CUBI - Earnings call transcript Q4 2018

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Operator

Good afternoon. And welcome to the Fourth Quarter 2018 Customers Bancorp Incorporated Earnings Call. Today’s call is being recorded. At this time, I would like to turn the call over to Mr. Bob Ramsey, Head of Investor Relations for Customers Bancrop.

begin. may You

Bob Ramsey

Thank you.

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

Jay Sidhu

investor Customers you, and QX, XXXX well Bancorp the for as ladies year good in and afternoon, dialing gentlemen. the Thank into Bob, call. much Thank you so as full

with he’s reported briefly today Luvleen CFO. in of with will who and in Analyst Bancorp results also President New on. here New Ramsey, today last XXth also later we more at Officer year. on in Chief highlights Dick Starting $X.XX CFO; the York and then as year XXXX, reporting QX you Officer Customers the from, of for us Sidhu, XXXX first provide BankMobile of you Customers just of operating XXXX earnings full and BankMobile. And an the me Joining Carla Leibold, our Operating York City financial $X.XX are priorities the loss Day October you EPS BankMobile heard joining you and quarter. Carla a Strategy offices reporting consolidated QX is Ehst, provide fourth our QX I discuss share, from President our strategic core will Pennsylvania Bancorp; Customers Chief for know, our with discussed and of Bank in we updates with on core on details $X.XX Bob

strong still XXXX, we earnings, $X.XX curve, consistently with maintaining management, credit total deposits expense core X.X% loans. culture year strong remained year-over-year as full XXXX the rising relatively very and year-end with We of during in our commercial in reporting ended while For C&I year full the credit growth longer-term expenses with BankMobile on interest X.XX% very a yield and period a an and about reporting planned operating Customers loans share core quality a only reported Bancorp earnings only flat $X.XX In our Customers Bank and only the enhancing with year. quality growing disciplined loss profitability, a of core $X.XX franchise for in principally and rates of loans, a non-performing non-interest and of operating loans. remained

our deposits more by growing total demand reliance Our our with CDs. XXXX while deposits grew on in loans, shrunk XX%, than we

over by our average borrowings $X in reduced XXXX. billion also We

about occupied multi-family the intentionally loans XX%, while year. by non-owner decreased CRE grew Our XX% C&I during our we and

total up loans. make XX% of now C&I Our loans

at strategic Now on to priorities our Analyst Day. our discussed

investment in and of a We stronger having a good towards Bancorp’s our of rate the ROA equity sheet, developing all an in strengthening tangible risk, progress are to much meeting pleased quality to manner foundation significant while the interest reducing started to shareholders have towards it achieving continues to balance priorities so our make our asset Customers ratios, BankMobile strong investment and on grow, get in in return monetizing X.XX% BankMobile. range our that our

take on of update where our me and strategic stand. you So priorities we each let

creating first through value profitability. ROAA The are want X.XX% we we over next that, four -- that target shareholder to years. priority to three years, four the maybe was improved mean we By years

higher from improving However, QX we one up end us X.XX% will is of XXXX, hope the we already get our ROAA XXXX rate help This year least possible. XXXX the assuming believe X.XX% in We perhaps margin really in and ROAA about are to at QX by middle the in QX hike more assumptions. from to at of Fed our time. core X.XX% achieve an present XXXX or in or to X% of X% the by

few at decrease our looking and C&I focusing operations. to moving to deposit our $X priority corresponding billion in and next banking XXXX, wholesale that borrowings. added in a five and deposits growth growing and more Now and deposits XXXX throughout we in about a core and strategic in was are core In our franchise. look our add a We XXXX teams

On our and billion believe and in and operations. to help the year, occupied This loans. in loans lending be the franchise definitely core decrease increase with CRE increasing a growing improving side, and in we is non-owner banking consumer our during we multifamily see about C&I corresponding us a $X going

we Bancorp BankMobile BankMobile, Customers to fourth Now XXXX. by to generate a positive on to quarter expect contribution

with in our few XXXX. year make a during and a to launch to partners will T-Mobile in expect continue at in We add BankMobile in to White the Label XXXX addition more of technology partnership investments successful

capital ratio. about TCE end Regarding X.X% at to XXXX we management, expect

fourth share million becomes financials. with in and best for back the back more future to you quarter callable be buying the allocation first XXXX. of stock year Carla come will on will you the buybacks XXXX but middle to of XXXX to give in to $XX some color outstanding and I preferred capital full CUBI, on and/or options the discuss restarted us, Carla? evaluate that redeeming Board our including or about Our continue possible of

