Customers Bancorp, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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EX-99.2 - EXHIBIT 99.2 - Customers Bancorp, Inc.	cubiq218investordeckfina.htm
8-K - 8-K - Customers Bancorp, Inc.	a8k63018.htm

Exhibit 99.1

Customers Bancorp

1015 Penn Avenue

Wyomissing, PA 19610

Contacts:

Jay Sidhu, Chairman & CEO 610-935-8693

Robert Wahlman, CFO 610-743-8074

Bob Ramsey, Director of Investor Relations and Strategic Planning 484-926-7118

Customers Bancorp Reports Net Income

For Second Quarter 2018

n Customers Bancorp, Inc.'s ("CUBI") second quarter 2018 ("Q2 2018") net income to common shareholders was $20.0 million, or $0.62 per diluted share. CUBI's six month net income to common shareholders was $40.6 million, or $1.26 per diluted share. Q2 2018 results include $869,000 of merger and acquisition related charges, or $0.02 per diluted share

n The Community Business Banking segment net income to common shareholders for Q2 2018 totaled $23.4 million, or $0.72 per diluted share, and for the six month period totaled $44.9 million, or $1.39 per diluted share. The segment's adjusted net income to common shareholders (a non-GAAP measure) for Q2 2018 totaled $23.5 million, or $0.73 per diluted share, and for the six month period totaled $45.0 million, or $1.39 per diluted share

n Adjusted for merger and acquisition related charges, securities gains and impairment losses, and depreciation and amortization catch-up adjustments, the adjusted Q2 2018 diluted earnings per share (a non-GAAP measure) increased 10% from second quarter 2017 ("Q2 2017"); however, the Community Business Banking segment adjusted earnings (a non-GAAP measure) were relatively flat year-over-year

n In Q2 2018, the return on average assets ("ROAA") was 0.89% and the ROAA for the Community Business Banking segment was 1.02%

n The BankMobile segment, which is expected to be spun off to shareholders and merged into Flagship Community Bank, reported a net loss for Q2 2018 of $3.3 million, or $0.10 per diluted share, and for the six month period lost $4.3 million, or $0.13 per diluted share. Included in its results are $0.02 of merger and acquisition related charges in Q2 2018. Adjusted for merger and acquisition related charges and depreciation and amortization catch-up adjustments, Q2 2018 losses improved to $(0.08) from $(0.14) in Q2 2017

n Total assets at June 30, 2018 were $11.1 billion, compared to $10.9 billion at June 30, 2017

n Commercial and industrial loans at June 30, 2018 increased $306 million, or 21.1%, from June 30, 2017

n Net interest margin, tax equivalent ("NIM") (a non-GAAP measure) was 2.62% in Q2 2018, compared to 2.67% in Q1 2018 and 2.78% in Q2 2017; seasonal reductions in BankMobile's non-interest bearing deposits reduced NIM approximately 4 basis points from first quarter 2018 ("Q1 2018")

n The Q2 2018 provision for loan losses decreased $1.3 million from Q2 2017 to a benefit of $0.8 million as a result of the resolution of problem loans, slower asset growth, and outstanding asset quality

n Q2 2018 book value per common share was $22.70 and tangible book value per common share (a non-GAAP measure) was $22.15. Book value per common share has increased at a compound annual growth rate of 10.3% over the past five years

n The BankMobile spin-off and merger are tracking to plan, with divestiture anticipated by or shortly after September 30, 2018

n CUBI common stock, with a July 20, 2018 closing price of $28.69 was trading at 8.72x the consensus 2019 earnings estimate, and 1.30x tangible book value (a non-GAAP measure).

Wyomissing, PA - July 25, 2018 - Customers Bancorp, Inc. (NYSE: CUBI), the parent company of Customers Bank (collectively “Customers”), reported net income to common shareholders of $20.0 million for Q2 2018, compared to $20.1 million for Q2 2017, a decrease of $0.1 million, or 0.29%, and $20.5 million for Q1 2018, a decrease of $0.5 million, or 2.33%. Fully diluted earnings per common share for Q2 2018 was $0.62, compared to $0.64 for Q1 2018 and $0.62 for Q2 2017.

Customers' Community Business Banking segment reported Q2 2018 net income to common shareholders of $23.4 million, which was relatively flat over Q2 2017, increased 8.67% from $21.5 million for Q1 2018. Adjusted for securities gains and impairment losses, the segment's adjusted earnings (a non-GAAP measure) in Q2 2018 of $23.5 million increased 9.36% from $21.5 million in Q1 2018.

Customers also reported net income to common shareholders of $40.6 million for the six months ended June 30, 2018, compared to net income to common shareholders of $42.2 million for the six months ended June 30, 2017. Fully diluted earnings per common share for the six months ended June 30, 2018 was $1.26, compared to $1.29 for the six months ended June 30, 2017. Adjusted for merger and acquisition related charges, securities gains and impairment losses, and depreciation and amortization catch-up adjustments, Customers' six month net income available to common shareholders (a non-GAAP measure) totaled $41.4 million, a 7.62% increase compared to $38.5 million for the first six months of 2017.

“Our Community Business Banking segment, the core business of Customers once the BankMobile spin-off has been completed, generated adjusted earnings (a non-GAAP measure) of $23.5 million, or $0.73 per share, a 9.1% increase in earnings from Q1 2018 but roughly flat year-over-year. The benefits of Customers' strong credit quality and disciplined underwriting were particularly evident this quarter as our reserve methodology resulted in a release of reserves, even as we maintained an allowance for loan losses equal to 149% of our nonperforming loans," stated Jay Sidhu, CEO and Chairman of Customers Bank. "Subject to final regulatory approvals, we anticipate spinning off BankMobile by or shortly after September 30, 2018," Mr. Sidhu concluded.

Strategic Priorities

Grow and Improve Financial Performance of the Community Business Banking Segment; Target in Excess of 1.1% ROAA

Priorities for the Community Business Banking segment in 2018 include strong risk management, core deposit growth, and a focus on net interest margin. Customers targets an ROAA in excess of 1.10% and a return on tangible common equity ("ROTCE") (a non-GAAP measure) greater than 12% for this segment. Longer term, the Community Business Banking segment is targeting a net interest margin greater than 2.75%, a compound annual growth rate of 10% to 15% in EPS, and an efficiency ratio in the low forties.

In Q2 2018, the Community Business Banking segment reported net income of $23.4 million ($0.72 per diluted share), which included the funds transfer pricing cost paid by the segment for use of BankMobile’s deposits at a rate of 3.03% of those deposits. For Q2 2018, the segment reported an ROAA of 1.02% and an ROTCE of 13.7%.

Credit quality at Customers Bank is very strong, as measured by the low level of nonperforming loans (0.29% of total loans at June 30, 2018); however, Customers' below average credit risk appetite is also reflected in

below industry average asset yields and a more narrow net interest margin. This narrower NIM is mitigated with a significantly better than peer-average non-interest expense to asset ratio. Customers continues to combat the pressures of a flat yield curve and rising rates by focusing on favorable balance sheet mix shifts. Customers recently announced its entry into non-QM residential mortgage lending. Simultaneously, Customers has been deemphasizing its multi-family business. Beginning in late 2017, Customers began to significantly limit originations of loans yielding less than 5%. Customers' deposit strategy is to look at the total cost of deposits as the sum of operating and interest costs. Customers’ branch light model, with a focus on cost control, is reflected in dramatically lower operating expenses than the industry - operating expenses in the Community Business Banking segment were equal to 1.42% of average assets in Q2 2018, which Customers believes is over 125 basis points lower than the industry overall. Core deposit growth is a strategic priority for Customers. Early in July, Customers launched a new digital, on-line banking business with a goal of gathering retail deposits without branches at an average cost that is below its current marginal cost of borrowing.

