EX-99.1 2 q319pressrelease.htm EX-99.1
Exhibit 99.1
Customers Bancorp, Inc.
1015 Penn Avenue
Wyomissing, PA 19610
Contacts:
Jay Sidhu, Chairman & CEO 610-935-8693
Carla Leibold, CFO 484-923-8802
Bob Ramsey, Director of Investor Relations 484-926-7118

Customers Bancorp Reports Record Net Income
For Third Quarter 2019
Q3 2019 GAAP Earnings Up $21 million, and Core Earnings Up $3 million Over Q3 2018
Net Interest Margin Expands to 2.83% and BankMobile Reaches Profitability
Wyomissing, PA, October 23, 2019 - Customers Bancorp, Inc. (NYSE: CUBI) t he parent company of Customers Bank and its operating division BankMobile (collectively “Customers” or "CUBI"), today reported third quarter 2019 ("Q3 2019") net income to common shareholders of $23.5 million, or $0.74 per diluted share, up from $5.7 million in second quarter 2019 ("Q2 2019") and $2.4 million in third quarter 2018 ("Q3 2018"). Core earnings for Q3 2019 totaled $23.0 million, or $0.73 per diluted share (a non-GAAP measure), up from $12.1 million in Q2 2019 and $20.1 million in Q3 2018 (non-GAAP measures). Core Q3 2019 diluted earnings per share were up 18% over Q3 2018 core diluted earnings per share (non-GAAP measures). Net interest margin, tax equivalent ("NIM") (a non-GAAP measure), expanded 19 basis points during Q3 2019 and average total loans and leases grew $825 million, or 9%, over Q2 2019.

(Dollars in thousands, except per share amounts) | USD |  | Per Share |  |  | USD |  | Per Share
Q3 2019 Net Income to Common Shareholders (GAAP) |  |  |  |  | YTD September 2019 Net Income to Common Shareholders (GAAP) |  |  |
Customers Bank Business Banking | $ | 22,767 |  |  | $ | 0.72 |  |  | Customers Bank Business Banking | $ | 47,531 |  |  | $ | 1.51 |
BankMobile | 684 |  |  | 0.02 |  |  | BankMobile | (6,574) |  |  | (0.21) |
Consolidated | $ | 23,451 |  |  | $ | 0.74 |  |  | Consolidated | $ | 40,957 |  |  | $ | 1.30 |
Q3 2019 Core Earnings (Non-GAAP Measure) |  |  |  |  | YTD September 2019 Core Earnings (Non-GAAP Measure) |  |  |
Customers Bank Business Banking | $ | 21,580 |  |  | $ | 0.68 |  |  | Customers Bank Business Banking | $ | 52,730 |  |  | $ | 1.67 |
BankMobile | 1,444 |  |  | 0.05 |  |  | BankMobile | (5,801) |  |  | (0.18) |
Consolidated | $ | 23,024 |  |  | $ | 0.73 |  |  | Consolidated | $ | 46,930 |  |  | $ | 1.49 |

•Customers Bank Business Banking segment reported Q3 2019 GAAP earnings per diluted share of $0.72, an increase of $0.32 per diluted share from Q2 2019. Customers Bank Business Banking segment Q3 2019 core earnings per diluted share of $0.68 (a non-GAAP measure) increased $0.07 per diluted share from Q2 2019.
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•Customers Bank Business Banking segment core earnings in Q3 2019 were impacted by a $1.0 million legal reserve accrual ($0.02 per diluted share) and gains on investment securities of $2.3 million ($0.06 per diluted share).
•The BankMobile segment reported Q3 2019 GAAP earnings per diluted share of $0.02, an increase of $0.20 from a loss per diluted share of $(0.18) in Q3 2018. BankMobile segment Q3 2019 core earnings per diluted share of $0.05 (a non-GAAP measure) increased $0.16 from a loss per diluted share of $(0.11) in Q3 2018.
•BankMobile segment core earnings in Q3 2019 were impacted by a $1.0 million legal reserve accrual ($0.02 per diluted share).
•NIM (a non-GAAP measure) expanded 19 basis points from Q2 2019 to 2.83% in Q3 2019 and up 36 basis points over Q3 2018; this marks our fourth consecutive quarter of NIM expansion from the trough of 2.47% reported in Q3 2018.
•The return on average assets ("ROAA") was 0.95% in Q3 2019, up significantly from 0.36% in Q2 2019 and 0.22% in Q3 2018. Core ROAA (a non-GAAP) measure was 0.94% in Q3 2019, up significantly from 0.61% in Q2 2019 and 0.88% in Q3 2018.
•The return on average common equity ("ROCE") was 11.81% in Q3 2019, up significantly from 2.96% in Q2 2019 and 1.31% in Q3 2018. Core ROCE (a non-GAAP) measure was 11.59% in Q3 2019, up significantly from 6.31% in Q2 2019 and 10.86% in Q3 2018.
•Total assets were $11.7 billion at September 30, 2019, compared to $11.2 billion at June 30, 2019 and $10.6 billion at September 30, 2018. However, average assets for Q3 2019 were $11.2 billion. Total asset growth at September 30, 2019 reflected a stronger than expected seasonal increase in mortgage warehouse loans outstanding due to higher refinancing activity resulting from a decline in market interest rates on mortgages.
•Total deposits increased $412 million, or 4.8%, year-over-year, which included a $538 million, or 24.8%, increase in demand deposits. BankMobile's first White Label banking partnership deposit balances were approaching $70 million at September 30, 2019.
•Loan mix improved year-over-year, as commercial and industrial ("C&I") loans, excluding commercial loans to mortgage companies, increased $470 million, or 26%. As planned, multi-family loans decreased $705 million, or 20%, year-over-year and were replaced by about an equal amount of consumer loans. Commercial loans to mortgage companies increased $975 million, or 62%, year-over-year.
•Asset quality remains strong. Non-performing loans were only 0.17% of total loans and leases at September 30, 2019 and reserves equaled 290% of non-performing loans. Net charge-offs were only $1.8 million, or 7 basis points of average total loans and leases on an annualized basis, during Q3 2019.
•Reflecting growth in loans, the provision for loan losses was $4.4 million in Q3 2019, compared to $5.3 million in Q2 2019 and $2.9 million in Q3 2018.
•Q3 2019 book value per common share was $25.66 and tangible book value per common share (a non-GAAP measure) was $25.16. Tangible book value per common share has increased at a compound annual growth rate of 10.2% over the past five years.
•Based on the October 17, 2019 closing price of $20.89, Customers Bancorp common equity is trading at 0.83x tangible book value of $25.16 (a non-GAAP measure) and 7.5x the 2020 consensus EPS estimate of $2.78.
•On September 25, 2019, Customers Bancorp, Inc. issued $25 million of 5-year senior notes at a rate of 4.5%, the net proceeds of which were contributed to the Bank as Tier 1 capital.
Jay Sidhu, CEO and Chairman of Customers Bank stated, "We are pleased with our strong earnings growth, superior asset quality, strong control in expenses, and net interest margin expansion this quarter, a reflection of improved loan mix, core deposit growth, disciplined pricing strategy and absolute focus on efficiency improvement and risk management. We are also excited that BankMobile reached profitability in the third quarter and its White Label banking strategy has generated nearly $70 million of very low-cost deposits to Customers, a number that is expected to grow over time."
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Looking Ahead to the Rest of 2019 and 2020
Mr. Sidhu continued, "Customers expects core earnings per share to exceed $2.20 in 2019, in line with our internal expectations and what we had previously disclosed. Customers is projecting core earnings per share of at least $3.00 for 2020 with continued improvement in all profitability metrics."
In spite of low rates and the flat to inverted yield curve, Customers continues to expect a full-year 2019 net interest margin above 2.70%, with further expansion expected in the fourth quarter from the 2.83% reported this quarter. Average interest earning assets for 2019 are expected to be roughly equal to 2018 average interest earning assets with total assets under $10 billion by year-end. Customers' balance sheet will naturally contract by December 31st given seasonality in the mortgage warehouse business and the planned sale and run-off of multi-family loans and some residential mortgage loans. Core non-interest income is expected to grow approximately 10% from 2018 and the core efficiency ratio for full-year 2019 is expected to be in the mid-60%s. C&I loans, excluding loans to mortgage companies, are expected to grow over $500 million in 2019. Including commercial loans to mortgage companies, C&I loans make up approximately 47% of total loans at September 30, 2019.
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Strategic Priorities Articulated at Analyst Day in October 2018
Improve Profitability: Target a 2.75% NIM by Q4 2019 and a 1.25% Core ROAA in 2-3 years
As stated during our 2018 Analysts Day in October 2018, Customers expects to remain focused on growing its core businesses, while improving margins, capital and profitability. Through favorable mix shifts in both assets and liabilities, Customers improved the overall quality of its balance sheet and deposit franchise, expanded its net interest margin, enhanced liquidity and remains relatively neutral to interest rate changes. The strategies articulated at the 2018 Analysts Day in October 2018 and subsequent 2019 progress are summarized below:

• | Target ROAA in top quartile of peer group, which we expect will equate to a ratio of 1.25% or higher over the next 2-3 years. ROAA was 0.95% in Q3 2019, up significantly from Q2 2019 and Q3 2018.
• | Achieve NIM expansion to 2.75% or greater by Q4 2019, with a full year 2019 NIM above 2.70%, through an expected shift in asset and funding mix. Actual results are materially better. NIM expanded to 2.83% in Q3 2019 and further expansion is expected in fourth quarter 2019 ("Q4 2019"). Since Q3 2018, Customers effectively restructured its balance sheet resulting in NIM expansion of 36 basis points in just one year.
• | BankMobile growth and maturity was expected with profitability achieved by year end 2019. BankMobile reached profitability in Q3 2019 and is expected to remain profitable in Q4 2019 and in 2020.
• | Expense control; we expect very modest growth in most Customers Bank Business Banking segment expenses during 2019, and incremental spend in other areas will be driven by revenue growth or new business or technology initiatives at BankMobile. Customers' consolidated efficiency ratio was 61.58% in Q3 2019, down from 77.32% in Q2 2019 and 66.42% in Q3 2018. Q3 2019 total non-interest expense was up only 4% over Q3 2018 and was flat compared to Q2 2019.
• | Growth in core deposits and good quality higher-yielding loans. DDA's grew 24.8% year over year. Customers currently has $1.8 billion of loans with yields below 3.75% at September 30, 2019, of which $1.5 billion are multi-family loans. Over the next two years, we expect to run-off some of these lower-yielding multi-family loans and will replace them with higher-yielding interest earning assets. During Q4 2019, we plan to sell approximately $500 million of multi-family loans and expect run-off of $300 million or more.
• | Maintain strong credit quality and superior risk management. We do not see any material deterioration on the asset quality front in the foreseeable future. Reserves to NPLs at September 30, 2019 were 290%. The Bank is relatively neutral to interest rate changes at September 30, 2019.
• | Evaluate opportunities to redeem our preferred stock as it becomes callable. Redeeming all of the preferred stock as it becomes callable would result in an increase to our diluted earnings per share. Currently, the dividends paid to our preferred shareholders reduce diluted earnings per share by approximately $0.46 annually. Customers will continue to analyze the best ways to execute this over the next two years subject to liquidity and capital needs.

