Customers Bancorp, Inc. "High Tech Forward-Thinking Bank Supported by High Touch" Second Quarter 2021 | Earnings Conference Call July 29, 2021 NYSE: CUBI Forward-Looking Statements In addition to historical information, this presentation may contain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.'s strategies, goals, beliefs, exp ...

Part I - Financial Information This section presents the company's financial statements and related analyses [Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Customers%20Bancorp%2C%20Inc.%20Consolidated%20Financial%20Statements%20as%20of%20March%2031%2C%202021%20and%20for%20the%20three%20month%20periods%20ended%20March%2031%2C%202021%20and%202020%20(unaudited)) Unaudited consolidated financial statements for Q1 2021 reflect the BMT divestiture and significant PPP loan activity Consolidated Balance Sheet (Unaudited) | (amounts in thousands) | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$18,817,660** | **$18,439,248** | | Cash and cash equivalents | $515,364 | $693,354 | | Investment securities, at fair value | $1,441,904 | $1,210,285 | | Loans receivable, PPP | $5,178,089 | $4,561,365 | | Total loans and leases receivable, net | $15,993,464 | $15,608,989 | | Assets of discontinued operations | — | $62,055 | | **Total Liabilities** | **$17,628,939** | **$17,322,162** | | Total deposits | $12,472,440 | $11,309,929 | | FRB PPP liquidity facility | $3,284,156 | $4,415,016 | | Liabilities of discontinued operations | — | $39,704 | | **Total Shareholders' Equity** | **$1,188,721** | **$1,117,086** | Consolidated Statements of Income (Unaudited) | (amounts in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net interest income | $132,731 | $81,321 | | Provision (benefit) for credit losses | ($2,919) | $31,786 | | Non-interest income | $18,468 | $11,160 | | Non-interest expense | $61,927 | $48,967 | | Net income from continuing operations | $74,631 | $8,454 | | Net loss from discontinued operations | ($38,036) | ($5,354) | | **Net income** | **$36,595** | **$3,100** | | **Net income (loss) available to common shareholders** | **$33,204** | **($515)** | Earnings Per Share (Unaudited) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Basic earnings (loss) per common share | $1.04 | ($0.02) | | Diluted earnings (loss) per common share | $1.01 | ($0.02) | [Notes to Consolidated Financial Statements](index=14&type=section&id=NOTES%20TO%20CONSOLIDATED%20UNAUDITED%20FINANCIAL%20STATEMENTS) Detailed notes explain accounting policies, BMT divestiture, loan portfolio, and capital adequacy, confirming regulatory compliance - On January 4, 2021, the company completed the divestiture of BankMobile Technologies, Inc. (BMT) BMT's historical financial results are now reflected as discontinued operations[42](index=42&type=chunk)[54](index=54&type=chunk) - The company is an active participant in the SBA's Paycheck Protection Program (PPP) PPP loans are carried at amortized cost, with net origination fees recognized over the loan's life No Allowance for Credit Losses (ACL) is recognized for these loans as they are **100% guaranteed** by the SBA[46](index=46&type=chunk)[83](index=83&type=chunk) - The net loss from discontinued operations (BMT) was **$38.0 million** for Q1 2021, compared to a loss of **$5.4 million** in Q1 2020[60](index=60&type=chunk) Allowance for Credit Losses (ACL) Activity | (in thousands) | Three Months Ended March 31, 2021 | | :--- | :--- | | Beginning Balance | $144,176 | | Charge-offs | ($14,646) | | Recoveries | $2,125 | | Provision (benefit) for credit losses | ($2,919) | | **Ending Balance** | **$128,736** | - As of March 31, 2021, both Customers Bancorp, Inc. and Customers Bank satisfied all regulatory capital requirements and were considered **well capitalized**[138](index=138&type=chunk)[140](index=140&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=51&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2021 financial performance, highlighting improved net income, increased net interest income, and enhanced