CUBI - Earnings call transcript Q4 2017

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Operator

Good day everyone and welcome to the Fourth Quarter 2017 Customers Bancorp Incorporated Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the call over to Bob Ramsey, Head of Investor Relations and Strategic Planning for Customers Bancorp. Please go ahead, sir.

Bob Ramsey

Thank you, Dana, and good morning, everyone. earnings and accompanying Company’s is www.customersbank.com. quarter issued deck website fourth evening yesterday posted Bancorp’s’ release slide and was at Customers on the the Director Officer; Dick Jay Chief Operating today Executive Representing myself, Bob Relations Ehst, the Bob and and and Planning. Ramsey, Officer; Financial Chairman Investor Chief are Chief Wahlman, Officer; on Company of Sidhu, call Strategic

presentation statements is applicable statements extent considered future or results. differ Investor like actual this anticipated. undertake begin, report update pleasure to XX-K forward-looking SEC from be may information remind new by of visiting yours. Customers you XX-Q that Bancorp’s filings, website. forward-looking the Please we or introduce risk to and risk including detailed speak of forward-looking. Jay, of factors also our be may no the for would the may on statements uncertainties the by events, Please that our obtained Form description to currently subject number floor these time, these the Sidhu. to our we of Relations affect the the refer our to we Copies in that of performance different this my forward-looking a statements section than the At more it’s SEC a the materially, Jay today Before required some and including securities CEO, except laws. note make of and to of only are These that results obligation results the risk to as cause light may are of date

Jay Sidhu

to I to good and gentlemen. Bob, welcome and call. fourth you morning, quarter thank am very much investor XXXX and you Yes, this ladies delighted

on wanted strategy, was share Number to those progress bit XXXX us priorities XXXX, one for December pleased you well just are unique you our results as that on foundation share business set capital achieving have was we all be very three by priorities. for we targets bank and laid our the little a core on to as very with strong XXXX. XX, the in in that set executing our and so would I important with We very with a

Bank path how have Our for clear second for clearly our best opinion priority value to a providing was give America’s years to our in called very our four was one for forward and third digital short-term Customers of the shareholders. next clear going very shareholders very our priority BankMobile showing it XXXX market a the double strategy over to clear long-term bank in a shareholder it creating performing extensive And establish so. is approximately and value to path a possible or for in possible

update all So I am you give pleased an these. of now on to

tax-free on so our were balance best As on core ourselves absolutely targets $X.XX XXXX, bank from bank performing one to XXXX. regarding for reported on per share the of securities any earnings per creating in quarter, press execute business our gains excluding you of by the about our as our sheet share banks core a fourth of share December capital could know In our in losses our well strategy can as our it we in transaction. shrinking six we of in our release XX% that and months America’s clear that and shareholders give the last by headroom, meet XXXX, despite XX, without $X.XX for so digital risk giving some earnings strong diluted we our foundation per XXXX,

you did pleased I with wanted was I important most – wanted bank our are core to that. we The share So with thing How our do? margin.

by lower margin certain XX assets away normalized multifamily interest that from increased quarter we our by liabilities shifting into changing execution was transactions our in clients. basis of and X.XX% our net fees fourth getting yielding and prepayment and done us from points mix of So and high by to our assets the also yielding

as As have equity press far as seen to capital shareholder is you our continued our concerned, release, may from increase.

book increase to December value was Our XX fourth tangible common equity our our X%. and continued X% more XXXX tangible capital is ratio important was leverage at and for about tangible ratio to Tier-X assets quarter

over in time, BankMobile benefits talk X% our year enjoy Bob talk charge in I the I million. year more exercise in we up to give of shareholders. our a and execution all very to some around by our reports the our hand this the stock that that were I’d shareholders. about to is from to well manage time seen them We a number financial in of we as to you same to treatment Just in was, position myself with put tax this of like dividend about this the strategies deferred vested at a At for can shareholders have try our ago, a the reduce from quarter stock this higher the very manner That certain $X.X executing the to so time, options, million. charge to same Wahlman period it. more my in of that fourth rate results our pleased XXXX in on in our time best to about $XX when and receiving of very for little financial asset over benefit basically Included $X a was $X.XX at that tax may that the decided good to results. value company and

