Q2 2024 Customers Bancorp Inc Earnings Call

Brianna: Good morning, my name is Brianna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Customers Bancorp Inc. Q2 2024 earnings webcast. All lines have been placed on mute to prevent any background noise.

Brianna: Good morning. My name is Brianna and I will be your conference operator today.

Brianna: My name is Brianna, and I will be your conference operator today.

Brianna: At this time, I would like to welcome everyone to the Customers Bancorp Inc Q2 2024 earnings webcast. All lines have been placed on mute to prevent any background noise.

Speaker Change: At this time, I would like to welcome everyone to the Customers Bancorp Inc Q2 2024 earnings webcast.

Brianna: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star, then the number one on your telephone keypad. To withdraw your question, please press star 1 again.

Brianna: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star, then the number one on your telephone keypad. To withdraw your question, please press star one again.

Speaker Change: 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, please press star, then the number one on your telephone keypad. To withdraw your question, please press star one again.

David Patti: I will now turn a call over to David Patti with Customers Bancorp. You may begin your conference.

Brianna: I will now turn the call over to David Patti with Customers Bancorp. You may begin your conference. Thank you, Brianna, and good morning, everyone.

Speaker Change: I will now turn the call over to David Patti with Customers Bancorp. You may begin your conference.

David Patti: Thank you, Brianna, and good morning, everyone. Thank you for joining us for the Customers Bancorp earnings webcast for Q2 of 2024. The presentation deck you will see during today's webcast has been posted on the investor's web page of the bank's website at CustomersBanc.com. You can scroll to Q2 24 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.

David W. Patti: Thank you for joining us for the Customers Bancorp Earnings webcast for Q2 of 2024. The presentation deck you will see during today's webcast has been posted on the investors web page of the bank's website at CustomersBank.com. You can scroll to the Q2 24 results and click download presentation.

David W. Patti: Thank you, Brianna, and good morning, everyone. Thank you for joining us for the Customers Bancorp Earnings webcast for Q2 of 2024.

David W. Patti: The presentation deck you will see during today's webcast has been posted on the investor's web page of the bank's website at customersbank.com. You can scroll to Q2 24 results and click download presentation. You can also download a PDF of the full press release at this spot.

David W. Patti: You can also download a PDF of the full press release at this location. Our investor presentation includes important details that we will walk through on this morning's webcast. I encourage you to download and use the documentation.

David W. Patti: 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.

David Patti: 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.

David W. Patti: 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.

Speaker Change: 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.

Speaker Change: 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.

David W. Patti: 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 FCC or by visiting the Investor Relations section of our website. At this time, it is my pleasure to introduce Customers Bancorp Chairperson, Jay Sidhu. Jay?

Speaker Change: 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.

David Patti: Copies may be obtained from the SEC or by visiting the Investor Relations section of our website.

Speaker Change: Copies may be obtained from the SEC or by visiting the Investor Relations section of our website.

Jay Sadoo: At this time, it is my pleasure to introduce Customers Bancorp Chair Jay Sadoo.

Jay S. Sidhu: At this time, it is my pleasure to introduce Customers Bancorp Chair, Jay Sidhu. Jay?

Jay Sadoo: Thank you, Dave, and good morning, ladies and gentlemen. Welcome to Customers Bancorp's 2024 second quarter earnings call. Joining me this morning are President and Chief Executive Officer of Customers Banc, Sam Sadoo, and Customers Bancorp CFO Phil Watkins. I'll provide some introductory comments, and then my colleagues will provide the details of the quarter. At the conclusion of our prepared remarks, we look forward to answering your questions. Let's move to slide three. I'll briefly touch on the highlights from this quarter, especially noting where our results are positively differentiated from industry trends. First, please note that we again delivered strong earnings for share in the quarter, exceeding consensus estimates on both gap as dollars core basis.

Jay S. Sidhu: Thank you, Deb, and good morning, ladies and gentlemen. Welcome to Customers Bancorp's 2024 Second Quarter Earnings Call. Joining me this morning are President and Chief Executive Officer of Customers Bank, Sam Sidhu, and Customers Bancorp CFO, Phil Watkins. I'll provide some introductory comments, and then my colleagues will provide the details of the quorum. At the conclusion of our prepared remarks, we look forward to answering your questions. Now, let's move to slide three.

Jay S. Sidhu: Thank you, Deb, and good morning, ladies and gentlemen.

Speaker Change: Welcome to Customers Bancorp's 2024 Second Quarter Earnings Call.

