Exhibit 99.1
Effortless Banking
Building a Unique High Performing Banking Model
Customers Bancorp, Inc.
1
Overall Corporate
Strategy
Strategy
Jay Sidhu
2
Forward-Looking Statements
This presentation as well as other written or oral communications made from time to time by us, may contain certain forward-
looking information within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended. These statements relate to future events or future predictions, including events or predictions relating to our future
financial performance, and are generally identifiable by the use of forward-looking terminology such as “believes,” “expects,”
“may,” “will,” “should,” “plan,” “intend,” “target,” or “anticipates” or the negative thereof or comparable terminology, or by
discussion of strategy or goals that involve risks and uncertainties. These forward-looking statements are only predictions and
estimates regarding future events and circumstances and involve known and unknown risks, uncertainties and other factors that
may cause our actual results, levels of activity, performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such forward-looking statements. This information is
based on various assumptions by us that may not prove to be correct.
looking information within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended. These statements relate to future events or future predictions, including events or predictions relating to our future
financial performance, and are generally identifiable by the use of forward-looking terminology such as “believes,” “expects,”
“may,” “will,” “should,” “plan,” “intend,” “target,” or “anticipates” or the negative thereof or comparable terminology, or by
discussion of strategy or goals that involve risks and uncertainties. These forward-looking statements are only predictions and
estimates regarding future events and circumstances and involve known and unknown risks, uncertainties and other factors that
may cause our actual results, levels of activity, performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such forward-looking statements. This information is
based on various assumptions by us that may not prove to be correct.
Important factors to consider and evaluate in such forward-looking statements include:
• changes in the external competitive market factors that might impact our results of operations;
• changes in laws and regulations, including without limitation changes in capital requirements under the federal
prompt corrective action regulations;
• changes in our business strategy or an inability to execute our strategy due to the occurrence of unanticipated events;
• our ability to identify potential candidates for, and consummate, acquisition or investment transactions;
• the timing of acquisition or investment transactions;
• constraints on our ability to consummate an attractive acquisition or investment transaction because of significant competition
for these opportunities;
for these opportunities;
• the failure of the Bank to complete any or all of the transactions described herein on the terms currently contemplated;
• local, regional and national economic conditions and events and the impact they may have on us and our customers;
• ability to attract deposits and other sources of liquidity;
• changes in the financial performance and/or condition of our borrowers;
• changes in the level of non-performing and classified assets and charge-offs;
3
Forward-Looking Statements
• changes in estimates of future loan loss reserve requirements based upon the periodic review thereof under relevant regulatory
and accounting requirements;
and accounting requirements;
• the integration of the Bank’s recent FDIC-assisted acquisitions may present unforeseen challenges;
• inflation, interest rate, securities market and monetary fluctuations;
• the timely development and acceptance of new banking products and services and perceived overall value of these products
and services by users;
and services by users;
• changes in consumer spending, borrowing and saving habits;
• technological changes;
• the ability to increase market share and control expenses;
• continued volatility in the credit and equity markets and its effect on the general economy; and
• the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the
Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard
setters;
Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard
setters;
• the businesses of the Bank and any acquisition targets or merger partners and subsidiaries not integrating successfully or such
integration being more difficult, time-consuming or costly than expected;
integration being more difficult, time-consuming or costly than expected;
• material differences in the actual financial results of merger and acquisition activities compared with expectations, such as with
respect to the full realization of anticipated cost savings and revenue enhancements within the expected time frame;
respect to the full realization of anticipated cost savings and revenue enhancements within the expected time frame;
• revenues following any merger being lower than expected; and
• deposit attrition, operating costs, customer loss and business disruption following the merger, including, without limitation,
difficulties in maintaining relationships with employees being greater than expected.
difficulties in maintaining relationships with employees being greater than expected.
These forward-looking statements are subject to significant uncertainties and contingencies, many of which are beyond our
control. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements. Accordingly, there can be no assurance that actual
results will meet expectations or will not be materially lower than the results contemplated in this presentation. You are
cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document
or, in the case of documents referred to or incorporated by reference, the dates of those documents. We do not undertake any
obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date
of this document or to reflect the occurrence of unanticipated events, except as may be required under applicable law.
control. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements. Accordingly, there can be no assurance that actual
results will meet expectations or will not be materially lower than the results contemplated in this presentation. You are
cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document
or, in the case of documents referred to or incorporated by reference, the dates of those documents. We do not undertake any
obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date
of this document or to reflect the occurrence of unanticipated events, except as may be required under applicable law.
4
Forward-Looking Statements
This presentation also includes estimated guidance regarding our fully diluted earnings per share for the years 2014 and
2015, which we have previously disclosed and is subject to the assumptions and qualifications included in that previous
disclosure. The guidance consists solely of estimates prepared by management based on currently available information
and assumptions of future performance of the company and the general economy. Our independent registered public
accounting firm has not audited, reviewed or performed any procedures with respect to the guidance and, accordingly,
does not express an opinion or any other form of assurance with respect to this data. Our actual results may differ from
the guidance, and any such differences could be material. Accordingly, undue reliance should not be placed on this
information. The factors discussed above should be considered and evaluated with respect to our guidance. In addition,
this presentation depicts a hypothetical scenario based on our having assets of $6.5 billion and certain additional
assumptions relating to our strategic plan, including assumptions as to loan assets, return on average assets, return on
average equity and efficiency ratio. This hypothetical scenario is not intended to alter or supplement our estimated
guidance. As a result, you should not consider this information to be a projection or estimate of our anticipated future
performance.
2015, which we have previously disclosed and is subject to the assumptions and qualifications included in that previous
disclosure. The guidance consists solely of estimates prepared by management based on currently available information
and assumptions of future performance of the company and the general economy. Our independent registered public
accounting firm has not audited, reviewed or performed any procedures with respect to the guidance and, accordingly,
does not express an opinion or any other form of assurance with respect to this data. Our actual results may differ from
the guidance, and any such differences could be material. Accordingly, undue reliance should not be placed on this
information. The factors discussed above should be considered and evaluated with respect to our guidance. In addition,
this presentation depicts a hypothetical scenario based on our having assets of $6.5 billion and certain additional
assumptions relating to our strategic plan, including assumptions as to loan assets, return on average assets, return on
average equity and efficiency ratio. This hypothetical scenario is not intended to alter or supplement our estimated
guidance. As a result, you should not consider this information to be a projection or estimate of our anticipated future
performance.
5
My Agenda
1. The changing face of banks in the United
States
States
2. Our approach in positioning bank to take
advantage of this changing environment
advantage of this changing environment
3. Customers Bancorp: Where we started
and where we are headed
and where we are headed
4. Organic growth vs. M&A growth
5. Why Bank Mobile is an additional vertical
6. What investors should expect from CUBI
6
Highly Experienced Management Team
7
The U.S. Banking Industry
8
U.S. Banking Sector Analysis
Source: FDIC, SNL Financial as of 12/31/2013
Banking Market
Key Market Statistics
9
U.S. Banking Industry Continues
to Consolidate…Biggest declines in banks below $500 million
to Consolidate…Biggest declines in banks below $500 million
Total U.S. Depository Institutions
10
…And Further Consolidation Expected With Over
90% of Remaining U.S. Banks Less Than $1B in Assets
Number of US Banks & Thrifts by Asset Size
Number of Banks & Thrifts Headquartered in DE, MD, NJ, NY, PA and VA by Asset Size
Source: SNL Financial
5,832
295
174
71
46
53
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
<$1B
$1B
-
$2B
$2B
-
$5B
$5B
-
$10B
$10B
-
$25B
$25B+
11
Since the End of the Crisis, U.S. Banks Have Also Shown
Meaningful Improvement Across Operating, Credit
and Capital Performance Metrics
___________________________
Source: SNL Financial. Median performance metrics for top 50 U.S. banks.
1. Nonperforming assets defined by SNL Financial as nonaccrual loans and leases, renegotiated loans and leases, and real estate owned.
U.S. Bank Operating Environment
Strong loan growth in recent years in a
challenging operating environment
Asset quality has shown substantial improvement
since the end of the credit crisis
since the end of the credit crisis
NIM has gradually declined over the past several years
Efficiency ratios have meaningfully increased
since 2009
After declines during the crisis, ROAA has
rebounded in recent years
Strong capital levels in response to new environment
12
Customers Bancorp, Inc. Has Already Out Performed The Median
Or Kept Pace With The Improvement of US Banks
Efficiency Ratio
Net Interest Margin
ROAA
NPAs / Assets (1)
Loan HFI Growth
TCE / TA
___________________________
Source: SNL Financial and Company Documents. Median performance metrics for top 50 U.S. banks.
1. Nonperforming assets defined by SNL Financial as nonaccrual loans and leases, renegotiated loans and leases, and real estate owned Customers nonperforming loans do not include covered loans..
U.S. Bank Operating Environment
Strong loan growth in recent years in a
challenging operating environment
Asset quality has shown substantial improvement
since the end of the credit crisis
since the end of the credit crisis
NIM has gradually declined over the past several years
Efficiency ratios have meaningfully increased
since 2009
After declines during the crisis, ROAA has
rebounded in recent years
Strong capital levels in response to new environment
13
Return on Average Equity
Efficiency Ratio
NPAs
Return on Average Assets
Source: SNL Financial on an LTM basis as of 4Q2013
Smaller Banks Lacking Scale to Get to 1.0% ROA
14
Return on Average Equity
Efficiency Ratio
NPAs
Return on Average Assets
Source: SNL Financial on an LTM basis as of 4Q2013
Smaller Banks Lacking Scale to Get to 1.0% ROA
15
Besides Size, Higher Profitability Key Driver in
Premium Tangible Book Value Multiple
Source: SNL Financial.
Note: All banks with assets between $1.0 billion - $20.0 billion and Texas Ratios less than 75%. Excludes merger targets and MHCs.
P/TBV as of 3/14/2014. ROATCE LTM as of most recent quarter available.
1.04x
1.35x
1.69x
2.20x
7.4%
10.1%
11.1%
13.2%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
0.00x
0.50x
1.00x
1.50x
2.00x
2.50x
0
-
25% Percentile
25
-
50% Percentile
50
-
75% Percentile
75
-
100% Percentile
Median P/TBV
Median ROATCE
Customers Bank on pace to
the 75th + percentile
the 75th + percentile
16
Taking Advantage Of This Changing
Environment
Environment
Organic vs. M&A Growth Strategies
17
Where We are in the Cycle
Stages in a Typical Market Recovery Cycle
Market
Decline
Decline
Assisted
Transactions
Transactions
Alternative Structures:
• Reorg/Recap
• Earnouts
• Bankruptcy (363 / Pre-
Pack Structures)
Pack Structures)
• Good Bank / Bad Bank
Traditional
M&A
M&A
Lower valuations,
distressed targets with
higher credit marks
distressed targets with
higher credit marks
Higher valuations,
normalized credit
marks
normalized credit
marks
§ Entered a new stage in the Recap/Reorg and M&A cycle
§ Volume of FDIC assisted deals continues to decline
§ Majority of 10% + growth is M&A driven. Few strong “organic” growth banks emerging
§ Separation between “builders”, “sellers” and “watchers”
§ New models of “banking” emerging
Stage 1
Stage 2
Stage 3
We are
here
here
18
Customers Bancorp’s Headquarters
Public Companies’ Headquarters
Private Companies’ Headquarters
Potential M&A Target For CUBI
Source: SNL Financial. Data as of most recent quarter available. Excludes merger targets. Eastern PA defined as the Allentown MSA and east of the Allentown MSA.
