Customers Bancorp(US:CUBI)2024-04-26 19:24Financial Data and Key Metrics Changes - The company reported a GAAP EPS of $1.40 and an adjusted core EPS of $1.68, with net income of $45.9 million and $55 million respectively [32][33] - The TCE/TA ratio increased to 7.3% and the CET1 ratio rose to 12.5%, with expectations to achieve a 7.5% TCE/TA soon [7][45] - The NPA ratio remained low at 17 basis points, indicating strong asset quality [11][55] Business Line Data and Key Metrics Changes - Total HFI loan balances increased by approximately $60 million, with over $200 million growth in corporate and specialized banking verticals, representing a 13% annualized growth [37] - Business unit deposit growth exceeded $1 billion for the fourth consecutive quarter, with a significant reduction in wholesale CDs by 66% and borrowings by over 40% [22][23] Market Data and Key Metrics Changes - The company has seen a robust deposit pipeline replenished to over $2 billion, with expectations to onboard this amount within the year [34] - The company has reduced wholesale CDs to 10% of total deposits, aligning with industry averages despite a branch-light business model [23][48] Company Strategy and Development Direction - The company is focused on disciplined loan growth of 10% to 15% in 2024, emphasizing holistic client relationships [12][41] - The recent hiring of 10 new high-performing business and commercial banking teams from legacy Signature Bank is expected to enhance the deposit franchise and accelerate strategic priorities [6][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the year ahead, citing strong loan and deposit pipelines and the ability to take market share [11][76] - The company anticipates meaningful net interest margin benefits and expects EPS accretion of about 10% in 2025 [21][47] Other Important Information - The company has achieved over 15% annualized growth in revenue, EPS, and tangible book value per share over the last five years [13] - The efficiency ratio is expected to improve to the mid-40s over the medium term as investments in new teams yield results [44][111] Q&A Session Summary Question: What is the expected run rate for PPNR? - Management indicated a target of over $400 million to $425 million, with a run rate of over $100 million by the fourth quarter [63] Question: What is the outlook for the efficiency ratio? - The efficiency ratio is expected to be in the low to mid-50s for the current quarter, moderating to the high 40s by the fourth quarter [64] Question: How much lending opportunity exists with the new teams? - The new teams are primarily deposit-focused, but there are opportunities for management lines and C&I extensions of credit [65] Question: What are the opportunities for reducing higher-cost funding? - There are still wholesale CDs above 5%, and opportunities exist in various deposit verticals [67] Question: What is the expected impact of the new teams on the loan portfolio? - The expected loan book associated with the new teams is under $1 billion, with potential to grow significantly over time [100]