Customers Bancorp (CUBI) 1 Nov 242024 Q3 Earnings call transcript

Thank you for standing by. My name is Briana, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Customers Bancorp Third Quarter 2024 Earnings Call and Webcast. Please note that this call is being recorded. [Operator Instructions] I will now turn the conference over to Mr. Bancorp. Customers with Patti David Please go sir. ahead,

during Thank joining us Briana, QX Investors The will web and on the been earnings www.customersbank.com. good for you XXXX. see you deck website Thank page everyone. presentation webcast for the for has posted morning, webcast you, today's bank's the at of Bancorp's Customer

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

Bancorp is Chair, this introduce Sidhu. to it Customers time, At my pleasure Jay

Third Earnings the ladies and Call. Customers good and Bancorp's and gentlemen, Dave, morning, welcome you, to Quarter XXXX Thank

description bank, and and detailed are followed where by Phil CEO about by time, Phil. of Bancorp Sam brief a the first will me this CFO, President provide stands company this and a Joining at Sidhu, morning Watkins. I discussion Customers the Sam

from presence selected evolve and bank a we a business national focused high-performing to to are and Customers specialized well in positioned a bank, markets. future a commercial regional Bancorp is community with bank

is dependent resemble and developed in find same not deposit loan customers clients for a largest that from at clients would time, differentiating model branch generation Our the At and normally the nation, traditional very the our we what have technology network. customer-centric community solutions on traditional hence, banks. banks

the completed the transformation of of By also we levels we have bank with calling to above-average ability of this model into end middle to forward-thinking a show will XXXX, are bank what an profitability. base

remain that manage We are through are experiencing we to times right our at these strategy. now on confident our executing in uncertain ability unique and highly focused

of our On strength past year, sensitivity, the organization. have a reduced maintained credit financial our liquidity quality, and the over which the capital is always increased remained asset we levels, on laser-focused front, significantly robust this

Customers year XXXX has we as Bank, our made been transitional a investments in for future.

an more our risk team, technology deposit-focused year early First, a product our various themes in hiring A+ management in investment recently the with and and infrastructure. significant improvement in and

trajectory strong pay a investments expansion by us NIM growth XXXX beyond, revenue these in and off in quarters, coming optimism to giving expect the We and about supported tailwinds.

pass some With providing the key Slide by highlights I'll will he that, start Sam? quarter. call Sam X, over to where the of on

morning, good Thank you, Jay, and everyone.

We continue to the distinguish industry. ourselves financial services in

approach, our contributing to outlook entrepreneurial next. and and holistic our with Our to These relationships particularly and a loan into is in customer to relationships. success our this dedication are fueling strategic unique and increase the business differentiated remainder optimistic of point-of-contact pipelines, for our through strong year contributing model, mindset single deposit combined

the the quarter to Against the strategic These a consumer commercial positive franchise. momentum growth right our we top commercial annualized in priority. financial inflows diversified XX% run off high-quality deposit demonstrate deposit and our The company's have growth deposit transformation we us deposits. less enabled most high-quality remains again pace. trends in banks strong loan are now, at generated experiencing that deposit once transforming fully Healthy,

reported a expected which it's presentation, important with we stable, net in the the will remain medium income through quarter, in growth term interest our Phil While that mostly our expansion bridge of base strong next later interest the walk declined well margin and net positioned to net our was margin the note over interest year. NIM for as result

this increase of perspective, an as among deposit Our remains driven But, was our will risk we while platform. as quarter. excellence noninterest did bank focused top key our be peers, operational continued in with the a quartile expense we highly in transformation core expansion. associated our the an costs investment remain increase regional well by further experience The we operating have, driver From and efficiency. always compliance talent our as our people and on improving of

quarter, best book the of the tangible to to growth industry which Moving the $XX share one value. after nearly in years. annualized be We in per generating past over several continues XX% reached the

if Our our capital in us was levels share a continue remained tangible book below should trading the share persists. of authorization And opportunistically price we our to portion at you as quarter value. utilized and grown do have this expect repurchase to robust times so when

growth. We also organic deployed capital into

NPA across very point saw including points, improvements loans substandard basis strong. to for most liquidity metrics, mention to be improving remained again. Credit strong declined metrics once Customers and a Bank. just quality ratio our and credit XX We special Our continue

scale. on deposit very Finally, a future a take strong optimistic position to loan unique pipelines. our we remain market to continue in with We're national about and commercial share

to new to these teams enhance accelerate and and serve Our start off prospects. are further an will banking excellent

X, Slide unique a recap where to Customers turn franchise. Bank what let's I'll makes Now

our of make having clients to and Where unique like cornerstone to highly times of service a our a client the is business differentiated and I'd key say, our exceptional culture day importance to In industry, Here, commoditized reemphasize model. our and every the at wow. competitive the goal is success.

their exceptional attract to has environment to Our are us current The driven clients' service by model organization. the is talent colleagues across needs. serve top allowed empowered who

areas leaders also to team members In and a members in we've the risk name to few. operations, new in, addition marketing, client-facing such as and new management, invested credit, technology team attracted we've

is product sophisticated of providing us This focus exceptional all firmly provide believe us clients allow larger a bank competitor to with expertise. offering with be a and focus focus of service industry allows bank. X by with delivered to on this top typical private our our will bankers a across deep the a verticals. Our products services We but level of the

in progress example period the a in I'll Venture later of when through we've we business in short our time. Banking give made an presentation walk of very this the you amazing

anchored time. which Our strategy contact by one is growth at of a service a delivery organic relationship single model, point drives

drive through and repeat Our growth business strong a of referrals. flywheel relationships