Increase Capital Ratios

Total shareholders' equity at June 30, 2018 increased $25.9 million, or 2.85%, from June 30, 2017 to $936.2 million. The estimated total risk-based capital ratio was approximately 12.7% for Q2 2018, compared to 12.4% for Q2 2017. The estimated common equity Tier 1 capital ratio was approximately 8.7% for Q2 2018, compared to 8.3% for Q2 2017. The estimated Tier 1 leverage capital ratio was approximately 8.9% for Q2 2018, compared to 8.7% for Q2 2017. The tangible common equity to tangible assets ratio (a non-GAAP measure) was 6.3% at June 30, 2018, compared to 6.2% at June 30, 2017.

"We continue to target a Tier I leverage capital ratio of 9.0% or higher and a total risk-based capital ratio of around 13.0%," Mr. Sidhu stated. "We expect our capital ratios to increase in the later part of 2018 as balance sheet growth moderates further, given seasonal declines in the mortgage warehouse business and our de-emphasis of multi-family lending" concluded Mr. Sidhu.

Grow and Successfully Divest the BankMobile Segment in 2018

BankMobile, a division of Customers Bank, operates a branchless digital bank offering very low cost banking services to its 1.8 million checking account holders, of which 1.0 million are active deposit customers. Deposit balances were approximately $420 million at June 30, 2018. The BankMobile segment reported a net loss of $3.3 million for Q2 2018, including $869,000, or $0.02 per diluted share, in merger and acquisition related charges. These charges include professional services expenses incurred in connection with the planned spin-off of the BankMobile business as well as expenses resulting from the 2016 acquisition of the Disbursements business. Results include the funds transfer pricing benefit for the originated deposits at a rate of 3.03%. Deposits generated by the BankMobile business averaged $468 million for Q2 2018.

During the third quarter of 2017, Customers decided that the best strategy for its shareholders for divesting BankMobile was to spin-off BankMobile to Customers’ shareholders subject to an agreement with Flagship Community Bank ("Flagship") for Flagship to acquire the BankMobile business. Flagship has filed its confidential Form 10 registration statement with the FDIC to register its class of common stock in connection with its expected listing on a national securities exchange, and the BankMobile spin-off subsidiary has filed its confidential Form 10 registration statement with the SEC to facilitate the spin-off and merger into Flagship. Public versions of the filings will be made closer to the spin-off date. Once approvals of the transactions and filings are received from the appropriate regulators, Customers will announce the record date for the distribution of the BankMobile spin-off subsidiary shares to Customers' shareholders. Following the spin-off of the BankMobile spin-off subsidiary from Customers and merger with Flagship, Customers and Flagship/BankMobile will be entirely separate entities. Customers will retain no ownership in the BankMobile business, there will be no common employees, facilities, or functions beyond certain temporary support services to BankMobile for an estimated six months according to the terms of a transition services

agreement and one common director. Subject to regulatory approvals, the BankMobile spin-off and merger are anticipated by or shortly after September 30, 2018.

Q2 2018 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended June 30, 2018 and the preceding four quarters, respectively:



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED

(Dollars in thousands, except per-share data)
	Q2			Q1			Q4			Q3			Q2
	2018			2018			2017			2017			2017

Net income available to common shareholders	$	20,048		$	20,527		$	18,000		$	4,139		$	20,107
Basic earnings per common share ("EPS")	$	0.64		$	0.65		$	0.58		$	0.13		$	0.66
Diluted EPS	$	0.62		$	0.64		$	0.55		$	0.13		$	0.62
Average common shares outstanding - basic	31,564,893			31,424,496			30,843,319			30,739,671			30,641,554
Average common shares outstanding - diluted	32,380,662			32,273,973			32,508,030			32,512,692			32,569,652
Shares outstanding period end	31,669,643			31,466,271			31,382,503			30,787,632			30,730,784
Return on average assets	0.89		%	0.95		%	0.84		%	0.29		%	0.93		%
Return on average common equity	11.32		%	11.73		%	10.11		%	2.33		%	11.84		%
Net interest margin, tax equivalent (1)	2.62		%	2.67		%	2.79		%	2.62		%	2.78		%
Efficiency ratio	64.35		%	60.84		%	62.42		%	68.55		%	58.15		%
Non-performing loans (NPLs) to total loans (including held-for-sale loans)	0.29		%	0.26		%	0.30		%	0.33		%	0.21		%
Reserves to non-performing loans	149.25		%	173.02		%	146.36		%	130.83		%	204.59		%
Net charge-offs	$	427		$	633		$	1,130		$	2,495		$	1,960
Annualized net charge-offs to average total loans	0.02		%	0.03		%	0.05		%	0.11		%	0.09		%
Tier 1 capital to average assets (leverage ratio) (2)	8.87		%	9.03		%	8.94		%	8.35		%	8.66		%
Common equity Tier 1 capital to risk-weighted assets (2)	8.69		%	8.51		%	8.81		%	8.28		%	8.28		%
Tier 1 capital to risk-weighted assets (2)	11.26		%	11.11		%	11.58		%	10.94		%	10.96		%
Total capital to risk-weighted assets (2)	12.66		%	12.55		%	13.05		%	12.40		%	12.43		%
Tangible common equity to tangible assets (3)	6.33		%	6.36		%	7.00		%	6.47		%	6.21		%
Book value per common share	$	22.70		$	22.30		$	22.42		$	22.51		$	22.54
Tangible book value per common share (period end) (4)	$	22.15		$	21.74		$	21.90		$	21.98		$	21.97
Period end stock price	$	28.38		$	29.15		$	25.99		$	32.62		$	28.28

(1) Non-GAAP measure calculated as GAAP net interest income, plus tax equivalent interest using an estimated 26% tax rate for Q2 2018 and Q1 2018, and an estimated 35% tax rate for Q4 2017, Q3 2017, and Q2 2017, divided by average interest earning assets.
(2) Regulatory capital ratios are estimated for Q2 2018.
(3) Non-GAAP measure calculated as GAAP total shareholders' equity less preferred stock and goodwill and other intangibles divided by total assets less goodwill and other intangibles.
(4) Non-GAAP measure calculated as GAAP total shareholders' equity less preferred stock and goodwill and other intangibles divided by common shares outstanding at period end.

Net interest income

Q2 2018 net interest income of $67.3 million decreased $1.3 million, or 1.87%, from Q2 2017 as the increase in average interest earning assets of $435.7 million, or 4.40%, was offset by a 16 basis point reduction in net interest margin, tax equivalent (a non-GAAP measure) to 2.62%. Q2 2018 net interest income of $67.3 million increased $2.3 million, or 3.5%, from Q1 2018 due to a $448.3 million, or 4.54%, increase in average interest earning assets, offset in part by a 5 basis point reduction in net interest margin to 2.62%. About 4 basis points of net interest margin compression resulted from the seasonal reduction in BankMobile's low cost deposits.

"The sequential quarter net interest margin compression was principally caused by rising funding costs and the seasonal reduction in BankMobile's non-interest bearing deposits," said Robert Wahlman, Customers Bancorp's CFO. "Customers' interest rate sensitivity objective is to limit sensitivity and the impact of a flat curve and rising rates over time. Our challenge for the second half of 2018 and into 2019 is balancing deposit growth with deposit costs in a competitive, rising rate, flat yield curve environment. We will continue to focus on originating lower cost, core deposits, disciplined loan pricing and remixing our assets as we work to combat margin pressure," concluded Mr. Wahlman.

