Attached files
| file | filename |
|---|---|
| 8-K - CUSTOMERS BANCORP, INC. FORM 8-K - Customers Bancorp, Inc. | customers8k.htm |
Exhibit 99.1
1
Committed to Shareholder
Value Creation
Value Creation
September 2013
2
This presentation as well as other written or oral communications made from time to time by us, may contain certain forward-looking information within the
meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. These statements relate to future events or
future predictions, including events or predictions relating to our future financial performance, and are generally identifiable by the use of forward-looking
terminology such as “believes,” “expects,” “may,” “will,” “should,” “plan,” “intend,” “on condition,” “target,” “estimates,” “preliminary,” or “anticipates” or the
negative thereof or comparable terminology, or by discussion of strategy or goals or other future events, circumstances or effects. These forward-looking
statements regarding future events and circumstances involve known and unknown risks, uncertainties and other factors that may cause our actual results,
levels of activity, financial condition, performance or achievements to be materially different from any future results, levels of activity, financial condition,
performance or achievements expressed or implied by such forward-looking statements. This information is based on various assumptions, estimates or
judgments by us that may not prove to be correct.
meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. These statements relate to future events or
future predictions, including events or predictions relating to our future financial performance, and are generally identifiable by the use of forward-looking
terminology such as “believes,” “expects,” “may,” “will,” “should,” “plan,” “intend,” “on condition,” “target,” “estimates,” “preliminary,” or “anticipates” or the
negative thereof or comparable terminology, or by discussion of strategy or goals or other future events, circumstances or effects. These forward-looking
statements regarding future events and circumstances involve known and unknown risks, uncertainties and other factors that may cause our actual results,
levels of activity, financial condition, performance or achievements to be materially different from any future results, levels of activity, financial condition,
performance or achievements expressed or implied by such forward-looking statements. This information is based on various assumptions, estimates or
judgments by us that may not prove to be correct.
Important factors to consider and evaluate in such forward-looking statements include:
§availability and adequacy of cash flow to meet our debt service requirements under the notes;
§changes in competitive and market factors might affect our results or operations;
§changes in laws and regulations, including without limitation changes in capital requirements under the Basel III capital proposals;
§changes in our business strategy or an inability to execute our strategy due to the occurrence of unanticipated events;
§our ability to identify potential candidates for, and consummate, acquisition or investment transactions;
§the timing and results of acquisitions or investment transactions;
§our failure to complete any or all of the transactions described herein on the terms currently contemplated;
§local, regional, national, and international economic conditions and events and the impact they may have on us and our customers, including our
operations and investments, both in the United States and contemplated in India;
operations and investments, both in the United States and contemplated in India;
§targeted or estimated returns on assets and equity, growth rates and future asset levels;
§our ability to attract deposits and other sources of liquidity and capital;
§changes in the financial performance and/or condition of our borrowers, and issuers of securities we hold;
§changes in the level of non-performing and classified assets and charge-offs;
§changes in estimates of future loan loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting
requirements, as well as changes in borrowers’ payment behavior and creditworthiness;
requirements, as well as changes in borrowers’ payment behavior and creditworthiness;
§changes in our capital structure resulting from future capital offerings or acquisitions;
§inflation, interest rate, securities market and monetary and foreign currency fluctuations, both in the United States, and internationally, especially in India
due to our pending strategic investment
due to our pending strategic investment
§the effects on our mortgage warehouse lending and retail mortgage businesses of changes in the mortgage origination markets, including changes due to
changes in monetary policies, interest rates and the regulation of mortgage originators, services and securitizers;
changes in monetary policies, interest rates and the regulation of mortgage originators, services and securitizers;
Forward Looking Statements
3
Forward Looking Statements
§ timely development and acceptance of new banking products and services and perceived overall value of these products and services by users;
§ changes in consumer spending, borrowing and saving habits;
§ technological changes;
§ our ability to grow, increase market share and control expenses, and maintain sufficient liquidity;
§ volatility in the credit and equity markets and its effect on the general economy;
§ the potential for customer fraud, especially in our mortgage warehouse lending business;
§ effects of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting
Oversight Board, the Financial Accounting Standards Board and other accounting standard setters;
Oversight Board, the Financial Accounting Standards Board and other accounting standard setters;
§ the businesses of the Bank and any acquisition targets, merger partners or strategic investments, and their subsidiaries not integrating successfully or
such integration being more difficult, time-consuming or costly than expected;
such integration being more difficult, time-consuming or costly than expected;
§ our ability to integrate currently contemplated and future acquisition targets and investments may be unsuccessful, or may be more difficult, time-
consuming or costly than expected;
consuming or costly than expected;
§ material differences in the actual financial results of merger, acquisition, and investment activities compared with expectations;
§ Investments in new markets, domestic or foreign, where we have little or no experience;
§ The levels of activity and revenue from referrals from contractual or investment arrangements; and
§ The liquidity and values of our strategic investments, including foreign strategic investments in India.