Robert Wahlman

of of critical us and as that December billion objective the just did target franchise XXXX, this before of under advantage was December of a for everyone. One we I strategic $X.X for lower loans and look down a had assets the this of mortgage the referred a Jay portion without from spend the on XX. residential seasonally Jay, piece – morning at million multifamily XX, to at end good investment lower assets September moment taking selling objective I’d billion And you, that securities. $XXX XX. objective yields mortgage the help by that, Thank to operational which quarter small achieved approximately as Customers warehouse damaging yielding was like increase limited of of balances, was having accomplished fourth which the $XX we recording and Customers amount those

these at benefit they classification of targeted at issuer substantively ratios Customers assets provided levels the ratios, capital to improve so As associated capital will Bank Amendment. end level the small and continue to pursuant debit maintaining as the a planned additional Jay This noted, while of cards fees receive and the as were our through help classification disposition. lower Customers long of as levels to Durban interchange with allow Customers that year are same BankMobile

down amounted So compared decline security securities about turning as X.XX% interest now margin that Jay and increased XXXX a was, assets Jay up that portfolio the year net at Investment loans in in the loan $XXX to XXXX asset from XXXX increase the portfolio, despite million QX X rest to was XXXX. fourth primary rest the was balance or or points more to billion fourth our of of an yields quarter increase quarter X% XXXX, and $XX.X million QX average margin our as Loan for approximately already X.XX% million $XXX to continuing earning a the up in were in $XXX fourth securities XX million QX the interest year-over-year million described to points up two quarter there about prepayments about level. XXXX. $X.X from the million ago of to QX yields up in $X.X Commercial a industrial the sources of to X.XX%, the X.XX% just noted year-over-year. managing Customers’ million in on the portfolio well noted basis loans indicating QX $XXX XXXX were balances, were basis loan which normalized has I talked as made million help and of trend operational is in XXXX as up portion earnings That’s engineered net up XXXX yields. compared $XXX multifamily from the quarter $XXX Average yields income QX the up or our QX billion X.XX% again average predominant a elements yields about. $X.X XXXX. from our from fourth returning of the QX X.X% were of on and increasing at bring compared – quarter the as portfolio.

approximately – about at on time, originated of XXXX of rate in are in what for million for coupon we loans Just the in X.XX%. over terms QX was this loans average point $XXX recording

in at to interest-bearing average were the million demand deposits borrowings deposits and at $XXX side, QX $XXX a million, of Average about about versus have billion $XXX $XXX demand Looking cost up funding approximately million XXXX Average were nearly deposits were and non-interest billion. compared QX $X.X interest-bearing average up were total up million XXXX off our $XXX year-over-year are million CDs. CDs million and work X.XX%, cost as we deposits points. basis up of then XXXX brokerage cost carrying were a XX at market $X.X about XXXX down $XXX we money a of QX up they

impairment Enterprises a $X.X million ago. in XXXX million. at income was million, Non-interest in $XX.X was year deflated to the of of $X.X million equity income. the quarter There non-interest investment of million The fourth taken because no impairment quarter to Religare the up $XX.X Turning fourth XXXX. was $XX.X the was for that charge Religare of charge compared

driver to due XXXX. expense. this in and in $X.X Turning in XXXX up bank factors. this million, expenses were million up three The XXXX million $XX.X compared $X.X is And compared to expense is XXXX. operations was Non-interest $XX.X to to different non-interest communication million primary QX QX to technology, of

efficiency conversion higher then quarter was was future we was certain as – will But our related – we through of It segment the XXXX. services. development through efficiency combining in a that to bank little quarter applications of a expense fourth that savings the segment ratio Overall, of substantially provide expenses go quarter card by rest reduced systems of the cost The XX% the low. were in was deflated Label because all, cost community BankMobile level the with core to XX.X% segment, expense. for are the bit was XXXX the in increased and Those expense, XX% fourth and had significant the of non-capitalizable bit White for debit for QX ratio primary fourth our flat development savings number First that incurring a of came the that are of a of some XXXX savings we there XXXX, areas. other the net banking year-over-year The expense drivers. quarter. non-interest are expenses community offset the the compared compensation

you. hand that So, concludes to overview. financial I’ll it the Jay, back

Jay Sidhu

Great, very Bob. thank much, you

Bob and having hand terms already our loans Bob views sort plans. maintain strong to as non-interest time, two very and in I’d value emphasize. our our drivers core as well regarding like share covered, by you capital In in ratios I’ve with bearing of asset creation in us our and XX% as XXXX, with deposits you as to it’s XXXX in important which to some priorities there business, discussed. important of to those Number grew value shareholder our of were for discuss points XXXX very it to important and as strategic one strong At XXXX, the XX% are long-term Ramsey XXXX this of I’d opinion well like over on besides we is, to able quality C&I grew are creation which