Public and Private Banks and Thrifts with Assets Less than $750 Million
Wyomissing
19
Role of CEO and Board …
Especially in this environment
Especially in this environment
1. Absolute clarity of your vision, strategy, goals and
tactics; there must be absolute alignment
between board and management
tactics; there must be absolute alignment
between board and management
2. Become a master of your internal environment
§ What’s going on inside your bank
3. Be a master of your external environment
§ Competition, economy, technology, regulatory,
etc.
etc.
4. Highest level of integrity and fairness in all we do
5. Passion for continuous improvement
20
How Do We Deal With these Issues
Impediments to Growth
External Forces
• Role of traditional bank branches
changing very rapidly
changing very rapidly
• Mobile banking fastest growing channel
• Banks of all sizes revisiting their
business strategies, revenue generation
models and cost structures
business strategies, revenue generation
models and cost structures
• Technology & customer need, desires
and style changing rapidly
and style changing rapidly
• Traditional CRE lending very difficult to
do
do
• Very little consumer loan growth
• Good banks experiencing 60%+/-
turndown rates for C & I loans
turndown rates for C & I loans
• Mortgage banking revenues down
dramatically
dramatically
• Regulators have no appreciation or
incentive to see banks grow profitability
incentive to see banks grow profitability
Business Issues
Model for Shareholder Value
Creation
Creation
• Start bank and sell at 2 to 3x book no
longer an option - what do small
privately held banks do?
longer an option - what do small
privately held banks do?
• Equity markets not available to small
banks
banks
• Banks need to earn 10% or more ROE if
they want to remain independent
they want to remain independent
• Consistent ROE of 12%or greater and
ROA of 1% or greater being rewarded
well by market
ROA of 1% or greater being rewarded
well by market
• Slow economic growth
• Low good quality consumer and
business loan demand
business loan demand
• Difficult to attract good talent
• Very difficult and inconsistent regulatory
environment
environment
Issues facing
Boards &
CEO’s
Boards &
CEO’s
• What is our unique
strategy for revenue and
profitable growth
strategy for revenue and
profitable growth
• How do we attract and
retain best talent?
retain best talent?
• How do we take
advantage of technology?
advantage of technology?
• How do we deal with
growing compliance
burden?
growing compliance
burden?
• How do we lower our
efficiency ratios?
efficiency ratios?
21
§ Innovator /
disruptor
disruptor
§ Differentiated /
Unique model
Unique model
§ Technology savvy
§ Product dominance
The Thesis on Current
U.S. Banking Environment
Credit Improving - Though Banks Face a
Number of Operational Headwinds
§ Credit Improving
4 NPAs and NCOs greatly declining across the sector
§ Asset Generation
4 Banks are starved for interest-earning assets and exploring new asset
classes, competing on price and looking into specialty finance business /
lending
classes, competing on price and looking into specialty finance business /
lending
§ NIM Compression
4 Low rate environment for the foreseeable future will continue to compress NIM
4 Several institutions have undergone balance sheet restructuring to alleviate
near-term NIM pressure
near-term NIM pressure
§ Operational leverage
4 Expense management is top of mind as banks try to improve efficiency in light
of revenue pressure and increased regulatory / compliance costs
of revenue pressure and increased regulatory / compliance costs
Capital Accumulation Continues To
ROI Continues to Trend Below 10% Despite
Being Modestly Higher Than Pre-Recession1
Critical to Have a Winning Business Model
§ Local dominance
§ Strong credit
quality
quality
§ Core deposits
Relationship
Banks
Banks
§ Diversity
§ Cross sell
§ Capital efficiency
§ Higher profitability /
consistent earnings
consistent earnings
Fee Income
Leaders
Leaders
Innovators
22
Customers Bank
Executing on Building a Unique High Performing
Banking Model
Banking Model
#1 in USA in Organic Top Line Growth in 2013 & 2012
* Excludes banks below $1 billion in assets
23
Investment Proposition
§ ~$5.0 billion asset bank
§ Well capitalized at 11% + total risk based capital and 9% + tier 1 leverage
§ Target market from Boston to Washington D.C. along interstate 95
§ ROA goal of 1% + and ROE of 12% + within 3-5 years
§ 3.00% net interest margin goal; Targeting efficiency ratio in the 40’s
§ 97% compounded annual growth in loans since 2009
§ DDA and total deposits compounded annual growth of 115% and 78% respectively since 2009
§ 300% compounded annual growth in core earnings since 2011
§ No charge-offs on loans originated after 2009
§ 0.32% non-performing assets (non-FDIC covered loans)
§ Total reserves to non-performing loans of 165.4%
Strong, High Growth, Low Risk, Branch Lite Bank in Attractive Markets
Profitability
Strong Credit Quality
* Includes mortgage warehouse
24
Investment Proposition
§ Over half of the loan portfolio will re-price within one year
§ 40% of loans have an average life of 3.8 years
§ ~ 20% of deposits are non-interest bearing
§ Extending liabilities at this time
§ $150 million in forward starting swaps
§ Current share price ($21.85) is 13.0x estimated 2014 earnings, and 11.1x estimated 2015 earnings
§ Price/tangible book estimated at 1.3x and 1.2x for 2014 and 2015 respectively
Low Interest Rate Risk
Valuation
* Includes mortgage warehouse
25
Execution Timeline
§ We invested in and
took control of a $270
million asset
Customers Bank (FKA
New Century Bank)
took control of a $270
million asset
Customers Bank (FKA
New Century Bank)
§ Identified existing
credit problems,
adequately reserved
and recapitalized the
bank
credit problems,
adequately reserved
and recapitalized the
bank
§ Actively worked out
very extensive loan
problems
very extensive loan
problems
§ Recruited experienced
management team
management team
§ Enhanced credit and risk
management
management
§ Developed infrastructure
for organic growth
for organic growth
§ Built out warehouse
lending platform and
doubled deposit and loan
portfolio
lending platform and
doubled deposit and loan
portfolio
§ Completed 3 small
acquisitions:
acquisitions:
– ISN Bank (FDIC-
assisted) ~ $70 mm
assisted) ~ $70 mm
– USA Bank (FDIC-
assisted) ~ $170 mm
assisted) ~ $170 mm
– Berkshire Bancorp
(Whole bank) ~ $85
mm
(Whole bank) ~ $85
mm
§ Recruited proven lending
teams
teams
§ Built out Commercial and
Multi-family lending
platforms
Multi-family lending
platforms
§ De Novo expansion;4-6
sales offices or teams
added each year
sales offices or teams
added each year
§ Continue to show strong
loan and deposit growth
loan and deposit growth
§ Built a “branch lite” high
growth Community Bank
and model for future
growth
growth Community Bank
and model for future
growth
§ Goals to ~12%+ ROE;
~1% ROA
~1% ROA
2009
Assets: $350M
Equity: $22M
2010-2011
Assets: $2.1B
Equity: $148M
2012-2013
Assets: ~$4.2B
Equity: ~$400M
1Q 2014
Assets: ~$5.0B
Equity: ~$401M
§ Single Point of Contact
Private Banking model
executed - commercial
focus
Private Banking model
executed - commercial
focus
§ Introduce bankmobile -
banking of the future
for consumers
banking of the future
for consumers
§ Continue to show
strong loan and
deposit growth
strong loan and
deposit growth
§ ~12%+ ROE; ~1%
ROA
ROA
§ ~$6 billion asset bank
by end of 2014
by end of 2014
§ ~$9 billion asset bank
by end of 2019
by end of 2019
26
What Customers Bank Stands For
Vision ( our dream)
“We want to build a highly successful bank that makes our customers say “WOW”
Mission (the path)
“We achieve our Visions by taking pride in delivering”:
• Absolutely memorable service to our customers
• High-touch personal or private banking supported by high-tech for all our customers
• Concierge Banking by meeting our customers 7 days a week - wherever and whenever
• Helping our customers succeed
Critical Success Factors (what we consider most important in running a strong bank)
“We will never deviate from the following five critical success factors”:
• We will always put our customers first and execute that strategy by having the best people
on our team
on our team
• Always attempt to maintain the highest quality loans and investments on our books
• Have best systems, practices and team in place to manage all risks we encounter as we run
a profitable bank
a profitable bank
• Strive to grow our revenues 2X greater than expenses
• Maintain strong capital levels
27
Disciplined Model for Increasing Shareholder Value
§ Strong organic revenue growth + scalable infrastructure =
sustainable double digit EPS growth and increased shareholder
value
sustainable double digit EPS growth and increased shareholder
value
§ A clear and simple risk management driven business strategy
§ Build tangible book value per share each quarter via earnings
§ Any book value dilution from any acquisitions must be overcome
within 1-2 years
within 1-2 years
§ Superior execution through proven management team
Disciplined Model for Superior Shareholder Value Creation
28
Banking Strategy
Consumer Banking Strategy
• Principal focus is getting deposits in a highly efficient and
unique model while meeting the needs of all the
communities in our assessment area
unique model while meeting the needs of all the
communities in our assessment area
• Introduce Bank Mobile and Prepaid business for Gen Y
and under-banked; strategic partnerships for credit
services
and under-banked; strategic partnerships for credit
services
Business Banking Strategy
• Loan and deposit business through these segments:
• Banking Privately Held Businesses
• Banking High Net Worth Families
• Banking Mortgage Companies
29
Consumer Deposit Strategy - High Touch, High Tech
§ Organic deposit growth goals of 20%+ a year from consumers
§ Implementation of
technology suite
allows for unique
product offerings:
technology suite
allows for unique
product offerings:
§ Remote account
opening &
deposit capture
opening &
deposit capture
§ Internet/mobile
banking
banking
§ Free ATM
deployment in
U.S.
deployment in
U.S.
