Customers Bancorp (CUBI) 27 Oct 222022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be conference operator today. At this time I would like to welcome everyone to the Customers Bancorp Third Quarter 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator you. Thank my Mr. now turn call today’s It pleasure to over is to David Patti. ahead. please Sir, go

quarter Brent, on at you, joining Bancorp's the webcast Bank's deck the for morning website during see Relations us Customer The today's third page you for the will call been Thank earnings good Investor for www.customersbank.com. and posted everyone. has XXXX. presentation the of Thank you of

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

with and business located private Philadelphia banking our supplements Bank nationwide offices Island, team really Gap] in community asset Thank Greater banking New York, from several working gentlemen. you, Florida as pleasure New York New Wilmington, diversified many North you Carolina welcome [Audio to then platforms and billion with offices to are XXX to and states a footprint operate morning out on a that We Community bank Portsmouth to members Pennsylvania, North to as It's Boston glitches, ladies good David, $XX with Road and only Hampshire or production well across Dallas, to Carolina located loan and of XX Texas. Florida.

present growth on industry risk positioned challenging environment. credit, to We the perspective ensure past are to strategies solid quarters organic liquidity challenging to actions from a this economic you quarter over environment. are have our and responsible taken and pleased in several focused the well earnings and that laser we remain this despite strategic prudent morning another capital, We management

core report that to pleased XXXX $X.XX our also earnings We have to per are already in XXXX. $X for share PPP we earnings guidance, excluding share beaten between of per

Our earnings QX XXX% QX excluding PPP over $X.XX, up were XXXX. core

our million. a balance as strategy. million mortgage $XXX of capital sale installment companies part at and company loans consumer to optimization and operating XX, risk generated increases year-over-year, by rates and income $XXX share down that's valuable of expenses growth X.XX% of or lending common $XX quarter QX, PPP loans XXXX, Core Assets executed XX.X%. All our This by a of core are of to PPP decline were a an led sheet while verticals per largely of bank which were core core was $X enhancement in $XXX was up gain loan $X.XX. million the expected XXXX in by low net net our the earnings specialty this year-over-year. was by million excluding interest XX% total numbers were good numbers. to on Year-to-date Our these way and was at equity September was core On look ROA Return Average excluding return million, offset about

reserves exceptional remains quality credit Asset are and robust.

improving deposit our margins, expects and to what and ratios, per pipelines our growth, strategic our remain loan while us capital focused it detail Sam. QX. of future. very share. from and and remain Our beating our expenses to to earnings over I like Customers strong our on optimistic Sam meeting results would we We or for are our and controlling initiatives the our about moderating very Street in now hand CEO President Sidhu, in Bancorp describe maintaining

Jay. first quarter disciplined the benefit responsible momentum I'm third Bancorp. the Building of the year, to thrilled growth on you even Customers no record industry strong strong at management, half our Good rate, net everyone. low you, morning, verticals and loss Thank team to income earnings, leading, balance in growth loan of out quarter of which after specialty the the helps off and focused of walk through interest in backing variable another recurring deliver sheet the lending PPP.

environment, focusing that uncertain our growth be on we the will recurring rewarded. is our while ratios, maintaining believe revenues we our how measured will further shareholders be and improving margin, expanding how growing Given and all moderating capital and

briefly $XX.X $X.XX. $X.XX. PPP out GAAP the stripping me results. earned summarize our of From Core earned benefit an income Let we income EPS, were million. which perspective a of of represents earnings net After $X.XX we earnings

variable risk on portfolio margin to of loan reduction begin after a and lower members. an higher we the and guidance incredible earlier, been our to remix the all mostly of end the feat, margin our the consumer portfolio loans. lending in call, prudent be mentioned again last very have in as and pricing will year-end incredible interest to rate I incorporating have Net record XXXX the complete and disciplined at remix provided will by yielding, on thanks impact undertaken our full the As to strategies. portfolio of increase we This strategic came quarter's efforts and deposit but we team lower

excluding core to Now, with XX% quarter. the ago the PPP, ended year quarter over the We sheet. moving billion balance up $XX.X assets in

grew and doubled billion three X% have book PPP impressive Total year-over-year the excluding than last to loan $XX.X end. deposits Our to years. XX% more quarter $XX.X billion, an at grew over

year continued prudent funding an importantly our Going forward to it's NII profitability through of over quarters. quality standpoint, few customers From remainder provide the measured high that for deposit base X.XX%. of the pre-tax, loan growth, credit prioritize a inherently XXXX, was next ROA a we and into a to low well expansion is the Strong we risk quality pre-provisioned the first institution. believe as pillar asset as franchise are adjusted

industry, credit our own averages. on deliver to peers, as continue historical as We superior quality well the versus

start continue that disclosed credit and as in on fed's proactively the inflations actions the book enhanced maintain at pristine credit reminder, the loan to the – on of and impact the effort and to inflation of frankly the underwriting a shifted economy. we year, we wait an a to mix As and full growth we tightened asmartly see