Bob Ramsey

Hey, Jay. thank you,

So, three our yes, to talk review just then first I our and little quickly a outlook. bit for top priorities XXXX wanted I’ll strategic about

very all capital targets were of target first ratio the strategic common to a of year. with XXXX and tangible end pleased end capital in maintain in with equity we is ratio strong line substantially our priority The to the X.X% ratios. achieved our at of fact We

with year generated internally with capital capital. growth expectation supported XXXX by at balance similar to levels that is is ratios Our the for end sheet

businesses. Although dip capital our we go of likely middle given ratios typical of part the to will as year the the seasonality

second disbursement modest and growth quarter BankMobile Rule to this is and Our balances in income it, to divest priority deposit expenses. reported Education average income missed anyone I BankMobile. includes deck for with that BankMobile want the did an breakout from headwinds mention case And of grow expanded segment successfully strategic investor Department of statement quarter year-over-year eight business. changes, XXXX in Despite fee our for and

the on be spin-off of track. that it And forward. about will real Flagship disclosed we going a progress and for growth our Label continue and that talked We make White with to BankMobile source or partnership is on we’ve believe previously merger business absolutely planned

and be left BankMobile XXXX strategic spin-off. of banking community for third profitability segment, Our the business priority business core business, is we will bank the the improve to with grow after the that the

We XXXX. in business’ are expense accomplishments proud of of for terms that management

In segment’s XX% than again are and in XX% in at total in that points the year the level and expenses year-over-year to charge-offs quality bank revenues overall reduce just at loans include a that a non-performing fact, loans. growth year-over-year reiterate A that bank. other non-interest revenues proud and business, in and we bearing loans accomplishments are XX I despite net with equal demand also already basis in deposits managed want couple that to slightly growth not mentioning segment for Jay growth business single but the faster does is actually BankMobile to C&I that is fair Bank. of particularly we is which basis purely goal that’s at the point mentioned, Customers the Credit the growing strength just of always expenses

While we focused deposit new growth out this remind and company’s that but consolidated just the bearing are community bearing partially deposits. room this growth over as from the obscure segment all reporting income core business are deposits some everyone products a basis, well. an divestiture and on we to deposit has growth BankMobile’s BankMobile’s year, in on units core non-interest that improvement was business want strong impact, the may deposit for I reflect does for know ruling statement bank our funding certain core deposit of paying year non-interest X%

I’d to outlook. to our like turn XXXX Now

past decided impact provide help core the likely to understand on divestiture guidance seasonality, about how earnings financials more market the thinking tax to XXXX business. our power have the of reform, or BankMobile’s and have than will its we in consolidated in Given until our we in are we future the banking

core of community EPS share. we segment, bank $X.XX $X our For per targeting business to are

to that Since issued $X by was that common our Now diluted XXXX. XX%. of target share context back put the this I – given, a company time, additional has EPS given count target approximately in the and the want was in stock

XXXX sheet size the by the We at the strategic preferred issued also additional reduce made decision and to about XX% of our equity. of end balance

in of All earnings ballpark items, reform recent us of these tax these the negative of by in back impact all items same general were largely puts terms offset the which power.

The full key drivers as mortgage Thinking warehouse invest Those revenues $X.XX assets total Bank and about are XX% earnings full divestiture timing compensation for and income by a that fee we I’d full million profitability shorter effective and XXs, count are exact BankMobile, balances as will we the the in do high really the Jay. approximately XX%. EPS very and of follows: like first slight about At to business and to and a expect tell that year quarterly everyone our the for a business XX% the back are seasonal. as the to you the over profit $X.XX $X all margin predicting the of Bank impact much in are are to expense. of segment efficiency average for in to continue net this rate to the balances I’d seasonal Bank loss range to do to in to call basis, we like on segment Now the $X.XX million quarterly. what $X.X for we growth impacted or interest increases so, and to numbers ratio of year segment exactly remind point, depend year in will quarter turn and seasonally can’t also full but business day $XX the the tax $XX that lower million, of for in year on the from

Jay Sidhu

from excited Bob. which very we maybe questions XXXX beyond with I try often as very you also – asked. and priorities the cover thank outlook, some go heard you about Okay, also to remain wanted you answer some that to strategic Bob, We much, of get but XXXX

bit question First BankMobile. talking always little about we is which a more get asked

part So, placement, their is think a that and I which reviewed investment about am good new very move – every so assured have thing upon they we based confident their are will to private equity. us more very transparent an a on process much this very, single far. decided bankers than give a Flagship’s get Flagship raise broader, has ability we’ll rather pursue that IPO we have executed to and

today, every offering One-third, for develop has a So, become and today, the in college take opportunity record absolutely single as States. this time college an has banking XX% absolute the millennials. to track United students is it States to a unbelievable opportunity dominant product to more BankMobile is you in know United them bound in had of business BankMobile of which with advantage of student offered services