asset quality driven by PPP loans Condensed Statement of Operations | (dollars in thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net interest income | $132,731 | $81,321 | | Provision (benefit) for credit losses | ($2,919) | $31,786 | | Total non-interest income | $18,468 | $11,160 | | Total non-interest expense | $61,927 | $48,967 | | Net income from continuing operations | $74,631 | $8,454 | | Net loss from discontinued operations | ($38,036) | ($5,354) | | **Net income available to common shareholders** | **$33,204** | **($515)** | - Net interest income increased by **$51.4 million** YoY, driven by a **$7.0 billion** increase in average interest-earning assets, primarily from PPP loans Net interest margin (NIM) remained stable at **3.00%**[243](index=243&type=chunk)[261](index=261&type=chunk) - A benefit for credit losses of **$2.9 million** was recorded, a significant reversal from the **$31.8 million** provision in Q1 2020, reflecting improved macroeconomic forecasts since the start of the COVID-19 pandemic[244](index=244&type=chunk)[269](index=269&type=chunk) - Non-interest income increased by **$7.3 million**, primarily due to a **$19.6 million** gain on the sale of investment securities, offset by a **$24.5 million** loss on the termination of cash flow hedge derivatives[247](index=247&type=chunk) - Total assets increased by **$378.4 million** from year-end 2020 to **$18.8 billion**, driven by a **$616.7 million** increase in PPP loans[302](index=302&type=chunk) [Critical Accounting Policies](index=55&type=section&id=Critical%20Accounting%20Policies) The Allowance for Credit Losses (ACL) is the most critical accounting policy, requiring significant judgment based on macroeconomic forecasts and portfolio performance - The ACL is the most critical accounting policy, requiring complex and subjective judgments based on economic forecasts and other factors[230](index=230&type=chunk)[231](index=231&type=chunk) - The net decrease in the ACL as of March 31, 2021, was primarily attributable to the continuing improvement in macroeconomic forecasts from Moody's March 2021 Baseline[236](index=236&type=chunk)[237](index=237&type=chunk) - A sensitivity analysis showed that using a **100% adverse economic scenario weighting** (instead of the baseline) would result in a hypothetical incremental quantitative impact to the ACL of approximately **$39.0 million**[238](index=238&type=chunk) [Financial Condition Analysis](index=67&type=section&id=Financial%20Condition) Total assets grew to **$18.8 billion** driven by PPP loans, with improved asset quality and a strategic shift towards lower-cost deposits Key Balance Sheet Changes (Q1 2021 vs YE 2020) | (dollars in thousands) | Change | % Change | | :--- | :--- | :--- | | Loans receivable, PPP | $616,724 | 13.5% | | Investment securities, at fair value | $231,619 | 19.1% | | Cash and cash equivalents | ($177,990) | (25.7)% | | Loans receivable, mortgage warehouse | ($208,810) | (5.8)% | | Total deposits | $1,162,511 | 10.3% | | FRB PPP liquidity facility | ($1,130,860) | (25.6)% | - Non-performing loans (NPLs) as a percentage of total loans and leases decreased to **0.30%** at March 31, 2021, from **0.45%** at December 31, 2020[352](index=352&type=chunk) - COVID-19 related loan deferments declined significantly to **$176.1 million** for commercial loans and **$13.0 million** for consumer loans as of March 31, 2021[346](index=346&type=chunk) - Non-time deposits grew by **$1.1 billion**, or **10.8%**, during the quarter, supporting the company's initiative to improve its funding mix with lower-cost sources[354](index=354&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=72&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages interest rate risk through income scenario modeling and EVE analysis, indicating a slightly asset-sensitive position within policy guidelines Net Interest Income Sensitivity Analysis (For 12 Months) | Rate Shocks | % Change (as of March 31, 2021) | | :--- | :--- | | Up 3% | 1.5% | | Up 2% | 1.4% | | Up 