In third quarter 2017, Customers decided that the best strategy for its shareholders for divesting BankMobile was to spin-off BankMobile to Customers’ shareholders through a spin-off/merger transaction. The tax-free spin-off is expected to be followed by a merger of Customers' BankMobile Technologies, Inc. subsidiary ("BMT") into Clearwater Florida based Flagship Community Bank ("Flagship"), with Customers' shareholders receiving shares of Flagship common stock in exchange for shares of BMT they receive in the spin-off. Flagship is expected to separately purchase BankMobile deposits directly from Customers for cash. Following completion of the spin-off and merger and other transactions contemplated in a purchase and sale agreement between Customers and Flagship, Customers' shareholders would receive collectively more than 50% of Flagship common stock, valued at approximately $110 million. The common stock of the merged entities, to be called BankMobile, is expected to be listed on a national securities exchange after completion of the transactions. Customers believes the transactions will be treated as a tax-free exchange for both Customers' shareholders and Customers. Customers expects to execute an Amended and Restated Purchase and Assumption Agreement and Plan of Merger (the “Amended Agreement”) with Flagship to effect the spin-off and merger and Flagship’s purchase of BankMobile deposits from Customers. Customers expects that the Amended Agreement will provide that completion of the transactions will be subject to the receipt of all necessary regulatory approvals, certain Flagship shareholder approvals, successful raising of capital by Flagship, and other customary closing conditions. Customers expects the transaction to close in mid-2018.

At December 31, 2016, BankMobile met the criteria to be classified as held for sale, and accordingly the assets and liabilities of BankMobile were presented as “Assets held for sale,” “Non-interest bearing deposits held for sale,” and “Other liabilities held for sale” and BankMobile’s operating results and associated cash flows were presented as “Discontinued operations”. However, with the third quarter 2017 spin-off/merger decision, generally accepted accounting principles require that assets, liabilities, operating results, and cash flows associated with a business to be disposed of through a spin-off/merger transaction not be reported as held for sale or discontinued operations until execution of the spin-off/merger transaction. Accordingly, BankMobile's assets, liabilities, operating results and cash flows will not be reported separately as held for sale or discontinued operations at September 30, 2017 and December 31, 2016 and for the three and nine month periods ended September 30, 2017 and 2016 and instead will be reported as held and used. As a result, Customers measured the business at the lower of its (i) carrying amount before it was classified as held for sale, adjusted for depreciation and amortization expense that would have been recognized had the business been continuously classified as held and used, or (ii) fair value at the date the decision not to sell was made. Customers recorded a charge of $4.2 million in third quarter 2017 relating to the amount of depreciation and amortization expense that would have been recorded had the assets been continuously classified as held and used.

Prior reported December 31, 2016 assets held for sale, non-interest bearing deposits held for sale and other liabilities held for sale have been reclassified to conform with the current period presentation as summarized below. Amounts previously reported as discontinued operations have also been reclassified to conform with the current period presentation within the accompanying consolidated financial statements as summarized below. Customers will continue reporting the Community Business Banking and BankMobile segment results. See NOTE 14 - BUSINESS SEGMENTS.

The following summarizes the effect of the reclassification from held for sale classification to held and used classification on the previously reported consolidated balance sheet as of December 31, 2016 and the previously reported consolidated statements of income for the the three and nine months ended September 30, 2016:



	December 31, 2016 As Previously Reported		Effect of Reclassification From Held For Sale to Held and Used			December 31, 2016 After Reclassification
(amounts in thousands)	December 31, 2016 As Previously Reported					December 31, 2016 After Reclassification
ASSETS
Cash and cash equivalents	$	244,709	$	20,000		$	264,709
Loans receivable	6,142,390		12,247			6,154,637
Bank premises and equipment, net	12,259		510			12,769
Goodwill and other intangibles	3,639		13,982			17,621
Assets held for sale	79,271		(79,271		)	—
Other assets	70,099		32,532			102,631
LIABILITIES
Demand, non-interest bearing deposits	$	512,664	$	453,394		$	966,058
Interest bearing deposits	6,334,316		3,401			6,337,717
Non-interest bearing deposits held for sale	453,394		(453,394		)	—
Other liabilities held for sale	31,403		(31,403		)	—
Accrued interest payable and other liabilities	47,381		28,002			75,383



	Three Months Ended September 30, 2016			Effect of Reclassification From Held For Sale to Held and Used			Three Months Ended September 30, 2016
	As Previously Reported						After Reclassification
Interest income	$	84,212		$	—		$	84,212
Interest expense	19,622			5			19,627
Net interest income	64,590			(5		)	64,585
Provision for loan losses	(161		)	249			88
Non-interest income	11,121			16,365			27,486
Non-interest expenses	36,750			19,468			56,218
Income from continuing operations before income taxes	39,122			(3,357		)	35,765
Provision for income taxes	15,834			(1,276		)	14,558
Net income from continuing operations	23,288			(2,081		)	21,207
Loss from discontinued operations before income taxes	(3,357		)	3,357			—
Income tax benefit from discontinued operations	(1,276		)	1,276			—
Net loss from discontinued operations	(2,081		)	2,081			—
Net income	21,207			—			21,207
Preferred stock dividend	2,552			—			2,552
Net income available to common shareholders	$	18,655		$	—		$	18,655



	Nine Months Ended September 30, 2016			Effect of Reclassification From Held For Sale to Held and Used			Nine Months Ended September 30, 2016
	As Previously Reported						After Reclassification
Interest income	$	238,931		$	—		$	238,931
Interest expense	53,548			13			53,561
Net interest income	185,383			(13		)	185,370
Provision for loan losses	2,605			249			2,854
Non-interest income	22,241			18,996			41,237
Non-interest expenses	100,706			27,600			128,306
Income from continuing operations before income taxes	104,313			(8,866		)	95,447
Provision for income taxes	39,942			(3,370		)	36,572
Net income from continuing operations	64,371			(5,496		)	58,875
Loss from discontinued operations before income taxes	(8,865		)	8,865			—
Income tax benefit from discontinued operations	(3,369		)	3,369			—
Net loss from discontinued operations	(5,496		)	5,496			—
Net income	58,875			—			58,875
Preferred stock dividend	5,900			—			5,900
Net income available to common shareholders	$	52,975		$	—		$	52,975