Focus on Capital Allocation
The tangible common equity to tangible assets ratio (a non-GAAP measure) was 6.7% at September 30, 2019, while the leverage ratio was 9.0%. Capital ratios declined in Q3 2019 largely due to the quarter-end spike in mortgage warehouse balances along with greater than expected seasonal balances but are expected to return to 2018 year-end levels by December 31st with the expected decline in total assets below $10 billion. "We anticipate having excess capital above our targeted minimum tangible common equity ratio of 7.0% at year-end, which gives us options," Sidhu stated. "As capital builds, we will evaluate the best uses for our excess capital, which may include calling our preferred equity as it becomes callable, starting in 2020," Sidhu continued. Customers raised $25 million in senior notes during Q3 2019, the net proceeds of which were contributed to the Bank as Tier 1 capital.
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BankMobile Segment is Expected to Generate a Positive Earnings Contribution by Q4 2019
BankMobile, a division of Customers Bank, operates a branchless digital bank offering low cost banking services to over two million Americans, with over 1.0 million active deposit customers. Customers reported in Q4 2018 that it expects to retain BankMobile for a 2-3 year period, but will regularly evaluate the best options for BankMobile. "We expect to remain focused on this strategy in the foreseeable future," stated Sidhu.
BankMobile deposits averaged $529 million in Q3 2019, with an average cost of just 0.19%. The Q3 2019 segment earnings increased to $0.7 million, or $0.02 per diluted share, compared to a net loss of $5.8 million, or ($0.18) per diluted share in Q3 2018, principally due to an increase in net interest income, partially offset by an increase in provision for loan losses and a legal reserve of $1.0 million in connection with the previously disclosed Department of Education matter. BankMobile Q3 2019 segment results also included $4.0 million of fraud related losses. The elevated level of fraud-related losses in Q3 2019 primarily resulted from an internet-based organized crime ring that was identified in Q3 2019 and ultimately mitigated through the implementation of "smart defenses" and other automated controls. BankMobile reached profitability one quarter earlier than expected and is expected to remain profitable in Q4 2019 and in 2020. "We are pleased to report that our college/student-related business is now profitable. We remain in the investment mode for our white label and other unique Banking as a Service ("BaaS") strategic opportunities for BankMobile," stated Luvleen Sidhu, President and Chief Strategy Officer of BankMobile.
On April 18, 2019, our White Label partner T-Mobile made a public announcement and began the first phase of launch of T-Mobile Money powered by BankMobile, a division of Customers Bank. The partnership has generated nearly $70 million in low cost deposits to date.
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Q3 2019 Overview
The following table presents a summary of key earnings and performance metrics for the quarter ended September 30, 2019 and the preceding four quarters, respectively:

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |
EARNINGS SUMMARY - UNAUDITED |  |  |  |  |  |  |  |
(Dollars in thousands, except per share data and stock price data) |  | Q3 | Q2 | Q1 | Q4 | Q3 |  |
|  | 2019 | 2019 | 2019 | 2018 | 2018 |  |
GAAP Profitability Metrics: |  |  |  |  |  |  |  |
Net income available to common shareholders |  | $ | 23,451 |  | $ | 5,681 |  | $ | 11,825 |  | $ | 14,247 |  | $ | 2,414 |  |  |
Per share amounts: |  |  |  |  |  |  |  |
| Earnings per share - basic | $ | 0.75 |  | $ | 0.18 |  | $ | 0.38 |  | $ | 0.45 |  | $ | 0.08 |  |  |
| Earnings per share - diluted | $ | 0.74 |  | $ | 0.18 |  | $ | 0.38 |  | $ | 0.44 |  | $ | 0.07 |  |  |
| Book value per common share (1) | $ | 25.66 |  | $ | 24.80 |  | $ | 24.44 |  | $ | 23.85 |  | $ | 23.27 |  |  |
| CUBI stock price (1) | $ | 20.74 |  | $ | 21.00 |  | $ | 18.31 |  | $ | 18.20 |  | $ | 23.53 |  |  |
| CUBI stock price as % of book value | 81 | % | 85 | % | 75 | % | 76 | % | 101 | % |  |
Average shares outstanding - basic |  | 31,223,777 |  | 31,154,292 |  | 31,047,191 |  | 31,616,740 |  | 31,671,122 |  |  |
Average shares outstanding - diluted |  | 31,644,728 |  | 31,625,741 |  | 31,482,867 |  | 32,051,030 |  | 32,277,590 |  |  |
Shares outstanding (1) |  | 31,245,776 |  | 31,202,023 |  | 31,131,247 |  | 31,003,028 |  | 31,687,340 |  |  |
Return on average assets ("ROAA") |  | 0.95 | % | 0.36 | % | 0.64 | % | 0.71 | % | 0.22 | % |  |
Return on average common equity ("ROCE") |  | 11.81 | % | 2.96 | % | 6.38 | % | 7.58 | % | 1.31 | % |  |
Efficiency ratio |  | 61.58 | % | 77.32 | % | 68.32 | % | 69.99 | % | 66.42 | % |  |
Non-GAAP Profitability Metrics (2): |  |  |  |  |  |  |  |
Core earnings |  | $ | 23,024 |  | $ | 12,083 |  | $ | 11,823 |  | $ | 16,992 |  | $ | 20,053 |  |  |
Per share amounts: |  |  |  |  |  |  |  |
| Core earnings per share - diluted | $ | 0.73 |  | $ | 0.38 |  | $ | 0.38 |  | $ | 0.53 |  | $ | 0.62 |  |  |
| Tangible book value per common share (1) | $ | 25.16 |  | $ | 24.30 |  | $ | 23.92 |  | $ | 23.32 |  | $ | 22.74 |  |  |
| CUBI stock price as % of tangible book value | 82 | % | 86 | % | 77 | % | 78 | % | 103 | % |  |
Net interest margin, tax equivalent |  | 2.83 | % | 2.64 | % | 2.59 | % | 2.57 | % | 2.47 | % |  |
Tangible common equity to tangible assets (1) |  | 6.71 | % | 6.79 | % | 7.35 | % | 7.36 | % | 6.80 | % |  |
Core ROAA |  | 0.94 | % | 0.61 | % | 0.64 | % | 0.82 | % | 0.88 | % |  |
Core ROCE |  | 11.59 | % | 6.31 | % | 6.38 | % | 9.05 | % | 10.86 | % |  |
Adjusted pre-tax pre-provision net income |  | $ | 39,178 |  | $ | 25,446 |  | $ | 25,036 |  | $ | 27,957 |  | $ | 31,821 |  |  |
Adjusted ROAA - pre-tax and pre-provision |  | 1.38 | % | 0.98 | % | 1.04 | % | 1.12 | % | 1.18 | % |  |
Adjusted ROCE - pre-tax and pre-provision |  | 17.91 | % | 11.39 | % | 11.57 | % | 12.96 | % | 15.28 | % |  |
Core efficiency ratio |  | 59.51 | % | 69.90 | % | 68.32 | % | 66.18 | % | 62.99 | % |  |
Asset Quality: |  |  |  |  |  |  |  |
Net charge-offs |  | $ | 1,761 |  | $ | 637 |  | $ | 1,060 |  | $ | 2,154 |  | $ | 471 |  |  |
Annualized net charge-offs to average total loans and leases |  | 0.07 | % | 0.03 | % | 0.05 | % | 0.10 | % | 0.02 | % |  |
Non-performing loans ("NPLs") to total loans and leases (1) |  | 0.17 | % | 0.15 | % | 0.26 | % | 0.32 | % | 0.27 | % |  |
Reserves to NPLs (1) |  | 290.38 | % | 330.36 | % | 194.15 | % | 147.16 | % | 174.56 | % |  |
Regulatory Ratios (3): |  |  |  |  |  |  |  |
Common equity Tier 1 capital to risk-weighted assets |  | 7.81 | % | 8.04 | % | 8.91 | % | 8.96 | % | 8.70 | % |  |
Tier 1 capital to risk-weighted assets |  | 9.95 | % | 10.32 | % | 11.47 | % | 11.58 | % | 11.26 | % |  |
Total capital to risk-weighted assets |  | 11.33 | % | 11.76 | % | 12.92 | % | 13.00 | % | 12.69 | % |  |
Tier 1 capital to average assets (leverage ratio) |  | 9.01 | % | 9.51 | % | 10.01 | % | 9.66 | % | 8.91 | % |  |
(1) Metric is a spot balance for the last day of each quarter presented. |  |  |  |  |  |  |  |
(2) Non-GAAP measures exclude investment securities gains and losses, severance expense, merger and acquisition-related expenses, losses realized from the sale of lower-yielding multi-family loans, loss upon acquisition of interest-only GNMA securities, legal reserves, and certain intangible assets. These notable items are not included in Customers' disclosures of core earnings and other core profitability metrics. Please note that not each of the aforementioned adjustments affected the reported amount in each of the periods presented. Customers' reasons for the use of these non-GAAP measures and a detailed reconciliation between the non-GAAP measures and the comparable GAAP amounts are included at the end of this document. |  |  |  |  |  |  |  |
(3) Regulatory capital ratios are estimated for Q3 2019. |  |  |  |  |  |  |  |

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Net Interest Income
Net interest income totaled $75.7 million in Q3 2019, an increase of $11.1 million from Q2 2019, primarily due to a 19 basis point expansion of NIM and an $0.8 billion increase in average interest-earning assets. Compared to Q2 2019, total loan yields increased 17 basis points to 4.79%. The cost of interest-bearing deposits decreased by 3 basis points. Borrowing costs decreased 23 basis points to 2.86% due to two Federal Reserve interest rate cuts during Q3 2019.
Q3 2019 net interest income increased $11.7 million from Q3 2018, primarily due to 36 basis points of NIM expansion and a $0.3 billion increase in average interest-earning assets. Compared to Q3 2018, total loan yields increased 41 basis points to 4.79%. Total investment securities yields increased 30 basis points to 3.60%, mostly due to the sale of $495 million of lower-yielding securities in Q3 2018 and run-off of other lower-yielding securities. Given Federal Reserve interest rate hikes in 2018 and the associated increases in market interest rates, which were partially offset by two Federal Reserve interest rate cuts in Q3 2019, the cost of deposits and borrowings increased 20 basis points to 2.33% for Q3 2019, up from 2.13% for Q3 2018. We expect these funding costs to gradually decrease.
Total loans increased $1.5 billion, or 17.4%, to $10.3 billion at September 30, 2019 compared to the year-ago period. Mortgage warehouse loans increased $975 million to $2.5 billion; C&I loans increased $470 million to $2.3 billion; other consumer loans increased $592 million to $644 million; residential mortgages increased $121 million to $632 million; and commercial real estate non-owner-occupied loans increased $111 million to $1.3 billion. These increases were offset in part by a planned decrease in multi-family loans of $705 million, or 20.1%, to $2.8 billion.
Total deposits increased $412 million, or 4.8%, to $8.9 billion at September 30, 2019 compared to the year-ago period. Total demand deposits increased $538 million, or 24.8%, to $2.7 billion, certificates of deposit accounts increased $29 million, or 1.2%, to $2.4 billion, and savings deposits increased $316 million to $591 million. In July 2018, Customers launched a new digital, on-line savings banking product with a goal of gathering retail deposits. As of September 30, 2019, this new product generated $534 million in retail deposits, an increase of $55 million since June 30, 2019. Higher cost money market deposits decreased $471 million, or 12.8%, to $3.2 billion at September 30, 2019 compared to the year-ago period.
Provision, Credit Quality and Risk Management
The provision for loan losses totaled $4.4 million in Q3 2019, compared to $5.3 million in Q2 2019 and $2.9 million in Q3 2018. The Q3 2019 provision expense included $2.0 million for net loan growth in the other non multi-family portfolios (primarily C&I), $2.3 million for net growth in the other consumer loan portfolio, $0.8 million for manufactured housing loans, and $1.7 million for specifically identified loans. These increases were offset in part by a $2.4 million release for multi-family loans due to runoff and the effect of $0.5 billion of multi-family loans transferred to held for sale as a result of Customers' intent to sell these loans. Net charge-offs for Q3 2019 were $1.8 million, or 7 basis points of average loans and leases on an annualized basis, compared to net charge-offs of $0.6 million, or 3 basis points in Q2 2019, and $0.5 million, or 2 basis points in Q3 2018.
Risk management is a critical component of how Customers creates long-term shareholder value, and Customers believes that asset quality is one of the most important risks in banking to be understood and managed. Customers believes that asset quality risks must be diligently addressed during good economic times with prudent underwriting standards so that when the economy deteriorates the bank's capital is sufficient to absorb all losses without threatening its ability to operate and serve its community and other constituents. "Customers' non-performing loans at September 30, 2019 were only 0.17% of total loans and leases, compared to our peer group non-performing loans of approximately 0.71% in the most recent period available, and industry average non-performing loans of 1.07% in the most recent period available. Our expectation is superior asset quality performance in good times and in difficult years," said Mr. Sidhu.
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Non-Interest Income
Non-interest income totaled $23.4 million in Q3 2019, an increase of $11.3 million compared to Q2 2019. The increase in non-interest income primarily reflected a $7.5 million loss recognized during Q2 2019 due to a shortfall in the fair value of interest-only GNMA securities acquired from a commercial mortgage warehouse customer that unexpectedly ceased operations in May 2019 and a $1.0 million gain realized from the sale of $95 million of corporate bonds during Q3 2019, along with increases of $1.7 million in unrealized gains from fair value adjustments on investment securities, $0.5 million in mortgage warehouse transactional fees, $0.4 million in commercial lease income, and $0.3 million in deposit fees. The increase in mortgage warehouse transaction fees primarily resulted from an increase in activity volumes coinciding with the decline in market interest rates for mortgages. The increase in commercial lease income primarily resulted from the continued growth of our Equipment Finance Group. The increase in interchange deposit fees primarily resulted from a seasonal increase in activity at BankMobile, coinciding with the beginning of the academic semester.
Non-Interest Expense
Non-interest expense totaled $59.6 million in both Q3 2019 and Q2 2019. The negligible increase in non-interest expense in Q3 2019 primarily resulted from increases in professional services of $2.6 million driven by costs incurred to support our White Label partnership and digital transformation efforts, provision for operating losses of $1.6 million stemming from an internet-based organized crime ring which targeted BankMobile checking accounts in Q3 2019, and legal reserve accruals totaling $2.0 million for Q3 2019 developments in the previously disclosed legal matters. These increases were almost entirely offset by a decrease in technology-related costs of $3.6 million primarily resulting from successful concentrated cost savings initiatives and a $2.6 million small bank assessment credit provided by the FDIC in Q3 2019 related to Customers' contributions to the growth of the FDIC's deposit insurance fund since July 2016.
Taxes
Customers' effective tax rate was 22.9% for Q3 2019, compared to 21.1% for Q2 2019 and 0.5% for Q3 2018. The increase in the effective tax rate from Q2 2019 and Q3 2018 was primarily driven by favorable return to provision adjustments recorded in Q2 2019 and Q3 2018. Customers expects the full-year 2019 effective tax rate to be approximately 22% to 24%.
Significantly Lowering Commercial Real Estate Concentration
Customers' total commercial real estate ("CRE") loan exposures subject to regulatory concentration guidelines of $4.1 billion as of September 30, 2019 included construction loans of $0.1 billion, multi-family loans of $2.8 billion, and non-owner occupied commercial real estate loans of $1.2 billion, which represent 328% of total risk-based capital on a combined basis, a reduction from a 388% commercial real estate concentration as of September 30, 2018. Customers' loans subject to regulatory CRE concentration guidelines had a 3 year cumulative reduction of 4.4% in Q3 2019, a deceleration from cumulative growth of 37.1% a year ago.
Customers' loans collateralized by multi-family properties were approximately 27.2% of Customers' total loan portfolio and approximately 222% of total risk-based capital at September 30, 2019, down from approximately 40.0% and 291%, respectively, at September 30, 2018. Following are some key characteristics of Customers' multi-family loan portfolio:
•Principally concentrated in New York City with an emphasis on properties subject to some type of rent control; and principally to high net worth families;
•Current average loan size is $6.9 million;
•Current weighted average annual debt service coverage ratio is 1.53x;
•Current weighted average loan-to-value for the portfolio is 61.0%;
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•All loans are individually stressed with an increase of 1% and 2% to the cap rate and an increase of 1.5% and 3% in loan interest rates;
•All properties are inspected prior to a loan being granted and inspected thereafter on an annual basis by dedicated portfolio managers or outside inspectors; and
•Credit approval process is independent of customer sales and portfolio management process.
Conference Call
Date: Thursday, October 24, 2019
Time: 9:00 AM EDT
US Dial-in: 888-207-0293
International Dial-in: 334-323-9869
Participant Code: 070008
Please dial in at least 10 minutes before the start of the call to ensure timely participation. Slides accompanying the presentation will be available on Customers' website at https://www.customersbank.com/investor-relations/ prior to the call.
Please submit any questions you have regarding the earnings in advance to rramsey@customersbank.com and the executives will address them on the call. Customers will also open the lines to questions following management's presentation of the third quarter results. A playback of the call will be available beginning October 24, 2019 at 12:00 PM EDT until 12:00 PM EDT on November 23, 2019. To listen, call within the United States 888-203-1112, or 719-457-0820 when calling internationally. Please use the replay passcode 2897022.
Institutional Background
Customers Bancorp, Inc. is a bank holding company located in Wyomissing, Pennsylvania engaged in banking and related businesses through its bank subsidiary, Customers Bank. Customers Bank is a community-based, full-service bank with assets of approximately $11.7 billion at September 30, 2019. A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender that provides a range of banking services to small and medium-sized businesses, professionals, individuals and families through offices in Pennsylvania, Illinois, New York, Rhode Island, Massachusetts, New Hampshire and New Jersey. Committed to fostering customer loyalty, Customers Bank uses a High Tech/High Touch strategy that includes use of industry-leading technology to provide customers better access to their money, as well as Concierge Banking® by appointment at customers’ homes or offices 12 hours a day, seven days a week. Customers Bank offers a continually expanding portfolio of loans to small businesses, multi-family projects, mortgage companies and consumers.
Customers Bancorp, Inc.'s voting common shares are listed on the New York Stock Exchange under the symbol CUBI. Additional information about Customers Bancorp, Inc. can be found on the Company’s website, www.customersbank.com.
“Safe Harbor” Statement
In addition to historical information, this press release may contain ''forward-looking statements'' within the meaning of the ''safe harbor'' provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Customers Bancorp, Inc.'s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words ''may,'' ''could,'' ''should,''
9