1% | 0.8% | | Down 1% | (0.1)% | Economic Value of Equity (EVE) Sensitivity Analysis | Rate Shocks | % Change From Base (as of March 31, 2021) | | :--- | :--- | | Up 3% | (4.0)% | | Up 2% | (0.8)% | | Up 1% | 0.5% | | Down 1% | (9.4)% | [Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal controls during the quarter - Management concluded that disclosure controls and procedures were **effective** as of March 31, 2021[408](index=408&type=chunk) - There were no changes in internal control over financial reporting during Q1 2021 that have materially affected, or are reasonably likely to materially affect, internal controls[409](index=409&type=chunk) Part II - Other Information This section provides other required information, including legal proceedings, risk factors, equity sales, and exhibits [Legal Proceedings](index=74&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary legal actions, notably defending against an **$8.1 million** PPP loan repayment claim from a Chapter 7 Trustee - The company is defending against an adversary complaint from the trustee of Specialty's Café Bakery, Inc. seeking to avoid and recover an **$8.1 million** PPP loan repayment The company is unable to determine the likelihood or range of loss[209](index=209&type=chunk) - A matter with the U.S. Department of Education regarding ATM access was settled, reducing liabilities from **$6.5 million** to a settlement amount of **$3.0 million**[206](index=206&type=chunk)[207](index=207&type=chunk) [Risk Factors](index=74&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred from the risk factors previously disclosed in the company's 2020 Annual Report on Form 10-K - There are no material changes from the risk factors included within the 2020 Form 10-K[413](index=413&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common stock in Q1 2021, does not expect cash dividends, but distributed a special BMTX common stock dividend - The company did not purchase any of its common stock during the three months ended March 31, 2021[414](index=414&type=chunk) - A special dividend of **0.15389 shares** of BM Technologies' common stock was distributed for each share of Customers' common stock held as of the record date of December 18, 2020, in connection with the BMT divestiture[420](index=420&type=chunk) [Defaults Upon Senior Securities](index=75&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period - No defaults upon senior securities were reported for the period[422](index=422&type=chunk) [Mine Safety Disclosures](index=75&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[422](index=422&type=chunk) [Other Information](index=75&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item - No other information was reported under this item[423](index=423&type=chunk) [Exhibits](index=76&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including BMT divestiture agreements, service agreements, and required officer certifications - The report includes a list of filed exhibits, such as the Agreement and Plan of Merger for the BMT divestiture, subsequent service agreements, and officer certifications[424](index=424&type=chunk)[426](index=426&type=chunk)

Customers Bancorp, Inc. (NYSE:CUBI) Q1 2021 Results Earnings Conference Call April 29, 2021 9:00 AM ET Company Participants David Patti - Director of Marketing and Communications Jay Sidhu - Executive Chairman Sam Sidhu - Vice Chairman, Chief Operating Officer Andy Bowman - Senior Executive Vice President, Chief Credit Officer Carla Leibold - Executive Vice President, Chief Financial Office Conference Call Participants Peter Winter - Wedbush Securities Casey Haire - Jefferies Steve Moss - B. Riley Securitie ...

Customers Bancorp, Inc. "High Tech Forward-Thinking Bank Supported by High Touch" First Quarter 2021 | Earnings Conference Call April 29, 2021 NYSE: CUBI Forward-Looking Statements In addition to historical information, this presentation may contain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.'s strategies, goals, beliefs, exp ...

