CUBI - Earnings call transcript Q4 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day. Thank you for standing by and welcome to the Customers Bank 2021 Fourth Quarter and Year-End Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers ' presentation, there will be a question-and-answer session. To ask a question during the session, [Operator Instructions]. today's being that advised be conference recorded. is Please Instructions] Thank you. [Operator the now to like would conference to I Mr. hand over today, your speaker Patti, Bank. David Customers for Director Sir, please go ahead.

David Patti

for Thank [Indiscernible] on Fourth the the been the see year-end presentation page, for morning, during you The and Bancorp's bank's everyone. Investor XXXX. www.customersbank.com. you Thank joining Calls Relations Good Quarter us website posted deck the of for today's Customer Earnings has you at will webcast

over and You on the can by hovering access Earnings line clicking Presentation. deck the

Our through Investor or I to includes will Presentation important details download, on encourage we that use, print walk webcast. the document. this morning's you

statements light events, Before may of presentation Copies applicable update the and statements the we make date of considered website. more speak note today anticipated. including to be remind we XX-Q description forward-looking the a of Form to factors refer a of risk or XX-K SEC in to future results. visiting the this like be SEC Please our undertake forward-looking these obligation our our statements forward-looking subject of for number except we you are that currently or laws. Relations Please that by to by and section risks securities we only detailed would some these required to affect may Form of from extent our Investor the no that information of new may filings, These obtained and the statements as begin, forward-looking.

Jay, pleasure Jay the yours. to is this introduce at Customers Sidhu. my Now Chair, it's audience time Bancorp

Jay Sidhu

presentation remarkable joining year today you We're achievements. from our attracting for Customers later, in morning, call. well-known the commitment, will And saluting high remarkable make very team, well good talent QX institutions. and XXXX, join as this the today, our in XXXX was also their you two Bank so hard and privilege please company. year morning Dave, huge, so had much their and ladies much, their a in in proud the opinion, or several very work, we gentlemen. our members you dedication, XXXX see me as the helping team past year investor as for of for unwavering Thank us performing for Thank this that of

a me achieved year per per of Now for Leibold full-year Officer QX 'XX. Customers on XXXX, the up Credit the presentation, $XXX.X share, Bank. was the Customer's is Andy well earnings over per million $XX.XX to full share, and core Chief the Financial Customers of year Core Executive QX as our above PPP record Officer $X.XX full earnings morning Sidhu for of quarter share, joining $X XXX% up or for Bank, Sam Officer Carla XX% Chief of as $XXX of XX% $X.XX XXXX, our full-year year And excluding we up Chief over XXXX of well the over XXXX. Gorman, In Bancorp, EPS or XXXX. this million guidance

story our since beginning. for vision the remained of growth part has Our a

financial of in $XX pleased we're Customers XX% $XX As company, million span into bank time. this we stock from institution approximately digital valued special able we puts to some of million in XXXX. our was XXXX about provide of a or to BMTX billion, a with distribution which BMTX XXXX, January we approximately accomplishments shareholders problem Bank to began equates were X XXX and XX Bank a in see problem BankMobile staggering clearly at and at that In this involved which divested us that making you institution, a in got grown million of a a in $XX bank technology-driven $XXX top in Customers investments other as can Onto has promised with the assets United figure by of which inherited small years, States. -first, Slide X, as of back QX

also year. We the deposit by the are of with preparing the agreement for end of servicing BMTX exploration now this

We to and will in pre our generating accretive about average considerably net expect beyond. that our to due deposits, low core $XX these success million cost above by explorations in -tax be income XXXX

helped block only funded would significantly chain-based loans the equity doing through funded tangible by now million to instant in a we and X is also but over this initiative jobs, $XXX $XX over these added In close accretive year. to billion the approximately the XXX,XXX or forgiven to save $X.X XXXX, SBA October PPP American common businesses $XXX from our and total launched have million either PPP fees of middle also loans, of cost earned We began earnings bringing not array clients America. levels PPP benefit only across government. by of totaling XX that to of growing generated in our about which payments no-cost, of deposits BXB the as or small to directly capital XXX,XXX immediately token loans no want days. our indirectly, no the to are payment billion instant serving billion, close and who X We million XXXX, over deferred loans This

in the more highlights. a let's on get few, will financial We to initiative details but about provide this now

average and was First, the I'll X And million, a record that's $XXX earlier, from with X.XX. assets XX%. This of pre quarter. represented shared perspective, income net and -tax, return net and translates which ROA -provision margin, interest quarter common a you margin, X.XX our to on a current -- earned [Indiscernible] earnings Slide X. core I as the X.XX% in for of focus XX.X% pre up equity earnings earnings, of the of $X.XX We on

ended core Now in typically. with quarter excluding the moving onto we billion $XX.X the sheet, assets balance approximately

about XX% $XX.X $XX or estate was loans, up million. or up about was were million. book about XX% $XXX of real or end occupied the up up XX% C&I million. Consumer loan the Construction billion. Commercial quarter. $X XX% at loans about Our $XX or billion owner was

around. [Indiscernible] decline, the but will you multifamily that's the As so to risks saw, turned some business, in continue we

