Customers Bancorp Reports Net Income for Third Quarter 2018

• Customers Bancorp, Inc.'s ("CUBI") third quarter 2018 ("Q3 2018") net income to common shareholders was $2.4 million, or $0.07 per diluted share. Adjusted for merger and acquisition related expenses and losses on investment securities, the adjusted Q3 2018 diluted earnings per share (a non-GAAP measure) was $0.62. Adjusted earnings per share increased approximately 29% from third quarter 2017 ("Q3 2017") adjusted earnings per share
• The Community Business Banking segment net income to common shareholders for Q3 2018 totaled $8.3 million, or $0.26 per diluted share. The segment's adjusted net income to common shareholders (a non-GAAP measure) for Q3 2018 totaled $23.7 million, or $0.73 per diluted share
• The BankMobile segment reported a net loss for Q3 2018 of $5.8 million, or $0.18 per diluted share. The segment's adjusted net loss to common shareholders (a non-GAAP measure) for Q3 2018 totaled $3.6 million, or $0.11 per diluted share
• BankMobile's merger with Flagship Community Bank was terminated on October 18, 2018 given regulatory complications, notably concerns that Customers and Flagship would be considered affiliates by the Federal Reserve and interchange income would be significantly reduced under the Durbin Amendment. Customers expects to retain BankMobile for the next 2-3 years, but will regularly reassess the best option for BankMobile. The termination triggered $2.0 million of after-tax merger and acquisition termination costs
• In Q3 2018, the return on average assets ("ROAA") was 0.22%. The adjusted return on average assets, which excludes the notable items described above (a non-GAAP measure) was 0.88% in Q3 2018 compared to 0.71% in Q3 2017. In Q3 2018, the return on average common equity was 1.31%. The adjusted return on average common equity, which excludes the notable items described above (a non-GAAP measure) was 10.86% in Q3 2018 compared to 8.71% in Q3 2017
• Total assets at September 30, 2018 were $10.6 billion compared to $10.5 billion at September 30, 2017. Subsequent to September 30, 2018, CUBI has reduced consolidated assets to below $10.0 billion, largely through the use of excess cash to repay borrowings
• Total deposits increased by $1.2 billion, or 16.7%, compared to June 30, 2018 and $917 million, or 12.1%, compared to September 30, 2017. Sequential deposit growth included $457 million of demand deposit growth, $439 million of savings and money market deposit growth, and $321 million of time deposit growth
• Year-over-year, core commercial and industrial loans, excluding commercial loans to mortgage companies, increased $233 million, or 15.0%, and consumer loans increased $111 million. Multi-family loans decreased $265 million and commercial non-owner-occupied real estate loans decreased $80.0 million
• Reflecting in part very strong core deposit growth, tax equivalent net interest margin ("NIM") (a non-GAAP measure) was 2.47% in Q3 2018, compared to 2.62% in Q3 2017
• On October 15, 2018, BankMobile announced a partnership with a significant White Label partner to provide competitive banking products to its broad customer base
• Q3 2018 book value per common share was $23.27 and tangible book value per common share (a non-GAAP measure) was $22.74. Book value per common share has increased at a compound annual growth rate of 8.6% over the past five years
• Based on the October 24, 2018 closing price of $18.60, Customers Bancorp common equity is trading at 0.82x tangible book value of $22.74 (a non-GAAP measure) and 8.2x the 2019 consensus estimate of $2.27

WYOMISSING, PA / ACCESSWIRE / October 25, 2018 / Customers Bancorp, Inc. (NYSE: CUBI), the parent company of Customers Bank (collectively "Customers"), reported net income to common shareholders of $2.4 million for Q3 2018, compared to $4.1 million for Q3 2017, a decrease of $1.7 million, and $20.0 million for Q2 2018, a decrease of $17.6 million. Fully diluted earnings per common share for Q3 2018 was $0.07, compared to $0.62 for Q2 2018 and $0.13 for Q3 2017. Both Q3 2018 and Q3 2017 included significant notable items.

