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 - Customers Bank 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 Customers Bank 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, commercial mortgage companies and equipment finance. 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 BOLI.

The BankMobile segment provides state-of-the-art high-tech digital banking and disbursement services to consumers, students and the "under banked" nationwide, along with "Banking as a Service" offerings with white label partners. 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 and costs associated with the development of white label products for its partners.

The following tables present the operating results for Customers' reportable business segments for the years ended December 31, 2018, 2017 and 2016. The segment financial results include directly attributable revenues and expenses. Consistent with the presentation of segment results to Customers' chief operating decision makers, overhead costs and preferred stock dividends are assigned to the Customers Bank Business Banking segment. The tax benefit assigned to BankMobile was based on an estimated effective tax rate of 24.56%, 37.67% and 38.00% for the years ended December 31, 2018, 2017 and 2016, respectively.



	For the Year Ended December 31, 2018
(amounts in thousands)	Customers Bank Business Banking		BankMobile			Consolidated
Interest income ⁽¹⁾	$	400,948	$	17,003		$	417,951
Interest expense	159,674		400			160,074
Net interest income	241,274		16,603			257,877
Provision for loan losses	2,928		2,714			5,642
Non-interest income	17,499		41,499			58,998
Non-interest expense	146,946		73,233			220,179
Income (loss) before income taxes	108,899		(17,845		)	91,054
Income tax expense (benefit)	23,742		(4,383		)	19,359
Net income (loss)	85,157		(13,462		)	71,695
Preferred stock dividends	14,459		—			14,459
Net income (loss) available to common shareholders	$	70,698	$	(13,462	)	$	57,236

Goodwill and other intangibles	$	3,629	$	12,870		$	16,499
Total assets	$	9,688,146	$	145,279		$	9,833,425
Total deposits	$	6,766,378	$	375,858		$	7,142,236
Total non-deposit liabilities	$	1,719,225	$	15,148		$	1,734,373



	For the Year Ended December 31, 2017
(amounts in thousands)	Customers Bank Business Banking		BankMobile			Consolidated
Interest income ⁽¹⁾	$	359,931	$	12,919		$	372,850
Interest expense	105,438		69			105,507
Net interest income	254,493		12,850			267,343
Provision for loan losses	5,638		1,130			6,768
Non-interest income	24,788		54,122			78,910
Non-interest expense	128,604		87,002			215,606
Income (loss) before income taxes	145,039		(21,160		)	123,879
Income tax expense (benefit)	53,013		(7,971		)	45,042
Net income (loss)	92,026		(13,189		)	78,837
Preferred stock dividends	14,459		—			14,459
Net income (loss) available to common shareholders	$	77,567	$	(13,189	)	$	64,378

Goodwill and other intangibles	$	3,630	$	12,665		$	16,295
Total assets	$	9,769,996	$	69,559		$	9,839,555
Total deposits	$	6,400,310	$	399,832		$	6,800,142
Total non-deposit liabilities	$	2,106,919	$	11,530		$	2,118,449


(1)	Amounts reported include funds transfer pricing of $15.7 million and $12.9 million, respectively, for the years ended December 31, 2018 and 2017, credited to BankMobile for the value provided to the Customers Bank Business Banking segment for the net use of low/no-cost deposits.



	For the Year Ended December 31, 2016
(amounts in thousands)	Customers Bank Business Banking		BankMobile			Consolidated
Interest income ⁽¹⁾	$	315,643	$	6,896		$	322,539
Interest expense	73,004		38			73,042
Net interest income	242,639		6,858			249,497
Provision for loan losses	2,246		795			3,041
Non-interest income	23,165		33,205			56,370
Non-interest expense	130,394		47,837			178,231
Income (loss) before income taxes	133,164		(8,569		)	124,595
Income tax expense (benefit)	49,149		(3,256		)	45,893
Net income (loss)	84,015		(5,313		)	78,702
Preferred stock dividends	9,515		—			9,515
Net income (loss) available to common shareholders	$	74,500	$	(5,313	)	$	69,187

Goodwill and other intangibles	$	3,639	$	13,982		$	17,621
Total assets	$	9,303,465	$	79,271		$	9,382,736
Total deposits	$	6,846,980	$	456,795		$	7,303,775
Total non-deposit liabilities	$	1,195,087	$	28,002		$	1,223,089


(1)	Amounts reported include funds transfer pricing of $6.9 million for the year ended December 31, 2016, credited to BankMobile for the value provided to the Customers Bank Business Banking segment for the net use of low/no-cost deposits.