BUSINESS SEGMENTS

Customers' segment financial reporting reflects the manner in which its chief operating decision makers allocate resources and assess performance. Management has determined that Customers' operations consist of two reportable segments - Community Business Banking and BankMobile. Each segment generates revenues, manages risk, and offers distinct products and services to targeted customers through different delivery channels. The strategy, marketing, and analysis of these segments vary considerably.

The Community Business Banking segment is delivered predominately to commercial customers in Southeastern Pennsylvania, New York, New Jersey, Massachusetts, Rhode Island, New Hampshire, Washington D.C., and Illinois through a single-point-of-contact business model and provides liquidity to residential mortgage originators nationwide through commercial loans to mortgage companies. Lending and deposit gathering activities are focused primarily on privately held businesses, high-net-worth families, selected commercial real estate lending, and commercial mortgage companies. Revenues are generated primarily through net interest income (the difference between interest earned on loans, investments, and other interest earning assets and interest paid on deposits and other borrowed funds) and other non-interest income, such as mortgage warehouse transactional fees and bank owned life insurance.

The BankMobile segment provides state-of-the-art high-tech digital banking and disbursement services to consumers, students, and the "under banked" nationwide. BankMobile is a full-service banking platform that is accessible to customers anywhere and anytime through the customer's smartphone or other web-enabled device. Revenues are currently being generated primarily through interchange and card revenue, deposit and wire transfer fees and university fees. The majority of revenue and expenses for BankMobile are related to the segment's operation of the ongoing business acquired through the Disbursement business acquisition.

The following tables present the operating results for Customers' reportable business segments for the three and nine month periods ended September 30, 2018 and 2017. The segment financial results include directly attributable revenues and expenses. Corporate overhead costs were assigned to the Community Business Banking segment as those expenses were expected to continue following the planned spin-off of BankMobile. Similarly, the preferred stock dividends have been allocated in their entirety to the Community Business Banking segment. The tax benefit assigned to BankMobile was based on an estimated effective tax rate of 24.57% for 2018 and 37.25% for 2017, respectively.

Please refer to NOTE 13 - SUBSEQUENT EVENTS for more information on the spin-off of BankMobile.



	Three Months Ended September 30, 2018
(amounts in thousands)	Community Business Banking			BankMobile			Consolidated
Interest income ⁽¹⁾	$	106,156		$	3,889		$	110,045
Interest expense	45,982			62			46,044
Net interest income	60,174			3,827			64,001
Provision for loan losses	2,502			422			2,924
Non-interest income	(7,756		)	9,840			2,084
Non-interest expense	36,115			20,989			57,104
Income (loss) before income tax expense (benefit)	13,801			(7,744		)	6,057
Income tax expense (benefit)	1,930			(1,902		)	28
Net income (loss)	11,871			(5,842		)	6,029
Preferred stock dividends	3,615			—			3,615
Net income (loss) available to common shareholders	$	8,256		$	(5,842	)	$	2,414



	Three Months Ended September 30, 2017
(amounts in thousands)	Community Business Banking		BankMobile			Consolidated
Interest income ⁽¹⁾	$	95,585	$	2,700		$	98,285
Interest expense	30,250		16			30,266
Net interest income	65,335		2,684			68,019
Provision for loan losses	1,874		478			2,352
Non-interest income	4,190		13,836			18,026
Non-interest expense	33,990		27,050			61,040
Income (loss) before income tax expense (benefit)	33,661		(11,008		)	22,653
Income tax expense (benefit)	18,999		(4,100		)	14,899
Net income (loss)	14,662		(6,908		)	7,754
Preferred stock dividends	3,615		—			3,615
Net income (loss) available to common shareholders	$	11,047	$	(6,908	)	$	4,139

(1) Amounts reported include funds transfer pricing of $3.9 million and $2.7 million for the three months ended September 30, 2018 and 2017, respectively, credited to BankMobile for the value provided to the Community Business Banking segment for the use of low/no cost deposits.



	Nine Months Ended September 30, 2018
(amounts in thousands)	Community Business Banking		BankMobile			Consolidated
Interest income ⁽²⁾	$	302,820	$	11,829		$	314,649
Interest expense	118,081		214			118,295
Net interest income	184,739		11,615			196,354
Provision for loan losses	3,128		1,129			4,257
Non-interest income	8,147		30,973			39,120
Non-interest expense	108,168		54,966			163,134
Income (loss) before income tax expense (benefit)	81,590		(13,507		)	68,083
Income tax expense (benefit)	17,567		(3,317		)	14,250
Net income (loss)	64,023		(10,190		)	53,833
Preferred stock dividends	10,844		—			10,844
Net income (loss) available to common shareholders	$	53,179	$	(10,190	)	$	42,989

As of September 30, 2018
Goodwill and other intangibles	$	3,629	$	13,196		$	16,825
Total assets	$	10,542,175	$	74,929		$	10,617,104
Total deposits	$	7,781,225	$	732,489		$	8,513,714
Total non-deposit liabilities	$	1,134,251	$	14,327		$	1,148,578



	Nine Months Ended September 30, 2017
(amounts in thousands)	Community Business Banking		BankMobile			Consolidated
Interest income ⁽²⁾	$	265,524	$	9,708		$	275,232
Interest expense	76,134		55			76,189
Net interest income	189,390		9,653			199,043
Provision for loan losses	5,459		478			5,937
Non-interest income	16,587		42,583			59,170
Non-interest expense	94,704		66,114			160,818
Income (loss) before income tax expense (benefit)	105,814		(14,356		)	91,458
Income tax expense (benefit)	39,584		(5,348		)	34,236
Net income (loss)	66,230		(9,008		)	57,222
Preferred stock dividends	10,844		—			10,844
Net income (loss) available to common shareholders	$	55,386	$	(9,008	)	$	46,378

As of September 30, 2017
Goodwill and other intangibles	$	3,632	$	12,972		$	16,604
Total assets	$	10,405,452	$	66,377		$	10,471,829
Total deposits	$	6,815,994	$	781,082		$	7,597,076
Total non-deposit liabilities	$	1,947,213	$	16,898		$	1,964,111

(2) Amounts reported include funds transfer pricing of $11.8 million and $9.7 million for the nine months ended September 30, 2018 and 2017, respectively, credited to BankMobile for the value provided to the Community Business Banking segment for the use of low/no cost deposits.