Additionally, continues Label partnership, an develop expected the which first launch exciting BankMobile of is to to in half XXXX. White

value. potential spin-off of and be in will partner following the by deposits transaction. by tax-free value stock The viewed we plans Customers the to and very to that up BankMobile of any and enhance make now it able called expect under our a that set divestiture to core which compensation its will any be will and clear new favorably incentive partnership generate I and market cash shareholders, believe performance very also the does BankMobile own compensation strong BankMobile’s all this the spin agreement shareholder we payments company Bank. make want a or cash-based to to publically We intend result traded there this XXXX December be not the payouts Customers not Bancorp will as transfer of incentive

between thing BankMobile retain is will Customers Bancorp business to remain not and very serving since on BankMobile. focused over one Board sit BankMobile’s to are that be any at to note that, BankMobile giving on of Flagship that I will we any have bank taking important of – Another independent asked bank have the self-sustaining and going link our the directors all way and business I independent new directly any twelve employees as will it be charter core is to two a its Customers been totally their not role – companies is ownership any in only in of Bancorp Board. that, the and BankMobile is will and the Customers’ of involved on ten shareholders directors to BankMobile’s

have As December them late benefit improve transition to benefit the on to though earlier able of than rates you with in rather receiving wanted way a as us in banking my this sometime first that franchise, so tax to so of our to to about the at spin-off that the company’s the or $X I by second of the BankMobile’s the BankMobile exercised by achieve dividend million reduce a excited the tax a shares help in cost or option company’s of the realize it around in benefited again some am XXXX. has million second in per tax resulted these that compared it’s participate you in $X And benefit I take to XXXX the million being would XXXX option way $X exercising XXXX. XXXX exercise share, at the $X comments the of my me really and this shared $X the of and such little was of in quarter higher enables stock in in to know exercising this resulted capital billion somewhere least company capital in to options, or targets XX the XXXX XXXX. goal a advantage and by benefit company to quarter, the done going I on ratios in as was capital those stock core during even would exercise and bit bigger or normally million to I mention have help earnings

stock, as While future Bancorp. this shares, am BankMobile’s Customers I as of stock receive exercise, sold shareholder was as intend no a a I as well the very do I a to being of nor Customers that for cashless about excited will I result both Bancorp large

capable will BankMobile, I, that today and with along estimate will opinion be that is receive a price and opinion Now and about questions consideration in the the think years. on and that’s the single every value could but It is to double period I shareholder a to range I believe stock significant times any stock be always to from our that giving provide in our over to or in best equates at asked. four that terms, In before year all $XX Customers we the is current the going stock shareholders. stock of the benefit about the double of XX the longer next stock of earning spin-off. within to that company $X.XX term for the multiple, per $X $X we share value shareholder prospects the roughly a four will somewhere our get our very every Bancorp simple the in to in

grow you years, ask. level end XXXX assets return So for a see how our X% some things things all $X very the or on four does the of aspect forward, that we you and for a a by providing XXXX simple. conservative time is and can is $X of comfortably so very sometime very business being in we customers our you to or on of X.X% that billion apply a four of achieve $XX $X on beat strategy. and assets we is will full for targeted in us profitability which that of bit number about can not share of that uniqueness It return the a share We a XXXX be opinion Talking in in and service $X.XX very by within EPS that a on can at the little from may hit as to period. company of year, about them the it’s going your few Customers do our unique we focused aware clarity a things being focusing and exceptional in year strategy doing same strategic of very Bancorp important if

in people the strategy a forward our XX% bearing maintain Bancorp. it very single banking these of loans XXXX growing but Some by strategy growth the that call by point we a Customers contact, single our kind in point we deposits has of called our going strategy is we can C&I and industry franchise. banking of non-interest of contact and that for core resulted XX% private in This confident rates are

in expansion, of Washington terms up this our Chicago we a D.C. to office expansion, in expect we open quarter. the and geographic fourth first quarter opened new the quarter, In in in office

fully is Chicago in office Our staffed.

with hired a track team about and a have that the very of we We a record bank capabilities team. away tremendous excited from local are

team comes us have these is right our of very on Bank from and He part expectations team and two quality now for of – America. leader team, of Washington D.C. from absolutely in exceptional. our team high Our is our our and we markets already growth to

at to locations. these within We expect both one of breakeven year

how launch new recently checking Philadelphia, added would some market in respond share what use and by other be the X% specially are with we We’ve consumer very our is teams on in we to product product. our I is hypothetically markets, and to up in For branches expansion only we will late a XXXX, planning our product doesn’t exceptional to this a trial do discussions picked behind have sample teams and very intend to This an to team you see this that existing product. and Philadelphia. with is received in to bonus logic are we and can the add geographic bank that can attractive in about questions depositors a

the check their of generate about So of average about balance for which of spend $XXXX XXXX debit account would $XX,XXX monthly their year staying in let’s interchange on By interest say $XXX about $XX,XXX from billion a monthly this year debit below charges X.X% by depositor of an their at $XXX of we $XX,XXX checking into December of cards - monthly pay their would a in of revenues card account, about is resulting month, XX, the with coming staying The $XX or interchange. a spend a expense the X.X% be your approximately balance. approximate on $XX,XXX $XXXX.