''pro forma,'' ''looking forward,'' ''would,'' ''believe,'' ''expect,'' ''anticipate,'' ''estimate,'' ''intend,'' ''plan,'' or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Customers Bancorp, Inc.'s control). Numerous competitive, economic, regulatory, legal and technological factors, among others, could cause Customers Bancorp, Inc.'s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements. In addition, important factors relating to the acquisition of the Disbursements business, the combination of Customers' BankMobile business with the acquired Disbursements business, the implementation of Customers Bancorp, Inc.'s strategy to retain BankMobile for 2-3 years, the possibility that the expected benefits of retaining BankMobile for 2-3 years may not be achieved, or the possible effects on Customers' results of operations if BankMobile is never divested could cause Customers Bancorp's actual results to differ from those in the forward-looking statements. Customers Bancorp, Inc. cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management's current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Customers Bancorp, Inc.'s filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K for the year ended December 31, 2018, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Customers Bancorp, Inc. does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Customers Bancorp, Inc. or by or on behalf of Customers Bank.
10

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |  |  |  |  |
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands, except per share data) |  |  |  |  |  |  |  |  |  |  | Nine Months Ended |  |
| Q3 |  |  | Q2 |  |  | Q1 |  |  | Q4 |  |  | Q3 |  |  | September 30, |  |  |
| 2019 |  |  | 2019 |  |  | 2019 |  |  | 2018 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Interest income: |  |  |  |  |  |  |  |  |  |  |  |  |
Loans and leases | $ | 118,444 |  |  | $ | 103,567 |  |  | $ | 93,116 |  |  | $ | 94,248 |  |  | $ | 97,815 |  |  | $ | 315,126 |  |  | $ | 278,986 |
Investment securities | 5,867 |  |  | 6,481 |  |  | 6,241 |  |  | 6,277 |  |  | 8,495 |  |  | 18,589 |  |  | 26,932 |
Other | 2,407 |  |  | 1,902 |  |  | 1,718 |  |  | 2,778 |  |  | 3,735 |  |  | 6,030 |  |  | 8,731 |
Total interest income | 126,718 |  |  | 111,950 |  |  | 101,075 |  |  | 103,303 |  |  | 110,045 |  |  | 339,745 |  |  | 314,649 |
Interest expense: |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits | 38,267 |  |  | 35,980 |  |  | 31,225 |  |  | 34,029 |  |  | 32,804 |  |  | 105,472 |  |  | 76,779 |
FHLB advances | 7,563 |  |  | 7,607 |  |  | 5,293 |  |  | 3,662 |  |  | 9,125 |  |  | 20,463 |  |  | 27,381 |
Subordinated debt | 1,684 |  |  | 1,684 |  |  | 1,684 |  |  | 1,684 |  |  | 1,684 |  |  | 5,053 |  |  | 5,053 |
Other borrowings | 3,469 |  |  | 2,000 |  |  | 3,569 |  |  | 2,404 |  |  | 2,431 |  |  | 9,039 |  |  | 9,082 |
Total interest expense | 50,983 |  |  | 47,271 |  |  | 41,771 |  |  | 41,779 |  |  | 46,044 |  |  | 140,027 |  |  | 118,295 |
Net interest income | 75,735 |  |  | 64,679 |  |  | 59,304 |  |  | 61,524 |  |  | 64,001 |  |  | 199,718 |  |  | 196,354 |
Provision for loan and lease losses | 4,426 |  |  | 5,346 |  |  | 4,767 |  |  | 1,385 |  |  | 2,924 |  |  | 14,539 |  |  | 4,257 |
Net interest income after provision for loan and lease losses | 71,309 |  |  | 59,333 |  |  | 54,537 |  |  | 60,139 |  |  | 61,077 |  |  | 185,179 |  |  | 192,097 |
Non-interest income: |  |  |  |  |  |  |  |  |  |  |  |  |
Interchange and card revenue | 6,869 |  |  | 6,760 |  |  | 8,806 |  |  | 7,568 |  |  | 7,084 |  |  | 22,435 |  |  | 23,127 |
Deposit fees | 3,642 |  |  | 3,348 |  |  | 2,209 |  |  | 2,099 |  |  | 2,002 |  |  | 9,199 |  |  | 5,726 |
Commercial lease income | 3,080 |  |  | 2,730 |  |  | 2,401 |  |  | 1,982 |  |  | 1,419 |  |  | 8,212 |  |  | 3,372 |
Bank-owned life insurance | 1,824 |  |  | 1,836 |  |  | 1,816 |  |  | 1,852 |  |  | 1,869 |  |  | 5,477 |  |  | 5,769 |
Mortgage warehouse transactional fees | 2,150 |  |  | 1,681 |  |  | 1,314 |  |  | 1,495 |  |  | 1,809 |  |  | 5,145 |  |  | 5,663 |
Gain (loss) on sale of SBA and other loans | — |  |  | — |  |  | — |  |  | (110) |  |  | 1,096 |  |  | — |  |  | 3,404 |
Mortgage banking income | 283 |  |  | 250 |  |  | 167 |  |  | 73 |  |  | 207 |  |  | 701 |  |  | 532 |
Loss upon acquisition of interest-only GNMA securities | — |  |  | (7,476) |  |  | — |  |  | — |  |  | — |  |  | (7,476) |  |  | — |
Gain (loss) on sale of investment securities | 1,001 |  |  | — |  |  | — |  |  | — |  |  | (18,659) |  |  | 1,001 |  |  | (18,659) |
Unrealized gain (loss) on investment securities | 1,333 |  |  | (347) |  |  | 2 |  |  | (101) |  |  | (1,236) |  |  | 988 |  |  | (1,532) |
Other | 3,187 |  |  | 3,254 |  |  | 3,003 |  |  | 5,019 |  |  | 6,493 |  |  | 9,443 |  |  | 11,718 |
Total non-interest income | 23,369 |  |  | 12,036 |  |  | 19,718 |  |  | 19,877 |  |  | 2,084 |  |  | 55,125 |  |  | 39,120 |
Non-interest expense: |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits | 27,193 |  |  | 26,920 |  |  | 25,823 |  |  | 26,706 |  |  | 25,462 |  |  | 79,936 |  |  | 78,135 |
Technology, communication and bank operations | 8,755 |  |  | 12,402 |  |  | 11,953 |  |  | 11,531 |  |  | 11,657 |  |  | 33,110 |  |  | 32,923 |
Professional services | 8,348 |  |  | 5,718 |  |  | 4,573 |  |  | 5,674 |  |  | 4,743 |  |  | 18,639 |  |  | 14,563 |
Occupancy | 3,661 |  |  | 3,064 |  |  | 2,903 |  |  | 2,933 |  |  | 2,901 |  |  | 9,628 |  |  | 8,876 |
Commercial lease depreciation | 2,459 |  |  | 2,252 |  |  | 1,923 |  |  | 1,550 |  |  | 1,103 |  |  | 6,633 |  |  | 2,838 |
FDIC assessments, non-income taxes, and regulatory fees | (777) |  |  | 2,157 |  |  | 1,988 |  |  | 1,892 |  |  | 2,415 |  |  | 3,368 |  |  | 6,750 |
Provision for operating losses | 3,998 |  |  | 2,446 |  |  | 1,779 |  |  | 1,685 |  |  | 1,171 |  |  | 8,223 |  |  | 3,930 |
Advertising and promotion | 976 |  |  | 1,360 |  |  | 809 |  |  | 917 |  |  | 820 |  |  | 3,145 |  |  | 1,529 |
Merger and acquisition related expenses | — |  |  | — |  |  | — |  |  | 470 |  |  | 2,945 |  |  | — |  |  | 3,920 |
Loan workout | 495 |  |  | 643 |  |  | 320 |  |  | 360 |  |  | 516 |  |  | 1,458 |  |  | 1,823 |
Other real estate owned (income) expenses | 108 |  |  | (14) |  |  | 57 |  |  | 285 |  |  | 66 |  |  | 151 |  |  | 164 |
Other | 4,376 |  |  | 2,634 |  |  | 1,856 |  |  | 3,042 |  |  | 3,305 |  |  | 8,869 |  |  | 7,683 |
Total non-interest expense | 59,592 |  |  | 59,582 |  |  | 53,984 |  |  | 57,045 |  |  | 57,104 |  |  | 173,160 |  |  | 163,134 |
Income before income tax expense | 35,086 |  |  | 11,787 |  |  | 20,271 |  |  | 22,971 |  |  | 6,057 |  |  | 67,144 |  |  | 68,083 |
Income tax expense | 8,020 |  |  | 2,491 |  |  | 4,831 |  |  | 5,109 |  |  | 28 |  |  | 15,343 |  |  | 14,250 |
Net income | 27,066 |  |  | 9,296 |  |  | 15,440 |  |  | 17,862 |  |  | 6,029 |  |  | 51,801 |  |  | 53,833 |
Preferred stock dividends | 3,615 |  |  | 3,615 |  |  | 3,615 |  |  | 3,615 |  |  | 3,615 |  |  | 10,844 |  |  | 10,844 |
Net income available to common shareholders | $ | 23,451 |  |  | $ | 5,681 |  |  | $ | 11,825 |  |  | $ | 14,247 |  |  | $ | 2,414 |  |  | $ | 40,957 |  |  | $ | 42,989 |
Basic earnings per common share | $ | 0.75 |  |  | $ | 0.18 |  |  | $ | 0.38 |  |  | $ | 0.45 |  |  | $ | 0.08 |  |  | $ | 1.32 |  |  | $ | 1.36 |
Diluted earnings per common share | $ | 0.74 |  |  | $ | 0.18 |  |  | $ | 0.38 |  |  | $ | 0.44 |  |  | $ | 0.07 |  |  | $ | 1.30 |  |  | $ | 1.33 |

