Business Segments

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Business Segments

BUSINESS SEGMENTS

Customers has historically operated under one business segment, "Community Banking." However, beginning in third quarter 2016, Customers revised its segment financial reporting to reflect the manner in which its chief operating decision makers (our Chief Executive Officer and Board of Directors) have begun allocating resources and assessing performance subsequent to Customers' acquisition of the Disbursement business from Higher One and the combination of that business with the BankMobile technology platform late in second quarter 2016.

Management has determined that Customers' operations consist of two reportable segments - Community Business Banking and BankMobile. Each segment generates revenues, manages risk, and offers distinct products and services to targeted customers through different delivery channels. The strategy, marketing, and analysis of these segments vary considerably.

The Community Business Banking segment is delivered predominately to commercial customers in Southeastern Pennsylvania, New York, New Jersey, Massachusetts, Rhode Island and New Hampshire through a single point of contact business model and provides liquidity to residential mortgage originators nationwide through commercial loans to mortgage companies. Lending and deposit gathering activities are focused primarily on privately held businesses, high net worth families, selected commercial real estate lending, and commercial mortgage companies. Revenues are generated primarily through net interest income (the difference between interest earned on loans, investments, and other interest earning assets and interest paid on deposits and other borrowed funds) and other non-interest income, such as mortgage warehouse transactional fees and bank owned life insurance.

The BankMobile segment provides state of the art high tech digital banking and disbursement services to consumers, students, and the "under banked" nationwide. BankMobile, as a division of Customers Bank, is a full service bank that is accessible to customers anywhere and anytime through the customer's smartphone or other web-enabled device. Revenues are currently being generated primarily through interchange and card revenue, deposit and wire transfer fees and university fees.

The following tables present the operating results for Customers' reportable business segments for the three and nine months ended September 30, 2016. Customers has presented the financial information and disclosures for prior periods to reflect the segment disclosures as if they had been in effect for the periods presented. The segment financial results include directly attributable revenues and expenses. Corporate overhead costs are assigned to the Community Business Banking segment as those expenses are expected to continue following the planned disposition of BankMobile. Similarly, the preferred stock dividends have been allocated in their entirety to the Community Business Banking segment. The tax benefit assigned to BankMobile was based on an estimated effective tax rate of 38%.

	Three Months Ended September 30, 2016
	Community Business Banking			BankMobile					Consolidated
Interest income	$	82,828		$	1,384		(1	)	$	84,212
Interest expense	19,620			7					19,627
Net interest income	63,208			1,377					64,585
Provision for loan losses	(162		)	250					88
Non-interest income	11,121			16,365					27,486
Non-interest expense	36,864			19,354					56,218
Income (loss) before income tax expense	37,627			(1,862		)			35,765
Income tax expense/(benefit)	15,284			(708		)			14,576
Net income (loss)	22,343			(1,154		)			21,189
Preferred stock dividends	2,552			—					2,552
Net income (loss) available to common shareholders	$	19,791		$	(1,154	)			$	18,637

	Three Months Ended September 30, 2015
	Community Business Banking		BankMobile					Consolidated
Interest income	$	62,153	$	1,583		(1	)	$	63,736
Interest expense	13,795		7					13,802
Net interest income	48,358		1,576					49,934
Provision for loan losses	2,094		—					2,094
Non-interest income	6,160		11					6,171
Non-interest expense	28,467		1,840					30,307
Income (loss) before income tax expense	23,957		(253		)			23,704
Income tax expense/(benefit)	8,511		(96		)			8,415
Net income (loss)	15,446		(157		)			15,289
Preferred stock dividends	980		—					980
Net income (loss) available to common shareholders	$	14,466	$	(157	)			$	14,309

(1) - Amounts reported include funds transfer pricing of $1.4 million and $1.6 million, respectively, for the three months ended September 30, 2016 and 2015 credited to BankMobile for the value provided to the Community Business Banking segment for the use of low/no cost deposits.

	Nine Months Ended September 30, 2016
	Community Business Banking		BankMobile					Consolidated
Interest income	$	234,513	$	4,418		(1	)	$	238,931
Interest expense	53,539		22					53,561
Net interest income	180,974		4,396					185,370
Provision for loan losses	2,605		249					2,854
Non-interest income	22,241		18,996					41,237
Non-interest expense	101,053		27,253					128,306
Income (loss) before income tax expense	99,557		(4,110		)			95,447
Income tax expense/(benefit)	38,691		(1,562		)			37,129
Net income (loss)	60,866		(2,548		)			58,318
Preferred stock dividends	5,900		—					5,900
Net income (loss) available to common shareholders	$	54,966	$	(2,548	)			$	52,418
As of September 30, 2016
Goodwill and other intangibles	$	3,642	$	13,282				$	16,924
Total assets	$	9,532,281	$	70,329				$	9,602,610
Total deposits	$	6,855,788	$	533,182				$	7,388,970

	Nine Months Ended September 30, 2015
	Community Business Banking		BankMobile					Consolidated
Interest income	$	177,215	$	4,922		(1	)	$	182,137
Interest expense	39,299		16					39,315
Net interest income	137,916		4,906					142,822
Provision for loan losses	14,393		—					14,393
Non-interest income	18,272		25					18,297
Non-interest expense	78,344		5,088					83,432
Income (loss) before income tax expense	63,451		(157		)			63,294
Income tax expense/(benefit)	22,557		(60		)			22,497
Net income (loss)	40,894		(97		)			40,797
Preferred stock dividends	1,487		—					1,487
Net income (loss) available to common shareholders	$	39,407	$	(97	)			$	39,310
As of September 30, 2015
Goodwill and other intangibles	$	3,654	$	—				$	3,654
Total assets	$	7,593,556	$	2,620				$	7,596,176
Total deposits	$	5,423,717	$	361,477				$	5,785,194

(1) - Amounts reported include funds transfer pricing of $4.4 million and $4.9 million, respectively, for the nine months ended September 30, 2016 and 2015 credited to BankMobile for the value provided to the Community Business Banking segment for the use of low/no cost deposits.