Customers Bancorp Inc (CUBI) Q1 2024 Earnings Call Transcript Highlights: Strong Performance ...

• GAAP EPS: $1.40

• Net Income: $45.9 million

• Adjusted Core EPS: $1.68

• Adjusted Core Net Income: $55 million

• ROCE: 14.5%

• ROA: 1.11%

• CET1 Ratio: 12.5%

• TCETA Ratio: 7.3%

• Loan Growth: 10% to 15% target for 2024

• Deposit Growth: Business unit deposit growth exceeded EUR1 billion

• NPL Ratio: 17 basis points

Release Date: April 26, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Can you provide guidance on the expected loan growth for the next three quarters? A: (Phil Watkins - CFO) Yes, the total expected loan growth is about 1.5 to 2 billion, spread relatively evenly over the next three quarters. The pipeline is predominantly driven by our corporate and specialized lending verticals, targeting about a 300 basis points spread on these products.

Q: Regarding the funding side, how is the deposit pipeline expected to develop, and what are the anticipated cost reductions from deposit remixing? A: (Sam Sidhu - President & CEO) The deposit pipeline is broad, with significant contributions expected from newly onboarded teams. The remixing of deposits is projected to reduce interest-bearing deposit costs by 150 to 250 basis points, significantly impacting net interest income.

Q: What is the projected PPNR growth for the year, and what does this imply for the quarterly run rate by the fourth quarter? A: (Phil Watkins - CFO) We're targeting a 10% to 15% growth from the $367 million baseline, implying a run rate of a little over $100 million by the fourth quarter.

Q: How will the efficiency ratio evolve throughout the year, and what are the main drivers? A: The efficiency ratio is expected to moderate from low to mid-50s this quarter to high 40s by the fourth quarter, primarily driven by the integration and productivity of the new banking teams.

Q: Can you discuss the lending opportunities associated with the new deposit-rich teams you have hired? A: (Sam Sidhu - President & CEO) While these teams are primarily deposit-focused, there are opportunities for C&I extensions of credit to move over primary relationships. We've preserved some liquidity in Q1 for this purpose.

Q: What are the expectations for deposit costs and the impact of the new teams on the deposit outlook for the year? A: (Sam Sidhu - President & CEO) Deposit costs are expected to trend down over the year. The deposit pipeline has been replenished and is expected to continuously refresh at impressive levels, contributing significantly to future growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.