Total loans outstanding, including loans held for sale, increased $133.2 million, or 1.48%, to $9.1 billion as of June 30, 2018, compared to total loans of $9.0 billion as of June 30, 2017. Commercial and industrial loans increased $305.8 million to $1.8 billion, up 21.1% over June 30, 2017. Commercial loans to mortgage companies decreased $171.3 million to $2.0 billion, a decrease of 7.94% over June 30, 2017. Multi-family loans decreased $7.6 million to $3.5 billion, a decrease of 0.21% over June 30, 2017. Commercial non-owner-occupied real estate loans decreased $60.0 million to $1.2 billion, down 4.94% from June 30, 2017. Consumer loans, including residential mortgage, increased $36.6 million to $0.6 billion and make up only about 6% of the loan portfolio.

Total deposits decreased $179.4 million, or 2.40%, to $7.3 billion as of June 30, 2018, compared to total deposits of $7.5 billion as of June 30, 2017. The largest decrease was $370.2 million, or 15.2%, in time deposits, which was partly offset by a $264.0 million, or 73.5%, increase in interest bearing demand deposits. During Q2 2018, total deposits increased $253 million, or 14%, annualized, compared to Q1 2018.

Provision and Credit

The Q2 2018 provision for loan losses decreased $1.3 million from Q2 2017 to a benefit of $0.8 million. The Q2 2018 release of $0.8 million in reserves resulted from continued strong asset quality and better than expected resolution of specific problem loans, offset in part by $0.3 million of provision for loan growth. Net charge-offs for Q2 2018 were $0.4 million, or 2 basis points of annualized net charge-offs to average loans, compared to Q2 2017 net charge-offs of $2.0 million. There were no significant changes in Customers' methodology that affected the Q2 2018 allowance for loan losses estimate.

Risk management is a critical component of how Customers creates long-term shareholder value, and Customers believes that asset quality is one of the most important risks in banking to be understood and managed. Customers believes that asset quality risks must be diligently addressed during good economic times with prudent underwriting standards so that when the economy deteriorates the bank's capital is sufficient to absorb all losses without threatening its ability to operate and serve its community and other constituents. "Customers' non-performing loans at June 30, 2018 were only 0.29% of total loans, compared to our peer group non-performing loans of approximately 0.82% in the most recent period available, and industry average non-performing loans of 1.26% in the most recent period available. Our expectation is superior asset quality performance in good times and in difficult years," said Mr. Sidhu.

Non-interest income

In Q2 2018, non-interest income decreased $2.3 million, or 12.31%, from Q2 2017 to $16.1 million. The decline from the year ago period was largely a result of decreases in BankMobile's interchange and card revenue of $2.3 million, mortgage warehouse transactional fees of $0.6 million and deposit fees of $0.5 million. Interchange and card revenue of $6.4 million for Q2 2018 is presented net of $1.2 million of debit and prepaid card interchange expense as a result of adopting the new revenue recognition standard in Q1 2018 on a modified retrospective basis. If Q2 2017 was presented on a consistent basis with Q2 2018, the reported amount of interchange and card revenue of $8.6 million would have been $7.4 million. In Q2 2017, debit and prepaid card interchange expense of $1.3 million was presented as technology, communication and bank operations expense within non-interest expense. BankMobile continues to focus on implementing its "Customers for Life" model and decrease its reliance on Disbursement related deposits. In Q2 2017, Customers also realized $3.2 million of gains from the sale of its investment securities. These decreases in non-interest income in Q2 2018 were offset in part by the increase in income from commercial leases of $1.1 million during Q2 2018.

Non-interest expense

Non-interest expenses totaled $53.8 million, an increase of $3.3 million from Q2 2017, or 6.62%. Salaries and employee benefits increased $4.1 million as Customers continues to hire new team members in the markets it serves. Technology, communication, and bank operations expense increased $2.4 million, given the continued investment in the BankMobile segment infrastructure and Customers' recent system conversion. Technology, communication, and bank operations expense of $11.3 million for Q2 2018 excludes debit and prepaid card interchange expense of $1.2 million, which was reported as a reduction in interchange and card revenue within non-interest income upon adoption of the new revenue recognition standard in Q1 2018. If Q2 2017 was presented on a consistent basis with Q2 2018, the reported amount of technology, communication and bank operations expense of $8.9 million would have been $7.6 million. These increases were partially offset by decreases in professional services of $2.4 million, which can vary from quarter to quarter. The Community Business Banking segment's non-interest expenses, which exclude the effect of BankMobile, increased by $7.2 million in Q2 2018 when compared to Q2 2017 primarily as a result of increased salaries and employee benefits of $5.1 million mainly due to salary increases and increased headcount. The BankMobile segment's costs declined by $3.8 million to $16.0 million in Q2 2018 from Q2 2017 as compensation costs and costs for outside services declined. The Q2 2018 efficiency ratio was 64.4% and the Q2 2018 efficiency ratio for the Community Business Banking segment was 52.8%.

Tax

The provision for income tax expense for Q2 2018 was $6.8 million, resulting in an effective tax rate of 22.4%, compared to 23.5% in Q1 2018. Customers currently estimates a 2018 effective tax rate of approximately 24.0%.

Profitability

Customers' return on average assets was 0.89% in Q2 2018, compared to 0.93% in Q2 2017, and its return on average common equity was 11.3% in Q2 2018, compared to 11.8% in Q2 2017. The return on average assets for the Community Business Banking segment was 1.02%, compared to 1.07% in Q2 2017.

Managing Commercial Real Estate Concentration Risks and Providing High Net Worth Families Loans for Their Multi-Family Holdings

Customers' total commercial real estate ("CRE") loan exposures subject to regulatory concentration guidelines of $4.7 billion as of June 30, 2018 included construction loans of $99.6 million, multi-family loans of $3.5 billion, and non-owner occupied commercial real estate loans of $1.1 billion, which represent 392% of total risk-based capital on a combined basis, a reduction from 421% as of June 30, 2017. Customers' loans subject to regulatory CRE concentration guidelines had 3 year cumulative growth of 46.3% in Q2 2018, a deceleration from 86.6% in Q2 2017. "In a flat curve environment, we will continue to deemphasize lower yielding multi-family loans and certain CRE loans," stated Mr. Sidhu.

Customers' loans collateralized by multi-family properties were approximately 294% of total risk-based capital at June 30, 2018. Customers' multi-family exposures are focused principally on loans to high net worth families collateralized by multi-family properties that are of modest size and subject to what Customers believes are conservative underwriting standards. Customers believes it has a strong risk management process to manage the portfolio risks prospectively and that this portfolio will perform well even under a stressed scenario. Following are some key characteristics of Customers' multi-family loan portfolio:


•	Principally concentrated in New York City with an emphasis on properties subject to some type of rent control; and principally to high net worth families;


•	Average loan size is $6.7 million;


•	Median annual debt service coverage ratio is 136%;


•	Median loan-to-value for the portfolio is 66.9%;


•	All loans are individually stressed with an increase of 1% and 2% to the cap rate and an increase of 1.5% and 3% in loan interest rates;


•	All properties are inspected prior to a loan being granted and inspected thereafter on an annual basis by dedicated portfolio managers or outside inspectors; and


•	Credit approval process is independent of customer sales and portfolio management process.