You saw the this continue we a feel-good growth in an you to -- quality, building because quarter asset greater that quality are fourth in really index our good should good we and of as that as credit Multi-Family year a see Loan pipeline. much now as increase

deposits. continue driven monumental backlog franchise, efforts levels. at across Our growth loan year have to Total success XXXX from expect our with we double-digit associated $X year-on-year, $X.X Token level I've deposits our into loan Instant grew this amplified or and and by Customers pipeline you deposits up overall, our low-cost all-time commercial about and category earlier, teams, an And in bank CBIT. by high our Bank in the XXX%. in are to team's billion as brought grown deposit with past we by Demand no-cost billion digital shared

all in are to CEO - XX%. Sam XX of I Sidhu, you NPAs and And continued support quality growth excellent quality. over CEO to details. take non and reserves superior our think have up compared [Indiscernible] I maintaining of were now just President Bank about NPLs of Our credit our your and and to quality the we started the asset franchise will growth. this through XXX%. all basis just to at of Strong the while it's and the of with next we want for credit points to getting Customers you continue a at that phase to core turn is to young company more thank amazing it Sam? period

Sam Sidhu

you, Jay. Thank

In the CUBI expect creation was In and tremendous stock we the plan business to strategic to year unique on priorities. guidance bank so record accomplishments our continue me number off have XXXX, a achieve for resulting well that our for helps we Slide what drive XXXX, our for capping Customers for Another XXXX ambitious our in our and returns for innovation are XXXX, out incredible hyper-focused we Both roadmap shareholders. for and explain quarter laid This incredible makes let and X, our Flipping on to said proud are on delivering. model value creation a we X value you driven in could we what incredible strong shareholders our what return. significant as has Bank unique will company. which delivered are as update shareholders. that country

covering Firstly, banking new community on geographies in and a we teams reboot Florida, office. recruited markets. expansion new the to Texas, the and X on the Carolinas new of Chicago several annual This slide. region, total In XXXX, plus brought the our capital Pennsylvania

course several added existing as over teams last also managers well the in the of the to our new We executives as and year, quarter. relationship

continuing to grow on existing focused also are business We lines. our

quadrupling a over year fee begin now multi-family also began the target and grew achieved and gain with our ending we income. by million year XXX% by originations maintaining will stated total portfolio. on previously our in sale As our of $X.X to we SBA in grow the we income

In XXXX will to priorities, C&I banking terms of teams. continue community regional recruit we

several have fact flight. conversations In in

community to more. Our by XX% expected about or verticals are grow

grow expected off by lower albeit XX%, over to SBA a is While of base.

as verticals last lending in high-operating These and to Fund referrals capital $XXX quarter from enabling strategic customers. customers. new in as To over in general, supported institutions new finance, verticals existing lines competencies, the these well existing deposit-rich year. are middle XXXX, Moving low verticals heard and technology, to existing of with operate last with close cross-sell expanded Jay, clients banking, come leverage inherently characteristics. next this, the from our the In to specialty venture and our help risk, group. credit you emphasize X core we launched as we million had are by financial

well also XX%, existing specialty and with by lending finance year, estate Our equipment XX%. finance XX%, by lender by the verticals in incredibly real growing performed

year, teams outperformed in to be future launched mortgage at billion business new cross new verticals. verticals, over lending. at evaluate verticals $X each including $X asset to lending, importantly In lending existing $X.X line. also will And these including digital in specialty specialty target individual Over we plus continue least warehouse to support We recruit a billion. estate billion-dollar new in to ending verticals, XXXX, lending our expected prior which are will our lending, expected technically of formerly outstandings. of growth This on time, was we 'XX, cumulative to is billion just about real

have senior successfully we ourselves our efforts, page in industry tech the new in XXXX, to to we executives banking Moving number technology broadly. innovation leader right the team members. the and reorganization the FinTech a and a key In of and space as and of a digital established banking banking more completed digital and technology in side hiring

At a achieved we over the And importantly, well website big Customers bank our and a and customers, unique, a at platform. banking Neobank has that medium-sized acquiring very in credit-led digital is profitable million Bank, we within customers acquired corporate half our digital completed which quarter, market. also sourced channels and by have business relaunch, our re-branding customers, through milestone created been crossing extremely consumer received very scale. through and We the the small

