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 Bank Corp second quarter 2023 earnings 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'd 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. And good morning, everyone. Thank you for joining us for the Customers Bank Corp's earnings call for the second quarter of 2023. The presentation deck you will see during today's webcast has been posted on the investor relations page of the bank's website at customersbank.com. You can scroll to Q2 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 relations section of our website. At this time, it's my pleasure to introduce to you Customer's Bank Corp Chair, Jay Sidhu.

Thank you, Dave, and good morning, ladies and gentlemen. Welcome to Customer Bank Corp's second quarter 2023 earnings call. Joining me this morning, our president and CEO of our bank, Sam Sidhu. Customers Bank Corp's CFO, Carla Liebold, Chief Credit Officer, Andy Bowman, and our Bank CFO and Head of Corporate Development, Phil Watkins. We are very pleased with our second quarter results as we executed seamlessly on our strategic priorities and delivered, one other part, strongest quarters to date. Despite all of the challenges banks are facing this year, We are pleased that we are not only delivering on our promises to our clients and to our investors, but finding opportunities in these challenging times. Please join me in thanking all of our team members across the bank who continue to work tirelessly every single day on executing superbly on our short-term as well as our long-term priorities. Beginning on slide three, As you can see, we believe our presentation today will once again demonstrate why we believe we are truly a forward-thinking bank with strong risk management capabilities. We will cover six key topics today. I will provide you with the highlights and my colleagues will cover them in more detail. First, in terms of quarterly performance, we are again comfortably beating street estimates on our core basis. While our industry is facing margin headwinds, we demonstrated our ability to improve net interest margin, which expanded by 19 basis points to 3.15% during the quarter. Hence, our net interest income was up 10% during the quarter on a smaller loan base. We are well positioned to achieve the full year net interest margin guidance we previously provided to you. Second, we executed on several strategic transactions in the quarter to accelerate our financial and strategic priorities. The venture banking portfolio acquisition from the FDIC represented once in a cycle opportunity to recruit a phenomenal team and will serve as another avenue to continue to improve our deposit franchise. We followed through on the commitment we communicated to you last quarter to exit non-strategic relationships and to continue to de-risk the balance sheet by executing on two non-core loan sale transactions during the quarter. Sam will provide more detail on each of these transactions later on in the presentation. We have a high quality, diversified, loyal customer base and are laser focused on continuing to improve our deposit base in 2023 and beyond. Evidence of the continued success of the efforts can be seen in the $1 billion or 29% quarter over quarter increase in our non-interest bearing deposits. We reduced our average cost of deposits in the quarter by 21 basis points despite an increase in interest rates and significant deposit pressures experienced by the entire industry. Fourth, our liquidity and capital position remain best in class. We continue to maintain immediately available liquidity of more than 200% of our uninsured deposits. in recognition of the uncertain times that remain for the industry. We also significantly improved our common equity tier one ratio by 70 basis points during the quarter and have a clear path towards the 11% plus target we stated to you last quarter. Lastly, and perhaps most important, is credit quality. This is always a key focus at Customers Bank. We were well ahead of the industry in tempering balance sheet growth, which we discussed with you on our Q4 2022 earnings call. Recent areas of credit focus in office and retail commercial real estate are absolutely de minimis components of our loan portfolio. This was obviously intentional and will pay dividends going forward. We are pleased with what we've accomplished this quarter, but even more excited about what we can do going forward. Turning to slide four, let me briefly share with you again our priorities, which remain unchanged. We have and will continue to moderate growth, build a stronger balance sheet during this time period because of the uncertain environment, and to assure ourselves that we are actually capturing holistic banking relationships and continuing to build our franchise. We will continue to fortify our balance sheet and then bring our capital ratios and then maintain those capital ratios above tier levels. As always, risk management remains at the core of the bank's DNA, and we are unchanged in our commitment to what we call are critical success factors. These are that we will never take our eye off the credit risk. We will always focus on superior interest rate risk management. We will continue to monitor liquidity daily and maintain robust liquidity under stress scenarios. We will have above average peer capital ratios, and we will always ensure our growth initiatives will generate positive operating leverage. With that, I'd like to turn it over to Sam to cover the key activity and results for the quarter in much more detail. Sam?