Importantly, about and well our through has trend, year-over-year, grown the as XXXX defended securities as and significantly, recurring industry book value has into been book thanks blocking XX% successfully growth organic optimization. strong XXXX to

lending end is at TA to TCE prudent of peers industry high to our ratio our optimization. the Importantly,

current initiatives we've implemented us and strategic six, to the slide to future for position external environment. Moving best

This number risk actions loan macroeconomic started portfolio year-over-year in taking growth. first started position XX% a we low-to-no to a credit navigate represented verticals, the our company shift of the early loan to with successfully toward As as of environment. which quarter, mix the our challenging

allowing installment up loss declining to guaranteed our government with address last represent from number. in XX% long a excluding years, our guidance of continue low-to-no meet cost, of changed evolving to total included loans, the Q&A. And loans as credit verticals increased will short beat loans, when several can environment. same time number increase the XX% over our X.X% this well XXXX. further PPP you more continue maintain at focus term portfolio appreciate This to in rapidly now X% Our from the period. which commitment last on spread as The consumer our perspective, over during our maintain happy least verticals funding to I'm specialty total this to not is discipline to a reinvestment significantly and this has to year us XX% over our to and risk lower as and

discipline assisted balance we pricing lowering the overall appetite. risk moderation growth as of to strategic more agile sheet our and our margin and Our has profitability, recently continue prioritize

We today, will facing growth especially sake chase loans, ever margin, where are is king. growth not credit in for of the industry and conditions capital like

top pipeline to For pricing for of prioritize the of dollars which both example, thresholds millions in-flight margin hundreds also the of and funnel and of capital. repriced a we employed strategy increased

grow quarter, securities portfolio quarter, quarters. cash our it's loan margin, meaningful $XXX the increase earlier and of book, securities continue the for reinvestment runoff margin flows, we Strategic and significant reminding portfolio runway efforts maturity provide million this the in positive actions. to proceeds this our such coming year second amortization continue and evaluate to our will sales you continued and to loan of on available opportunities of Additionally, impacts in as held additional that for capital the and ratio, for the sale to PPP a our consumer transfer loan our worth and

consumer portfolio gain. sale, X% million allowing XXX underwriting, that for we our direct conservative a the to our nearly Customers validated us On Bank pleased are sell market of the net

technology deposit liquidity. by pipeline This $XX is remains well XXXX. our deposit already CBIT from existing growth, extremely by bringing platform, capabilities company which financial verticals, low onboard Moving core further we billion differentiated in our supported our our to on, the enabled institutions in like approximately significant expect our technology and cost is as liquid, group evidenced banking by opportunities, in which as driven transaction with

happy not just are as and technology broadly. have handedly to we bank service, is space, institutions in a of as well a to out the thousands in past banking lip banking nation of and industry tech-forward Fintech I'm demonstrated further. in have one any established questions more XX in ourselves the This explain and the several digital years, have the we over we top it answer absolutely as innovation leader delivered and As

page, on Bank about next In terms minute in this Instant of the few Customers a a the talking spend I'll pages. Token

We we scan is a that far business our at pace than continue projected. have to greater

current kicking and planned and we revenue as based expect Our lending marketplace pipeline quarter partnership annual is as this in on million to pilot it Banking $XX as opportunities. much As off A generate Service,

financing that launch roll term our as revolving build to are space XA are small-medium out adding to equipment we as as to into learning’s loan, and innovate offerings. offering of an the digital card well our line as of digital off well to as rolling credit look and next continuing of We success credit, year, size business SMB bundle report pleased pilot and we

truly build slide Flipping XX%, can say we of anticipate improving continue all and in Bank. maintain helping initiatives reducing structure processes transaction of efficiency at by and customers Finally, greater is off based that headcount by suite, API strategic at space technology overhead, ourselves treasury will last addition and effective on tech-enabled importantly organization Customers simplify modern, to current serve feel built operational the in the X%, be ways quarter bottom which leading over on to product CBIT, and major these a efficiencies. experience on Through page, to which strive improving quarter, our growth In led the technology on companies for making Wow! uncovered enabled seven, more to for and which customers our branch these you current while we our and better are their the while efforts, supported our two needs. excellence priorities we the for an allows past of while continually time. Combining to must banking self-assessment, us our position we cloud customers streamline update us we disrupt seeking that be future innovation are honest our we platform Building by our ratio our industry customers closures so to to also to banking future and to reducing we quarter. success making efficiency future right announced able being best-in-class evaluate will

complex tech enabling capabilities, to which now expand includes is Our treasury of and This team and best-in-class documentation, enabling our robust all commercial, and a us payments customer treasury facing lending simple payments library is As of services. API this Fintech last the tech quarter API income Banking which after and in Service addition marketplace the signed is operational A integration. fee to partnerships first partner was launching and quarter led

experience reinforcing approach, the users our driving build treasury being enhance centric and dozens customer our brand interviews up, continue by the product new customer makers, payments to Our platform and service which and service built offerings. is from ground with input and with decision from will and customer we of end hope loyalty tremendous

and banking partner customer focused necessity. nuanced, looking package are but by of the Assets, our as most our customers' cost and in and opportunities gatherings, by as current verticals well as another and banking on out forward our corporate working us Institutions Said as a and growth customers, the digitizing we low spend internal While enhance to leap income Finance, transformation way, to Group, it significant commercial are technology banks focused Customers well seem of a for we Tech facilitate as may deposit frog partner large high are innovation Venture. on banking. who to Digital processes, led fee rather anticipated focusing tailoring by and Fund needs. prioritize digital Financial to choice, it's value our This Transaction Bank, now tech tax proposition view and critical future than will