Conference Call

Date: Wednesday, July 25, 2018

Time: 5:00 PM ET

US Dial-in: 888-523-1194

International Dial-in: 719-884-1601

Participant Code: 739801

Please dial in at least 10 minutes before the start of the call to ensure timely participation. Slides accompanying the presentation will be available on the company's website at http://customersbank.com/investor_relations.php prior to the call. A playback of the call will be available beginning Wednesday, July 25, 2018 at 8:00 PM ET until 8:00 PM ET on August 24, 2018. To listen, call within the United States 888-203-1112 or 719-457-0820 when calling internationally. Please use the replay pin number 1229607.

Institutional Background

Customers Bancorp, Inc. is a bank holding company located in Wyomissing, Pennsylvania engaged in banking and related businesses through its bank subsidiary, Customers Bank. Customers Bank is a community-based, full-service bank with assets of approximately $11.1 billion. A member of the Federal Reserve System with

deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender that provides a range of banking services to small and medium-sized businesses, professionals, individuals and families through offices in Pennsylvania, the District of Columbia, Illinois, New York, Rhode Island, Massachusetts, New Hampshire and New Jersey. Committed to fostering customer loyalty, Customers Bank uses a High Tech/High Touch strategy that includes use of industry-leading technology to provide customers better access to their money, as well as Concierge Banking® by appointment at customers’ homes or offices 12 hours a day, seven days a week. Customers Bank offers a continually expanding portfolio of loans to small businesses, multi-family projects, mortgage companies and consumers.

Customers Bancorp, Inc.'s voting common shares are listed on the New York Stock Exchange under the symbol CUBI. Additional information about Customers Bancorp, Inc. can be found on the company’s website, www.customersbank.com.

“Safe Harbor” Statement

In addition to historical information, this press release 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 statements with respect to Customers Bancorp, Inc.'s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words "may," "could," "should," "pro forma," "looking forward," "would," "believe," "expect," "anticipate," "estimate," "intend," "plan," or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.'s control). Numerous competitive, economic, regulatory, legal and technological factors, among others, could cause Customers Bancorp, Inc.'s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements. In addition, important factors relating to the acquisition of the Disbursements business, the combination of Customers' BankMobile business with the acquired Disbursements business, the implementation of Customers Bancorp, Inc.'s strategy regarding BankMobile, the possibility of events, changes or other circumstances occurring or existing that could result in the planned spin-off and merger of BankMobile not being completed in the anticipated time frame or at all, the possibility that the planned spin-off and merger of BankMobile may be more expensive to complete than anticipated, the possibility that the expected benefits of the planned transactions to Customers and its shareholders may not be achieved, the possibility of Customers incurring liabilities relating to the disposition of BankMobile, or the possible effects on Customers' results of operations if the planned spin-off and merger of BankMobile are not completed in a timely fashion or at all also could cause Customers Bancorp's actual results to differ from those in the forward-looking statements. Further, Customers' expectations with respect to the effects of the new tax law could be affected by future clarifications, amendments, and interpretations of such law. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management's current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.'s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2017, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank.



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED - UNAUDITED
(Dollars in thousands, except per share data)
	Q2			Q1		Q4		Q3			Q2
	2018			2018		2017		2017			2017
Interest income:
Loans receivable, including fees	$	74,238		$	66,879	$	70,935	$	67,107		$	67,036
Loans held for sale	21,002			19,052		20,294		21,633			17,524
Investment securities	9,765			8,672		4,136		7,307			7,823
Other	2,634			2,361		2,254		2,238			1,469
Total interest income	107,639			96,964		97,619		98,285			93,852

Interest expense:
Deposits	24,182			19,793		18,649		18,381			16,228
Other borrowings	3,275			3,376		3,288		3,168			1,993
FHLB advances	11,176			7,080		5,697		7,032			5,340
Subordinated debt	1,684			1,684		1,685		1,685			1,685
Total interest expense	40,317			31,933		29,319		30,266			25,246
Net interest income	67,322			65,031		68,300		68,019			68,606
Provision for loan losses	(784		)	2,117		831		2,352			535
Net interest income after provision for loan losses	68,106			62,914		67,469		65,667			68,071

Non-interest income:
Interchange and card revenue	6,382			9,661		9,780		9,570			8,648
Mortgage warehouse transactional fees	1,967			1,887		2,206		2,396			2,523
Bank-owned life insurance	1,869			2,031		1,922		1,672			2,258
Deposit fees	1,632			2,092		2,121		2,659			2,133
Gain on sale of SBA and other loans	947			1,361		1,178		1,144			573
Mortgage banking income	205			121		173		257			291
Gain on sale of investment securities	—			—		268		5,349			3,183
Impairment loss on investment securities	—			—		—		(8,349		)	(2,882		)
Other	3,125			3,757		2,092		3,328			1,664
Total non-interest income	16,127			20,910		19,740		18,026			18,391

Non-interest expense:
Salaries and employee benefits	27,748			24,925		25,948		24,807			23,651
Technology, communication and bank operations	11,322			9,943		12,637		14,401			8,910
Professional services	3,811			6,008		7,010		7,403			6,227
Occupancy	3,141			2,834		2,937		2,857			2,657
FDIC assessments, non-income taxes, and regulatory fees	2,135			2,200		1,290		2,475			2,416
Merger and acquisition related expenses	869			106		410		—			—
Loan workout	648			659		522		915			408
Advertising and promotion	319			390		361		404			378
Other real estate owned expense	58			40		20		445			160
Other	3,699			5,175		3,653		7,333			5,606
Total non-interest expense	53,750			52,280		54,788		61,040			50,413
Income before income tax expense	30,483			31,544		32,421		22,653			36,049
Income tax expense	6,820			7,402		10,806		14,899			12,327
Net income	23,663			24,142		21,615		7,754			23,722
Preferred stock dividends	3,615			3,615		3,615		3,615			3,615
Net income available to common shareholders	$	20,048		$	20,527	$	18,000	$	4,139		$	20,107

Basic earnings per common share	$	0.64		$	0.65	$	0.58	$	0.13		$	0.66
Diluted earnings per common share	$	0.62		$	0.64	$	0.55	$	0.13		$	0.62



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,
	2018		2017
Interest income:
Loans receivable, including fees	$	141,117	$	128,497
Loans held for sale	40,054		31,470
Investment securities	18,437		13,710
Other	4,996		3,269
Total interest income	204,604		176,946

Interest expense:
Deposits	43,975		30,551
Other borrowings	6,651		3,600
FHLB advances	18,256		8,401
Subordinated debt	3,369		3,370
Total interest expense	72,251		45,922
Net interest income	132,353		131,024
Provision for loan losses	1,333		3,585
Net interest income after provision for loan losses	131,020		127,439

Non-interest income:
Interchange and card revenue	16,043		22,158
Bank-owned life insurance	3,900		3,624
Mortgage warehouse transactional fees	3,854		4,743
Deposit fees	3,724		5,260
Gain on sale of SBA and other loans	2,308		1,901
Mortgage banking income	325		446
Impairment loss on investment securities	—		(4,585		)
Gains on sale of investment securities	—		3,183
Other	6,883		4,414
Total non-interest income	37,037		41,144

Non-interest expense:
Salaries and employee benefits	52,673		44,763
Technology, communication and bank operations	21,266		18,827
Professional services	9,820		13,739
Occupancy	5,975		5,371
FDIC assessments, non-income taxes, and regulatory fees	4,335		4,141
Loan workout	1,307		929
Advertising and promotion	709		704
Merger and acquisition related expenses	975		—
Other real estate owned expense	98		105
Other	8,873		11,199
Total non-interest expense	106,031		99,778
Income before income tax expense	62,026		68,805
Income tax expense	14,222		19,336
Net income	47,804		49,469
Preferred stock dividends	7,229		7,229
Net income available to common shareholders	$	40,575	$	42,240