Carla Leibold

results. Thanks, Jay, a shareholders On per off $X.XX good or $XX.X everyone. with fourth will basis, GAAP XXXX was common million and our diluted quarter income year consolidated start to afternoon, fourth net share. GAAP and the available I quarter full

share the shareholders full the or segment Banking XXXX, share the $X.XX was quarter diluted of $XX.X of For income diluted to Business perspective, share per and full net full $X.XX or diluted the fourth or available $XX.X of the $X.XX net for million XXXX. for of fourth a or From million XXXX. year a net $XX.X for share or million segment quarter BankMobile common million per million a year $X.XX year for per per $XX.X loss per diluted diluted GAAP $X.X share. reported loss the a and $X.XX of earned

$XXX,XXX, on included fourth or investment earnings That GAAP multi-family million sale results from securities and notable core related were of quarter fourth performance which around of of share. yielding our million $X.XX of and $XX per the items, a core include metrics. acquisition as $X.X severance such lower of expense quarter core the are executive $X.X disclosures million, not losses diluted earnings being other $XX Our in loans, consolidated certain on loss realized for million expenses a merger and $XXX,XXX of basis, said,

per full reported $XX.X XXXX. or $X.X core the what XX, earnings and million assets at a full or XXXX. fourth share. quarter per and of an $X.X core share from or essentially successfully per share diluted or For remixed of billion, of ended liabilities $X.XX year share diluted $X.XX reported year a diluted $X.XX reported the asset or million fourth per million diluted $XX.X core we million We year for the were the for Banking December year share perspective, core flat earnings The quarter per for $XX.X of $X.XX the balance of From full of for on sheet. XXXX, $XX.X segment our we the million $X.XX BankMobile the and Business XXXX. loss loss at diluted

$XXX On we at loan the of ending year C&I or the year-over-year, XX%, billion. $X.X side million loan growth achieved

$XXX the the $XXX loan consumer million. was Our portfolio including growth, million, ending year mortgage up at residential

at X%, multi-family warehousing to of billion. $X.X at $XXX of million billion, portfolio year Also our decline were ended a CRE portfolio year mortgage a commercial end our planned, billion, XX% or $X.X about down non-owner loans occupied the $X.X declined or As million and our million $XXX XX%. decline $XX or

ended increased a accounts at X% increased or ending XX% our and decline market replacing X% at and billion XX/XX/XXXX $XXX year million billion $X.X On mix X% Total at savings the funding end. $X.X demand cost we with from BankMobile, higher improved billion, funding increase Total and cost deposits deposits an liability direct digital core business bank our deposits money of $X.X year-over-year were $X.X core billion, at lower year-over-year. side, year-over-year or our of units. CDs at ending

up interest to the margin reported Moving quarter. our basis the quarter interest we reported XXXX. net of for net X.XX% we That’s points X.XX% XX fourth third in that the on from margin, a of

points third expansion Excluding XX prepayments, that the quarter XXXX. from increased basis

Our X side, at lower also in reflecting a NIM assets shift mainly from quarter about side, a mix. our due off disciplined basis increased our on running funding asset favorable funding benefited on XX yielding strategy about five loans the points of by the adding and and from benefited yields points basis the of to a and minimum

to well. At loans loans portfolio points XX perform non-performing quality, credit total remarkably charge-offs XXXX core basis total basis X average assets was for points. to Turning and our continues to year to end,