net months basis XX have an advantages few Bank the advantage us is a Durban XX points this we to of cost – a account of for So combining the another bank and Customers and strategic this of size of of opportunity a with is exceptional for us.

banking and to for from new the take stronger Bancorp Customers view customers plans we also. prospects bank become and a advantage also by So, that’s point our benefit of have digital of much product existing we introduced this of similar and why deposits a

spin-off. a planned kind questions a may receive XXXX This increases like to any value amount bank of very for conclusion, significant I for And exciting of They through this for franchise, I shareholders. in shareholder both about So am ought to at line our in very would be will as the open BankMobile. well as you up their year have. point, our the excited core for

us please? So, out Dana, you can help

Operator

we’ll your Yes, thank sir. you, Instructions] [Operator announce name. please first, go And

Steve Moss

morning. It’s Steve Good Moss.

Richard Ehst

are you? how Steve, Hi,

Steve Moss

the spin-off over the the and think several transaction should about of we how BankMobile the the progress to regard With here, transaction next months? here milestones Good.

Jay Sidhu

to time answer Thanks, Steve. Good question. on bit Like this we’ve stated little fully before, your spend but question. let a more me

application FDIC week. next So, we with file expect Flagship to an

the complete for the Flagship technically, by had the and FDIC Even month, by this that are we strategic to and to a up deposits, of acquisition They approval of and did benefit the business, educate well plans. and so end Flagship with very needed – is of that as everything done but very only invite plan the right the some confident for that though, at share the regulatory as a doing by so, for be was the prepare application end And a they me filed invite FDIC’s Flagship with set is will are meeting meeting approach that a they extensive the good deposits. did by of rightfully entire very FDIC the this month. will and taking Flagship have right FDIC

BankMobile should after place of the Technologies. Customers spin-off that audit the will two Number our for the intend with the end by this So be of complete. file do is Bancorp month. that in SEC to is, We

file and So February. we our that XX-K file means, in after by expect our week the last we to XX-K

the intend a accomplished FDIC. They the merging follow a didn’t bank, also. expect private of that After new for So, XXXX, registration statements, up audited probably, they’ve moved file CUBI BankMobile March two We’ve in the other of early should the the as the with expect Technologies. and their has you for set file already to also become financial SEC assets the statement with of spin-off informed BankMobile to to they IPO than audit us the called is to then February Technologies they and BankMobile. into BankMobile a transaction and whereby Flagship the completed the deposits you appropriate shareholders to be a spun-off they be that was a deposits by there subsidiary public the separate which end that Flagship will have need is know, of subsidiary get – standards company. for acquiring our Flagship will so and March, to

record however file registration be we record bank Flagship second in SEC the XXXX will to and a think we date statement statement become in record the and to of for company timeframe. not important holding the , the that it they then since a date expect be March quarter CUBI that will to similar intend with will FDIC date. the So announce somewhere the spin-off

all in their investment interviewed that that who of banking their will be XXXX. So for that have BankMobile us of of have on date the IPO have different will ones all has this Flagship be completed dividend shared sometime in of the to the firms selected the the will that that firms who us receive IPO. execution shareholders are they spin-off. They informed involved to nationally middle and with our shareholders they Technologies record be known our

dividends of of believe the take we all IPO. BankMobile of as will shareholders, So, Technologies well its place that acquisition the the BankMobile Technologies at Flagship’s to CUBI’s as conclusion

BankMobile. BankMobile Customers I think would that dividend a best BankMobile. provided of and a BankMobile’s – we interest of and deck, a our interest-bearing Steve, opinion, income in be Now, question you just look information have the But credit, BankMobile profitability of we’ve in getting be about think way non-interest all for what – net lot and for to given the they segment being to based are if interest is detailed deposits a X% detailed about very obviously normal reporting at is investor given if bearing which our asking shareholders yield upon the you Bancorp credit on

those what from they would make deposits reported. interest X%, own your encourage be happen be So earning a independent, once to if at is that see those this could their to business will just you invest existing income rate, it assumptions are, two you we be can assets the rates we business times net able in have what market to but which

others. And only several Label go. having of one in benefits business and but the White lose XXXX, in based margin looking been can The so, partners. where the White would Label money wider discussions is less BankMobile and have still upon significantly already ahead and partner large one we has while guess may BankMobile it think with BankMobile this can

Flagship’s with the for answering our only of existing we we will benefit questions to and that So, management for shareholders. but leave are discuss

your Steve, So, answer, good pretty question. longwinded for

Steve Moss

what partnership just follow-up the the In you launch in timing White terms of public and but announcements the comment maybe one is on just, so Label of of there, of can’t this, terms forth?

