Customers Bancorp (CUBI) 27 Oct 232023 Q3 Earnings call transcript

Good morning everyone. Thank you for joining us for the Customers Bancorp Earnings Call for the third quarter of 2023. The presentation deck you will see during today's webcast has been posted on the Investors web page of the bank's website at www.customersbank.com.

You can scroll to Q3 '23 results and click download presentation.

You can also download a PDF of the full press release at the spot.

important webcast. we includes on walk presentation morning's this investor details will that through Our you download encourage I to document. and use the

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

Thank good to you, Welcome morning, Inc. Dave, and Customers Bancorp, ladies gentlemen. and

Earnings XXXX Call. Quarter Third

of morning. us, us you Bowman. I Carla from service Andy this morning as Officer, Bank's Bancorp's to Customers Leibold, CFO, all CFO, want Sam he CEO, Chief retiring his bank Phil the Andy after at Bancorp's Credit the and for all me this Joining share and pleased to be to with Customers know, Customers are he'll Customers and to Bank's, Sidhu, And company. service year. We're Watkins, results our leaving you the thank President really end the exceptional is

our capital. across deposits, This our demonstrate with profitability margin, liquidity, and quarter's priorities all continued positive strength include the financial top franchise results momentum of that

management also serving possible. risk in place members we We in whose execute principles. our hard success who thank our Customers the bank to this and of strong banking commitment every I throughout team want salute flawlessly to needs. trust Bank try our their All as day maintaining while their clients our makes work

We again demonstrate our strong Looking risk X. forward-thinking is at bank wish a Slide Bank to management. Customers with

this will topics We each will cover cover my I'll a in detail. X and more major few presentation. in highlights cover morning's topic colleagues

in return by terms of strong metric quarter First, across capital while on quarterly exceeded improving assets, all our every that on of Street of ratios. return margin strong based on equity, expansion, another materially measured these as performance we estimates performance, expenses, control delivered significantly underlying our

continue Second, the an bank. as create client to we relationships. to deepen value disruption saw and the create opportunity across We franchise market

members Banking our expectations. in proud team example, that but not As met only of Group Tech so Venture & an have we're the exceeded our

attractive of Venture new build in and generated quarter result deposit We to going a base, our our Tech opportunities generate billion these excellent loan welcome again who core $X.X is firm, also once brand would our borrowers, of of is driving in from growth ahead our acquired our And quarter. economy. and fantastic clients deposit deposit forward. We progress innovation to growth like are to strong momentum client self-funded X Banking there our As schedule. portfolio and already the & the

Loan Bank we of our down promised, advances. deposits paying base overall Federal some Home high-cost of the by and wholesale deposits to quality improve our outstanding these funding As used high-cost redeeming

granular was across gathering our deposits. deposit deposits noninterest-bearing our franchise our of and our total diverse and increased XX% Importantly, to

TCE we Sam will more wanted a that XX a increase were Carla levels to and basis second for balance details, this but our in row. sheet, controlled quarter. mention capital Third, we points by significantly increased much ratio with able I provide to our quarter

CETX always credit went this to of end over Fourth, quarter focus ratio key improving these part by as Customers XX.X%, DNA focus went of our quality, and Recent incredibly our sheet. maintaining a to are ratios. XXX strong. points slightly risk-based up which quarter. We're remains balance also committed further absolutely capital estate this in the commercial basis XX.X% up of at is retail and at immaterial of office, as Our or well ratio basis XXX by points areas Bank components real our to

has of loan we're and confident remained future the portfolio. stable, our in ratio NPA performance Our

to year quarter's Finally, share we exceed core our remain EPS very report and full and and our of We're expect significantly with XXXX pleased a stronger guidance results results core about optimistic beyond. XXXX performance. in our future $X

X. Slide Now to turning

briefly Let priorities, unchanged. remain our me reiterate which

continue We relationships. will and franchise-enhancing moderate and banking growth have capturing full ensure to we're

We ratios to our thing in prudent that will continue sheet to balance fortify do improve uncertain our and the is capital environment. because this

we're and secondly, are: liquidity to As management our place the credit principles. and These success always, remains capital commitment maintaining asset have managing the started risk factors. of with rate first, success critical the unchanged our levels factors been and core in interest management They our bank. since bank's critical we in robust DNA day liability at strong risk;

competitive single-digit our attractive a sophistication We're assuming mix regional high our Third, stable operating always to double-digit drive growth deposit making creates environment. show We seeing economic we next able growth of to believe of and and that low decisions year, loan positive advantage to loan should unique be opportunities. peers. many believe new bank leverage. We size

liquidity have to strong We growth. and ample support capital moderate

at remaining real with less than and each retail our represent exceptional quality commercial ratio roughly stated X% total points. Office loans. remains of our Asset as estate I -- basis like flat just XX earlier, NPA

want pass regular who to that to the excited welcome group Bancorp reports. With new Raymond of insights that, already quarter to Sam, our research in activities an I to extremely call and I'd the to I analyst the joined more Customers to detail. key of add over and the analysts results cover it his turn quarter for like on call, Sam? discussions Moss, Steve Steve James. to the Steve to Sam will the story. Before follow from research talented We're each

and good Jay, in one metrics, the XXXX, especially report that again $XX net of of produced $X.XX on uncertain pleased million. strong yet, geopolitical GAAP earning We're to third our our quarter delivered extremely macroeconomic Thanks, across environment. In in profitability we everyone. an best and EPS income of team GAAP quarters all results morning,