Finance stated, state crossed we the we risk the accelerated Tech business digital one are supported these available to once steady this we beating update payment our best-in-class on XXX and funded, and have a As and self-funded previously we we XXX% last by an report during instant space block-chain proud of The we expect by our a the that be timeline which of in at of rail Despite total quarters, billion market the that XXX% significant supported which in Bank quarter team growth, Token, over over instant Flipping launch, Venture Similarly volatility and eight, year, the our new slide our onboarding the be which on customers on through $X of SLAs Instant to business Fund the efforts. onboarding enablement. XXX asset on be continues XX/X/XXX. platform payments compliance for frankly to outstanding as tech our and customers management. least end expect deposits compliance few tokenizes on to is to internal this onboarding crossing the again target the customer quarter. Customers

leading technology calling is long incumbent basic needed institution. out and and the innovation, service platform Our banking infrastructure forcing industry from challenges

and in backlog just fourth underlying transactions deposits quarter continue customer more and our accounts, Our their fee doubled robust the the to clear, up ahead, transactions dollar already quarter to CBIT trading. currency be we and have for just no of used and remains customers, ramp up month crypto to payments with is significantly operating exposure than a quarter. of of last assets

Our Touch to digital customer customer quarters already the categories. to each largest Service Customers just innovative diversified, High-Tech, High in moving few progress of is speaks banks in many which primary major of On the their continue asset Bank take base relationships us, in banking a banking model. to and service Experience, and our Customers

Leibold. Financial like I'd over hand Carla to Now, Chief our to it Officer,

keep low I'll Number shift. and key risk low things. with mix comments positive loan organic deposit transaction one, of two, growth TDS. everyone. good proportion focused franchise and growing significant a morning Sam, and my growing five Number Thanks, related on

income core effective The growth with all expansion liquidity expense position. five, bank third, and tangible four, the book margin capital opportunity. interest strong with management. Number value And and combined disciplined accretion, from

growth in I'll start slide nine, to low low loans. positive shift and with risk, Turning

XXXX million, of was quarter. approximately quarter third over up the X% prior the in growth loan core organic Our about $XXX

even has approximately past C&I vertical, vertical included in lower of up no our largely been that by XX%, business, ours about relationship this $XXX finance multi-family risk, in delinquency. which low for our rate, Importantly, the growth million lending a our also production losses is until growth seven $XXX led variable single a We've specialty business, approximately in lending yielding from of close experienced million of didn't had years that QX or we’ve QX. which

loan the As loan the we of sale about testament that Execution consumer installment par results and to transaction reasons. at expected, total book. less with de-risked One, to the consumer a the and million our for have it than banking number extremely installment price million reported of book, by we core equates rapidly and this Overall, companies assets. decreased $XXX are due declined earlier environment changing $XXX in slightly consumer the a credit we sale this XX% month. of to pleased now loans, X% superior loans-to-mortgage that of is loans than which our less consumer less loan our loans installment than quality installment of a consumer

As a at and was points; reserve financial a ratios resulting net XX are customer million, weighted the of benefits a of loss And secondly, to our rates million it one, about XX of costs par. lower regulatory benefit QX at the point $X.X and risk expected in fixed assets basis XX. is basis trading about from, $XX reminder, these or capital that rate our of release benefit million, in of third, unamortized other costs $XXX which $X.X Cecil and despite still increase are between roughly XX.X% of of approximately XXX significant loans $XX.X of acquisition million, deal on benefit sale million net approximately

loan of of greater consumer of which $XXX and of PPP. characteristics of XX% a assets earning mix market installment not so deposits the the majority see while in us been are years. deposit this operating about to our third million pipelines From some sensitive interest our customers at deposit asset portfolio units the than approximately past consumer space, several market interest What proportion installment Slide changes accounts, our loans of slide by also re-pricing vast Approximately reduced ending channels, sensitive excluding move to mix or shift perspective, digital liabilities, year. money have in customers, at far about on are and points leaving is modestly increasing to these earning Give DVAs we’ve XXX had breakout sale increased DVAs sensitive. overall our we’ve in our This from interest five that the funds, quarter basis Considering over the assets core expecting third sensitive, end action, $X.X balances million. other QX accounts do asset can increasing XX% combined quarters. deposits by with largely further of credit verticals rates. risk specialty transaction quarter. reducing institution XX be quarter, from experiencing trend improved expected funds has this XX on group overall such our September related asset rate, low our loan rate increasing about continue bearing corporate we the in is in the market market $XXX risk, $XXX loan low-mix that to Finance unexpected we over financial into variable the of Since strong by as Moving XX, risk, core had the the XX% specialty approximately our Lender XX%. institutional related of variable Fund fourth more complete steadily fact proportion while given in costs, million expect total slide been growth the Finance, lending CBIT you sensitivity. million which next lending the was to deposit are and and growth has sticky our the with mix the our our this low We shift the higher shows year-over-year of

lending ex-PPP organic XX%. Year-over-year prior XX, net net a interest our by past from income income, over strong income X% slide trend excluding normalized a specialty driven our basis. slide the shows this of on net Compared increased or quarters, the increased largely the increasing C&I core to quarter, to Moving in business. bank interest five growth our PPP XX% interest