Jay Sidhu

we Steve, it expect the Yes, XXXX, first in to okay. half happen of

Steve Moss

kind with of for through many sorry. that’s hikes, loan Okay, walk And the yield terms are The rate guidance deposit of to including just assumptions? Bank, in those and regard or am I rate can just hikes you cost? the of your how you fees in helpful. interest-bearing margin then timing

Jay Sidhu

through two rate hikes XXXX, incorporate of half they and those in XXXX. Bob hikes Ramsey assumptions, in are walked all and to one factored we the second two guidance in assumed Yes, all the rate in and you XXXX they some provided we’ve how of March that one in

Steve Moss

of in Okay. And about on growth that how of perhaps, mortgage we average the think terms business XXXX, in should an warehouse basis? the business,

Jay Sidhu

in I think few expected seasonally picking balances if is average first be we XXXX to up at the slightly you look clients. to slower to think close The more that But is our low. you’ve compared year. as And the during I XXXX. market quarter but will be be seen, expectation performance, our XXXX are XXXX XXXX will a pretty

to the you our XXXX a approximately So, XXXX. for guidance be would basis on use of quarter-by-quarter numbers to

Steve Moss

very you Thank right. All much.

Jay Sidhu

Thanks, Steve.

Operator

And to Please go question. next we’ll caller. go our ahead

Mike Perito

KBW. Mike Good morning guys. Perito,

Jay Sidhu

are How Mike. you? Hey,

Mike Perito

questions. of update in the the a me, then or few done maybe so can or thanks, but over deposits here, to pegged how legacy just both the order parts the trying to Good, One, opened the there for and us and offices is financial curious expect deposit of attract was in with just Jay questions initiatives press one either, of months strategic in moving D.C. those part kind still short Few numbers. maybe of obviously some the a to But you core in you Bob, an BankMobile six and be with kind how trend next couple I the delineate Chicago Jay. release bank early year? on last you’ve give

Jay Sidhu

of and will majority our as core deposits, core our markets. teams, assets. they for of based achievement take income their do know we’ve deposit and that asset well well All responsibility in as billion customers, it from their coming be deposits. earning and a well Mike, growth of wholesale about are and customers This be as shooting all maybe XXXX deposit fee existing all $X for are - the will be as but deposits expenses of targeted some goals as that compensated, new We will emphasis their quality combination you our in of is geographic as upon our goals as goals

their and were works able I New very $X.X deposits Park Right to XXth you bank So sure am own out of – office example, don’t a it’s December we York and Avenue. in to teams. like now, in And, to we of it legal XXX billion how our the in you and that our single XX, attract out York, is give an happens may so are running have have office be floor but New visited or Rye Brook. high-quality

office. Chicago that in England in are well deposit as New teams both in They about very teams XXXX. and So as Brook on to focused Rye their on we going out assets. targeting hand million generation in our in of clients Washington Philadelphia and a only team XXXX are deposit service deposits Similarly, focused be growth same are $XXX higher and liabilities

Mike Perito

area And emphasis do I kind you you are the or the place, felt guys like especially the mentioned this at have that of team an doest the I moving is the guess, management Chicago offices, – talent feel you with guys comfortable of forward? you specifically in newer you point that that – in mean, franchise across treasury

Jay Sidhu

year I on you management business. products for the believe over maybe working can Dick, be to more, to and comment treasury able that been believe, that We that attract already services on and we’ve a now all we have but

comment So, that. but that, on can Dick on

Richard Ehst

thank you, Jay. Yes,

and will New new completed significant XXth have February, days complete also, product to ago. product We our market. addition of the in effective in products that, customers the conversion XX for serve our York enhancements to about But our treasury development multifamily we scheduled our with development in –

Mike Perito

then, spin-off Great, moving guess, received I checking BankMobile, But outlook obviously the this of of and Jay. gaining appreciate markets. curious and what have at for a the it. given I know guess, to try less from could I clients on this guys it questions you thanks. couple guess, going the one, learn guys behind strategic growth depending financials guys you little you forward, kind X% how the as take be on the you piece maybe you of think point it? of interchange terms new emphasize And color account attractive. you see in will trial I by of and it’s some here forward

