP - Customers Bancorp Twelve Months ($ in thousands) Ended December 31, Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 2022 2021 GAAP net income $ 28,711 $ 63,912 $
Slide 31: Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision, excluding PPP - Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 GAAP net income $ 28,711 $ 63,912 $ 58,650 $ 76
Slide 32: Core Return on Average Common Equity
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Core Return on Average Common Equity – Customers Bancorp ($ in thousands) Twelve Months Ended December 31, Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 2022 2021 GAAP net income to common shareholders $ 25,
Slide 33: Annualized Net Charge-Offs
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Annualized Net Charge-Offs ($ in thousands, expect percentages) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Net Annualized Annualized Annualized Annualized charge- net charge- Net charge- net charge-off Ne
Slide 34: Core Efficiency Ratio
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Core Efficiency Ratio - Customers Bancorp ($ in thousands) 2022 2021 2020 2019 2018 GAAP net interest income $ 623,720 $ 685,074 $ 403,688 $ 277,310 $ 257,877 GAAP non-interest income $ 32,272 $ 77,867
Slide 35: Core non-interest expense, excluding BMTX
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Core non-interest expense, excluding BMTX - Customers Bancorp ($ in thousands) 2022 GAAP non-interest expense $ 304,629 Severance expense (1,363) Impairments on fixed assets and leases (1,362) Legal re
Slide 36: Tangible Book Value per Common Share
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Tangible Book Value per Common Share - Customers Bancorp ($ in thousands, except per share data) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 GAAP - Total shareholders' equity $ 1,402,961 $ 1,386,931 $ 1,35
Slide 37: Tangible Common Equity to Tangible Assets, Excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Tangible Common Equity to Tangible Assets, Excluding PPP - Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 GAAP - Total shareholders' equity $ 1,402,961 $ 1,386,931 $ 1,353,3
Slide 38: Total loans and leases, excluding PPP (Core loans)
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Total loans and leases, excluding PPP (Core loans) – Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 $ 15,794,671 $ 15,336,688 $ 15,664,353 $ 14,073,518 $ 14,568,885 Total lo
Slide 39: Core Loans to total deposits; Core assets
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Core Loans (Total loans and leases, excluding PPP) to total deposits - Customers Bancorp ($ in thousands) 2022 2021 2020 2019 2018 Total loans and leases $ 15,794,671 $ 14,568,885 $ 15,832,251 $ 10,051
Slide 40: Interest earning assets, excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Interest earning assets, excluding PPP - Customers Bancorp ($ in thousands) 2022 2021 2020 2019 2018 Interest earning deposits $ 397,781 $ 482,794 $ 615,264 $ 179,410 $ 44,439 Investment securities, at
Slide 41: Coverage of credit loss reserves, excluding PPP
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Coverage of credit loss reserves for loans and leases held for investment, excluding PPP – Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Loans and leases receivable $ 14,14
Slide 42: Net Interest Income and NIM, Excluding PPP (quarterly)
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Net Interest Income, Excluding PPP - Customers Bancorp ($ in thousands) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 $ 135,137 $ 159,032 $ 164,852 $ 164,699 $ 193,694 GAAP net interest income 2,791 (9,632)
Slide 43: Net Interest Income and NIM, Excluding PPP (annual)
Reconciliation of Non-GAAP Measures – Unaudited (Contd.) customers bancorp Let’s take on tomorrow. Net Interest Income, excluding PPP - Customers Bancorp ($ in thousands) 2022 2021 2020 2019 2018 GAAP - net interest income $ 623,720 $ 685,074 $ 403,688 $ 277,310 $ 257,877 PPP net interest income (60