Considering secured sale the quarter yield the past by $XXX the our million three investment was keeping we Upon to net Over a sold interest fourth with year, quarter, five of in range ex-PPP loan million third two our in quarters at installment X%. compression of fourth negatively impacted end with very margin equal. net completion margin in securities and third the of net expansion quarter. the margin points could our by interest mix the quarter, consumer else of that above have of interest guided expect basis this that opportunities previously last and of upper purchase we we subsequent our Consistent do prior shift of about see will X.XX% the margin timing and another see been XXXX. guidance, you disciplined in for points. our in quarter loan we the do our in X.X% three loans range QX, a communicated loans interest trough The NIM basis the all XX $XXX quarter the believe or sale net late margin likely so within

totaled in September, loans recognized $XXX under this slide recognized of in which XXXX. the at approximately approximately in of Round million, X quarter of X $X.X of origination of recognized loans $XXX loans At to X and There quarter approximately have deferred PPP been billion been the third PPP million lower of was the September. the forgiveness million amount in quarter. XX% about $XX end of Turning leaving XX% be of was recognition fees, XXXX million forgiven approximately million second resulted Rounds the in we’ve early XX, have forgiven. and under deferred about fourth fee approximately $XX $X To-date originated the end & PPP originated of This XXXX.

one As of difficult expecting we’ve the next timing two of to are the but predict quarters. the said fees fees, recognized to majority be previously, it's we to these the over

to to investment committed was held in the consumer million liquidity late we by of as time. to resulting the installment us, our XX, growth deposits with organic the as our have to of adding portfolio, $XXX in deposit purchase service you maturity expiration portfolio When see leaving the growth liquidity positioned to securities by act the outflow lowest over investment Turning BMTX. sources agreement driven loans, in well find of us tremendous well cash from slide $XX and QX. capacity growth, can close available to The borrowing our billion very of position sold our

of side see of XX% an portfolio, the On floating X.X%. available sale approximately for is some X.X years characteristics duration slide, of which yield of you key that in rate, right our has can investment book approximately effective

to XX, levels. Moving at capital capital XX.X%. to total strong we approximately The estimated the maintain September continue slide risk-based was ratio of end

Our TCE ratio around estimated and CETX excluding X.X% was was XX.X%. PPP our ratio

after-tax X% quarter, in This impact fair about an on Our basis third would targeted TCE of impacted on if accounting the points. our adjustment ratio the has negatively our to that impacted the permanent at note balance are and impact internal value X%. roughly deferred to impact, between Without securities is midpoint negatively close was AOCI capital here of $XXX sheet. that range AOCI important end TCE have It's unrealized no the losses million XX by our of by the September. about end the of ratio ratio X.X% this TCE at been held

in a As was further our was deterioration earnings XX.X%, accretion XXXX above about AOCI. to stated regulatory, than similar a our the book we saw of as earlier, this ratio significantly minimums. value CETX tangible book of on $X.XX, third quarter AOCI Despite offset approximately well-capitalized impacted which impact close negatively quarter value tangible by X% more estimated required GAAP

Looking forward tangible value our are of to we $XX. the book XXXX, still be to expecting over end

over sheet to about that, earnings in above with to asset more talk balance by be four X.X% quarters, quality. next to Andy We And management. three turn and TCE retained ratio I'll our it the to supported over also growth expect

everyone. Thank you, good Carla, and morning

detailed, just on having XX total looking, $XX NPAs of points. represents loans only non-multifamily an low-level decline recession. total XX special quality predominantly was sustain or points The slide day failed clearly by basis heavily only and substandard to total test strong loans, percentage or importantly basis of noted the as a a a analysis points, performing X% a credit a operating classified moving XX, completed it recover As that million most XX NCOs exit in assessment real-time of total to due real credit forward forward. After delinquencies strengths, level as loans. COVID-XX of remains commercial by evidenced of basis portfolio stress were an assets to evidenced NPLs mention increase to to to XX performance ability estate to was operations and impacted in that XX

we've to over both that one just performing consumer credits given high been which as this credits on a modest NCOs year basis susceptible an loans inflationary total QX was a over XXX was deterioration forward-looking basis points, basis year. to same analysis an from probability From of loans NCOs million being line detailed levels QX. of loans overall discretionary average are point, consumer and improvement XXX $X average overall basis any QX from and recovering as points pressures growth all of COVID-XX, total now improvement loan early total XX this of points of in to with historical For ongoing perspective, for well XXXX NCOs and mark highly and mark this actually in commercial QX commercial in off, for recession charge late average spending, Adjusting XXXX. unique that the a level

with continues remain to book weighted of consumer with average addition, perform In off we in lifetime half factoring than years. pleased just the installment loss of reserved our loan how rates life X.XX% fully annualized X.X the well of less running when charge rate at

and strong this as improved noted adjusting XX underlying installment QX credit metrics of portfolio remaining the and for on remained the $XXX million XX sale, that addition, In QX over of XX, loan in after slides consumer successful the appendix.