So by significantly previously to million. of specific quarter that by we and below of change prior driven lower for offset are our quality totaled allowances the the of portfolio incurred loans year expense in credit trend and fourth peers. XXXX improved losses relatively amount but the loan was $X.X estimated. mix flat from than continue our That for the Provision

and XXth. the shares our share, Board loans, additional about Looking resulting growth forward year consumer end the tangible and common per $XX.XX December, from book be year expected shares common you. expected will of of at provision outstanding of an stock the we it X.X% in our equity of XXX,XXX repurchased capital of fourth shares at tangible with that flat is expense come will per the of cost And remainder was on income Subsequent about about value the X% upon we of year. From origination ratios about of I our year represented earlier while throughout share. a end, a $XXX capital interest $XX.XX back improved September end, to in to target Jay, Also of at at repurchased year price an average that, was XX% X%. ratio above XX,XXX turn was which amount to of million across quarter the XXXX, earned being expected in recorded the At those prior year. in loans relatively to growth the as the during perspective,

Jay Sidhu

that private York, a the States Bank serving grow in markets is to Thanks we much, highlights summarize Okay. let as time. we for privately focused point-of-contact Washington businesses as me it United Northeast strong of single now share Customers on the our our and questions-and-answers, management very Metro sheet. New really And is the our quality well We franchise and our for before markets. a Greater believe attractive area, so believe of present up model, Number also Board the Chicago one, D.C. business Carla. you open banking at bank Greater is unique Philadelphia in starting improved and top dramatically the using balance held our have we England, investment that New

we leader that rather experience the become relies XX a clients. Number we have only which act highly expenses In have more the to reimburse and well and during period, people, on growth banks we profitability their those them. struggling have are technology more than skilled we improving model, using somewhere more bank many we many to billboards future for acquisitions. to having relying growth than branches is States available United many only use, margins customers for ATMs in and ATMs margins serving as strong level a people, that our bank where show experience our between the strategy, every for ATM organic supports as significantly we banks. industry our We believe for them, mergers maintain are and our as through an on team any model so every of Number and or and two, to other ATM with ATM are three, might XX teams years that bank’s strategy having of in typically years the a can our

management, the rates rising the curve. year of continuation or have interest in report with three deposits. is one those, today inverted in year, managing of accounts of Fed on rate functions, five You X.XX% already consumer four of credit risk and increase this a we we risk shareholders. the as the a should least earlier is have of position well ROAA of expect I about bank even think that attracting higher lowering should yield each quality, range strong the I higher Bancorp years think gradually in strong is in within management that for the year that the potentially end that or rate bank an ROAA digital continuation and across with consumers maintaining and substantial very interest if by of things to focusing the us. This flat flat latest beginning shareholder our BankMobile especially us you create of or middle in value a risk digital like is of to by strong we checking definitely the like stated one year even an achievable with disruptive at only, position, all the we a become for Number margin demand curve years risk factored our opinion few, with X% Customers is perhaps America Number hundreds X.XX% all or not thousands within as we are shared four profitable

doing confident of lot our the very -- BankMobile is the that. do a and are effectiveness we focused have team on to very We of of improve to work that

currently you tangible are about XXXX. of street at the know times estimates $X.XX X and times a consensus our we XX% to about trading only today So as X.X share at of for book XXXX

those mortgage XXXX, consumer these provisions estimates. estimates have us in consensus then straight and in will with will comfortable you might we enjoy quarter-to-quarter. in street and create the the mentioned, some Carla not that first on quarters. front-load we line where loans, business our have be planned believe warehouse to growth growth the Also and of characteristics to growth revenue are as loans see few But chunkiness by consumer due think with quarters going later are months the BankMobile for seasonal put We to

year, deposits quality. seriously management, risk becoming you However, focus disciplined focus growth expense enhancing of we continued and an in stronger strong the expect at $XX no C&I mid-XXXX. again should later on XXXX, during the crossing growth in continued core franchise look management, continuation independent loans and also the credit billion In on consumer mark bank will than BankMobile especially with

that, would So, any may you for questions of to ask Jonathan up with I any it now like to have. open

Operator

[Operator Thank We Perito with question first KBW. take Michael will our you. from Instructions]

Jay Sidhu

Hi, Mike.

Michael Perito

Hey. Good afternoon, guys.

Jay Sidhu

you? are How

Michael Perito

the taking I you? for -- am How good. Thanks are

Jay Sidhu

Good.

