Customers Bancorp Reports Net Income for Fourth Quarter and Full Year 2018

WYOMISSING, PA / ACCESSWIRE / January 24, 2019 / Customers Bancorp, Inc. (NYSE: CUBI) the parent company of Customers Bank (collectively ''Customers''), today reported:

• Customers Bancorp, Inc.'s (''CUBI'') fourth quarter 2018 (''Q4 2018'') net income to common shareholders was $14.2 million, or $0.44 per diluted share. Core earnings for Q4 2018 totaled $17.0 million, or $0.53 per diluted share (non-GAAP measures).
• CUBI's net income to common shareholders for 2018 (''FY 2018'') was $57.2 million, or $1.78 per diluted share. Core earnings for FY 2018 totaled $78.5 million, or $2.43 per diluted share (non-GAAP measures), an increase of approximately 10% from 2017 (''FY 2017'').

(Dollars in thousands,except per share amounts)		USD				Per Share					USD				Per Share
Q4 2018 Net Income to Common Shareholders (GAAP)									FY 2018 Net Income to Common Shareholders (GAAP)
Customers Bank Business Banking		$	17,521			$	0.55		Customers Bank Business Banking		$	70,698			$	2.19
BankMobile			(3,274	)			(0.10	)	BankMobile			(13,462	)			(0.42	)
Consolidated		$	14,247			$	0.44		Consolidated		$	57,236			$	1.78
Q4 2018 Core Earnings (Non-GAAP)									FY 2018 Core Earnings (Non-GAAP)
Customers Bank Business Banking		$	19,911			$	0.62		Customers Bank Business Banking		$	88,633			$	2.75
BankMobile			(2,919	)			(0.09	)	BankMobile			(10,150	)			(0.31	)
Consolidated		$	16,992			$	0.53		Consolidated		$	78,483			$	2.43

• Net interest margin, tax equivalent (''NIM'') (a non-GAAP measure) was 2.57% in Q4 2018, an increase of 10 basis points from third quarter 2018 (''Q3 2018''). Excluding prepayment fees, NIM increased 15 basis points from Q3 2018.
  
• In late November 2018, BankMobile's first White Label banking partnership went live in beta test phase, offering BankMobile's best in class banking products to the partner's broad customer base. Even before any marketing or advertising efforts, the partnership generated nearly 4,500 funded deposit accounts just in one month, with over $5 million in total deposits. We expect account openings and deposit growth to accelerate throughout 2019.
  
• In December 2018, Customers repurchased 719,200 shares of common stock at an average price of $18.04 per share, or approximately 80% of tangible book value at December 31, 2018. An additional 31,159 shares were repurchased in January 2019 at an average price of $18.35 per share.
  
• Efforts improved loan mix year-over-year, as core commercial and industrial loans, excluding commercial loans to mortgage companies, increased $312 million, or 19.7%, and mortgages and other consumer loans increased $392 million, or 119%. As planned, multi-family loans decreased $361 million and commercial non-owner occupied real estate loans decreased $93.6 million.
  
• Total assets were $9.8 billion at both December 31, 2018 and 2017. Total deposits increased by $342 million, or 5.0%, from December 31, 2017, with demand deposits increasing $350 million, or 22%.
• Q4 2018 book value per common share was $23.85 and tangible book value per common share (a non-GAAP measure) was $23.32. Tangible book value per common share has increased at a compound annual growth rate of 10.2% over the past five years.
• Based on the January 18, 2019 closing price of $20.97, Customers Bancorp common equity is trading at 0.90x tangible book value of $23.32 (a non-GAAP measure) and 9.5x the 2019 consensus estimate of $2.21.

Customers reported net income to common shareholders of $14.2 million for Q4 2018, compared to $2.4 million for Q3 2018, and $18.0 million for Q4 2017. Fully diluted earnings per common share for Q4 2018 was $0.44, compared to $0.07 for Q3 2018 and $0.55 for fourth quarter 2017 ("Q4 2017"). Customers also reported net income to common shareholders of $57.2 million for FY 2018, compared to $64.4 million for FY 2017. Fully diluted earnings per common share for FY 2018 was $1.78, compared to $1.97 for FY 2017. Core earnings (a non-GAAP measure) for FY 2018 totaled $78.5 million, an increase of approximately 10% compared to $72.0 million for FY 2017. Q4 2018, Q3 2018, Q4 2017, FY 2018 and FY 2017 include one or more significant notable items, such as executive severance expense, merger and acquisition-related expenses, losses realized from the sale of lower-yielding investment securities and multi-family loans as management strategically changed the mix of assets and liabilities on its balance sheet. Also excluded are investment securities gains and losses and impairment charges. These significant notable items are not included in Customers' disclosures of core earnings and other core performance metrics.