XX%. ROE Our ROA was was X.XX% and

flat continue we franchise, to our interest continued We management. remained quality but industry focused were quarter significantly as provide the sheet quarter NPLs. to trends From us in and shortly. Credit NPA up at we roughly the X% sheet. net the Total perspective, as evidenced deposit a remain increased of to our ratio, deposits quality not Reserve levels disciplined, more which transform X.X%. do the margin on We I'll maintained balance in see a walked portfolio the balance our of signs XXX% hyper through. robust detail any book, on of remained in Jay benign weakness by buck

proud into industry We well reported more wanted into above context. We put I all moment expectations significantly detail, of this quarter. accomplish we above by We're trends. significantly to and and extraordinary able we more of building net in core the in margins equity, of base to achieved a all XXX take work grew their basis to capital was producing the interest and our our XX% on earnings results. while what by expanded income appreciative common Before than earned dive of our and extremely hard XX% team We quarterly return these points. performance

even the in that franchise. industry, throughout $XXX environment of per Slide week for perspective, core X. deposit growth the by combined billion a in billion across the growth. significant after I deposits a represents is core paydowns. our deposit but of grow we growth say $XXX quarter. When deposit this $X.X growth. of challenging over $X.X growth, last quality just deposit million, core In deposit This which achieved effort From we to net generation had this significant a again, not I'll wholesale quarter's The team our growth. Moving franchise. have to with is was also able over million want were of to we the a quantity billion growth, the highlight deposit deposit $X.X a

deposit X also about most of caliber as growth client growth the our commercial up or transformation. This we deposit the them $XX X,XXX very was more, deposit of with quality franchise our million solid over channels saw value high-quality quarter This true our base. demonstrating new context, added continues quarter. strengthen in granular in of to additional For deposit of represents broad-based the dozen creation nature and and growth relationships

which balances, last the $XXX pay reduction Our used the down quarters. was paydown million over core quarter growth deposit totals the funding of as higher over again wholesale once over of with wholesale to in $X.X billion cost CD as well X in

industry franchise. $X.X billion. has deposit now strengthening the deposits. a steadily the by testament balances, losing our Noninterest-bearing year-to-date, of been is total we deposits we've increasing to quarter of third deposits noninterest-bearing noninterest-bearing This comprise our our XX% consecutive which deposits, believe the is While noninterest-bearing increased of deposit

of quality very of seen has this result regional the XX quarter, collateralized. of insured of the in lowest the environment peers. on average the bank in remain efforts, position average X keeps As again the quarter, industry these basis history. end bank most quarter, to Fed cost this relative This And in industry year. entire declined first we're of the with industry. metric recent increases our of basis a points of the in deposit deeply to points the either in a in the by the certainty, only increasing is spite in XX% decline. certainly cost which We us our increased one believe can the deposits. deposits the that at is deposits only we say were Since -- strong our or deposits This accomplish of focused challenging stability and rates, our We

by likely so. billion, the earlier million over increasing we Our of the franchise. one the deposit to granularity their year. $XXX move core the overall December. of XXXX with of or $X.X one marked be significant -- transformative note the our deposit anticipate year customer next disruption, robust over would the to month and BMTX pipeline industry this and at and in over student the franchise X quarters that strength which of of by diversification, We're beneficiaries in the plus managed remains sometime partner portion new biggest deposit we expect a for deposits bank will the We onboarding of

would more Slide Moving income million second ex to be from ex-PPP interest after PPP. increase outsized record roughly net of income in adjusting base. off X. the discount of positive net the accretion interest for interest income have quarterly XX% $XX discount Loan of a The record this had NII represents a to Banking Even quarter continue a in in the momentum quarter portfolio. normalized acquired than $XXX accretion, million we for this outside and row net expansion of Venture

over one-off, is continued much of been this floating about turn additional with rate the the fourth we the in I'd industry XXXX. deposits, expanded margin quarter, performances industry While best versus X.X% to of Carla outsized X.XX% headwinds, quarter. transformation, last benefiting sequential the the the call the for quarter, and had expect by where this deposit to from the and not upward interest-earning second improvement. With face trajectory from like into story we quarter our and highlights X.X% accretion, the our was that, the the continue Normalizing to in in to discuss net our Similar enhanced continues NIM quarter the to interest on to have to composition assets if accretion. our would

morning, Slide and Sam, on good I'll X. begin you, Thank everyone.