11

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
CONSOLIDATED BALANCE SHEET - UNAUDITED |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  |  |  |  |
| September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30,
| 2019 |  | 2019 |  | 2019 |  | 2018 |  | 2018
ASSETS |  |  |  |  |  |  |  |  |
Cash and due from banks | $ | 12,555 |  |  | $ | 24,757 |  |  | $ | 41,723 |  |  | $ | 17,696 |  |  | $ | 12,943 |
Interest-earning deposits | 169,663 |  |  | 71,038 |  |  | 75,939 |  |  | 44,439 |  |  | 653,091 |
Cash and cash equivalents | 182,218 |  |  | 95,795 |  |  | 117,662 |  |  | 62,135 |  |  | 666,034 |
Investment securities, at fair value | 608,714 |  |  | 708,359 |  |  | 678,142 |  |  | 665,012 |  |  | 668,851 |
Loans held for sale | 502,854 |  |  | 5,697 |  |  | 1,602 |  |  | 1,507 |  |  | 1,383 |
Loans receivable, mortgage warehouse, at fair value | 2,438,530 |  |  | 2,001,540 |  |  | 1,480,195 |  |  | 1,405,420 |  |  | 1,516,327 |
Loans and leases receivable | 7,336,237 |  |  | 7,714,106 |  |  | 7,264,049 |  |  | 7,138,074 |  |  | 7,239,950 |
Allowance for loan and lease losses | (51,053) |  |  | (48,388) |  |  | (43,679) |  |  | (39,972) |  |  | (40,741) |
Total loans receivable, net of allowance for loan losses | 9,723,714 |  |  | 9,667,258 |  |  | 8,700,565 |  |  | 8,503,522 |  |  | 8,715,536 |
FHLB, Federal Reserve Bank, and other restricted stock | 81,853 |  |  | 101,947 |  |  | 80,416 |  |  | 89,685 |  |  | 74,206 |
Accrued interest receivable | 38,412 |  |  | 38,506 |  |  | 35,716 |  |  | 32,955 |  |  | 32,986 |
Bank premises and equipment, net | 14,075 |  |  | 10,095 |  |  | 10,542 |  |  | 11,063 |  |  | 11,300 |
Bank-owned life insurance | 270,526 |  |  | 268,682 |  |  | 266,740 |  |  | 264,559 |  |  | 263,117 |
Other real estate owned | 204 |  |  | 1,076 |  |  | 976 |  |  | 816 |  |  | 1,450 |
Goodwill and other intangibles | 15,521 |  |  | 15,847 |  |  | 16,173 |  |  | 16,499 |  |  | 16,825 |
Other assets | 285,699 |  |  | 269,165 |  |  | 235,360 |  |  | 185,672 |  |  | 165,416 |
Total assets | $ | 11,723,790 |  |  | $ | 11,182,427 |  |  | $ | 10,143,894 |  |  | $ | 9,833,425 |  |  | $ | 10,617,104 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |
Demand, non-interest bearing deposits | $ | 1,569,918 |  |  | $ | 1,380,698 |  |  | $ | 1,372,358 |  |  | $ | 1,122,171 |  |  | $ | 1,338,167 |
Interest-bearing deposits | 7,355,767 |  |  | 6,805,079 |  |  | 6,052,960 |  |  | 6,020,065 |  |  | 7,175,547 |
Total deposits | 8,925,685 |  |  | 8,185,777 |  |  | 7,425,318 |  |  | 7,142,236 |  |  | 8,513,714 |
Federal funds purchased | 373,000 |  |  | 406,000 |  |  | 388,000 |  |  | 187,000 |  |  | — |
FHLB advances | 1,040,800 |  |  | 1,262,100 |  |  | 1,025,832 |  |  | 1,248,070 |  |  | 835,000 |
Other borrowings | 123,528 |  |  | 99,055 |  |  | 123,963 |  |  | 123,871 |  |  | 123,779 |
Subordinated debt | 109,050 |  |  | 109,026 |  |  | 109,002 |  |  | 108,977 |  |  | 108,953 |
Accrued interest payable and other liabilities | 132,577 |  |  | 129,064 |  |  | 93,406 |  |  | 66,455 |  |  | 80,846 |
Total liabilities | 10,704,640 |  |  | 10,191,022 |  |  | 9,165,521 |  |  | 8,876,609 |  |  | 9,662,292 |
Preferred stock | 217,471 |  |  | 217,471 |  |  | 217,471 |  |  | 217,471 |  |  | 217,471 |
Common stock | 32,526 |  |  | 32,483 |  |  | 32,412 |  |  | 32,252 |  |  | 32,218 |
Additional paid in capital | 441,499 |  |  | 439,067 |  |  | 436,713 |  |  | 434,314 |  |  | 431,205 |
Retained earnings | 357,608 |  |  | 334,157 |  |  | 328,476 |  |  | 316,651 |  |  | 302,404 |
Accumulated other comprehensive loss | (8,174) |  |  | (9,993) |  |  | (14,919) |  |  | (22,663) |  |  | (20,253) |
Treasury stock, at cost | (21,780) |  |  | (21,780) |  |  | (21,780) |  |  | (21,209) |  |  | (8,233) |
Total shareholders' equity | 1,019,150 |  |  | 991,405 |  |  | 978,373 |  |  | 956,816 |  |  | 954,812 |
Total liabilities & shareholders' equity | $ | 11,723,790 |  |  | $ | 11,182,427 |  |  | $ | 10,143,894 |  |  | $ | 9,833,425 |  |  | $ | 10,617,104 |

12

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  |  |  |
| Three Months Ended |  |  |  |  |  |  |
| September 30, 2019 |  |  | June 30, 2019 |  |  | September 30, 2018 |
| Average Balance | Average Yield or Cost (%) |  | Average Balance | Average Yield or Cost (%) |  | Average Balance | Average Yield or Cost (%)
Assets |  |  |  |  |  |  |  |
Interest earning deposits | $ | 100,343 |  | 3.26% |  |  | $ | 78,666 |  | 3.01% |  |  | $ | 309,588 |  | 1.97% |
Investment securities (1) | 652,142 |  | 3.60% |  |  | 687,048 |  | 3.77% |  |  | 1,029,857 |  | 3.30% |
Loans and leases: |  |  |  |  |  |  |  |
Commercial loans to mortgage companies | 2,103,612 |  | 4.58% |  |  | 1,658,070 |  | 4.76% |  |  | 1,680,441 |  | 5.02% |
Multi-family loans | 2,929,650 |  | 3.91% |  |  | 3,097,537 |  | 3.84% |  |  | 3,555,223 |  | 3.89% |
Commercial and industrial loans and leases (2) | 2,159,067 |  | 5.24% |  |  | 2,041,315 |  | 5.19% |  |  | 1,782,500 |  | 4.83% |
Non-owner occupied commercial real estate loans | 1,294,246 |  | 4.57% |  |  | 1,181,455 |  | 4.53% |  |  | 1,255,206 |  | 4.36% |
Residential mortgages | 729,603 |  | 4.11% |  |  | 723,160 |  | 4.28% |  |  | 582,910 |  | 4.02% |
Other consumer loans | 600,256 |  | 9.47% |  |  | 289,511 |  | 9.41% |  |  | 11,618 |  | 8.88% |
Total loans and leases (3) | 9,816,434 |  | 4.79% |  |  | 8,991,048 |  | 4.62% |  |  | 8,867,898 |  | 4.38% |
Other interest-earning assets | 98,279 |  | 6.39% |  |  | 94,388 |  | 5.58% |  |  | 111,600 |  | 7.81% |
Total interest-earning assets | 10,667,198 |  | 4.72% |  |  | 9,851,150 |  | 4.56% |  |  | 10,318,943 |  | 4.24% |
Non-interest-earning assets | 591,946 |  |  |  | 520,692 |  |  |  | 409,396 |  |
Total assets | $ | 11,259,144 |  |  |  | $ | 10,371,842 |  |  |  | $ | 10,728,339 |  |
Liabilities |  |  |  |  |  |  |  |
Interest checking accounts | $ | 1,014,590 |  | 1.83% |  |  | $ | 836,154 |  | 1.96% |  |  | $ | 696,827 |  | 1.53% |
Money market deposit accounts | 3,100,975 |  | 2.22% |  |  | 3,168,957 |  | 2.26% |  |  | 3,564,148 |  | 1.99% |
Other savings accounts | 561,790 |  | 2.19% |  |  | 484,303 |  | 2.16% |  |  | 116,172 |  | 1.59% |
Certificates of deposit | 2,227,817 |  | 2.34% |  |  | 1,972,792 |  | 2.33% |  |  | 2,288,237 |  | 2.05% |
Total interest-bearing deposits (4) | 6,905,172 |  | 2.20% |  |  | 6,462,206 |  | 2.23% |  |  | 6,665,384 |  | 1.95% |
Borrowings | 1,770,459 |  | 2.86% |  |  | 1,462,362 |  | 3.09% |  |  | 1,918,577 |  | 2.74% |
Total interest-bearing liabilities | 8,675,631 |  | 2.33% |  |  | 7,924,568 |  | 2.39% |  |  | 8,583,961 |  | 2.13% |
Non-interest-bearing deposits (4) | 1,431,810 |  |  |  | 1,345,494 |  |  |  | 1,109,819 |  |
Total deposits and borrowings | 10,107,441 |  | 2.00% |  |  | 9,270,062 |  | 2.04% |  |  | 9,693,780 |  | 1.89% |
Other non-interest-bearing liabilities | 146,347 |  |  |  | 115,717 |  |  |  | 84,786 |  |
Total liabilities | 10,253,788 |  |  |  | 9,385,779 |  |  |  | 9,778,566 |  |
Shareholders' equity | 1,005,356 |  |  |  | 986,063 |  |  |  | 949,773 |  |
Total liabilities and shareholders' equity | $ | 11,259,144 |  |  |  | $ | 10,371,842 |  |  |  | $ | 10,728,339 |  |
Interest spread |  | 2.71% |  |  |  | 2.51% |  |  |  | 2.35% |
Net interest margin |  | 2.82% |  |  |  | 2.63% |  |  |  | 2.46% |
Net interest margin tax equivalent (5) |  | 2.83% |  |  |  | 2.64% |  |  |  | 2.47% |
(1) For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. |  |  |  |  |  |  |  |
(2) Includes owner occupied commercial real estate loans. |  |  |  |  |  |  |  |
(3) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees. |  |  |  |  |  |  |  |
(4) Total costs of deposits (including interest bearing and non-interest bearing) were 1.82%, 1.85% and 1.67% for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively. |  |  |  |  |  |  |  |
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for the three months ended September 30, 2019, June 30, 2019 and September 30 2018, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. |  |  |  |  |  |  |  |