We deliver the to for customized meet solutions. culture adapt scale the to the entrepreneurial them have needs and required our of clients, but

will allows us invest exceptional in branch-light which focused from people and model through believe point areas, they single technology we these sophisticated, our delivery truly differentiate contact our growth. us on of both meet We Additionally, executing now to the a our the strategic in remain service, and organic necessary drive model and providing to where offerings future. product in peers, are clients a

financial on X highlights. Slide to turn Let's

core we million. see per can $XX.X $X.XX delivered of you of quarter the in share on income earnings Here, net

Deposits. generated growth strong XX.X% ROAA and in XX were and We points, basis respectively. ROCE Loans and both Our

and XX% on stable Deposits NPA, As importantly, as and I as by here. X% credit mentioned, evidenced see the our increased reserve quality Most levels, can Loans annualized. by remains NPL you

represent credit our are and other results strong also some culture banks many us. the challenges, is model for experiencing credit While transition in a period shining through quarter. These business

the a these transitory, strong While we some temporary trajectory fundamental of we have in faced interest quarter and reported base profitability and headwinds forward. and terms margin noninterest and elevated in moving expenses, are improved net

in income our Additionally, by that that you in dollar-for-dollar our our the impacted closed preprovision corresponding attributes pretax with will equipment beneficial notice vertical quarter. tax release in was on we finance transactions press

highly confident respectively. of mid-teens are the returning and into our We ROA ROE to and on focused north in X%, and

management taper these this our by or become investments. Achieving the elevated of risk a generating year, would As burdened this our off teams early in next profitable base benefit and XX% new of growth and breakeven XXXX banking investments. EPS year more we low of have

shortsighted that short-term not times may put results. pressure investments we are reported on at long-term We and know

creation and will have We our shareholders. we're value focused for to continue long-term on mitigate these, and

Moving X. Slide to

quality As I primacy, our to of mentioned, to continue we deposits. remains relationship, transformation. a deposit less higher granularity. top strategic financial of our replacing next the cost priority combination quality, mean focus on By with execute deposits leg involves and and cost higher This a on

to exclusively mostly client pay are of performance higher We from quarter. $X.X cost, franchise. in commercial utilized with approximately these our We strategic deposits had almost commercial deposits our million gathering our the $XXX We less franchise. Deposit in gross in inflows down Deposit thrilled billion,

XX% base our banking came in quarter. Since approaching deposits. remix million deposit large A These of experienced have our more $XX the producing growth just more. deposit driver relationship-based from XXXX, channels More inflows were or growth $X.X new a low-cost, XX alone. in of with inflows of generated once billion XX% again is first these teams half than than broad-based quarter these the This channels teams new from hired newly banking about approximately of granular, of holistic these teams.

or to we more of XX% the -- balance will the is base. their I new a contextualizes year, continue improvements anticipate Deposit within number we've the of in our in is experiencing growth franchise. these providing at remarkable our of we All lift per really the value, seen Deposit also added franchise Importantly, accounts, which million X,XXX transformation last are to highlighted be stride, close a commercial than more generate tremendous In going This before. the forward, sheet. we accounts net to truly hit bank. flattish $XXX new quality really increase The teams our and commercial can net quarter, approximately in and will

deposits billion inflows this are fully first the we've between in that we in franchise of undertaking is the regional XXXX. It bank are share banking differences Since $X we not when our pays And investment is bank. the a crisis, the uptick our as existing coming quarter. value the enter often quarters, Deposit remix when per but is there the in in about half The exit understandable timing such, off deposit yet and price, in significant expect creation reflected averaged deposits substantial. new as profitability

over inflows we've XX%. remix per of quarter. organic result $X deposit about that, than billion growth base averaged repeat a our in industry. more granular believe is We The Deposit this high-quality this transformation me is #X Deposit by the of quarters, Let X of

end high as continue of franchise the the ended total collateralized focus and of at Finally, This industry. quarter Deposit insured, affiliate the XX% we to stability deposits remains on Deposits. of the the at

banking ago X. Slide space Deposit We lift-out I XXXX. adds team minute in to take to Moving our and team success our growth of lift years incredible million in was vertical, $XXX of first close stories. venture show of million a demonstrates entered quickly success with the a successful The we've in had power by which the our growth to team nearly about want to banking quarter achieving venture Loan the $XXX of to Boston. local and X out the capabilities

In in bankers last a portfolio level national position already Washington, to San turned existing our franchise, Chicago, from Top XX X took into next a market player that York FDIC with And a new local companies, with growth Francisco, we mostly today. and in to when we importantly, and to We presence the brought Boston. Los New add the acquired Denver, from Raleigh, June business the team. of focused late year, on Angeles, a stage to early stage, and Loan D.C., Austin, late-stage

our a vertical attractive $X us to is deliver compete, scale for now which for business invest us, shareholders. This nearly the and gives billion returns

of this towards self-funded is and platform the time. is ratio essentially a quarter, working deposit-to-loan over X:X As

billion we in -- Ken Ken's incredible we've more in Fugate. national prior soon had by team will mind, will with We deposits believe Keep than at become we institution. led their competitor team this assembled a $X X Top

to We they'll replicate confident that at model be are able bank. that our

are This teams cover joined on similarly that slide. have the record just new X next with I'll Bank the which we commercial mirrors months joined over with we've the will the Customers banking track continue the ago, last us and we that had confident success teams decade,