"Customers Bancorp generated adjusted net income (a non-GAAP measure) of $20.1 million, or $0.62 per share, a year-over-year increase of approximately 29% in adjusted earnings per share. Earnings improved at both our Community Business Banking and BankMobile segments. We understand that our recent decision to retain BankMobile for 2-3 years due to unexpected regulatory complications caught some investors by surprise, but we continue to like the prospects of that business and are particularly excited about its new White Label partnership. We are also excited about our plans to strengthen the balance sheet, remix our assets and liabilities, widen our net interest margin, increase our ROAA, and build capital, which we outlined at our recent Analyst Day. On that last point, we expect to take a closer look at capital management options, given our expectation that our tangible common equity ratio will be about 7.5% by year-end, comfortably above our 7.0% target." stated Jay Sidhu, CEO and Chairman of Customers Bank.

Customers' Community Business Banking segment reported Q3 2018 net income to common shareholders of $8.3 million. Adjusted for losses on investment securities, the segment's adjusted net income (a non-GAAP measure) in Q3 2018 was $23.7 million, an increase of 14.8% from $20.6 million in Q3 2017.

Customers also reported net income to common shareholders of $43.0 million for the nine months ended September 30, 2018, compared to net income to common shareholders of $46.4 million for the nine months ended September 30, 2017. Fully diluted earnings per common share for the nine months ended September 30, 2018 was $1.33, compared to $1.42 for the nine months ended September 30, 2017. Adjusted for merger and acquisition related expenses and losses on investment securities adjusted net income available to common shareholders (a non-GAAP measure) for the nine months ended September 30, 2018 totaled $61.5 million, a 14.0% increase compared to $54.0 million of adjusted income for the first nine months of 2017.

Strategic Priorities

Improve Profitability: we target a 2.75% NIM in 12-18 months and a 1.25% ROAA in 3-5 years

Customers targets an ROAA of 1.25% in the next 3-5 years. Customers expects to get there by improving net interest margin to 2.75%+ in 12 to 18 months (up from the prior target of 2.60% to 2.75% within a 1-2 year period), a focus on positive operating leverage and expense discipline, as well as eliminating the drag on profitability from BankMobile. Credit quality at Customers Bank is very strong, as measured by the low level of nonperforming loans (0.27% of total loans at September 30, 2018); Customers has always emphasized credit quality as its most important critical success factor.

• Target ROAA in top quartile of peer group, which we expect will equate to a ratio of 1.25% or higher
• Expect shift in asset and funding mix will drive a wider NIM to 2.75% or higher
• BankMobile growth and maturity will enhance profitability; we expect BankMobile to be profitable by the end of 2019
• Focused on expense control; we expect de minimus growth in most Community Business Banking segment expenses, and incremental spend in other areas driven by revenue growth
• Opportunistically grow fee income. BankMobile's new White Label partnership will contribute to fee income growth

Grow CUBI Core Businesses, Stay Under $10 Billion, and Optimize Balance Sheet Mix

While Customers will remain relatively flat in terms of total assets, Customers is focused on growing its core businesses and most profitable assets and liabilities. Through favorable mix shifts in both assets and liabilities, Customers expects to improve the overall quality of its balance sheet and deposit franchise, expand its net interest margin, enhance liquidity and improve interest rate sensitivity.

• Core Deposit Growth Strategy. Customers' deposit strategy factors in the total cost of deposits as the sum of operating and interest costs. Customers' branch lite model, with a focus on cost control, is reflected in dramatically lower operating expenses than the industry - operating expenses in the Community Business Banking segment were equal to 1.35% of average assets in Q3 2018, which Customers believes is at least 175 basis points lower than the industry overall. Core deposit growth is a strategic priority for Customers. In July 2018, Customers launched a new digital, on-line banking business with a goal of gathering retail deposits. As of September 30, 2018, this new business had generated $231 million in retail deposits. Year-to-date September 30, 2018, Customers reported 25% growth in total deposits, which included 38% growth in demand deposits, 19% growth in money market and savings accounts, and 26% growth in time deposits.