13

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |
AVERAGE BALANCE SHEET / NET INTEREST MARGIN - UNAUDITED |  |  |  |  |
(Dollars in thousands) |  |  |  |  |
| Nine Months Ended |  |  |  |
| September 30, 2019 |  |  | September 30, 2018 |
| Average Balance | Average Yield or Cost (%) |  | Average Balance | Average Yield or Cost (%)
Assets |  |  |  |  |
Interest earning deposits | $ | 88,146 |  | 2.95% |  |  | $ | 227,960 |  | 1.80% |
Investment securities (1) | 676,859 |  | 3.66% |  |  | 1,109,555 |  | 3.24% |
Loans and leases: |  |  |  |  |
Commercial loans to mortgage companies | 1,678,461 |  | 4.75% |  |  | 1,677,895 |  | 4.88% |
Multi-family loans | 3,092,473 |  | 3.84% |  |  | 3,584,640 |  | 3.84% |
Commercial and industrial loans and leases (2) | 2,041,379 |  | 5.19% |  |  | 1,716,907 |  | 4.65% |
Non-owner occupied commercial real estate loans | 1,215,469 |  | 4.52% |  |  | 1,268,597 |  | 4.29% |
Residential mortgages | 716,294 |  | 4.19% |  |  | 463,389 |  | 4.06% |
Other consumer loans | 337,126 |  | 9.42% |  |  | 6,488 |  | 7.27% |
Total loans and leases (3) | 9,081,202 |  | 4.64% |  |  | 8,717,916 |  | 4.28% |
Other interest-earning assets | 91,135 |  | 5.99% |  |  | 122,736 |  | 6.17% |
Total interest-earning assets | 9,937,342 |  | 4.57% |  |  | 10,178,167 |  | 4.13% |
Non-interest-earning assets | 531,656 |  |  |  | 398,570 |  |
Total assets | $ | 10,468,998 |  |  |  | $ | 10,576,737 |  |
Liabilities |  |  |  |  |
Interest checking accounts | $ | 889,336 |  | 1.89% |  |  | $ | 584,228 |  | 1.44% |
Money market deposit accounts | 3,138,112 |  | 2.24% |  |  | 3,426,620 |  | 1.67% |
Other savings accounts | 476,331 |  | 2.14% |  |  | 63,772 |  | 1.08% |
Certificates of deposit | 1,920,063 |  | 2.28% |  |  | 2,041,721 |  | 1.78% |
Total interest-bearing deposits (4) | 6,423,842 |  | 2.20% |  |  | 6,116,341 |  | 1.68% |
Borrowings | 1,556,405 |  | 2.97% |  |  | 2,278,262 |  | 2.44% |
Total interest-bearing liabilities | 7,980,247 |  | 2.35% |  |  | 8,394,603 |  | 1.88% |
Non-interest-bearing deposits (4) | 1,379,633 |  |  |  | 1,165,478 |  |
Total deposits and borrowings | 9,359,880 |  | 2.00% |  |  | 9,560,081 |  | 1.65% |
Other non-interest-bearing liabilities | 122,309 |  |  |  | 81,663 |  |
Total liabilities | 9,482,189 |  |  |  | 9,641,744 |  |
Shareholders' equity | 986,809 |  |  |  | 934,993 |  |
Total liabilities and shareholders' equity | $ | 10,468,998 |  |  |  | $ | 10,576,737 |  |
Interest spread |  | 2.57% |  |  |  | 2.48% |
Net interest margin |  | 2.69% |  |  |  | 2.58% |
Net interest margin tax equivalent (5) |  | 2.69% |  |  |  | 2.58% |
(1) For presentation in this table, average balances and the corresponding average yields for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. |  |  |  |  |
(2) Includes owner occupied commercial real estate loans. |  |  |  |  |
(3) Includes non-accrual loans, the effect of which is to reduce the yield earned on loans and leases, and deferred loan fees. |  |  |  |  |
(4) Total costs of deposits (including interest bearing and non-interest bearing) were 1.81% and 1.41% for the nine months ended September 30, 2019 and September 30, 2018, respectively. |  |  |  |  |
(5) Non-GAAP tax-equivalent basis, using an estimated marginal tax rate of 26% for both the nine months ended September 30, 2019 and 2018, presented to approximate interest income as a taxable asset. Management uses non-GAAP measures to present historical periods comparable to the current period presentation. In addition, management believes the use of these non-GAAP measures provides additional clarity when assessing Customers’ financial results. These disclosures should not be viewed as substitutes for results determined to be in accordance with U.S. GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other entities. |  |  |  |  |

14

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
SEGMENT REPORTING - UNAUDITED |  |  |  |  |  |  |  |  |
(Dollars in thousands, except per share amounts) |  |  |  |  |  |  |  |  |

The following tables present Customers' business segment results for the three and nine months ended September 30, 2019 and 2018:

| Three Months Ended September 30, 2019 |  |  |  |  |  | Three Months Ended September 30, 2018 |  |  |  |
| Customers Bank Business Banking |  | BankMobile |  | Consolidated |  | Customers Bank Business Banking |  | BankMobile |  | Consolidated
Interest income (1) | $ | 113,995 |  |  | $ | 12,723 |  |  | $ | 126,718 |  |  | $ | 106,156 |  |  | $ | 3,889 |  |  | $ | 110,045 |
Interest expense | 50,734 |  |  | 249 |  |  | 50,983 |  |  | 45,982 |  |  | 62 |  |  | 46,044 |
Net interest income | 63,261 |  |  | 12,474 |  |  | 75,735 |  |  | 60,174 |  |  | 3,827 |  |  | 64,001 |
Provision for loan losses | 2,475 |  |  | 1,951 |  |  | 4,426 |  |  | 2,502 |  |  | 422 |  |  | 2,924 |
Non-interest income | 11,757 |  |  | 11,612 |  |  | 23,369 |  |  | (7,756) |  |  | 9,840 |  |  | 2,084 |
Non-interest expense | 38,347 |  |  | 21,245 |  |  | 59,592 |  |  | 36,115 |  |  | 20,989 |  |  | 57,104 |
Income (loss) before income tax expense (benefit) | 34,196 |  |  | 890 |  |  | 35,086 |  |  | 13,801 |  |  | (7,744) |  |  | 6,057 |
Income tax expense (benefit) | 7,814 |  |  | 206 |  |  | 8,020 |  |  | 1,930 |  |  | (1,902) |  |  | 28 |
Net income (loss) | 26,382 |  |  | 684 |  |  | 27,066 |  |  | 11,871 |  |  | (5,842) |  |  | 6,029 |
Preferred stock dividends | 3,615 |  |  | — |  |  | 3,615 |  |  | 3,615 |  |  | — |  |  | 3,615 |
Net income (loss) available to common shareholders | $ | 22,767 |  |  | $ | 684 |  |  | $ | 23,451 |  |  | $ | 8,256 |  |  | $ | (5,842) |  |  | $ | 2,414 |
Basic earnings (loss) per common share | $ | 0.73 |  |  | $ | 0.02 |  |  | $ | 0.75 |  |  | $ | 0.26 |  |  | $ | (0.18) |  |  | $ | 0.08 |
Diluted earnings (loss) per common share | $ | 0.72 |  |  | $ | 0.02 |  |  | $ | 0.74 |  |  | $ | 0.26 |  |  | $ | (0.18) |  |  | $ | 0.07 |

(1) Amounts reported include funds transfer pricing of $0.3 million and $3.9 million for the three months ended September 30, 2019 and 2018, respectively, credited to BankMobile for the value provided to the Customers Bank Business Banking segment for the use of excess low/no cost deposits.
15

| Nine Months Ended September 30, 2019 |  |  |  |  |  | Nine Months Ended September 30, 2018 |  |  |  |
| Customers Bank Business Banking |  | BankMobile |  | Consolidated |  | Customers Bank Business Banking |  | BankMobile |  | Consolidated
Interest income (2) | $ | 309,882 |  |  | $ | 29,863 |  |  | $ | 339,745 |  |  | $ | 302,820 |  |  | $ | 11,829 |  |  | $ | 314,649 |
Interest expense | 139,402 |  |  | 625 |  |  | 140,027 |  |  | 118,081 |  |  | 214 |  |  | 118,295 |
Net interest income | 170,480 |  |  | 29,238 |  |  | 199,718 |  |  | 184,739 |  |  | 11,615 |  |  | 196,354 |
Provision for loan losses | 3,245 |  |  | 11,294 |  |  | 14,539 |  |  | 3,128 |  |  | 1,129 |  |  | 4,257 |
Non-interest income | 20,304 |  |  | 34,821 |  |  | 55,125 |  |  | 8,147 |  |  | 30,973 |  |  | 39,120 |
Non-interest expense | 111,840 |  |  | 61,320 |  |  | 173,160 |  |  | 108,168 |  |  | 54,966 |  |  | 163,134 |
Income (loss) before income tax expense (benefit) | 75,699 |  |  | (8,555) |  |  | 67,144 |  |  | 81,590 |  |  | (13,507) |  |  | 68,083 |
Income tax expense (benefit) | 17,324 |  |  | (1,981) |  |  | 15,343 |  |  | 17,567 |  |  | (3,317) |  |  | 14,250 |
Net income (loss) | 58,375 |  |  | (6,574) |  |  | 51,801 |  |  | 64,023 |  |  | (10,190) |  |  | 53,833 |
Preferred stock dividends | 10,844 |  |  | — |  |  | 10,844 |  |  | 10,844 |  |  | — |  |  | 10,844 |
Net income (loss) available to common shareholders | $ | 47,531 |  |  | $ | (6,574) |  |  | $ | 40,957 |  |  | $ | 53,179 |  |  | $ | (10,190) |  |  | $ | 42,989 |
Basic earnings (loss) per common share | $ | 1.53 |  |  | $ | (0.21) |  |  | $ | 1.32 |  |  | $ | 1.69 |  |  | $ | (0.32) |  |  | $ | 1.36 |
Diluted earnings (loss) per common share | $ | 1.51 |  |  | $ | (0.21) |  |  | $ | 1.30 |  |  | $ | 1.65 |  |  | $ | (0.32) |  |  | $ | 1.33 |
As of September 30, 2019 and 2018 |  |  |  |  |  |  |  |  |  |  |
Goodwill and other intangibles | $ | 3,629 |  |  | $ | 11,892 |  |  | $ | 15,521 |  |  | $ | 3,629 |  |  | $ | 13,196 |  |  | $ | 16,825 |
Total assets (3) | $ | 11,131,914 |  |  | $ | 591,876 |  |  | $ | 11,723,790 |  |  | $ | 10,542,175 |  |  | $ | 74,929 |  |  | $ | 10,617,104 |
Total deposits | $ | 8,260,080 |  |  | $ | 665,605 |  |  | $ | 8,925,685 |  |  | $ | 7,781,225 |  |  | $ | 732,489 |  |  | $ | 8,513,714 |
Total non-deposit liabilities | $ | 1,747,846 |  |  | $ | 31,109 |  |  | $ | 1,778,955 |  |  | $ | 1,134,251 |  |  | $ | 14,327 |  |  | $ | 1,148,578 |

(2) Amounts reported include funds transfer pricing of $8.1 million and $11.8 million for the nine months ended September 30, 2019 and 2018, respectively, credited to BankMobile for the value provided to the Customers Bank Business Banking segment for the use of excess low/no cost deposits.
(3) Amounts reported exclude inter-segment receivables.
16

The following tables present Customers' business segment results for the quarter ended September 30, 2019, the preceding four quarters, and the nine months ended September 30, 2019 and 2018, respectively:

Customers Bank Business Banking: |  |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |
|  | Q3 2019 |  | Q2 2019 |  | Q1 2019 |  | Q4 2018 |  | Q3 2018 |  | 2019 |  | 2018
Interest income (1) |  | $ | 113,995 |  |  | $ | 103,014 |  |  | $ | 92,871 |  |  | $ | 98,129 |  |  | $ | 106,156 |  |  | $ | 309,882 |  |  | $ | 302,820 |
Interest expense |  | 50,734 |  |  | 47,061 |  |  | 41,605 |  |  | 41,592 |  |  | 45,982 |  |  | 139,402 |  |  | 118,081 |
Net interest income |  | 63,261 |  |  | 55,953 |  |  | 51,266 |  |  | 56,537 |  |  | 60,174 |  |  | 170,480 |  |  | 184,739 |
Provision for loan losses |  | 2,475 |  |  | (2,206) |  |  | 2,976 |  |  | (200) |  |  | 2,502 |  |  | 3,245 |  |  | 3,128 |
Non-interest income (loss) |  | 11,757 |  |  | 970 |  |  | 7,577 |  |  | 9,352 |  |  | (7,756) |  |  | 20,304 |  |  | 8,147 |
Non-interest expense |  | 38,347 |  |  | 38,107 |  |  | 35,384 |  |  | 38,778 |  |  | 36,115 |  |  | 111,840 |  |  | 108,168 |
Income before income tax expense |  | 34,196 |  |  | 21,022 |  |  | 20,483 |  |  | 27,311 |  |  | 13,801 |  |  | 75,699 |  |  | 81,590 |
Income tax expense |  | 7,814 |  |  | 4,629 |  |  | 4,880 |  |  | 6,175 |  |  | 1,930 |  |  | 17,324 |  |  | 17,567 |
Net income |  | 26,382 |  |  | 16,393 |  |  | 15,603 |  |  | 21,136 |  |  | 11,871 |  |  | 58,375 |  |  | 64,023 |
Preferred stock dividends |  | 3,615 |  |  | 3,615 |  |  | 3,615 |  |  | 3,615 |  |  | 3,615 |  |  | 10,844 |  |  | 10,844 |
Net income available to common shareholders |  | $ | 22,767 |  |  | $ | 12,778 |  |  | $ | 11,988 |  |  | $ | 17,521 |  |  | $ | 8,256 |  |  | $ | 47,531 |  |  | $ | 53,179 |
Basic earnings per common share |  | $ | 0.73 |  |  | $ | 0.41 |  |  | $ | 0.39 |  |  | $ | 0.55 |  |  | $ | 0.26 |  |  | $ | 1.53 |  |  | $ | 1.69 |
Diluted earnings per common share |  | $ | 0.72 |  |  | $ | 0.40 |  |  | $ | 0.38 |  |  | $ | 0.55 |  |  | $ | 0.26 |  |  | $ | 1.51 |  |  | $ | 1.65 |

(1) Amounts reported include funds transfer pricing of $0.3 million, $2.2 million, $5.6 million, $3.8 million and $3.9 million for the three months ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018, and September 30, 2018, respectively. Amounts reported also include funds transfer pricing of $8.1 million and $11.8 million for the nine months ended September 30, 2019 and 2018, respectively. These amounts are credited to BankMobile for the value provided to the Customers Bank Business Banking segment for the use of excess low/no cost deposits.