Speaker Change: Joining me this morning are President and Chief Executive Officer of Customers Bank, Sam Sidhu, and Customers Bancorp CFO , Phil Watkins.

Speaker Change: I'll provide some introductory comments and then my colleagues will provide the details of the quorum. At the conclusion of our prepared remarks, we look forward to answering your questions.

Jay S. Sidhu: I'll briefly touch on the highlights from this quarter, especially noting where our results are positively differentiated from industry trends. Please note that we again delivered strong earnings per share in the quarter, exceeding consensus estimates on both GAAP as well as CoreBase. Again, against the trends that many banks are experiencing right now, we generated strong, high-quality loan growth in the quarter, at a 11% annualized pace. We continued to execute on the company's deposit transformation in the quarter. We used $600 million plus of core commercial deposit growth to repay higher-cost consumer deposits and further reduced wholesale CD rates.

Speaker Change: Let's move to slide three.

Speaker Change: I'll briefly touch on the highlights from this quarter, especially noting where our results are positively differentiated from industry trends.

Speaker Change: First, please note that we again delivered strong earnings per share in the quarter, exceeding consensus estimates on both GAAP as well as core basis.

Jay Sadoo: Again, the trends that many banks are experiencing right now against those trends regenerated strong high-quality loan growth in the quarter. We continue to execute on the company's deposit transformation in the quarter. We used 600 million plus of core commercial deposit growth to repay higher cost consumer deposits and further reduced wholesale CD. We also reduced our average cost of deposits during the quarter. In contrast to most in the industry, our net interest margin expanded by a healthy 19 basis points, and we expect continued expansion by the end of the year. Tangible book value per share exceeded $50 after generating 13% annualized growth in the first half of 2024.

Speaker Change: Again, the trends that many banks are experiencing right now.

Speaker Change: Against those trends, we generated strong, high-quality loan growth in the quarter, a 11% annualized pace.

Speaker Change: We continued to execute on the company's deposit transformation in the quarter. We used $600 million plus of core commercial deposit growth to repay higher cost consumer deposits and further reduced wholesale CDs.

Jay S. Sidhu: We also reduced our average cost of deposits during the quarter. In contrast to most in the industry, our net interest margin expanded by a healthy 19 basis points, and we expect continued expansion by the end of the year. Tangible book value per share exceeded $50. After generating 13% annualized growth in the first half of 2024, we achieved our previously stated seven and a half percent tangible common equity to tangible asset target in just two quarters of 2024.

Speaker Change: We also reduced our average cost of deposits during the quarter.

Speaker Change: In contrast to most in the industry, our net interest margin expanded by a healthy 19 basis points, and we expect continued expansion by the end of the year.

Speaker Change: Tangible book value per share exceeded $50 after generating 13% annualized growth in the first half of 2024.

Jay Sadoo: We achieved our previously stated 7.5% tangible common equity to tangible asset target in just two quarters of 2024. We remain very optimistic about the year, with strong loan and deposit pipelines. We believe we are in an enviable position to continue to take market share. Our new business and commercial banking teams are off to a great start and will serve to further accelerate and enhance those prospects.

Speaker Change: We achieved our previously stated 7.5% tangible common equity to tangible asset target in just two quarters of 2024.

Jay S. Sidhu: We remain very optimistic about the year ahead, with a strong loan and deposit pipeline. We believe we are in an enviable position to continue to take market share. Our new business and commercial banking teams are off to a great start and will serve to further accelerate and enhance those processes. Now turning to slide four, we again reiterate our priorities to you, which broadly remain unchanged.

Speaker Change: We remain very optimistic about the year with strong loan and deposit pipelines.

Speaker Change: We believe we are in an enviable position to continue to take market share.

Speaker Change: Our new business and commercial banking teams are off to a great start and will serve to further accelerate and enhance those prospects.

Jay Sadoo: Now turning to slide 4, we again reiterate our priorities to you, which broadly remain unchanged. Having achieved both our CET1 and our TCE to TA capital target, we are well positioned to execute the disciplined loan growth we have previously shared with you, as well as continue to generate strong growth deposit growth. And remain focused on holistic grind relationships, strengthening our balance sheet, continuing to improve our liquidity and maintaining or expanding as a set of year are margin.

Speaker Change: Now turning to slide four, we again reiterate our priorities to you, which broadly remain unchanged.

Jay S. Sidhu: Having achieved both our CET1 and our TCE2TA capital targets, we are well positioned to execute the disciplined loan growth we have previously shared with you, as well as continue to generate strong deposit growth and remain focused on holistic client relationships, strengthening our balance sheet, continuing to improve our liquidity, and maintaining or expanding, as I said earlier, our margin. I will now turn the call over to Sam to talk about what makes Customers Bank a unique franchise. Sam?