We loan continued the quality of our strategy of quarter. overall the our during third improving portfolio

the we've on in focus client $XXX estate mortgage multifamily relationships. modestly warehouse, in consumer, stated quarter, did deposit holistic investment not As portfolios our have held about with building for meaningful third and we real decreases by declined our from clients commercial previously, remains relationships. Loans million where

the the say that our the in possible portfolio loan returns, evaluate don't I'm capital ensure for see pleased portfolio. loan continuously remixing additional need we we to risk-adjusted generating is to While best

to us X as points percentage liquidity to continue also quartile XX%, the bank improved We putting maintain our top loan-to-deposit of end strong the our ratio third in by at peers. regional quarter

into selective loan-to-deposit heading our deposit As provides of significant growth ratio core originations, flexibility and loan result us XX% XXXX. a

for assets consistent lowest Turning expenses the banks with all expenses traded levels were one the quarter publicly to operate to efficiency operating We to believe opportunities our among the flat metric. of expense to average the million, at proud bank in roughly of noninterest leverage decile in generate ability our And Slide guidance. Core U.S. positive core with have significant base. we're $XX X. the third regional noninterest peers. the at We're our top current of bank of we

you committed physical to Bank of As of at providing the a confident with branch ability and operate differentiator tech-enabled mid-XXs we've service the medium bank in discussed over we're We remain network. ratio in the efficiency the our true limited our client past, high-touch the is business a Customers model with This term. to franchise. capabilities

Moving to Slide XX.

many taking bank when continues to undue you X/X we those most peers to. management. while forward-looking That We purposely to pay taking continue reposition Xx risk, about the proactively have that of we complacent this had of to throughout credit the exposed to risk duration regional time our securities As industry portfolio remember, relative yield approximately action took generate only may accomplished our portfolio of bank the securities strategy during dividends XXXX on peers. themselves a become today. Without to securities

top by of XXX As management, risk a of actually a during peers. Over HTM and of strong in is Slide during rates quarter, low interest declined AFS unrealized our basis quartile the TCE about portfolios relative XX. common percent result tangible despite the AOCI points increase bank And as the rate our the quarter. third the regional to in on among level our losses equity

billion $XX.X robust on best-in-class Our $X.X cash immediately and liquidity sheet. including liquidity, available in position total in liquidity, billion remains balance with billion $X.X of

of excess $XXX of repaid million liquidity, strong reduce of end uninsured percentage over the helps end freeing XX% up grew third incremental advances high Loan us quarter Home interest forward As and peers. putting is we and also while a a of Bank callable as the Federal very deposit quarter. growth going the core expense bank This at regional almost during off-balance sheet our liquidity. Immediately the at XXX%, available liquidity now deposits of third result

appropriate to sheet level to conditions market the cash. determine continue We monitor will of balance

cash. However, prudent operate we it is of from to with a to management continue believe perspective levels risk higher

remaining more to organic impact our contrast $XX our available-for-sale benefited target and report quarter, We're AOCI Slide positive in our the third securities with X industry. Turning book from XX. to to portfolio, the stark which is XXXX. to very achieved than capital We added tangible from value which generation per in we that of to already $X a in tangible pleased value book share strong quarter

longer such environment expect our industry rate be rate continue may cause a for duration we short headwinds, the securities While higher a because to do to not meaningfully on portfolio. by of impacted outlook

the years, XX% share value Over an our on X book basis. last by we per increased tangible annualized have

X than We that to to growth value quarter track on grow have to We're subject more year, during exceeded this XXXX more tangible by with already XX% XX% book impacts. market our go. external only

XX. Slide to on Moving

by is and balance of balance our Our an $X.X basis impact strong TCE ratio sheet. discipline. a earnings a on increase quarter point has XX flat ended to on ratio This sheet relatively XX was X.X%, AOCI in sheet billion the I'll third basis testament a which this points this a about single impact quarter to out that of balance cash also points. power ratio. negatively continues material at

I assets. billion XX.X%, all in top that also we $XXX billion CETX with from achieved ratio AOCI Our grown already our CETX to quartile previously basis to which ratio by at X the highlight is that is year. our we've ratio. XX.X%. estimated the increase of XXXX, guided points banks to second adjusted our CETX in quarter able this is consecutive materially quarter CETX ended $XX go been ratio We've quarter This XXX our have And third range. will more

in Credit by the remains in low past quarters. Consumer all XX quarter our the the line the million to was are XX. Slide nonperforming our and metrics metrics. Non-performing $X.X Turning X million, quarter. $XX loans portfolio third ended declined across over experienced strong quality we've at third points. with Both basis charge-offs at just in levels, about ratio asset