PART I [Business](index=10&type=section&id=Item%201.%20Business) Customers Bancorp operates Customers Bank, a commercial and consumer lender, recently divested BankMobile, and is now under CFPB supervision - Customers Bancorp operates a diversified lending business through its subsidiary, Customers Bank, with a focus on commercial & industrial loans, commercial real estate, multi-family lending, SBA lending, and residential mortgages, also serving national specialty niches like mortgage warehouse lending and consumer loans via fintech partnerships[29](index=29&type=chunk) Financial Snapshot as of December 31, 2020 | Metric | Value (in billions) | | :--- | :--- | | Total Assets | $18.4 | | Total Loans and Leases, net | $15.7 | | - of which, PPP Loans | $4.6 | | Total Deposits | $11.3 | | Shareholders' Equity | $1.1 | - On January 4, 2021, the company completed the divestiture of BankMobile Technologies, Inc. (BMT); while BMT's historical financial results will be reclassified to discontinued operations in 2021, all of BankMobile's serviced deposits and loans, along with the related net interest income, will remain with Customers Bank[30](index=30&type=chunk)[37](index=37&type=chunk)[57](index=57&type=chunk) - The company's workforce totaled **830 team members** at year-end 2020; following the BMT divestiture in January 2021, approximately **257 team members** became employees of the new entity, BM Technologies[85](index=85&type=chunk) - Having exceeded the **$10 billion asset threshold**, Customers Bank became subject to supervision by the CFPB in 2020 and lost its small issuer exemption under the Durbin Amendment, which limits debit card interchange income[106](index=106&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company faces various risks inherent to its banking operations, strategic changes, and the broader economic and regulatory environment - The company's business is highly susceptible to credit risk; the adoption of the CECL accounting standard on January 1, 2020, resulted in a **$79.8 million** increase to the opening balance of the Allowance for Credit Losses (ACL), reflecting a shift to an 'expected loss' model[187](index=187&type=chunk)[192](index=192&type=chunk) - A strategic shift to de-emphasize multi-family loans in favor of commercial and consumer loans may increase lending risks, as consumer loans are particularly sensitive to economic conditions like unemployment and interest rates[195](index=195&type=chunk)[198](index=198&type=chunk) - The COVID-19 pandemic has negatively impacted the global economy and the company's business, creating significant uncertainty for future financial results[308](index=308&type=chunk)[309](index=309&type=chunk) - Significant participation in the SBA's Paycheck Protection Program (PPP), with **$4.6 billion** in loans outstanding at year-end, presents risks of potential fraud, delays in loan forgiveness, and holding low-yield loans for an extended period[313](index=313&type=chunk)[315](index=315&type=chunk) - The planned phase-out of LIBOR after 2021 creates uncertainty, as the transition to an alternative reference rate like SOFR is complex and could adversely affect LIBOR-based assets and liabilities[234](index=234&type=chunk)[235](index=235&type=chunk) - Following the divestiture of BMT, the company will continue to face risks associated with BM Technologies through various service, license, and loan agreements for periods ranging from one to ten years[302](index=302&type=chunk)[303](index=303&type=chunk) [Unresolved Staff Comments](index=79&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - None[422](index=422&type=chunk) [Properties](index=81&type=section&id=Item%202.%20Properties) The company leases all of its properties, including its corporate and bank headquarters, as well as all branch and administrative offices, which are deemed sufficient for current operations - Customers leases all of its corporate, bank headquarters, branch, and administrative office properties from third parties[424](index=424&type=chunk) [Legal Proceedings](index=81&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, including a PPP loan-related adversary complaint, but does not expect material effects beyond accrued amounts - For information on legal proceedings, the report refers to NOTE 21 - LOSS CONTINGENCIES in the financial statements[425](index=425&type=chunk) [Mine Safety Disclosures](index=81&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[426](index=426&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=82&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Customers Bancorp's common stock trades on the NYSE under 'CUBI'; the company has not historically paid cash dividends and did not repurchase common stock in 2020, but issued a special dividend of BM Technologies, Inc. common stock - The company's common stock