Speaker Change: Having achieved both our CET1 and our TCE2TA capital target, we are well positioned to execute the disciplined loan growth we have previously shared with you, as well as continue to generate strong growth deposit growth.

Speaker Change: and remain focused on holistic client relationships, strengthening our balance sheet, continuing to improve our liquidity, and maintaining or expanding, as I said earlier, our margins.

Sam Sadoo: I will now turn the call over to Sam to talk about what makes Customer Bank a unique franchise.

Speaker Change: I will now turn the call over to Sam to talk about what makes Customers Bank a unique franchise. Sam?

Sam Sadoo: Thank you, Jay, and good morning, everyone. I want to first start off by thanking all of our team members for helping Customers Bank to be named the number one bank by American Banker among all banks between 10 and 50 billion assets just this month. This is a testament to the hard work and contributions from our team members across the entire bank around our clear and simple strategy. Banking is a highly competitive industry, and long-term success is dependent upon being able to differentiate the company, especially in the eyes of clients. We wanted to take a moment to convey what we believe makes us different.

Samvir S. Sidhu: Thank you, Jay, and good morning, everyone. I want to first start off by thanking all of our team members for helping Customers Bank to be named the number one bank by American Banker among all banks between $10 and $50 billion in assets just this month. This is a testament to the hard work and contributions from our team members across the entire bank around our clear and simple strategy. Banking is a highly competitive industry, and long-term success is dependent upon being able to differentiate the company, especially in the eyes of clients. We wanted to take a moment to convey what we believe makes us different.

Samvir S. Sidhu: Thank you, Jay, and good morning, everyone. I want to first start off by thanking all of our team members for helping Customers Bank to be named the number one bank by American Banker among all banks between $10 billion and $50 billion in assets just this month.

Samvir S. Sidhu: This is a testament to the hard work and contributions from our team members across the entire bank around our clear and simple strategy.

Samvir S. Sidhu: Banking is a highly competitive industry and long-term success is dependent upon being able to differentiate the company, especially in the eyes of clients. We wanted to take a moment to convey what we believe makes us different.

Sam Sadoo: We have a unique operating model anchored around a culture of exceptional customer service delivered by entrepreneurial minded professionals, a focused product offering, and a unique strategy. Client service is a key differentiator for Customers Bank. It's in our company's name for a reason and has always been at the very heart of why we exist as an organization. We firmly believe that if our clients are successful and our team members are successful, when both of these groups say, wow, that will result in success for our company and its shareholders. We believe that our entrepreneurial culture has been and will continue to be critical to our success, but we won't ask you to take our word for it.

Samvir S. Sidhu: We have a unique operating model anchored around a culture of exceptional customer service delivered by entrepreneurial-minded professionals, a focused product offering, and a unique strategy. Customer service is a key differentiator for customers' banks. It's in our company's name for a reason and has always been at the very heart of why we exist as an organization.

Samvir S. Sidhu: We have a unique operating model anchored around a culture of exceptional customer service delivered by entrepreneurial-minded professionals, a focused product offering, and a unique strategy.

Samvir S. Sidhu: Client service is a key differentiator for Customers Banc. It's in our company's name for a reason and has always been at the very heart of why we exist as an organization.

Samvir S. Sidhu: We firmly believe that if our clients are successful and our team members are successful, when both of these groups say, wow, that will result in success for our company and its shareholders. We believe that our entrepreneurial culture has been and will continue to be critical to our success. But we won't ask you to take our word for it.

Samvir S. Sidhu: We firmly believe that if our clients are successful and our team members are successful, when both of these groups say wow, that will result in success for our company and its shareholders.

Samvir S. Sidhu: We believe that our entrepreneurial culture has been and will continue to be critical to our success.

Samvir S. Sidhu: The incredible talent we've been able to recruit over the past year shows that. The top-tier professionals who had their pick of banks chose to join our company in large part because of the unique culture at Customers Bank. While other banks of our size have relied for a long time on more commodity-oriented vending verticals like Middle Market C&I Franchise, thanks to our strategic moves over the past few years to start verticals, build out technology and treasury products, and attract incredible talent.