Michael Perito

a to had Thanks wanted for things taking the I I questions. hit few on.

was sounds on First, help, going it comment like a guys about the bit release the could starting and I to structure side, if give what of in a were little maybe maybe little that the you that wondering, noticed are strategy? more revenues boost to color kind BankMobile increasing you there bit, in fee us the start a plans and business overall I the

Jay Sidhu

do to Luvleen, you that? take want

Luvleen Sidhu

I be to. happy Sure. would

and So, mission, yes, account the add to starting with which we by remain banking. that was consistent to mid-February wanted BankMobile our have we decided in on fact have really affordable the fees vision decision to Vibe driven the is and

sort put offer the on, solution. made what of so we less to are we are So than living whatever up fees that that we still banking we competitors that and sure substantially would affordable

with able and waive the to $X.XX starting option deposited fee the month student a this -- the $XXX would deposits the graduate we more monthly adding the or be implementation fee we or Feb, be to if today of give So in a account. into

is an and that for rewarding them trying it’s are There this relationships it’s way able to for with incentive them So those banking to engaging really account. attract to for avoid primary the that. a be and really

this adhering an Additionally, feel are average this affordability an more the vision again, $XX than to again. is below NSF adding national good $XX, is still of cognizant to fee, the very But that good we will about being and can NSF behavior important think for also that lot and $XX said, a we how do fee us we it be they drive that hitting very the if we people fee avoid that we mission of are and provide in future. the education for

Michael Perito

Helpful. then… And

Luvleen Sidhu

Does that help?

Michael Perito

Ramsey, have little a of the we to White in BankMobile, maybe associated revenues for kind and And if was like the very point partnership light on was doesn’t T-Mobile question can curious, and more -- be Bob clarity not and it offer through to helpful. you Label I of Yeah. add are especially you to at economics any on bit expect maybe expenses guys kind are That then how it guys the to willing flow just specifically, maybe sounds more but but looking partnership, this of some partners. the another

think partnerships? a bit guys like more statement in help color to share of -- would terms the I anyway these income you it kind geography the able and what for of are of to little have look what will on on the

Bob Ramsey

Sure. answer I will be Mike, that. to happy

the think with revenues. past overall of on these in have revenue said what the opportunity sort as to we of to the offer of the So piece part partners relationships, have I some interchange we share is our

these the income. on help And be full and piece so will get expenses, so bear. will we what be statement share is interest end but on what will will the our see of interchange interest of be expense share income. you a income will the the to our see expenses that we income our you interchange relationships, is some we There will well, will the will portion in income what that up there And our as doing statement just come net then

be that a to So driven for us revenue and the what you net model are will us will see reported is by spread predominantly pieces that income.

Michael Perito

guys not T-Mobile. then of That’s you interchange that you what or not, the ask? sense I if activity right. am that brought was Do $X on of kind million or figured could already in I’d deposits with share the have helpful. that All And on just have any but you sure of

Jay Sidhu

I think we started marketing the, yeah, products. right Mike, even now, haven’t these

who the and early ones be this of Apple search deals. web, the to app for So kind things those as as adapters stores, stores or the happens well the

So will enough of the second we to you share that year, middle more the of there We of in share chance half be the meaningful activity us for by you, some numbers. that will there with with think the very is good a year. some

Bob Ramsey

add, that only of very started I end Mike, November. would also the we at really

only fairly So with over only a it’s month much bit little to people that time have of less start to and given enough month, we a move have a and over. you debit things use fund accounts time period the cards

So not is we have the point I at really that this data think meaningful.

we of aggregate sort better to Jay months to those see information you. bit, I have much little we information and with said, as just have think, will six share got another once account a season

Michael Perito

I make one, I -- customer correctly. just to Fair enough. sure side, over to And one Jay, then, the you switching last heard just want just

are range we then release that the number? to so So guys way you start expense I loaded, kind consumer higher expect any -- of providing in you as try conceptually the growth to provision front-end down. visualize the what said lending XXXX work annual kind that’s provision it the be think what and general be and consumer just thoughts growth, should But about will of its