''In 2018, Customers Bancorp generated core earnings per share (a non-GAAP measure) of $2.43, a year-over-year increase of approximately 10%. We are focused on improving profitability and quality of our balance sheet profile and generating an ROAA of 1.25% within 3-4 years. We are happy to report that earnings improved at both Customers Bank Business Banking and BankMobile segments and are optimistic about accelerating this trend. In 2018, commercial and industrial loans grew 20% and demand deposits grew 22%, while we decreased lower-yielding multi-family and commercial real estate loans by $455 million, or approximately 10%. BankMobile launched its first major White Label partnership in 2018, which has started generating deposits but is still in its very early days. We also began repurchasing stock, which we considered very attractive trading at approximately 80% of tangible book value. In 2019, we will remain focused on further improving our profitability and our capital ratios, strengthening the balance sheet through a remix in our assets and liabilities, expanding our net interest margin and increasing our ROAA and ROCE,'' stated Jay Sidhu, CEO and Chairman of Customers Bank.

Strategic Priorities

Improve Profitability: Target a 2.75% NIM in 9-15 months and a 1.25% ROAA in 3-4 years

Customers expects to keep total assets relatively flat in 2019, with a focus on growing its core businesses with improving margins, capital and profitability. Through favorable mix shifts in both assets and liabilities, Customers expects to improve the overall quality of its balance sheet and deposit franchise, expand its net interest margin, enhance liquidity and improve interest rate sensitivity.

• Target ROAA in top quartile of peer group, which we expect will equate to a ratio of 1.25% or higher over the next 3-4 years.
• Expected shift in asset and funding mix is expected to drive a wider NIM to 2.75% and possibly higher in the next 9-15 months.
• BankMobile growth and maturity expected to enhance profitability; we expect BankMobile to be profitable by the end of 2019.
• Expense control; we expect very modest growth in most Customers Bank Business Banking segment expenses, and incremental spend in other areas driven by revenue growth.
• Core deposit and high-yielding loan growth are strategic priorities. Customers currently has approximately $270 million of deposits with a cost of 2.75% or greater that we expect to run off and replace with lower cost funding. Similarly, we have $2.2 billion of loans with yields below 3.75% at December 31, 2018, of which $1.8 billion are multi-family loans. We expect to run-off multi-family loans and replace them with higher-yielding earning assets.
• Maintain strong credit quality.

Build and Deploy Capital

''We have excess capital above our targeted minimum tangible common equity ratio of 7.0%, which enabled us to commence a capital deployment strategy in 2018,'' Sidhu stated. ''Capital ratios will continue to build in 2019 as we retain earnings and the balance sheet remains flat. We continue to evaluate the best uses for our excess capital,'' Sidhu continued.

The estimated total risk-based capital ratio was approximately 13.0% for Q4 2018. The estimated common equity Tier 1 capital ratio was approximately 9.0% for Q4 2018. The estimated Tier 1 leverage capital ratio was approximately 9.7% for Q4 2018. The tangible common equity to tangible assets ratio (a non-GAAP measure) was 7.4% at December 31, 2018.

BankMobile Segment is Expected to Generate a Positive Earnings Contribution by Q4 2019

BankMobile, a division of Customers Bank, operates a branchless digital bank offering low cost banking services to over 1.0 million active deposit customers. Customers expects to retain BankMobile for a 2-3 year period, but will regularly evaluate the best options for BankMobile so it can continue to take advantage of the small issuer exemption under the Durbin Amendment.

BankMobile is expected to generate a positive contribution to Customers' earnings by Q4 2019, due in large part to expected core deposit growth from its first White Label banking partnership and fee changes being implemented in its student disbursement business. In late November 2018, BankMobile's first White Label banking partnership went live in beta test phase, offering BankMobile's best in class banking products to the partner's broad customer base. Even before any marketing efforts, the partnership generated nearly 4,500 funded deposit accounts with over $5 million in total deposits in just one month. Account openings and deposit growth are expected to accelerate later this year when our partner begins to market the account.

In total, demand deposits generated by the BankMobile business averaged $532 million for Q4 2018 with an average cost of 0.14%.