• Funding Mix Strategy. Customers expects core deposit growth, including BankMobile's demand deposits, to replace higher cost funding. In October 2018, Customers used excess cash to repay $500 million of FHLB borrowings (and exited associated swaps), which had an effective cost of 2.85%. Customers currently has over $700 million of deposits with a cost of 2.5% or greater that it expects to run off and replace with lower cost funding.

• Asset Mix Strategy. Customers expects to grow its higher yielding, core commercial and industrial lending business as well as consumer lending, while running off lower yielding multi-family loans. Year-over-year, core commercial and industrial loans, excluding commercial loans to mortgage companies, increased $233 million, or 15.0%, and consumer loans increased $111 million. Multi-family loans decreased $265 million and commercial non-owner-occupied real estate loans decreased $80.0 million. Customers expects to end 2018 with approximately $3.3 billion in multi-family loans.

Build and Deploy Capital

"We now target a minimum tangible common equity ratio of 7.0%. Given our balance sheet reduction and expected retained earnings, we expect to be comfortably above this level by December 31, 2018," Mr. Sidhu stated. "Capital ratios will continue to build in 2019 and beyond as we retain earnings and the balance sheet remains flat; hence, we are currently evaluating our options to deploy excess capital," concluded Mr. Sidhu.

The estimated total risk-based capital ratio was approximately 12.6% for Q3 2018, compared to 12.4% for Q3 2017. The estimated common equity Tier 1 capital ratio was approximately 8.7% for Q3 2018, compared to 8.3% for Q3 2017. The estimated Tier 1 leverage capital ratio was approximately 8.9% for Q3 2018, compared to 8.4% for Q3 2017. The tangible common equity to tangible assets ratio (a non-GAAP measure) was 6.8% at September 30, 2018, compared to 6.5% at September 30, 2017, and Customers estimates that rate to be greater than 7.0% today.

Generate a Positive Contribution from BankMobile Segment to 2019 Earnings

BankMobile, a division of Customers Bank, operates a branchless digital bank offering very low cost banking services to approximately 1.0 million active deposit customers. On October 18, 2018, the agreement between Customers and Flagship, whereby Customers would spin-off BankMobile which would then be acquired by Flagship, was terminated. Customers currently expects to retain BankMobile for a 2-3 year period, but will regularly evaluate the best options for BankMobile. "While our strategy may have pivoted, we always believed in BankMobile's future and wanted a way for our shareholders to participate in that value creation. For the next 2-3 years, Customers' shareholders should enjoy the benefits of BankMobile's low cost deposit growth, which we expect to benefit our net interest margin and overall profitability," stated Sidhu.

BankMobile is expected to generate a positive contribution to Customers' earnings by the end of 2019, due in large part to expected core deposit growth from its recently announced White Label partnership. Demand deposits generated by the BankMobile business averaged $497 million for Q3 2018 with an average cost of 0.04%. BankMobile demand deposit balances were approximately $732 million at September 30, 2018.

Q3 2018 Overview

The following table presents a summary of key earnings and performance metrics for the quarter ended September 30, 2018 and the preceding four quarters, respectively:

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
EARNINGS SUMMARY - UNAUDITED
(Dollars in thousands, except per-share data)

(1) Non-GAAP measure calculated as GAAP net income available to common shareholders adjusted for merger and acquisition related expenses, losses and gains on investment securities, impairments of investment securities, and depreciation and amortization catch-up adjustments. Please note that not each of the aforementioned adjustments affected the reported amount in each of the periods presented. A detailed reconciliation between this non-GAAP measure and the comparable GAAP amount is included at the end of this document.

(2) Non-GAAP measure calculated as GAAP net income available to common shareholders adjusted for merger and acquisition related expenses, losses and gains on investment securities, impairments of investment securities and depreciation and amortization catch-up adjustments divided by average common shares outstanding - diluted. Please note that not each of the aforementioned adjustments affected the reported amount in each of the periods presented. A detailed reconciliation between this non-GAAP measure and the comparable GAAP amounts is included at the end of this document.

(3) Non-GAAP measure calculated as GAAP net income adjusted for merger and acquisition related expenses, losses and gains on investment securities, impairments of investment securities and depreciation and amortization catch-up adjustments divided by average total assets. Please note that not each of the aforementioned adjustments affected the reported amount in each of the periods presented. A detailed reconciliation between this non-GAAP measure and the comparable GAAP amount is included at the end of this document.