Jay Sidhu

No.

versus to in and that yield are of run-offs. unsecured upon done and be going put about in the We and then simply be somewhere have get the are And it scores of portfolios our and we quality provisioning. and to they of segment, It’s of X% second to XX% performance monitor fair are we the loans because that XX% they our a these maybe are those the FICO loans consumer going on quarter between will secured other assumptions numbers and and the those we will not, whether there or simply first so say will maintaining so out, be from or to loans the replacing depends expectations, XX%. the to the in like, are we the only quarter. These obviously

Michael Perito

Okay.

next sounds fairly your half year? XXXX so first actually of then, annual of dramatic it hold should the expense majority So a theoretically like provision

Jay Sidhu

That’s correct.

First quarter...

Michael Perito

Very appreciate I Thank you. helpful everyone. it.

Jay Sidhu

Mike. Thanks, Thanks. Yeah.

Operator

Instructions] Steve Thank question our B. We FBR. from Riley take you. Moss [Operator will next with

Steve Moss

afternoon. Good

Jay Sidhu

Hi, Steve. afternoon. Good

Steve Moss

was you on? expect here expected XXXX, growth that cost will of deposit on terms in the kind wondering coming in I be what of deposit the do of

Jay Sidhu

demand through Again, -- of Steve, through to market we XX%, our that franchises. division we counting of rates and about at will the on are very the are pretty XX% deposits, BankMobile coming the of non-interest the close bearing on market deposits non-interest cost deposits maximum the and XX% majority are rates. low being to other on focusing will about our XX% the on being be below bearing deposits be

So very cost -- the is story. on it’s are very deposits earning giving aspects giving margin. expansion we guidance on for it’s different -- assets, are just yields we of are and part the of we predict our difficult us of and the exact margin But the to guidance, but just not difficult

Steve Moss

XXXX. I wondering, Right. remarks, in was in one I -- Fed expect And modeling that Jay, believe your rate prepared hike you you then are said you

doesn’t the of be? would Just Fed if wondering, what you margin guys kind the hike, to expect

Jay Sidhu

slightly We are liability sensitive.

be So help. a to it’s going

So the one one looking and this middle year, at we hike Fed the Fed December rate perhaps, in year. of are rate of hike in

in our we put but in. may not an will modeling, may which that have So or have effect,

Steve Moss

on expenses projects any pretty this adding in tightly Okay. or be XXXX, on plan or sounds a going investments rate here, like just is it run thing third guys my are there for in the year XXXX? are And controlled they in expenses you then upcoming reasonable to

Jay Sidhu

we you, adding be more we us geographic shared our markets. all with think, help a in few to like, will existing have teams, I

we any in management are make at in are planning very so spend not then on geographic area continuing build to -- our expenses that investments risk markets. our like strength We mentioned, we management. risk very, And BankMobile, in are technology And expanding continuing the that look the we in our some that, on of business technology area, we customer-centric we as the with on adding I then shared side in strategic to ending for expense, of initiative with of customers. bank digitizing a we intention and experience a Day, also going on contact are supporting Analyst process up better our through a the so focused the major you are with single point with better of much

side. there be that few on So a will expenses

on to are We all just forward. is experience mentioned improved things higher you that the people things not about management I staff besides our and going those customer we to focusing or other on are talking any revenues that so risk adding of for or

Steve Moss

much. very you Thank Great.

Operator

you. Thank

Russell with We question will from Gunther Davidson. our next D.A. take

Russell Gunther

Hey. evening, Good guys.