Basic earnings per common share	$	1.29	$	1.38
Diluted earnings per common share	$	1.26	$	1.29



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - UNAUDITED
(Dollars in thousands)
	June 30,			March 31,			December 31,			September 30,			June 30,
	2018			2018			2017			2017			2017
ASSETS
Cash and due from banks	$	22,969		$	9,198		$	20,388		$	13,318		$	28,502
Interest-earning deposits	228,757			206,213			125,935			206,162			384,740
Cash and cash equivalents	251,726			215,411			146,323			219,480			413,242
Investment securities, at fair value	1,161,000			1,181,661			471,371			584,823			1,012,605
Loans held for sale	1,931,781			1,875,515			1,939,485			2,113,293			2,255,096
Loans receivable	7,181,726			6,943,566			6,768,258			7,061,338			6,725,208
Allowance for loan losses	(38,288		)	(39,499		)	(38,015		)	(38,314		)	(38,458		)
Total loans receivable, net of allowance for loan losses	7,143,438			6,904,067			6,730,243			7,023,024			6,686,750
FHLB, Federal Reserve Bank, and other restricted stock	136,066			130,302			105,918			98,611			129,689
Accrued interest receivable	33,956			31,812			27,021			27,135			26,165
Bank premises and equipment, net	11,224			11,556			11,955			12,369			12,996
Bank-owned life insurance	261,121			259,222			257,720			255,683			213,902
Other real estate owned	1,705			1,742			1,726			1,059			2,358
Goodwill and other intangibles	17,150			17,477			16,295			16,604			17,615
Other assets	143,679			140,501			131,498			119,748			113,130
Total assets	$	11,092,846		$	10,769,266		$	9,839,555		$	10,471,829		$	10,883,548

LIABILITIES AND SHAREHOLDERS' EQUITY
Demand, non-interest bearing deposits	$	1,090,744		$	1,260,853		$	1,052,115		$	1,427,304		$	1,109,239
Interest-bearing deposits	6,205,210			5,781,606			5,748,027			6,169,772			6,366,124
Total deposits	7,295,954			7,042,459			6,800,142			7,597,076			7,475,363
Federal funds purchased	105,000			195,000			155,000			147,000			150,000
FHLB advances	2,389,797			2,252,615			1,611,860			1,462,343			1,999,600
Other borrowings	186,888			186,735			186,497			186,258			186,030
Subordinated debt	108,929			108,904			108,880			108,856			108,831
Accrued interest payable and other liabilities	70,051			64,465			56,212			59,654			53,435
Total liabilities	10,156,619			9,850,178			8,918,591			9,561,187			9,973,259

Preferred stock	217,471			217,471			217,471			217,471			217,471
Common stock	32,200			31,997			31,913			31,318			31,261
Additional paid in capital	428,796			424,099			422,096			429,633			428,488
Retained earnings	299,990			279,942			258,076			240,076			235,938
Accumulated other comprehensive (loss) income	(33,997		)	(26,188		)	(359		)	377			5,364
Treasury stock, at cost	(8,233		)	(8,233		)	(8,233		)	(8,233		)	(8,233		)
Total shareholders' equity	936,227			919,088			920,964			910,642			910,289
Total liabilities & shareholders' equity	$	11,092,846		$	10,769,266		$	9,839,555		$	10,471,829		$	10,883,548



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED)
(Dollars in thousands)
	Three Months Ended
	June 30,			March 31,			June 30,
	2018			2018			2017
	Average Balance		Average yield or cost (%)	Average Balance		Average yield or cost (%)	Average Balance		Average yield or cost (%)
Assets
Interest earning deposits	$	188,880	1.78%	$	184,033	1.53%	$	203,460	1.08%
Investment securities	1,213,989		3.22%	1,085,429		3.20%	1,066,277		2.94%
Loans:
Commercial loans to mortgage companies	1,760,519		4.93%	1,591,749		4.69%	1,762,469		4.14%
Multifamily loans	3,561,679		3.90%	3,637,929		3.71%	3,508,619		3.75%
Commercial and industrial	1,713,150		4.75%	1,653,655		4.34%	1,405,150		4.21%
Non-owner occupied commercial real estate	1,269,373		4.05%	1,281,502		3.93%	1,299,809		4.00%
All other loans	482,098		4.85%	330,100		5.07%	542,093		4.36%
Total loans	8,786,819		4.35%	8,494,935		4.10%	8,518,140		3.98%
Other interest-earning assets	139,842		5.15%	116,823		5.79%	105,908		3.48%
Total interest earning assets	10,329,530		4.18%	9,881,220		3.97%	9,893,785		3.80%
Non-interest earning assets	391,660			394,487			371,548
Total assets	$	10,721,190		$	10,275,707		$	10,265,333

Liabilities
Total interest bearing deposits (1)	$	5,862,211	1.65%	$	5,812,055	1.38%	$	6,258,310	1.04%
Borrowings	2,736,644		2.36%	2,182,463		2.25%	1,951,282		1.85%
Total interest bearing liabilities	8,598,855		1.88%	7,994,518		1.62%	8,209,592		1.23%
Non-interest bearing deposits (1)	1,109,527			1,278,947			1,082,799
Total deposits & borrowings	9,708,382		1.67%	9,273,465		1.39%	9,292,391		1.09%
Other non-interest bearing liabilities	84,788			75,307			74,429
Total liabilities	9,793,170			9,348,772			9,366,820
Common equity	710,549			709,464			681,042
Preferred stock	217,471			217,471			217,471
Shareholders' equity	928,020			926,935			898,513
Total liabilities and shareholders' equity	$	10,721,190		$	10,275,707		$	10,265,333

Net interest margin			2.61%			2.66%			2.78%
Net interest margin tax equivalent			2.62%			2.67%			2.78%

(1) Total costs of deposits (including interest bearing and non-interest bearing) were 1.39%, 1.13% and 0.89% for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017, respectively.



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED)
(Dollars in thousands)
	Six months ended
	June 30,			June 30,
	2018			2017
	Average Balance		Average yield or cost (%)	Average Balance		Average yield or cost (%)
Assets
Interest earning deposits	$	186,470	1.66%	$	350,693	0.88%
Investment securities	1,150,064		3.21%	948,657		2.91%
Loans:
Commercial loans to mortgage companies	1,676,601		4.81%	1,622,182		4.07%
Multifamily loans	3,599,593		3.81%	3,423,449		3.73%
Commercial and industrial	1,683,566		4.55%	1,378,085		4.13%
Non-owner occupied commercial real estate	1,275,404		3.99%	1,288,610		3.90%
All other loans	406,519		4.94%	479,242		4.52%
Total loans	8,641,683		4.23%	8,191,568		3.94%
Other interest-earning assets	128,396		5.44%	91,026		3.87%
Total interest earning assets	10,106,613		4.08%	9,581,944		3.72%
Non-interest earning assets	393,066			356,311
Total assets	$	10,499,679		$	9,938,255

Liabilities
Total interest bearing deposits (1)	$	5,837,271	1.52%	$	6,237,532	0.99%
Borrowings	2,461,085		2.31%	1,543,154		2.01%
Total interest-bearing liabilities	8,298,356		1.75%	7,780,686		1.19%
Non-interest-bearing deposits (1)	1,193,769			1,198,355
Total deposits & borrowings	9,492,125		1.53%	8,979,041		1.03%
Other non-interest bearing liabilities	80,074			75,876
Total liabilities	9,572,199			9,054,917
Common equity	710,009			665,867
Preferred stock	217,471			217,471
Shareholders' equity	927,480			883,338
Total liabilities and shareholders' equity	$	10,499,679		$	9,938,255

Net interest margin			2.64%			2.75%
Net interest margin tax equivalent			2.64%			2.76%

(1) Total costs of deposits (including interest bearing and non-interest bearing) were 1.26% and 0.83% for the six months ended June 30, 2018 and 2017, respectively.