These forward-looking statements are subject to significant uncertainties and contingencies, many of which are beyond our control. Although we believe
that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, financial
condition, performance or achievements. Accordingly, there can be no assurance that actual results and cash flows will meet our expectations or will not
be materially lower than the results, cash flows, or financial condition contemplated in this presentation. You are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date of this document or, in the case of documents referred to or incorporated by
reference, the dates of those documents. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to
reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.
that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, financial
condition, performance or achievements. Accordingly, there can be no assurance that actual results and cash flows will meet our expectations or will not
be materially lower than the results, cash flows, or financial condition contemplated in this presentation. You are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date of this document or, in the case of documents referred to or incorporated by
reference, the dates of those documents. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to
reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.
This presentation is for discussion purposes only, and shall not constitute any offer to sell or the solicitation of an offer to buy any security, nor is it intended
to give rise to any legal relationship between Customers Bancorp, Inc. (the “Company”) and you or any other person, nor is it a recommendation to buy
any securities or enter into any transaction with the Company. The information contained herein is preliminary and material changes to such information
may be made at any time. If any offer of securities is made, it shall be made pursuant to a definitive offering memorandum or prospectus (“Offering
Memorandum”) prepared by or on behalf of the Company, which would contain material information not contained herein and which shall supersede,
amend and supplement this information in its entirety.
to give rise to any legal relationship between Customers Bancorp, Inc. (the “Company”) and you or any other person, nor is it a recommendation to buy
any securities or enter into any transaction with the Company. The information contained herein is preliminary and material changes to such information
may be made at any time. If any offer of securities is made, it shall be made pursuant to a definitive offering memorandum or prospectus (“Offering
Memorandum”) prepared by or on behalf of the Company, which would contain material information not contained herein and which shall supersede,
amend and supplement this information in its entirety.
4
Forward Looking Statements
Any decision to invest in the Company’s securities should be made after reviewing an Offering Memorandum, conducting such investigations as the investor
deems necessary or appropriate, and consulting the investor’s own legal, accounting, tax, and other advisors in order to make an independent
determination of the suitability and consequences of an investment in such securities. No offer to purchase securities of the Company will be made or
accepted prior to receipt by an investor of an Offering Memorandum and relevant subscription documentation, all of which must be reviewed together with
the Company’s then-current financial statements and, with respect to the subscription documentation, completed and returned to the Company in its
entirety. Unless purchasing in an offering of securities registered pursuant to the Securities Act of 1933, as amended, all investors must be “accredited
investors” as defined in the securities laws of the United States before they can invest in the Company.
deems necessary or appropriate, and consulting the investor’s own legal, accounting, tax, and other advisors in order to make an independent
determination of the suitability and consequences of an investment in such securities. No offer to purchase securities of the Company will be made or
accepted prior to receipt by an investor of an Offering Memorandum and relevant subscription documentation, all of which must be reviewed together with
the Company’s then-current financial statements and, with respect to the subscription documentation, completed and returned to the Company in its
entirety. Unless purchasing in an offering of securities registered pursuant to the Securities Act of 1933, as amended, all investors must be “accredited
investors” as defined in the securities laws of the United States before they can invest in the Company.