Sam Sadoo: The incredible talent we've been able to recruit over the past year shows this: the top tier professionals who had their pick of banks chose to join our company in large part because of the unique culture at Customers Bank. While other banks of our size have relied, longer lied on more commodity-oriented vending verticals like M-M-M-M-M-M-M-M-M-M-M-M-M-M-M-M-M-M-M-M market to see an eye franchise. Thanks to our strategic moves over the past few years to start verticals, build out technology and Treasury products. With decades-long relationships and experience, these factors are driving incredible deposit momentum and profitability across the franchise. We deliver the product, breath and sophistication of a larger bank and a level of service beyond what the large banks can realistically offer.

Samvir S. Sidhu: But we won't ask you to take our word for it.

Samvir S. Sidhu: The incredible talent we've been able to recruit over the past year shows this.

Samvir S. Sidhu: The top tier professionals who had their pick of banks chose to join our company in a large part because of the unique culture at Customers Bank.

Samvir S. Sidhu: While other banks of our size have long relied on more commodity-oriented lending verticals

Samvir S. Sidhu: Middle Market C&I franchise.

Samvir S. Sidhu: Thanks to our strategic moves over the past few years to start verticals, build out technology and treasury products and attract incredible talent.

Samvir S. Sidhu: With decades-long relationships and experience, these factors are driving incredible deposit momentum and profitability across the franchise. We deliver the product breadth and sophistication of a larger bank and a level of service beyond what the large banks can realistically offer. We believe being a top three to five national competitor in any niche verticals in which we participate is imperative as we can't be all things to all people like Money Center Bank. We are seeking to be a bank with a breadth of products and services where a client we serve never has to leave our institution.

Samvir S. Sidhu: With decades-long relationships and experience, these factors are driving incredible deposit momentum and profitability across the franchise.

Samvir S. Sidhu: We deliver the product breadth and sophistication of a larger bank and a level of service beyond what the large banks can realistically offer.

Sam Sadoo: We believe being a top three to five national competitor in any niche verticals in which we participate is imperative, as we can't be all things to all people like the money center banks. We are seeking to be a bank with a breadth of products and services where a client we serve never has to leave our institution. Diversification has always been a key component of our business model. Past and recent history has shown that no matter how strong any given vertical seems, concentration can cause challenges for banks. We have proactively limited loan and deposit levels across our franchise to ensure our growth will be broad-based, diversified, and deliver consistent returns for our shareholders.

Samvir S. Sidhu: We believe being a top 3-5 national competitor in any niche verticals in which we participate is imperative as we can't be all things to all people like the Money Center Banks.

Samvir S. Sidhu: We are seeking to be a bank with a breadth of products and services where a client we serve never has to leave our institution.

Samvir S. Sidhu: Diversification has always been a key component of our business model. Past and recent history have shown that no matter how strong any given vertical seems, concentration can cause challenges for banks. We have proactively limited loan and deposit levels across our franchise to ensure our growth will be broad-based, diversified, and deliver consistent returns for our shareholders. Our branch light model allows us to invest in the people and technology that clients desire both today and into the future without being burdened with an expensive legacy branch network, as well as technology, and we can do this while still operating with top quartile efficiency rates. Financial results are an output of the unique set of inputs that a company chooses to employ.

Samvir S. Sidhu: Diversification has always been a key component of our business model.

Samvir S. Sidhu: Past and recent history has shown that no matter how strong any given vertical seems, concentration can cause challenges for banks.

Samvir S. Sidhu: We have proactively limited loan and deposit levels across our franchise to ensure our growth will be broad-based, diversified, and deliver consistent returns for our shareholders.

Sam Sadoo: Our branch-light model allows us to invest in the people and technology that clients desire both today and into the future without being burdened with an expensive legacy branch network, as well as, frankly, a technology stack. And we can do this while still operating with top core tile efficiency ratio. Financial results are an output of the unique set of inputs that a company chooses to employ. As we've discussed on previous calls, we believe in revenue, earnings per share, and tangible book value per share growth are key metrics for shareholder returns in the banking industry. The unique combination of the attributes I just discussed is what has resulted in a five-year compounded annual growth rates of 21% in revenue, 33% in earnings per share, and 15% in book value through 2023 compared to just 12, 7, and 8% respectively for the top core tile of all banks with 10 to 100 billion assets.

Samvir S. Sidhu: Our BranchLite model allows us to invest in the people and technology that clients desire both today and into the future without being burdened with an expensive legacy branch network, as well as, frankly, a technology stack.

Samvir S. Sidhu: And we can do this while still operating with top quartile efficiency ratio.

Samvir S. Sidhu: Financial results are an output of the unique set of inputs that a company chooses to employ. As we've discussed in previous calls, we believe in revenue, earnings per share, and tangible book value per share growth are key metrics for shareholder returns in the banking industry.

