Customers Bancorp, Inc

has been posted on the investor relations page of the bank's website at customersbank.com. You can access the deck by clicking the red button marked latest earnings presentation. Our investor presentation includes important details that we will walk through on this morning's webcast. I encourage you to use, download, or print the document. Before we begin, we would like to remind you that some of the statements we make today may be considered forward-looking. These forward-looking statements are subject to a number of risks and uncertainties that may cause actual performance results to differ materially from what is currently anticipated. Please note that these forward-looking statements speak only as of the date of this presentation, and we undertake no obligation to update these forward-looking statements in light of new information or future events, except to the extent required by applicable securities laws. Please refer to our SEC filings including our Form 10-K and 10-Q, for a more detailed description of the risk factors that may affect our results. Copies may be obtained from the SEC or by visiting the Investor Relations section of our website. At this time, it's my pleasure to introduce Customer's Bank Corp Chair, Jay Siddiqui.

Jay, the audience is yours. Thank you, David, and good morning, ladies and gentlemen. Thank you so much for joining us for this third quarter call. I'm joined today by my colleagues, Sam Sidhu, the president of Customers Bank Corp, as well as the chief executive officer of our subsidiary bank, Customers Bank. Carla Leibold, our chief financial officer, and Andy Bowman, our chief credit officer. Andy, Carla, Sam, and I make up what we call the office of the chair at Customers Bank Corp. We are very excited to be able to report another record quarter for our company today. This quarter, we generated more income in a single quarter than we have in any previous full-time year, yearly earnings. This milestone was achieved through incredible hard work by our teammates, consistently working very hard, being very focused on priorities, being innovative, and delivering the highest quality service to our clients, which has been one of our company's of hallmarks since its founding almost 12 years ago even more exciting than our performance this quarter is where we are where we stand today as a company which we are very excited to share with you this morning and you will be pleased with our with our outlook for the future We are proud to have stepped up last year to our innovative approach and our tech capabilities to help small businesses all across America by funding approximately 350,000 PPP loans and for almost $10 billion and being number two in the nation among those who gave out the numbers of loans. This outstanding execution has generated $350 million approximately in SBA deferred origination fees, which has and will continue to significantly improve our capital levels and allow us to expedite investments in our continued growth in shareholder value. And very important and gratifying to us is that we are seeing thousands of businesses all across America who are now our clients thriving. Let me briefly share with you the results for the third quarter. Total loans outstanding, excluding PPP and mortgage warehouse, were up 10% year-to-date annualized, led by 19% year-over-year growth in CNI and 32% year-over-year growth in consumer installment loans. Total deposits grew about 57% year-over-year, and an incredible $3.1 billion during third quarter, with practically all the growth coming in non-interest-bearing demand deposits. Broad-based organic growth drove our strong performance for the quarter. Net interest income was up about 100% year-over-year, and quite importantly, tangible book value per share increased 35% over last year. The safety and soundness of the bank continues to reflect the very strong credit quality and significantly improving capital ratios. Our strong performance supports further investments in the delivery and scalability of our business model by investing in capabilities and product lines that further serve our clients' needs and provide on the ground support as we continue to build our company. Exemplary of our agility and speed is that this quarter we entered, and a few quarters before that, we entered several new businesses. So this has been a remarkable year for us. Some examples, as you can see on slide three, are everything that's in green. You can see that we've now entered the fund finance business. We've recruited teams in technology and venture capital banking. We've recruited teams in the financial institutions group. And we have embarked on CBIT, or Customers Bank Instant Token, which is our digital payment system. And we are very excited about digital asset banking and the small business sector. as well as SBA and credit card services that you can see from there. So we offer a full suite of community banking, specialty banking, digital banking, both for the consumer and also for the commercial. And we are laying the footprint to be a nationwide bank over the next couple of years. We will continue to leverage our best-in-class technology to efficiently deliver high-touch community banking services specialty banking, and digital banking services, keeping our customers at the core of everything we do. I want to thank you all for your continued support, and it's amazing to think that we are just getting started. I'll now turn it over to Sam Sidhu, President of Customers Bank, to take you through more detail. Sam?