Jay Sidhu

Hi, Russell. evening. Good

Russell Gunther

Thank you.

growth the touched this originated all give as purchase on could on So sense this front-end of us earlier. whether is well? to growth, just follow-up loaded a include expected some portfolio or quick guys the consumer you a you be CUBI Could

Jay Sidhu

both. be will it think I

Russell Gunther

reserve about you then are on? Okay. then Jay. thanks, of this general thinking consumer coming in for book if just that’s could -- you And where the terms range a how And

Jay Sidhu

any on for So not -- we I are subprime -- going are loans. think not putting to we

we a they figure be from those a we reserve have numbers in are that X.XX and a -- to our are to those is so will happen use we will and happen be reserve. to customers will other we develop the set and what really if higher they X.XX we we accounting FICO, out buying to going that X.XX at, and So can X.XX to want in of FICO, but with. In the happen will relationship All to you loans loans be up. be will I that we discount, quality if the with like and kind a to reserving say lower can conservative so in at have they the looking some cases industry they are purchase up end a to they

you estimates to a we are quarter-to-quarter our all we But very EPS. it’s with is you with even tell definitive difficult give can the very street So -- consensus comfortable guiding chunkiness in guidance.

Russell Gunther

Got it.

the year, there. Thanks, Okay. me appreciate last I just C&I obviously, is, growth, to switch then steady one core from a outlook pretty success Jay. gears good to growth that. Last

So share just to geographically if us overall then have additional please you’d in included where with growth for strategy your come there expect target that any and from, teams? you

Jay Sidhu

Yes.

all to we million happened on C&I were loans similar of pipeline a is a have franchise idea December. booked what our give that’s above looks -- we saw they an we the and about very in Also C&I are question. $XX good of and and above, we December average, So X% good. an month yield, right strong now, to the pipeline in believe very I you

New expect completing I coming are will growth humming. The will businesses all in markets the and we markets all of they XXXX, being in market slightly market year of existing you but are and think those, lines their half would New are the within that slower the this so terms and for Washington this up our we as one in and increase. first of the in of think the area happen York full geography, full opening they year Pennsylvania second year, expect -- rates within and England In from be they where Chicago to us,

question have little incentive deposits, perhaps, generating and quarterly lending both know, basis and in rewards your to about how future generate various are both upon and calls. doing for them at based you more the our as so the profit loss on monthly think plan will loans bit Now, statements we more a deposits with fact, our teams by and And compensation a the we deposit on than teams, our teams share sides you loans.

Russell Gunther

That’s great. I appreciate you taking my question.

Operator

you. Thank

will next & from our with Frank Sandler O’Neill take Schiraldi We question Partners.

Jay Sidhu

Frank. Hello,

Frank Schiraldi

of end us just first, couple quarter. could you wondered remind the on, a of period deposits, questions deposits Just on versus last I if the

in you seems off, are based we about thought you at I that million XXth, deposits then majority like deposits know September done going are got quarter. were only the at release just I billion of you that you the So done wholesale $X.X But at $XXX and think, $X.X up here. some to in run I a commentary on billion. about was in the had

So if about talk that making you decrease, of rest what’s the that could up?

Jay Sidhu

have of sharing are are focused run-off are billion that why because of we not right, we you with numbers, growth $X there’s of one run-off, same for deposits talking our of the am term so -- do. on lot to and we points also, some that’s having about still a a will that expect which Frank, or you and a a which directionally, low at the are -- of And other deposits Well, not the our deposits ones so $X more that’s time, we going. I way you exact see we just but billion the had deposits, to that BankMobile absolutely did seasonality an of wholesale yes, have municipal and And effect. we

million we non-interest certain run-off of deposits you million come in dates, some having already. $XXX $XXX experienced the in. beginning and January, may $XXX have the about in million certain see In a -- quarters some year DDAs So us growth bearing to

those our balance you that that. on will of kinds XXst? are go things in which But on sheet. stay I can’t March the So tell

improve you determined franchise quality our So, see to confident are make we happen. we and us that that of the but pretty are will

Frank Schiraldi

year I have where a have were $XXX can you where Do Do the so at you -- at at the deposits where see can those I of understand the available Okay. you XXth, the low can... of handy at BankMobile were I million end and or end -- BankMobile I is can they September at point year. see provide just

Jay Sidhu

Sure.

Bob Ramsey

Yeah. Frank, the deck these our slide actually slide numbers… so -- got and of last has deposit

Frank Schiraldi

Okay.

