Customers Bancorp (CUBI) 28 Jan 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Customers Bancorp, Inc. 2020 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. [Operator Instructions] Please be advised that today’s conference is being recorded. now speaker to today, is over the It your to Mr. Instructions] my turn pleasure call [Operator Dave Patti, Communications Director. Sir, please go ahead.

Thank Thank on relations bank's you see during Customers good the XXXX. The morning, investor us year webcast you and and at for website the will deck quarter call Bancorp’s you, for the earnings has of page fourth full today's of presentation for www.customersbank.com. Ray joining the everyone. been posted

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good healthy these all to call. and safe unprecedented gentlemen. morning and much taking so for us Dave, And much, during join are our Hope the and morning, you time ladies thanks very this you Thank for times.

is different Jim our is Officer who from -- colleagues Administrative make are President Sidhu and Bank, as at Financial you is what -- all Officer Operating Customers Chief as me office Carla Sam of for Officer Chair Leibold this These locations one ago. call many, Officer. us morning Chief company. the many our and many the Bowman, well Chief Credit for that Collins And of my years as worked our Sam we Chief Officer, up our our Chief and together of been Executive Joining has Bank year Customers of Andy recent we've know

on Sam So, company. our congratulations your first anniversary with

these very, have and XX% don't team. results our we've We've But members had working Before you I comment we our good team about so to for -- anybody's just extraordinary you really performed achieved. of have team where expectations. have beyond of -- They join very our that contributions because plus like to perform branches this to take with share me me expectations. opportunity with share I'd you members. easy have comments my beyond anybody's it's in saluting It's situations remotely been been I

become We I our does time with of share members took and to course think we communities your challenge support So you bank to rose our steps to clients customers, we support morning. when evident all their company pretty our the of the that's extraordinary this and your now Bancorp going families. our results to same and extraordinary team steps took

added million would same revenues million approximately while company we our XXX,XXX that accomplishment approximately and our in we $XXX America, jobs at add provided profits the or the to for us small was across also at our estimate businesses in a country for and major Another saved time. least approximately across

expanding bank name So quality that core created was operating while as and watched as to maintaining expenses positive superior and leverage. our credit well in we addition our

million that that Exchange. we've close value of of it that upon are dollars. January, at pleased in the Inc., in York we stock Mobile been working our based announced and were company and the the of in $XX on the divestiture Bank which see for so past in no approximately valuation accomplishment in was billion Technologies as shareholders $XXX to New to some -- major That's that valued CUBI we today Another but in own Stock the time closure now is

our but And about in loans. be then also and driven of some -- loans accomplishments, as of it so loans total by was well the and recognize increase that the the so, and it's leases amount combine billion tremendous mortgage up that our PPP PPP $X.X a we we accomplishment to increased XX.X% loans commercial as T&I companies in showed -- still year-over-year business of you highlights excluding all will loans a of the of growth that

accomplishment important principal $XXX asset deposits these one get results. focus loans of been is PPP we but increase included major deployments XX.X% ours excluding very million, deposit is of improve our franchise quality that increase side of on something in about is deployments are which of we'll which or million is of demand the a year-over-year into in only two and deployments they are with our billion our to recorded total deposits and some X.X% declined quality XX% On which pleased relentless about did to interest about and those later year an our point which they deployments thing in $X.X loans. we are was which the $XXX the From our and view

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couple who more eight Bancorp or we have -- we the next are the think share the analysts we some that Day I are to now cover lot having Analyst to all seven about So committed our opportunities also we months, of investors. intend detail a our you to us time Customers presents in with where and

title at to are move we If tech you X customers a same mean with digital absolutely available calling banks you that relationship the expect page. be is that? we as high-touch. huge page are tech features there also saw key really be that that we to time calling We those not forward a opportunities you huge, but think who and ourselves do savvy. our transformational high-tech just bank it's savvy -- But We oriented savvy to banks high touch. mean by our call to What thinking on

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businesses through focused so, industry on goal do stated total which on platforms returns, on are that come and and deposits you've focused by deposits bank privately to focus we of the that assets, but continue call supporting long-term we core and companies -- and and digital reporting are very bearing on and DDAs same for very held is and be becoming the and return our non-interest banking to primarily having our return on time equity, we focused at measured organic our on now on our and on balance are also got and I digital focused delivering them -- earnings. quality return and sheet risk From XX% very to focus still an management of are small very growth. solving leading which reporting capital superior by So think a the -- will to continue lending we consumers our private

we in guidance in to have we confirming XXXX are away earnings and million are be earnings ways giving above earnings by our will we core above not in we and $X fixed in the there. that goal core shying several XXXX $X.XX dollars get you So, XXXX or at core of and in