about of XX% blended period at commercial about impressive X.X% new gathered total with $XXX have Importantly, banking time. in short growth Our relationship-based of million demonstrated a in of quarter noninterest-bearing. results cost, deposit teams Deposits the very alone, $XXX generated They've bringing these to around a million about Deposits being

of to X,XXX by last the XX-day week, Because an only opening and least we will teams. experiencing quarter, and account today. are XX% are accounts XX- to and at these accounts the per continue is of a openings account operational. period of materially The opened accounts, Similar nature funded In the funded accounts new operational meaningfully pace they are we for XXX quarter, between now foreseeable often additional these this were future. believe when of the these approximately

stands commercial I'm update and of of proud excess this strength deposit assembled. and Despite our growth, mix, million teams banking the the managed, and exciting has crossed in maintaining grown a billion. the of similar deposit to really as we've tremendous as now that $X in teams week, shows you deposits the which rate well for $XXX is while pipeline franchise

as past consistently pipeline have our quarters. convert we over to look few so will the done We

last to convert well. and been replenish have a to the Deposit quarters, period, know, X you X- our able as always it over X-quarter Over we pipeline as

the we to continue new have teams. that quarter per next we deposit Further, achieve confidence from $XXX these will year or more about million

we break by years. from to the even over the full teams Finally, to grow for into XXXX first and these expect X their next of of banking end base institution quarter track on Deposit prior their remain the

growth, we On That's million held-for-investment quarter $XXX an loan second granular Loan XX%. new of mentioned, from $XXX and about that as lending relationships by we quarter. was the growth Slide increase was the The $XXX high-quality demonstrated million XX, growth the had in in of had XXX Loan growth established. can we have over additional the Annualized you see in quarter. million I

a that's across in that the To increase put one quarter. value, about franchise franchise back in perspective, going to X% just

quarter. addition and XX the based. relationships, new was in broad In funded originated existing to the relationships loans about XXX Production

mortgage led were finance, new geographic our contributors teams, banking by -- finance. commercial our estate largest equipment Our real C&I, commercial and

Customers market is rates, deep this to of expectations will relationships expecting shoots green XXXX. MBA XX% see advantage the has well-oiled activity and a if Bank from experiencing increased look this it long-standing with finance that is to Mortgage vertical take of about arises. machine opportunity a the in in lower

in Given the advantage. below relative be high our CRE industry, competitors concentration of concentration low to a our is XXX%, the proving CRE competitive significant

many very expertise family owners long-term competitors, of our selective an in commercial growing had estate. with cases, to book we've multi-generational With significant businesses real opportunity the in be strong pullback and with in

loan approximately incredible capacity is We are franchise. this being at deposit and The we're an are given quarter new reserving supports it commercial real highly themselves franchise average The production real seeing attractive competitive the of terms estate executed where drives commercial environment. this for the value to million. estate granular and loans $X the results with size growth, lower also

testament about trends. CRE and share industry deposits we a and the to Importantly, $XXX far are growth CRE is of vertical very loan gathered market atypical acquiring from million Investment bucking thus the the the exceeded quarter. This in for collective relationship-based

vertical also similar expect the which of reducing should fixed given quarter, and growth Loan the added further the this nature in have Deposit benefit vertical, rate sensitivity. our You typical asset fourth the of we'll in

specialized Our basis deliver points corporate SOFR+ attractive yields verticals all continue highly targeting XXX in. and XXX to risk-adjusted to about

and 'XX from remain quarter expected contributions lending in pipelines strong, verticals the into Loan of fourth Our many of with our XXXX.

XX% of our to track approximately growth million We Loan quarter. the are $XXX to XX%, on in to fourth to full $XXX growth achieve year Loan translates of which million

on very That franchise-enhancing disciplined safe growth. to and Loan be said, importantly, we organic focused continue

just million per provide pipelines by they $X our new average teams, million Loan While of with enhanced credit highly $X relationship. balances granular been to facilities roughly our have also only banking

Phil call like some provide that, return additional detail. to to With I'd the over to

which and On in provided Welcome our interest components good net the [ $XXX morning, ]. and we of everyone. was Slide margin, income, our have XX, interest the million X.XX% net quarter was which

it was margin interest appear may key driven reduction X in by net the larger, While components. primarily

related portfolio acquired and prepayment accretion XX QX quarter approximately lower was to income to compared from points our in discount First, loan levels. basis the lower

to income going accretion bit beyond. in accretion the to a come has going be will in accretion accelerated always expect saw trend in now will difficult forward. a 'XX Therefore, notable predict, While QX. we continue the remaining of majority slowdown And a that likely and the

points reduced approximately impact proactive loan repositioning balance was the to increased in components more the consumer sensitivity basis These margin in in due loan which liquid securities XX% of X net quarter. high-quality we Second, portfolio on we measures QX, for completed sale the interest and including and a resulting the asset average balances than took sheet accounted X assets. lower

Further, deposits of funding with more It's category. Having specifically timing that, also reprice result a remixing worth in rate as environment, in than have down of with we increased the should have a Deposits. cost our the will of declining Loan strong likely other growth, and we interest deposit deposits costs expense future. and interest-bearing like impacts faster noting said yields banks, interest-bearing flexibility a on our environment, rate that in the the

there slight balance lag side So the be our in the liability ability net margin of a to will on recapture sheet. interest

higher would effects with continued be we're of margin take looking Deposit in hold and remix roughly as the expansion the QX, In flattish Loan then look to 'XX balances. the for benefit for of and