have committed to the we we following. performed, our well are remain with how Although portfolios pleased

and economic in First, social, uncertainty given strong maintain the the reserve continued position climates. political

of As of which total evidenced coverage X.XX%, XXX% NPAs. by solid equates coverage ratio the

finally adhering portfolio mix Secondly, finally, adhering NPL, NPA, consistently of evidenced loan portfolio our and by excluding risk end a strong at risk which performance predominantly the $XXX comprised recession. million, the our low dependent into portfolio current such at loan with Based just QX. low our continued market and office Jay and segments of on and exposure CRE stress credit is at certain portfolio by our testing, low flagged. are enhancing you be risk weather as to lending I'd loan strongly $XXX million; time standards, discretionary over spending limited solid CRE almost in to only mix XX% risk back of presentation evidenced upcoming retail portfolio, strong in recourse not to concentrations to positioned credit NCO ongoing like to higher morning, as and at was would $XXX Sidhu. focus like management industries, now lending to hospitality of greater management which your this segments with level being we XX% PPP XX% investment to on strong And that underwriting credit for carrier the million, low well I loans, only turn strategy investment delinquency and and segments feel to loan appears core of thank volatility, metrics, what a loan

Andy. Thanks

have let shared what we with colleagues up for Before it questions, already me you. summarize open my

$X track moderating rapidly $XXX growth last our loans. up the all Since billion, our consumer other excluding we changing cash beginnings. see of growth organic in or can from on industry the sale digital $X of from about report funded shown you we XXXX, improve our and so loan year further We are as supported wide of or to slide billion, intent best-in-class expand and growth the in margins deposit chapter our deposits to loan and maintain PPP continuing same, core middle are and received XX, about remain on in million from growth up about loans this ratios. of $X In growth core higher environment have As two EPS but our banking. loan leading the was have three spite to by

heard that As you from and been of to confident credit Andy, one has are hallmarks intend we and way. we exceptional our quality remain

are us over our premium committed Our maintaining customer advantages and and we to letting centric are get our peers. capabilities models pricing technological business

estimates. Xx book about valuation Speaking as extremely our say shareholders the of consensus individual attractive, one and can trading of the company, at XX% of I is tangible only largest XXXX

back trading buy million months the we $X tangible below to us over authorization authorized expect our share next should few book. remain if You

from open any it please the Brent, up audience. for So questions

[Operator Instructions] KBW. with Perito from question of the line first comes Your Michael

line open. Your is

is Thank Andrew for in Mike. questions. This taking for our Hi! you filling

growth First off, prioritize capital and building into how near and then in to the guys I XXXX beyond. will you wanted see term just versus

question. Yeah, can so take I that

the first, us capital, allotted we repurchase shares. organic loan we're And a Supporting below some book we share So growth using may value, you opportunistic when said, to tangible are in always will is best we're thinking priority. about to That about program. said, always capital. Jay our $X thinking strategies extent buyback optimize as see be million just the common

that thank deposit like forward? the you. will how diversification, CBIT, the turning continue to Great, going that expect customers how then be mix future? grow of And change the customers to do as then in you And with to

Sure.

So this that Thanks for so is Sam. Good much question. morning, Andrew.

digital customer asset platform So banking cost think that's from we to doing. set franchise to and started it's gathering our build we that we're vertical, what the CBIT really perspective, deposit banking and out acquisition low-to-no deposit I a important the when everyone remind

a with well larger also payers a they handful but do only operating balances earning to happen that, to are XX% on but us, finer put I varying of the point tend not of depositors these capital small to larger interest. cornerstone that over mentioned, But as be to anchors platform. accounts, our we today have customers are So client CBIT just hold

growth. the So payments allows there. the and effect platform increase network It volumes the flow you volumes payments to network customer this deposits increases us said Increasing new know, overall CBIT here the effect. differently allows increases

clients [ph] space So dividend we bearing. platform, should class on the will of be come to look that that non-interest at the as majority you expect this

one Sam. in thanks there, last me any just then And know the sale and loan you sell any term? you Great, on the plans to the consumer for loans have remarks here. more but I near consumer prepared the mentioned

bit So on you of there. on Andrew, the transaction think the color a I little that loan add know consumer sale, I’ll

market CD smaller We close we a portfolio process We know originate an bit multiple as decided you So at interesting know on portfolio. this our selling ran entire to put mentioned, to where actually out receive amount. par. We we the bidders, had is direct you or bids.

platform. appreciate, you we've tremendous in amount value a can As franchise that of created

hundreds of acquired thousands have We of customers.

go feels lots of principal; no capital, the that's XX% of we we know something could interested horizon, sell of in very the we strategic You today. on size where evaluating the of feels than overall to let plans loan, the that's which position, and where however, servicing point an on which a that not relationship. we level or about more that's have appropriate XX% a XX,XXX but to we potentially of are given manage of about we in we actively diversification a like It's maintained type this customer that space minus our time for working are But franchise. plan sale approximately At plus near We very are something term. originate further very portfolio. the on portfolio the less partnerships in like – be total to