Cost of Funds + Branch Operating Expense - Fees = ALL-IN-Cost < Competitors
Goal: All-in cost less than competitors funding cost over the long-term
Technology
§ Low cost banking
model allows for
more pricing
flexibility
model allows for
more pricing
flexibility
§ Significantly lower
overhead costs vs. a
traditional branch
overhead costs vs. a
traditional branch
§ Pricing/profitability
measured across
relationship
measured across
relationship
Pricing
§ Experienced
bankers who own a
portfolio of
customers
bankers who own a
portfolio of
customers
§ Customer
acquisition &
retention strongly
incentivized
acquisition &
retention strongly
incentivized
§ Takes banker to the
customer’s home or
office, 12 hours a
day, 7 days a week
customer’s home or
office, 12 hours a
day, 7 days a week
§ Appointment
banking approach
banking approach
§ Customer access to
private bankers
private bankers
§ “Virtual Branches”
out of sales offices
out of sales offices
Sales Force
Concierge Banking
30
Deposits: Organic Growth With Controlled Costs
Source: Company data.
Total Deposit Growth ($mm)
Average DDA Growth ($mm)
Cost of Deposits
Customers strategies of single point of contact and recruiting known teams in target markets produce
rapid deposit growth with low total cost
rapid deposit growth with low total cost
31
Customers Bank Advantage
All Consumer
Products
Products
All Business
Products
Products
All Non-Credit
Products
Products
Client
Makes
One Call
Makes
One Call
Client
Private /
Personal
Bankers
Personal
Bankers
Concierge
Bankers
Bankers
Loan Portfolio Mix ($mm)
Single Point of Contact
High Touch / High Tech
§Creation of solid foundation for future
earnings
earnings
32
Business Banking Strategy
Small Business
§ Target companies with less than $5.0 million
annual revenue
annual revenue
§ Principally SBA loans originated by small
business relationship managers or branch
network
business relationship managers or branch
network
§ Current focus PA & NJ markets
Private & Commercial
§ Target companies with up to $100 million
annual revenues
annual revenues
§ Very experienced teams
§ Single point of contact
§ NE, NY, PA & NJ markets
Banking Privately Held Business
Business Banking Loan and Deposit Growth ($B)
33
Multi-Family and Non-Owner Occupied Commercial Real Estate Banking Strategy
Banking High Net Worth Families
§ Focus on families that have income
producing real estate in their portfolios
producing real estate in their portfolios
§ Private banking approach
§ Multi Family and non owner occupied
income CRE loan products
income CRE loan products
§ Focus Markets: New York & Philadelphia
MSAs
MSAs
§ Average Loan Size: $4.0 - $7.0 million
§ Remote banking for deposits and other
relationship based loans
relationship based loans
§ 342% compounded annual growth rate since
2011
2011
§ Portfolio grown organically from a start up
with very experienced teams hired in the
past 3 years
with very experienced teams hired in the
past 3 years
§ Strong credit quality niche
§ Interest rate risk managed actively
34
Mortgage Warehouse Banking Strategy
§Private banking focused on mortgage
companies with $5 to $10 million equity
companies with $5 to $10 million equity
§Lower interest rate and credit risk line of
business
business
§~75 strong warehouse clients
§All warehouse loans classified as held for
sale
sale
§All deposits are non-interest bearing DDA’s
§Balances not expected to be materially
higher in 2014
higher in 2014
§Loan balances below 2011 levels but fees
and deposits remain strong
and deposits remain strong
§Selected lending against servicing portfolios
introduced in 2014
introduced in 2014
§Opportunistic purchases of variable rate
mortgage loans
mortgage loans
Banking Mortgage Companies
35
These Deposit and Lending Strategies Results in Disciplined & Profitable Growth
Core Net Income (1)
Source: SNL Financial and Company data.
• Strategy execution has produced superior growth in revenues and earnings
36
Strong Growth Provides for Shareholder Value Creation
§ Per share tangible book value up 31% since December 2010
§ Focused on continuous growth of TBV aligns executive management compensation with
shareholder value creation
shareholder value creation
§ Any tangible book value dilution from acquisition must be recovered within 1 to 2 years
Tangible Book Value Growth
37
Key Financial Targets for the Next 3-5 Years
Focus in future years
•Single point of contact model - “High touch supported by high tech”
•Only superior credit quality niches
•Above average organic growth
•Expense management
Earnings per share growth estimated at ~ 17% year over year
•Assumes no additional common shares are issued during 2014 or 2015
Expecting banking for mortgage companies balances to remain flat and
continue to shrink as a percentage of total assets
continue to shrink as a percentage of total assets
Strategically aligned technology partners
•Core Banking Platform - Fiserv
•Mobile Banking Platform - Malauzai
Unique branch model
•24 hours concierge bankers
•All-In-Cost (interest expense + operating cost)
•Alternative channels emerging in our model
•Use of technology to reduce branch traffic
•Bank Mobile & prepaid cards
Criteria 3 -5 Year Targets
Year EPS Expectations
*Efficiency ratio = non-interest expenses/(net interest income + non-interest
income - securities gains)
income - securities gains)
38
Startling Facts About Banks
§ Banks each year charge $32 billion in over draft fees - that’s
allowing or creating over 1 billion over drafts each year….Why??
allowing or creating over 1 billion over drafts each year….Why??
§ Payday lenders charge consumers another $7 billion in fees
§ That’s more than 3x what America spends on Breast Cancer and
Lung Cancer combined
Lung Cancer combined
§ Combined this is about 50% of all America spends on Food Stamps
§ Some of banking industries most profitable consumer customers
hate banks
hate banks
§ Another estimated 25% consumers are unbanked or under banked
This should not be happening in America
We hope to start, in a small way, a new revolution
to address this problem
to address this problem
39
Customers Bank Views Itself As A Marketing
Company With A Bank Charter
Company With A Bank Charter
40
41
Mobile Banking - Creating a Virtual Bank for the Future
§ New banking vertical supplementing Consumer and Community Banking
§ Marketing Strategy
§ Target technology dependent <35 years old and larger depositors >50 years
old segments
old segments
§ Reach markets through Affinity Banking Groups
§ Revenue generation from debit card interchange and margin from low cost
core deposits
core deposits
§ Total investment not to exceed $5.0 million by end of 2015 but expected to be
offset by revenues
offset by revenues
§ Expected to achieve above average ROA and ROE within 5 years
42
Summary
§ Strong high performing ~$5.0 billion bank with significant growth opportunities
§ “High touch, high tech” processes and technologies result in superior growth,
returns and efficiencies
returns and efficiencies
§ Shareholder value results from the combination of increasing tangible book
value with strong and consistent earnings growth
value with strong and consistent earnings growth
§ Attractive risk-reward: growing several times faster than industry average but
yet trading at a significant discount to peers
yet trading at a significant discount to peers
§ Experienced management team delivers with strong results
§ Ranked #1 overall by Bank Director Magazine in the 2012 and 2013 Growth
Leader Rankings
Leader Rankings
§ Introducing among the 1st mobile banking application for account opening and
complete mobile platform based servicing in the USA
complete mobile platform based servicing in the USA
43
Regional Bank Comparison
High Performance Regional Banks
Source: SNL Financial, Company documents. Market data as of 3/31/2014. Consists of Northeast and Mid-Atlantic banks and thrifts with assets between $3.0 billion and $8.0 billion and most recent quarter core ROAA greater
than 90 bps. Excludes merger targets and MHCs.
than 90 bps. Excludes merger targets and MHCs.
(1)Customers Bancorp NPAs/Assets calculated as non-covered NPAs divided by total assets. Non-covered NPAs excludes accruing TDRs and loans 90+ days past due and still accruing.
(2)Customers Bancorp Core ROAA & ROAE include adjustments for securities gains along with unusual provision related to significant growth at the end of March.
|
|
|
MRQ Profitability
|
|
Capitalization
|
|
Asset Quality
|
|
Market Trading
|
|||||||||
|
Name
|
State
|
Assets
($MM) |
Core ROAA
|
Core
ROAE |
Effic. Ratio
|
|
TCE/TCA
|
Tier 1 Ratio
|
Leverage
Ratio |
Total
Capital Ratio |
|
NPA's/
Assets (1) |
Reserves/N
PL's |
|
Market Cap
($MM) |
Price/TBV
|
Price/LTM
EPS |
|
OFG Bancorp
|
PR
|
$7,856
|
1.06%
|
9.51%
|
58.4%
|
|
8.0%
|
14.8%
|
9.5%
|
16.6%
|
|
2.9%
|
70.0%
|
|
$773.6
|
1.24 x
|
9.6 x
|
|
NBT Bancorp Inc.
|
NY
|
$7,753
|
0.99%
|
9.10%
|
64.0%
|
|
8.2%
|
11.8%
|
9.1%
|
13.1%
|
|
0.8%
|
116.4%
|
|
$1,066.3
|
na
|
14.9 x
|
|
Provident Financial Services, Inc.
|
NJ
|
$7,501
|
0.92%
|
6.74%
|
60.0%
|
|
8.4%
|
11.6%
|
8.5%
|
12.9%
|
|
2.0%
|
44.2%
|
|
$1,099.6
|
na
|
15.1 x
|
|
Community Bank System, Inc.
|
NY
|
$7,397
|
1.25%
|
10.14%
|
59.2%
|
|
7.5%
|
14.2%
|
9.5%
|
15.3%
|
|
0.4%
|
177.0%
|
|
$1,586.5
|
3 x
|
19.7 x
|
|
Boston Private Financial Holdings, Inc.
|
MA
|
$6,705
|
0.96%
|
10.34%
|
68.9%
|
|
8.9%
|
13.7%
|
10.2%
|
15.0%
|
|
1.0%
|
111.6%
|
|
$1,082.4
|
2.37 x
|
18.5 x
|
|
Tompkins Financial Corporation
|
NY
|
$5,042
|
1.03%
|
11.01%
|
64.7%
|
|
7.4%
|
NA
|
8.7%
|
13.7%
|
|
0.8%
|
79.6%
|
|
$726.0
|
1.99 x
|
14 x
|
|
S&T Bancorp, Inc.
|
PA
|
$4,707
|
1.23%
|
9.84%
|
59.2%
|
|
8.9%
|
12.4%
|
9.8%
|
14.4%
|
|
1.2%
|
81.7%
|
|
$704.3
|
1.74 x
|
13.5 x
|
|
TrustCo Bank Corp NY
|
NY
|
$4,579
|
0.88%
|
10.83%
|
51.3%
|
|
8.1%
|
17.1%
|
8.1%
|
18.4%
|
|
1.4%
|
87.4%
|
|
$665.7
|
1.79 x
|
16 x
|
|
WSFS Financial Corporation
|
DE
|
$4,546
|
1.50%
|
16.73%
|
65.5%
|
|
8.2%
|
13.5%
|
10.7%
|
14.7%
|
|
1.2%
|
79.9%
|
|
$636.4
|
1.72 x
|
12.1 x
|
|
Dime Community Bancshares, Inc.
