In This Article:
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Core Earnings Per Share: $1.34 in the quarter.
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Net Income: $43.8 million.
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Return on Common Equity (ROCE): 10.7%.
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Return on Average Assets (ROAA): 89 basis points.
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Loan Growth: 16% annualized pace.
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Deposit Growth: 9% annualized increase.
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Tangible Book Value: Nearly $53 per share, 18% annualized growth.
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Net Interest Income: $159 million in the quarter.
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Net Interest Margin (NIM): 3.06%.
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Non-Performing Assets (NPA) Ratio: Improved to 22 basis points.
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Net Charge-Offs: Declined by about $1.7 million or 9%.
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Deposit Inflows: $1.1 billion, primarily from commercial clients.
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New Commercial Accounts: Close to 4,000 net new accounts added in the last year.
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Capital Ratios: CET1 at 12.5%, TCE to TA at 7.7%.
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Liquidity Coverage: 183% coverage of immediately available liquidity to uninsured deposits.
Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Customers Bancorp Inc (NYSE:CUBI) reported strong high-quality diversified loan growth at a 16% annualized pace, demonstrating resilience against industry trends.
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The company achieved nearly $53 per share in tangible book value, with an 18% annualized growth in the quarter, marking one of the best performances in the industry.
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CUBI's liquidity metrics remain robust, with a strong coverage of immediately available liquidity to uninsured deposits at 183%.
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The bank's credit quality remains a strong point, with improvements across most credit metrics, including a decline in special mention and substandard loans.
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CUBI's new banking teams have shown impressive results, generating about $370 million of relationship-based deposit growth in the quarter alone.
Negative Points
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The reported net interest margin declined in the quarter, primarily due to lower discount accretion from the acquired loan portfolio and lower prepayment income.
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Core non-interest expenses increased, driven by investments in new hires and risk management infrastructure, impacting short-term profitability.
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The bank is experiencing temporary elevated non-interest expenses due to ongoing investments in risk management and compliance platforms.
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Despite strong deposit inflows, the timing of deposit remixing has not yet fully translated into reduced interest expenses.
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CUBI is under a regulatory written agreement related to its digital asset business, requiring enhancements in risk management and compliance.
Q & A Highlights
Q: Can you explain the balance sheet remix and its impact on asset sensitivity and deposit pricing trends? A: Philip Watkins, CFO, explained that the remix involved increasing fixed-rate lending and implementing forward-starting swap hedges to convert fixed to floating on the liability side. The securities portfolio was also repositioned to trade out floating rate securities for longer-duration fixed-rate assets, enhancing liquidity and reducing asset sensitivity. Sam Sidhu, CEO, added that deposit pricing for new inflows was in the low 3% range, with a significant remix from higher-cost deposits at 5.25% to lower-cost deposits.