Great! questions. Thanks taking you for all the color my for thank and

Sure.

with the Your Winter line D. A. next from of Peter Davidson. question is

line Your is open.

morning. margin Good of some drivers next the ask year. Thanks. wanted about outlook for to I expansion the to

morning. see Sure in seat. to Peter, good Great your you new

next over know and broadly to to net XXXX, experiencing not understand risk, just taking interest level position months important continue going in ourselves so volatility you perspective all unnecessary is that how likely the more taken from profitability market a about to actions it's but for also we're I considering past interest think better we've income think what into know the margin, six especially without year. credit of You rate we which

is interest growth next throughout assets net yield Rather even an responsible we're growing income provided data, a specific the ideal risk all, we So margin, or have this that on we low growth though interest on talked net focused than deposit about guidance through extensively. first focusing of sheet plus expand will year. us margin continue know static on growth our our or a going us that sensitivity of to to top of minus top our allow be – on to allow will balance and you is

you You asset sensitivity. reinvestment loans, flows that the as about next the know bit know of can how top on the expect about year, the little well talk cash book, maybe modest think we payoffs and asset, Carla, securities you PPP a the we

good Sure and morning Sam Peter.

couple the Regarding expansion, margin big drivers there of a are here.

have we forgiveness be First, we reinvested and billion PPP quarters, of from are that over very $X next at can cash over of unique market process. the loan couple that based rates solely the

XX% assets next assets, third, lag to XX higher assets the because benefit seeing months. And to rate NII ultimately our interest full our over not of approximately Secondly, are still redeployed in we're earning line of the market our opportunities invested This the significant when planned repricing the as Sam the funding. and rate to market have about, generate to causes deposits. up compared several goes hikes very the sensitive over still to low-to-no deposits quarters. in be repricing can which the XX generate lower our of just we sensitive And lastly, assets next variable sensitivity, catches a away asset core yielding of of cost talked

thank you. Okay,

mix quarter-to-quarter. on know big bearing pretty was and mix that you there DDA in But grew you outlook costs Carla, maybe deposit deposits into interest and for about this I point Can meant deposits shift growth? the shift deposit point, increased rapidly. that last talk Just just think a you from

and I'll of talk talk to to some I'll opportunities. turn about then it shift deposit the Sure, Sam generating mix about the back over

the most moved paid deposit interest deposits. X market been XX% strategies? do as you want related rates deposits market quarter. So in to that, some third bearing accounts CBIT up demand total DDAs. money make Sam, And to roughly Currently about talk of to deposits money of total of our have our related Having CBIT generating the rapidly said in October accounts competitive changing our all and of to be this environment, the we based market moved

and you bearing deposit on move little I this before just bit, add just me let non-interest Yeah know a migration. absolutely,

As is volume last the anchor our was the been it official probably important for it is This asset has Carla our couple deposits. and has payments It as we of behind related key one-time to know us some but competitive given a CBIT. of decision to significantly strategically stated, quarter us it's pressure, of up CBIT this you to to in was been obviously, was tremendous points. new there pay interest is thought to make which amount quarters, why the

would know to also of outflows, We us quarter-to-quarter steps to some be a would you would these customers move in you actions. migration bearing just small it just variability we're – No mentioned. – of otherwise from take really across it Carla and accounts [ph] saw expected which know our digital or a business be protecting opposed important franchise, our that closed as and of type to it is able be not a damage asset amount customers

also transaction deposit growth, talked about you would we talked say some and reiterate Now the what to slides. I – asked is business banking of about

Sort verticals that growth not number our of we've high two, are our waterfall yet lending in new discussed commercial of deposit self-funded. deposit is the that number growth important quality in initiatives our growth one, verticals;

we which to expect broader deposits three, the And those leads example, potentially enabled through there’s talked growth and platform, are those technology are to payment and For and our $X.X those technology number The for venture and treasury and platform transaction pipelines see aggregate which newly fund CBIT to deposits leads loans that in integrations we are strong. launched services, in CBIT our flow medium financing and billion network in then enabled banking to again term our is groups be the with to customer and [inaudible]. the and deposits obviously the associated about. stronger payments self-funded

installment almost essentially just you $XXX appreciate really I last that’s the sold right, helpful in consumer color, million but loans, par. All and this at question. one all

give loss some Can from loss sale. take You the million just you entailed? color did that a what $XX

Sure Peter, I take one. can that

components were there couple a of it. So to

but cost sale a acquisition million. and was needed $X.X million deal of on sale, costs $XX.X at to around price there unamortized XX.X, some related that from there the customer was time be then the loss was at there $X.X written resulting in First, secondly, sales the just other at, million

Got it, the Thanks questions. for taking okay. questions, my

Absolutely.

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

line Your is open.

