Customers Bancorp(US:CUBI)2022-10-27 18:14Financial Data and Key Metrics Changes - Core earnings per share excluding PPP were $2.30, up 135% year-over-year, with year-to-date core earnings per share at $5.15 [9][10] - Net interest income generated by the core bank was up 38% year-over-year, while total operating expenses decreased by $4 million year-over-year [10] - Core assets excluding PPP were $19.2 billion, up 36% year-over-year, and total deposits grew 3% to $17.5 billion [17][18] Business Line Data and Key Metrics Changes - Core loan growth was led by $500 million in low-risk specialty lending, offset by a $300 million decline in loans to mortgage companies and a $500 million sale of consumer installment loans [10][44] - Specialty C&I lending business grew approximately 10%, contributing to organic core loan growth of about $100 million [44] - The consumer installment loan portfolio decreased by 21% following the sale, ending the quarter at approximately $1.4 billion [50] Market Data and Key Metrics Changes - The bank's liquidity position remains strong with approximately $10 billion in liquidity sources available [28][57] - The bank's TCE ratio excluding PPP was around 6.5%, with a CET1 ratio of 10.1%, significantly above regulatory minimums [58][60] Company Strategy and Development Direction - The company is focused on responsible organic growth, capital enhancement, and maintaining strong asset quality [8][11] - A strategic shift towards low-to-no credit risk verticals has been implemented, with 63% of total loans now in these segments [22][68] - The bank aims to prioritize high-quality deposit customers to support continued loan growth and net interest income expansion [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance despite a challenging economic environment, with expectations to report $6 or higher in core EPS in 2023 [72] - The bank is committed to maintaining exceptional credit quality and leveraging technological capabilities to enhance customer relationships [73] Other Important Information - The bank's efficiency ratio improved to 43%, reflecting effective cost management and operational excellence [32] - The bank has established itself as a leader in technology and innovation within the digital banking space [29] Q&A Session Summary Question: How will the company prioritize growth versus capital building in the near term? - The company will support organic loan growth while being opportunistic with its $2 million share repurchase program if trading below tangible book value [76] Question: What is the expected mix of deposit customers going forward? - The company aims to build a low-to-no cost deposit acquisition franchise, with over 90% of client capital in varying operating accounts [78] Question: Are there plans to sell more consumer loans in the near term? - Currently, there are no plans to sell more consumer loans, but the company is open to evaluating strategic partnerships for origination [82] Question: What are the drivers for margin expansion outlook for next year? - Key drivers include reinvestment of cash from PPP loan forgiveness, redeployment of lower yielding assets, and significant opportunities for low-to-no cost core deposits [88][89] Question: Can you provide color on the loss from the consumer loan sale? - The loss included a $2.5 million loss on sale and $18.6 million in unamortized customer acquisition costs [97]