Importantly, these Loan efforts relationship-based the add activity front. on both value to the our and Deposit franchise will given

Slide XX. to Moving

forward. positive We on going drivers perspectives have the NII provided for and some unique NIM of

the in a XX we sensitivity a position, modestly the closer Though remain asset reduce us bringing number is environment. sensitive, meaningfully we asset taken which current to our headwind neutral. do months, last have to Over of actions

opportunities come side of balance our majority the of asset for but side. to see opportunity We us from believe liability will we also sheet, the on continue the the

bring in granular drive lower-cost growth environment way through concentrated cost in replace to Deposit is higher our momentum high-rate gains deposit easiest balances. margin costs. Deposits this We'll look reduction we remix to accomplish to The as as more and in

is XXXX million the lower in to time $XXX Second and $XXX opportunity another with maturing 'XX. reprice million opportunity in deposits

a the we basis originate hedging we we implemented strategy high-quality lower begin about XXX proactive growth And reprice loan as the mentioned. maturing to starting loans is that likely rate XXX Third rate to a we originations. QX and in have new new us environment. finally, enter the Generally, will on spread benefit fixed to Sam point target that opportunity

compensation XX expense we primarily members some increased related salary expenses. the Let's turn by noninterest increases increases million the and annual increase. Core a to were $X hires, to were outside for services about onboarded our Compensation of discuss full some main noninterest of new including to the The in in higher QX, team quarter. incentives. newest Slide drivers quarter midyear and the

As teams. mentioned, of $X operating million we expenses Sam associated new with are $XX with to our million about

However, benefits of starting statement. rent the income only the impact new are to our

from have progress 'XX. few teams profitability months, their even to break With ability just improved the within excellent and in we seen in a we in drive then past are these year confident the

of expenses, regional quartile Even our is higher noninterest with assets noninterest bank core these of our levels among a top expense peers. average still as percent

QX, additional would large next we for the quarters as be Going expected X and These driven then expect expeditiously we somewhat outside elevated to some risk mentioned enhance part work management infrastructure. normalize. our expenses from increase we forward, to services will remain the in in

our at and allow Moving to We we our disposal reinvest deliver we will to business. us our levers that for to expense do importantly ensure on and numerous target revenue to shareholders in have continue Slide XX.

the additional as including we platform our clients products bank. to income, other real generate First, well using as payments fee from instant see across opportunities

consolidation rationalization realignment our savings We opportunities the expense in we're also application to strategic some some see like and across tech through evaluating across organization. stack, areas create

with the Finally, continues teams revenue we expenses just resources look total, end for associated model will provide business the in for of and term, long investments mature. mentioned at make near in not to the to but the to over the generation savings and performance-based this to these term. these future the tied a revenue success, will In expense we expenses year, position new as transition our to with enhancements us important

With Slide that, I'll move XX. on to

annualized quarter. a up is share, per value book to of about more since XXXX growth the $XX mentioned. beginning tangible is This quarter Our the the increase. this than reflecting XX% nearly share of This $X.XX rate, sixth double-digit per increased Sam consecutive

XX. Slide to Moving

Our in target. capital us our and remain XX.X% provide organic our At across TCE/TA above robust at X.X% X.X% excess and ratios flexibility the for with of opportunities. CETX target growth remain board substantial we XX.X%,

approximately an Our last was below value repurchase quarter our in of basis balance increase approximately of ratio generated tangible flat $XX to points our the spending over million We by the ratio XXX capital year. organically increased the relatively maintained and this book and TCE in while sheet. size with shares

planned, we points deployed of basis capital about XX strategic growth. franchise-enhancing risk-based into As loan

most this believe bank. to is of valuable continue We the form for the capital deployment

view will share utilize it accretion, performance as we repurchase especially we metrics. the and tangible critical hesitate However, authorization, which value book X results remaining if not in EPS to

Moving on of remains Slide maintaining robust liquidity focused We remain as levels environment uncertain. the on XX. to

of Our liquidity remains to at immediately uninsured deposits extremely strong XXX%. coverage available

to at at Our provide compared continues XX% to HFI loan-to-deposit peers XX%. us with only funding ratio flexibility

the Slide XX, cover trends credit the quarter. in Moving I'll on to

our credit As performance and underwriting the efforts most and organization. initial of The credit strong active management through net in comes statistics. both focus at been know, team always has result really culture our through of the a you by a concentrated of hallmark portfolio

our mentioned, in XX ratio the basis Sam As just declined quarter. NPA points

declined or charge-offs little by to net in further. X% about aggregate, also was points. which million the X down Total a Net basis $X.X break about charge-offs declined that

trend consumer consumer additional which quarter consecutive quarter ratio the in bringing consumer that is X.XX%. us This gives the have charge-off and net to decreased, also commercial the to basis NCOs down declined, points NCO the XX rate Our charge-offs net confidence in the declined for second portfolio.

quarterly third quarter. portfolio. the level our commercial decline despite This decreased The Special growing positive were and forward-looking the XX%. also loan consecutive in loans mention is by in about trends this substandard

improvements also delinquencies. to We in XX- saw XX-day

back the Q&A. to call that, the with for I'll And pass we Sam before open line over up

Thanks, Phil.