5
Investment Highlights
§ $3.8 billion asset bank with non-covered NPAs less than .70%
§ ROA of 0.90% - 1.00% and ROE of 10% or greater
§ Attractive target market from Boston to Washington D.C. along Interstate 95
Clean
Profitable
Bank in
Attractive
Markets
Attractive
Markets
Experienced
and Proven
Management
Team
and Proven
Management
Team
Unique
Organic
Growth
Strategy
Organic
Growth
Strategy
§ Senior management team with an average of 30+ years of banking experience
with ability to react quickly to market conditions
with ability to react quickly to market conditions
§ Extensive experience in organic and M&A growth
§ Management and insiders own over 20% of the company
§ Demonstrated ability to grow loans and deposits organically
§ Unique “High Touch Supported with High Tech” model for private banking,
deposit and lending relationships
deposit and lending relationships
§ High credit quality niches for loans
Disciplined
Shareholder
Value
Creation
Model
Shareholder
Value
Creation
Model
§ Focus on tangible book value accretion
§ Demonstrated ability to grow EPS
§ Very disciplined M&A strategy
6
Current Company Overview
Source: SNL Financial and Company data.
Note: Branch proposed in northeastern Philadelphia.
*Source: Company Documents. Represents deposits pro forma for the acquisition of CMS Bancorp (expected to close in Q1 2014). Actual deposits transferred may be different.
§ $3.8 bn institution with 18 sales offices with target
market from Boston to Washington D.C.
market from Boston to Washington D.C.
– Additional 6 branches from CMS post close
§ Operating in key Mid-Atlantic and Northeast
markets
markets
– New York City area (Westchester County and
Manhattan)
Manhattan)
– Philadelphia area (Bucks, Berks, Chester, Delaware
and Philadelphia Counties in southeastern
Pennsylvania and Mercer county in New Jersey)
and Philadelphia Counties in southeastern
Pennsylvania and Mercer county in New Jersey)
– Boston area (Operations in Boston and Providence)
– Washington D.C. (Loan production office)
§ Unique “high-touch, high-tech” value proposition
– Exceptional customer service supported by state-of-
the-art technology
the-art technology
§ Business banking, a mortgage warehouse
business and multifamily real estate lending in the
New York City area
business and multifamily real estate lending in the
New York City area
§ Mortgage banking starting in Q3, 2013
Current Markets
|
Location
|
No. of
Offices |
Total
Deposits ($M) |
|
Total Montgomery, Delaware & Bucks Counties
(PA) |
8
|
$1,052
|
|
Total Berks County (PA)
|
4
|
$450
|
|
Total New York & New Jersey
|
8
|
$747
|
7
Customers Bank Advantage -
Single Point of Contact Banking
Single Point of Contact Banking
Cash
Management
Residential
Real Estate
Credit
Cards
Commercial
Real Estate
Commercial
Banking
Retail
Branches
Client
Makes
One Call
Makes
One Call
Client
High Touch supported by
High Tech
High Tech
Single point of contact
banking
banking
Private /
Personal
Bankers
Personal
Bankers
Concierge
Banking
Banking
8
Disciplined Model for Superior Shareholder
Value Creation
Value Creation
§ Build tangible book value per share each quarter
§ Above average and consistent revenue growth, resulting in above
average EPS growth
average EPS growth
§ A clear and simple risk management driven business strategy
§ Above average to average ROAA and ROAE
§ Proven management team
9
Enhancing Shareholder Value by
Growing Tangible Book Value
Growing Tangible Book Value
§ Per share tangible book value up 58% since June 2010
§ Management focused on continuous growth of TBV
§ Strategies and key decisions are framed by estimated effect on per share TBV
§ Customers growth strategy is directed to increasing earnings per share and TBV per share
Tangible Book Value Growth
CAGR: 16%
10
Strong Capital Levels Enable EPS Growth
§ Strong capital enables asset and deposit
growth
growth
§ Customers raised $200+ million of equity
capital in past year at book value or better.
capital in past year at book value or better.
§ Current capital levels will provide for over
$1.0 billion + of growth (assumes risk
weighted assets are 90% of total assets).
$1.0 billion + of growth (assumes risk
weighted assets are 90% of total assets).