$X.X more underwritten source, to loan lifetime loan Moving ended consumer of direct digital We and funded since a credit origination specifically, portfolio personal $X.X billion program the billion. digital inception. of [Indiscernible] loan with our personal business our topped through

funded origination In we XXX,XXX our as SMB, in to terms XXX,XXX heard from of $XXX digital year, total, bringing the funded, loans for generating million small loans for you bank. and PPP $XX.X PPP in billion the medium-sized Jay, or businesses fees approximately over

first now have launch. in deposits CBIT-related the of in attracted billion XX We $X.X days

for our effort Finally, lending FinTech Banking-as-a-Service we partners. a launched

revolving to forward the well quarters. Digital through coming base our to to are This journeys will a digitally native marketing and products the for XXXX, customer as relationships digital products offer customer plus First half-a-million number As to look be on portfolio data who multi-product prioritize we advancing lines and presents cards, of our to credit analytics as tremendous our team SMB to our cross-sell create in credit Consumer teams our we for science loans, of this add data a term opportunity digital base. help seeking roadmap

which $XX our we million expect least, to $X run to million rate a banking of not expect efforts, XXXX $XX of but revenue increase to we in in as-a-service last -- revenue as in over XXXX. result Importantly

and Moving evolve we to from bank to a beyond. community Slide X, community a bank digital as super forward

industry payments team see best recap environment chain initial found primary by We've much entrepreneurial as talent left deep last in on of circle an significantly the new needs the here verticals. asset well related shifted X, team. business opportunities on our based Banking XX digital them organizations is also a the network vertical launch from from to for required creation year. block and each that we in and shows scaling as turn bring on Digital best-in-class competencies have payments strategic priorities. of customer of strengthened our The many as out from have effects. and Flipping Slide members soft instant our with our Asset talent sticky we slide the rapidly and exciting much Bank. today the Our a more quick with Customers draw to institutions, the the in our who larger, recruited the lays experience focus approximately by customers to creating in led our hired and powerful firms practices, tech-oriented our in relationships We new acquisition launch cases, exciting customer launched We've are platform,

ecosystem. engagement our more our driving and thereby network focus be growth, Our connectivity XXXX in attracting strengthening growing and into API by inflows customer will on

We in now customer are mode and launch deposit XXXX. full expect significant in growth and

XX on PPP. Slide to Moving

Here to year-end, summary of the at which balances decline. a out PPP we lay continued

addition purchase realize in quarter, In additional most quarter, several will the PPP the which XXXX. million we fourth $XXX in the adding portfolio the to in another of revenue, dollars similar for of discount million third portfolio million of $XXX purchased

remained which after It's we a with This We forgiveness to slowdown versus deferred on a we our if, of about this is Direct surged not momentum, fees, has be Voluntary PPP impacted SBA this a NII mentioned, platform. application million will when slow this expect Forgiveness had Jay but timing recognized question in saw X January. forgiveness in As of pushed the technology move. into consensus, origination which the $XX year. mostly be XXXX. still and partnership

the ahead XXXX. up tactical teams CBIT industry. some commercial ramping gearing the growth Moving year-over-year. grew very of us were be or up geographies launch by expansion warehouse, we through in in is for by mortgage loan and teams up 'XX to to billion will lending the incredibly setting But PPP excluding are characteristics. significantly growth in quarter, well loans, loan which of Slide tracking and of a XX, record proud for XXXX quarter, nicely our our verticals. summarize, dollars These walked XX% adding throughout We Jay the and and

We improvements significant have remained our record pipeline at our had and and mix in backlog loan levels.

quarterly this bias of expect We year. of $X upper $XXX are double-digit loan million growth end, a the growth be reaffirming average with to guidance we to of our an to which loan

or Moving $X.X year growth on to year-over-year. Slide deposit XX, had we next an incredible with billion XX% of growth

$X.X our up Importantly, to were non-interest bearing XX% deposits billion.

slight reduction we our in well basis a which out activity, quarter, decline to rate. took quarterly $XXX of points GDAs with expectation significant million low spot quarter XX as the resulted deposits number As down mortgage market balances. deposits of cost $XXX initiatives points basis the million, a seasonal about the These coupled of student linked and we further as in actions to warehouse lower was cost in XX CBIT of with funding future and have reduced and no laid for last addition

run However, Many it through rising significant growth in our out the banks with this With Carla backdrop room pass grow financials. still rate of and expect that, to by expectations. but cost of was deposit we bottomed have reduction deposit opportunities have I'll on environment, line rest to to potential. to deposit the CBIT a supported our remix facing the