Good morning.

sort sure quarter. I fourth wondered make want I have Just on growth. a of the to right

flat. growth, or to expect is you know running specialty the portfolio vertical rest about $XXX million basically to be net talked of of that you the in You anything fairly the

we billion. book, to between somewhere year mortgage end the expecting in a warehouse that a are [inaudible] decline seasonal $X.X decline, to $X.X billion the

– million should that of mortgage that $XXX yeah, we said in growth thinking. have outside would outside see kind idea of of I the be so the largely is Okay, warehouse,

right. That's

terms than of as gig you – that on know follow you’ve the level a Okay, that front and you stock, and - would you lending? would then a back do capital get be quite buy if up, the of in in the to be think willing what slowdown, make growth in that sort fourth do you aggressive specialty do would your you quarter, decision to you to otherwise anticipated do maybe or accept lower just

Frank, this that is Jay. I’ll Frank. take

will growth more that training we at to if be hit a buy in to capital our stock, same in the it's the enormous, to do which very makes of multiples you time it kind our growth terms in you moderating take profitability terms from should sense shareholders and even it We bit makes quality of way, but our and know at We are balancing that. if more terms one of are the act. opportunities us sense to growth, cycle the return we the said balance we earnings, capital, and margin think this that the ratios improving returns to of trade view, a of with growth like moderating think our for at sheet time for of our little of expect in have And important. providing balance at that on a point and liquidity, will I it's of a maximization for quarter, timing back

of we there right in would now. know you I our that add rather are we out look – our quartile – the if sorry, is group, you the Frank, are just trading TEC banks top the peer top And up

there if action, So do only we in underway, capital to adequate our even to we we did appreciation do relative if the industry. we efforts that under have would take decide have is the levels peers of which

it, you. Thank Got okay.

Group. Hovde from Your with the The next is David line Bishop question of

Your line open. is

deposit It the customers Sticking platform, I reading customers morning. on-boarded yet. good wrong. not bringing these with client Yeah, XXX the new were deposits in in am here, this you sales looks in to CBIT is – they deposits like guys things but that’s

accounts, the why in the in curious that’s Thanks. growth decline deposits. big Just

good David, Absolutely sure. morning. Yeah,

the we a the approximately the So those balances of some on-boarded average already quarter, towards funded, and XXX customers, XX% know million. $X.X end to of account over of those you opened about up million accounts $X are

end the integration account a account primary growth those payments (a) is a is either and ramp or some the offering At it sometimes funded slow of there of takes these accounts deposits CBIT times So up. and day (b) into get it when key customers. is a for

of indicator leading deposit a the and it's So future but funded. growth, are accounts very active

activity in just the sense or just of platform? payments maybe you Got scale it. or size then And know any terms across

on my payments referenced for. several to quarter, Yeah, all paid I dollars and say in online its billion the remarks. grow, What activity is I prepared our continues would

it. one the question there. containment front. on And Good expense Got cost final

run rate You Thanks. here did that quarter the tech expense see the in good decline expense. rate. run inter a decline just technology as the in drove sort a of that Is

Yes.

by deposit have place we in BMTX. currently services So impacted that agreement is largely the with that

depending As that serviced we $X said are BMTX. on previously, a upon million that down Up deposits quarter runs quarterly some maybe seasonality around million basis. $XX and of by the

million. $XX roughly was quarter This

thanks. it, Got

of with line question Matthew Stephens. next Your is from the Breese

Your line open. is

BM guys. the to here? come I should hearing apologize, that a out I’m you cost tough remaining tied What Technologies time was having

$XX million. So $XX annual On its an roughly quarter, was it a this that's roughly basis million. million and quarter about $XX

you expect think I sort off higher the offset similarly, be the That's you there $X.X the that? know assets, had billion of it to And of going to you then where fall I to the Is lower some BMTX. it still to to about if it's know What's expected year. offset be? borrowings assets? or lower was of And deposits end at last do tied Okay.

that. things a Well, couple on

had and point the for to growth some sources that position by service deposit liquidity and of $X.X described core $XX strong about and Sam our billion. deposit fact we've things. two comments is organic One strong had liquidity the we close BMTX two, in you would currently to So I pipelines billion earlier the

some how us options BMTX service we gives deposits. that the So on of the outflow that find actual

versus us you Okay, the incremental replacement. of remind and of can cost the cost the deposits

Yes.

be are market So first rates. that cost could right then now costs channels X% any be go the low-to-no to and based and those to shortfall it we around would organic on extent replaced, deposit

cadence back going then the had I to make just I NIM, And the wanted to sure Okay. right.

stable/expanding fourth a expanding, there. expected have core extent quarter basis of then down be you it some will know XX frame to You points just of do in this the is And then right, the bottom. NIM reference, and I be if from expect off I want the expansion of it's

So and on that opportunities based we the items a sheet, roughly quarter on static the we then three XX where that on we we be and fourth of impact described will the a quarter be would consumer for we quarter, within the transaction a three the said the expansion and have on basis fourth and call. balance sale the the margin guided earlier points NIM in is what to

maybe that. just And follow-up a Okay. to

your another what full where data estimate it you deposit this fund call at costs of have fed point? basis XXX we cycle asked know to if or are You peak way, hikes deposit do expect another

optimal focused goes previously not the pay what commercial to data, them out largely deposit we're we an specific institutional not on built When and and and what some can said rate up, is deposit our franchise, banks giving think, but it's we're they or I clients. guidance say we So an on just money. expect data ideal

I just data talked quarter from we related the last market end industry. competitive in is to the we at that the if that, in would deposit a add of to standpoint think And about seeing what were I

Our whereas their their changed the folks with XX view over continue industry all estimates. at you seen not past some has have the cost know in you raise days, to

And I think…

Okay.