§ Customers is targeting an 11% Total Risk
Based Capital floor (regulatory requirement
for well capitalized = 10%) and 7% TCE
Based Capital floor (regulatory requirement
for well capitalized = 10%) and 7% TCE
§ ROAE target is 10% or greater
Equity
Assets
11
Results of Disciplined and Profitable Growth
Revenue ($mm)
Adjusted PTPP Earnings ($mm) (1)
Core EPS (2)
Source: SNL Financial and Company data.
(1)Adjusted PTPP earnings is calculated as: Pretax earnings + provision expense + adjustments for realized gains, nonrecurring revenue, and nonrecurring expense.
(2)Core income, on a diluted per-share basis is net income before extraordinary items, less the after-tax portion of income from investment gains and nonrecurring items. CAGR calculated from Dec-10 to Mar-13.
Net Interest Income ($mm)
CAGR: 99%
CAGR: 93%
CAGR: 184%
CAGR: 95%
§ Strategy has produced superior growth in revenues and earnings
12
Loan Portfolio: High Growth With Strong
Credit Quality
Credit Quality
Loan Portfolio Mix & Yield
§ Centralized credit committee approval for all loans
§ Average C&I loan < $2.0 million
§ Average Multi-family loans < $5 million; concentrated in New York City
§ ~90 strong warehouse clients
§ Warehouse loans are classified as loans held for sale
§ High credit quality derives from Customers’ underwriting standards and conservative loan mix
§ Loan portfolio has grown rapidily while credit quality has improved
§ No losses on loans originated since new management team took over
(1) Includes C&I and owner occupied CRE
(2) Non-owner occupied CRE
13
§ No charge-offs on loans originated since 2009
§ Less than 0.70% of NPAs from non-FDIC covered and acquired loans
§ Strong credit and risk management cultures
Minimal Credit Issues
Source: Company documents.
*Excludes accruing TDRs and loans 90 days+ past due and still accruing.
($ in millions)
Non-covered Nonperforming Assets
14
Deposits: Organic Growth With Controlled
Costs
Costs
Source: Company data.
Average DDA Growth
Cost of Deposits
Deposits per Branch
CAGR 34%
CAGR (21%)
§ Customers strategies of single point of contact and recruiting known teams in target markets produce
rapid deposit growth with low cost
rapid deposit growth with low cost
15
Highly Efficient Cost Structure
Customers
Peers
Source: SNL Financial and Company data.
Peers consists of Northeast and Mid-Atlantic banks and thrifts with assets between $2.0 billion and $6.0 billion and most recent quarter core ROAA greater than 90bps.
Efficiency ratio calculated as noninterest expense and noninterest revenues, excluding only gains from securities transactions and nonrecurring items.
§ +20% more efficient than peers leading to higher ROAE vs. peers
Efficiency Ratio: Customers Bancorp vs. Peers
16
Critical Success Factors Drive Business
Strategy and Superior Performance
Strategy and Superior Performance
§ High Credit Quality - ensures low non-performers and charge offs.
§ Revenues 2X Expenses - gets bank to 50% or less efficiency ratio
through positive operating leverage.
through positive operating leverage.
§ Customers Come First - results in strong relationships,customer
referrals and franchise value.
referrals and franchise value.
§ Strong Capital - 7% (+/-) minimum TCE ratio and 11% minimum RBC
ratio
ratio
§ Strong Risk Management - critical for successful banking operation.
17
Key Financial Targets
§ Targets were made public in 2009
§ Management’s commitment is to build on its accomplishments and continuously
improve the company’s financial performance
improve the company’s financial performance
18
High Quality Board of Directors
§ A strong risk management culture begins with the Board of Directors
§ Customers’ engaged and accomplished Board of Directors provides strategic input and oversight
|
|
|
|
|
Name
|
Position
|
Background
|
|
Jack Miller, CPA
|
Director
(Financial Expert) |
• Former Vice Chairman of KPMG
• Former Chairman of the US Comptroller General's Governmental Auditing Standards Advisory Council |
|
Larry Way, CPA, J.D.
|
Director
(Chairman of the Audit Committee) |
• Former Chairman of ALCO Industries, Inc.
• Former President and CEO of ALCO Industries, Inc. |
|
Steven J. Zuckerman
|
Director
(Chairman of Compensation Committee) |
• President and CEO of Clipper Magazine (sold to Gannett
Corp.) • Partner at Opening Day Partners |
|
Daniel K. Rothermel, J.D.
|
Director
(Chairman of Risk Management Committee) |
• President and CEO of Cumru Associates, Inc.