Q4 and Full Year 2018 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended December 31, 2018 and the preceding four quarters and the years ended December 31, 2018 and 2017, respectively:

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES

EARNINGS SUMMARY - UNAUDITED

(Dollars in thousands, except per share data and stock price data)		Q4 2018				Q3 2018				Q2 2018				Q1 2018				Q4 2017				Full Year 2018				Full Year 2017
GAAP Profitability Metrics:
Net income available to common shareholders		$	14,247			$	2,414			$	20,048			$	20,527			$	18,000			$	57,236			$	64,378
Per share amounts:
Earnings per share - basic		$	0.45			$	0.08			$	0.64			$	0.65			$	0.58			$	1.81			$	2.10
Earnings per share - diluted		$	0.44			$	0.07			$	0.62			$	0.64			$	0.55			$	1.78			$	1.97
Book value per common share		$	23.85			$	23.27			$	22.70			$	22.30			$	22.42			$	23.85			$	22.42
CUBI stock price		$	18.20			$	23.53			$	28.38			$	29.15			$	25.99			$	18.20			$	25.99
Average shares outstanding - basic			31,616,740				31,671,122				31,564,893				31,424,496				30,843,319				31,570,118				30,659,320
Average shares outstanding - diluted			32,051,030				32,277,590				32,380,662				32,273,973				32,508,030				32,233,098				32,596,677
Shares outstanding			31,003,028				31,687,340				31,669,643				31,466,271				31,382,503				31,003,028				31,382,503
Return on average assets ("ROAA")			0.71	%			0.22	%			0.89	%			0.95	%			0.84	%			0.69	%			0.77	%
Return on average common equity ("ROCE")			7.58	%			1.31	%			11.32	%			11.73	%			10.11	%			7.90	%			9.38	%
Efficiency ratio			69.99	%			66.42	%			64.35	%			60.84	%			62.42	%			65.35	%			61.53	%
Non-GAAP Profitability Metrics (1):
Core earnings		$	16,992			$	20,053			$	20,841			$	20,597			$	18,086			$	78,483			$	71,971
Per share amounts:
Core earnings per share - diluted		$	0.53			$	0.62			$	0.64			$	0.64			$	0.56			$	2.43			$	2.21
Tangible book value per common share		$	23.32			$	22.74			$	22.15			$	21.74			$	21.90			$	23.32			$	21.90
Net interest margin, tax equivalent			2.57	%			2.47	%			2.62	%			2.67	%			2.79	%			2.58	%			2.73	%
Tangible common equity to tangible assets			7.36	%			6.80	%			6.33	%			6.36	%			7.00	%			7.36	%			7.00	%
Core ROAA			0.82	%			0.88	%			0.91	%			0.96	%			0.85	%			0.89	%			0.85	%
Core ROCE			9.05	%			10.86	%			11.76	%			11.77	%			10.15	%			10.83	%			10.49	%
Pre-tax pre-provision core net income		$	27,957			$	31,821			$	30,652			$	33,757			$	33,394			$	124,410			$	135,191
Core ROAA - pre-tax and pre-provision			1.12	%			1.18	%			1.15	%			1.33	%			1.30	%			1.19	%			1.33	%
Core ROCE - pre-tax and pre-provision			12.96	%			15.28	%			15.26	%			17.23	%			16.72	%			15.18	%			17.60	%
Core efficiency ratio			66.18	%			62.99	%			63.31	%			60.72	%			61.95	%			63.23	%			61.42	%
Asset Quality:
Net charge-offs		$	2,154			$	471			$	427			$	633			$	1,130			$	3,685			$	6,067
Annualized net charge-offs to average total loans			0.10	%			0.02	%			0.02	%			0.03	%			0.05	%			0.04	%			0.07	%
Non-performing loans ("NPLs") to total loans			0.32	%			0.27	%			0.29	%			0.26	%			0.30	%			0.32	%			0.30	%
Reserves to NPLs			147.16	%			174.56	%			149.25	%			173.02	%			146.36	%			147.16	%			146.36	%
Regulatory Capital Ratios (2):
Common equity Tier 1 capital to risk-weighted assets			8.96	%			8.70	%			8.61	%			8.51	%			8.81	%			8.96	%			8.81	%
Tier 1 capital to risk-weighted assets			11.58	%			11.26	%			11.16	%			11.11	%			11.58	%			11.58	%			11.58	%
Total capital to risk-weighted assets			13.04	%			12.69	%			12.55	%			12.55	%			13.05	%			13.04	%			13.05	%
Tier 1 capital to average assets (leverage ratio)			9.67	%			8.91	%			8.87	%			9.03	%			8.94	%			9.67	%			8.94	%

(1) Non-GAAP measures exclude executive severance expense, merger and acquisition-related expenses, losses realized from the sale of lower-yielding investment securities and multi-family loans, investment securities gains and losses and impairment charges, and certain intangible assets. Please note that not each of the aforementioned adjustments affected the reported amount in each of the periods presented. Customers' reasons for the use of these non-GAAP measures and a detailed reconciliation between the non-GAAP measures and the comparable GAAP amounts are included at the end of this document.
(2) Regulatory capital ratios are estimated for Q4 2018 and FY 2018.