is traded on the New York Stock Exchange (NYSE) under the symbol '**CUBI**'[429](index=429&type=chunk) - The company has not paid cash dividends on its common stock and does not anticipate doing so in the near future, citing needs for earnings retention to support growth and regulatory limitations[430](index=430&type=chunk)[431](index=431&type=chunk) - A special dividend of BM Technologies, Inc. common stock was issued to Customers Bancorp shareholders following the divestiture of BankMobile, with shareholders receiving **0.15389 shares of BMTX** for each share of CUBI held as of the record date[434](index=434&type=chunk)[435](index=435&type=chunk) - No shares of common stock were repurchased during the year ended December 31, 2020[436](index=436&type=chunk) [Selected Financial Data](index=85&type=section&id=Item%206.%20Selected%20Financial%20Data) The company presents five years of selected consolidated financial data, showing **$118.5 million** net income and **$18.4 billion** total assets in 2020, driven by PPP loan originations Selected Financial Data (2016-2020) | (in thousands, except per share data) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Income Statement Data** | | | | | | | Net interest income | $403,688 | $277,310 | $257,877 | $267,343 | $249,497 | | Net income available to common shareholders | $118,537 | $64,868 | $57,236 | $64,378 | $69,187 | | Diluted EPS | $3.74 | $2.05 | $1.78 | $1.97 | $2.31 | | **Balance Sheet Data (at Period End)** | | | | | | | Total assets | $18,439,248 | $11,520,717 | $9,833,425 | $9,839,555 | $9,382,736 | | Loans and leases receivable | $7,575,368 | $7,318,988 | $7,138,074 | $6,768,258 | $6,154,637 | | Deposits | $11,309,929 | $8,648,936 | $7,142,236 | $6,800,142 | $7,303,775 | | Shareholders' equity | $1,117,086 | $1,052,795 | $956,816 | $920,964 | $855,872 | | **Key Ratios** | | | | | | | Return on average assets | 0.85% | 0.74% | 0.69% | 0.77% | 0.86% | | Return on average common equity | 14.55% | 8.30% | 7.90% | 9.38% | 12.41% | | Tangible book value per common share (Non-GAAP) | $27.92 | $26.17 | $23.32 | $21.90 | $20.49 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=88&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses significant 2020 growth, with net income increasing to **$118.5 million** and total assets growing to **$18.4 billion** due to PPP loans, while maintaining strong capital ratios and managing COVID-19 impacts and the BankMobile divestiture - Net income available to common shareholders increased by **82.7%** to **$118.5 million** in 2020 from **$64.9 million** in 2019, primarily driven by a **45.6%** increase in net interest income[484](index=484&type=chunk) - The COVID-19 pandemic significantly impacted operations, leading to **$5.0 billion** in PPP loan originations and loan modification programs, with total deferments declining to **$218.5 million** by year-end 2020 from a peak of **$1.2 billion**[463](index=463&type=chunk)[464](index=464&type=chunk) - The Allowance for Credit Losses (ACL) is a critical accounting policy, with CECL adoption on January 1, 2020, and the economic impact of COVID-19 driving an increased provision for credit losses[471](index=471&type=chunk)[477](index=477&type=chunk) - Total assets increased by **$6.9 billion (60.1%)** to **$18.4 billion** at year-end 2020, driven by PPP loan originations, funded by a **$4.4 billion** increase in PPPLF borrowings and a **$2.7 billion** increase in deposits[536](index=536&type=chunk)[538](index=538&type=chunk) [Results of Operations](index=92&type=section&id=Results%20of%20Operations) Net income available to common shareholders rose to **$118.5 million** in 2020, driven by a **$126.4 million** increase in net interest income from PPP lending, partially offset by higher provision for credit losses and non-interest expenses Condensed Statement of Income Comparison (2020 vs. 2019) | (in thousands) | 2020 | 2019 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $403,688 | $277,310 | $126,378 | 45.6% | | Provision for credit losses | $62,774 | $24,227 | $38,547 | 159.1% | | Total non-interest income | $101,734 | $80,938 | $20,796 | 25.7% | | Total non-interest expense | $266,690 | $231,901 | $34,789 | 15.0% | | Net income available to common shareholders | $118,537 | $64,868 | $53,669 | 82.7% | - Net interest margin (tax equivalent) decreased slightly by **4 basis points** to **2.71%** in 2020, but would have been **2.96%** excluding the impact of low-yielding PPP loans[496](index=496&type=chunk)[502](index=502&type=chunk) - Net charge-offs increased significantly to **$54.8 million (0.41% of average loans)** in 2020 from **$7.8 million (0.08%)** in 2019, primarily due to partial charge-offs on two commercial real estate loans and increased installment loan charge-offs[487](index=487&type=chunk)[507](index=507&type=chunk) [Financial