• Served over 20 years on the Board of Sovereign Bancorp & Sovereign Bank |
|
Jay Sidhu
|
Chairman and Chief Executive Officer
|
• Former Chairman and CEO of Sovereign Bank and
Sovereign Bancorp. • Former Chairman and CEO of SIDHU Advisors |
|
Bhanu Choudhrie
|
Executive Director of C&C Group
|
• Private Equity Investor, London, U.K.
|
19
Strong Risk Management Culture
§ Seasoned management team with the board develops strategy and it’s execution
|
Name
|
Title
|
Years of Banking
Experience |
Background
|
|
Jay S. Sidhu
|
Chairman & CEO
|
35
|
Chairman and CEO of Sovereign Bank & Sovereign Bancorp, Inc.
|
|
Richard A. Ehst
|
President & COO
|
44
|
EVP, Commercial Middle Market, Regional President (Berks County) and Managing Director of Corporate Communications
at Sovereign Bank |
|
Robert E. Wahlman,
CPA
|
Chief Financial Officer
|
32
|
CFO of Doral Financial and Merrill Lynch Banks; various roles at Bank One, US GAO and KPMG.
|
|
Steve Issa
|
EVP, New England Market President, Regional
Chief Lending Officer |
36
|
EVP, Managing Director of Commercial and Speicalty Lending at Flagstar and Sovereign Bank.
|
|
George Maroulis
|
EVP, Head of Private & Commercial Banking -
NY |
21
|
Group Director and SVP at Signature Bank; various positions at Citibank and Fleet/Bank of America's Global Commercial &
Investment Bank |
|
Glenn Hedde
|
EVP, President Warehouse Lending
|
24
|
President of Commercial Operations at Popular Warehouse Lending, LLC; vaious positions at GE Capital Mortgage
Services and PNC Bank |
|
Warren Taylor
|
EVP, President Community Banking
|
29
|
Division President at Sovereign Bank, responsible for retail banking in various markets in southeastern PA and central and
southern NJ |
|
Thomas Jastrem
|
EVP, Chief Credit Officer
|
33
|
Various positions at First Union Bank and First Fidelity Bank
|
|
Timothy D. Romig
|
EVP, Regional Chief Lending Officer
|
27
|
SVP and Regional Executive for Commercial Lending (Berks and Montgomery County), VIST Financial; SVP at Keystone
|
|
John Lomanno
|
EVP, President Mortgage Lending
|
27
|
President GMH Mortgage Services. Various other senior management positions in all facets of mortgage banking
|
|
Robert B. White
|
EVP, President Special Assets Group
|
24
|
President RBW Financial Consulting; various positions at Citizens Bank and GE Capital
|
|
James Collins
|
EVP, Chief Administrative Officer
|
20
|
Various positions at Sovereign including Director of Small Business Banking
|
|
Glenn Yeager
|
EVP, General Counsel
|
34
|
Private practice financial services law firm. Senior Counsel Meridian Bancorp, Inc.
