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 Customers Bancorp first quarter 2023 earnings webcast. 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 Patty, Director of Communications, you may begin your conference.

Thank you, Rob. And good morning, everyone. Thank you for joining us for the Customer Bank Corp's earnings call for the first quarter of 2023. The presentation deck you will see during today's webcast has been posted on the investor page of the bank's website at www.customersbank.com. You can scroll to Q1 23 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 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 section of our website. At this time, it's my pleasure to introduce Customers Bank Corp Chair, Jay Sidhu.

Thank you, Dave. Good morning, ladies and gentlemen. Welcome to the Customers Bank Corp First Quarter 2023 Earnings Call. Joining me this morning are President and CEO of the bank, Sam Sidhu, Customers Bank Corp CFO, Carla Leibold, the Chief Credit Officer of Customers, Andy Bowman, and Customers Bank's CFO and head of corporate development for the holding company, Phil Watkins. In spite of a rather volatile period over the past several weeks, I'm pleased to share with you this morning that Customers Bank Corp Inc. is in an even stronger position today than year-end 2022. I'd like to thank our team members who work tirelessly every single day to serve our clients, and execute superbly on our priorities. Turning to slide three, our presentation today will demonstrate our belief that we truly are a forward-thinking bank with strong risk management capabilities. We will cover six topics in our presentation for you this morning. I will just provide you with some highlights, and my colleagues will cover all of them in detail. First, in terms of quarterly performance, we comfortably beat street estimates and are well positioned to drive net interest margin expansion by about 20 basis points over the remainder of 2023. Second, we will discuss the continued strengthening of our franchise. We have a high-quality, diversified, loyal customer base and are hyper-focused on continuing to improve our deposit franchise in 2023 and beyond. Evidence of this can be seen by our stable deposit levels and peer-leading 81% insured deposit ratio, as well as a very meaningful increase in non-interest-bearing deposits coming from operating accounts during the quarter. As a result of our technology and service offerings, coupled with our decision not to pay up for volatile deposits, we were able to shift considerable amount of deposits from interest-pairing to non-interest-pairing and also acquired several new relationships from the failed banks. Next, on to our liquidity position, we believe it's among the best in class with $9.5 billion of immediate available liquidity, providing more than 270% coverage of uninsured deposits. Moving on to capital, we have a strong capital position and will discuss the ways in which we will continue to improve it over the course of 2023. We have a year-end goal of reaching 11% to perhaps 11.5% CET1 ratio and PCE ratio of approximately 7%, including AOCI impact. On the credit front, we have always been laser focused on maintaining superior credit quality, and for well over a year, we've been discussing with you a strategic shift of our loan portfolio into low to no credit risk verticals that are also variable rate in nature, with totally deemphasizing commercial real estate. Today, we have a healthy loan loss reserve in addition of north of 400% of non-performing loans. And lastly, we remain optimistic about the continued improvement in our balance sheet that should result in stronger levels of profitability this year and in the future, and my colleagues will give you the guidance for the future. Turning to slide four, let me also briefly share with you again our priorities. First, with a very high probability of a recession, we believe it's prudent to even shrink our balance sheet somewhat and reduce further our exposure to non-core loans such as consumer loans and even some low-margin commercial loans. This should improve further the credit profile of our entire loan portfolio. This will also result in higher capital ratios and eventually higher margins. And secondly, risk management is an absolute integral part and is part of our DNA. We are, for years now, we've been calling these four points of as our four critical success factors. First, never take our eye off credit risk, especially when times are good. Second, always focus on superior interest rate risk management and run different scenarios to deal with it. Third, must monitor liquidity daily and maintain robust liquidity under different stress scenarios. And lastly, Always focus on positive operating leverage with lower efficiency ratios each and every year. With that, I'd like to turn it over to Sam to cover some of these topics in more detail. Sam?