loan executed charge-off very million roughly quarter-over-quarter. commercial the for appears well for while for end of account estate quarter. consumer balances guidance XX% each real $XX to XX% of portfolio While our sale led $XXX market. Commercial office of at Jay average exposure. sectors higher, ahead commercial low million real consumer This sale loan at excluding of comprises extremely the portfolio. only million $XX positioned of X% we and XX% skewed end approximately of decline noted, $XX is the provision multifamily, total our regional peers We ratio that about have quarter. our million loan lower the retail very potential the real Furthermore, bank the to our also the consumer of the challenges remain estate expense as came highlight only our in by per second I'll estate, the

was during roughly flat must on well Sam provide of back call basis feel total We're some we address for today. With thoughts. why held economic management we're the Bank. credit of well our we're strong the positioned very times, I'll firm is to the investment. Superior DNA feel loans outlook Sam? uncertain remain that, reserved Our concluding Customers believers reserve credit in despite level at quarter-over-quarter quality points and macroeconomic to pass is which risk focused environment we XXX and highly that

Thank would remainder our on a the wrap you, Carla. for I XXXX. to up expectations like of update with brief

franchise maintaining a through top of focus capital growing sheet, Before want remain base. with to I our levels the balance improving our liquidity our that as and as deposit industry-leading strong going areas details, strengthening reiterate well

perform We guidance. previous deposit loan to against our continue and

deposit well runway portfolio a I and share loan disruption, is due complete, as has fantastic market earlier, through our already, ahead. is underway As the of of the our market to described Carla taking mentioned franchise remixing transformation

CETX NIM normalized already third that expect continued this and an and But clearly up, in we XXXX. To to with We quarter. we're approximately margin, of tangible achieved set book year, new wrap from I'm optimistic for as very in there. so at providing ambitious prospects per outlook results can target. And beginning EPS strong you targets. far was our the expansion you in value X.X% share very the achieved XXXX we're that year, report was this proud we finally, we've interest to our have net imagine, the that significantly quarter, this in of the exceeding year. forward goal financial We we anticipate to our an incredibly For about conclude, and $X look pleased

are Number takeaways. course industry we've times priority. is on of our the materially franchise. and headwinds, one, Here quality as numerous call said Number management our continue despite the year, some throughout and we be risk of will deposit improve always this the two, to top

Over $X.X X and the have $X.X quarters, reduced core our by wholesale billion. last deposits we grown funding billion by

deposit was and Our broad-based growth granular.

grow just sustainable. XX% is pipeline We continued demonstrating our three, net to year started. Number getting margin strong at deposits, four, ratios. we're The of noninterest-bearing importance in this achieved Number of significant improvement primacy improvement capital relationships. remains and and our deposits, tremendous core interest and our recurring approximately we

industry in between the banking we future Bank. metric. as despite towards sheet. you TA on is by by in heard adjusted increased say, the quartile CETX very And increased is a AOCI, the on billion this to for challenges today, for flat relatively balance points. And single the billion quarter TCE $XXX basis basis And $XX as of XXX lastly, ratio look Bank all banks Customers a in bright Carla and top Customers Our points our XX XXXX,

we're for Our next over loan positioned complete, and portfolio the well growth year. is remix

further strengthen opportunities We our to franchise. have deposit strong

positive liquidity needs. Thank current profitability. now extremely levels And Our and able have is to be and And open very up clients' questions. at for our is to much. leverage drive to you that, platform capital with line happy support the efficient operating we we'll and

from Raymond Moss [Operator question comes first Instructions] Our James. with Steve

kind here. comments. deposit just starting Maybe you, the side Thank for on your Jay,

the much how team the and curious transaction? the FDIC Just came from in Venture quarter

about less billion. our $X.X Steve, half of than

there is then And Okay. forward, well? the much pipeline going of how as in terms

get As in the of medium year to X:X to the by X:X. we longer end Banking expected Venture team the stated, to term, was the

trajectory. We the onboarding of past continue that the In to team feverishly transition and reiterate that near client servicing all on. has working the been efforts term, we're

credit also under from pent-up as had those of who to demand requests, can FDIC number looking customers, make the some that outsized out. of We while hence go-forward basis, decisions, were you was the imagine, we're accretion receivership. On a a from

around and very all supporting is have excited, We investors. we're where national management and as their those imagine, And customers you Francisco, personally existing meeting as as the we're events well the can team in San country efforts. perspective

lines just we Got still And the you. kind it's business both kind the in and And just X months I deposit side on of Sam, you're curious side? Tech the what's seeing the of how underlying that about X, capital realize but think early lending mix & between Venture? call and

Sure.

we've of have that team a fund We historically, Fund the focused a and capital Group Group. moved Fund franchise. these of the a business. their steady noninterest-bearing the So our customers. And focused been and cover your on tremendous growth from question seen coming to Finance granular line over the Banking seeing from slow amount -- used we're of teams finance couple their to has Banking impacted to address just private not also on business number call the add that to was banks clients the but look of sort our The specific Finance of side, just deposits capital banks actually associated Venture side on existing as that's good seen that to Venture well dislocation did new as equity we've and more but inherit relationships Venture

billion team had acquisition we of to prior the and a this franchise. this reminder, a portfolio As $X.X

and credit, treasury that's including about team members services. portfolio have We XX fully integrated, management

the continue up So this franchise to and we to medium leg significant grow in really look have a to near term.