|
|
Mary Lou Scalese
|
SVP, Chief Risk Officer
|
35
|
Director of Internal Audit at Sovereign Bank
|
|
Ken Keiser
|
EVP, Director CRE and Multi-Family Housing
Lending |
35
|
SVP and Market Manager, Mid-Atlantic CRE Lending at Sovereign Bank; SVP & Senior Real Estate Officer, Allfirst Bank
|
20
Comparison with Two Highly Successful
Banks (Similar Banking Models)
Banks (Similar Banking Models)
|
Signature Bank SBNY - (5 year 440+% Shareholder
Value) |
|
Customers Bancorp CUBI - (3 year % Shareholder
Value)
|
||||
|
Asset Size / Growth
|
|
|
|
Asset Size / Growth
|
|
|
|
Total Assets (MRO)
|
$18.0
|
billion
|
|
Total Assets (MRO)
|
$4.0
|
billion
|
|
5 yr CAGR Deposits
|
26%
|
|
|
3 yr CAGR Deposits
|
71%
|
|
|
TCE / TA Ratio
|
9.4%
|
|
|
TCE / TA Ratio
|
9.9%
|
|
|
CRE & Multi Family / Assets
|
75%
|
|
|
CRE & Multi Family / Assets
|
27%
|
|
|
Credit Quality
|
|
|
|
Credit Quality
|
|
|
|
NPA / TA
|
0.32%
|
|
|
NPA / TA
|
0.65%
|
(1)
|
|
NPL / Loans
|
0.50%
|
|
|
NPL / Loans
|
0.56%
|
(1)
|
|
Reserve / Loans HFI
|
1.09%
|
|
|
Reserve / Loans HFI
|
1.44%
|
(1)
|
|
Profitability
|
|
|
|
Profitability
|
|
|
|
ROAA
|
1.15%
|
|
|
ROAA
|
0.98%
|
|
|
ROAE
|
12.20%
|
|
|
ROAE
|
10.11%
|
|
|
Valuation
|
|
|
|
Valuation
|
|
|
|
2013 Consensus P/E
|
19.8
|
x
|
|
2013 Consensus P/E
|
11.6
|
x
|
|
2014 Consensus P/E
|
18.1
|
x
|
|
2014 Consensus P/E
|
10.7
|
x
|
|
Price / LTM EPS
|
21.7
|
x
|
|
Price / LTM EPS
|
9.5
|
x
|
|
Price / Tangible Book
|
2.4
|
x
|
|
Price / Tangible Book
|
1.1
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) NPL/NPA/Reserve data based on non-covered loans only
|
||
21
|
Texas Capital Bancshares TCBI - (5 year 316%
Shareholder Value) |
|
Customers Bancorp CUBI - (3 year % Shareholder
Value)
|
||||
|
Asset Size / Growth
|
|
|
|
Asset Size / Growth
|
|
|
|
Total Assets (MRO)
|
$10.0
|
billion
|
|
Total Assets (MRO)
|
$4.0
|
billion
|
|
5 yr CAGR Deposits
|
18%
|
|
|
3 yr CAGR Deposits
|
71%
|
|
|
TCE / TA Ratio
|
8.4%
|
|
|
TCE / TA Ratio
|
9.9%
|
|
|
CRE & Multi Family / Assets
|
22%
|
|
|
CRE & Multi Family / Assets
|
27%
|
|
|
Credit Quality
|
|
|
|
Credit Quality
|
|
|
|
NPA / TA
|
0.70%
|
|
|
NPA / TA
|
0.65%
|
(1)
|
|
NPL / Loans
|
0.81%
|
|
|
NPL / Loans
|
0.56%
|
(1)
|
|
Reserve / Loans HFI
|
1.08%
|
|
|
Reserve / Loans HFI
|
1.44%
|
(1)
|
|
Profitability
|
|
|
|
Profitability
|
|
|
|
ROAA
|
1.39%
|
|
|
ROAA
|
0.98%
|
|
|
ROAE
|
16.80%
|
|
|
ROAE
|
10.11%
|
|
|
Valuation
|
|
|
|
Valuation
|
|
|
|
2013 Consensus P/E
|
14.5
|
x
|
|
2013 Consensus P/E
|
11.6
|
x
|
|
2014 Consensus P/E
|
13.7
|
x
|
|
2014 Consensus P/E
|
10.7
|
x
|
|
Price / LTM EPS
|
14.8
|
x
|
|
Price / LTM EPS
|
9.5
|
x
|
|
Price / Tangible Book
|
2.4
|
x
|
|
Price / Tangible Book
|
1.1
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) NPL/NPA/Reserve data based on non-covered loans only
|
||
Comparison with Two Highly Successful
Banks (Similar Banking Models)
Banks (Similar Banking Models)
22
Summary
§ Clean high performing ~$4.0 billion bank with significant growth opportunities
§ Shareholder value results from the combination of increasing tangible book value with strong and
consistent earnings growth
consistent earnings growth
§ Customers has delivered increases in TBV and earnings each quarter over the past three years of
existence and is well positioned to continue its success
existence and is well positioned to continue its success
§ Critical success factors and our business model for superior shareholder value creation designed to
produce above average value
produce above average value
§ Experienced management team delivers on execution
§ Ranked #1 overall by Bank Director Magazine in the 2013 Growth Leader Rankings
Appendix
24
Federal Reserve Bank (“FRB”) Referral
§ For 2011 and 2012 lending activities, the FRB of Philadelphia (the “FRB”) believes Customers Bank may have been redlining
Philadelphia County
Philadelphia County
§ Pursuant to FRB policy, all circumstances where the agency believes a bank may have been redlining must be referred to the
Department of Justice (“DOJ”)
Department of Justice (“DOJ”)
§ While Customers Bank believes is has not redlined Philadelphia County, the Bank is committed to resolving this matter in the