BankMobile: |  |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |
|  | Q3 2019 |  | Q2 2019 |  | Q1 2019 |  | Q4 2018 |  | Q3 2018 |  | 2019 |  | 2018
Interest income (2) |  | $ | 12,723 |  |  | $ | 8,936 |  |  | $ | 8,204 |  |  | $ | 5,174 |  |  | $ | 3,889 |  |  | $ | 29,863 |  |  | $ | 11,829 |
Interest expense |  | 249 |  |  | 210 |  |  | 166 |  |  | 187 |  |  | 62 |  |  | 625 |  |  | 214 |
Net interest income |  | 12,474 |  |  | 8,726 |  |  | 8,038 |  |  | 4,987 |  |  | 3,827 |  |  | 29,238 |  |  | 11,615 |
Provision for loan losses |  | 1,951 |  |  | 7,552 |  |  | 1,791 |  |  | 1,585 |  |  | 422 |  |  | 11,294 |  |  | 1,129 |
Non-interest income |  | 11,612 |  |  | 11,066 |  |  | 12,141 |  |  | 10,525 |  |  | 9,840 |  |  | 34,821 |  |  | 30,973 |
Non-interest expense |  | 21,245 |  |  | 21,475 |  |  | 18,600 |  |  | 18,267 |  |  | 20,989 |  |  | 61,320 |  |  | 54,966 |
Loss before income tax expense or benefit |  | 890 |  |  | (9,235) |  |  | (212) |  |  | (4,340) |  |  | (7,744) |  |  | (8,555) |  |  | (13,507) |
Income tax benefit |  | 206 |  |  | (2,138) |  |  | (49) |  |  | (1,066) |  |  | (1,902) |  |  | (1,981) |  |  | (3,317) |
Net loss available to common shareholders |  | $ | 684 |  |  | $ | (7,097) |  |  | $ | (163) |  |  | $ | (3,274) |  |  | $ | (5,842) |  |  | $ | (6,574) |  |  | $ | (10,190) |
Basic loss per common share |  | $ | 0.02 |  |  | $ | (0.23) |  |  | $ | (0.01) |  |  | $ | (0.10) |  |  | $ | (0.18) |  |  | $ | (0.21) |  |  | $ | (0.32) |
Diluted loss per common share |  | $ | 0.02 |  |  | $ | (0.22) |  |  | $ | (0.01) |  |  | $ | (0.10) |  |  | $ | (0.18) |  |  | $ | (0.21) |  |  | $ | (0.32) |
Deposit balances (3) |  |  |  |  |  |  |  |  |  |  |  |  |  |
Disbursements business deposits |  | $ | 598,064 |  |  | $ | 409,683 |  |  | $ | 615,710 |  |  | $ | 370,690 |  |  | $ | 732,489 |  |  |  |  |
White label deposits |  | 67,541 |  |  | 46,514 |  |  | 11,046 |  |  | 5,168 |  |  | — |  |  |  |  |
Total deposits |  | $ | 665,605 |  |  | $ | 456,197 |  |  | $ | 626,756 |  |  | $ | 375,858 |  |  | $ | 732,489 |  |  |  |  |

(2) Amounts reported include funds transfer pricing of $0.3 million, $2.2 million, $5.6 million, $3.8 million and $3.9 million for the three months ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018, and September 30, 2018, respectively. Amounts reported also include funds transfer pricing of $8.1 million and $11.8 million for the nine months ended September 30, 2019 and 2018, respectively. These amounts are credited to BankMobile for the value provided to the Customers Bank Business Banking segment for the use of excess low/no cost deposits.
(3) As of September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018, and September 30, 2018.
17

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
PERIOD END LOAN COMPOSITION - UNAUDITED |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  |  |  |  |
| September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30, |
| 2019 |  | 2019 |  | 2019 |  | 2018 |  | 2018 |
Commercial: |  |  |  |  |  |  |  |  |
Multi-family | $ | 2,800,018 |  |  | $ | 3,017,531 |  |  | $ | 3,212,312 |  |  | $ | 3,285,297 |  |  | $ | 3,504,540 |
Mortgage warehouse | 2,549,286 |  |  | 2,054,307 |  |  | 1,535,343 |  |  | 1,461,810 |  |  | 1,574,731 |
Commercial & industrial | 2,252,843 |  |  | 2,131,790 |  |  | 1,983,081 |  |  | 1,894,887 |  |  | 1,783,300 |
Commercial real estate non-owner occupied | 1,268,557 |  |  | 1,176,575 |  |  | 1,107,336 |  |  | 1,125,106 |  |  | 1,157,849 |
Construction | 61,200 |  |  | 59,811 |  |  | 53,372 |  |  | 56,491 |  |  | 95,250 |
Total commercial loans | 8,931,904 |  |  | 8,440,014 |  |  | 7,891,444 |  |  | 7,823,591 |  |  | 8,115,670 |
Consumer: |  |  |  |  |  |  |  |  |
Residential | 631,866 |  |  | 654,556 |  |  | 626,668 |  |  | 568,068 |  |  | 511,236 |
Manufactured housing | 72,616 |  |  | 75,597 |  |  | 77,778 |  |  | 79,731 |  |  | 82,589 |
Other consumer | 643,553 |  |  | 552,839 |  |  | 153,153 |  |  | 74,035 |  |  | 51,210 |
Total consumer loans | 1,348,035 |  |  | 1,282,992 |  |  | 857,599 |  |  | 721,834 |  |  | 645,035 |
Deferred (fees)/costs and unamortized (discounts)/premiums, net | (2,318) |  |  | (1,663) |  |  | (3,197) |  |  | (424) |  |  | (3,045) |
Total loans | $ | 10,277,621 |  |  | $ | 9,721,343 |  |  | $ | 8,745,846 |  |  | $ | 8,545,001 |  |  | $ | 8,757,660 |

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
PERIOD END DEPOSIT COMPOSITION - UNAUDITED |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  |  |  |  |
| September 30, |  |  | June 30, |  |  | March 31, |  |  | December 31, |  |  | September 30, |
| 2019 |  |  | 2019 |  |  | 2019 |  |  | 2018 |  |  | 2018 |
Demand, non-interest bearing | $ | 1,569,918 |  |  | $ | 1,380,698 |  |  | $ | 1,372,358 |  |  | $ | 1,122,171 |  |  | $ | 1,338,167 |
Demand, interest bearing | 1,139,675 |  |  | 925,180 |  |  | 811,490 |  |  | 803,948 |  |  | 833,176 |
Savings | 591,336 |  |  | 529,532 |  |  | 417,346 |  |  | 384,545 |  |  | 275,825 |
Money market | 3,201,883 |  |  | 2,912,266 |  |  | 3,265,823 |  |  | 3,097,391 |  |  | 3,673,065 |
Time deposits | 2,422,873 |  |  | 2,438,101 |  |  | 1,558,301 |  |  | 1,734,181 |  |  | 2,393,481 |
Total deposits | $ | 8,925,685 |  |  | $ | 8,185,777 |  |  | $ | 7,425,318 |  |  | $ | 7,142,236 |  |  | $ | 8,513,714 |

18

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ASSET QUALITY - UNAUDITED |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands) | As of September 30, 2019 |  |  |  |  | As of June 30, 2019 |  |  |  |  | As of September 30, 2018 |  |  |  |
| Total loans | Non accrual /NPLs | Total credit reserves | Total NPLs to total loans | Total reserves to total NPLs | Total loans | Non accrual /NPLs | Total credit reserves | Total NPLs to total loans | Total reserves to total NPLs | Total loans | Non accrual /NPLs | Total credit reserves | Total NPLs to total loans | Total reserves to total NPLs
Loan type |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multi-family | $ | 2,300,244 |  | $ | — |  | $ | 7,498 |  | — | % | — | % | $ | 3,017,531 |  | $ | — |  | $ | 9,926 |  | — | % | — | % | $ | 3,504,540 |  | $ | 1,343 |  | $ | 11,829 |  | 0.04 | % | 880.79 | %
Commercial & industrial (1) | 2,363,599 |  | 7,382 |  | 18,765 |  | 0.31 | % | 254.20 | % | 2,184,556 |  | 6,327 |  | 17,096 |  | 0.29 | % | 270.21 | % | 1,841,704 |  | 14,585 |  | 15,866 |  | 0.79 | % | 108.78 | %
Commercial real estate non-owner occupied | 1,268,557 |  | 83 |  | 6,440 |  | 0.01 | % | 7759.04 | % | 1,176,575 |  | 94 |  | 6,159 |  | 0.01 | % | 6552.13 | % | 1,157,849 |  | 158 |  | 6,449 |  | 0.01 | % | 4081.65 | %
Construction | 61,200 |  | — |  | 658 |  | — | % | — | % | 59,811 |  | — |  | 649 |  | — | % | — | % | 95,250 |  | — |  | 1,062 |  | — | % | — | %
Total commercial loans and leases receivable | 5,993,600 |  | 7,465 |  | 33,361 |  | 0.12 | % | 446.90 | % | 6,438,473 |  | 6,421 |  | 33,830 |  | 0.10 | % | 526.86 | % | 6,599,343 |  | 16,086 |  | 35,206 |  | 0.24 | % | 218.86 | %
Residential | 628,786 |  | 6,093 |  | 4,083 |  | 0.97 | % | 67.01 | % | 648,860 |  | 5,083 |  | 4,168 |  | 0.78 | % | 82.00 | % | 509,853 |  | 5,522 |  | 3,901 |  | 1.08 | % | 70.64 | %
Manufactured housing | 72,616 |  | 1,567 |  | 1,051 |  | 2.16 | % | 67.07 | % | 75,597 |  | 1,570 |  | 489 |  | 2.08 | % | 31.15 | % | 82,589 |  | 1,921 |  | 621 |  | 2.33 | % | 32.33 | %
Other consumer | 643,553 |  | 1,140 |  | 12,582 |  | 0.18 | % | 1103.68 | % | 552,839 |  | 359 |  | 10,267 |  | 0.06 | % | 2859.89 | % | 51,210 |  | 112 |  | 1,540 |  | 0.22 | % | 1375.00 | %
Total consumer loans receivable | 1,344,955 |  | 8,800 |  | 17,716 |  | 0.65 | % | 201.32 | % | 1,277,296 |  | 7,012 |  | 14,924 |  | 0.55 | % | 212.84 | % | 643,652 |  | 7,555 |  | 6,062 |  | 1.17 | % | 80.24 | %
Deferred (fees) costs and unamortized (discounts) premiums, net | (2,318) |  | — |  | — |  | — | % | — | % | (1,663) |  | — |  | — |  | — | % | — | % | (3,045) |  | — |  | — |  | — | % | — | %
Loans and leases receivable | 7,336,237 |  | 16,265 |  | 51,077 |  | 0.22 | % | 314.03 | % | 7,714,106 |  | 13,433 |  | 48,754 |  | 0.17 | % | 362.94 | % | 7,239,950 |  | 23,641 |  | 41,268 |  | 0.33 | % | 174.56 | %
Loans receivable, mortgage warehouse, at fair value | 2,438,530 |  | — |  | — |  | — | % | — | % | 2,001,540 |  | — |  | — |  | — | % | — | % | 1,516,327 |  | — |  | — |  | — | % | — | %
Total loans held for sale | 502,854 |  | 1,325 |  | — |  | 0.26 | % | — | % | 5,697 |  | 1,325 |  | — |  | 23.26 | % | — | % | 1,383 |  | — |  | — |  | — | % | — | %
Total portfolio | $ | 10,277,621 |  | $ | 17,590 |  | $ | 51,077 |  | 0.17 | % | 290.38 | % | $ | 9,721,343 |  | $ | 14,758 |  | $ | 48,754 |  | 0.15 | % | 330.36 | % | $ | 8,757,660 |  | $ | 23,641 |  | $ | 41,268 |  | 0.27 | % | 174.56 | %
(1) Commercial & industrial loans, including owner occupied commercial real estate loans. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

19

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  |  |  |  |
| Q3 |  | Q2 |  | Q1 |  |  | Q4 |  |  | Q3 |
| 2019 |  | 2019 |  | 2019 |  | 2018 |  | 2018
Loan type |  |  |  |  |  |  |  |  |
Multi-family | $ | — |  |  | $ | (7) |  |  | $ | 541 |  |  | $ | — |  |  | $ | — |
Commercial & industrial (1) | 15 |  |  | (186) |  |  | (239) |  |  | 1,457 |  |  | 60 |
Commercial real estate non-owner occupied | (8) |  |  | (114) |  |  | (6) |  |  | (10) |  |  | (15) |
Residential | (5) |  |  | 61 |  |  | 33 |  |  | 52 |  |  | (6) |
Other consumer | 1,759 |  |  | 883 |  |  | 731 |  |  | 655 |  |  | 432 |
Total net charge-offs (recoveries) from loans held for investment | $ | 1,761 |  |  | $ | 637 |  |  | $ | 1,060 |  |  | $ | 2,154 |  |  | $ | 471 |
(1) Commercial & industrial loans, including owner occupied commercial real estate. |  |  |  |  |  |  |  |  |

20

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED |  |  |  |  |  |  |  |  |

Customers believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our core results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in Customers' industry. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our ongoing financial results, which we believe enhance an overall understanding of our performance and increases comparability of our period to period results. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition. Although non-GAAP financial measures are frequently used in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results of operations or financial condition as reported under GAAP.
The following tables present reconciliations of GAAP to non-GAAP measures disclosed within this document.