Condition](index=101&type=section&id=Financial%20Condition) Total assets grew **60.1%** to **$18.4 billion** by year-end 2020, driven by PPP and mortgage warehouse loans, funded by increased deposits and PPPLF borrowings, while non-performing loans rose Balance Sheet Highlights (December 31, 2020 vs. 2019) | (in thousands) | 2020 | 2019 | | :--- | :--- | | Total Assets | $18,439,248 | $11,520,717 | | Loans receivable, PPP | $4,561,365 | $0 | | Loans and leases receivable, net | $15,608,989 | $9,508,367 | | Total Deposits | $11,309,929 | $8,648,936 | | FRB PPP Liquidity Facility | $4,415,016 | $0 | | Total Shareholders' Equity | $1,117,086 | $1,052,795 | - The investment securities portfolio grew to **$1.2 billion** from **$595.9 million**, with significant purchases of asset-backed securities, CLOs, and government agency securities[543](index=543&type=chunk) - Total loans and leases reached **$15.8 billion**, with the portfolio (excluding PPP and mortgage warehouse loans) growing by **$168 million** to **$7.4 billion**, reflecting a strategic shift to higher-yielding commercial and industrial and installment loans[572](index=572&type=chunk) - Non-performing loans (NPLs) increased to **$70.5 million (0.45% of total loans)** at year-end 2020, compared to **$21.3 million (0.21%)** at year-end 2019[595](index=595&type=chunk) - Total deposits grew by **$2.7 billion**, with a strategic shift towards core deposits, as non-time deposits increased by **$3.7 billion** while higher-cost time deposits decreased by **$1.0 billion**[619](index=619&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=127&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages interest rate risk using income simulation and EVE models, indicating short-term liability sensitivity, with a **100 basis point** rate increase projected to decrease net interest income by **0.8%** and EVE by **6.1%** Interest Rate Sensitivity Analysis (as of Dec 31, 2020) | Rate Shock | % Change in Net Interest Income (Next 12 Months) | % Change in Economic Value of Equity (EVE) | | :--- | :--- | :--- | | +300 bps | (2.7)% | (18.9)% | | +200 bps | (1.6)% | (12.2)% | | +100 bps | (0.8)% | (6.1)% | | -100 bps | 1.4% | (4.2)% | - The company uses income simulation modeling and EVE estimates to measure and manage interest rate sensitivity, providing a comprehensive view of exposure to changes in the interest rate environment[672](index=672&type=chunk) - The balance sheet gap analysis at December 31, 2020, shows a positive cumulative gap within the next year, suggesting that rising rates may increase net interest income over that period[681](index=681&type=chunk) [Financial Statements and Supplementary Data](index=130&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the company's audited consolidated financial statements for 2020, 2019, and 2018, along with detailed notes on accounting policies, segment information, and the BankMobile divestiture - The financial statements for 2020 and 2019 were audited by Deloitte & Touche LLP with an unqualified opinion, while the 2018 statements were audited by BDO USA, LLP[686](index=686&type=chunk)[708](index=708&type=chunk) - A critical audit matter for the 2020 audit was the Allowance for Credit Losses (ACL), due to the subjective nature of the estimate, CECL adoption, and the economic impact of COVID-19[691](index=691&type=chunk)[692](index=692&type=chunk)[697](index=697&type=chunk) - Note 26, Subsequent Events, details the completion of the BankMobile Technologies, Inc. (BMT) divestiture on January 4, 2021, with BMT's historical results to be presented as discontinued operations starting in Q1 2021[1074](index=1074&type=chunk)[1075](index=1075&type=chunk)[1077](index=1077&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=211&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants on accounting and financial disclosure - None[1083](index=1083&type=chunk) [Controls and Procedures](index=211&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2020, with no material changes due to remote work - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[1084](index=1084&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2020, an assessment also affirmed by Deloitte & Touche LLP's unqualified opinion[1082](index=1082&type=chunk)[1085](index=1085&type=chunk) - No changes in internal control over financial reporting occurred during the fourth quarter of 2020 that materially affected, or are reasonably likely to materially affect, these controls[1087](index=1087&type=chunk) [Other Information](index=212&type=section&id=Item%209B.