Net Interest Income

Net interest income totaled $61.5 million in Q4 2018, a decrease of $2.5 million from Q3 2018, principally due to a reduction in the average balance of interest earning assets of $0.8 billion. Partially offsetting the decline in the average balance of interest earning assets was a 10 basis points expansion in tax equivalent NIM (a non-GAAP measure) reflecting efforts to re-mix the balance sheet to focus on higher-yielding assets and lower-cost funding. Compared to Q3 2018, total loan yields were 1 basis point lower at 4.37%, driven by a $1.2 million reduction in loan prepayment fees to $0.4 million. The reduction in loan prepayment fees reduced the yield on multi-family loans 13 basis points, the yield on total loans 6 basis points and the tax equivalent NIM (a non-GAAP measure) by 5 basis points. Securities yields increased 30 basis points sequentially to 3.60% reflecting a full quarter benefit from the sale of lower-yielding securities in Q3 2018; the cost of total deposits increased by a modest 4 basis points to 1.71%, as the average balance of non-interest bearing deposits increased $151.5 million, and borrowing costs increased 39 basis points to 3.13%. Compared to the year-ago quarter, tax equivalent NIM (a non-GAAP measure) narrowed 22 basis points, which reflected a 71 basis points increase in the yield on securities and a 29 basis points increase in the yield on total loans, more than offset by a 79 basis points increase in the cost of deposits, and a 100 basis points increase in the cost of borrowings.

As planned, total loans outstanding decreased $163 million, or 1.9%, to $8.5 billion as of December 31, 2018 compared to December 31, 2017. Commercial and industrial loans, excluding commercial loans to mortgage companies, increased $312 million to $1.9 billion, up 19.7%; multi-family loans decreased $361 million, or 9.9%, to $3.3 billion; commercial non-owner-occupied real estate loans decreased $94 million to $1.1 billion; mortgages and other consumer loans increased $392 million to $722 million; and commercial loans to mortgage companies decreased $383 million to $1.5 billion.

Total deposits increased $342 million, or 5.0%, to $7.1 billion as of December 31, 2018 compared to total deposits of $6.8 billion at December 31, 2017. Total demand deposit accounts increased $350 million, or 22.2%, to $1.9 billion, savings and money market deposits increased $163 million, or 4.9%, to $3.5 billion, and certificates of deposit accounts decreased $172 million, or 9.0%, to $1.7 billion. In July 2018, Customers launched a new digital, on-line banking business with a goal of gathering retail deposits. As of December 31, 2018, this new business generated $333 million in retail deposits.

Provision, Credit Quality and Risk Management

The provision for loan losses totaled $1.4 million in Q4 2018, compared to $2.9 million in Q3 2018 and $0.8 million in Q4 2017. The Q4 2018 provision expense included $0.5 million for growth in the consumer and commercial and industrial loan portfolios, net of the multi-family and commercial real estate loan run-off, and a $1.2 million increase for impaired loans, offset in part by a benefit of $0.3 million resulting from improved asset quality and lower incurred losses than previously estimated. Net charge-offs for Q4 2018 were $2.2 million, or 10 basis points of annualized net charge-offs to average loans. Net charge-offs for FY 2018 were $3.7 million, or 4 basis points of average loans, down from net charge-offs of $6.1 million, or 7 basis points of average loans, for FY 2017.

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 December 31, 2018 were only 0.32% of total loans, compared to our peer group non-performing loans of approximately 0.73% in the most recent period available, and industry average non-performing loans of 1.16% 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

Non-interest income totaled $19.9 million in Q4 2018, up $17.8 million from $2.1 million in Q3 2018. This increase was primarily due to the $18.7 million loss realized from the sale of lower-yielding investment securities in Q3 2018. Compared to the year-ago quarter, non-interest income increased $0.1 million from $19.8 million in Q4 2017. Q4 2018 non-interest income included $2.0 million of gains realized from the termination of interest rate swaps associated with the $500 million of FHLB advances that were repaid in October 2018 and $1.4 million of income earned on commercial operating leases generated by our Equipment Finance Group as that business continues to grow. Partially offsetting these increases was the loss of $1.2 million realized from the sale of lower-yielding multi-family loans, reduced interchange and card revenue of $0.6 million, and $1.6 million of debit and prepaid card interchange expense, which prior to the adoption of the new revenue recognition standard in Q1 2018 was included in non-interest expense and reported as technology, communications and bank operations expense.