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
SEGMENT REPORTING - UNAUDITED

(Dollars in thousands, except per share amounts)

The following tables present Customers' business segment results for the three and six months ended June 30, 2018 and 2017:



	Three months ended June 30, 2018									Three Months Ended June 30, 2017
	Community Business Banking			BankMobile			Consolidated			Community Business Banking		BankMobile			Consolidated
Interest income ⁽¹⁾	$	104,110		$	3,529		$	107,639		$	91,107	$	2,745		$	93,852
Interest expense	40,182			135			40,317			25,228		18			25,246
Net interest income	63,928			3,394			67,322			65,879		2,727			68,606
Provision for loan losses	(1,247		)	463			(784		)	535		—			535
Non-interest income	7,465			8,662			16,127			6,971		11,420			18,391
Non-interest expense	37,721			16,029			53,750			30,567		19,846			50,413
Income (loss) before income tax expense (benefit)	34,919			(4,436		)	30,483			41,748		(5,699		)	36,049
Income tax expense (benefit)	7,910			(1,090		)	6,820			14,493		(2,166		)	12,327
Net income (loss)	27,009			(3,346		)	23,663			27,255		(3,533		)	23,722
Preferred stock dividends	3,615			—			3,615			3,615		—			3,615
Net income (loss) available to common shareholders	$	23,394		$	(3,346	)	$	20,048		$	23,640	$	(3,533	)	$	20,107

Basic earnings (loss) per common share	$	0.74		$	(0.11	)	$	0.64		$	0.77	$	(0.12	)	$	0.66
Diluted earnings (loss) per common share	$	0.72		$	(0.10	)	$	0.62		$	0.73	$	(0.11	)	$	0.62

(1) - Amounts reported include funds transfer pricing of $3.5 million and $2.7 million for the three months ended June 30, 2018 and 2017, respectively



	Six Months Ended June 30, 2018							Six Months Ended June 30, 2017
	Community Business Banking		BankMobile			Consolidated		Community Business Banking		BankMobile			Consolidated
Interest income ⁽¹⁾	$	196,664	$	7,940		$	204,604	$	169,938	$	7,008		$	176,946
Interest expense	72,100		151			72,251		45,883		39			45,922
Net interest income	124,564		7,789			132,353		124,055		6,969			131,024
Provision for loan losses	627		706			1,333		3,585		—			3,585
Non-interest income	15,904		21,133			37,037		12,398		28,746			41,144
Non-interest expense	72,052		33,979			106,031		60,714		39,064			99,778
Income (loss) before income tax expense (benefit)	67,789		(5,763		)	62,026		72,154		(3,349		)	68,805
Income tax expense (benefit)	15,638		(1,416		)	14,222		20,609		(1,273		)	19,336
Net income (loss)	52,151		(4,347		)	47,804		51,545		(2,076		)	49,469
Preferred stock dividends	7,229		—			7,229		7,229		—			7,229
Net income (loss) available to common shareholders	$	44,922	$	(4,347	)	$	40,575	$	44,316	$	(2,076	)	$	42,240

Basic earnings (loss) per common share	$	1.43	$	(0.14	)	$	1.29	$	1.45	$	(0.07	)	$	1.38
Diluted earnings (loss) per common share	$	1.39	$	(0.13	)	$	1.26	$	1.36	$	(0.06	)	$	1.29
As of June 30, 2018 and 2017

Goodwill and other intangibles	$	3,629	$	13,521		$	17,150	$	3,633	$	13,982		$	17,615
Total assets	$	11,017,272	$	75,574		$	11,092,846	$	10,815,752	$	67,796		$	10,883,548
Total deposits	$	6,876,688	$	419,266		$	7,295,954	$	7,021,922	$	453,441		$	7,475,363
Total non-deposit liabilities	$	2,843,360	$	17,305		$	2,860,665	$	2,481,618	$	16,278		$	2,497,896

(1) - Amounts reported include funds transfer pricing of $7.9 million and $7.0 million for the six months ended June 30, 2018 and 2017, respectively.

The following tables present Customers' business segment results for the quarter ended June 30, 2018 and the preceding four quarters:



Community Business Banking:
	Q2 2018			Q1 2018		Q4 2017		Q3 2017		Q2 2017
Interest income (1)	$	104,110		$	92,554	$	94,407	$	95,585	$	91,107
Interest expense	40,182			31,917		29,304		30,250		25,228
Net interest income	63,928			60,637		65,103		65,335		65,879
Provision for loan losses	(1,247		)	1,874		179		1,874		535
Non-interest income	7,465			8,439		8,200		4,190		6,971
Non-interest expense	37,721			34,331		33,900		33,990		30,567
Income before income tax expense	34,919			32,871		39,224		33,661		41,748
Income tax expense	7,910			7,728		13,369		18,999		14,493
Net income	27,009			25,143		25,855		14,662		27,255
Preferred stock dividends	3,615			3,615		3,615		3,615		3,615
Net income available to common shareholders	$	23,394		$	21,528	$	22,240	$	11,047	$	23,640

Basic earnings per common share	$	0.74		$	0.69	$	0.72	$	0.36	$	0.77
Diluted earnings per common share	$	0.72		$	0.67	$	0.68	$	0.34	$	0.73

(1) - Amounts reported include funds transfer pricing of $3.5 million, $4.4 million, $3.2 million, $2.7 million and $2.7 million for the three months ended June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017 and June 30, 2017, respectively.



BankMobile:
	Q2 2018			Q1 2018			Q4 2017			Q3 2017			Q2 2017
Interest income ⁽¹⁾	$	3,529		$	4,410		$	3,212		$	2,700		$	2,745
Interest expense	135			16			15			16			18
Net interest income	3,394			4,394			3,197			2,684			2,727
Provision for loan losses	463			243			652			478			—
Non-interest income	8,662			12,471			11,540			13,836			11,420
Non-interest expense	16,029			17,949			20,888			27,050			19,846
(Loss) income before income tax (benefit) expense	(4,436		)	(1,327		)	(6,803		)	(11,008		)	(5,699		)
Income tax (benefit) expense	(1,090		)	(326		)	(2,563		)	(4,100		)	(2,166		)
Net (loss) income available to common shareholders	$	(3,346	)	$	(1,001	)	$	(4,240	)	$	(6,908	)	$	(3,533	)

Basic (loss) earnings per common share	$	(0.11	)	$	(0.03	)	$	(0.14	)	$	(0.23	)	$	(0.12	)
Diluted (loss) earnings per common share	$	(0.10	)	$	(0.03	)	$	(0.13	)	$	(0.21	)	$	(0.11	)



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED

(Dollars in thousands, except per share data)

Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our financial results, which we believe enhance an overall understanding of our performance. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP.

The following tables present reconciliations of GAAP to Non-GAAP measures used to report business segment performance.