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industry the ask me it the value believe how people new got built the XX, everybody finally answer, that And that branches. We know, recognizing technical your my because guys having many our to how many brands ways too you banks company we based customers and know we in As have? you branches. That's diminishing always of you no upon XX. reach

very end today done And believe very, less we we gradually so what and up will few have today. than and branches -- we with

value Our We size them. billion how $X every changing conference segmentation same the XX tremendous see building of and cetera basically a relevant are again people a XX lenders valuable where only or to our up XX,XXX clear universe at discussed available done mainly now that's lenders ourselves with tech about who and can that why we group as next top provider the average opportunity. as the last tech digitally [indiscernible] been COVID States we've we have and customers heads, that today putting what reduction to is for you to there and this? four PPP single an emerge in going XX accelerating same are about the the are not that and average and Among which have branch of million we analyzed jobs focused how be and value United think onboard them efficiencies what's of distribution one have because list is can is on that, net digital created years commercial scratching be months and we operating and time, our business fintech pride capabilities of one better the coming then platform is set this transformation PPP can the and in banks. is approach that four the our at fully built the testing among once at you and to that very -- we system, that our every we after again. banks we and developed today capabilities in utilizing the in to with like is two developed or worth market while back they will rapidly. hope going America and yesterdays think we of we focused three this America the see we capabilities months technology of were very Salesforce processes time look is At we is three not in fintech partners but you far time business incorporate we to digital shy high customers platforms are Florida that United be going technology successful pride seven their will banks take totally and it and environment at call in And digital top live the becomes through bankers among become in member to been of the across the because we three were provider all undergoing going working PPP That digitize the KBW offices within continuously so that single and the first is in team to banking the that all by then us are with whatever is behind be to branches we all see the $XXX time consumer all digital et we there believe be one, list Snowflake or in out We've of it And be and see t this who undergoing on using States work. will that up we banks to ago, same us. to platform X,XXX at and is models and all everything our generation the every have been where we the Docusign ServiceNow and ways working by no those and and were whatnot --

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year-to-year. XXX% earnings up from know As were our all you They that were XX% quarter-to-quarter. up

XXst to so, And that only the to been believe -- yet other and XX% -- forgiven we X% by loans our PPP of XX% have X% we far XX% December so the going this by going to most are much that year forgiven of generation of half to this be the really that's year in this of accelerate and them first capital year.

Bowman at are the Andy as and be quality If points we assets. you asset at look my total colleague assets to now it, partner, basis non-performing right discussing will XX

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I slide talk issuing and tangible company on If without to you and want our we've been move at equity laser to focused capital about XX, equity. generating common it doing

back will And stock. we so start time. is that you not we reflective this buying middle discussed our totally the year, see of valuation by can If last

will And to and no is future are of is discounts so feel are we confident so that company and trading that over about because what we here seen accept we at there way market. the the determined this you've

even tangible that loans balance go X.X% away because getting in assuming to by million income. you the liquid that us. all always any the second PPP can might up sheet still of sheet is fee our that after assets buyback ratio half year, this common beyond because achieved you've our X% stock balance $XX about So recognized off equity take to of When the you a asset see

So with with it credit to about over Bowman Andy? that, to now I'd Andy you. talk like to hand

Jay the remains on pleased portfolio total retain points into and with a XX, political their NPA and performance very into end. given we’ve good of not overall, pleased which reserve note strong was economic competitive additional very hotel, bidding associated successfully are its XXXX. we foresee large continued Despite the active do the process through We've bidders. significant successful basis and with NPA successful at COVID-XX loan position X% written-down holding recovery. economic, quality extremely associated incurring we of stood credit sold the no NPA uncertainty as COVID-XX our And though this I Starting the XX year-end offered and a by to multiple basis this overall loss, large of NPA was had increases a we resolution about value done going would X.X% social stood at of although brought everyone. which pressures flagged slide at XX Jay, taken And and at month. assets large up social Thanks, at against have noted year we're as the resolution how account strong. with The only and was earlier a year-end points. the If morning

reserve levels portfolio detailed undertake by CECL a well factors economic which factors deep reserve and economic field upon attributes as build and noted we impacted dive COVID-XX remains XXXX upon as Moving reserve X.X% approximately based This nearly COVID-XX approximately to the or NPAs confident deal XXX% on as predicated earlier portfolio sale. by for impacted this equated and of these month. as will accounts the We're well-positioned various individual year-end rates coverage to XX of effects residual successful NPA actual results of of NPA of loans that's XX. charge-off level XX, The with regarding of coverage for throughout into $XXX.X this large slides portfolio reserves assessment a and XXXX. resolution for that to by a that's and the held moving QX XXX% into slide being the million

end peak after principal portfolio are that of or previously about impacted XX% multi-family talked at were showing CRE view, $XXX.X of up to to also deferments on in side XX, take our regarding million a at to deferment XX% hospitality $X.X successful commercial QX and billion rollout. for Moving Jay of witnessed Slide and touching a the from industries significant XX% upon consumer dropping hospitality commercial portfolios at as loan further the in of portfolio a a until our and steady bit outlines granular on little a July, regarding in XXXX were $XXX at remain at later year and to only XX investment deferment deferments. rates million million the commercial likely not overall positive slide or in both looking end in X.X% at climbing highly vaccination provides Overall within at or improvement deferments and hold wide ending at decline current in very deferments, $XXX.X We've our slide year-end. near deferments XX portfolio deferments more trend. to deferment XX such year-end levels