Thank you, Jay. It has indeed been another great quarter and a very strong year so far. Our momentum has picked up pace, and we have benefited from continued growth across the company, which highlights the broad-based strength of the franchise. Let me briefly summarize our results in a little bit more detail. We recorded a record $3.36 in core EPS, which represented net income of $113.9 million, up an impressive 178% over the year-ago quarter. This translates to a core ROCE of 42%, ROA of 2.35%, and a pre-tax, pre-provision ROA of 3.36%. And our net interest margin came in at 3.24% for the quarter. Now moving to the balance sheet, we ended the quarter with $14.2 billion in core assets, excluding PPP. Our loan book was $10.6 billion at quarter end. Importantly, our loan pipeline and backlog have grown to all-time high levels across the franchise, and we expect loan growth to continue to accelerate in the fourth quarter and into 2022. As you heard from Jay, our total deposits grew by $6.1 billion, with $3.1 billion of that in the last quarter driven by our efforts on the customer's bank Instant Token, our CBIT launch, which brought in $1.5 billion of non-interest-bearing deposits as of September 30th. Strong asset quality is at the core of our franchise, and we continue to have superior credit quality to peers with NPAs of just 27 basis points and our coverage ratio now at 1.65%. And very importantly, on capital, our TCE ratio crossed 8%, ending at 8.1%, as we continue to experience tremendous capital build thanks to both strong core earnings as well as PPP revenue recognition, which was accelerated by our efforts to partner with the SBA on their direct forgiveness platform. Our book value has increased an incredible 46% in the last six quarters, which is unprecedented growth of a bank of our size. And importantly, we reach these levels and achieve this growth without any dilution to our shareholders. Flipping to slide five, let me update you on our strategic initiatives broadly across the company. This is what makes Customers Bank so unique, and this is what has and we expect will continue to drive value creation for our shareholders. Firstly, on the commercial side, as you heard from Jay, we seeded a new team in the Carolinas to be based in Wilmington. This brings this year's total to four new expansion markets to date with additional teams in the recruitment pipeline. A reminder that this recruitment is driven by a single point of contact team lift out strategy, which has proven to be a very successful part of the business model, especially in 2021, given the disruption caused by the M&A industry amplified by the great resignation. Moving to specialty lending, we've launched two new verticals, as you heard from Jay, in technology and VC banking, as well as a financial institutions group based in Dallas. As you can see, these teams are strategic fill-ins, both geographically for our footprint and new business lines in verticals that are close to our existing core competencies, enabling cross-sell to existing customers and their affiliates. We are supporting the strong demand across the franchise by continuing to add experienced senior bankers to our existing teams as well to help support the growth from that demand. Our SBA team continues to perform very well with traditional 7A loan originations in the third quarter double of what we saw in the first half of 21. On digital 7A, a reminder that many of these businesses don't have pre-existing banking relationships, and a number of them came to customers' banks with their PPP loans. This is why we created a Digital 7A product, and we believe we are the only bank that has a platform where a digitally sourced customer for loans under $350,000 can apply online, receive quick decisioning, and close in 30 days, which is unheard of and unprecedented in the SBA world. The Digital 7A pilot continues to progress well with nearly a million dollars in originations in the month of September, which we would like to scale up, as we previously stated, to three to five million of monthly originations. We achieved $4.3 million in year-to-date SBA gain on sale, well in line with our $6 million stated full-year target. In our multifamily business, we experienced faster-than-expected runoff in the current rate environment, and as such, we have put a plan in place to grow the portfolio back to our stated target of 15% of total loans. Now moving to the middle on our consumer business. Our digital direct personal loan business crossed a billion dollars in the quarter of customers, crossed a billion dollars in the quarter of customers sourced, applied, underwritten by our credit program. Customers bank direct originations. We ended up with digital personal loan portfolio of 1.3 billion, of which 70% has been sourced directly. To put this in perspective, this is compared to a portfolio of $845 million as of December 2019, of which only 15% had been sourced directly under the customer's bank banner at that time. As you can see, we've created an extremely profitable credit-led neobank within our bank with over 130,000 active, profitable personal loan, student loan, medical, dental, specialty loan customers, all sourced through digital channels and partnerships. When we add in our digital bank savings account customers and our 2020 and 2021 PPP customers, the total increases to over 450,000 active customers