much $XXX curious then for accounting how purchase And here million you accretion? on the $XXX guide, the I color are million appreciate the to there. margin assuming Okay. just with

anything. in, impact is data guidance guidance the X, and Carla, the me we I that conversations. -- diligence get The when quarter room, NIM, third provide all just is Steve for jump contacts missed I'll if outsized don't the And we in in let customer really months know catch-up. you normalized here of necessarily the of and So you're had those

million million our So of the going sort to normalized guide is $XXX $XXX forward.

Okay.

then about, call you $XX So guys had let's million, mark. million it, $XX

going And to accretion and million,$XXX that million so over above there's be $XXX range?

No, happy we through to some of Steve. I'm at that walk the booked do are and little a books. accounting can the you on bit offline. our loans The impact discounted

already through flowing earnings. normalized it's So our

Our Jefferies. Haire next from Casey question comes with

So NIM, borrowing? a the the is where the position position. guide in fourth NIM that does what around specifically follow-up on cash question trends -- as cash cash presume quarter as the the What well the position --

Yes.

should the risk perspective. in levels maintain as that stated quarter, for in and those level to our we cash continue same position, stay about we'll management that on it the So we the remarks have it third

benefit say borrowings. I that quarter. there continue there'll third quarter, On benefit third late that evaluate the levels, the $XXX to on into quarter will like. advances that are the But the some borrowings, be be to opportunities would in We'll did remix the fact borrowings, million some we so based some call coming there looks fourth

to $XXX range All of the in of guided $XXX fourth that quarter. into million factored the million is

it's a with up with I position XX% mean, of sheet, balance Okay. And on the your just run lot I cash. why But to of that. at prudent understand cash following -- it's your for at to flexibility further almost lean there's some borrowings. definitely Xx it's that period, -- you I there's mean NIM. almost of -- the end optimize into and the

lean that more? why curious just So not into

Yes.

for we're Sam and would preparing portion of as bank deposits. I outflow the add that, been of that, preparing for service So a just mentioned, have mobile the

leaving fourth student are those late quarter. in quarter, So deposits in fourth the the

want that we we fund to hand sure make ample to cash outflow. have on So

And continue and in CD fourth add and CBIT cash. also maintain we we've to balances discussed, have as finally, our continue to will maturities the that, I'd Casey, quarter. then And we wholesale have

the And was $XXX million, Okay. on that that where is deposit summer? outflow, student during around the it

seasonally elevated No. There is some balance.

businesses some So associated have the them deposit the year. with school student seasonality

saying June associated second -- numbers. back of to last of roughly But is it's at quarters XX. was that with we've with released some half quarter BMTX their earnings yet, reported pointing the so we it So it's student what seasonality been those balances the roughly we're deposits. half hasn't

just one for And last Very me to capital. switching Okay. good.

above and price. book above are the your -- guys You stock XX% well CETX sub-tangible

Just what's wondering more from you buy back a be holding back? the aggressive little bit on

next And Casey, a pick right some on -- always well we we our loan opportunities will see -- but And we for we're continued we're with said, seeing like now, for growth be our see I that. growth remix, year. we're -- in done deposits.

to But our buying see that. for X% target the go But TCE ratio even And now, would or for think up preferred, we the common back basis. all I higher. update redeeming is like things are So, our regular on table. we will you right a on

question next with Our Davidson. comes Winter D.A. Peter from

specialty double the from to high just next digit. nice heard that naturally you loan was lending it expect secondly, then loan certain there's say year, for you do outlook to of you I the remixing run the businesses? additional growth besides And So single other about low portfolio, hear portfolios growth come the but digit, down? to would Where expect no some

Go Sam. ahead,

Peter. Yes,

a on it's So And almost in opportunities. see XXX as increasing evidenced CETX, loan the we integrating ratios. capital of very attractive think just period. basis number really that to acquisition up focused opportunities, well continue our Venture as that's over Banking -- on points been the the X-month on We've a

outstandings. as floating relationships. Venture and finance, to growing opportunities say, are the finance We're real significant very spreads points. focused focused Venture we Banking is be points. finished -- that to heard Banking strategic that of extra benefit to see you on to sort at Carla prime continuing going a we've added to fund deposits in XXX the finance remix. of comes finance specialty equipment verticals So plus basis and lender up relative definitely XXX to now of with that rate care, health commitments We're portfolio estate XXX across and relative basis And obviously, on

that is And there lower? continue portfolios migrate other And are any that kind slowing? of to

Yes. multifamily. We've discussed historically

portfolio yield. under book is just multifamily X% Our

can capital the and when least to we You said accretive XXX other it's basis having for that, higher next at about still some not get have to year. today. of we about to think strategic opportunities points XXX that margin not accretive allocation But

portfolio an being that's a that of So example is deemphasized.