Now Slide XX. on to up wrap

terms of remain we First, deposit quarter's of committed of with pleased are cost quality in to and funding Deposit gathering our deposits activity. franchise and the transformation this

have deposit in billion million profitability $X.X lift. us $XXX future to The allowed inflows deposits, less of strategic remix providing

and momentum are banking anticipate the deposit future. and driving verticals teams across the steady similar in franchise remixing new Our in generation, we of amounts

In fact, Bank in are will we've rebuilding remix scheduled onboarded. opportunity. the tremendous billion, be quarter banking has a already those for from banking quarter, 'XX our enhance fourth Customers teams and $X Fourth beyond our exceeded our new Pipelines period steadily as despite deposits franchise. being we and commercial

this Second, in in are banks we outpacing environment. other the delivered to industry-leading at loan that current quarter, deliver struggling the growth pace

focused the allowing capitalize growth, offer most robust on attractive and to Our with avenues Loan us most verticals specialized multiple banking pricing. for the opportunities corporate

in As banking the highlighted our divisions finance teams, quarter. success new were our commercial drivers commercial earlier, mortgage key real and finance, of equipment estate

importantly, XXXX. through specific discussed NIM will NIM the drivers and positive some income we drivers net walk in of in and more have quarter expecting Phil the Next, the and tailwinds interest

positioned enhance have drive continued robust we year. loan to both opportunities We growth next remix will NII are pipelines, deposit uniquely through and which as margin,

X generated XX% shareholder in Finally, well the to generating similar is stated, and strive We to value the quartile is our metric book top in assets. double tangible rate growth book compounded value perspective, in annual billion value. aligned $XXX past a of performance creating XX% believe previously returns with growth about To the long-term banks value that put with as time. years this book $XX over billion we quarter growth over is continue

beyond. will be call the mode, you to and prospects expect it look company. optimistic to remain in next for and realize our to very continue providing forward the XXXX outlook XXXX January our our payoffs with full and of investment in in future about management we we While taper We on earnings

to take your questions. be With that, we'd happy

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

here. asset there about remix of of with of and a And you you of Or are talked the sensitivity we kind early guys reducing Maybe of seeing through just of sheet balance purchase -- securities starting assets? then deposit your I'm securities, here, remix to that the do swaps? guys kind just was in that, just done the was the curious, kind rate are of variable for how kind sales just trends about think pricing? what relation some

Steve. Sure.

X to it. components say I'd there's So

sheet. Some side the is balance the on of organic

You've seen rate was a major back driver the some forward fixed that the that here. we lending bit taking starting fixed floating. swap put to liability QX, increase highlighted QX, here going on But on were converting side in us in effect we hedges

there. was rate, liquid mentioned -- for was And effect the there then also of out sensitivity securities I securities liquidity we the had but some both that assets, longer portfolio fixed asset repositioning rate floating trading really increasing duration which high-quality value, also reducing

in. Steve, I'll And jump just

as a on fell unfortunately just that about year. young fellow to you add, the empathize last with pricing. Firstly, Thursday father, deposit your I this kids, yesterday Halloween touched But sorry also

That is of about What's we're of on in of ] we've I a just component [ was in that trajectory. that happy I you little X.XX%. at the basis. $X.X this of million that talk sort a sort blended cost remit color about at think touch to also talked the came million at low kind X to at noninterest-bearing bit the new QX. [ as remix. billion on is be today's of a that the little the that. Xs higher least with team customers important able The rates, brokered that we've the It's team We of and, with scheduled $XXX talked larger, to about sort of we . The component the and and bit of give about below we of remixing, later sort to that X.X%. was $XXX cases, component well. in as scheduled also had some ]

in put tremendous really perspective, kind going to this it this to gives context of some So that's remix on.

The timing third said, the deposit is we're quarter based Like on not generation. fourth scheduling I quarter perfect.

success. least Halloween color, that was Sam, Appreciate a Okay. at

here, gathering you the In -- the highlight opened. accounts terms you've of guys that in X,XXX the just of Deposit terms

of as granularity? like Is tend is curious, us larger these can there us kind give you Just the Do Just of if accounts -- kind size. give or be average there more anything little incremental to the color early there? going? the a maybe curious how there's in

relative a on I was Steve. Sure, of but can the to bit ] plus and, of XXX color. earlier kind accounts that ], the of slide. how believe, sense an you have little exact added a size, I many million to get don't of I'm XXX happy funded average have minus been Yes. [ in that or was quarter million [ the provide

So the through what give a is noninterest-bearing and it's sense little ratio. that, But a at get we're sort and bit to a of XX% of remain happy to continues average granular extremely you size that of follow-up.

And range kind the some a or sort typically is what's expenses of have is million these hundred of year. that a is $XX thousand-ish lot of folks smaller $XX DDA, that this accounts, type customers about payroll in average that range. have couple somewhere that We $X that of million of interesting which do million in to have

X accounts So us. sort operating of that of sit thinking months to about with X

this we're in with focused geographically markets tier typically They're focused granular. highly sort team especially of that recruiting. are these top the But on,

as about estate of of as our well New well. opportunities it as we're City commercial seeing Metro, here as Coast teams. thrilled we're that real think So York West sort And the

with question Kelly of next KBW. line the comes Our from Motta

what costs story. to growth this gives much. remix just So of we're came all around what there point? as surprised I'm dynamic NII you to see appreciate the driver brought at bottom through? reconcile there we to changed really the kind off that the Deposit fall to color why that not just new in in didn't And that's a actually dynamics confidence the versus you you're ahead the I Deposit the But of of seeing? seeing start Can off. clearly what piggybacking and team line start that Maybe when seeing that the help pull that should