we warehouse, portion portfolio portfolios, finance our the our impacted largest a million of the at-risk activity our only of total into the hospitality over and pandemic. by is lender a year-end -- a exposure touching and our the little a comprised continued of services diversified further a limited. around as mix you that well-balanced segment, in it’s C&I XX COVID-XX. bit the pandemic What maintains hospitality risk diversification as a moving the such gradual of warehouse gradually portfolio to XX exposure. little of industries is an overall the and and that hospitality exposure C&I revenue commercial basically credits and service weather loan more those the transition focuses transitioned bank X.X% and and on quite and represents bullish the at-risk to while generation portfolio commercial not impacted on exposure and that in the maintaining organization full value Overall certain industries highly key to exposure overall industries current evidences and book. termed perspectives commitment lending throughout XX on business the I and Overall wanted slide business loan a some unchanged remained significant slide as throughout positioned of continue concentration through companies CRE portfolio what's mitigate this the both enhance very means we Moving XXXX our indicates significantly you feel and a of well with owner XXXX share us This manufacturers, to by between portions that portfolio with why portfolio evidence to significantly of into industry sticking commercial Slide multi-family well-diversified levels the to as and from lines. mortgage on At comprised of the characteristics bank’s wholesalers, investment-free occupied a is consumer Touching of represented $XXX of And have commercial lines with ability portfolio. multiple professionals. slide are bank X.X% multiple to financial industries as dive a our is institution. takes book. deeper to And on being share portfolio its bank's is commercial

Cape agreements that predominantly contracts government destination First are under Avalon, given pandemic. wanted requests within May, with New Jersey one that portfolio than supported or New to We Again represents were had the near nearly Long and no $XXX with which performed geographically facilities were a majority and XX% Nearly million housing. operating trade at York extremely XXXX. The previously. healthcare and approximately about to to anticipate of personal you significant the area. beds XXXX I million located Jersey deferments gradual noted operated portfolio only of and high-end liquidity over the $XXX.X as in and capacity no trends any our guarantee for nor encompasses the XX% more occupancy quarters XX% transitioning over book NPA York, improving status operations are year-end three XX% loans with majority hotels payment and into during continue NPA deferment within or form into banks last hospitality being hotels in hospitality of next Pennsylvania a quite of million reduction marking status around and and risk summer transitioned New not sector. portfolio. New flagged of recourse principle we New non-flagged do few support our see is XX% hotels overall is although in XX% segment a that the has share the traditional also book delinquencies under industry ample dispersed comprised some from being there possess reserves it hospitality Jersey, it's to well July. throughout was transitional we've upon a total defined The a has a considerable I of by of of earlier only. quarters X,XXX And continue healthcare moving and that focus Island the in portfolio XX% the high looking stated forward. current $XXX.X as the touch deferments is our really overall Slide we And this industry been destinations the XX

specific costs addition really as in a that and the help to then with share evidenced predominantly performance both had to pandemic mix increased portfolio was you, because and the as the safe underwriting XXXX. Medicare implement it we're to predominantly the trends overall about levels throughout continue nothing that the has do with standards Medicaid portfolio mandated performed staffing is The as reduce government I’ll the we of occupancy and majority decision well during conservative X.X% low of XX reaching portfolios. CRE years. at commonwealth. personal decreased reimbursement by [ph] PPE perspective or local many with is Philadelphia, Boston and debt the $XXX.X housing. in-place fully have these Deferments defray the volatile talking and service coverage which slide have ratios from well portfolio conservative LTVs, less being insurance origination X.X states both secured with as payer workforce and virtually historically license decreased a And as the our million is by multi-family of around real multi-family a the Sticking significantly steadily by to Overall backed portfolio on yearend. with around comprised in key component segment rates is investment for In deal guarantees. characteristics some The private industry

comprised throughout companies some from XX% key at note came XX, component increase presentation. deferments speculative my Overall, by or slide properties, very robust are the to turnovers statistics increasing principal-only. exposure. up the so wrapping our predominately of XX% by around little professionals On XXXX I'm volume in the billion on of activity. credit had is but managed only portfolio, of those banking that And performing yearend. We is year-over-year with refinance mortgage stabilized experienced construction and the as side $XX.X which portfolio extremely evidenced predominantly

XX that Fannie, XX% that I less is Freddie volume hold business or the days, traditionally wanted also Ginnie than purchase line note given are was profile these assets bank’s period a the to of carries on very of However, home these strong this risk fact eligible. low XX% individual to credit

We extremely sub-XXX% traditional are rate have performed in and to entire the of XXX% nearly pleased garnering market business we funding XXXX the and market. rate US with of X% XXX%. sales one Overall, mortgage how of a the between share

with pass Chairman to Sam? Sidhu, Sam it Operating our Vice Chief like along to So Officer. I'd and that,

we XX, to our slide round Andy. Slipping loan update forgiveness. Thanks, PPP to Good wanted and one two morning you on everyone.

