USINESS 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, as a division of Customers Bank, 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 month periods ended March 31, 2018 and 2017. The segment financial results include directly attributable revenues and expenses. Corporate overhead costs are assigned to the Community Business Banking segment as those expenses are 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.



	Three Months Ended March 31, 2018
	Community Business Banking		BankMobile					Consolidated
Interest income	$	92,554	$	4,410		⁽¹	⁾	$	96,964
Interest expense	31,917		16					31,933
Net interest income	60,637		4,394					65,031
Provision for loan losses	1,874		243					2,117
Non-interest income	8,439		12,471					20,910
Non-interest expense	34,331		17,949					52,280
Income before income tax expense (benefit)	32,871		(1,327		)			31,544
Income tax expense (benefit)	7,728		(326		)			7,402
Net income (loss)	25,143		(1,001		)			24,142
Preferred stock dividends	3,615		—					3,615
Net income (loss) available to common shareholders	$	21,528	$	(1,001	)			$	20,527

As of March 31, 2018
Goodwill and other intangibles	$	3,630	$	13,847				$	17,477
Total assets	$	10,690,479	$	78,787				$	10,769,266
Total deposits	$	6,418,810	$	623,649				$	7,042,459
Total non-deposit liabilities	$	2,759,156	$	48,563				$	2,807,719



	Three Months Ended March 31, 2017
	Community Business Banking		BankMobile				Consolidated
Interest income	$	78,832	$	4,262	⁽¹	⁾	$	83,094
Interest expense	20,656		20				20,676
Net interest income	58,176		4,242				62,418
Provision for loan losses	3,050		—				3,050
Non-interest income	5,427		17,327				22,754
Non-interest expense	30,147		19,219				49,366
Income (loss) before income tax expense (benefit)	30,406		2,350				32,756
Income tax expense (benefit)	6,116		893				7,009
Net income (loss)	24,290		1,457				25,747
Preferred stock dividends	3,615		—				3,615
Net income (loss) available to common shareholders	$	20,675	$	1,457			$	22,132

As of March 31, 2017
Goodwill and other intangibles	$	3,636	$	13,982			$	17,618
Total assets	$	9,833,721	$	72,915			$	9,906,636
Total deposits	$	6,627,061	$	708,419			$	7,335,480
Total non-deposit liabilities	$	1,660,967	$	30,372			$	1,691,339

(1) - Amounts reported include funds transfer pricing of $4.4 million and $4.3 million for the three months ended March 31, 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.