(4) Non-GAAP measure calculated as GAAP net income available to common shareholders adjusted for merger and acquisition related expenses, losses and gains on investment securities, impairments of investment securities, and depreciation and amortization catch-up adjustments divided by average total common shareholders' equity. Please note that not each of the aforementioned adjustments affected the reported amount in each of the periods presented. A detailed reconciliation between this non-GAAP measure and the comparable GAAP amount is included at the end of this document.

(5) Non-GAAP measure calculated as GAAP net income, plus provision for loan losses and income tax expense divided by average total assets.

(6) Non-GAAP measure calculated as GAAP net income available to common shareholders, plus provision for loan losses and income tax expense divided by average common equity.

(7) Non-GAAP measure calculated as GAAP net interest income, plus tax equivalent interest using an estimated 26% tax rate for Q3 2018, Q2 2018, and Q1 2018, and an estimated 35% tax rate for Q4 2017 and Q3 2017, divided by average interest earning assets.

(8) Total loans, including held for sale loans.

(9) Regulatory capital ratios are estimated for Q3 2018.

(10) Non-GAAP measure calculated as GAAP total shareholders' equity less preferred stock and goodwill and other intangibles divided by total assets less goodwill and other intangibles.

(11) Non-GAAP measure calculated as GAAP total shareholders' equity less preferred stock and goodwill and other intangibles divided by common shares outstanding at period end.

Net Interest Income

Net interest income decreased $3.3 million, or 4.9% to $64.0 million in Q3 2018 from $67.3 million in Q2 2018 principally due to 15 basis points NIM compression which reflected seasonally lower balances in our high yielding mortgage warehouse business, lower prepayment fees, increases in cash balances late in the quarter, and higher deposit costs which enabled us to grow deposits by $1.2 billion in the quarter.

Q3 2018 prepayment fees totaled $1.6 million, a decrease of $0.9 million from Q2 2018, which reduced NIM by approximately 4 basis points.

Q3 2018 net interest income of $64.0 million decreased $4.0 million, or 5.9%, from net interest income in Q3 2017 as average interest earning assets decreased $33.5 million, and the Q3 2018 NIM narrowed by 15 basis points to 2.47%, reflecting factors discussed above. The 66 basis point increase in total cost of deposits and borrowings was mitigated by a 47 basis point increase in yield on interest earning assets, primarily due to increase in yield on our loans of 44 basis points; the yield on investment securities increased 43 basis points to 3.30%.

Total loans outstanding, including commercial loans held for sale, decreased $417 million, or 4.5%, to $8.8 billion as of September 30, 2018 compared to total loans of $9.2 billion as of September 30, 2017.

Compared to the year-ago period, commercial and industrial loans, excluding commercial loans to mortgage companies, increased $233 million to $1.8 billion, up 15.0%; multi-family loans decreased $265 million to $3.5 billion, or 7.0%; commercial non-owner-occupied real estate loans decreased $80.0 million to $1.2 billion; consumer loans increased $111 million to $645 million; and commercial loans to mortgage companies decreased $438 million to $1.6 billion.

Total deposits increased $917 million, or 12.1%, to $8.5 billion, compared to total deposits of $7.6 billion at September 30, 2017. Total demand deposit accounts increased $382 million to $2.2 billion, savings and money market deposits increased $442 million to $3.9 billion, and certificates of deposit accounts increased $93.0 million to $2.4 billion.

Provision and Credit

Customers' Q3 2018 provision for loan losses totaled $2.9 million compared to a provision expense of $2.4 million in Q3 2017 and a benefit of $0.8 million in Q2 2018. The Q3 2018 provision expense included $2.3 million for growth in the consumer loan portfolio and a $0.9 million increase for specifically identified loans, offset in part by a release of reserve of $0.2 million resulting from improved asset quality and lower incurred losses than previously estimated. Net charge-offs for Q3 2018 were $0.5 million, or 2 basis points of annualized net charge-offs to average loans. There were no significant changes in Customers' methodology for estimating the allowance for loan losses in Q3 2018 or during the past year.