XXX,XXX administered you which in we billion loans PPP X% over plus represents across As know, $X.X true. loans all of

approximately industry easy You'll our forgiveness the loans had below that Year. submitted a accelerated a application we in $XXX,XXX, applications approved forgiveness an see Congress to coronavirus can of you in and forgive rate. see the XX% really December, while which slow has XX%-plus In New had for forgiveness the bill from have start as loan experienced balances

accelerate of it's slide our before XX% program wanted applications PDP eight It's minute XXth our borrowers we $XXX,XXX XX, apply application days billion to January realization. half be the to majority forgiveness. this more talk that first for three. we a about officially on for balances XX, are of earlier and the And of loan PPP easy borrower capital year. will to anticipate Monday, Well, you we Jay’s let the spend the want to loans below As in to forgiven know about of worth first days, to and noting to that the still I point to in collecting begin January Slipping have the one allow believe forgiveness we $X.X early our I of nation of quickly are encourage banks opened.

white to and a the We process portion over and in investors between CUBI customized it's round. to in there banks hundreds pleased five Round The signed journey is that not of I'm by year aware loans for applicant, a applications. is banks lenders of or billion of loans an which portal $XX,XXX. minimum a and unable PPP over that Last our end-to-end change have borrower are banks is one with intuitive agreements each is $X,XXX most this label for participate today additionally country offering $XX up fee our biggest banks slightly origination were direct are the $XX for and specific across be a base. on taking of XX% the their to application Our customer below way banks, program of and X who inform we agents for you country now amplified PPP $XX,XXX. over $X,XXX in including unwilling top billion,

$XXX place million new smallest over this origination This will be our who borrowers check country. across share million forward origination the serve earned like of plus would the we structure $XX as million more $XX in fee institutions structure benefit approximately of these in earned only on we tremendously our have loans. ourselves However Had fee.

to a SMBs incredible and note result the X as country in an as of new increased that size of average under the already Monday over one loans week we over we That of funding to approximately you by X pipeline, last Friday, process. loan today. began approved in our first XX% SBA loans last with XX,XXX built applications it's We week give of As had customers our thousands reputation X,XXX $XX,XXX. with Round of we Round Again to day. in of interesting and are has by had this tens now number on the perspective around of just

our in on we moving XX, share you consumer SBA wanted day. slide to just on one again Now portfolio, to with

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deposits unsung for are an to performance. moving highlight XX, the ahead back company. Flipping continues to this be near We to slide to normal

and As demand $X.X grew we dramatically deposits. our $X.X billion billion deposits Jane improved growth year-over-year that mentioned by form of and coming the in of mix

Our borrowings the to is going a digits fraction settle in historic which assets to of high-single mid ratio is ex-PPP levels.

further to points Additionally, now and decline this stands our decline expected year. even it cost-to-deposits continues to XX and at is basis

to franchise beginning stated focus Now high-tech, single moving on leading value outlook, we’ve to it’s into on our of XX, ahead approach. as we high-touch point building contact will slide by continue model, previously

warehouse Jake the or as grow will new are we underwriting. to to which auto Our in digital AI mortgage by of C&I businesses in by lending to more. touched X% XX% year We're next on expected excluding loans And XX% industry-leading on grow program on, an to adding terms roadmap have credit consumer and platform lending by the improvement, driven cards lines direct-to-home approach supported portfolio product an including that origination and over XXXX.

to by building partners. banking who the SMBs commercial around in are lending success and of will serve underserved our country of terms PPP, their In lending, off continue digital we

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manage to million. we multi-family Finally, will $X.X our book

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financial it Now for on guidance. I'd pass to Carla like to

morning Sam, Thanks, and good everyone.

Before to updated XXXX, quarter reviewing might and helpful our first on impact financial BankMobile I thought guidance of the reporting accounting be for financials. review our divestiture it the financial

Upon the received had considerations which As more whether of previously transaction, million of or $XX cash of BankMobile we closing million reported, the we transaction our mix depended would the and of XX% for technology in to shares of million accounting interest we actual newly in cash this as Technologies and for that formed exchange refer stock BMTX X.X team the recorded were the note distributed X.X interests be approximately for accounted X.X Of we members received, $XX will shareholders of and certain It XX% BankMobile and were two special for that as the given of important million distribution million different transaction of in to to value is steps. the million our to X.X a equity and payments. that the equity I BM fair and own upon severance shares in will a received the BMTX. which BMTX. Inc., ownership accounting

the first be between of first the an increase be continued and recorded recorded scenario our in the sale received earnings. difference additional interest cash no as with a will paid-in non-controlling will capital. consolidation anon-controlling in to recognized The gain interest quarter The for step account under

will distribution of the for to the direct The million step to The will second severance stock. be equity. accounted of X.X million special on of expense reduction their shares approximately given shares in our will with based recorded BMTX The as earnings at shares X.X accounted carry be a and and increase form to value the in of members distribution value. to BankMobile be team QX for offsetting be million of be payments X.X merger-related to for retained account the certain our will million shareholders $XX recorded as an will

As capital a neutral be from of effect result, net entries will these the a perspective.