Carla Leibold

good I'll focused key on morning, everyone. Thank you, topics. Sam. X And my comments keep

investment the net strong the in portfolio liquidity first loan ability growth bank. two, organic interest core future The resulting to income generated is growth by and growth. Number ample fund in significant

in significant well-positioned quality. And sensitivity rate accretion for value. Fourth, book asset future hikes. credit tangible and and exceptional being X, number capital third, The

slide start net the XX, XX%. the year-ago fourth quarters, with increasing shows and This core increased over interest growth net coordinate net and strong the margin, income interest quarter, of to trend excluding PPP. income XXXX, Compared to I'll Turning past loans. slide driven C&I by largely quarter the income in consumer interest five interest

down our also while quarter-over-quarter, see of yields continuing we've can deposits. that maintained our to You loan cost drive

year-over-year, the percentage interest-bearing are well in of significant that there as point been decline the non-interest-bearing deposits. in deposits of XX a cost basis a Additionally, has increase as

to Slide on Moving XX.

in in You of liquidity particularly our can the see tremendous back position, XXXX. growth half

tripled $X.X over has At has investments and than about close prior to Our we billion borrowing of year-end more doubled year-over-year, which quarter. portfolio of had committed includes billion. $X the XXXX, liquidity, capacity

MBS Our and the CMOs. portfolio investment with of the portfolio invested remains in well diversified majority

first growth. fund securities to the investment ultimately characteristics used pay that Our excess is loan down before in I'll organic earning costs in then a wholesale deployed of our interest comments shows higher is overall make Slide used cash strategy and or unchanged funding re-pricing to few here. assets. it any XX remains

exceptional, XX% Slide modeled quality near-term using XXX scenario, our basis improvements the points in environment. Net are scenario. stable. First, XX% perspective, significantly an in remains in given sensitive deposit turning And A our XX XX% our to Briefly are internally Income basis Interest will or that expecting asset credit deposit strong less in XX. that we've year From over level. increase our our meaning made past interest costs to and be sensitive few interest Overall, and up outlook of to a a so, XX% an earning related rising second, XX% assets rate we franchise deposit beta our credit market to comments credit reserve high-level XX to rising are to transformational points to reserves quality the up we've rates. remains and

than we charge-offs. XXXX, our current loan $X commercial of million by And prior have became less all XXXX. commercial of For year-end deferment

over which XXXX year the points improvement risk-based XXX ago. end capital up estimated preferred significant points redemption This at related revenues. accretion the our total decreased basis the in up XX tangible about the about XXXX, basis PPP December basis as XX% our the TCE capital fourth periods was XXXX, highlights was really over year up the despite is by a X.X% December third quarter is slide this year-over-year. million ago risk-based quarter spot XX, XXst, our period capital core The from as the the a $XX.X book total standalone XX At risk-based of excluding in stock Slide value ratio points. That's on well presented. to X.X% driven of the Moving bank, basis XX. total XXX PPP, At by profitability reported of XXst,

you PPP is the in million forma Lastly, [Indiscernible] book with pro $XX our will value fee, remaining $XX. if or you, I of deferred Jay. And that, tangible origination back above to it turn at

Jay Sidhu

can very Thank you you the of upbeat are prospects as we team company. very our future these are Carla. and much, of really of remarkable we proud achievements see, And our about

profitability, management our growth core at on summarized Looking XX as and while our a months deposits, we months, over quality. in expect in prudent to industry within above-average, well low-cost growth X to XXs as years. And as we well are the XX, expense low way loans the revenue of the next core maintaining efficiency we Slide the bringing double-digit on X focused average the credit XX combination above as strong through improving years ratios next

environment. higher We rate are very well-positioned for interest

rate We rate we increases that in assets we current As the market our modeled from continue interest-earning with a will that expected sensitive, XXXX, and of possibility and the to environment. in increases into believe is low X be the beta deposit heard XXXX. there in Carla, XX%

strategy power huge believe From contiguity Bank, believe and point-of-view we doesn't the allowed the somewhat and to the a of program, will common of average financial participant incubate above core $XXX generated be matter helped this tech to project had The believe aside, us million our for coming because compared to in approximately And benefits for of the lines for best-in-class we businesses ours, growth support that it $XXX we also PPP it's friend it'll a new PPP rest of be industry, major us, which we prudent remain earnings our of a sustainable that asset to our However, recurring be equity in is us least a years. in by sensitive. Customers attractively current to that million or of the over is our of $X that shareholders. the range creating share $X.XX valued, bank. Q&A. value, XXXX, shareholders stock We well our for to X XX than that $XX $X XXXX. guidance huge the end-of-year it's of like see pleased of also shareholders. yield upside I above our would in X XXXX with either Operator And With of share about to and open guidance tangible at years you like our times please less previous it per I'm number that we potential adjusted XXXX, or X.X team believe XXXX ahead of for earning. is were at to the of Carla book $X that, XXX% share. up And explained times the XXXX our members about us

Operator

line as please, [Operator our of Jefferies. from the And instructions] Thank comes reminder, Haire One a first you, from moment, Casey first for question and our question.

is line open. Your

Casey Haire

Yeah, everyone. morning, thanks. Good

Sam Sidhu

Hi.