Bob Ramsey

year the than September of which a ago $XXX If it, down at actually million, years, $XXX last pull -- call you at is were decline need couple them by quarter. of little bit but fourth to million the September, the about, so end they less were the over in they

So we and business pattern years. the in see same this you that year also in seasonal other see this

Frank Schiraldi

concern point? largely, guess, I quarter there levels, funding this first and bounced at quarter-over-quarter no levels has is sounds back like But, the the Okay. total expected contraction is deposit and it about in

Jay Sidhu

concern. No

Frank Schiraldi

obviously to just strong. not C&I then big non-performing but credit as give would all It’s wanted about a helpful. anything up there see And in number, I one C&I that the well you is were provide remains ask charge-offs little bit there Is relationship, Okay. on you be a did some really any and I that the can that, could color ticked book.

Jay Sidhu

teams. of were three management loans, things there whatever the on or or it’s of lack the the technology whether There Frank, two times in even focus and best smaller happen for

So think is know, best of can worse. all which credit is as say get only in the times, we can times you for we are we the it quality,

area an that about So that important that we heard very a these focus us. keeping the quality, practices for to why in you are us off management talk our you the get is and eye it’s on our eye on is and never us risk strong very DNA times that will credit that’s

in So can has company, unique say are is all think to it to we way only because go. situation non-performing we you not but our any because loans expecting one but of to up, we move

Frank Schiraldi

in curious, where are your pretty the just late your talk people mean, just economic guess are larger I we obviously seeing certainly U.S. about strong, numbers at cycle you in economy borrowers. what I cycle point, from the in the And least, general thoughts Right. this about you about here, how at feeling are being just and look

Jay Sidhu

We we our were a any of a seeing are economy remain we XXXX In expecting XXXX. slowdowns are that a There minds significant two and cyclical in was for will that modeling, and have question. XXXX slowdown. that in our what, happen that the that’s we doubt keep question. that be slowdown it will very Actually, a ourselves our not will and in to anything, that timeframe assuming a ago us guess type is asking XXXX modeling. in But makes good way we own no which believe years

happen those So will our six don’t are international that is but which too good the concerned months. we what trade, are, doing are have economies a many pretty next XX who can change. clients, and global clients over But about they there believe we the chance, to

markets, advantage struggling, and metropolitan temporarily and some employees, want there seeing we people have having impact we developed the of major in we federal difficult take of a seeing where now number benefits a time in citizens certain And them it. some areas, we a program offering the to are is of lines so and help those larger short-term are our are are fellow we because along who

economy with So be in horizon. year a bottomline, steady it the this clouds some should

Frank Schiraldi

All right. Thank you.

Operator

our Dezellem [Operator Instructions] will from you. Management. take We with Thank question next Tieton Capital Bill

Bill Dezellem

a couple Thank I of had you. questions.

Jay Sidhu

Bill. Hi,

Bill Dezellem

how relative the of the White to their with all, did business, beta out Label testing? started stores T-Mobile many First

Jay Sidhu

Bill, family, stores and internal now, really so any is is at friends seeing not test yet. available beta with which test, their opening it’s the of beta up truly its right folks, and a just

Bill Dezellem

is and general And or to tied itself are employee, family account a an carrier an That’s with -- T-Mobile, the not accepting these the phone the friends T-Mobile somehow helpful. public but accounts carrier simply account? from maybe

Jay Sidhu

No. it’s can all limited. awareness if promotion you account the marketing… and you internal. somebody the up app I tonight or not the in go an so No. But and all -- no There is download am and Bill, can is saying open is

Bill Dezellem

Okay.

Jay Sidhu

who already I and anybody to think, XX,XXX the to-date. somewhere -- that’s we yes, have XX,XXX but had, up Nothing, how account the opened have

Bill Dezellem

those accounts… of And

Jay Sidhu

States than days. more in accounts Without or of United XX% in last that’s in any XX opened XX days have the promotion, what the banks checking

Bill Dezellem

Right.

Jay Sidhu

they of from but of we funding the we in average any disclosing at levels. funded power seeing the yet, kind coming accounts, not are and are they those that this balances at and are those of are so That’s assumed

beta before test So a real this is the starts. marketing

Bill Dezellem

That is across concentrated or geographic have helpful. is in it spread those accounts when look particular the And at opened, regions country? evenly you that

Jay Sidhu

over all from the country. are They No.