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, 2018 were only 0.27% of total loans, compared to our peer group non-performing loans of approximately 0.78% in the most recent period available, and industry average non-performing loans of 1.21% in the most recent period available. Our expectation is superior asset quality performance in good times and in difficult years," said Mr. Sidhu.

Non-interest Income

Non-interest income decreased $14.0 million in Q3 2018 to $2.1 million, compared to $16.1 million in Q2 2018. Q3 2018 included a loss on investment securities of $18.7 million from the sale of $495 million of lower yielding securities. Other non-interest revenues increased $3.6 million, driven by increases in income from commercial leases as well as a $2.8 million gain on discontinuing cash flow hedge accounting for three interest rate swaps, offset in part by a $1.2 million negative mark to market on an equity investment.

Non-interest income decreased $15.9 million in Q3 2018 to $2.1 million from $18.0 million in Q3 2017. Included in Q3 2018 non-interest income is the above mentioned $18.7 million loss on sale of lower yielding securities and $1.2 million negative mark to market on an equity investment, which were offset in part by a $2.8 million gain from discontinuing cash flow hedge accounting for three interest rate swaps, which Customers now believes are not needed due to strong core deposit growth. Also included within non-interest income for Q3 2018 was $1.2 million of debit and prepaid card interchange expense, which was recorded as a reduction to the gross amount of interchange and card revenue (which totaled $8.3 million without the effect of netting these expenses) as a result of the adoption of the new revenue recognition standard in Q1 2018. Prior to the adoption of the new standard, these expenses were included with non-interest expense and reported as technology, communications and bank operations expense. Included in Q3 2017 non-interest income was an $8.3 million impairment charge related to an equity investment and a $5.3 million gain on sale of investment securities.

Non-interest Expense

Non-interest expenses totaled $57.1 million, a decrease of $3.9 million, or 6.4% from Q3 2017. Included in Q3 2017 non-interest expenses was $2.8 million in catch-up depreciation and amortization for BankMobile assets that were previously classified as held for sale. Professional services for Q3 2018 totaled $4.7 million, a decrease of $2.7 million, or 35.9% from Q3 2017 as a result of ongoing efforts to manage expenses. These improvements to non-interest expense were partially offset by a $2.9 million increase in merger and acquisition related expenses due to the termination of the Flagship agreement and a $0.7 million increase in salaries and employee benefits.

Tax

We expect an effective tax rate of approximately 24% for the remainder of 2018.

Profitability and Book Value

Customers' return on average assets was 0.22% in Q3 2018 compared to 0.29% in Q3 2017, and its return on average common equity was 1.31% in Q3 2018 compared to 2.33% in Q3 2017. The adjusted return on average assets, which excludes the notable items described above (a non-GAAP measure) was 0.88% in Q3 2018 and the adjusted return on average common equity, which excludes the notable items described above (a non-GAAP measure) was 10.86% in Q3 2018.

The Q3 2018 efficiency ratio was 66.4% compared to the Q3 2017 efficiency ratio of 68.6%.

The book value and tangible book value (a non-GAAP measure) per common share increased to $23.27 and $22.74 per share, respectively, at September 30, 2018, reflecting a CAGR of 8.6% and 8.3% over the past five years, respectively.

BankMobile Segment

The BankMobile segment reported a pre-tax loss of $7.7 million in Q3 2018 compared to a pre-tax loss of $11.0 million for Q3 2017. Q3 2018 segment results included $3.9 million in fund transfer pricing revenues on its deposits, at an average rate of 3.10%. The BankMobile segment reported a net loss for Q3 2018 of $5.8 million, or $0.18 per diluted share. The segment's adjusted net loss to common shareholders (a non-GAAP measure) for Q3 2018 totaled $3.6 million, or $0.11 per diluted share. Included in Q3 2018, was $2.9 million in merger and acquisition related charges. Included in Q3 2017 non-interest expenses of BankMobile was $2.8 million in "catch-up" depreciation and amortization for BankMobile assets that were previously classified as held for sale but reclassified as held for investment at the time Customers decided to spin-off the segment rather than sell the BankMobile segment.