Samvir S. Sidhu: As we've discussed in previous calls, we believe revenue, earnings per share, and tangible book value per share growth are key metrics for shareholder returns in the banking industry. The unique combination of the attributes I just discussed is what has resulted in a five-year compounded annual growth rate of 21% in revenue, 33% in earnings per share, and 15% in book value through 2023 compared to just 12, 7, and 8%, respectively, for the top quartile of all banks with 10 to 100 billion in assets.

Samvir S. Sidhu: The unique combination of the attributes I just discussed is what has resulted in a five-year, compounded annual growth rates of 21% in revenue, 33% in earnings per share, and 15% in book value through 2023, compared to just 12, 13, and 14 years ago.

Samvir S. Sidhu: 7% and 8% respectively for the top quartile of all banks with 10 to 100 billion in assets.

Sam Sadoo: As you can see, our performance is multiples, not just above the industry average, but also above the top core tile performing banks as well.

Samvir S. Sidhu: As you can see, our performance is multiples, not just above the industry average, but also above the top quartile performing banks as well. On slide six, we've provided the quarter's financial highlights on a gap basis, and on slide seven, we have provided our results on a core basis.

Samvir S. Sidhu: As you can see, our performance is multiples, not just above the industry average, but also above the top quartile performing banks as well.

Sam Sadoo: On slide six, we provided the quarter's financial highlights on a GAAP basis, and on slide seven we have provided a result on a core basis. We had a really solid financial quarter across the board. This is a function of years of investment paying off. In the quarter, we earned $1.66 in GAAP EPS on 54.3 million of net income. Core EPS was $1.49 on 48.6 million of net income, and our core ROCE and ROA were 12.4% and 1%, respectively. Our net interest margin expanded 19 basis points to 3.29. The primary difference between our gap and core earnings was a positive benefit from a gain we realized on a Fintech investment purchase at a discount in the quarter, as well as severance-related expense.

Speaker Change: On slide six, we've provided the quarter's financial highlights on a gap basis, and on slide seven, we have provided our results on a core basis.

Samvir S. Sidhu: We had a really solid financial quarter across the board. This is a function of years of investment paying off. In the quarter, we earned $1.66 in GAAP EPS on $54.3 million of net income. Core EPS was $1.49 on $48.6 million of net income, and our core ROCE and ROA were 12.4% and 1%, respectively. Our net interest margin expanded by 19 basis points to 3.29. The primary difference between our GAAP and core earnings was a positive benefit from a gain we realized on a fintech investment purchase at a discount in the quarter, as well as severance-related expenses. Credit quality remains strong, as evidenced by our NPA ratio of just 23 basis points.

Speaker Change: We had a really solid financial quarter across the board. This is a function of years of investment paying off. In the quarter, we earned $1.66 in GAAP EPS on $54.3 million of net income.

Speaker Change: Core EPS was $1.49 on $48.6 million of that income, and our core ROCE and ROA were 12.4% and 1% respectively.

Speaker Change: Our net interest margin expanded.

Speaker Change: 19 basis points to 3.29. The primary difference between our gap and core earnings was a positive benefit from a gain we realized on a fintech investment purchase at a discount in the quarter, as well as severance related expenses.

Sam Sadoo: Credit quality remains strong, as evidenced by our NPA ratio of just 23 basis points. Moving to slide 8, our top financial priority remains continuing to execute on the next leg of our deposit franchise transformation. We are thrilled with our deposit performance today. As Jay mentioned, we generated about 600 million of gross commercial dollars to a billion dollars of high quality commercial deposit inflows per quarter, which will be used to similarly remix and strengthen the franchise. And while total deposits were down modestly, this is due to a timing lag of remixing. Growth was once again broad based, with more than 20 deposit channels growing in the quarter; about half of these channels experience growth of 25 million dollars or more.

Speaker Change: Credit quality remains strong, as evidenced by our NPA ratio of just 23 basis points.

Samvir S. Sidhu: Moving to slide eight, our top financial priority remains Continuing to execute on the next leg of our deposit franchise transformation. We are thrilled with our deposit trend performance today. As Jay mentioned, we generated about $600 million of gross commercial dollars to a billion dollars of high-quality commercial deposit inflows per quarter, which will be used to similarly remix and strengthen the franchise. And while total deposits were down modestly, this is due to a timing lag of remittances.

Speaker Change: Moving to slide 8, our top financial priority remains continuing to execute on the next leg of our deposit franchise transformation.

Speaker Change: We are thrilled with our deposit trend performance to date.