next few months and will immediately address all issues raised by the FRB or DOJ
next few months and will immediately address all issues raised by the FRB or DOJ
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Investment in Religare
§ Customers Bancorp Inc., the holding company for Customers Bank, has announced it is making an equity
investment in Religare Enterprices Limited (“Religare”)
investment in Religare Enterprices Limited (“Religare”)
§ Religare is a leading non-bank financial services company in India which is applying for a banking license
in India. Religare provides financial services including asset management, life and health insurance,
lending, investment banking and wealth management
in India. Religare provides financial services including asset management, life and health insurance,
lending, investment banking and wealth management
§ The investment will provide Customers Bank with access to professionals and businesses from South
East Asia with interests in Customers’ northeast US footprint, and northeast US professionals and
businesses with interests in South East Asia
East Asia with interests in Customers’ northeast US footprint, and northeast US professionals and
businesses with interests in South East Asia
§ Customers Bancorp Inc. has purchased $1 million of Religare stock at this time, and the remaining
investment of up to 4.9% of Religare stock is subject to the completion of due diligence
investment of up to 4.9% of Religare stock is subject to the completion of due diligence
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Peer Group Comparison
High Performance Regional Peers
Source: SNL Financial, Company documents. Market data as of 5/6/13. Consists of Northeast and Mid-Atlantic banks and thrifts with assets between $2.0 billion and $6.0 billion and most recent quarter core ROAA
greater than 90bps. Excludes merger targets and MHCs.
greater than 90bps. Excludes merger targets and MHCs.
Note: Customers Bancorp P/Estimated EPS ratios based on mid-point of publicly disclosed estimates by Customers Bancorp in the earnings call on 4/22/13.
(1)Customers Bancorp Core ROAA and ROAE excludes after tax impact of $2 million charge for warehouse fraud (tax rate of 35%). Including $2 million charge, reported ROAA of 0.98% and ROAE of 10.6%.
(2)Customers Bancorp NPAs/Assets calculated as non-covered NPAs divided by total assets. Non-covered NPAs excludes accruing TDRs and loans 90+ days past due and still accruing.
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The Thesis on Current U.S. Banking
Environment
Environment
A Return to Shareholder Value Creation will Continue
to be Elusive for the Foreseeable Future
to be Elusive for the Foreseeable Future
Critical to Have a Winning Business Model
Capital Accumulation Continues To
Create Deployment Challenges
Create Deployment Challenges
Credit Improving - Though Banks Face a
Number of Operational Headwinds
Relationship
Banks
Fee Income
Leaders
Product
Differentiators
Differentiators
¡ Local dominance
¡ Strong credit quality
¡ Core deposits
¡ Expense
management
management
¡ Diversity
¡ Cross sell
¡ Capital efficiency
¡ Higher profitability /
consistent earnings
consistent earnings
¡ Product
dominance
dominance
¡ Innovator /
disrupter
disrupter
¡ Asset generator
¡ Credit Improving
} NPAs and NCOs generally declining across the sector
¡ Asset Generation
} Banks are starved for interest-earning assets and are exploring new asset classes,
competing on price and looking into specialty finance businesses / lending
competing on price and looking into specialty finance businesses / lending
¡ NIM Compression
} Low rate environment for the foreseeable future will continue to pressure NIM
} Several institutions have undergone balance sheet restructurings to alleviate near-term NIM
compression
compression
¡ Operational Leverage
} Expense management is top of mind as banks try to improve efficiency in light of revenue
pressure and increased regulatory / compliance costs
pressure and increased regulatory / compliance costs
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