|
NY
|
$4,280
|
0.93%
|
8.73%
|
48.4%
|
|
9.1%
|
12.5%
|
9.2%
|
13.1%
|
|
0.8%
|
65.3%
|
|
$623.5
|
1.62 x
|
14 x
|
|
Sandy Spring Bancorp, Inc.
|
MD
|
$4,169
|
1.09%
|
8.87%
|
61.6%
|
|
10.4%
|
14.6%
|
11.4%
|
15.9%
|
|
1.0%
|
98.3%
|
|
$625.6
|
1.47 x
|
14 x
|
|
Eagle Bancorp, Inc.
|
MD
|
$3,804
|
1.34%
|
12.34%
|
51.9%
|
|
10.0%
|
11.6%
|
10.8%
|
13.0%
|
|
1.2%
|
115.2%
|
|
$937.7
|
na
|
20.1 x
|
|
Washington Trust Bancorp, Inc.
|
RI
|
$3,194
|
1.22%
|
11.56%
|
59.8%
|
|
8.7%
|
12.4%
|
9.6%
|
13.6%
|
|
1.2%
|
69.2%
|
|
$623.3
|
2.29 x
|
16.6 x
|
|
Financial Institutions, Inc.
|
NY
|
$3,016
|
0.95%
|
10.81%
|
57.1%
|
|
6.6%
|
10.9%
|
7.5%
|
12.1%
|
|
0.6%
|
166.9%
|
|
$318.9
|
1.63 x
|
12.6 x
|
|
|
|
|
|||||||||||||||
|
Median
|
|
$4,579
|
1.06%
|
10.1%
|
59.2%
|
|
8.4%
|
13.0%
|
9.5%
|
14.4%
|
|
1.0%
|
87.4%
|
|
$723.1
|
1.63 x
|
14.9 x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customers Bancorp, Inc.
|
MA
|
$5,014
|
0.76%
|
8.5%
|
60.6%
|
|
7.9%
|
10.9%
|
9.1%
|
11.6%
|
|
0.4%
|
162.1%
|
|
$507.0
|
1.28 x
|
15 x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aspirational Banks
|
|||||||||||||||||
|
Signature Bank
|
NY
|
$23,104
|
1.17%
|
14.25%
|
36.1%
|
|
8.3%
|
14.1%
|
8.5%
|
15.1%
|
|
0.3%
|
235.2%
|
|
$6,123.5
|
3.2 x
|
24.7 x
|
|
Texas Capital Bancshares, Inc.
|
TX
|
$12,144
|
0.97%
|
10.95%
|
58.5%
|
|
8.7%
|
9.9%
|
11.6%
|
12.7%
|
|
0.4%
|
196.0%
|
|
$2,789.7
|
2.63 x
|
25.7 x
|
44
Customers Bank
Operating Strategies
Operating Strategies
Richard A. Ehst
45
Operating Strategies
Critical Success Factors - Driver of Consistent High Performance
Talent & Execution of SPOC
• Creating an exceptional customer experience at a low cost.
Asset Quality
• Maintain exceptional underwriting standards.
Master of External Environment
• Develop keen awareness of external influences on the operating model.
Master of Internal Environment
• Maintain the culture.
Expense Management
• Generate $2 in revenue for every $1 in expense.
Well capitalized
46
Branch Lite
Community Banking
Community Banking
Model
Warren Taylor
47
Deposit Strategy
Primary Goal - Low cost core deposits from consumers and commercial in
Southeast PA, NY, and NJ.
Southeast PA, NY, and NJ.
Concierge Banking
§ Takes banker to the
customer’s home or
office, 12 hours a
day, 7 days a week
customer’s home or
office, 12 hours a
day, 7 days a week
§ Appointment banking
approach
approach
§ Customer access to
private bankers
private bankers
§ “Virtual Branches”
out of sales offices
out of sales offices
Sales Force
§ Experienced
bankers who own
a portfolio of
customers
bankers who own
a portfolio of
customers
§ Customer
acquisition &
retention strongly
incentivized
acquisition &
retention strongly
incentivized
Pricing
§ Low cost banking
model allows for more
pricing flexibility
model allows for more
pricing flexibility
§ Significantly lower
overhead costs vs. a
traditional branch
overhead costs vs. a
traditional branch
§ Pricing/profitability
measured across
relationship
measured across
relationship
Technology
§ Implementation of
technology suite allows
for unique product
offerings:
technology suite allows
for unique product
offerings:
§ Remote account
opening, deposit
capture & Picture Pay
opening, deposit
capture & Picture Pay
§ Internet/mobile
banking
banking
§ Free ATM deployment
in U.S.
in U.S.
Cost of Funds
Plus: Branch Operating
Expense
Expense
Less: Fees
= All-in Cost < Competitors
Goal: All-in cost less than wholesale funding cost over the long-term
1.64%
Deposit Strategy- High Tough, High Tech
48
Results
Deposits
in
Millions
in
Millions
49
Results
347%
260%
165%
50
Wyomissing Office
1.19%
All-In Cost
$163
Million in
deposits
Million in
deposits
$22.6
million in
DDAs
million in
DDAs
51
Hamilton, NJ Office
Low
Overhead
Overhead
Rent
$24,000 / yr
$134 million
in deposits
in deposits
52
Conclusion
• Effortless banking coupled with:
• Maintaining extremely low overhead
• Hiring the best bankers in the market
• Providing a better value proposition for customers
• Service designed to build relationships and loyal
customers.
customers.
• Convenience via technology that enables customers
to manage their money from anywhere, anytime
to manage their money from anywhere, anytime
• We support our Commercial partners through SPOC
• But… what if we could:
• Drive overhead lower, “Branch” anywhere, increase
our value proposition even more, target customers
better, and open thousands of accounts in a day?
our value proposition even more, target customers
better, and open thousands of accounts in a day?
53
Banking to Private
Owned Business’
George Maroulis
Steve Issa
Tim Romig
54
CB Private & Commercial Banking
New York Metropolitan Division
George Maroulis
gmaroulis@cbpcb.com
212.843.2490
55
Overview of CB Private & Commercial Banking
Vision/Mission of Division
vOur mission is to grow organically to $1 Billion in earning assets and liabilities, respectively,
within 4 - 5 years; and build a highly successful bank that makes our customers say “wow!”
within 4 - 5 years; and build a highly successful bank that makes our customers say “wow!”
vProvide absolutely memorable service to our customers.
vHigh-tech, high touch private banking model for all of our customers
Values
vAlways putting our customers first
vPracticing the highest level of integrity
vDelivering exceptional results for our investors, customers, and team members
Execution
vNew York Metropolitan Area (NYM, NY Metro): the world’s most lucrative & competitive banking
market
market
vCompete using a unique game-changing model
vAttract deposits with the current operating model
vModel produces better assets and deeper relationships
vOrganic, low-cost growth yields superior and sustainable ROE over time
vModel produces a superior efficiency ratio
vModel aligns the interests of shareholders, customers, team members & management
56
New York Metro Footprint
CBPCB’s New York Metro (NYM) Division
vNYM’s primary footprint is our assessment area
vNYM’s secondary footprint is defined as the Federal Reserve Bank’s Second District
vBanking Groups follow their clients beyond the primary marketing area
Primary Market
Secondary Market
57
New York Metro Opportunity
Compete By Being Unique
vExecute on a unique operating model that affords us to
compete in overbanked yet underserved markets by being
different
compete in overbanked yet underserved markets by being
different
vGame changing method of interacting with your
clients/customers using a high-tech, high-touch
model via a single point of contact
clients/customers using a high-tech, high-touch
model via a single point of contact
vMake every client/customer feel like they are our only
client/customer
client/customer
v$1 billion deposits = only a 0.077% market share
vLongstanding and deep relationships in the C&I lending
world located within a 20 block radius of our Manhattan
world located within a 20 block radius of our Manhattan
Divisional headquarters.
"While big banks have
traditionally had an
advantage over smaller
banks in terms of
convenience of branch
locations and technology,
their disadvantage was
often in the personal
service customers
desired"¹
traditionally had an
advantage over smaller
banks in terms of
convenience of branch
locations and technology,
their disadvantage was
often in the personal
service customers
desired"¹
-- Jim Miller
Senior Director of Banking
J.D. Power & Associates
¹ Press Release: J.D. Power and Associates Reports. 19 April 2013.
58
Execution
Single Point of Contact
v Aligns the interests of shareholders, clients, team members & management
v “Bank within a bank” model yields a superior efficiency ratio over time
v Can be integrated into current sales & client management structure
v Deeper and more profitable and “sticky” relationships
v Higher quality and more profitable assets
v Deeper KYC & BSA
mitigates risk
v Minimizes attrition
v Scalable
59
New York Metro Deposits
Division Sourced & Manages More Deposits than 4,634 Institutions in the US ²
¹ The Division’s deposit gathering activities occur solely out of the Bank’s Rye Brook Branch located at 14 Rye Bridge Plaza, Rye Brook, NY 10573.
² Balances and statistic are as of 5 May 2014. As of the same search date there were 6,725 institutions in the United States. Source: FDIC.gov.
¹
With just 1 in-market branch and
in approximately 6 months of
operation, we are 26% of our
$1 billion in deposits
by 2017 goal !
in approximately 6 months of
operation, we are 26% of our
$1 billion in deposits
by 2017 goal !
60
Commercial & High Net Worth Lending
What We Primarily Do in C&I:
vCommercial and Industrial (C&I) lending to the middle market¹ including primary,
bi-lateral, club, assignments, syndicated facilities and other direct lending
vBusiness Banking² C&I lending
vOwner-occupied commercial mortgages
vSmall Business Administration guaranteed lending programs & lending using other
government-backed economic incentives
What We Primarily Do With High-net Worth Individuals:
v Competitive loan to value facilities for Investor real estate³
v Primary and secondary residence portfolio lending
v Personal loans >$1 million used for commercial purposes
v Secured non-purpose lending4
Competitive Advantage:
v Rapid and thoughtful decisioning
v Highly experienced in-market chief lending officer
¹ Commercial obligors ≥ $20 million - $2 Billion in total revenue.
² We define Business Banking by deal structure and or total exposure and we do not employ a pure gross revenue definition as is common in the marketplace.
³ We rely on and do not deviate from, the Bank’s Commercial Real Estate policy.
4 Loans secured by marketable securities for non-specified purposes
61
Why Customers Bank?
Talent in the marketplace is attracted to Customers Bank because of our:
Culture:
vAt the core of the company is a culture built on trust and teamwork—NO SILOS
Values:
vShared values that puts customers/clients first
vMutual respect among all whom we deal
vPracticing the highest level of integrity
vDelivering exceptional results with a positive attitude
Leadership:
vJay Sidhu
vRichard Ehst
vEntire executive management team
vFlatter organization
62
Current Banking Groups
¹ The regional Chief Lending Officer (CLO) and the credit staff are locally based at the Division’s NYC office. CBPCB’s CLO reports directly to the Bank’s Chief
Credit Officer located in Phoenixville, PA. This setup permits the Division to be very responsive to client credit request while simultaneously maintaining a
“Chinese Wall” between the credit and line functions.