the I'll transaction received to of taxable in Lastly, based us on million. be about just fair add that BankMobile is on will value that that $XXX less $XX consideration the a which or about we investment the million generally

million. between million $XX transaction will So the that tax and estimating we be $XX related this to are expense

ops. the discontinued period I'll updated on our guidance will of as of divestiture that to overview also XXXX slide that turn this beginning for historical was X. level financial prior in transaction the information of financial filed the BankMobile was reference And For presented be that quarter with Form included I'll financial the Technologies add the statements January first our high in to XX. results in X-K on

billion growth to the As quarters. December decline warehouse expected of balances billion mortgage down at to XX, XXXX. $X.X and The and expected the XXXX balance next digits $X.X companies at XX, mid PPP billion $X.X over is is March several high Sam in commercial $X.X excluding to mentioned to to mortgage between our and single then average loan billion

to expecting by total expected in the and year PPP the the TCE the and then exceed of ratio half our be is year. by first ratio between to volumes stronger risk-based XXXX. X% XXXX loans see and XX% to declines capital year-end of are continue in to The excluding expected is half second We year-end X.X%

the the the be are impacted range divestiture by PPP bank NIM our expand non-interest between XXXX. X.XX% of to and quarter again will loans We and projecting mobile. fourth excluding by income of expense X.XX% non-interest Also

So, benefits be $XX non-interest that giving guidance between million. we about income quarter we expenses in are the that million will excluding for some project earlier between $XX talked $XX will and million be operating first million I and $X QX the -- and

our this continuing tax effective for and an project XX% also operations. rate between XXXX We XX% and be from will

track achieved book, in planning years the XX%. total portfolio of XX% of to C&I PPP our to loan mix next see XXXX participation our do due the is over Our but NIM we earnings earnings core volatile mixing we earn multi-family at on does in XXXX our XX% to $X PPP. the core expect XXXX note EPS portfolio we our XX% we or $X.XX remain about in to to horizon, When loan making and expansion think least to likely remaining trend to include XXXX be I core expect will quarters and about be EPS the income up in core several for will on in do EPS and the $X by be is Also our net our that that between guidance portfolio. expected the in interest earn XXXX. loan

around flat by will that mark. Our stay investment CRE XX%

be costs to between the efforts loans XX focused are near and our and consumer in to be Again consumer them expect basis XX% Our down bringing companies and points we continuing be book to XX%. deposit banking on less and our bring will future. XX% commercial we down and than XX% XX% will towards growth and our be our approximately between will XX% approximately will

$X proposition to the Moving to included see. turn we it in very last This deck. just similar It's significant to EPS really with path next getting I'll is core the that we XXXX. of back quarter’s the value to Jay. what to slide. in you a that, show It to is trying And

of Okay. good I just superior our one. team. we emphasize to focused Thank report is maintaining open wanted to you Number Q&A Very to credit their our quality. probably that things number on. one very is One are very up Carla. just full for much,

we although about portfolio is continue both management. portfolio management, get we’ll focus but from never one get away You'd is feel our away to as it very it, our and number from priority comfortable today never

Next common our is exceeding or tangible that we shared with leading targets of in the terms you. equity

beyond that or the we expanding of on not think We but average value. of increase the is Number is from an expect that along you and are quality absolute And least that relentless our our last bulk really positive as franchise laser while value improving three maintaining margins because our leverage with will focused companies. well as funding, that maintaining our operating quality revenue growth shareholder call continue our focus intend advantage working and with as banking prospects very of fintechs us capabilities. that that what of to significant and with thinking there in technology think we clients and opportunities other on take environment, right remain way And service. we a that's -- opportunistically and in build PPPP we to exist are And this to very forward continuing now.

questions. any ask with to would I it up So, you Emily for open that, please

Bruyette Keefe, Your & comes Schiavone Instructions] from question first [Operator Michael from Woods.

is open. line Your

be everyone. direct maybe to and just You company growth will know hitting or it? bit that expect also morning, Hi. investments a verticals drive strategy, the will how the they explaining is spend just making help scale technology indirect you Good Can growth? time loan that your on main the more it

Sure. that? Sam, you want to take

components the touch can by I Carla, and of vertical why -- loan -- the Sure. don't and with on then start you then technology. the growth

Sure.

coming first off we as year we're and we then that being stronger C&I the half our of we helping in levelling fluctuate through the to half in second mentioned do business business. expect year what to see that growth the of really So, before, the core and

growth specialty this and pipeline and currently some our businesses.as with commitments our SBA mentioned have on lending to continue do our at We other portfolio our expect strong of time. we a books I in to So, over point process. to it those also from direct the book there. see of consumer and want our if and origination to take fund in XXXX expect Sam we expect some we course to you

Sure. Absolutely.

direct to like customers. first and are in our about But $XX on originating originating I’d touch digital impact our from currently of a to month million consumer portfolio. to approach So technology $XX we million the the lending

more direct portfolio as money originations. has also has up XX% our and flowed pay We the accelerated the have stimulus direct all in seen overall we downs. monthly almost The to our are or But originations less balance system now of XXXX. been flat represent through