Bill Dezellem

you. what removed? if may, moment, BankMobile the to I of the for a And deposit the $XXX Great. fee not have today to to month each student do then side want Thank do shift I proportion of accounts the

Bob Ramsey

Yeah. avoid fees, make Bill, though hurdles, they more or frequently proportion at this certainly hopes today and that here a use in to primary with deposit of put will substantial that of accounts that a incentive is that. choose our use more to an as -- students meeting not there account that our least it’s the the money more

to So see a of love we very total. be the it’s today, that but number small would percentage XXX%,

Jay Sidhu

of as Bill, Luvleen think around actually incentives and will -- into fees I effect, XXth mentioned the go our are February. And

Bob Ramsey

half of February, the back yeah. In

Bill Dezellem

Right.

-- me have all make understand -- I to correct let the If this would X deposit a were accounts to a imply depositing am incremental down the sure roughly each So few students month, just and I going are month, would zero million a the that all deposits correctly. million that that and round math say of very of would have you since you per the Is of $XXX month. that $XXX math? to $XXX

Jay Sidhu

range. But X% really to account start If a Luvleen And the them The in first the and it after that everybody to thinking off success will make if gradual customers. we correct of is you in -- primary it’s in does we XX% it, be and will couple potential in right. somewhere absolutely a to months beginning, be will are as that. reach checking math XX% mentioned are the X% the it it range, someday it’s

have it’s we and another add through to because available account. once more get is White banking make the to get more Label once they potential to good, will So that do either very BankMobile. our and them And value partners, T-Mobile benefits with to having these clients, going including relationship much awesome deposit or have an -- they one all that once is graduate, way they

Bob Ramsey

your they you two-fold have benefit $XXX not income benefit hypothetical because just substantial our that are in money would students see a deposit, and we will that in going our example, month to benefit there in addition a And is the will scenario but spend that hypothetical to every income increase fee balances. in interchange Bill, would spend deposit add and so the I in million a the

Bill Dezellem

Right.

that, not month, Okay. which the $X going or if that make and my no assumption accurate. that annual But students it to helpful. is currently depositing $X recognize a hypothetical if million fee the works one X would and am reverse an on accounts lead completely month $XXX the basis… And incremental million to out, That’s that quite case, of million were then I I again, per approximately take are and the that

Jay Sidhu

I Bill, will…

Bill Dezellem

Pardon me.

Jay Sidhu

Yeah.

XX%, of have about drawdown the XX% but accounts, lot we which I their students. think Bill, to possible, students XX% theoretically a of that’s who is

becomes balance let and that to fees is not a very and zero these Sometimes not because it balance, get the money comes and consumer-friendly in low into charge to accounts decided have we not negative strategy. a

we necessarily become to primary they if their and them not or it a folks, try customer. zero will those to take $X so to in account account, encourage in going And have $X their are but to we down

paying $X.XX whatever are you a but they everybody balance are So, will theoretically the customers, be deposit don’t month if right, fee.

Bill Dezellem

neighborhood? Which that is roughly something annually $X.XX a of earnings, in share

Jay Sidhu

Theoretically possible.

Bill Dezellem

Right.

the the of earnings so a year from really around in out $XXX from world, theoretical deposits it between, putting that’s somewhere that primary fees of incremental million this realistically, which likely move from account. $X.XX of per fees higher come hopefully to if also then falls but potential so the higher we from fees interchange bracket a month share And would leads the and $X.XX, the making to

Jay Sidhu

That’s correct.

Bill Dezellem

time. Thank you for the both

Operator

Thank you.

Jay Sidhu

Thank you.

Operator

showing At Thank the you. I in am [Operator Instructions] queue. questions this no time, further

Jay Sidhu

evening. Thank so much Good. a us have Well, thank and us much, email you for if and a further questions. very any please you you have ladies in give good and or call calling gentlemen

Operator

teleconference. gentlemen, today’s Thank this concludes and you. Ladies

disconnect. now may You

Customers Bancorp (CUBI) 24 Jan 192018 Q4 Earnings call transcript