63
Experienced Team
Over 275 years of experience forged at premiere institutions
64
Why Buy Banks When Seasoned Banking
Group May Be Recruited?
Group May Be Recruited?
v Growth by sourcing seasoned & established
Banking Groups from competitors.
v Branch based talent sourced in branches with
>$100mm in footings
v Each new location can house several groups
v Phase 1, 2015 plan: grow to six groups
v Phase 2, 2015 - 2016 plan: onboard new groups
in strategic locations & obtain branch licensing
in strategic locations & obtain branch licensing
v Phase 3, 2016 - 2017 plan: expand into strategic
areas of Long Island, Westchester County and
Northern New Jersey
v Preferred locations are close to courthouses,
major offices complexes and industrial parks
v New banking groups will determine new locations
v Occupancy rates outside of Manhattan are
significantly lower and have little or no
commercial lease tax, resulting in new groups
attaining profitability over a shorter period
65
66
New England Commercial &
Specialty Lending
67
Team Overview
ØCurrently have 2 commercial offices in NE; Providence, RI and Boston, MA and
recently opened Specialty group in PA. A total of 18 team members, that provide full
commercial banking services in each location.
recently opened Specialty group in PA. A total of 18 team members, that provide full
commercial banking services in each location.
ØMajority of the team has worked together for over 15 years with a successful track
record of starting/building a successful commercial business.
record of starting/building a successful commercial business.
ØHighly talented energized individuals with the right “DNA” that demonstrate strong
“Integrity, Commitment & Values.”
“Integrity, Commitment & Values.”
ØDiverse experience in each position within each team structure; providing a “High-
touch world class service” experience to every customer.
touch world class service” experience to every customer.
ØDepth of long-term relationships with customers and referral sources, ie (CPA’s,
Atty’s, Investment bankers, State and local economic development agencies)
Atty’s, Investment bankers, State and local economic development agencies)
ØAverage deal size is $3MM to $10MM.
ØFocused on high quality commercial loans diversified by industry, region and
collateral type.
collateral type.
ØOur target industries include, mfg, service businesses, professional firms,
distributors, etc..
distributors, etc..
ØStrong cash mgmt products & services as well as in-market product specialists to
offset lack of branches.
offset lack of branches.
NE Commercial Banking
68
Steve Issa - EVP, Serving as NE Market president & Managing Director of Commercial & Specialty Lending
§ Over 35 years of experience in Commercial Banking in Northeast.
§ Former EVP & Managing Director of Commercial & Specialty Banking at Flagstar Bank, prior to that Sovereign & Fleet Bank.
Paula Pais - SVP, Serving as NE Director of Planning & Administration
§ Over 25 years of experience in Commercial Banking in Northeast.
§ Former VP of Planning & Administration at Flagstar Bank, prior to that Sovereign Bank
Kevin Farrell - SVP, Serving as Market Manager of Commercial & Specialty lending in RI/CT
§ Over 27 years of experience in Commercial Banking in Northeast.
§ Former SVP & Market Manager of Commercial Banking for RI/ SE Mass at Flagstar Bank, prior to that Sovereign & Fleet Bank.
Joe O’Leary - SVP, Serving as Market Manager of Commercial lending in Mass
§ Over 32 years of experience in Commercial Banking in Northeast.
§ Former SVP & Market Manager of Commercial Banking for Mass, prior to that Sovereign & Fleet Bank.
George Drapeaux - SVP, Serving as NE Cash Mgmt Sales Manager
§ Over 25 years of experience in Cash Management in Northeast.
§ Former SVP & Treasury Mgmt Sales Director at Flagstar Bank, prior to that Sovereign Bank.
Lyle Cunningham - SVP, Serving as Managing Director of Specialty Finance
§ Over 28 years of experience in Specialty Finance in Northeast.
§ Former Managing Director at National City bank sponsor finance.
Relationship Managers, Loan Administrators, & Product specialists
§ Seasoned sales teams with avg of 18 yrs in commercial banking in Northeast.
§ Live and work in the communities they serve.
§ Volunteer in community outreach efforts
NE Commercial Banking
Seasoned Management Team
69
§ Seamless transition to Customers Bank in Q2 2013 with 100% customer
and team member retention.
§ Total middle market relationships grew by 40% since March, $215MM
from $150MM, despite a 78% turndown rate.
from $150MM, despite a 78% turndown rate.
§ 2013 fees totaled $500K.
§ Instituted a bank wide SWAP program working with Treasury, Finance,
Credit and Risk Management which resulted in approximately $750K in
total first year bank-wide swap fees.
§ Total commercial deposits were $26MM with cash mgmt fees totaling
approximately $120K in revenue.
NE Commercial Banking
2013 Accomplishments
70
NE Commercial Banking
Strategic Plan to $1Billion GOAL over next 3-4 years
§ Continue to deliver profitable growth with solid profit margins, strong fee
income, relatively flat expenses, steady deposit growth, while maintaining a strong
credit culture.
income, relatively flat expenses, steady deposit growth, while maintaining a strong
credit culture.
§ Plan to grow net loan outstanding's on an annual basis, in the $200MM range to
achieve the $1Billion over the next 3-4 years.
achieve the $1Billion over the next 3-4 years.
§ Plan to add loan fees on cash basis of $1MM within the next 12-18mths.
§ Continue to cross sell “high tech, high touch” world class products, exceptional
service, value & convenience.
service, value & convenience.
§ Pay for performance by aligning Rewards with Behaviors.
§ Sustained business development efforts with our key referrals sources for
Commercial & Specialty finance.
Commercial & Specialty finance.
71
NE Commercial Banking
Strengths & Opportunities
§ Local decisioning and authority with a Senior credit officers that reside in each
market.
market.
§ Maintain excellent rapport with credit risk admin teams.
§ Deal screen prepared on each deal to provide quick level of interest.
§ Quick response time with multiple client touches & communication.
§ Large banks seem to be internally focused
o Lack of attention to client needs
o Very intense & slow credit approval process
o High turnover of Rm’s - business lines have no authority
§ Grow & Deepen relationships thru compelling and timely cross-sell/up-sell that
will prompt a willingness for Customers Bank to service their entire banking
relationship.
will prompt a willingness for Customers Bank to service their entire banking
relationship.
72
Right DNA
NE Commercial Banking
73
Pennsylvania and
New Jersey
Banking Private Owned Business
74
Investor Day May 2014
Strategic Vision
• Porters model of competitive advantage employing both Cost Leadership and Differentiation
to achieve superior financial results.
to achieve superior financial results.
• Strategically located branches and loan production offices in high performing markets.
• Leverage technology to cost effectively gather and manage deposits and deploy the low cost
deposits to high quality small business and corporate borrowers .
deposits to high quality small business and corporate borrowers .
• Differentiate from competition by employing Single Point of Contact strategy.
• The Single Point of Contact strategy will be delivered though a flat, regionally based sales
force, with local leadership and decision making capabilities.
force, with local leadership and decision making capabilities.
• Outperform the ten billion plus asset banking institutions that have become disconnected
from the marketplace, caught in corporate bureaucracy, are slow to respond and compete
primarily on price.
from the marketplace, caught in corporate bureaucracy, are slow to respond and compete
primarily on price.
• Outperform local smaller community banks who routinely provide the Private Banking style of
service, but lack the effective size, technological sophistication and resources to effectively
meet the clients needs.
service, but lack the effective size, technological sophistication and resources to effectively
meet the clients needs.
75
Investor Day May 2014
Target Market
• “Mutual Fund” approach to target client base.
• Average size of credit relationship $2.5 to $7.0 million
• Broad spectrum of business and industries, no concentrations
• Clients that need “Value Add” in a relationship
• Price important but willing to pay up for a relationship
• Long term relationship oriented
• Clients with proven track records, experienced management, strong credit quality
76
Investor Day May 2014
Strengths:
• Highly skilled team members that can execute the Single point of contact strategy. Private
Relationship Managers that add value, not just order takers.
Relationship Managers that add value, not just order takers.
• The Commercial Banking staff has an average of 20 years experience in commercial banking.
• Technology as a way of doing business. Continued emphasis on Remote Deposit Capture and
the adoption of Mobile Banking on both a business and personal level. High Tech and High
Touch model.
the adoption of Mobile Banking on both a business and personal level. High Tech and High
Touch model.
• Flat organization with no business silos. Private Relationship Manager delivers the Bank to
the Client.
the Client.
• Localized approval and decision making, bankers are part of the community they serve.
• Continued emphasis on strong and conservative credit culture, no compromise on credit
quality.
quality.
77
Investor Day May 2014
Pennsylvania and New Jersey Where Do We Stand Today
Current Infrastructure and Talent: The Commercial Banking function in Southeastern
Pennsylvania and New Jersey is presently broken down into four (4) regional sales teams and a
small business portfolio management/SBA Guaranty Lending Team. Additionally there is a
commercial deposit services team consisting of four people that support the entire footprint.
Pennsylvania and New Jersey is presently broken down into four (4) regional sales teams and a
small business portfolio management/SBA Guaranty Lending Team. Additionally there is a
commercial deposit services team consisting of four people that support the entire footprint.
Team Private Portfolio Average Assets
Region Leader RM Outstanding Private RM
Berks 1 4 $272 million $54.5 million
Del-Val 1 2 $129 million $43.2 million
Bucks 1 1 $ 70 million $35.0 million
Phila 0 2 $ 11 million $ 5.5 million
Small Bus 1 3 $ 48 million $16.0 million
5 teams 4 12 $530 million $40.0 commercial/$12 sm. bus
78
Investor Day May 2014
Pennsylvania and New Jersey Where Do We Stand Today
2013 Production Highlights:
• Originated $265.4 million in new commercial and small business loans.
• Increased outstanding Loan balances $126 million dollars .
• Generated a Gain on sale of SBA Guaranty Loans of $1.0 million
• Increased commercial deposits outstanding by $70.1 million
79
Investor Day May 2014
Pennsylvania and New Jersey as a One Billion Dollar Market
• The goal is to make Pennsylvania and New Jersey a $1.0 billion dollar market in three to five years.
• Execution of the Single Point of Contact Strategy, a unique market strategy
• Drive business referrals from centers of influence and existing client base.
• Employ Technology to efficiently gather deposits and manage client relationships
• Create loyal customer base and limit customer turnover
• Build out the four (4) existing markets and teams
• Expand into contiguous sales markets by opportunistically hiring experienced teams.
• Specialty Teams support the entire regional market
• Measurable Goals, Metrics and Regional Business Plans
80
Investor Day May 2014
SBA and Government Guaranty Lending
• Customers Bank generated SBA 7-A loans totaling $13.2 million with a gain on sale of $1.0 million in 2013
• Customers Bank ranked in top 10 percent nationwide of 2,344 SBA lenders and number 10 in the
Philadelphia District, in total SBA guaranty lending.