of there's about X over $XXX quarters next reminder, or the plus a X maturities million, As to in minus, portfolio. that

talk -- how or just can reduce borrowings fourth Federal Okay. in in -- much CDs and how is you and Loan And in rather then, much to forward? just Home ongoing the Bank left about the mature CDs going much opportunities Sam, quarter brokered how

Yes.

amount $XXX callables, sort or million, we minus, of in quarters. expect $XXX a it's third the fourth Peter, In why minus. third I couple as of of additional the taken they quarter. FHLB in side, the as somewhere that believe should -- redeeming, in And advances we on the or it the were of quarter, reduce plus to the which expensive had million, next million, was quarter So we around similar we have hence were $XXX plus also intention collables always had the

Okay.

last my Jay, years you're young. Just XX question,

once Just to played. plenty said of the plans consider you courses think still wondering retiring future earnings got above you be I there's are? you what golf for and $X, if

we time, running the $X. benefit that pleased from I XXXX at Thanks asking so plan. shareholders will had were that that. that our fact X expecting also XXXX, reach we're to Yes. I'm said of years ahead that -- for

the excited the will company, many and I'm update opportunities largest shareholder, you, -- us. for about I'm I exciting very in but so So we see we're shareholder individual opportunities. the

And next active. remain years to at least just so, out, X or so intend look I for but we the

quarter Okay. Congratulation on line. a really solid the down

Thanks.

comes next Our Michael KBW. question from with Perito

not just expecting year-end? And I if to overall Is in by fair? for us those quarter? to sheet I fourth to on but morning, the the rethink in of we X.X%, guide you're kind the third fair year? room growth to think follow-up for mind X% ask kind differently, a saw know quarter to but continue that X% kind of to get kind differently? expectation that, 'XX I probably still of then balance there's Is of capital yet, it missed as wanted guess to was build initial this providing that And next I that for start bumping any reach some -- apologies making is bit capital of level. should you growth, are a Or but around it a kind ratios little I similar jumping sure the this. more about guys top we of still and thoughts

for the Mike, thanks question.

we target of the reached range year, plus So We're we've CETX, on for necessarily good the the XX.X%. to we've as the you range XX% jump tailwind feels like been see of the a us. of firstly, of looking We optimizing same benefit extra a had type that operating the won't given -- course not throughout the of accretion.

plus by high and a maintaining bump Because liquidity future. X% is tremendous cetera. sheet, significantly what the for way about said minus, up of that's there's foreseeable cash flat our the a that flow, not to loan bump earnings created pipeline amount to end thinking that accretion, by of about us et sort maintaining balance best capital range capital is On relative retained securities, gives TCE we're the that's committed is you think about and as to for organic happen the the up that increase always assets, in strong next to to can especially medians we've the organic with point ratio very higher. future what closer continue TCE, fourth within that loan-to-deposit of the one book help to on as when securities side the going and for of short lower interest-earning the the flow or to in if continues to the how growth, ratio. And that that provides industry also and the range. maintain that Obviously, in we're an to year can grow opportunity a of industry. the to So remix the jumping-off And opposed to duration thinking cash stretch loan-to-deposit XX%, quarter range, fund the depositive sort discipline just means including accretion

hold could And missed in a a question, of against model balances sure kind as kind the or this were as more fee on move over cash thinking think into what about to guys contribution quarter? And prior of those quarters, of excess but broadly verticals about have the about you imagine some couple of of revenues mention some foundation cash the end would into then of I more 'XX? it. these speaking, of -- little and just deposit of the how that at forward? in new or of think opportunities I third think about heard I if the it, just It's you that, going just different in I more there's balances. recent I that of we bit are then But response the a kind you obviously, follow-up. high-level holding kind guys the are CBIT past grow Got businesses. as you get you about but But mentioned Apologies, strong that how another and niches guys business gone of you a X% now. optimize it's you you we X% kind thinking curious are

Yes. Mike. Thanks,

XX% Average self-imposed CBIT, on billion, -- obviously, balances or quarter-over-quarter, cap. flat our were firstly, plus were So essentially below $X.X balances the around minus. our

portfolio, say, we the able customer customers stabilize manage central institutional been we think really balances we've to that right saying large customers, where most reemphasize that is to any integral to it's that onboard of So to to to sort But it I'd be. We've industry. of deposit onboarded "I'll That's the essentially credit I want and risk really rate type the we over entire incredibly important, customers target dramatically really year, the years. that past focus the loan to those to worked on off by we've that about important also call just it's instead our here, also wanted is $XX to X held high-quality is building operating us -- We about little on across for going look in customer year, over of achieve program down within We may incredibly Fee last talked brought bit. which of strong franchise our risk XX% time we've our there's relative lot that over held-for-sale that. a consumer to that to strategy a revenue concentration and million balances we'll float, of even is remix, remixing. But reduced spent income or large franchise, down Peter's well underwriting that to think from a we're of business to of X% continue amount associated question NPL between investment be portfolio hard about talking on billion not to allow the it total X on perceived end the building maintain the and of $X.X X% good that of our credit so tremendous important. a to relationships deposits." So a in though noninterest-bearing consumer typical run generate this a portfolio, on of fluctuate today.