%20Other%20Information) The company reported no other information for this item - None[1089](index=1089&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=213&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2021 Annual Meeting of Shareholders Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Shareholders[1092](index=1092&type=chunk) [Executive Compensation](index=213&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the 2021 Annual Meeting of Shareholders Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Shareholders[1093](index=1093&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=213&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and equity compensation plans is incorporated by reference from the 2021 Annual Meeting of Shareholders Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Shareholders[1094](index=1094&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=213&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the 2021 Annual Meeting of Shareholders Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Shareholders[1095](index=1095&type=chunk) [Principal Accountant Fees and Services](index=213&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2021 Annual Meeting of Shareholders Proxy Statement - Information is incorporated by reference from the Proxy Statement for the 2021 Annual Meeting of Shareholders[1096](index=1096&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=214&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including consolidated financial statements, corporate governance documents, debt indentures, and BankMobile divestiture agreements - The consolidated financial statements are filed under Item 8 of this report[1099](index=1099&type=chunk) - A comprehensive list of exhibits is provided, including corporate governance documents, debt indentures, employment agreements, and key transaction documents like the merger agreement for the BankMobile divestiture[1099](index=1099&type=chunk)[1101](index=1101&type=chunk)[1102](index=1102&type=chunk) [Form 10-K Summary](index=219&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary was provided - None[1105](index=1105&type=chunk)

Customers Bancorp (NYSE:CUBI) Q4 2020 Earnings Conference Call January 28, 2021 9:00 AM ET Company Participants Dave Patti - Director of Corporate Communications Jay Sidhu - CEO Carla Leibold - CFO, Customers Bank Corporate bank Sam Sidhu - VC, COO Customers Bank Jim Collins - CAO, Customer Bank Andy Bowman - CCO, Customers Bank Conference Call Participants Michael Schiavone - KBW Steve Moss - B. Riley Securities Casey Haire - Jefferies Operator Ladies and gentlemen, thank you for standing by and welcome to ...

"High Tech Forward-Thinking Bank Supported by High Touch" & Fourth Quarter & Full Year 2020 ' Earnings Conference Call January 28, 2021 NYSE: CUBI & Forward-Looking Statements - In addition to historical information, this presentation may contain "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.'s strategies, goals, beliefs, expect ...

Financial Performance - Net income for the three months ended September 30, 2020, was $50,515 million, compared to $27,066 million in the same period of 2019, representing an increase of 86.2%[20] - Basic earnings per common share for the three months ended September 30, 2020, were $1.49, up from $0.75 in the same period of 2019, indicating an increase of 98.7%[20] - Net income available to common shareholders for the three months ended September 30, 2020, was $47,085,000, compared to $23,451,000 for the same period in 2019, representing a 100% increase[67] - Net income for the nine months ended September 30, 2020, was $76,332,000, compared to $51,801,000 for the same period in 2019, representing a 47.3% increase[31] - Comprehensive income for the three months ended September 30, 2020, was $44,729 million, compared to $28,885 million in the same period of 2019, representing an increase of 55.0%[24] Asset Growth - Total assets increased to $18.78 billion as of September 30, 2020, compared to $11.52 billion at December 31, 2019, reflecting a growth of approximately 63.5%[18] - Total loans and leases receivable reached $16.42 billion, up from $9.51 billion, marking a 72.5% increase year-over-year[18] - Total deposits grew to $10.84 billion, an increase of 25.3% from $8.65 billion at the end of 2019[18] - Total loans held for sale decreased to $26.69 million from $486.33 million, indicating a strategic shift in asset management[18] Credit Loss Provisions - The allowance for credit losses on loans and leases rose to $155.56 million from $56.38 million, indicating a significant increase in provisions due to credit risk[18] - The provision for credit losses on loans and leases was $12,955 million for the three months ended September 30, 2020, compared to $4,426 million in the same period of 2019, reflecting a significant increase of 192.5%[20] - Provision for credit losses on loans and lease losses increased significantly to $65,688,000 from $14,539,000, indicating a rise of 351.5%[31] Income and Expenses - Total interest income for the three months ended September 30, 2020, was $139,650 