Core Earnings - Customers Bancorp |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |  |  |  |
| Q3 2019 |  |  |  | Q2 2019 |  |  |  | Q1 2019 |  |  |  | Q4 2018 |  |  |  | Q3 2018 |  |  |  | 2019 |  |  | 2018 |
(dollars in thousands except per share data) | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |
GAAP net income to common shareholders | $ | 23,451 |  | $0.74 |  |  | $ | 5,681 |  | $ | 0.18 |  |  | $ | 11,825 |  | $ | 0.38 |  |  | $ | 14,247 |  | $ | 0.44 |  |  | $ | 2,414 |  | $ | 0.07 |  |  | $ | 40,957 |  | $ | 1.30 |  |  | $ | 42,989 |  | $ | 1.33 |
Reconciling items (after tax): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance expense | — |  | — |  |  | 373 |  | 0.01 |  |  | — |  | — |  |  | 1,421 |  | 0.04 |  |  | — |  | — |  |  | 373 |  | 0.01 |  |  | — |  | — |
Loss upon acquisition of interest-only GNMA securities | — |  | — |  |  | 5,682 |  | 0.18 |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 5,682 |  | 0.18 |  |  | — |  | — |
Merger and acquisition related expenses | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 355 |  | 0.01 |  |  | 2,222 |  | 0.07 |  |  | — |  | — |  |  | 2,957 |  | 0.09 |
Losses on sale of multi-family loans | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 868 |  | 0.03 |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |
Legal reserves | 1,520 |  | 0.05 |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 1,520 |  | 0.05 |  |  | — |  | — |
(Gains) losses on investment securities | (1,947) |  | (0.06) |  |  | 347 |  | 0.01 |  |  | (2) |  | — |  |  | 101 |  | — |  |  | 15,417 |  | 0.48 |  |  | (1,602) |  | (0.05) |  |  | 15,545 |  | 0.48 |
Core earnings | $ | 23,024 |  | $0.73 |  |  | $ | 12,083 |  | $ | 0.38 |  |  | $ | 11,823 |  | $ | 0.38 |  |  | $ | 16,992 |  | $ | 0.53 |  |  | $ | 20,053 |  | $ | 0.62 |  |  | $ | 46,930 |  | $ | 1.49 |  |  | $ | 61,491 |  | $ | 1.90 |

Core Return on Average Assets - Customers Bancorp |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |
(dollars in thousands except per share data) | Q3 2019 |  | Q2 2019 |  | Q1 2019 |  | Q4 2018 |  | Q3 2018 |  | 2019 |  | 2018
GAAP net income | $ | 27,066 |  |  | $ | 9,296 |  |  | $ | 15,440 |  |  | $ | 17,862 |  |  | $ | 6,029 |  |  | $ | 51,801 |  |  | $ | 53,833 |
Reconciling items (after tax): |  |  |  |  |  |  |  |  |  |  |  |  |
Severance expense | — |  |  | 373 |  |  | — |  |  | 1,421 |  |  | — |  |  | 373 |  |  | — |
Loss upon acquisition of interest-only GNMA securities | — |  |  | 5,682 |  |  | — |  |  | — |  |  | — |  |  | 5,682 |  |  | — |
Merger and acquisition related expenses | — |  |  | — |  |  | — |  |  | 355 |  |  | 2,222 |  |  | — |  |  | 2,957 |
Losses on sale of multi-family loans | — |  |  | — |  |  | — |  |  | 868 |  |  | — |  |  | — |  |  | — |
Legal reserves | 1,520 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,520 |  |  | — |
(Gains) losses on investment securities | (1,947) |  |  | 347 |  |  | (2) |  |  | 101 |  |  | 15,417 |  |  | (1,602) |  |  | 15,545 |
Core net income | $ | 26,639 |  |  | $ | 15,698 |  |  | $ | 15,438 |  |  | $ | 20,607 |  |  | $ | 23,668 |  |  | $ | 57,774 |  |  | $ | 72,335 |
Average total assets | $ | 11,259,144 |  |  | $ | 10,371,842 |  |  | $ | 9,759,529 |  |  | $ | 9,947,367 |  |  | $ | 10,728,339 |  |  | $ | 10,468,998 |  |  | $ | 10,576,737 |
Core return on average assets | 0.94 | % |  | 0.61 | % |  | 0.64 | % |  | 0.82 | % |  | 0.88 | % |  | 0.74 | % |  | 0.91 | %

21

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |  |  |  |  |  |  |  |  |

(Dollars in thousands, except per share data)

Adjusted Net Income and Adjusted ROAA - Pre-Tax Pre-Provision - Customers Bancorp |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |
(dollars in thousands except per share data) | Q3 2019 |  | Q2 2019 |  | Q1 2019 |  | Q4 2018 |  | Q3 2018 |  | 2019 |  | 2018
GAAP net income | $ | 27,066 |  |  | $ | 9,296 |  |  | $ | 15,440 |  |  | $ | 17,862 |  |  | $ | 6,029 |  |  | $ | 51,801 |  |  | $ | 53,833 |
Reconciling items: |  |  |  |  |  |  |  |  |  |  |  |  |
Income tax expense | 8,020 |  |  | 2,491 |  |  | 4,831 |  |  | 5,109 |  |  | 28 |  |  | 15,343 |  |  | 14,250 |
Provision for loan losses | 4,426 |  |  | 5,346 |  |  | 4,767 |  |  | 1,385 |  |  | 2,924 |  |  | 14,539 |  |  | 4,257 |
Severance expense | — |  |  | 490 |  |  | — |  |  | 1,869 |  |  | — |  |  | 490 |  |  | — |
Loss upon acquisition of interest-only GNMA securities | — |  |  | 7,476 |  |  | — |  |  | — |  |  | — |  |  | 7,476 |  |  | — |
Merger and acquisition related expenses | — |  |  | — |  |  | — |  |  | 470 |  |  | 2,945 |  |  | — |  |  | 3,920 |
Losses on sale of multi-family loans | — |  |  | — |  |  | — |  |  | 1,161 |  |  | — |  |  | — |  |  | — |
Legal reserves | 2,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,000 |  |  | — |
(Gains) losses on investment securities | (2,334) |  |  | 347 |  |  | (2) |  |  | 101 |  |  | 19,895 |  |  | (1,989) |  |  | 20,023 |
Adjusted net income - pre-tax pre-provision | $ | 39,178 |  |  | $ | 25,446 |  |  | $ | 25,036 |  |  | $ | 27,957 |  |  | $ | 31,821 |  |  | $ | 89,660 |  |  | $ | 96,283 |
Average total assets | $ | 11,259,144 |  |  | $ | 10,371,842 |  |  | $ | 9,759,529 |  |  | $ | 9,947,367 |  |  | $ | 10,728,339 |  |  | $ | 10,468,998 |  |  | $ | 10,576,737 |
Adjusted ROAA - pre-tax pre-provision | 1.38 | % |  | 0.98 | % |  | 1.04 | % |  | 1.12 | % |  | 1.18 | % |  | 1.15 | % |  | 1.22 | %

Core Return on Average Common Equity - Customers Bancorp |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |
(dollars in thousands except per share data) | Q3 2019 |  | Q2 2019 |  | Q1 2019 |  | Q4 2018 |  | Q3 2018 |  | 2019 |  | 2018
GAAP net income to common shareholders | $ | 23,451 |  |  | $ | 5,681 |  |  | $ | 11,825 |  |  | $ | 14,247 |  |  | $ | 2,414 |  |  | $ | 40,957 |  |  | $ | 42,989 |
Reconciling items (after tax): |  |  |  |  |  |  |  |  |  |  |  |  |
Severance expense | — |  |  | 373 |  |  | — |  |  | 1,421 |  |  | — |  |  | 373 |  |  | — |
Loss upon acquisition of interest-only GNMA securities | — |  |  | 5,682 |  |  | — |  |  | — |  |  | — |  |  | 5,682 |  |  | — |
Merger and acquisition related expenses | — |  |  | — |  |  | — |  |  | 355 |  |  | 2,222 |  |  | — |  |  | 2,957 |
Losses on sale of multi-family loans | — |  |  | — |  |  | — |  |  | 868 |  |  | — |  |  | — |  |  | — |
Legal reserves | 1,520 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,520 |  |  | — |
(Gains) losses on investment securities | (1,947) |  |  | 347 |  |  | (2) |  |  | 101 |  |  | 15,417 |  |  | (1,602) |  |  | 15,545 |
Core earnings | $ | 23,024 |  |  | $ | 12,083 |  |  | $ | 11,823 |  |  | $ | 16,992 |  |  | $ | 20,053 |  |  | $ | 46,930 |  |  | $ | 61,491 |
Average total common shareholders' equity | $ | 787,885 |  |  | $ | 768,592 |  |  | $ | 751,133 |  |  | $ | 745,226 |  |  | $ | 732,302 |  |  | $ | 769,338 |  |  | $ | 717,522 |
Core return on average common equity | 11.59 | % |  | 6.31 | % |  | 6.38 | % |  | 9.05 | % |  | 10.86 | % |  | 8.16 | % |  | 11.46 | %

22

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |  |  |  |  |  |  |  |  |

(Dollars in thousands, except per share data)

Adjusted ROCE - Pre-Tax Pre-Provision - Customers Bancorp |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |
(dollars in thousands except per share data) | Q3 2019 |  | Q2 2019 |  | Q1 2019 |  | Q4 2018 |  | Q3 2018 |  | 2019 |  | 2018
GAAP net income to common shareholders | $ | 23,451 |  |  | $ | 5,681 |  |  | $ | 11,825 |  |  | $ | 14,247 |  |  | $ | 2,414 |  |  | $ | 40,957 |  |  | $ | 42,989 |
Reconciling items: |  |  |  |  |  |  |  |  |  |  |  |  |
Income tax expense | 8,020 |  |  | 2,491 |  |  | 4,831 |  |  | 5,109 |  |  | 28 |  |  | 15,343 |  |  | 14,250 |
Provision for loan losses | 4,426 |  |  | 5,346 |  |  | 4,767 |  |  | 1,385 |  |  | 2,924 |  |  | 14,539 |  |  | 4,257 |
Severance expense | — |  |  | 490 |  |  | — |  |  | 1,869 |  |  | — |  |  | 490 |  |  | — |
Loss upon acquisition of interest-only GNMA securities | — |  |  | 7,476 |  |  | — |  |  | — |  |  | — |  |  | 7,476 |  |  | — |
Merger and acquisition related expenses | — |  |  | — |  |  | — |  |  | 470 |  |  | 2,945 |  |  | — |  |  | 3,920 |
Losses on sale of multi-family loans | — |  |  | — |  |  | — |  |  | 1,161 |  |  | — |  |  | — |  |  | — |
Legal reserves | 2,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,000 |  |  | — |
(Gains) losses on investment securities | (2,334) |  |  | 347 |  |  | (2) |  |  | 101 |  |  | 19,895 |  |  | (1,989) |  |  | 20,023 |
Pre-tax pre-provision adjusted net income available to common shareholders | $ | 35,563 |  |  | $ | 21,831 |  |  | $ | 21,421 |  |  | $ | 24,342 |  |  | $ | 28,206 |  |  | $ | 78,816 |  |  | $ | 85,439 |
Average total common shareholders' equity | $ | 787,885 |  |  | $ | 768,592 |  |  | $ | 751,133 |  |  | $ | 745,226 |  |  | $ | 732,302 |  |  | $ | 769,338 |  |  | $ | 717,522 |
Adjusted ROCE - pre-tax pre-provision | 17.91 | % |  | 11.39 | % |  | 11.57 | % |  | 12.96 | % |  | 15.28 | % |  | 13.70 | % |  | 15.92 | %