coming in through our digital branch. It is worth mentioning that to date, we have cross-sold additional products to less than 5% of that pool. This presents a tremendous opportunity for our data science and digital marketing teams who are advancing our data analytics capabilities to help our team to prioritize products on our roadmap and importantly create digital cross-sell journeys for these customers. Moving to our consumer gain on sale initiative, our digital team originated and created loan pools, which were sold to investors in two separate transactions in the quarter, bringing our year-to-date total to $4.5 million, already in excess of the $4 million target for the year. We have sold 140 million of loans originated for sale to date, year to date. As previously mentioned, we are also working on our first marketplace lending partnership expected to launch in 2022, which has been led by our embedded FinTech team, which was recruited and joined in the last 100 days or so. We're also working, continuing to work, as you heard from Jay, on a new credit card launch and additional consumer products in an effort to have an opportunity to earn multi-product relationships with our digital customers. Now, moving to the right side of the page, firstly, in conjunction with the anticipation of our real-time payments platform, as we mentioned, we onboarded a significant number of non-interest-bearing deposits towards the end of the quarter. To assist us in these efforts, we recruited an experienced team to help with payments product launch, business development, customer onboarding, and customer success to form the digital asset banking vertical. Moving to our digital SMB bundle, this is an advanced rollout starting with the digital 7A, which has already launched. Term loans, revolving line of credit, commercial credit card are all on the near-term roadmap. This is critical to build on our PPP success with small businesses. Finally, as previously discussed, we have engaged a leading global digital consultancy to rebrand and relaunch our omni-channel online presence, which reflects the digital maturation and institutional growth of customers' banks. This is on track to be completed by the end of the year. Moving to slide six. As you can see, our partnership with the SBA and Direct Forgiveness has proven to be an incredibly smart decision. We had a soft launch in August, and it has resulted in significant acceleration of forgiveness for our 2021 PPP originations. We have been able to process over 30% of these loans for forgiveness in just a matter of weeks. I'm proud of the team's technical agility and entrepreneurship to collaborate on such an important technology initiative that many other banks will now have the ability to take advantage of. As you can see, we still have just under 50% of our deferred origination fee still to be recognized in the coming quarters. This will further improve our capital and, more broadly, our franchise position and strength. Flipping to slide seven, Here you'll see a summary of the timeline and overview of the CBIT launch process. We launched within nine months of commencement of our comprehensive opportunity analysis, which first started with a build by partner evaluation. This summer, after selecting our partner and signing our contract, we integrated the platform into our environment and implemented compliance processes and began our business development in earnest. In late September, we began opening up DDAs in anticipation of our imminent payments platform launch. And after we completed testing and had a fully functional platform, we soft launched earlier this month. Our soft launch will include around 20 customers, plus or minus, and we expect to remain in soft launch for a few months before opening up more broadly to all commercial banking customers. With our non-interest-bearing deposit growth to date, we will be focusing on balance sheet, capital, and profitability discipline. We are taking actions on the following items, some of which are already in flight. Firstly, we paid down our PPPLF funding by $3.9 billion in the third quarter and saving an associated 35 basis points or $3.4 million per quarter. We currently have no PPPLF funding remaining. Next, we are focused on improving our deposit mix and cost of funding by reducing or running off higher-cost deposits. For example, our digital bank deposits totaled over $1.2 billion and have savings rates around 50 basis points. We also have a planned runoff by the end of 2020 of our bank mobile associated deposits, which were around $2 billion as of September 30th. In addition to further improving our deposit franchise, we are also laser-focused on interest-earning asset deployment. We increased the size of our investments portfolio by $357 million in the quarter, and we will continue to deploy cash in excess of balances necessary to fund organic lending growth in the fourth quarter and thereafter. In terms of loan growth, We have been very tactical through 2021, gearing up for the launch of our real-time payments platform by adding commercial teams in our expansion geographies and lending verticals like fund finance, technology venture capital, real estate specialty finance, and digital asset banking. These teams are hitting a stride and will be ramping up nicely in 2022. With that, I'll pass it to Carla to cover the financials in more detail.