million, an increase from $126,718 million in the same period of 2019, representing a growth of 10.4%[20] - Non-interest income totaled $33,793 million for the three months ended September 30, 2020, up from $23,369 million in the same period of 2019, marking a significant increase of 44.6%[20] - Total non-interest expense increased to $65,561 million for the three months ended September 30, 2020, compared to $59,592 million in the same period of 2019, which is an increase of 9.9%[20] Capital Structure - Shareholders' equity slightly decreased to $1.05 billion from $1.05 billion, indicating a stable capital position despite market challenges[18] - The company issued 9 million preferred shares, maintaining a strong capital structure to support future growth initiatives[18] - The total shareholders' equity as of September 30, 2020, was $1,051,491,000, an increase from $1,007,847,000 as of June 30, 2020, representing a growth of 4.3%[26] Liquidity and Funding - The Federal Reserve PPP liquidity facility contributed $4.81 billion to the company's liquidity position, enhancing its financial stability during the pandemic[18] - Customers had $4.8 billion of borrowings under the PPPLF, with a borrowing capacity of up to $5.0 billion as of September 30, 2020[140] - Short-term debt as of September 30, 2020, totaled $1.53 billion, an increase from $1.038 billion as of December 31, 2019[137] Loan Portfolio and Risk Management - Customers had $5.0 billion in Paycheck Protection Program (PPP) loans outstanding as of September 30, 2020, fully guaranteed by the SBA, with interest income recognized at $24.3 million for the quarter[88] - Non-performing loans (NPLs) included in total loans held for sale were $19.7 million as of September 30, 2020, compared to $1.3 million at December 31, 2019, indicating a rise in credit risk[84] - The risk rating categories for loans include pass/satisfactory, special mention, substandard, doubtful, and loss, which are updated periodically to monitor credit quality[115] Derivatives and Fair Value - The company reported a balance of $60,810,000 in derivative assets as of September 30, 2020[193] - The total fair value of derivatives designated as cash flow hedges was recorded as $46,785,000 in liabilities as of September 30, 2020[193] - The fair value of financial instruments is determined using various methods, including quoted market prices and valuation techniques, with a focus on market conditions at the measurement date[1] Business Segments - The Customers Bank Business Banking segment primarily generates revenue through net interest income and other non-interest income, focusing on commercial customers in several states[208] - The BankMobile segment offers digital banking services and generates revenue mainly from interest income on consumer loans and various fees[208]

Customers Bancorp, Inc. (NYSE:CUBI) Q3 2020 Earnings Conference Call October 29, 2020 9:00 AM ET Company Participants Dave Patti - Director of Corporate Communications Jay Sidhu - CEO Dick Ehst - President, CEO, Customers Bank Carla Leibold - CFO, Customers Bank Corporate bank Sam Sidhu - VC, COO Customers Bank Jim Collins - CAO, Customer Bank Andy Bowman - CCO, Customers Bank Conference Call Participants Steve Moss - B. Riley Securities Michael Perito - KBW Russell Gunther - D.A. Davidson Frank Schiraldi - ...

Financial Performance - The company expects to earn $100 million in pre-tax origination fees from PPP loans, with the majority recognized in the first half of 2021[8] - The company reported a Return on Average Assets (ROAA) of 1.12% and a Return on Common Equity (ROCE) of 23.05% for Q3 2020[8] - Core earnings per share (EPS) was $1.20 in Q3 2020, compared to $0.74 in Q3 2019[10] - Tangible book value per share was $25.97 as of September 30, 2020[10] - The company projects the recognition of PPP fees and interest income to drive the company's Tangible Common Equity (TCE) to Total Assets (TA) Ratio to approximately 8.0% and Total Capital Ratio to approximately 14.0% by year-end 2021[11] Asset Quality - Non-Performing Assets (NPAs) to total assets ratio decreased to 0.34% at the end of Q3 2020 from 0.48% three months prior[8, 13] - The coverage ratio, excluding PPP loans, was 2.02% at the end of Q3 2020[8, 13] - Commercial criticized loans were 2.56% of total loans and leases, excluding PPP balances, at the end of Q3 2020[8, 16] - Total loan deferrals were 2.6% of total loans and leases, excluding PPP balances, as of September 30, 2020[8, 17] Loan and Deposit Portfolio - Total loans and leases, excluding PPP balances, increased by $1.4 billion, or 13% year-over-year[9] - Commercial and Industrial (C&I) loans grew by 23%, or $408 million year-over-year[9] - Demand deposits increased by 71% year-over-year[9] - The total cost of deposits decreased by 115 basis points year-over-year to 0.67%[9]