Adjusted Net Income to Common Shareholders - Customers Bancorp										Q4			2,017		Q3			2,017
	Q2 2018				Q1 2018					Q4 2017					Q3 2017						Q2 2017
	USD		Per share		USD			Per share		USD			Per share		USD			Per share			USD			Per share
GAAP net income to common shareholders	$	20,048	$	0.62	$	20,527		$	0.64	$	18,000		$	0.55	$	4,139		$	0.13		$	20,107		$	0.62
Reconciling items (after tax):
Religare impairment	—		—					—		—			—		12,934			0.40			1,758			0.05
Merger and acquisition related expenses	655		0.02		80			—		256			0.01					—			—			—
Losses (Gains) on investment securities	138		—		(10		)	—		(170		)	—		(3,356		)	(0.10		)	(1,942		)	(0.06		)
Catch-up depreciation/amortization on BankMobile assets	—		—		—			—		—			—		1,765			0.05			(883		)	(0.03		)
Adjusted net income to common shareholders	$	20,841	$	0.64	$	20,597		$	0.64	$	18,086		$	0.56	$	15,482		$	0.48		$	19,040		$	0.58



Adjusted Net Income to Common Shareholders - Customers Bancorp	Six Months Ended June 30, 2018				Six Months Ended June 30, 2017
	Six Months Ended June 30, 2018				Six Months Ended June 30, 2017
	USD		Per share		USD			Per share
GAAP net income to common shareholders	$	40,575	$	1.26	$	42,240		$	1.29
Reconciling items (after tax):
Religare impairment	—		—		(28		)	—
Merger and acquisition related expenses	736		0.02		—			—
Losses (Gains) on investment securities	128		—		(1,942		)	(0.06		)
Catch-up depreciation/amortization on BankMobile assets	—		—		(1,765		)	(0.05		)
Adjusted net income to common shareholders	$	41,439	$	1.28	$	38,505		$	1.18



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)

(Dollars in thousands, except per share data)



Adjusted Net Income to Common Shareholders - Community Business Banking Segment Only
	Q2 2018				Q1 2018					Q4 2017					Q3 2017						Q2 2017
	USD		Per share		USD			Per share		USD			Per share		USD			Per share			USD			Per share
GAAP net income to common shareholders	$	23,394	$	0.72	$	21,528		$	0.67	$	22,240		$	0.68	$	11,047		$	0.34		$	23,640		$	0.73
Reconciling items (after tax):
Religare impairment	—		—		—			—		—			—		12,934			0.40			1,758			0.05
Loss/(Gains) on investment securities	138		—		(10		)	—		(170		)	—		(3,356		)	(0.10		)	(1,942		)	(0.06		)
Adjusted net income to common shareholders	$	23,532	$	0.73	$	21,518		$	0.67	$	22,070		$	0.68	$	20,625		$	0.64		$	23,456		$	0.72



Adjusted Net Income to Common Shareholders - Community Business Banking Segment Only	Six Months Ended June 30, 2018				Six Months Ended June 30, 2017
	Six Months Ended June 30, 2018				Six Months Ended June 30, 2017
	USD		Per share		USD			Per share
GAAP net income to common shareholders	$	44,922	$	1.39	$	44,316		$	1.36
Reconciling items (after tax):
Religare impairment	—		—		(28		)	—
Loss/(Gains) on investment securities	128		—		(1,942		)	(0.06		)
Adjusted net income to common shareholders	$	45,050	$	1.39	$	42,346		$	1.30



Adjusted Net Income to Common Shareholders - BankMobile Segment
	Q2 2018						Q1 2018						Q4 2017						Q3 2017						Q2 2017
	USD			Per share			USD			Per share			USD			Per share			USD			Per share			USD			Per share
GAAP net income to common shareholders	$	(3,346	)	$	(0.10	)	$	(1,001	)	$	(0.03	)	$	(4,240	)	$	(0.13	)	$	(6,908	)	$	(0.21	)	$	(3,533	)	$	(0.11	)
Reconciling items (after tax):
Merger and acquisition related expenses	655			0.02			80			—			256			0.01			—			—			—			—
Catch-up depreciation/amortization on BankMobile assets	—			—			—			—			—			—			1,765			0.05			(883		)	(0.03		)
Adjusted net income to common shareholders	$	(2,691	)	$	(0.08	)	$	(921	)	$	(0.03	)	$	(3,984	)	$	(0.12	)	$	(5,143	)	$	(0.16	)	$	(4,416	)	$	(0.14	)



Adjusted Net Income to Common Shareholders - BankMobile Segment	Six Months Ended June 30, 2018						Six Months Ended June 30, 2017
	Six Months Ended June 30, 2018						Six Months Ended June 30, 2017
	USD			Per share			USD			Per share
GAAP net income to common shareholders	$	(4,347	)	$	(0.13	)	$	(2,076	)	$	(0.06	)
Reconciling items (after tax):
Merger and acquisition related expenses	736			0.02			—			—
Catch-up depreciation/amortization on BankMobile assets	—			—			(1,765		)	(0.05		)
Adjusted net income to common shareholders	$	(3,611	)	$	(0.11	)	$	(3,841	)	$	(0.11	)



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)

(Dollars in thousands)



Return on Tangible Common Equity - Community Business Banking Segment Only

	Q2 2018			Q2 2017
GAAP net income to common shareholders	$	23,394		$	23,640

Total shareholder's equity	907,284			904,973
Reconciling Items:
Preferred stock	(217,471		)	(217,471		)
Goodwill & other intangibles	(3,629		)	(3,633		)
Tangible common equity	$	686,184		$	683,869

Return on tangible common equity	13.67		%	13.87		%



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END LOAN COMPOSITION (UNAUDITED)
(Dollars in thousands)
	June 30,		March 31,			December 31,		September 30,			June 30,
	2018		2018			2017		2017			2017

Commercial:
Multi-family	$	3,542,770	$	3,645,374		$	3,646,572	$	3,769,206		$	3,550,375
Mortgage warehouse	1,987,306		1,931,320			1,844,607		2,012,864			2,158,631
Commercial & industrial	1,755,183		1,648,324			1,582,667		1,550,210			1,449,400
Commercial real estate- non-owner occupied	1,155,998		1,195,903			1,218,719		1,237,849			1,216,012
Construction	88,141		81,102			85,393		73,203			61,226
Total commercial loans	8,529,398		8,502,023			8,377,958		8,643,332			8,435,644

Consumer:
Residential	494,265		226,501			235,928		436,979			447,150
Manufactured housing	85,328		87,687			90,227		92,938			96,148
Other consumer	3,874		3,570			3,547		3,819			3,588
Total consumer loans	583,467		317,758			329,702		533,736			546,886
Deferred (fees)/costs and unamortized (discounts)/premiums, net	642		(700		)	83		(2,437		)	(2,226		)
Total loans	$	9,113,507	$	8,819,081		$	8,707,743	$	9,174,631		$	8,980,304



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION (UNAUDITED)
(Dollars in thousands)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2018		2018		2017		2017		2017

Demand, non-interest bearing	$	1,090,744	$	1,260,853	$	1,052,115	$	1,427,304	$	1,109,239
Demand, interest bearing	623,343		510,418		523,848		362,269		359,361
Savings	38,457		36,584		38,838		37,654		41,345
Money market	3,471,249		3,345,573		3,279,648		3,469,410		3,523,056
Time deposits	2,072,161		1,889,031		1,905,693		2,300,439		2,442,362
Total deposits	$	7,295,954	$	7,042,459	$	6,800,142	$	7,597,076	$	7,475,363