Our next Schiraldi comes with from Frank Sandler. Piper question

multifamily I'm given about rolling you a curious a -- mentioned off you talked there. lot just Jay, of playing opportunities to degree. out the

pretty room interested, good been on opportunity which I on you just that But of been there's negative the others thinking pick if their overall, books, plenty right about there call. imagine have guys with You up business. side shrinking were and certainly has to CRE

permanent of bridge that's looking loan businesses? guys all, if at a at, just the you sort wondering Just are business or CRE either

Yes.

Sam. ahead, go So

but and major bank, at not their otherwise we're diversify of Yes, business high-quality the they drivers. opportunities to are are sponsors to be very major to end incredible liquidity, banks, X question. their of be will of day, franchise who I enhancement of you consolidate not going when with those would net the and all number focused the worth across we're that evaluating a willing types have have business your They're that agree, CRE. Frank, needle very drivers, on But

Okay. just, that I anything interested was FDIC. the win. or through is kind And of of I in loan you left obviously, you at there FDIC bid there great has currently? But guys coming then And out, what's track are the that by the up is FDIC guess, been book guys acquired the I lost mean, a maybe

Yes.

noncore of left that think was what us, to I Frank, the and portfolio was CRE. nonstrategic So, mostly

thinking -- bring loans obviously, run sounds to accretion, did was just accretion. Okay. that the outsized other discount Fair than and you that in enough. portion you assume spoke I like kind of there about that it outsized quarter. discount the And another rate then that the more over was

the can discount what so we duration is time? kind the rate you remaining over book, the how run then that of or if wondering share accretion progresses model and of the just can So

Yes, Frank.

not to out going that breaking the I think discount. we're So be

mentioned, these accreted. than gain have acquisition discounted bargain a I balance is whole different purchase equity this it's sheet As bank our In on -- these in are case, books and the a you at are booked when our loans -- there's -- this rate.

X.X-year about So these of essentially to duration, about a question it's your duration. sort about to -- think this

how to you of kind type think the outsized sense say if you a million this period. quarter, X/X a gives of So $XX about was of X-quarter it it over

Yes.

lastly, all you NII. getting there's assume right that's time, I return And the in still that great is time, I -- now just idea expectation growth. fee or idea I wanted assume is the noninterest-bearing But -- assume, on on I the to guess, so And mentioned noninterest-bearing. side I the just mean, Okay. Great. the I the you're just CBIT. a of over thing. over

up of Just curious Is think you you something how you if that? thinking ramp could sort line? the further XXXX? down that's Or that about are in

XXXX. needs. working collaboratively anticipate higher it's has Okay. technology question. longer scenario, Frank, we been need in don't a for We're there and great with customers a Obviously, type their

low need sheet. of you can but imagine, also that rate need business, So balance a take so does environment, doesn't to in your as to much be fee-based a this eventually, up it

a time, evolution event. over be an that So XXXX being will that I don't but anticipate

Matthew Our next from comes Stephens. Breese with question

to I a the noninterest-bearing portion know components of better drove VC you deposit increase? I had growth. for of kind just color the But were the quarterly that what driving was some referenced as hoping the

Yes.

replenish sort $X So $X.X in growth, talked the we in billion last about $X.X we of our still Despite billion have pipeline. Matt, I think, billion pipeline. quarter of our

pipeline X/X And verticals. noninterest-bearing also that Banking the of consistent across being across We reasonably talked Venture about was that team.

you and growth deposit it, outlook have you for know of 'XX, but and is don't then I And overall near-term the mentioned Okay. -- what outlook if deposit? this, in kind noninterest-bearing both if

Sure.

$X.X would be that X/X So quarters, noninterest-bearing. billion X of about about

fourth gets BMT that of sort you quarter, the you of kind with of out noncore, just we $XXX of X/X to a student and reminder, quarter will So a in million the have be nonstrategic But deposits. noninterest-bearing. the do a have -- transition that

of and in foundation the to So sort fourth flattish base of in hopefully when the incredibly franchise, taken in again, X done the over as balances. But quarter growing have off replenish potentially deposit decline we'll the that continue next go-forward continue last about successfully will of early year slight the be totality quarters. a to pipeline we

reside? where deposits currently the noninterest-bearing? did BMTX mean I And student interest-bearing,

Yes.

So give some you on that. I color can

So it's split.