with SBA the SBA a and we that your by on who once month lending our million again the question. We $XX that of lending of more up consumer that to allow our do on plan to will Similarly anticipate establish an the really for service in-house do built book which half ticket is apparently the inbound to And be continue So originating and business in we and Again to lending. from about is year on that similar by originators said that portfolio to will we able or been about we of in-house the platform be most half may origination be direct our behalf to consumer there and have we we we credit will more second that set will as growth request a launch we partners just on has books expertise mentioned in that that in be box. our in a majority the to based eventual which the within that using consumer originating platform. driven the year. smaller that have portfolio. a Carla about that business learn anticipate going Hopefully platform to businesses originated today, basis similar there portfolio, technology market will principal we your loan $X.XX to million indirect upon technology expertise us. But remains be in of platform of direct our FTEs billion We we've second as an to the side, kick of that are us will two stated answers in rest to-date as that side some below work direct or get and to direct $XX of previously sold we our added growth. business mature remaining SBA Similarly within a $X on define small small perspective business today have a the loans. one a million our our we organization. Having opposed have

top teams generating and company. we private lending are team teams public have really about through P&L that then relationship, et banking that on as have banking so have strength Mike, that XXX% offices private deposits, loans these focused which we banking usually the is C&I well own we are And And all core as and very of working Yeah. very, XX of private their is cetera. with in

be of you -- build very that when franchise combine cannot So, believe copied we which all easily. a we valuable

for second following of on just the Thanks your my Okay. update going can mobile, you deployment an guys provide bank question fees and divestiture just generation for that.and capital forward?

the guidance color think total on give where income given the guidance in. know and I our you we also statements the would you to have I you see coming like pretty much on look the you how income

of those into point into So, allocation -- can achieving capital which translate the see know you process. into view, goals, from a -- you the those capital we

that any of -- So, that is related there that? specific if I question you Mike don't to had

you you. the were. capital idea what -- are priorities deployment an trying Yeah. you're -- capital target just I to like get just mean I provided helpful. Thank was of your employment But

just important on And liquidity XXXX? spend and question, you more provided you as to but such one some impact time the how then guidance, over just NIM can -- expect PPP some you you

where given for NIM know to be XXXX you NIM. we've the That on guidance rating the put through excluding think PPP accounting, the end as -- the the the the see agencies of we us also to you requires I NIM PPP. by it the --

and profitability need difficult guidance, very Carla XX% last be loans It's quarter-by-quarter us. of half and all there of XX% NIM for statement to in you expect give this PPP to income that first said mentioned given be and given to to capital our by significant will we as the for us yearend. a to through that a Sam we our some it but and year you and amount are you volatility we've to going flow they the the So, year revenues earnings, -- -- for we originated but we in generating year of

you Okay. for questions. Thank taking my

question Riley [Operator Instructions] Steve from comes Your Securities. Moss B. next from

is line Your open.

Good morning. be do kind the revenue maybe couple to smaller, to of more around things you sharing is seem -- then just you partners. you of this to And but Starting PPP think do curious how guys REMS with it one think about I the should time know prior this a here have similar I’m going be model?

kind to one versus the spring? how curious sizing just of so as about REMS you're up thinking last And this maybe

Sam want to you take do that?

Sure. Absolutely. morning. Hi, Steve. Good

loans think XX,XXX perspective as revenue think share I terms origination above those the of we just forward have a time X% were the going $XX,XXX, servicing perspective would shares -- on partners on of in loans also have split. X% under XX% I with after below we mentioned agent share earned agency gross from or we're can cetera. at structure were the been to give you using minimum those XX% our X% So been include about would loans origination where partners and last fee et about we And $X,XXX that fee and

Okay.

and the the the the those those And In is couple those retained you assumption. do How fair -- One balance then is a guys of with or have more terms a billion loans have number we I highlighted you that sheet on by a are retain you $XX guess bank time of this PPP here top five volume $XX I think will points things. you be probably banks. banks? respective or billion up banks is will just partners just going touch

That's will all right we those originate loans. service forgive process fund

Okay.

the releases on going And reservations then XXXX? you're to reserve reserve Okay kind truth strong trends how in of that's here moving in in about your helpful. just of terms forward as just and to thinking

to you Carla take want that.

Sure.

million and belief and use related do in to macroeconomic in credit That just I'll driven That provision forward. will in the the specific the we we in if were said, not was expense giving that We for quarter guidance quality you seen a any our was said, our provision know the model. variables, as going projections, not an the recent. fourth recorded by XXXX. Moody's largely estimate improvement $XX there somewhere on comment that no between baseline be being million So you expect quarter, significant deterioration $XX that we're

thinking Okay. or expense, just is I And -- in $XX about you’re driven covering provision loan just in here terms about think $XX charge-offs that that? as of to then as million growth on million

A combination of would loan charge-offs. as some both say, growth some I as well

as We that have well. in factored

And then about multi-family balance more just Okay. question one I may if thinking sheet the fund. the on mix. I’m

start usually slide You years by the this deck, up. old pick to guys loans was about revised are to at here are see about the at you it’s the sort way point, it XX --story and before

kind XXXX? to owe by is it the and of see guys you drivers curious think to only are decrease you the billion about in keeping modest that what year-end, a bank or dynamics I So as $X.X a

Yeah.

expecting So, $X.X keep to multi-family that we billion about book. in are

right. you're So

considering so as book. of that can to able replace XX% will our about that about the multi-family we keep additional kind that where one-off markets are of feel need think one-off, will different we total be we that. and to I lending We to our we replace some confident multi-family add

question There is this further time. no at

may You continue.