Non-interest income totaled $59.0 million for FY 2018, down $19.9 million from $78.9 million for FY 2017. This decrease was primarily due to the $18.7 million loss realized from the sale of investment securities in FY 2018 compared to gains of $8.8 million realized in FY 2017, reduced interchange and card revenue and deposit fees totaling $5.3 million mainly resulting from reduced transaction volumes at the BankMobile business segment, $5.5 million of debit and prepaid card interchange expense recorded as a reduction in non-interest income beginning in Q1 2018, and $2.2 million of reduced mortgage warehouse transactional fees primarily driven by reduced volumes. These decreases were offset in part by $12.9 million of impairment losses recorded in FY 2017, $4.8 million of income realized from the termination of interest rate swaps previously designated as cash flow hedges and increased income of $4.7 million earned on commercial operating leases.

Non-Interest Expense

Non-interest expense totaled $57.0 million in Q4 2018, down $0.1 million from $57.1 million in Q3 2018. This decrease primarily resulted from reduced merger and acquisition related expenses of $2.5 million offset in part by executive severance expenses of $1.9 million. Compared to the year-ago quarter, non-interest expense increased $2.3 million from $54.8 million in Q4 2017. This increase primarily resulted from executive severance expense of $1.9 million and increased depreciation expense on leased equipment of $1.2 million, offset in part by reductions in other operating expenses as management continues its efforts to monitor and control expenses.

Non-interest expense totaled $220.2 million in FY 2018, up $4.6 million from $215.6 million in FY 2017. This increase primarily resulted from increased salaries and employee benefits of $9.3 million largely due to executive severance expense of $1.9 million and increased full-time equivalents (''FTEs'') year-over-year of 62, increased merger and acquisition-related expenses of $4.0 million, and increased depreciation expense on leased equipment of $3.9 million, offset in part by reductions in other operating expenses as management continues its efforts to monitor and control expenses.

Tax

The effective tax rate of 22.2% for Q4 2018 was primarily driven by an estimated research and development tax credit recorded in Q4 2018. In Q4 2017, Customers recorded a deferred tax asset re-measurement charge to its income tax expense of $5.5 million as a result of the enactment of the Tax Cuts and Jobs Act of 2017. This one-time tax effect was offset by a $7.3 million benefit from exercises of employee stock options, principally by Customers' CEO, and vesting of restricted stock units.

Customers expects the 2019 effective tax rate to be around 24%.

Profitability and Book Value

Customers' return on average assets was 0.71% in Q4 2018, compared to 0.22% in Q3 2018 and 0.84% in Q4 2017, and its return on average common equity was 7.58% in Q4 2018, compared to 1.31% in Q3 2018 and 10.11% in Q4 2017. The core return on average assets (a non-GAAP measure) was 0.82% in Q4 2018, compared to 0.88% in Q3 2018 and 0.85% in Q4 2017 and the core return on average common equity (a non-GAAP measure) was 9.05% in Q4 2018, compared to 10.86% in Q3 2018 and 10.15% in Q4 2017.

The Q4 2018 efficiency ratio was 70.0%, compared to 66.4% in Q3 2018 and 62.4% in Q4 2017. The core efficiency ratio (a non-GAAP measure) was 66.2% in Q4 2018, compared to 63.0% in Q3 2018 and 62.0% in Q4 2017.

The book value and tangible book value (a non-GAAP measure) per common share increased to $23.85 and $23.32 per share, respectively, at December 31, 2018, reflecting a CAGR of 10.4% and 10.2% over the past five years, respectively.

Segment Discussion

Customers Bancorp has two operating segments: Customers Bank Business Banking and BankMobile.