Jay Sidhu

make strategy. have to your to with very our lending we with Bancorp. now, and part it’s Yes, as deposit with opinion, built banking Customers in that I I relationships critical clear our relationships is for don’t relationships them. no Right We with us. very any think have our want deep we have that it’s customers all borrowers relationships a how of just

not bank. a wholesale We are

you managements bank business you building the focused of business to franchise that a segment. businesses. you banking have on have banking and top employees are We those and In businesses, segment, have very the happens community be

developments strategy in high-tech deeper to with that of have touch will the and achieve deposit why of supported all them that for checking the building will on it be and high is provide we our relationships which the with clients business type are of very products important banking place products we And process So the side banking we the and part that very have our the about further of concierge supplement confident sheet. bonus we all that that to our have private of to of services is develop the balance we that banking in of including the success developed completing side managements a private some and is banking the type asset clients.

a plus rate banking digital share well banking broker that as have growth is as electronic and services generate our So the on other deposit side growth we improve – we having quality more offerings that a wholesale loans but that in growth should the of we side some the we And be our in to above some We and C&I franchise. gradually of in private XX% to reducing deposits combine minus greater. that, continuing greater would deposit deposits. XXXX to today, and average lines core in and value should is recognize are on the core intention focusing addition be experiment franchise to deposit areas strategic our continuing on our banking, those be as – to of plan to our

Mike Perito

update helpful. last BankMobile everything spend and the thank just you. one, it’s And appreciate Got it. also Helpful, on then, the

forward. curious learned here BankMobile of some with is is to several now sure and has makes there need, that Customers technological Bank there of can of benefit if or what if guess, any sense. going I banking side-by-side you’ve working total help of that of process from lot been benefit you have if a the future for digital has or kind guys their guys digital could I but am am I Customers you outlook? obviously if years the side. going kind just on further you the I question and investments clarify say take those kind to it been approach learned of not investment anything that and is can from curious, to just kind Just frame

Jay Sidhu

branches. use very traditionally, is the And question, a attract Because, good it’s terms approach community and as Mike to purpose we a medium-sized think of I that to of banking ATM have of customers, the know, that then, branch network asked. you’ve those businesses small in consumers. is to learnt what you in and bank

about money does. that about branch So without the that having your to besides bank a billboard, mean, from think from you ATM get them all for customers bank to can it continue incur charges that’s I withdrawal. having

give It’s channel delivery business example is That’s cannot to services from through learnt and and digital to by transferred what working They year. only what learned? have loved customers ridiculous Bancorp’s Bank paying which That’s digitally customers, that to for five that average in means we to be size we’ve student free. to you, our management $XX,XXX a are customers, banking concierge but it’s think business customers of is our ATM customers digital world-class customers for given banking because century. Business business. of America’s just America are network, And adequated than and banks the XXth banking our by XX% which Wells what their their time apply wait times keeps our they treasury private also. it So business for banking delivery account. be by not is banking still those have Customer banking products we products can’t over branches have but offering keeps innovation going decided from They that existing electronic, $XXX, top and not networks, we’ve the in benefits approach going customers. I’ve what consumer can what them a of an human those in learnt Bank product to be liked, banks hear Who the who customer offer can better with we of smart it branches these the trim who that to is stand even $XXX account. ATM them. is We’ve are beings a ATM from the waive all business in their the the about Fargo’s to learnt knows, do in that to which we or employees can for someone all

and just the Bancorp a see Customers like you us. bank opportunities watch Now of

Mike Perito

you. Got it. appreciate Thanks, all my Thank I questions. color on Jay. the

Operator

Please we’ll question. caller. to go our ahead And go next

Bill Dezellem

with It’s Capital. In Tieton Philadelphia… Dezellem Bill

Jay Sidhu

Bill. Hey,

Bill Dezellem

And would You this – Philly? or be new in? please us are mentioned team teams in you terms you talks are share going in another have will that late-stage a adding what how of you fit with team, in you currently to with

Jay Sidhu

medium-sized have Philadelphia, a businesses. that the in banking team it, small we I’ll Currently let teams and about consumer have more cover mainly segment. which and But the small Dick business talk covers we don’t

So, Dick, could you?

Richard Ehst

$X in lenders. our we there year, a about $XX than business customer. – office, development staffed of Last million Street is less small our XXXX fully at community North business, per Absolutely, – did Broad small We production. anything has in Jay. million team We we office believe

that’s out Square. identified we small only as where small the new But we Jay really medium-size business is mentioned, XXX from we’ve to location facility. can fully serve businesses Now to build that need a that at

and team. this we negotiation middle office going through that’s So middle now are building particular one teams, teams, lower we the are right with market for market teams C&I that

Jay Sidhu

want our for advantage take We significant unique of to that. opportunity has we and business model feel Philadelphia

Bill Dezellem

Great. Thank you both.