Managing Commercial Real Estate Concentration Risks and Providing High Net Worth Families Loans for Their Multi-Family Holdings

Customers' total commercial real estate ("CRE") loan exposures subject to regulatory concentration guidelines of $4.7 billion as of September 30, 2018 included construction loans of $107 million, multi-family loans of $3.5 billion, and non-owner occupied commercial real estate loans of $1.1 billion, which represent 388% of total risk-based capital on a combined basis, a reduction from 437% commercial real estate concentration as of September 30, 2017. Customers' loans subject to regulatory CRE concentration guidelines had 3-year cumulative growth of 37.1% in Q3 2018, a deceleration from 64.5% in Q3 2017. "In a flat curve environment, we will continue to deemphasize lower yielding multi-family loans and certain CRE loans," stated Mr. Sidhu.

Customers' loans collateralized by multi-family properties were approximately 40.0% of Customers' total loan portfolio and approximately 290% of total risk-based capital at September 30, 2018, down from approximately 41.1% and 327%, respectively, at September 30, 2017. 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;
• Average loan size is $6.7 million;
• Median annual debt service coverage ratio is 136%;
• Median loan-to-value for the portfolio is 65.8%;
• 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: Friday, October 26, 2018

Time: 9:00 AM ET

US Dial-in: 855-719-5008

International Dial-in: 334-323-0517

Participant Code: 498335

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 the company's website at http://customersbank.com/investor_relations.php prior to the call. A playback of the call will be available beginning Friday, October 26, 2018 at 12:00 PM ET until 12:00 PM ET on November 25, 2018. To listen, call within the United States 888-203-1112 or 719-457-0820 when calling internationally. Please use the replay pin number 5953250.

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 $10.6 billion at September 30, 2018. 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, the District of Columbia, 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," "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 of the spin-off and merger of BankMobile not being completed also could cause Customers Bancorp's actual results to differ from those in the forward-looking statements. Further, Customers' expectations with respect to the effects of the new tax law could be affected by future clarifications, amendments, and interpretations of such law. 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, 2017, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K 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.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(Dollars in thousands, except per share data)

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET - UNAUDITED
(Dollars in thousands)

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED)
(Dollars in thousands)

(1) Total costs of deposits (including interest bearing and non-interest bearing) were 1.67%, 1.39% and 0.99% for the three months ended September 30, 2018, June 30, 2018, and September 30, 2017, respectively.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCE SHEET / NET INTEREST MARGIN (UNAUDITED)
(Dollars in thousands)

(1) Total costs of deposits (including interest bearing and non-interest bearing) were 1.41% and 0.88% for the nine months ended September 30, 2018 and 2017, respectively.

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, 2018 and 2017:

(1) - Amounts reported include funds transfer pricing of $3.9 million and $2.7 million for the three months ended September 30, 2018 and 2017, respectively.

(2) - Amounts reported include funds transfer pricing of $11.8 million and $9.7 million for the nine months ended September 30, 2018 and 2017, respectively.

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

(1) - Amounts reported include funds transfer pricing of $3.9 million, $3.5 million, $4.4 million, $3.2 million and $2.7 million for the three months ended September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017, and September 30, 2017, respectively.

(2) - Amounts reported include funds transfer pricing of $3.9 million, $3.5 million, $4.4 million, $3.2 million and $2.7 million for the three months ended September 30, 2018, June 30, 2018, March 31, 2018, December 31, 2017, and September 30, 2017, respectively.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END LOAN COMPOSITION
(UNAUDITED)
(Dollars in thousands)

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
PERIOD END DEPOSIT COMPOSITION (UNAUDITED)
(Dollars in thousands)

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY - UNAUDITED

(1) Commercial & industrial loans, including owner occupied commercial real estate.
(2) Includes activity for BankMobile related loans, primarily overdrawn deposit accounts.

CUSTOMERS BANCORP, INC. AND SUBSIDIARIES
NET CHARGE-OFFS/(RECOVERIES) - UNAUDITED
(Dollars in thousands)