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, 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 and six month periods ended June 30, 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 38.00% for 2017, respectively.



	Three Months Ended June 30, 2018
	Community Business Banking			BankMobile			Consolidated
Interest income ⁽¹⁾	$	104,110		$	3,529		$	107,639
Interest expense	40,182			135			40,317
Net interest income	63,928			3,394			67,322
Provision for loan losses	(1,247		)	463			(784		)
Non-interest income	7,465			8,662			16,127
Non-interest expense	37,721			16,029			53,750
Income (loss) before income tax expense (benefit)	34,919			(4,436		)	30,483
Income tax expense (benefit)	7,910			(1,090		)	6,820
Net income (loss)	27,009			(3,346		)	23,663
Preferred stock dividends	3,615			—			3,615
Net income (loss) available to common shareholders	$	23,394		$	(3,346	)	$	20,048



	Three Months Ended June 30, 2017
	Community Business Banking		BankMobile			Consolidated
Interest income ⁽¹⁾	$	91,107	$	2,745		$	93,852
Interest expense	25,228		18			25,246
Net interest income	65,879		2,727			68,606
Provision for loan losses	535		—			535
Non-interest income	6,971		11,420			18,391
Non-interest expense	30,567		19,846			50,413
Income (loss) before income tax expense (benefit)	41,748		(5,699		)	36,049
Income tax expense (benefit)	14,493		(2,166		)	12,327
Net income (loss)	27,255		(3,533		)	23,722
Preferred stock dividends	3,615		—			3,615
Net income (loss) available to common shareholders	$	23,640	$	(3,533	)	$	20,107

(1) - Amounts reported include funds transfer pricing of $3.5 million and $2.7 million for the three months ended June 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.



	Six Months Ended June 30, 2018
	Community Business Banking		BankMobile			Consolidated
Interest income ⁽¹⁾	$	196,664	$	7,940		$	204,604
Interest expense	72,100		151			72,251
Net interest income	124,564		7,789			132,353
Provision for loan losses	627		706			1,333
Non-interest income	15,904		21,133			37,037
Non-interest expense	72,052		33,979			106,031
Income (loss) before income tax expense (benefit)	67,789		(5,763		)	62,026
Income tax expense (benefit)	15,638		(1,416		)	14,222
Net income (loss)	52,151		(4,347		)	47,804
Preferred stock dividends	7,229		—			7,229
Net income (loss) available to common shareholders	$	44,922	$	(4,347	)	$	40,575

As of June 30, 2018
Goodwill and other intangibles	$	3,629	$	13,521		$	17,150
Total assets	$	11,017,272	$	75,574		$	11,092,846
Total deposits	$	6,876,688	$	419,266		$	7,295,954
Total non-deposit liabilities	$	2,843,360	$	17,305		$	2,860,665



	Six Months Ended June 30, 2017
	Community Business Banking		BankMobile			Consolidated
Interest income ⁽¹⁾	$	169,938	$	7,008		$	176,946
Interest expense	45,883		39			45,922
Net interest income	124,055		6,969			131,024
Provision for loan losses	3,585		—			3,585
Non-interest income	12,398		28,746			41,144
Non-interest expense	60,714		39,064			99,778
Income (loss) before income tax expense (benefit)	72,154		(3,349		)	68,805
Income tax expense (benefit)	20,609		(1,273		)	19,336
Net income (loss)	51,545		(2,076		)	49,469
Preferred stock dividends	7,229		—			7,229
Net income (loss) available to common shareholders	$	44,316	$	(2,076	)	$	42,240

As of June 30, 2017
Goodwill and other intangibles	$	3,633	$	13,982		$	17,615
Total assets	$	10,815,752	$	67,796		$	10,883,548
Total deposits	$	7,021,922	$	453,441		$	7,475,363
Total non-deposit liabilities	$	2,481,618	$	16,278		$	2,497,896

(1) - Amounts reported include funds transfer pricing of $7.9 million and $7.0 million for the six months ended June 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.