I there's there. Yes, Sure. Thanks a for the of components question. think couple

timing So the the highlighted of of the as remix. -- one, definitely, some Sam

interest our in had deposit So if over we you bearing look, actually million $XXX about accounts. increase average

helping, expense immediately creating drive immediately the overall there. value great while that's obviously, And doesn't long-term sort so of interest down doesn't

us these element can that more rate drop an a then a I that -- opportunity higher paying recently they're that makes is that them forward. are if are very then difficult gives very, opportunity are a new there but an onboarded, And in bit from some some to you rates. And onboarded, there as more cut, accounts well, organizations that immediately think it going are of of with of these imagine coming

but And we long-term so of value. drives rate, to that franchise incredible cost customer there's a acquisition a pay sometimes associated while don't bit

And I Kelly. to just add would that,

perspective. you Just of margin really also of -- a to to the picture kind touched complete I -- simplify, sort funding just think from on to cost you

perspective. I higher, a from A our look month loan balances, given QX, think at probably were these loans growth of you loans of of sort the in, spot average if been significantly our you slow. in actually can September while a lot on August basis, that came has see

in average lower loan unexpected payoffs actually with were an basis up. were we the that caught fact, of and sort on month some we of In July

that's to So, the well. as story side that's of contextualize important the other

$XX see before. to through that changed of us That's there's I at underlying are near [ it. and And of walk of mid-XXXs that NII it then you Can around of margin I slides. confidence at million the growth what we're kind the out expansion like is ] And least and guys dynamics helpful. pointed you But some helpful. -- million lot sort that can sides appreciate of your sounds Got gives moving term that we think reconcile. what one? you help can flat, in $XX also you looking a

Sure. Yes.

which -- regarding highlighted it, a accretion. discount think is there accelerated component of we I the Kelly, So

type down of So sort did of come refinance And credits either loan some our see have the event just given capital caused portfolio, been recent sort where types you nature in was more it yields to more that meaningfully. consistent of high-touch what of these we activity that the of or accelerate. or that would need experiencing

into then, that, of it settle we've decided some the for that QX. some a more the really to think level. normalized do proactive the are we take But we the of of more come on right term. mentioned that much the we to with We continue that long but obviously, seen And expecting business QX saw side. actions expense short-term we and were more now much and into

seeing And kind what be through. as there I number to on of by the on driven that, a again, what levers But already sheet, we're deposit really, forward, to Sam walked both and looking so of I the going guess there's what it's think side continue balance pieces. moving would say, said, you of the sides opportunities lot a I including of

Kelly, the also our -- over rate planning to to Obviously, low we a ]X past our than north from little environment, what really just think a with -- a X little [ process. of minus, as purpose X in, I I could ] more early If think And a plus slide reminder or go [ a in bit increased to a preview. of NIM years go. the is. it's X. we've back, tailwinds of giving strategic point that's bit rising I in that jump of less the We're

I think important. was it

we ramp As in the the of that the as started continue lift NII up remainder year really Phil to mentioned, XXXX. through had to bridge accretion this expected on

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

think kind that deposit If you think, think, the new million, Just interesting as quarterly. I And to teams and of hate you on spoke guys I if X.X%, the about average being here. talked guys cost onboarded, horse just coming about from about maybe of I that's curious the of if part we -- And an steps additional beta comparable. expect implied But right, stuff -- the beyond, down how what's over that expect pricing and if just in what's it. believe least at the the the do that's cuts? should come rate over to I already. guess I are with that's XQ you time there? we at at you come current you beat a can how dead obviously, but those look on an is $XXX Deposits, story

I'd take Frank, Absolutely. Sure. that. happy to be

today So same of sort relative first the at sort and it's of question, see funds. we're addressing, part your Fed continue what to to levels of seeing

], and sort on we're basis. a X% blended [ [ X% of now around ] were below we So

Xst, catch-up seeing not that the September months some of we're year. X, an entered of bit X, the customer higher of acquisition those as example, little folks necessarily, and at get get a progresses cases, X, beta from day, -- with cost September we as a X immediately quarter X, into some we've, perspective the bank made are on even weeks short-term in commitments. We because of within sort X help XXth, the reducing or costs very weeks will in end us a into we next as . And or

other about noninterest-bearing I think at interest-bearing that these remain that noninterest-bearing quarter what's as on. levels. have provide think also per providing, to on headwinds noninterest-bearing new are as banks of replacing we're as there a be guidance quarter coming mix sort about really relationships continued continues shift if pace these of million as is is positive are those what that this And with is going $XXX going important next, that think sort component picks We into that I we of you up XXX% it this deposits deposits, that tailwind actually beginning of -- actually us seeing are help negative at sort is and shift. to mix sort to which

know you'd ask, I but me covered everything I hopefully, if that So missed anything. let

are just the is that's down -- I and see priced -- coming funds good that's on -- this a off think Fed pretty stuff think terms beta, mean you rates of you gap of as mostly cut? in it's I

right. that's Yes,

It of of component, on is mid- is an just expect way of relationship funds relative to over the the is customers component [ primary it interest-bearing general the ] have of those high interest-bearing of what of on component high-service, relationship That to you kind that, gross component Fed and to At sort down deposits. XX% up. sort should shows can So end in the which that expect of holistic noninterest-bearing deposits the at these you deposits. sort these and remember of looking the Xs time. day, the you that spread we're

because service costs. they the "our of But customers and bank interest-bearing blend longer we're because because competitive to we continue earns breadth deposits it's the rest our those services we're noninterest-bearing that the that whatever as providing deposits of these determine of to market technology standpoint. platforms, deposit a providing, the stay from are that interest-bearing the at that and providing our we're And the of us the of products

here. And you're then that provide XXXX the down to road Okay. recognizing guidance going just

maybe off, $XXX in talked the stuff coming we much you coming million curious, off at quarter deposit Just expect If the deposits sort fourth growth about prices. still in the of higher quarterly there for commercial do? from sheet next decent the new growth balance teams new teams, remixing is from is the bogey venture, to of a year? total still that plenty Or