Speaker Change: dollars to a billion dollars of high quality commercial deposit inflows per quarter which will be used to similarly remix and strengthen the franchise.

Speaker Change: And while total deposits were down modestly, this is due to a timing lag of remixing.

Samvir S. Sidhu: Growth was once again broad-based, with more than 20 deposit channels growing in the quarter. About half of these channels experienced growth of $25 million or more. As a result of these incredible efforts from our team members, our average cost of deposits actually declined in the quarter by five basis points to 3.4%, as we continue to buck industry trends. Non-interest-bearing spot deposits were down modestly but stable as of Friday, June 28th and continue to represent about 25% of total deposits at quarter end. Average balances were actually up modestly as we continue to see tailwinds here with deposit generation from the new teams coming in at at least our current mix with a bias to somewhat higher levels.

Speaker Change: Growth was once again broad-based with more than 20 deposit channels growing in the quarter. About half of these channels experienced growth of 25 million dollars or more.

Sam Sadoo: As a result of these incredible efforts from our team members, our average cost of deposits actually declined in the quarter by five basis points to 3.4 percent as we continue to buck industry trends. Non-interest bearing spot deposits were down modestly but stable as a Friday, June 28th, and continue to represent about 25 percent of total deposits in quarter end. Average balances were actually up modestly as we continue to see tailwinds here with deposit generation from the new teams coming in, at least our current mix, with a bias to somewhat higher levels. Importantly, we continue to focus on the stability of the deposit franchise, as in short and collateralized and affiliate deposits, end of the quarter at 76 percent of total deposits, which is at the high end of the industry.

Speaker Change: As a result of these incredible efforts from our team members, our average cost of deposits actually declined in the quarter by five basis points to 3.4% as we continue to buck industry trends.

Speaker Change: Non-interest bearing spot deposits were down modestly but stable as of Friday June 28th and continue to represent about 25% of total deposits at quarter end.

Speaker Change: Average balances were actually up modestly as we continue to see tailwinds here with deposit generation from the new teams coming in at at least our current mix with a bias to somewhat higher levels.

Samvir S. Sidhu: Importantly, we continue to focus on the stability of the deposit franchises insured and collateralized and affiliate deposits at the end of the quarter at 76% of total deposits, which is at the high end of the. Moving to slide nine, in line with our discussion last quarter, the next phase of our deposit transformation involves replacing less strategic and higher cost deposits with higher quality deposits. By quality, we mean a focus on some combination of depth of relationship, cost, and granularity.

Speaker Change: Importantly, we continue to focus on the stability of the deposit franchise's insured and collateralized and affiliate deposits end of the quarter at 76% of total deposits, which is at the high end of the industry.

Sam Sadoo: Moving to slide 9, in line with our discussion last quarter, the next phase of our deposit transformation involves replacing less strategic and higher-cost deposits with higher-quality deposits. By quality, we mean a focus on some combination of depth of relationship, cost, and granularity. We want to provide you with a brief update in the performance of the teams that joined us over the last year, including the 10 new banking teams that joined the bank in April. We are extremely thrilled with their progress today. Since the first quarter of 2023, newly hired banking teams have generated about $900 million of growth and granular low-cost relationship-based deposits averaging about a 3 percent blended rate or two and a half percent below Fed funds.

Speaker Change: Moving to slide nine. In line with our discussion last quarter, the next phase of our deposit transformation involves replacing less strategic and higher cost deposits with higher quality deposits.

Speaker Change: By quality, we mean a focus on some combination of depth of relationship, cost, and granularity.

Samvir S. Sidhu: We want to provide you with a brief update on the performance of the teams that have joined us over the last year, including the 10 new banking teams that joined the bank in April. We are extremely thrilled with their progress to date. Since the first quarter of 2023, newly hired banking teams have generated about $900 million of growth in granular, low-cost, relationship-based deposits, averaging about a 3% blended rate or 2.5% below Fed funds.

Speaker Change: We want to provide you with a brief update on the performance of the teams that joined us over the last year, including the 10 new banking teams that joined the bank in April .

Speaker Change: We are extremely thrilled with their progress to date. Since the first quarter of 2023, newly hired banking teams have generated about $900 million of growth in granular, low-cost, relationship-based deposits, averaging about a 3% blended rate or 2.5% below Fed funds.

Sam Sadoo: I'll take a moment to give more detail on the early performance of our newest teams that joined us just last quarter in the month of April. We knew when we hired the banking teams that they were highly experienced and talented bankers, but we have been amazed at the strength of the relationships that these bankers have with their long-standing clients. I have personally participated in more than 175 in-person meetings with customers and prospects since the new teams joined. The receptivity from clients has been nothing short of fantastic. We have the capabilities to deliver for these clients, and we believe nearly all of them are looking to join the bank thanks to our best-in-class customer service and financial strength.

