Customers Bancorp, Inc

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Customer's Bank Corp fourth quarter and year-end earnings report conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. David Patti, Director of Communications, you may begin your conference.

Thank you, Rob. Good morning, everyone. Thank you for joining us for the Customer Bank Corp's earnings call for the fourth quarter and full year of 2022. The presentation deck you will see during today's webcast has been posted on the investor relations page of the bank's website at www.customersbank.com. You can scroll to Q4 22 and year-end results and click download presentation. You can also download a PDF of the full press release at this spot. Our investor presentation includes important details that we will walk through on this morning's webcast. I encourage you to download and use the document. Before we begin, we'd 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 Customers Bank Corp Chair, Jay Sidhu.

Thanks, Dave. Good morning, ladies and gentlemen. Welcome to Customers Bank Corp Q4 2022 and year-end 2022 earnings call. Joining me this morning is our President and CEO of our bank, Sam Sidhu, Customers Bank Corp CFO, Carla Leibold, our bank's CFO and head of corporate development at Customers Bank Corp., Phil Watkins, and the company's chief credit officer, Andy Bowman. As some of you may know, we are actually pleased to share with you again that about 10 years ago, Customers Bank Corp. became a publicly traded company using what was a troubled, small, $150 million asset Pennsylvania-based bank as our charter. and we invested our personal money into it. And today, this little troubled bank has been transformed into one of the 100 largest banks in the country. As you can see on slide three of our deck, we are today a $20 billion asset super community bank focused on superior customer service by executing on our high-touch supported by high-tech model. Today, we have a very simple but unique business model operating with community banking, corporate banking, which includes specialty banking, and then last, digital banking franchise. It is our belief that forward-thinking banks must be execution-driven, clearly define the markets that they wish to focus on as well as what they will not focus on, and have a superior tech-forward digital strategy. These are the things that we are focusing on every single day. It is by sticking to these fundamentals that customers have grown its assets, its loans, its deposits, its income, and shareholder value by an average of 20% to 30% a year since becoming a public company just 10 years ago. I'd like to take a minute to provide the perspective on the current external environment. As you all know, the historic pace of interest rate increases by the Fed inverted yield curve as well as the quantitative tightening has created a very challenging environment, especially as it relates to deposits, and especially for institutions or banks like ours, which are principally focused on serving business customers. All of these factors have led to an increase in our deposit costs over our expectations, and the sophisticated nature of our primary depositor base expects market rate deposits. So we have focused tremendously on also market rate lending, and our loan data is far in excess of what you normally see in the banking sector. We expect this challenging environment, however, to persist, and with the Fed fund rate peaking at or above 5% in the first half of this year. As a result, there may be very temporary, some pressure on our margins for just a quarter or so, hitting an infection point as the Fed tapers followed by NIM expansion beginning sometime in the second half of the year. We will go over our guidance with you today in some detail. In this challenging rate and inflationary environment, we believe that you need an explanation of some of the few non-recurring items and Carla, our CFO, will go over those items with you in some detail. Now, On to our current performance, we are pleased to report to you that Q4 2022 earnings from the core bank were $1.37 per diluted share, and that beat our internal targets, and we believe they beat by about 10 cents the normalized consensus estimates. This brings our full year 2022 core earnings per share to $6.51, And when you exclude PPP and the provision release benefit from the sale of $500 million of consumer installment loans in Q3, our adjusted earnings per share for the year were $5.65. Our reported earnings beat the upper end of our own 2022 core earnings per share guidance of $4.75 to $5, and we beat that by about 13%. Our responsible organic growth strategy is laser-focused on credit quality, with 90% of our growth over the past year in very low credit risk, as well as variable rate specialty lending verticals, and that's resulted in us achieving an above-average asset data. Asset quality remains exceptional, and credit reserves are extremely robust at 425% of total non-performing loans. We've taken prudent risk management strategic actions over the past several quarters to ensure that we are well positioned from a capital point of view, credit, liquidity, as well as earnings. And we believe we are very well positioned as we head into this uncertain 2023 and beyond. We are very focused on improving our margins, improving our capital ratios, and we will do that by moderating our growth in 2023, improving the quality of our balance sheets, while we control our expense base, and we are going to be very actively buying back stock, common stock, to the extent that we are trading below book value. And we believe that will result in creating exceptional value for our shareholders. Like I said earlier, we are very optimistic about our future. I'll now turn it over to Sam to talk about the performance of our franchisees in this, as well as some key financial highlights. Sam?