Casey Haire

touch to high. if sounds pretty at here growth. an heard on start I'll like a you fourth all-time (ph), the are right, I And wanted loan pipelines step I Jay it quarter. the big Obviously, in up --

mean, coming growth and could a little off XX% appreciate but level, bit of loan like very bit link-quarter bar. I annualized a -- So double-digit more little you low more frame seems a could XX% put because the pace that -- you we're a

Jay Sidhu

you this? want to Sam take

Sam Sidhu

Casey. morning, Good Sure.

momentum quarter. XXXX, was set have To year by growth, businesses: XXXX, building of with the off recall, and Fund XXXX half fourth a bit created led we in forward about a X. slow put being many back of was about by on a grew the think it finance specialty quarter. of the little look our a that, we we point in to first relatively X. block loan million for will that be the of we finer $XXX memories. year the as end the as Having the we our said As banks, of all

by in the lender XXX business finance quarter. billion grew Our nearly

$XXX to closer to as of $XXX XXXX, end we of gave look of quarter QX. that in forward average higher We've we in So million an XXXX. guidance per in adjusted to the $XXX million million that range,

Casey Haire

Thank you. Gotcha.

Jay Sidhu

I multi-family the greater a you, to you also mentioned, we like Casey, $XXX only growth, are think, area we that. And in much as than see mentioned seeing saw that I million opportunities I

I think was mortgage does warehouse correct flooded. that going the projections expect the are you be going business, that we probably that we not happen, if And color to and MDS think warehouse get also industry might do be the folks haven't -- see the the mortgage business -- better factored that than what in But have most model [Indiscernible]. expecting. we we a will of are to

Casey Haire

Great. what switching growth provide CBIT than Could just saw as quarter. positive, bit drove pretty the is very prospects a you there. a in strong Okay. deposit deposits, just some And going what color on just like that start little sounds in lower you forward? moderation to and what still upbeat the you're to growth It we the third expect

Sam Sidhu

Absolutely. Sure.

out for laid the quarter. It soft to. launch adding fourth of which deposit to no customer said in we their increase There's really real is at existing customers we bases. launch, was As we've the a XX-XX stuck the customers just platform, what

of that over ramping base first While the grow in not customer did appreciably, up network year begin quarter course we the customers start growing will as and to strengthens. the of note the the number the

Casey Haire

of reasonable lot good. is like of What growth the for kind are 'XX? recruiting. here. lot on you And on new Very and obviously, expense sounds expense verticals Okay. still side, guys A a going

Carla Leibold

Casey, take I one. can that

with certain that was I think at us expense First, fourth management walking Quickly them, transitory the just is $X quarter, want important in our items consistent it's there quarter. of to non-recurring or understand. that focus fourth about through always to quarter last And million Customers Bank. comment results had for

to The $X.X third performance tied of incentive quarter million we had items. we that in non-recurring But of fourth million about record the quarter, accruals we that had financial about was achieved. -- increased XXXX incur the $X expense really

occupancy headquarters location. it's related it's was the but in attractive of and fourth that much the quarter $X.X for was to Secondly, a That was expense, efficient our as in -- place that of our move really some results. resulted there There million bank's about previous a took headquarters. relocation in recorded more flooding described

$X.X sponsorships, -related. of tied and $X.X some million We had corporate was a couple was the of which then deposits. which And increased we then And servicing-related there that miscellaneous, charitable also million. ESG $X technology service increased growth of expenses had to totaled were in million XXX,XXX BMTX contributions, another about

So see when around what trend as of you third at the can -- quarter, stable million $XX remained look relatively second, expenses for we core the $XX our you to that think million. at and fourth

as the And surpassing. so when expense we we're and XXXX, not growth growth level efficiency sure we on, think the of that going The and focus that and we in out growth. should expect throughout services absolute related revenue ratio increasing into making you ratios, measure really seats guidance, really in to of XXXX XX gave are thinking ratio is XX, is about low see PPP And well the the revenues, so right XX% expense then key XXXX efficiency in guidance expense on. with below deposit the that some XXXX, focused to But that the the efficiency that associated the to will to agreement expenses exclude that and to get XXXX as

Casey Haire

Thanks, Carla. great. I that. Okay, appreciate

for last me. Just X

well over to guide just of about make the this I'm right. 'XX $X, thinking EPS want On sure

is a service number doesn't on you benefit rates deposit which in that agreement Assuming mobile you an you around to factor from the $X.XX. any get correct? high And asset-sensitive lapsing, or about that that then have from sheet, growth $X.XX puts bank and 'XX balance in anything $X in

