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 Inc fourth quarter and full year 2023 conference call. All lines have been placed on mute to prevent any background noise after the speakers 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 Paddy, Director of Communications.

Thank you, Rob. Good morning, everyone. Thank you for joining us for the Customer Bank Corps' earnings call for the fourth quarter and full year of 2023. The presentation deck you will see during today's webcast has been posted on the Investors webpage of the bank's website at customersbank.com. You can scroll to Q423 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 is my pleasure to introduce Customers Bank Corp Chair, Jay Sidhu.

Thank you, Dave, and good morning, ladies and gentlemen. Welcome to Customers Bank Corp fourth quarter and full year 2023 earnings call. Joining me this morning are President and CEO of the bank, Sam Sidhu, Customers Bank Corp CFO, Carla Leibold, Customers Bank CFO, Phil Watkins. I will give you some introductory comments, and then my colleagues will provide details of the quarter and for the full year 2023 for you. While the banking industry has largely recovered following the events from last spring, there is still a lot of uncertainty and a lot of headwinds facing our industry. However, customers' banks' differentiated strategy bucked industry trends, gaining strong momentum in 2023, and we expect that to continue into 2024. We continue to execute on our strategic priorities and are pleased to report that we are delivering another strong quarter for our shareholders. We are also very excited about the prospects and look forward to sharing our outlook for 2024 with you later on in this presentation. As a forward thinking bank with strong risk management, we believe we are creating tremendous franchise value across the bank through execution of our profitable customer centric model. In addition, we have and will continue to capitalize on market disruption as an opportunity to create new and deeper existing client relationships, resulting in stronger loan and deposit growth. As you know, We are reporting $1.90 of core EPS for Q4 2023 with continued deposit transformation, higher margin, no expense growth during the quarter. We generated $1.1 billion of core deposit growth in the quarter. We use these deposits to improve the overall quality of our funding base, including the planned exit of BMTX deposits from our bank on December 1st, as well as paying off about over $700 million of high-rate wholesale CDs during Q4. Capital levels increased substantially again, with our tangible common equity to tangible asset ratio now over 7%, and our CET1 increasing to 12.2%. we are extraordinarily proud of our ability to meet and exceed our capital goals that we outlined to you earlier last year. Asset quality remains exceptional with our NPA ratio down in the quarter and reserve levels are robust at almost 500%. We have only about a 1% loan exposure to the office sector of commercial real estate and our average loan size to the office is is less than $4 million. We believe the office sector will continue to create challenges for the industry in the coming quarters. In addition to the future benefit from continued improvement in our deposit franchise, as well as top quartile capital ratios, we are seeing attractive loan origination opportunities. These are primarily loans where we have a holistic and primary relationship with the client. we have ample liquidity and capital to support a 10% to 15% loan growth in 2024. Moving on to slide four, I'd like to take a moment to reflect back on the promises we made going back to our 2018 Investor Day, just about five years ago. Today, on the fifth anniversary of this Analyst Day, We are thrilled to say that we have delivered on all these promises, the promises that we made to you at that time. Here they go. Let me share those with you. Number one, we are now, as I said earlier, 7% TCE ratio. And at that time, we were talking about perhaps getting to 7%. Number two, we've delivered 15% average annual tangible book value growth. And at that time, we were shooting for just under 10%. We've achieved a NIM of 331 and at that time we were at 240 NIM. We have a core ROA of 122 and our goal was at least 1%. We are reporting a return on common equity of 18.3% and our goal was at least 10. And we delivered $7.72 of core EPS in 2023, surpassing our $6 EPS goal for 2025. So we are at least two years ahead. And most important is that we maintained a strong risk management culture throughout this period. Turning to slide five, we again reiterate our priorities to you, which remain absolutely unchanged. They are moderating growth during these uncertain times while strengthening our balance sheet and having a strong risk management culture. We are so proud of what we've accomplished in 2023 in an extremely challenging environment for our industry. Our commitment to risk management and a client-first mindset where clients say, wow, it's positioning us well to navigate in this challenging environment. I want to salute and express our gratitude and thanks to all our team members for their hard work and their continued dedication to serving our clients flawlessly. Lastly, we want to recognize all our investors for their support and confidence in us. As you know, Customers Bank Corp was the number one performing publicly traded bank stock in the United States in 2023, as measured by stock price and total shareholder return. Clearly, the markets are recognizing the strength of our performance, and we commit to doing everything in the long run and the short term to serve our clients and provide solid returns to our investors. Before I pass the call on to Sam, I want to welcome Hal Gash, to the call. Hal joins the call from B. Riley Securities, where he recently initiated coverage on customers' Bancorp. We want to thank all of the research analysts for their efforts and the insights that they bring to the bank and to the investment community. With that, I'll turn it over to Sam to cover the key activity and results of the quarter in much more detail.