Net Interest Margin, Tax Equivalent - Customers Bancorp |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |
(dollars in thousands except per share data) | Q3 2019 |  | Q2 2019 |  | Q1 2019 |  | Q4 2018 |  | Q3 2018 |  | 2019 |  | 2018
GAAP net interest income | $ | 75,735 |  |  | $ | 64,679 |  |  | $ | 59,304 |  |  | $ | 61,524 |  |  | $ | 64,001 |  |  | $ | 199,718 |  |  | $ | 196,354 |
Tax-equivalent adjustment | 184 |  |  | 183 |  |  | 181 |  |  | 171 |  |  | 172 |  |  | 548 |  |  | 514 |
Net interest income tax equivalent | $ | 75,919 |  |  | $ | 64,862 |  |  | $ | 59,485 |  |  | $ | 61,695 |  |  | $ | 64,173 |  |  | $ | 200,266 |  |  | $ | 196,868 |
Average total interest earning assets | $ | 10,667,198 |  |  | $ | 9,851,150 |  |  | $ | 9,278,413 |  |  | $ | 9,518,120 |  |  | $ | 10,318,943 |  |  | $ | 9,937,342 |  |  | $ | 10,178,167 |
Net interest margin, tax equivalent | 2.83 | % |  | 2.64 | % |  | 2.59 | % |  | 2.57 | % |  | 2.47 | % |  | 2.69 | % |  | 2.58 | %

23

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |  |  |  |  |  |  |  |  |

(Dollars in thousands, except per share data)

Core Efficiency Ratio - Customers Bancorp |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |
(dollars in thousands except per share data) | Q3 2019 |  | Q2 2019 |  | Q1 2019 |  | Q4 2018 |  | Q3 2018 |  | 2019 |  | 2018
GAAP net interest income | $ | 75,735 |  |  | $ | 64,679 |  |  | $ | 59,304 |  |  | $ | 61,524 |  |  | $ | 64,001 |  |  | $ | 199,718 |  |  | $ | 196,354 |
GAAP non-interest income | $ | 23,369 |  |  | $ | 12,036 |  |  | $ | 19,718 |  |  | $ | 19,877 |  |  | $ | 2,084 |  |  | $ | 55,125 |  |  | $ | 39,120 |
Loss upon acquisition of interest-only GNMA securities | — |  |  | 7,476 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
(Gains) losses on investment securities | (2,334) |  |  | 347 |  |  | (2) |  |  | 101 |  |  | 19,895 |  |  | (1,989) |  |  | 20,023 |
Losses on sale of multi-family loans | — |  |  | — |  |  | — |  |  | 1,161 |  |  | — |  |  | — |  |  | — |
Core non-interest income | 21,035 |  |  | 19,859 |  |  | 19,716 |  |  | 21,139 |  |  | 21,979 |  |  | 53,136 |  |  | 59,143 |
Core revenue | $ | 96,770 |  |  | $ | 84,538 |  |  | $ | 79,020 |  |  | $ | 82,663 |  |  | $ | 85,980 |  |  | $ | 252,854 |  |  | $ | 255,497 |
GAAP non-interest expense | $ | 59,592 |  |  | $ | 59,582 |  |  | $ | 53,984 |  |  | $ | 57,045 |  |  | $ | 57,104 |  |  | $ | 173,160 |  |  | $ | 163,134 |
Severance expense | — |  |  | (490) |  |  | — |  |  | (1,869) |  |  | — |  |  | (490) |  |  | — |
Legal reserves | (2,000) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,000) |  |  | — |
Merger and acquisition related expenses | — |  |  | — |  |  | — |  |  | (470) |  |  | (2,945) |  |  | — |  |  | (3,920) |
Core non-interest expense | $ | 57,592 |  |  | $ | 59,092 |  |  | $ | 53,984 |  |  | $ | 54,706 |  |  | $ | 54,159 |  |  | $ | 170,670 |  |  | $ | 159,214 |
Core efficiency ratio (1) | 59.51 | % |  | 69.90 | % |  | 68.32 | % |  | 66.18 | % |  | 62.99 | % |  | 67.50 | % |  | 62.32 | %

(1) Core efficiency ratio calculated as core non-interest expense divided by core revenue.

Tangible Common Equity to Tangible Assets - Customers Bancorp |  |  |  |  |  |  |  |  |
(dollars in thousands except per share data) | Q3 2019 |  | Q2 2019 |  | Q1 2019 |  | Q4 2018 |  | Q3 2018
GAAP - Total shareholders' equity | $ | 1,019,150 |  |  | $ | 991,405 |  |  | $ | 978,373 |  |  | $ | 956,816 |  |  | $ | 954,812 |
Reconciling items: |  |  |  |  |  |  |  |  |
Preferred stock | (217,471) |  |  | (217,471) |  |  | (217,471) |  |  | (217,471) |  |  | (217,471) |
Goodwill and other intangibles | (15,521) |  |  | (15,847) |  |  | (16,173) |  |  | (16,499) |  |  | (16,825) |
Tangible common equity | $ | 786,158 |  |  | $ | 758,087 |  |  | $ | 744,729 |  |  | $ | 722,846 |  |  | $ | 720,516 |
Total assets | $ | 11,723,790 |  |  | $ | 11,182,427 |  |  | $ | 10,143,894 |  |  | $ | 9,833,425 |  |  | $ | 10,617,104 |
Reconciling items: |  |  |  |  |  |  |  |  |
Goodwill and other intangibles | (15,521) |  |  | (15,847) |  |  | (16,173) |  |  | (16,499) |  |  | (16,825) |
Tangible assets | $ | 11,708,269 |  |  | $ | 11,166,580 |  |  | $ | 10,127,721 |  |  | $ | 9,816,926 |  |  | $ | 10,600,279 |
Tangible common equity to tangible assets | 6.71 | % |  | 6.79 | % |  | 7.35 | % |  | 7.36 | % |  | 6.80 | %

24

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |  |  |  |  |  |  |  |  |

(Dollars in thousands, except per share data)

Tangible Book Value per Common Share - Customers Bancorp |  |  |  |  |  |  |  |  |  |  |  |  |
(dollars in thousands except share and per share data) | Q3 2019 |  | Q2 2019 |  | Q1 2019 |  | Q4 2018 |  | Q3 2018 |  |  |  |
GAAP - Total shareholders' equity | $ | 1,019,150 |  |  | $ | 991,405 |  |  | $ | 978,373 |  |  | $ | 956,816 |  |  | $ | 954,812 |  |  |  |  |
Reconciling Items: |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock | (217,471) |  |  | (217,471) |  |  | (217,471) |  |  | (217,471) |  |  | (217,471) |  |  |  |  |
Goodwill and other intangibles | (15,521) |  |  | (15,847) |  |  | (16,173) |  |  | (16,499) |  |  | (16,825) |  |  |  |  |
Tangible common equity | $ | 786,158 |  |  | $ | 758,087 |  |  | $ | 744,729 |  |  | $ | 722,846 |  |  | $ | 720,516 |  |  |  |  |
Common shares outstanding | 31,245,776 |  |  | 31,202,023 |  |  | 31,131,247 |  |  | 31,003,028 |  |  | 31,687,340 |  |  |  |  |
Tangible book value per common share | $ | 25.16 |  |  | $ | 24.30 |  |  | $ | 23.92 |  |  | $ | 23.32 |  |  | $ | 22.74 |  |  |  |  |

Tangible Book Value per Common Share - CAGR - Customers Bancorp |  |  |  |  |  |  |  |  |  |  |  |  |
(dollars in thousands except share and per share data) | Q3 2019 |  | Q4 2018 |  | Q4 2017 |  | Q4 2016 |  | Q4 2015 |  | Q4 2014 |  | Q4 2013
GAAP - Total shareholders' equity | $ | 1,019,150 |  |  | $ | 956,816 |  |  | $ | 920,964 |  |  | $ | 855,872 |  |  | $ | 553,902 |  |  | $ | 443,145 |  |  | $ | 386,623 |
Reconciling Items: |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock | (217,471) |  |  | (217,471) |  |  | (217,471) |  |  | (217,471) |  |  | (55,569) |  |  | — |  |  | — |
Goodwill and other intangibles | (15,521) |  |  | (16,499) |  |  | (16,295) |  |  | (17,621) |  |  | (3,651) |  |  | (3,664) |  |  | (3,676) |
Tangible common equity | $ | 786,158 |  |  | $ | 722,846 |  |  | $ | 687,198 |  |  | $ | 620,780 |  |  | $ | 494,682 |  |  | $ | 439,481 |  |  | $ | 382,947 |
Common shares outstanding | 31,245,776 |  |  | 31,003,028 |  |  | 31,382,503 |  |  | 30,289,917 |  |  | 26,901,801 |  |  | 26,745,529 |  |  | 26,646,566 |
Tangible book value per common share | $ | 25.16 |  |  | $ | 23.32 |  |  | $ | 21.90 |  |  | $ | 20.49 |  |  | $ | 18.39 |  |  | $ | 16.43 |  |  | $ | 14.37 |
CAGR | 10.23 | % |  |  |  |  |  |  |  |  |  |  |  |

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CUSTOMERS BANCORP, INC. AND SUBSIDIARIES |  |  |  |  |  |  |  |  |
RECONCILIATION OF GAAP TO NON-GAAP MEASURES - UNAUDITED (CONTINUED) |  |  |  |  |  |  |  |  |

(Dollars in thousands, except per share data)

Core Earnings - Customers Bank Business Banking Segment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |  |  |
| Q3 2019 |  |  |  | Q2 2019 |  |  |  | Q1 2019 |  |  |  | Q4 2018 |  |  |  | Q3 2018 |  |  |  | 2019 |  |  | 2018 |
(dollars in thousands except per share data) | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |
GAAP net income to common shareholders | $ | 22,767 |  | $ | 0.72 |  |  | $ | 12,778 |  | $ | 0.40 |  |  | $ | 11,988 |  | $ | 0.38 |  |  | $ | 17,521 |  | $ | 0.55 |  |  | $ | 8,256 |  | $ | 0.26 |  |  | $ | 47,531 |  | $ | 1.51 |  |  | $ | 53,179 |  | $ | 1.65 |
Reconciling items (after tax): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance expense | — |  | — |  |  | 359 |  | 0.01 |  |  | — |  | — |  |  | 1,421 |  | 0.04 |  |  | — |  | — |  |  | 359 |  | 0.01 |  |  | — |  | — |
Loss upon acquisition of interest-only GNMA securities | — |  | — |  |  | 5,682 |  | 0.18 |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 5,682 |  | 0.18 |  |  | — |  | — |
Losses on sale of multi-family loans | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 868 |  | 0.03 |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |
Legal reserves | 760 |  | 0.02 |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 760 |  | 0.02 |  |  | — |  | — |
(Gains) losses on investment securities | (1,947) |  | (0.06) |  |  | 347 |  | 0.01 |  |  | (2) |  | — |  |  | 101 |  | — |  |  | 15,417 |  | 0.48 |  |  | (1,602) |  | (0.05) |  |  | 15,545 |  | 0.48 |
Core earnings | $ | 21,580 |  | $ | 0.68 |  |  | $ | 19,166 |  | $ | 0.61 |  |  | $ | 11,986 |  | $ | 0.38 |  |  | $ | 19,911 |  | $ | 0.62 |  |  | $ | 23,673 |  | $ | 0.73 |  |  | $ | 52,730 |  | $ | 1.67 |  |  | $ | 68,724 |  | $ | 2.13 |

Core Earnings (Loss) - BankMobile Segment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Nine Months Ended September 30, |  |  |  |
| Q3 2019 |  |  |  | Q2 2019 |  |  |  | Q1 2019 |  |  |  | Q4 2018 |  |  |  | Q3 2018 |  |  |  | 2019 |  |  | 2018 |
(dollars in thousands except per share data) | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |  |  | USD |  | Per share |
GAAP net loss to common shareholders | $ | 684 |  | $ | 0.02 |  |  | $ | (7,097) |  | $ | (0.22) |  |  | $ | (163) |  | $ | (0.01) |  |  | $ | (3,274) |  | $ | (0.10) |  |  | $ | (5,842) |  | $ | (0.18) |  |  | $ | (6,574) |  | $ | (0.21) |  |  | $ | (10,190) |  | $ | (0.32) |
Reconciling items (after tax): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Severance expense | — |  | — |  |  | 13 |  | — |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 13 |  | — |  |  | — |  | — |
Legal reserves | 760 |  | 0.02 |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 760 |  | 0.02 |  |  | — |  | — |
Merger and acquisition related expenses | — |  | — |  |  | — |  | — |  |  | — |  | — |  |  | 355 |  | 0.01 |  |  | 2,222 |  | 0.07 |  |  | — |  | — |  |  | 2,957 |  | 0.09 |
Core loss | $ | 1,444 |  | $ | 0.05 |  |  | $ | (7,084) |  | $ | (0.22) |  |  | $ | (163) |  | $ | (0.01) |  |  | $ | (2,919) |  | $ | (0.09) |  |  | $ | (3,620) |  | $ | (0.11) |  |  | $ | (5,801) |  | $ | (0.18) |  |  | $ | (7,233) |  | $ | (0.22) |

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