Samvir S. Sidhu: I'll take a moment to give more detail on the early performance of our newest teams that joined us just last quarter in the month of April. We knew when we hired these banking teams that they were highly experienced and talented bankers.

Speaker Change: I'll take a moment to give more detail on the early performance of our newest teams that joined us just last quarter in the month of April .

Speaker Change: We knew when we hired the banking teams that they were highly experienced and talented bankers, but we have been amazed at the strength of the relationships that these bankers have with their long-standing clients.

Samvir S. Sidhu: But we have been amazed at the strength of the relationships that these bankers have with their longstanding clients. I have personally participated in more than 175 in-person meetings with customers and prospects since the new teams joined. The receptivity from clients has been nothing short of fantastic. We have the capabilities to deliver for these clients, and we believe nearly all of them are looking to join the bank, thanks to our best-in-class customer service and financial strength. In fact, all but two of the client prospects I've personally met with are already customers or expected to become customers.

Speaker Change: I have personally participated in more than 175 in-person meetings with customers and prospects since the new teams joined. The receptivity from clients has been nothing short of fantastic.

Speaker Change: We have the capabilities to deliver for these clients, and we believe nearly all of them are looking to join the bank, thanks to our best-in-class customer service and financial strength.

Sam Sadoo: In fact, all but two of the client prospects I've personally met with are already customers or expected to become customers. We are thrilled to welcome these new clients to our bank. The teams hired in April generated more than $250 million of new deposit balances, with about 30 percent being non-interest bearing, at a blended cost of approximately 3 percent. of the more than 1,400 accounts that we've opened, approximately 20% have been funded in a meaningful way. This is as of July 23rd, 2024. The primary operating account nature of these relationships takes time to transition, but also signifies the quality and stickiness of these accounts.

Speaker Change: In fact, all but two of the client prospects I've personally met with are already customers or expected to become customers.

Samvir S. Sidhu: We are thrilled to welcome these new clients to our bank. The teams hired in April generated more than $250 million of new deposit balances, with about 30% being non-interest bearing at a blended cost of approximately 3%. Of the more than 1,400 accounts that we've opened, approximately 20% have been funded in a meaningful way. This is as of July 23rd, 2024.

Speaker Change: We are thrilled to welcome these new clients to our bank.

Speaker Change: The teams hired in April generated more than $250 million of new deposit balances with about 30% being non-interest bearing at a blended cost of approximately 3%.

Speaker Change: Of the more than 1,400 accounts that we've opened, approximately 20% have been funded in a meaningful way. This is as of July 23, 2024.

Samvir S. Sidhu: The primary operating account nature of these relationships takes time to transition, but it also signifies the quality and stickiness of these accounts. Just to put that account opening into context, on March 31, 2024, we had around 15,000 commercial customers.

Speaker Change: The primary operating account nature of these relationships takes time to transition but also signifies the quality and stickiness of these accounts.

Sam Sadoo: Just to put that account opening into context, on March 31st, 2024, we had around 15,000 commercial customers. So these new teams have increased our commercial account franchise by almost 10% in approximately 100 days of business development. It was recruited over the last year is over $2 billion, which we expect to convert over the next few quarters. Importantly, we remain on track for the newest recruited teams to be breakeven by the end of the first quarter of 2025, as we previously guided to, which is going to be an incredible feat in just a few short quarters.

Samvir S. Sidhu: So these new teams have increased our commercial account franchise by almost 10% in approximately 100 days of business development. The revenue recruited over the last year is over $2 billion, which we expect to convert over the next few quarters. Importantly, we remain on track for the newest recruited teams to be breakeven by the end of the first quarter of 2025, as we previously guided, which is going to be an incredible feat in just a few short. On slide 10, you can see that we generated $358 million of held for investment net loan growth in the quarter, an impressive 11% annualized growth rate at a time when industry loan demand is tepid.

Speaker Change: Just to put that account opening into context, on March 31st, 2024, we had around 15,000 commercial customers. So these new teams have increased our commercial account franchise by almost 10% in approximately 100 days of business development.

Speaker Change: recruited over the last year is over $2 billion, which we expect to convert over the next few quarters.

Speaker Change: Importantly, we remain on track for the newest recruited teams to be break-even by the end of the first quarter of 2025, as we previously guided to, which is going to be an incredible feat in just a few short quarters.