Philadelphia District, in total SBA guaranty lending.
• Incorporate SBA loan goals into relationship manager and branch manager goals
• Expand the SBA sales effort to cover the entire bank footprint from New England to Washington DC.
• Hire an SBA Sales manager and SBA Specialists in each market.
• Continue to partner with third party service providers for back office and technical support
• Increase partnerships with local CDC and other economic development groups in market to generate new
loan opportunities
loan opportunities
• Target niche industries including Medical/Dental/Pharmaceutical, Veterinary, Funeral Services and
Franchise Food and Hospitality Services.
Franchise Food and Hospitality Services.
• Direct marketing into trade publications and conferences on a regional basis.
81
Investor Day May 2014
New Market Expansion
We will look to be opportunistic and hire teams of experienced commercial lenders in
contiguous markets with the below two markets being identified as expansion opportunities.
contiguous markets with the below two markets being identified as expansion opportunities.
Mercer County New Jersey: We are already in this market form a retail branch perspective.
We are presently interviewing a potential team of lenders in this market in the Robbinsville
area and would look to locate a team in the Robbinsville, Princeton or Trenton area. It is
necessary from a CRA standpoint that we develop a lending presence in this market. This is
contiguous to our Bucks County market .
We are presently interviewing a potential team of lenders in this market in the Robbinsville
area and would look to locate a team in the Robbinsville, Princeton or Trenton area. It is
necessary from a CRA standpoint that we develop a lending presence in this market. This is
contiguous to our Bucks County market .
Lancaster County Pennsylvania: This market is contiguous to the Berks market and has similar
market characteristics. We have already been approached by a team of lenders to join us but
were unable to agree on compensation. We will actively look for other teams in this market.
market characteristics. We have already been approached by a team of lenders to join us but
were unable to agree on compensation. We will actively look for other teams in this market.
82
83
Banking to High Net
Worth Families
Christopher McGowan
Jonathan Lewis
84
Banking to High Net Worth Families
Ken Keiser - EVP, Director of Multi-Family and Investment CRE Lending
•Over thirty-seven (37) years as a banking professional including:
•Eight (8) years as SVP and Market Manager responsible for CRE Lending in Sovereign Bank’s Central
PA region
PA region
•Twenty-five (25) years with Bank of Pennsylvania (now part of M&T Bank) in various positions
including Senior Real Estate Officer
including Senior Real Estate Officer
•Worked as a consultant to Banks participating in the FDIC’s Shared Loss Program
Jonathan Lewis - EVP, Managing Director Business Development
•Over thirty (30) years of Lending experience including:
•Eight (8) years as the State Manager for NY and NJ for Residential Lending for Allied Home Mortgage
Capital Corp.
Capital Corp.
•Former President of Atlantic Coast Bank’s Mortgage Division
Christopher McGowan, - EVP, Managing Director Multifamily Lending (The Meridian Relationship)
•Over 15-years of experience in Commercial Lending in the Northeast.
•Former SVP & Director of Originations for Capital One / Beech Street Capital (Fannie Mae / Freddie
Mac seller servicer), prior to that Peoples United Bank, prior to that Santander Real Estate Capital
Mac seller servicer), prior to that Peoples United Bank, prior to that Santander Real Estate Capital
85
Banking The High Net Worth Families (Individuals and Family Offices)
•4 of the top 10 MSA’s are within our core market and house some of the oldest real estate
families in the US, primarily NYC and Philadelphia.
families in the US, primarily NYC and Philadelphia.
•These folks are our target customer for 3 reasons: geography, reputation, net worth &
liquidity.
liquidity.
•These are the folks who have the time tested ability to manage through any type of market.
•Typically 2, 3rd and 4th generation of the family in the business with thousands of multifamily
units under management and over 30-years of operational experience. These folks also own
other asset types like retail, office and warehouse. Customers has the expertise to execute for
all of these but the multifamily loan remains our core focus for these folks.
units under management and over 30-years of operational experience. These folks also own
other asset types like retail, office and warehouse. Customers has the expertise to execute for
all of these but the multifamily loan remains our core focus for these folks.
•Their reputation is paramount. These are not the folks who make late payments, but the flip
side is they demand a very high level of service and a quality execution. This what they are
used to.
side is they demand a very high level of service and a quality execution. This what they are
used to.
Banking to High Net Worth Families
86
Banking The High Net Worth Families (Individuals and Family Offices)
• Typical entry to this client base is through a multifamily real estate loan. $4-$7MM average
size located in the 5- boroughs of NYC and Philadelphia.
size located in the 5- boroughs of NYC and Philadelphia.
•The Customers Unique 5 Point Approach - build on relationships, speed, flexibility, creativity,
certainty of execution that these clients demand.
certainty of execution that these clients demand.
•Primary focus is also Meridian Capital Group. Largest broker of multifamily loans in the NYC
market.
market.
•As we grow as an institution we are exploring all options that our capabilities allow including:
Originating loans for our balance sheet, originating loans to sell to other Banking institutions or
investors (servicing retained or released).
Originating loans for our balance sheet, originating loans to sell to other Banking institutions or
investors (servicing retained or released).
•Our unique approach allows us the ability to generate assets in an efficient way and our
expertise gives us the tools to meet our customers needs and the needs of the organization.
expertise gives us the tools to meet our customers needs and the needs of the organization.
Banking to High Net Worth Families
87
High Net Worth Families
Three years ago We were given the task of Building
Lasting Relationships with High Net Worth Families
Lasting Relationships with High Net Worth Families
Phase I-Planting (CRE has been the initial tool to make
introductions)
introductions)
•Meet
•Set Expectations
•Communicate
•Exceed Expectations
When our customers speak to their friends we want to be a topic of
conversation.
conversation.
The WOW factor.
88
Results
Phase 2-Polination
Our Results
•$121.5 Million of Loans in first 6 months of 2011
•$399 Million in 2012
•$836 Million in 2013. In the last quarter of 2013 we ramped up to meet
Bank needs.
Bank needs.
•$623 Million in the Q1 2014.
•Total deposits currently $75 Million growing at $7 Million per month.
By being responsive to requests, honoring our term sheets and closing
quickly we created excitement in the industry.
quickly we created excitement in the industry.
WE ALWAYS ASK FOR REFERRALS AND DEPOSITS
89
Harvesting Relationships
Phase 3-Harvesting
•Follow up with customers
•Determine other needs
•Cross Sell Products-In the last 3 months we have identified over $100
million of C&I opportunities
million of C&I opportunities
•Get Referrals
Review results and repeat.
90
Who are our Customers
Customer Mix
•355 Plus Transactions
•150 Different customers
•Five C’s ( Character, Capability, Credit, Collateral, Cash Flow)-We are
highly focused and disciplined.
highly focused and disciplined.
•We continue to be laser focused on credit quality.
•Our Q1’14 efforts taught us that a thoughtful quick response is a
Strategic Advantage
Strategic Advantage
•Our customers are willing to pay a ¼ of a percent more for quicker
execution and certainty
execution and certainty
•We believe that we are making an extra $4,500,000 per year as a
result of our execution
result of our execution
91
Banking to
Mortgage Companies
Glenn Hedde
92
Banking for Mortgage Companies
State of the Industry (prior to mid-2013):
•Industry enjoyed strong origination volume post-crisis driven by
refinance activity due to low interest rates
refinance activity due to low interest rates
•Strong margins due to limited industry capacity
|
Annual Industry Mortgage Origination Volume -- 2006 - 2012 ($ Tril.)
|
|
- Originations are estimates from the Mortgage Bankers Association
|
93
Banking for Mortgage Companies
Current State of the Industry:
•Mortgage Rate increase in mid-2013 led to 50-60% drop in volume
•Profit margins shrink with excess industry capacity
•Moderate growth predicted in - 2014 thru 2016
|
Industry Quarterly Mortgage Originations 2013 & 2014 ($ Tril.)
|
|
* - Indicates forecasted periods per the Mortgage Bankers Association
|
94
Banking for Mortgage Companies
Customers Bank Business Growth
•Business unit grown from $0 in late 2009
95
Banking for Mortgage Companies
Key Success Factors:
•Very experienced team in sales, credit and operations
•Institutional Understanding/Commitment of Business
•High Service model driven by single point of contact model
•Strong Risk Management Controls
Attractive Financial Results:
•Fee Income
•Deposit Gathering
96
Banking for Mortgage Companies
Differentiating Factors:
•Financing mortgage servicing rights on a term basis
•Warehouse Construction-to-perm loans and other salable products
•Private Banking for owners of mortgage companies
97
Customers Bank
Operating Strategies
Q & A
98
Technology
Jim Collins
99
Table of Contents
• Customers Bank Advantage……………………………………. 101
• Single Point of Contact - CRM ……………………………....... 102
• Single Point of Contact - Business Intelligence……………… 103
• High Touch supported by High Tech…………………………… 104
• Malauzai Software……………………………………………….. 105
• BOLTS Partnership………………………………………………. 114
• Security……………………………………………………………. 117
• Conclusion………………………………………………………… 119
100
Customers Bank Advantage
Cash
Management
Residential
Real Estate
Credit
Cards
Commercial
Real Estate
Commercial
Banking
Retail
Branches
Client
Makes
One Call
Makes
One Call
Client
High Touch supported by High Tech
Single Point of Contact Banking
Private /
Personal
Bankers
Personal
Bankers
Concierge
Banking
Banking
Other Products/
Services
Services
101
• Account Management Features: Contact records – demographic information, as well as account history.• Activity Management Features: Calendars, task assignments, Outlook integration, etc.• Customer Service Features: Case/ticket management, agent workflow tools, service resolution tools (i.e. decision trees)• Mobile Support: Dedicated apps, HTML5.• Reporting and Analytics: Real-time dashboards for marketing, sales and service.• Sales Management Features: Lead generation, qualification, and pipeline management.
102
SPOC - Business Intelligence
Data Analytics and Distributed Data Views
•Provisioning the data analytics and mobile distribution will be
accomplished by QlikView (Qlik Technologies).
accomplished by QlikView (Qlik Technologies).