Carla Leibold

correct. that's Yes,

Casey Haire

Okay. you. Thank

Operator

Peter of line the from comes question next Your from Securities. Winter Wedbush

open. is line Your

Peter Winter

just Good I'm $X.XX of but rate $X and X mentioned to you that guidance at the model $X? included morning. year and that environment more Jay, this you is hikes, you favorable $X.XX the reconfirm in assumes wondering, had given guidance point Guys, that to your interest one EPS October, guidance in is rate but

Sam Sidhu

that models gentle speaking, we a who give are precise the knows, Peter, on company we at. overall Yes, not guidance, generally running the number

So aspects portfolio. do of yes sensitive. our loan on asset flaws We we certain some have are

bullish is things evident We And have to the company result global because we saying going this give in, of year. be be Again, also earnings precise going evident on been is really Interest GAAP the you there the until very but only continue Net up above those to well leading a in factored the earnings we're This XXXX. think invariably going have And than to the -- are numbers, real year, into [Indiscernible]. second that's as in, will higher well power factored XXXX, six March of of I as that will opportunities well of why accelerate because rate be higher We a as PPP. Income of our very X forward, of all above stocks. XXXX. half rather not

Peter Winter

different $X, can to $X.XX back ask Right. I If estimate? one does any that going Does way. earnings than assume rate -- hikes just

Sam Sidhu

Yes.

Peter Winter

Can talk impact is? ask Just XX the point to that? one interest Okay. income what hike, net does? more can rate I It you basis question on for about every

Carla Leibold

basis betas we I -- that I and about we're so can using to the between keep I'll points, talked give points Yes, that, the comments think deposit XX% to some and XX XX basis guidance XX%. on and focused

model point at NII up more that a see think use. estimate points I -- I XX%. good scenario, X% XXX to In internally than an probably should to up-XXX that's somewhere basis say you basis give conservatively to but I'll you we so a would Looking that, scenario, between expect increase

Peter Winter

about you're than the And it's CBIT or X, I'm Okay. of -- And initiative. CBIT just wondering type had originally out rolling planned. if of deposit you then it just growth quarter -- Thanks, growth it's any just terms launch, have in see good Carla. to on looks a earlier guidance the that you like Sam, from it customer

Sam Sidhu

Sure.

as is that approach, to the the I mentioned, bit way right walk we a are to think year. And run little I -- walk, that mentioned, the give it's course significant the previously guidance, think specific it's as over to stated expect crawl, of the now. about taking you of beginning at we difficult we be as I launch, started it think it of to we

the payments increased efforts. level there's gets a deposits to and volume and network [Indiscernible] to we'll lot a where naturally scale, connectivity see then those As more

So we that specific from at have first a in least what while not can you we're is base perspective, the customer guidance, assume would giving quarter. probably doubled

Peter Winter

Sam. Thanks, Okay.

Sam Sidhu

Sure.

Operator

from line comes question Perito next Michael Your KBW. of the from

Your line open. is

Michael Perito

good everybody. Hey, morning,

Sam Sidhu

Hi, Mike.

Michael Perito

that. my taking obviously, strong And congratulations on for Thanks XXXX so really questions.

some wondering Just like a Based opportunities on stick growth will hires, year. in of the that that have couple Sam, now really clarifications -- exit start it I pilot if to you wanted there. could you what how what transform about as looks aggressively growing you not working more just seems also could areas, you I second pursue spend to to and the half everything believe I getting making targeted the to curious XX functions, on the what you customers but on pilot those about I only said, and for will what out CBIT guys the play touch to second you platform the as was back presumably XX talking guys about year like customer on. the just a sales a pipeline -- on the these sure obviously mean, process so made

Sam Sidhu

from is a need team to their for, businesses, bank customers key space, period Mike, this take way launch, It addition also you payments. critical to technology, about I boarding in partners the on was looking about grow But where, it Absolutely. with to what time pressure to infrastructure, of as to for test mentioned, and soft time. think to think very was think that. to working be, time spend over The processes helpful was members their Sure. the very they where it tactical. of the the the they're

quarter. we So double the we mentioned, the to base in first customer as look we'll,

think We are participants relative networks That's adding about customers of spokes more that that we're we sub-verticals. for Think with of payments, the various the API hubs how the automation of each the over of course road-mapping and previously market and the year. described assets the way to and the digital of expanding we are connectivity. as

may over talked cutting and legacy, services for which also we Banking the year, Now, edge as add of about, Digital coverage. well products the the Asset over course we other lending, and as

Michael Perito

are that guys about USD when elastic digital you is products exploring? due loans collateralize lending, asset Okay. that there to you talk are other or And

Sam Sidhu

Yes.

they're So that they regardless participants digital loans whether the could focusing would backed asset Bitcoin. be to then also industry. by lend enterprise they point, are to, would market specifically, otherwise loans of that include to And we your collateral asset digital