Matt, focusing interest everybody expecting. be growth is consistency interest on the looking I income and at believe think what should income, we net is and are what net we of

beta our see us for will a lots we asking questions yields think sheets like balance our up, and deposit is which would you as – It's up of be fee assets that's deposit to the see well. we focus. if show costs we we better that going about I going you earning have going too, up asset should So and what

the Understood, okay. I I had. it. appreciate all you. questions That's Thank

Matt. Thanks

Your the final Management. of from Dezellem with Bill Tieton comes question Capital line

open. Your line is

That's I let Tieton you. start Capital me Sam. take and Thank the bait. will

what about we that you initiatives ask should there? technology would said and I’ll the the without highlight to turn any digital top and You over you banks. being specific in question that to just like you XX

absolutely. and much to thanks you the Great for morning, to Good question. speak Sure, so Bill.

able the You our future last year, on had that top of our the bank DNA Once Bank years be added couple Subsidiary we and a have that the technology technology. Mobile, lifted had number year that a take team in the legacy traditional know started terms development franchise, of plus we five ago build thanks members where out that rebranding with we initiatives was a and of talked in lot to about the We’ve we organization along of technology last information. to divested organization. organization we to this the predecessor to of XX

is continue you small market helping innovation digital And They innovate team, our have Our hand-in-hand developers, security with our we it, Technology facilitate department know are Information tech is force, bank, that the run changing don't team with the the the helps our XX the of bank team And just it's left CRM, IT members from the the bank. – way management separate in from to know which we technology the department. market folks product sales the right technology changing you that the the are separate We changing folks at this our industry. to is of dedicated change organization. side, hand that have think department, are hand XX the side. about and bank a fully to engineers, to work to

over in ERP of a to to able be ability have virtual of the roadmap initiatives. to focusing customer, count costs, We're of digitizing, less reducing experience. are it's to and can The that our and a million be really can matter to compete a need best-in-class customer initiatives reporting of of opposed talk out the helpful days deposits roadmap or So delivering move commercial the underway be on not we're a you customer them an but frictionless do months. that types types these team we're they and us of in we're to Y X, not focusing on on delights that ability has that integration able two to banks types moving And against capabilities, tend Z that's that capabilities, as and focusing of lot have larger ends, matter and account not a on agile. and experience have and effortless $XXX that and terms one paper, not we to hopefully you, and focusing of the to say large an on

in really any transactions associated benefit. about the deposit CBIT or doubling. Thank talked arena or there is And helpful. for matter, number CBIT the is you That Sam. you, with that any transactions the it revenue cost of Is entirely

Sure.

outside and on use charge commercial bank, chain vents wire, off and don't the on the we do off to etcetera, digital the payments have payments revenue we of tokenized for our fees ACH deposits So, before and which services. block are traditional based for the banking settlement. transfer We vent and

is and industry, improve really CBIT gathering bring a cost don’t charge continue margin which for platform, improve deposits. and term. low-to-no the create But vertical fee deposit the again, you to volatility we deposit the our the the the but is So know outs, do and digital for we in derive large That will the reduce franchise main in to asset payments, medium of the organization. instant in today income customer starting and purpose of

interest know, would banking your maybe are then and it's interest that the there all And a initial to lastly, discuss service, early you please as too but you in seeing perspective?

Sure, absolutely.

know You and by because as we're services billion we a capabilities as FedNow, actually today. deposit that very relevant deposit the time enabled, to it is finally referring that. payments, BTI BXB loan whether service, which is you the really loan and which for of talked and payments, And well Bank banks know Wire, near as is handled capabilities their I’ll Wire, three about, so origination, as $XX capabilities are CBIT we to smaller of have taking There There's Fed Customers ACH come or that’s today in we payments so it’s are the have exemption, sub taking think forms these back future. types other or real Durban there what will of and banking of typically pillars.

so the just you experienced long-standing as and we platforms. as going consumer dozen as initially servicing built our Fintech number of platform, we top Marketplace lending to So were long we our as five-plus know, of or purchasing back partnering marketplace partnership, have years half and a ago, of loans of and originator a and relationships

compliance technology lend there's that for and them billions opportunity compliance an to to as them from able and of perspective. of generally risk have their in platform, have as liquidity help customers with we ROA dollars paid existing high that of interest we opportunities annual still and their and amount risk handful fees. well small them significant who be In business, onboarded So some loans, to run we get cases, a originate we and have a of enough already many whereby relationships

Thank you.

Thanks Bill.

further this will to the Sidhu. I time. no call turn Jay are now There Mr. over questions at back

you interest I Customers. very in we thank much. appreciate your Yeah, really

anytime. a please call give us So

you estimates beating and always We consensus ideas you. are for hear Thank us we to meeting committed your for to XXXX. the or are there have

concludes gentlemen, this today's Ladies and call.

lines. your disconnect now may You