Jay Sidhu

you. Thank

Operator

ahead And we’ll caller. Please [Operator go next. go our to Instructions]

Frank Schiraldi

Schiraldi Frank morning. Good from Sandler.

Jay Sidhu

Hello.

Frank Schiraldi

if Hi. I wanted to could. ask a I few

contribution. Bob, you in quarterly mentioned I of BankMobile First – the terms on think

the think included profitability. I – gave slight could You range you

stronger reach soon? given quarter or BankMobile BankMobile the was might profitability interchange. So, think XXXX XQ the be the you you of that I or if just so is But that quarter stronger about too implication guys wondering first could do for reach think I could

Robert Wahlman

No, – business. BankMobile is I saw you is year. normal a the and think we it’s mean, It I as seasonal for say that what seasonal pattern last

this could you year. a I expect think trend similar

Frank Schiraldi

BankMobile are you say, when mean, where profitability, only within is have to really there Customers, quarters slight so you thinking. is I the two Okay, going

better be hitting the to So slight quarter then mentioned? you you the would where would XQ shot profitability have

Robert Wahlman

mean, we said haven’t We’ve quarters. two said I Yes, mid-XXXX.

to a have side I that, So only then I quarterly you – start little thereafter. of but, a there – is of why could believe yes profitability and not right, guess slight losses bit

Frank Schiraldi

then, has And relationship back already White signed. been that the Okay. just Label to large

and should guess, of that I registration expected in I think, the Jay, up get first your should be in that that you you files, mentioned disclosure March XXXX. running half statement understanding it Is said? it we Flagship of guys’

Jay Sidhu

White Before Flagship everything their cites you, the Label know market about partner. will

Frank Schiraldi

when get saying not Okay. just But registration make we I you don’t – I – out it will that and in are thought sense, necessarily statement the to there? trying figure but disclosure would think might be you was okay,

Jay Sidhu

details launch shareholders to before the in be is Flagship about the disclosures upward the IPO, CUBI believe the we not launch we appropriate But Flagship strategy it Label will and and Label us the disclose that execution the a or may partner. may not for important put in disclosures CUBI detail to have appropriate March. it’s may may in and will everything there or making think making about question of no White about I partner that and be strap White

Frank Schiraldi

finally, are would looking take is that moving businesses and some of sheet, BankMobile off be any maybe or about up sort strategy time new for think there that thinking stock curious if then frees it just niches to just Customers? And balance interesting a I Okay. with at, and you Jay, could

Jay Sidhu

that We don’t track have to years,, record, build it’s but to continue best Frank, four the we strategies. that intend our our mistakes long our upon about opportunity huge better but from we of enough it’s for successes. is to to five a execution have we’ve believe learned that. and us And

very is to clear model us. Our

are We high-quality recruiting teams.

that by not buying We execution the build interested value franchise by taking necessarily in have not our banks are future. franchise our book teams. future the for intend We through the to to value do for dilution value

focused success on products management strong these critical teams. innovation the infrastructure very is to and We of are and very risk that

managements We who at have can Frank. as developed – leadership that is important recruiting quality by our now, the are we Those understand are development future, create the programs company, themselves. right teams a and leaders which very as bank run for well to the bank

bank. So, look in at an New as looking independent we bank. have as independent an We York we CUBI. an Pennsylvania, you New financial them example, have on - at as look New and are – are We measure by we monthly statements, New run those England, as at England Within measure detail York, teams which than teams statements measure and we we basis. P&L monthly more a them that

at So, all be to we is Frank buying are our do, we opportunities tackling are services for products enhancement and in look and and looking not blocking banks. better trying spend and at to the energy do – at just going

Frank Schiraldi

sides, a guess. doesn’t for while, businesses any okay. very of much. then growth opportunity to busy take It commercial got – you plenty you new the you sort there I keep on and that’s and going sound Thank like is of Okay, just you

Jay Sidhu

value for our be a shareholders. build Yes, Frank shareholder and to should which try very attractive returns

Operator

– time sorry. ahead am sir. this Go at And I

Jay Sidhu

No other for there I Dana, to is was any say, just if going us. questions

Operator

[Operator Instructions] We have no further questions.

Jay Sidhu

thank day. good My to Once hesitate have have XXX-XXX-XXXX. any and very at for any our don’t Well, of is ladies call and all, please again, much so you gentlemen, direct you questions us. Thank number if you joining call. a line much

Operator

And conference. Thank Thank conclude participation and your for you. now you you disconnect. does today’s may that

Customers Bancorp (CUBI) 25 Jan 182017 Q4 Earnings call transcript