Michael Perito

Got it.

what what a Okay. you $XX pick new the that that fully of billion. sense be will that back the better that service conservatively what that in -- actually that get rather, guys at Helpful. makes away? you then over that incorporate that of The and Is honoring exactly? though loss of comparable even up, agreement. costs correct a Thank or you debit replace believe rate up you. secondary deposit on Is moved the guys And is costs? million And rate, deposits servicing will then service will BankMobile that, that accretion on and trying you were the expiration, just BM -- also interchange moving is to Technologies there? with $XX number deposits the Is I termination Just also? assumes guys

Jay Sidhu

Yes I'll that. take

in set At look were able this was million result with to with Mike costing we and costs million why about maximum to with to were profitable any costs so us, basis they deposit. when up replacing will them up -- CBIT more heading basis much are locked them deposits are you these BMPX. now That's owning flat right than agreements we XX assets you and us be points they the us, become we those the -- we they deposits this are and profitable have rates but number time, for when XX to cost will as that expected as lower that's strategy. a of as down. that. So are will yet, call of And are know yes, we at $XX our be transfer those why of categories points that the XXXX expenses you well overall coming deposit both we we grow to operating accretion as $XX be of confident those, And expect plus up includes they servicing that that replace have will agreement, funds

Michael Perito

Okay.

Just it of then it's out come mix though, it'll that be sounds the geography, fair costs, also lower replaced potentially to a the from but of spread like representation be clear million will accretion? assuming of that of expires, lower Is a $XX on the all kind when deposits? higher funding geographic expenses that with CBIT

Jay Sidhu

that's Mike, Yes, correct.

Michael Perito

EPS reserve that at sheet pull-forward the lastly + size 'XX now maybe and guys guiding the me, EPS just you that rails you you the guys then bank And percentage in was balance that well, are ---- give in operating see generally Okay. the time. $X some the I $X if of just of wondering for to, could around

with obviously, a any moving Just targeted and for X of what's PPP in bit you of be would target, you with lending but the me. liquidity know provide the a of on system excess guardrails just of kind the kind some is also helpful it's have I niche items those can

So just you could provide. appreciate anything

Jay Sidhu

balance agreement at Sam core well time. so the this with our on having to a run are capital of this can bit ask higher At improving through be then numbers mean termination depletion that a give into that. color replacing And are cost year very servicing some by course, increasing sheet, you we year, same sheet. Overall, of Carla to and capital balance is as be but deposit accretive disciplined you. next of as to off to of And not lot Carla greater then more I the the going about and of see, ratios. maintaining There's quite our us. much going quality We those we the by stable, deposits start looking I'll BMTX our significantly deposits.

you that From $XX the point balance average you of modeling view, by a sheet, all somewhere up. quarter combine $XX, of in assume size that billion the should we bring that net $XX when to total So balance.

Carla Leibold

reserving from then guidance a provision obviously, per give we se. And perspective, forward-looking expense Yeah. don't any

it's still using coverage makes sense, adequately Mike? $XX which is and that what Our quarterly right XXX reserved. that internally when we're that looking out to we expense provision million we're now at are about I modeling model. we're not $XX far, if conservatively to think Internally, helpful, which ratio feel we Is

Michael Perito

Yes. Thank taking guys it. for questions. my you Appreciate all

Operator

Your next question the of Moss Securities. Riley comes from Steve from B. line

open. line is Your

Steve Moss

Good morning.

Sam Sidhu

Morning.

Steve Moss

think course heard year. and the here to customers about over Maybe the Jay, of off back the backlog curious of that the first to more a doubling have I you in just customers going the you're pipeline potential than with next CBIT the to quarter, the starting the customers. -- over -- the of just as size how

Sam Sidhu

Yes.

to this focused stated backlog. necessarily wasn't we I think we type in and pull It healthy a to through pilot the customers, had we both selecting customers, out test in we it When strategy, on brought -- beginning. ecosystem. to a able more were be that a reaching was that programs, the push customers, XX and create

spokes for more QX XX the hubs future as well and nodes respective and of new about will networks creating think it the network we as augmenting QX, as first be So growth.

they, any especially As payments I've an via ability ramp volume their API sure to basis, are costs to connected that well key as as well the customers, our as larger quickly. customer initial automating mentioned, make and partners up have

Steve Moss

growth up as going a And loan model helpful. loan of Okay. of following for you to on then see That's in as curious these kind what pricing days? forward. terms just here, Just

Jay Sidhu

was on pricing? question Your loan

Steve Moss

Yes.