The Customers Bank Business Banking segment reported net income available to common shareholders of $17.5 million, or $0.55 per diluted share, for Q4 2018, down from $22.2 million, or $0.68 per diluted share, for Q4 2017. The segment's core earnings for Q4 2018 totaled $19.9 million, or $0.62 per diluted share, compared to $22.1 million, or $0.68 per diluted share, for Q4 2017 (non-GAAP measures). The decrease in GAAP earnings resulted from NIM compression from reduced net interest income of $8.6 million driven by higher funding costs as interest rates increased, executive severance expense of $1.9 million and a $1.2 million loss realized from the sale of lower-yielding multi-family loans, offset in part by reduced tax expense of $7.2 million driven by lower enacted federal tax rates and lower taxable income.

The Customers Bank Business Banking segment reported net income available to common shareholders of $70.7 million, or $2.19 per diluted share, for FY 2018, down from $77.6 million, or $2.38 per diluted share, for FY 2017. The segment's core earnings for FY 2018 totaled $88.6 million, or $2.75 per diluted share, up from $84.9 million, or $2.60 per diluted share, for FY 2017 (non-GAAP measures). The decrease in GAAP earnings resulted from NIM compression from reduced net interest income of $13.2 million driven by higher funding costs as interest rates increased, increased non-interest expenses of $18.3 million and reduced non-interest income of $7.3 million, offset in part by reductions in provision expense of $2.7 million and tax expense of $29.3 million driven by lower enacted federal tax rates and lower taxable income.

The BankMobile segment reported a net loss for Q4 2018 of $3.3 million, or $0.10 per diluted share. The segment's core loss (a non-GAAP measure) for Q4 2018 totaled $2.9 million, or $0.09 per diluted share, an improvement from a core loss (a non-GAAP measure) for Q4 2017 of $4.0 million, or $0.12 per diluted share.

The BankMobile segment reported a net loss for FY 2018 of $13.5 million, or $0.42 per diluted share. The segment's core loss (a non-GAAP measure) for FY 2018 totaled $10.2 million, or $0.31 per diluted share, an improvement from a core loss (a non-GAAP measure) for FY 2017 of $12.9 million, or $0.40 per diluted share. The improvement reflected an increase in net interest income, given the benefit of higher rates on BankMobile's low cost deposits, and reduced expenses, mitigated by lower fee income and an increase in provision expense as the segment began adding consumer loans.

Part of BankMobile's strategy to reach profitability in 2019 includes the addition of reasonable monthly and NSF fees in the student disbursement business beginning at the end of Q1 2019. In order to incentivize desired behaviors, monthly fees can be waived and an attractive rate of interest can be earned for customers who meet certain requirements. BankMobile also intends to deploy its low-cost deposits into consumer loans to increase net interest income. This strategy is likely to be front-end loaded in 2019, with higher provision cost in the first half of the year and higher interest income in the second half of the year.

Significantly Lowering Commercial Real Estate Concentration

Customers' total commercial real estate (''CRE'') loan exposures subject to regulatory concentration guidelines of $4.4 billion as of December 31, 2018 included construction loans of $70 million, multi-family loans of $3.3 billion, and non-owner occupied commercial real estate loans of $1.0 billion, which represent 361% of total risk-based capital on a combined basis, a reduction from 418% commercial real estate concentration as of December 31, 2017. Customers' loans subject to regulatory CRE concentration guidelines had 3 year cumulative growth of 10.6% in Q4 2018, a deceleration from 54.5% a year ago.

Customers' loans collateralized by multi-family properties were approximately 38.4% of Customers' total loan portfolio and approximately 270% of total risk-based capital at December 31, 2018, down from approximately 41.9% and 311%, respectively, at December 31, 2017. 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 139%;
• Median loan-to-value for the portfolio is 65.2%;
• 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: Thursday, January 24, 2019
Time: 5:00 PM EST
US Dial-in: 855-719-5007
International Dial-in: 334-323-0517
Participant Code: 665552

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 Thursday, January 24, 2019 at 8:00 PM EST until 8:00 PM EST on February 23, 2019. To listen, call within the United States 888-203-1112 or 719-457-0820 when calling internationally. Please use the replay pin number 8701039.

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 $9.8 billion at December 31, 2018. 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 to retain BankMobile for 2-3 years, the possibility that the expected benefits of retaining BankMobile for 2-3 years may not be achieved 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, including any amendments thereto, 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.

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Contacts:

Jay Sidhu, Chairman & CEO 610-935-8693
Carla Leibold, CFO 484-923-8802
Bob Ramsey, CFO - BankMobile 484-926-7118

SOURCE: Customers Bancorp, Inc.

View source version on accesswire.com:
https://www.accesswire.com/533544/Customers-Bancorp-Reports-Net-Income-for-Fourth-Quarter-and-Full-Year-2018