Thanks, Frank.

what good And it's question. say I So latter. the would is

And Slide the XX was, continue lift -- That remix on inflows or gives you our that give you deposits eventually, gives gross remix the to come once in. you're for on couple of increase it going we're to we'll as sheet with going able a sense slide we're complete start of remix, deposit color that you we're of then XX, XXXX. in that. right, balance I'll to getting you're as little see thinking NII we're that more be perspective It's bit for a absolutely with a quarters. to sort those So how whichever January about to

deposits going moment, as Loan But growth of That quarter, power absolute the is franchise quarter. best-in-class just of even in at our forward faster a are growing as at $X than the a a for continue in Loan growth. the roughly look numbers. the this Deposit million $XXX pace we take billion industry on growth of

And in. I Great. one if could sneak last just one

the this over talked mentioned in you in next quarters. levels services investments couple the of compliance you outside quarter, the elevated growth the terms Just about of

then around similar you of the down? we X Just next of guardrails sort that? can put levels ] expect step a any for [ and sort Should

Frank.

come expect this it So little We'd down the we a it step other yes, -- back start bit little like think to obviously, expect sort quarter to of come can in a quarter. back of for then next side you look And up bell before normalize into bit on. -- to sort the lighter curve. I early ways, some think it bell we'd so curve, of, that, a of

And add to that, if I just could Frank.

and slightly I on these these to reemphasize we are to see the that across that board, whether curve. the comments, expenses in fourth say, compliance that want the I heard the making ratio whether franchise-enhancing think me from And you investments to about drop quarter that how more investment to going first -- January elevated think important Phil's technology. and teams, And you're going given you're new -- we're of are bell it's in noninterest it's about sort quarter. We'll color sort this this, in the to second as the to provide risk taper the as sort -- it's this, our quarter, of provided. in of see targets then off think as efficiency but in

being targets operating branch achieve businesses And high to teams deposit-focused goals. a leverage. these in down us really efficiency us Yes, first and this then type we're or has slowed ratio like bank But helps committed with those and and getting being the mid-XXs below of investments. XX% those to and

Our from next comes the of David Hovde line Bishop question with Group.

in teams of quarter Just salary I that topic this benefits. into like on reflective in the in year. quarter run curious, and is rate XXXX? fully uptick looks second sort pretty of a of hired the the you the good staying that on Is expenses, fourth had the

does going Dave, plan I'd we the from an mention shift yes, profit-based incentive the of mention standpoint. -- think kind did shift then capture towards that. now the guess next the I towards of I fully only sort the into thing eventually year,

point reasonable have those as starting impacts yes, well. So -- now. but obviously, for But

an slide excellence. the Phil if that I on I don't through to I to the operational want ran just underscore -- add -- And actually could want

signing really that really you that's the to important. guided providing bonuses past some things in that should moving in you services, the sort sunsetting. outside what think the guidance towards in that the give to I comfort addition about the give we're That's should of we've comfort of on

added of fee of future ring-fenced But headwinds expense that most excellence well as from actually well it's and sort more operating mitigated that importantly, as importantly, to the And going some and the as be discipline initiatives that opposite. have to really opportunities perspective. expense as you the the we've ensure operational an

We expect beginning of quarter those year. second the in to be tailwinds next

is look Got of been but year of where the then side. sort early more balance at Sam, a Do you're of know large it. step grows maybe what think XXXX, next on little expecting you the And story a I not. sheet maybe the sheet story into This stability. it's growing of the to sheet bit balance maybe balance year loan growth has sort

about balance year. curious overall Just thinking sheet how you're growth next

So yes, Dave.

the So levels of you made But see, ago. years where our I remix. reaching we're focusing to Frank first, really getting X it back Deposit think book just was that earlier, would highlight sort is absolutely I on of of to can as sort comment correct. loan I

of strong focused point, in your were and addition assets Deposit of work of noncore exiting addition we year, Deposit, really risk-weighted year, building last loans, year, to the on that holistic So the focus to relationships. in selling did [indiscernible] to also actually noncore part participation, Deposit loans, the capital reduction and all to remix, remix in reduction capital strategic and on this we franchise-enhancing last that

a to join at grow teams our also want and model, loan of teams. said, we more single it are financial that book. the are than contact March a has faster model, But it January. a grateful in It color it significantly has last that the the point feel us the has deposits after looking safety that of which excellent behavior very to sort assembled looking more year, allowing of all we've performance. and provide which we drive bank incentive has even we'll grow It for feel soundness, has to has us the and are and So moment, compensation platform our like I customers would

repositioning the final Got talked of Phil, it. the question. one about And you maybe securities book.

rate added that. I some assets to think fixed you've

at rates? the density have looks -- security Does that Just lower off books term? in of the yield shorter sort the taken the asset that curious of year how you of to book the the terms over sensitivity some

Yes. exactly Dave, thanks for the question. That's right.