So the and then T-Mobile the are student deposits currently are noninterest in deposits interest-bearing. deposits in related

Or XX-XX? of kind what's the split they are -- what's And breakdown?

the the around year. seasonality XX-XX roughly It's tied some with to school deposits student

books. this the third-party PPP were then And left still quarter, PPP to Okay. there expense a legal on some some There's lender. tied

like that better as feels for what on in it's million the happened $X what it's legal your -- And for resolving PPP then is some costs? ongoing So for was of $X million, peers. to the one, caused looking been most I longer clarity than of It outlook I just stub remaining guess, been for loans? piece

Matt.

be PPP, ago to stay $XX million a balance of sheet. We guided We ongoing. balances just a we $XXX this couple book as we balances obviously, originated value reminder, quarters So our on may $X of of revenue, right? It's expected our it billion, on X% of to had made of number of about accretion. origination,

do would answer specifically, that's effort also this issues. franchise. To matrics to that we some back now just We that, of of needing put tables forma our was in your that pro last question any make of in quarter up guided our be quarter sure the in to the also last an the cleaned

As were of XXXX. prior March services to PPP you there can no imagine,

years. capabilities, had necessarily to be et So to X cetera, business didn't this technology plan X PPP also who in and servicers for

this arbitration to some year had we are cleaned There We up. disputes we no on of take So those talked about things a particular efforts, and servicing ago. outgoing.

the in of was fourth it think quarter year. last I

transformed don't So de as our grand prior minor, an of of we they're we going disclosed as the but major they're dispute. we up incredible cleaned great when but us interest very going funds, PPP. know to no part rate, from and our and X% to much PPP given to made cost that an in can these we've And us essentially no that balances, forward, is in a term and just behind nothing, assume franchise year there's out, minimis program the was in make quarter PPP today, things. for of us where scheme where we're entire not

Understood.

of back and should about way Is stub the Okay. we a And resolution balances. expect the to think maybe now it? that won you servicing, whole that servicing, you've your expedited do have the

stub essentially these So X Remember, termed folks balances or PPP and a are sheets balance on X-year that are balances banks their right? have have loan, the well. most these Matt, part, for as out

one, charge-offs. to installment from that's Okay. turn I to quite coming hoping was bit With the a book. there's

look outlook on today for the with sense this the charge-offs And something So here, early from versus stage are the last What we should that consistent what a does like quarter? maybe for book just if us expect quarter? give secondarily, delinquencies? then installment

Watkins. Phil is this Matt, Yes.

see over an aggregate come we to mature you'll quarter. that consumer of the in down on on saw continue those the basis, that and consumer by as continues those came say million you kind $X.X down HFI think And I time. decline actually portfolio did trajectory charge-offs So the side on to

it's the would But it but overall. going. And from things overnight quarter, not are obviously portfolio happen our early in reminder, that far going think as a closely. portfolios, monitor where continue to look into very those as So is consumer as we to is we a the very differentiated

income. -- super $XXX,XXX XX% FICO, DTI, of over prime super-prime, and So XXX

levels, normalization we changes. So to is but we're performing credit Obviously, the low unsustainably as expected. from continue book any there was feel the not seeing material

Bill Dezellem comes from Our last Management. question with Tieton Capital

opportunity? talk those growth function were to that to to loan degree that of pulling in segments the you they're you environment? navigate market is you XXXX, the most a opportunity, that see where back Relative referencing you would categories to the And competitors what from anticipate trying the as

sort bring call question. and some To together the some of we -- good the conversations of Bill, of today. on the had recap

Venture of we to be commitment sort So expect Banking driver. a major

but this comes with -- spread, we in our business. the also can But growth credit time we can in loans. funds the great loans you market huge of balance to end build those of in $XX imagine, tremendous that originating deposit that space of of year pipeline non-bilateral responsibly. associated short customers of to share, have of be last actually as deposit-only XXX amount these period market of happen a and a growth noninterest-bearing customers, we're taking on increases also last amount the side fund average, onboarded and of extra banking, customers deposit -- of amount lending a sold million There's year basis And types a from beginning call As of quarter customers. and we plus million, also well, or all will disruption. Also and only from a starting are, Fed that were at points capital those that where line the from net $X we're finance not not balanced tremendous of

teams environment. years of we our have over franchise examples existing Banking Remember, the X an the that are has has board, have most the and well, those built have great good, Community relationships. we incredible So that expanded competitive couple across past and a team from dislocated existing existing new franchises of as

does that pipeline business. business known Finance Care opportunities good as Health our has Finance building Commercial Equipment great Our a with business locally as our --

I'm of have next will will if that correctly, you areas -- be others the the but function of some of of some have these competitive just the so year you segments, dislocation do for simply that hearing of a function irrespective a lending the growth you And strength of environment? some of be

Bill. right, That's

President I CEO, and now closing Sam session. Sidhu, to back question-and-answer remarks. our the turn concludes for This call will

we'd and look support you like really speaking for you Customers and Everyone, really Bancorp continued of to Brianna. to Thanks, you. thank forward again interest soon. your to Thank

This concludes today's conference.

You may now disconnect.