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY - UNAUDITED
(Dollars in thousands)	As of June 30, 2018										As of March 31, 2018											As of June 30, 2017
	Total Loans		Non Accrual /NPLs		Total Credit Reserves		NPLs / Total Loans		Total Reserves to Total NPLs		Total Loans			Non Accrual /NPLs		Total Credit Reserves		NPLs / Total Loans		Total Reserves to Total NPLs		Total Loans			Non Accrual /NPLs		Total Credit Reserves		NPLs / Total Loans		Total Reserves to Total NPLs
Loan Type
Originated Loans
Multi-Family	$	3,540,261	$	1,343	$	12,072	0.04	%	898.88	%	$	3,642,808		$	—	$	12,545	—	%	—	%	$	3,396,888		$	—	$	12,028	—	%	—	%
Commercial & Industrial (1)	1,728,577		14,121		14,643		0.82	%	103.70	%	1,618,845			15,299		14,353		0.95	%	93.82	%	1,410,252			12,258		13,701		0.87	%	111.77	%
Commercial Real Estate- Non-Owner Occupied	1,140,483		2,350		4,260		0.21	%	181.28	%	1,176,949			—		4,444		—	%	—	%	1,185,878			—		4,593		—	%	—	%
Residential	106,076		1,902		2,047		1.79	%	107.62	%	107,920			1,767		2,111		1.64	%	119.47	%	111,157			610		2,169		0.55	%	355.57	%
Construction	88,141		—		992		—	%	—	%	81,102			—		921		—	%	—	%	61,226			—		716		—	%	—	%
Other Consumer (2)	1,752		—		131		—	%	—	%	1,339			—		101		—	%	—	%	1,159			—		14		—	%	—	%
Total Originated Loans	6,605,290		19,716		34,145		0.30	%	173.18	%	6,628,963			17,066		34,475		0.26	%	202.01	%	6,166,560			12,868		33,221		0.21	%	258.17	%
Loans Acquired
Bank Acquisitions	136,070		4,264		3,990		3.13	%	93.57	%	141,343			4,146		4,848		2.93	%	116.93	%	157,239			4,228		4,970		2.69	%	117.55	%
Loan Purchases	439,724		2,015		663		0.46	%	32.90	%	173,960			1,979		803		1.14	%	40.58	%	403,635			2,075		1,030		0.51	%	49.64	%
Total Acquired Loans	575,794		6,279		4,653		1.09	%	74.10	%	315,303			6,125		5,651		1.94	%	92.26	%	560,874			6,303		6,000		1.12	%	95.19	%
Deferred (fees) costs and unamortized (discounts) premiums, net	642		—		—		—	%	—	%	(700		)	—		—		—%		—%		(2,226		)	—		—		—	%	—	%
Total Loans Held for Investment	7,181,726		25,995		38,798		0.36	%	149.25	%	6,943,566			23,191		40,126		0.33	%	173.02	%	6,725,208			19,171		39,221		0.29	%	204.59	%
Total Loans Held for Sale	1,931,781		—		—		—	%	—	%	1,875,515			—		—		—%		—	%	2,255,096			—		—		—	%	—	%
Total Portfolio	$	9,113,507	$	25,995	$	38,798	0.29	%	149.25	%	$	8,819,081		$	23,191	$	40,126	0.26	%	173.02	%	$	8,980,304		$	19,171	$	39,221	0.21	%	204.59	%

(1) Commercial & industrial loans, including owner occupied commercial real estate.
(2) Includes activity for BankMobile related loans, primarily overdrawn deposit accounts.



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED
(Dollars in thousands)
	Q2			Q1		Q4			Q3			Q2
	2018			2018		2017			2017			2017
Originated Loans
Commercial & Industrial (1)	$	140		$	54	$	(109	)	$	2,025		$	1,840
Commercial Real Estate- Non-Owner Occupied	—			—		731			77			—
Residential	42			—		3			125			69
Other Consumer (2)	459			254		686			348			172
Total Net Charge-offs from Originated Loans	641			308		1,311			2,575			2,081
Loans Acquired
Bank Acquisitions	(214		)	325		(181		)	(80		)	(121		)
Loan Purchases	—			—		—			—			—
Total Net Charge-offs (Recoveries) from Acquired Loans	(214		)	325		(181		)	(80		)	(121		)
Total Net Charge-offs from Loans Held for Investment	$	427		$	633	$	1,130		$	2,495		$	1,960

(1) Commercial & industrial loans, including owner occupied commercial real estate.
(2) Includes activity for BankMobile related loans, primarily overdrawn deposit accounts.



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED

(Dollars in thousands)

The following tables present reconciliations of GAAP to Non-GAAP measures disclosed within this document.



Net Interest Margin, tax equivalent
	Six months ended June 30,
	2018			2017			Q2 2018			Q1 2018			Q4 2017			Q3 2017			Q2 2017
GAAP Net interest income	$	132,353		$	131,024		$	67,322		$	65,031		$	68,300		$	68,019		$	68,606
Tax-equivalent adjustment	342			197			171			171			245			203			104
Net interest income tax equivalent	$	132,695		$	131,221		$	67,493		$	65,202		$	68,545		$	68,222		$	68,710

Average total interest earning assets	$	10,106,613		$	9,581,944		$	10,329,530		$	9,881,220		$	9,875,987		$	10,352,394		$	9,893,785

Net interest margin, tax equivalent	2.64		%	2.76		%	2.62		%	2.67		%	2.79		%	2.62		%	2.78		%



Tangible Common Equity to Tangible Assets
	Q2 2018			Q1 2018			Q4 2017			Q3 2017			Q2 2017
GAAP - Total Shareholders' Equity	$	936,227		$	919,088		$	920,964		$	910,642		$	910,289
Reconciling Items:
Preferred Stock	(217,471		)	(217,471		)	(217,471		)	(217,471		)	(217,471		)
Goodwill and Other Intangibles	(17,150		)	(17,477		)	(16,295		)	(16,604		)	(17,615		)
Tangible Common Equity	$	701,606		$	684,140		$	687,198		$	676,567		$	675,203

Total Assets	$	11,092,846		$	10,769,266		$	9,839,555		$	10,471,829		$	10,883,548
Reconciling Items:
Goodwill and Other Intangibles	(17,150		)	(17,477		)	(16,295		)	(16,604		)	(17,615		)
Tangible Assets	$	11,075,696		$	10,751,789		$	9,823,260		$	10,455,225		$	10,865,933

Tangible Common Equity to Tangible Assets	6.33		%	6.36		%	7.00		%	6.47		%	6.21		%



CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED)

(Dollars in thousands, except per share data)



Tangible Book Value per Common Share
	Q2 2018			Q1 2018			Q4 2017			Q3 2017			Q2 2017
GAAP - Total Shareholders' Equity	$	936,227		$	919,088		$	920,964		$	910,642		$	910,289
Reconciling Items:
Preferred Stock	(217,471		)	(217,471		)	(217,471		)	(217,471		)	(217,471		)
Goodwill and Other Intangibles	(17,150		)	(17,477		)	(16,295		)	(16,604		)	(17,615		)
Tangible Common Equity	$	701,606		$	684,140		$	687,198		$	676,567		$	675,203

Common shares outstanding	31,669,643			31,466,271			31,382,503			30,787,632			30,730,784

Tangible Book Value per Common Share	$	22.15		$	21.74		$	21.90		$	21.98		$	21.97

Customers Bancorp, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 25, 2018

Attached files

Customers Bancorp, Inc. Reports