them now you on we X about the floating to getting in -- which peers AFS rate again, portion multiple of So actions of to ahead, of rate us if And portfolio back book, across we the much up. XXXX, XX%. did the down remember reduced took have positioned way of many securities -- reduce more our floating where really, kind basically many think XXXX, of the sensitivity the we we repositionings,

well those in timed then started started And flatten, of curve we the the see to see really in to direction. as go we -- QX other to kind as

of bit really of in to well margin, really terms that so again, sensitivity and of your on reduces as the an HQLA effect And was, of, came short-term point, impact with the increasing asset portion other with the as a comes the but book. mentioned, benefits I

Instructions] Motta from line the next question [Operator comes of KBW. Our Kelly with

the news regulatory after order the earnings hoping came was out call quarter. the I of last

fully thinking could and value just that? to? the should So sensitive, your it view dedicated Is something viewing provide business how just digital an relatively offers asset I and -- asset that how be in longevity as if the of ahead? we you Or update you you're was wondering we're terms look about of this on

that. answer Happy Kelly. Yes, to absolutely,

And the management But asset think folks think business. bid really banks as is of business also as the I importantly, in generally, being of the that, pointed, in done So inherently in see risk business, transaction this is we've to business. of digital anchored of and sort but payments a model deposit the being it's payments in most sort all business business relates we're lending it importantly, business. our as on

So these help number of treasury our proprietary have payments, is way. technology to risk beginning We to exceptional customers in platform compliance a perspective, last be into of next an well year. from we're go building the this digital a as talked to space going going we into management which we of to able to began is We've a payments serve -- as so, to as business summer as going or us solutions instant sort benefits consolidate about are This continuing we customers before. platform. a outside tremendous and asset And well.

have instituted we've as the you to seen page, adding now, business. we worked Right base on here to fee some our with income may also and customer the begin

about to a is that a a of partnership You nice couple going or should hundred so thousand think expect be to month, with lift. which the base. I really it be And X-way our customer shows

in risk the it moat we to want us management that the and we do a which our we that, are belief business, make But that term. hope this can help medium platform. we around long to actually to Once compliance regulatory provide in is importantly, is investing and sure going

that do doing I to really weren't the think, insight doing? And the I are any you Got look-back you that early early Okay. it. with know with one the regards order asking the is share of months, that process to main things of us, couple the -- it's was in period? findings first of that can guys regulatory you Any

absolutely. Sure, Yes.

it's about specifics. obviously to not will doing. and said bar we needs to is that our regulatory need think So that bar. our is We what's And to we the as can't important there's weren't be there, higher -- than enhance what would say that benefit we what's there, out is, to enhance. partners out it's publicly. that, speak Having the agreements important I is But of

we'll bar adapt And over evolve but sometimes that evolves and over also time, time.

a organization in will. -- specifically we committed So risk to think time committed are I complying And super improving we super lines. vertical, think be around there. it much that what's we're with this a important to we so, get and we're infrastructure, going to we and is going once the has we that management business. do moat We're stronger And to the

those you ratios about way XXX overall it. the here And of last But a maybe here as is to growth little that then you selling above remarks, balance really I ratios now built growth been addition a has the to of basis early is up to right year your was in if asset above target, target. with XXXX finalized. in -- those talking helpful. sheet Got question prior but, build this it apologize it's capital mentioned, the about from CETX already the some is year me. the This rise, TCE order points budget answered in that ratio allowing some for not about mentioned? buyback you've think That's

is below Bank. growth But are our and book That's buybacks right, stay you and ever should Organic to Customers do at continue accretive, this going always consider below top Kelly. saw we priority value be those as in to quarter, a always if at level should that. we

that's think once that sheet -- is our And is I opportunities. deposit what's help growth important I mentioned before, the gross our I to exceeding as going So exceeding our that drive loan complete with growth we're is growth high-quality think remix. our thing, the deposit really balance growth

line David of question next the Wedbush. comes from with Our Chiaverini

the see to in agreement. material business? talk the follow-up digital can by about about an just agreement limitations? you Can But around asset material had talk I any the didn't any upon cap. it's written imposed on I asset you So agreement, the anything limitations whether a specific you

think informally formally. is, well on I that good But if partnership, asset communicative public. you digital strategy, it's regulatory there notifications. done have things aren't the done as what's is as can Dave, important there you rightfully as limitations typical are are anything outside Yes, be a those And said,

And any expected of -- your frame lifted? the written what's having time agreement

I until next over important we way within the of would a think typically, expect we orders, that be I've and do committed But a year. move until tremendous of is really then time I thing the X-year screen we've in these work of the they're amount that you is completed And is, crests said that we've have the then think frame that kind have about to down to lease which months, that most lifted. to run It couple sustainability. into the of this think first to. type typical So work typically

of made But judge which you kind key saw made? some Got we it. key of being of progress probably other I the kind And any bogeys that being is with made bogeys component any it. hires, for agreement? can the progress a written

technology. processes, People,

happen sure senior crossed and are like hired to of just outside So from also sort the helping said, services a make couple a that's you lead Ts sense executives. a lot work. a our we give a They're people Is is seasoned to going of last technology. this you that really view about should I that think technology sense quarter. expect how to the we how you process of platform a last internally And that the and perspective, that's initiatives should crest, year of that perspective, give we are And high-quality and dotted that hopefully of we we which the of begun to we upgrade build the hand-off type from and had talked to

back no remarks. the Sidhu Sam time. now I for at will to turn have We questions call closing further this

of in that talking Customers Bancorp great we're forward strategic you a and for speaking great plan. the weekend. about your our look and incredible next everyone We day and with support franchise and quarter Thank have to again to continued you, you importantly, interest Thank building. and a really

This concludes today's conference Thank call. for all you participation. your

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