•Leading edge provider for this service and leader in the financial
services field particularly
services field particularly
Foundation Data Warehouse Architecture
•Oracle will be the primary database used to support the data
warehouse
warehouse
•Fiserv will be contracted to provide OpenData table updates for
consolidated DNA information tables
consolidated DNA information tables
103
High Touch supported by High Tech
High Tech
§Implementation of
technology suite
allows for unique
product offerings:
technology suite
allows for unique
product offerings:
§ Remote account
opening
opening
§ Remote & Mobile
deposit capture
deposit capture
§ Mobile banking
§ Picture Pay
§ Internet Banking
transition to
Smart Web App
transition to
Smart Web App
Technology
High Touch
§Takes banker to the
customer’s home or
office, 12 hours a day,
7 days a week
customer’s home or
office, 12 hours a day,
7 days a week
§Appointment banking
approach
approach
§Customer access to
private bankers
private bankers
§“Virtual Branches”
out of sales offices
out of sales offices
§Commercial & Retail
account opening
capabilities
account opening
capabilities
Concierge Banking
104
Malauzai Software
Customers and Partners
Mission - Cool SmartApps, Easily Managed and Measured
170+ Customers in Live Production with:
- 15 different core systems
- 3 different bill payment systems
6 Strong Business Partners
- Computer Services Inc. - 460+ core customers
- Catalyst Corporate Federal Credit Union - 1,200+ capitalized members
- Corporate Central Credit Union - 300+ capitalized members
- CFC Technology - 500+ payment customers
- Bottomline Technologies, Inc. - 600+ business and commercial banking customers
- Jack Henry Symitar Division - 300+ core customers
4 Mobile Platforms - iOS, Android, Native iPad, SmartwebApps
3 Applications - Consumer, Business and Corporate, Enterprise Employee-Facing
105
Malauzai Software
106
Malauzai Software
Standard “Cool” Features
• Mobile Onboarding- Sign up for a new account via a mobile device
• Real-Time Account Data- Stay up-to-date with your account balances
• Quick Balance- Access balances/history with the touch of a button
• Picture Bill Pay- Take a picture of a bill to make payments
• Mobile Check Deposit- Deposit checks from anywhere, anytime
• Debit Card Management- Turn On/Off your debit card in REAL-TIME
• Personalized SmartApp- End-user defined custom views
107
Malauzai Software
Advanced “Sizzle” Features
• Can I Buy?- Automated cash calendar that predicts future balances
• Voice Mobile Banking- Allow end-users to talk to mobile SmartApp
• Video Chat- Deliver a superior remote service experience
• Gamification- Mobile rewards program to increase end-user engagement
• Mobile Payments- Pay any merchant, anytime, anywhere (future)
• Mobile Mortgage Quotes- Take a picture of a house & get a quote (future)
• Biometric Login- Increase security with fingerprints, voice and pictures
108
Innovation
“Can I Buy” Feature
This feature allows a customer to see if they can afford to buy something either
today or in the future. Based on their cash available and an estimate of a future
balance, a customer can make an immediate decision on what they can buy. A
customer can take a picture of a bar-code of a product OR enter details manually
(such as for a TV that does not have a package or bar code) AND decide on when
they want to buy and the Mobile Banking SmartApp will tell them if they can afford
it.
today or in the future. Based on their cash available and an estimate of a future
balance, a customer can make an immediate decision on what they can buy. A
customer can take a picture of a bar-code of a product OR enter details manually
(such as for a TV that does not have a package or bar code) AND decide on when
they want to buy and the Mobile Banking SmartApp will tell them if they can afford
it.
The SmartApp will automatically predict funds available based on looking at
previous transactions i.e., there will be no data entry, which is critical to making
this work as if people have to enter data, they will not use the feature. Think of
this as automated Personal Financial Management (PFM).
previous transactions i.e., there will be no data entry, which is critical to making
this work as if people have to enter data, they will not use the feature. Think of
this as automated Personal Financial Management (PFM).
The “Innovation”:
Helping customers manage their funds i.e. making PFM useful to the
masses and the automation as it will require no data entry.
masses and the automation as it will require no data entry.
109
Innovation
Voice Mobile Banking Features
This feature allows a customer to interact with Mobile Banking using voice
commands. First, a customer will be able to hear their balances when they
enter the SmartApp. Especially when the customer is in “SmarText-Mode”,
the App will tell them their balance right away. Second, a customer will be
able to access certain features, such as bill pay or P2P by talking to the
SmartApp.
commands. First, a customer will be able to hear their balances when they
enter the SmartApp. Especially when the customer is in “SmarText-Mode”,
the App will tell them their balance right away. Second, a customer will be
able to access certain features, such as bill pay or P2P by talking to the
SmartApp.
This covers both using voice as an “output” mechanism, i.e. read me my
balance and recent history AND using voice as an “input” mechanism, i.e.
Issuing requests to pay a bill or send money to a friend.
balance and recent history AND using voice as an “input” mechanism, i.e.
Issuing requests to pay a bill or send money to a friend.
The “Innovation”:
Use of voice and ease of interaction with the bank via BankMobile SmartApp.
110
Innovation
Mobile Picture Banking
This set of features allows the customer to extensively use the camera to
perform banking transactions. Starting with opening an account where they
take a picture of their drivers license, through funding the account by taking a
picture of a check, and including taking pictures of bills to make payments,
the camera will be a main-stay of BankMobile’s SmartApp.
perform banking transactions. Starting with opening an account where they
take a picture of their drivers license, through funding the account by taking a
picture of a check, and including taking pictures of bills to make payments,
the camera will be a main-stay of BankMobile’s SmartApp.
The “Innovation”:
extensive use of the camera which is unique the mobile device.
Real Time Person to Person Payments
This feature allows a customer to transfer money to a friend in REAL-TIME.
Using a friends debit card, which they take a picture of, a customer can
transfer money in seconds to a friend. This innovation here it REAL-TIME
transfers. Current P2P (via Harland as Customers Bank is doing it) uses
ACH to settle and it keeps volumes very very low. The debit card number
and the Visa settlement rails make this an instant transfer.
Using a friends debit card, which they take a picture of, a customer can
transfer money in seconds to a friend. This innovation here it REAL-TIME
transfers. Current P2P (via Harland as Customers Bank is doing it) uses
ACH to settle and it keeps volumes very very low. The debit card number
and the Visa settlement rails make this an instant transfer.
The “Innovation”:
REAL-TIME settlement AND the use of the camera to minimize data entry.
111
Innovation
Cash Deposits Anywhere
This feature allows a customer to make a cash deposit at a merchant
such as Walmart and get access to the funds Immediately. It is called
MoneyPak today (as implemented by Higher One). The feature uses
the GreenDot network to settle the funds. To our knowledge there are
very few banks doing this and one of them is Higher One.
such as Walmart and get access to the funds Immediately. It is called
MoneyPak today (as implemented by Higher One). The feature uses
the GreenDot network to settle the funds. To our knowledge there are
very few banks doing this and one of them is Higher One.
The “Innovation”:
Ability to allow cash deposits from anywhere in the nation and the fact that
few others are doing it in association with a bank account (usually used for
pre-paid cards).
few others are doing it in association with a bank account (usually used for
pre-paid cards).
112
What is BOLTS all about………
•Serves Community Banks and Credit Unions in Solving Complex Technology
Challenges and Helps them Bring Innovative Products and Services to the Market
Faster, Better, Cheaper
Challenges and Helps them Bring Innovative Products and Services to the Market
Faster, Better, Cheaper
•Uses Process-Centric Approach to Deliver Streamlined Back Office
•Develops Integrated Products that Drastically Reduce Costs by Reducing/Eliminating
Manual Processes
Manual Processes
•Leverages Technology to Solve Today’s Demanding Risk & Compliance Challenges
by Embedding Controls in the Process Engine
by Embedding Controls in the Process Engine
•Provides Enterprise Business Process Work Flows to Connect 3rd Party Systems with
Bank’s Line Functions to Reduce Errors and Improve Service to Internal and External
Customers
Bank’s Line Functions to Reduce Errors and Improve Service to Internal and External
Customers
•Provides Support As A Service Using Multi-Channel, Unified, Customer Contact
Management Platform to Address the Needs of Today’s Mobile Customer
Management Platform to Address the Needs of Today’s Mobile Customer
113
BOLTS Partnership
• BOLTS team is providing integration and work-flow based
framework to ensure a fully automated customer onboarding &
support solution that includes:
framework to ensure a fully automated customer onboarding &
support solution that includes:
• Real-time Customer Identification, Verification & Validation
• Real-time Account Provisioning (Checking and Saving with Overdraft)
• Real-time Debit Card Provisioning
• Real-time Exceptions Management
• Full Integration with Back Office Functions for Fully Automated Work Flow
• Welcome Kit Provisioning
• Support Case Management
• Contact Management Center Solutions for Mobile Customers
• Information Security Management
• Deep expertise in systems integration & agile product development
• Innovative solutions to reduce operating costs, increase
efficiencies and expand customer relationships
efficiencies and expand customer relationships
114
BOLTS Partnership
Automated Onboarding Business Process
115
BOLTS Partnership
Customer Support & Contact Management Solutions
116
Security
Current Threat Environment
•Malware
•Hacking
•Social Engineering
•Identity Theft
•Card Breaches
•ACH / Wire
117
Security
Solutions & Business Partners
•Enhanced Multi-Factor Authentication
•Intrusion Detection Tools
•Anti-Malware & Anti-Virus Tools
•Vulnerability Management
•Security Administration
118
Conclusion
Technology………
……………….drives innovation
……………….enables a superior customer experience
……………….creates operational efficiency
……………….supports regulatory, compliance, and security mandates
……………….significantly impacts the bottom line of the organization
119
120
BankMobile.com
Warren Taylor
Luvleen Sidhu
121
Banking of the Future
Mobility. Simplicity. No Fees.
122
Mission
1. Effortless experience
2. Loyalty Creation
3. Win / Win Outcome
123
Opportunity
• Capitol One, Schwab, Ally - have less than 4%
of US Deposits
of US Deposits
• “Big Banks” can’t compete
• Durbin interchange impact
• Overhead, structure, bureaucracy
• Technology lags
• Value - fees, rates, service
124
Generation Y
Gen Y
What are their banking expectations?
125
Houston, we have a problem…
Mobility has revolutionized our world…
…however, banks have been slow to adapt
Millennial Desperate for a
Better Banking Experience
Better Banking Experience
(50%) indicate they are counting on start
up firms to overhaul how banks work
up firms to overhaul how banks work
A THREE-YEAR STUDY FINDS THAT
MILLENNIALS ARE LOOKING FOR WAYS TO
LIVE A BANK-FREE EXISTENCE IN THE
FUTURE.
MILLENNIALS ARE LOOKING FOR WAYS TO
LIVE A BANK-FREE EXISTENCE IN THE
FUTURE.
With the widespread adoption of
smartphones, the use of mobile banking
services is expected to approach
50% by 2016 versus 15% today
smartphones, the use of mobile banking
services is expected to approach
50% by 2016 versus 15% today
126
bankmobile is born!
•bankmobile is a virtual bank designed for the on-the-go lifestyle
and specific needs of the digital consumer
and specific needs of the digital consumer
•Our mission is to make the frustrated millennial say “Wow! I finally
found a transparent, effortless bank!
found a transparent, effortless bank!