We’ll them read from three individuals I'll you. Jay, Okay. to Thank and online. have questions you. We take do questions

Some on, the they’ve of questions asked. these we probably the knows so that that I'll touched been questioner things read

the mid question capital in a big -- are -- Jefferies. grow Jay, the the that Haire a XX.X% to of digits? value total describes questions from comes first buy ratio high-single question, not capital Casey first shares picture rather The Tier first with XX% five that than why X back he loans come book is from

will from we continue revenues now, going book we loans. not that shared on get are the I not Yeah. at value, our capital sheet and that will of is PPP but very which we appropriately buy be is think right we've balance PPP between we are back year, sheet huge to revenues of by if excess Casey so we and buy off are to you to to stock. stock opportunity PCD X clear initiatives of we -- the but We to by this book. to temporarily of X. capital a half build balance second deploy this will back that our gotten we you, We end our make know the now if to in and But PPP year. already more the absolutely through with want be right right will -- ratio called trading see the somewhere that do be going and getting this at should majority least first back that very, back priority more this and stock but year. expect the be after trading PPP to -- we've half and expanding of not going be be buying this shy a we to I taken X% below buy it is $XX That us $XX will we’re obviously from And in we've which

Okay. Thank you.

The bucket second as loan the bps biggest to the deposits? question yield is to what makes money about And down asked deposit on new cost and XX of NIM. Casey is which contribution production getting

Yeah.

Okay.

quarter next -- where these directly. our on into you questions So, our Casey into of can around section all ask first come

as X.XX%. the we’re interest-bearing our yield from X.X% for cost between And those which And so ones the well market decrease that the of on getting as the deposits right funds. to average think obviously are us offer it's money DDAs, I potential running now, to the loans greatest interest-bearing

warehouse. Okay. mortgage Casey next is about question

forecast about down down as targeting versus about warehouse XXXX. XX% your guidance so, is XX% long-term? What And you are in for mortgage percent are MVA concentration

again Carla make that. the you expect that Carla, give sure just want be reiterate to I to think that We’ve want numbers. you to guidance. I

Yeah.

be to be book. the the in the expect year mentioned of the volume strong of of And to to first warehouse mortgage the in total our XX% a our half expecting total bit we and I between XX% are loan earlier, We second little half year. lag as

and somewhere the X.X%. from and full balance X.X% perspective year end first expecting for So, the the X.X%. we're and X% And an between the at of somewhere end between quarter at of X.X% somewhere average the between year X.X%

Thank you.

Next the question spot the Jay no does is what a quickly rate? allowance in can do assuming we change forecast? as versus we see get X.X% for how there credit loss landing And

effect good shared forward the to be as of in this a clearly of of get we the at I environment. time consistent we to the model the politically because quite our think pretty the and That's conservative to trying Carla thinking Moody's some more good keep with adjustments view, banks. and SX looking uncertainty around as a use reserving well big

as so, conservative we we and in portfolio. our seen future And activity forecast obviously have ARPU that be amounts will the trends for be on as will well the allow actual be the that our our And economic would it aggressive. dependent upon

very and details. We shared you some indeed quality credit are seeing strong with

and coverages $XX consumer see -- good year having a do we that which have quarter is now. provisions change rather not million for significant think a nature in Carla in number charge-offs has to And in of gave guidance it. growth why a a we’ll our in a right is by we portfolio which principally in or So, the that's the envision as charge-offs and to growth $XX in as $XX $XX in million million million I

it’s Sam the of this what's Okay well Sam. can for new final PPP? our question us and probably estimate a Casey round of you give one good for magnitude

which like. and of can say Jay. in into looks the point pipeline that think is loan thing One this approximately Thanks the time couple that require a it's have to with you that portals have application lenders that fintech pre-existing applications of organizations. multiple as it a to a tendency online there don't institution available what average at Casey size basically back difficult be unique you of be banks I customer to could about

we'll half pipeline better based pipeline but feel it pretty origination around case. -- feels did base that the we upon last of next to as coming have much in So weeks we comfortable that through volume the sift we in the the be sense the approximately a time the

it we think outlook where credit Peter do Wedbush And me Securities. from wants case one elaborate the ratio read questions loss in economic Three the to allowance answered fall you for of first let anyone could think as I this Winter again to? but improves

$XX addressed horizon. Again, think not we'll expecting it's short-term any deterioration said, significant the predict we've somewhere say where horizon I I’ll difficult end that just reasonable. an on up I expense we’re previously. next we of So, estimate We're to already the the million quarter, year. if that. are That seems or end million at that -- using that repeat on between provision a or credit of $XX will being of

you, Okay. Peter’s question guidance. And Carla. involves Thank next NIM

And in we that will of that high-end to the so, the drivers what some take our the -- expand our we X.XX% guidance range? PPP to in to with of -- without with for to X.XX% are range get that

of upon give do north just Jay's We've a instead progress So of We reducing our have cost continuing in remarks. on significant explained Again, made extra to color of million are some first I'll and and little -- About remain willre-price deposits. CDs to in the earlier of our and focused in those $XXX is $XXX I’ll it we about a little XXXX range. will efforts. half now year those right re-price forre-pricing about of of in then that of the available cost XXXX. two-thirds million the $XXX $XXX

there cost bring to the down overall of So, there's deposits. some significant ability

as only you. It And stress asks is Thank question Peter deferral? final XXXX? to range potential XX losses. -- bps returning the charge loans what's And remaining in only of there net was secondly, on off the credit higher the XXXX? is Peter's in for is come