Jay Sidhu

I much pricing as you we've different maintain can loan been yields, average time think see able to our categories. the from our period, this on during pretty

has is that float. around rates about like finding should up should warehouse that be that to consumer sector in there's a talked that to consumer so the think where pressure. game, the ahead yield. suddenly as such, are as I Everybody which [Indiscernible] Multi-Family and average and And I variable other all really higher compression a lot As finance, loans sector the consumer you seen on such tension the being In portfolio. credit [Indiscernible] rate things, of which in that strong pricing, you very attractive X.X% the lot is back quality They're expect business area, of mortgage or the adjusted of now, fund the areas, so we quality. go the be about lending, specialty since are in credit we've

period warehouse business the of time, We level some or the float. software lower over a be to quarter. it to build at in view, starts expect portfolio, increasing before we'll it to have X% are slightly it because short and but removing like lowest of the we instituted could now other the it the prepare, mortgage can And floats In we be the be going rate. first in we we the up, index,

benefit the able be same that in So that. you've that past. we would will think as seen what to about from on we the be The margins

Steve Moss

you Thank Appreciate the color. Okay. much. all All right. very

Operator

comes question Piper from Schiraldi from Sandler. the Frank next of line Your

line open. is Your

Frank Schiraldi

morning. Good

Sam Sidhu

morning. Hey Frank good

Frank Schiraldi

-- ask to talked for really guide. the wanted growth. about Sheet on XXXX Any you sort Balance expectations of Just the optimization more than

can guess give curious to that that. shins Just kind of kind back and if I you But plus. expectations I to hit of that get ROAA you $X need get into to

Jay Sidhu

range. the we ROAA all in Frank, factoring so X.XX% it are that be think will to in, I those X.XX%

you And out. that figure are correct. -- absolutely can are You we then

allocate optimum making both that best at result value end sure we and which is optimization are look priorities for is time balance will us shareholder growth. Our capital sheet creation. as of And the well the to optimization evaluate, way as the all a

on. So that's we're what focused

Frank Schiraldi

book value And expectations you cost Carla as per I for But there? as the sorry TCE a far ratio missed it you comments, XXXX, XX I share shared if know -- book I comments. have tangible

Carla Leibold

Yes.

if of to you factoring core the you give you $X to color, we our then to the of PPP, $XX $XX is $XX get to $X.XX a take get for little between that range. which just million fee, of what Just bit $XX excludes EPS, shared the and that in to deferred

Frank Schiraldi

book per tangible on value Right, share.

Carla Leibold

Yeah

Frank Schiraldi

TCE the on ratio. then And

Carla Leibold

that size just around On factoring somewhere ratio, X.X% is in sheet the the again, of TCE range. the balance

Frank Schiraldi

Okay, X.X% guess is the still, misspoke and sorry, I say I bit below peer a [Indiscernible] group. I'd

C&I capital thoughts the side, on do what in Jay, -- side, you CBIT the given potential offensive opportunity Given that near-term. the for opportunity rates on the your the

Jay Sidhu

and which We time, we the to the plans our retiring always capital, but way always in no continue value. best process, will we best to at us opportunity shareholder evaluate option for this be allocate have drive is to the the best available

We continue evaluate to always options. all

Frank Schiraldi

from $XX ending buying you sure just the guess the currently make bank the service think a expire want a I that million that of to I I or BankMobile required that or to deposit -- move does is and they bank will process as is relationship [Indiscernible], able in then And understand, just relationship? Do partner to end be pickup Okay. finally, relationship, on what BankMobile, deposit to in requirement partner replace that anyway? it to is

Jay Sidhu

for the the maintain well But their year, you'll think win-win are, this December both by of effect into objectives will and BMTX go pretty do see and of the all institutions that being XXst. It by do in by company expires seeing well taking -- anyway. I that's to steps taking a line whatever their end course, is it's deposits why falling BMTX should termination I the well by think those

Frank Schiraldi

you deposit Then front, XXbps costs, deposits. billion guess finally, just on in that's in about the on Okay. mentioned $X related I that

line? word, communications an So standpoint. that's just XX, in that guess The a $X mostly technology all modeling expensive, around I million. of Is from the is rest that

Jay Sidhu

right. That's

Carla Leibold

right. That's

Frank Schiraldi

pickup million run the rate. XQ per And that's $XX quarter or $XX million from

Jay Sidhu

correct. That's

Frank Schiraldi

All Okay. you. right Thank great.

Jay Sidhu

you, Thank Frank.

Operator

Mr. Now remarks. we conference have Q&A session. back A reached the hand closing like to end - the I Sam our would of to Sidhu for

Sam Sidhu

have give in Customers call. if you really appreciate please we much Thank us you have follow-up thank and you and and good very Well, dialing a again day. for your a questions, any interest

Operator

you. call. Thank gentlemen, you this for today's Ladies participating. Thank and concludes conference

stay please post-conference. for now the disconnect. line on You Presenters, the may

Customers Bancorp (CUBI) 25 Jan 222021 Q4 Earnings call transcript