•bankmobile brings all your banking to your smartphone & tablet
letting you bank where, when, and how you want
letting you bank where, when, and how you want
127
Competition
Customer Target
Branch Density
*
heavy
none
Millennial
Baby Boomers
* not bank
128
How are we different?
Mobile banking is only an add on service adding
costs
costs
Low rates & High fees
Product offering/pricing the same whether you
open an account in a branch or on mobile device
open an account in a branch or on mobile device
Defensive: Mobile apps are not used to attract
new customers; Only to respond to demand for
mobile with a costly & large branch network still
there
new customers; Only to respond to demand for
mobile with a costly & large branch network still
there
They just have a mobile banking app…
129
Banks are looking for ways to cut
their branch networks
their branch networks
Branch Sales and Closings Since 12/31/12 by Top 50 Largest Banks
Source: SNL Financial. Market data as of 4/30/14, operating data as of most recent quarter
130
How are we different?
Virtual Banks
• Attract age 55+, higher
balance, rate sensitive
customer
balance, rate sensitive
customer
• Not focused on creating
simplistic mobile
experience with innovative
banking features
simplistic mobile
experience with innovative
banking features
Internet Banks
Neo Banks
bankmobile
• One of the first mobile
virtual bank
virtual bank
• Effortless, simple, superior
user experience, premium
customer service, free ATM
access
user experience, premium
customer service, free ATM
access
• Absolutely NO Fees is our
goal; HIGHER rates, a full
suite of banking products
goal; HIGHER rates, a full
suite of banking products
• Commitment to building a
trusting community of loyal
customers through
financial education and
transparency
trusting community of loyal
customers through
financial education and
transparency
• Provide superior user
experience, simplified
banking and above average
customer service
experience, simplified
banking and above average
customer service
• Revenue model built
entirely around interchange
fee from debit or prepaid
cards
entirely around interchange
fee from debit or prepaid
cards
• Do not provide a full suite
of banking products &
services. Little cross-sell
capabilities
of banking products &
services. Little cross-sell
capabilities
131
Guiding principles
Keep it simple - with goal of NO FEES
Best-in-class user experience and
customer service are how we will win
customer service are how we will win
We need to speak with an authentic
voice - absolute transparent disclosures
voice - absolute transparent disclosures
You can’t manage what you can’t
measure
measure
132
Product Launch Plans
July 2014
October 2014
• Picture account opening
• Checking account
• Savings account
• Real time account data
• Remote check deposit
• P2P payments
• Picture bill pay
• Traditional bill pay
• Debit card management
(on/off capability)
(on/off capability)
• 4 digit pin
• E-statement viewer
• Automated customer service
Jan 2015 & Beyond
• Can I buy feature
• Voice mobile banking
• Gamification
• Biometric login
• Auto loans
• Mortgages
• Credit cards
• Prepaid cards
• Insurance
• Video chat for personalized
customer service
customer service
• Text chat
• PFM integration
• Marketing offers
• Daily financial tip “push
notification”
notification”
• Increase debit card limit
• Real time P2P payments
133
Product demo
134
bankmobile strategy
Who are they?
Why are they
attractive?
attractive?
How will we
do it?
do it?
§ Ages 18-35; Largest generation at around 84 million
§ Not just future customers, but influencers
§ Millennials rank the four largest banks among the 10 least loved brands in
America
America
§ Tech savvy, tech dependent, largest group of mobile users
§ 33% say they are switching banks in the next 90 days
§ Overburdened with debt
§ Purchasing power over $1.3 trillion
§ Looking for banks to provide financial knowledge and advice
§ Partnership with Higher One; access to ~250K graduates each year
§ Create hype and engagement through multiple social media platforms
§ Utilize college students as brand ambassadors
§ Develop & distribute content on financial topics to build loyalty & trust
§ Digital ad campaign
1. PrincipallyTarget Millennials
135
Customer acquisition
Attract users leveraging a multi-channel marketing approach
|
Channel
|
Strategy Detail
|
|
PR
|
Target key blogs & publications. Pitch ‘mobile’ and ‘community bank’
focused message |
|
Social Media
|
Establish FB & Twitter presence & drive traffic through commentary &
questions |
|
Blog
|
Leverage to give bankmobile a personal touch and communicate our
feelings and opinions to users |
|
Conferences &
Events |
Secure panel & presenter opportunities to promote the bankmobile team
& brand |
|
SEO
|
Entire site is optimized for content search and discovery
|
|
Affiliate Marketing
|
Affiliate sales model / campus ambassadors
|
|
Gorilla Marketing
|
Campus activations, campus tours, etc.
|
|
Above the line
advertising |
Select advertising through digital channels, including paid search and
targeted banner ads |
136
bankmobile strategy
2. Affinity Marketing
Objective
Partnership
Structure
Structure
Examples
§ Create affinity relationships with not for profits as well as profit generating
organizations
organizations
§ Members, followers, or customers must feel passionate about the
organizations we partner with
organizations we partner with
§ Develop a win/win partnership - Enter into a marketing fee agreement
§ Customers receive a branded banking experience
§ We financially compensate the organization our customers are passionate
about
about
§ We receive loyal banking customers
§ Credit card companies targeting affinity groups in the 80’s
§ USAA & Veterans
§ Bancorp Bank & T Mobile
§ We plan to target alumni associations, foundations, charities, advocacy groups
religious groups etc
religious groups etc
137
Revenue model
bankmobile
Revenue
Model
Revenue
Model
Interchange Fees
(Debit & Prepaid)
Margin from Interest
Bearing Deposits
Bearing Deposits
Margin from Non Interest
Bearing Deposits
Bearing Deposits
Offering Credit
bankmobile Advantage
Banks below $10B can generate at least 2X more from interchange than banks
>$10B
>$10B
138
Goals
Over a 5 year period, acquire ~250,000
customers
customers
Make 1.25% plus ROA
Make 15% plus ROE
139
“ideas are just one thing; execution
is everything.”
is everything.”
- Jay Sidhu, CEO Customers Bank
140
Any questions?
141
Future Financial Model/
Risk Management
Robert Wahlman
142
What Makes Us Unique
§ We are building a new kind of bank using technology and relationship
building to develop a new kind of customer relationship
building to develop a new kind of customer relationship
§ Our innovative organic growth model is a great way to build a profitable
bank and create shareholder value at a low cost
bank and create shareholder value at a low cost
o The branch lite, high touch/high tech, single point of contact
approach builds strong relationships while it lowers costs
approach builds strong relationships while it lowers costs
§ Selective M&A of smaller financial companies gives us access to new
geographies or products that we expand with our organic growth model
geographies or products that we expand with our organic growth model
§ We focus on rapid growth of strong credit quality niche products and
deposit products providing above average returns
deposit products providing above average returns
§ We support our businesses with state of the art technology obtained
through partners, converting developmental costs to variable costs
through partners, converting developmental costs to variable costs
§ Bank Mobile provides an incredible opportunity for future profitable
growth
growth
143
Q1 2014 Results
• With one time items, in both revenue and expense, of ~ $3.0 million
each the net change to our core earnings was immaterial.
each the net change to our core earnings was immaterial.
144
Hypothetical $6.5 Billion Bank
145
Customers has adopted a CAMELS+ approach to identify, measure,
monitor and control risk throughout the organization. The eight
phase process is shown graphically below . . .
monitor and control risk throughout the organization. The eight
phase process is shown graphically below . . .
q Set Risk
Thresholds/
Tolerances
Thresholds/
Tolerances
q Horizontal
Risk
Assessment
Risk
Assessment
Capital
Asset
Quality
Quality
Liquidity
Sensitivity
+’s
Manage-
ment
ment
Earnings
q Vertical Risk
Assessment
Assessment
Pre-Phase
q Setup Risk
Committee
Committee
q Adopt
CAMELS+
Approach
CAMELS+
Approach
Model
Base
Case
Scenario
Base
Case
Scenario
1. Variable
Stress Tests
Stress Tests
2. Enterprise
Wide Stress
Tests
Wide Stress
Tests
Two
Approaches:
Approaches:
Stress
Test the
Base
Case
Test the
Base
Case
Model
Alternative
Scenarios
Alternative
Scenarios
Pro Forma
CAMELS+
Assessment
CAMELS+
Assessment
CAMELS+
Assessment
Assessment
Identify
Trigger
Events
Trigger
Events
Mitigation
Strategies/
Policies/
Procedures
Strategies/
Policies/
Procedures
146
CAMELS + ERM Program
|
Enterprise Risk Management
|
||
|
Tone at the Top • Risk Management Compliance Program
Board of Directors • Board Risk Committee • Board Audit Committee • Board Compliance Committee
Capital Committee • Loan Committee • Management Risk Committee • Asset Liability Committee • Management Compliance Committee
|
||
|
C
|
ALCO
Capital Committee
Treasury
|
Capital Policy
Capital Plan
Capital Metrics
Capital Stress Testing
|
|
A
|
Risk Management Committee
Loan Committee
Watch List Committee
ALLL Committee
Credit and Loan Review
|
Performance Metrics and Monitoring
Migration Analysis
Credit Concentration Analysis
Underwriting Policies
|
|
M
|
Risk Management Committee
Various and numerous Policies and Committees
Corporate Ethics Policy
|
All Metrics and Monitoring
All Stress Testing
Strategic Plan and Budget
All Scorecards
Enterprise Risk Management
|
|
E
|
ALCO
Business Review Committee
FP & A
|
Annual Budget and Continuous Forecast
Annual Strategic Plan
Performance Metrics Monitoring
Budget to Activate at Manager Level
|
|
L
|
ALCO
Treasury
Risk Management Committee
|
Liquidity Plan
Liquidity Performance Metrics and Monitoring
Contingency Funding Plan
Liquidity Stress Testing
|
|
S
|
ALCO
Treasury
Risk Management Committee
|
Interest Rate Sensitivity Analysis
Interest Rate Risk Metrics and Monitoring
Interest Rate Risk Guidelines
Interest Rate Risk Stress Testing
|
147
CAMELS + ERM Program
|
Enterprise Risk Management
|
||
|
Tone at the Top • Risk Management Compliance Program
Board of Directors • Board Risk Committee • Board Audit Committee • Board Compliance Committee
Capital Committee • Loan Committee • Management Risk Committee • Asset Liability Committee • Management Compliance Committee
|
||
|
+
+
+
+
+
+
+
|
Compliance
CRA and Fair Lending
Bank Secrecy Act
Legal and Regulatory
Reputation
Operational Risk
Information Technology
|
Board Compliance Committee
Management Compliance Committee
IT Steering Committee
Internal Audit
Legal, Finance, Technology, Operations Functions
Operating Policies and Procedures
Annual Internal Control Review and Effectiveness Assessments
Public Relations Plan
Investor Relations Plan
Security Information Plan
|
148
Q & A
149