I'll handle one. that Yeah. And, This is yeah, Andy.

we where stand and I portfolio And right. to overall aggressive that from in that's I stance moving really probably $XX assets. think rate given the $XX quality We're realistic we've non-performing the of of taken million per it's off kind loss at think looking the today million mentioned, quarter.

been flow between month stress forward it's as looking to of on first We're quarter their operations up coming of the not the and build assets lot off of the really cash assets. it's cash assets feel portfolio haven't that successful deferment. end far that deferments off today. that the hotel coming those economic going take as as coming longer think the as will don't as for deferment. the they We cycle on really payments highly been term to I Massachusetts. ensure impacted We -- off on evidenced well XXXX recover deferment have through that seen sorry, And reserves loans all this and to get fully in end to on for as of sound the did the the hospitality. to the such those especially asset really of analysis very move in with we be to of concerning XXXX industries a deferments first They've in loans there's on to did think significant stress those able to that those

I can coming industries those coming share trend deferment those specialty continue. what been have that So off date successfully hardhead off really for today And will and of and been think we have borrowers we forward. moving that all position that industries to back when in at-risk get XXXX weather we working in made with very have a somewhat or closely normalcy those to semblance they're to sure

investments first income are the the have the Web into loans the initial taken income fourth processing quarter how and Daniel have life into into was the much that Daniel and XXXX? of we a taken give will Jay Steve half fees income And in follow-up over the approximately question final estimate do of you taken you. realizing to Moss he will PPP the from in what be from then ask

Carla?

little recognized around we’ve I bit our on loans. today if color So just PPP think a what of

the PPP to that response the in on of about fee the million a from have recognition recognition. the net interest half of the of forgiveness $XX some loans we about was level did was So of interest million we've Year-to-date deferred amount over in income was about that income a quarter little million interest XXXX recognized fourth a from and $XX income deferred was fees really $XX of there of of fourth perspective that total quarter. there recognized

and first from that of XXXX range first are color one specific significant again but around in half we the just XXX and some of half the given forgiven amount to we year for the on gives on two that projecting to guidance still perspective haven't XXX the NIM a be repeat that So I'll overall a quarter. of fourth

return to will Thank his you the and we closing can for to question Steve Ray question can us last for it today Moss Carla. then which you remarks. Jay give for be

is open. like Moss Steve Sure.

the and a new maybe with just Then terms on types of about the the how PPP going fees the timeline how thank follow-ups latest the PPP? do you are of right. recognition, of on income you the aspect, we of for into All couple starting in think round with --

Yeah. take quickly. that I'll

With as next below that the first be you. first sometime latest will is on average are of be which in to the this And the PPP, Sam our see then, quarter. below the expected since think quarter XX,XXX Steve already loan we -- in will these in with start shared closings done the size you will

probably per $X make to determine more should you you this year. we've that make the So our discreet practice the process share estimates share the following conservative over is year guidance. next to guidance should in expect us We a some $X forgiveness to than we've that recognition. will exact and you that us during given expect given And year $X.XX

banking continue trading all enough So, loan expanding to I growth us you In as its is will think unless But earnings with bank aggressive to we that on unless volatility looking into stock once think are that street also buying expected back that we be the below quarter-to-quarter. capital was we just that know it's as putting again by out sector. mentioned as be revenues generating. Carla not be ought case, see difficult is these in very the trading. in core we where we there'll And Casey might a to still we pointed the be our at margins, continue

PPPX is estimated back be value if already amount, our And buy think truly PPPX raise million. and We company stock. heard that are can shareholder reflecting for and huge revenues using in that and You can value we from know Carla company. stock after you adjustment similar make to to buy opportunities we you of $XX of our can for that what’s We all back from our put the sure taxes. our another see could

that to add basis a that just month would -- of cost the point XX it’s charge. X% I and rate interest XX

Okay.

going forgiveness like fees a then and amortize to you would that on basis six of… So is would it’s to extent probably through months is you accelerated -- the kind flow

right. That’s

-- to a fair you normal -- as Great. of for How just think with about Okay. consumer portfolio? the it? then about is that, think a And that just I the in million quarterly sec, going basically it $X a or terms to in is churn thing to provision other assume just back if will churn so that

the then margins are that $X factored Charge-offs for gave Maybe rest $XX and on you the $X us, bit on basis. that's is quarterly expected to correct. only million That's in when be by up of more million, and less Carla million. And not to in a guidance asset the $XX group. been little already to or a the without expectations coming million

Great.

you that. Great. very Thank much. Appreciate Okay.

once ask follow-up -- join forward to you Will you. the Casey time your on call don't us to so so safe you much. in please with appreciate Bancorp. please again look questions. and We And Really day. taking everybody. a hesitate have stay questions. a can have for And us good us you Thank any -- Customers and any interest Peter, Thanks that call with And Yeah. working directly

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

now may You disconnect.