Sam Sadoo: On slide 10, you can see that we generated 358 million of held for investment net loan growth in the quarter and impressive 11% annualized growth rate at a time when industry loan demand is tepid. This production came from our corporate and specialized banking verticals. Our largest contributors were Fund Finance, Healthcare and Equipment Finance. Given the high commercial realistic concentration of regional banking peers, our relative low CRE concentration is proving to be a competitive advantage, and with the pullback of competitors, there may be select opportunities for us to add some volume in the back half of 2024 to support our best clients where we have a primary relationship and substantial deposits.

Speaker Change: On slide 10, you can see that we generated $358 million of held-for-investment net loan growth in the quarter, an impressive 11% annualized growth rate at a time when industry loan demand is tepid. This production came from our corporate and specialized banking verticals. Our largest contributors were fund finance, healthcare, and equipment finance.

Samvir S. Sidhu: This production came from our corporate and specialized banking verticals. Our largest contributors were fund finance, health care, and equipment. Given the high commercial real estate concentration of regional banking peers, our relative low CRE concentration is proving to be a competitive advantage.

Speaker Change: Given the high commercial real estate concentration of regional banking peers,

Samvir S. Sidhu: And with the pullback of competitors, there may be select opportunities for us to add some volume in the back half of 2024 to support our best clients where we have a primary relationship and substantial deposit. New loan production came in at highly attractive yields with floating rate loans pricing, all in around SOFR plus 300 basis. Our loan pipelines remain strong, and our outlook of 10 to 15% loan growth in 2024 remains intact.

Speaker Change: Our relative low CRE concentration is proving to be a competitive advantage, and with the pullback of competitors, there may be select opportunities for us to add some volume in the back half of 2024 to support our best clients where we have a primary relationship and substantial deposits.

Sam Sadoo: New loan production came in at highly attractive yields, with floating rate loans pricing all in around SOFR plus 300 basis points. Our loan pipelines remain strong, and our outlook of 10 to 15% loan growth in 2024 remains intact. We will remain disciplined and focus on selective full relationship franchise-enhancing loan growth. We again have visibility into a pipeline of roughly four to five hundred million dollars getting booked in the third quarter as we are seen and converting great opportunities across the franchise. Our new banking teams are also contributing to the pipeline. And as a note, these are highly granular relationships with a typical average balance of roughly only two to three million dollars.

Speaker Change: New loan production came in at highly attractive yields with floating rate loans pricing all-in around SOFR plus 300 basis points.

Speaker Change: Our loan pipelines remain strong, and our outlook of 10-15% loan growth in 2024 remains intact. We will remain disciplined and focus on selective, full-relationship, franchise-enhancing loan growth.

Samvir S. Sidhu: We will remain disciplined and focus on selective, full-relationship, franchise-enhancing loans. We again have visibility into a pipeline of roughly $400 to $500 million getting booked in the third quarter as we are seeing and converting great opportunities across the franchise. Our new banking teams are also contributing to the pipeline, and as a note, these are highly granular relationships with a typical average balance of roughly only $2 to $3 million. With that, I'd like to turn the call over to Phil to provide additional detail. Thanks, Sam. And good morning, everyone.

Speaker Change: We again have visibility into a pipeline of roughly $400 to $500 million.

Speaker Change: getting booked in the third quarter as we are seeing and converting great opportunities across the franchise. Our new banking teams are also contributing to the pipeline. And as a note, these are highly granular relationships with a typical average balance of roughly only two to $3 million.

Phil Watkins: With that, I'd like to turn the call over to Phil to provide additional detail.

Speaker Change: With that, I'd like to turn the call over to Phil to provide additional detail.

Phil Watkins: Thanks, Sam, and good morning, everyone. On slide 11, we have provided the components of our net interest income, which grew by over $7 million or about 5% in the quarter. Net interest margin expanded by 19 basis points to 329, outpacing what much of the banking industry is experiencing right now. Included in the expansion was an approximately five basis point impact of prepayment income on loans and securities. Even adjusting for this, we still would have experienced about 14 basis points of name expansion in the quarter. For the third quarter in a row, we had a decline in our interest expense, this quarter by five million dollars.

Philip Watkins: On slide 11, we have provided the components of our net interest income, which grew by over $7 million, or about 5%. The net interest margin expanded by 19 basis points to 329, outpacing what much of the banking industry is experiencing right now. Included in the expansion was an approximately five basis point impact of prepayment income on loans and security. Even adjusting for this, we still would have experienced about 14 basis points of NIM expansion in the. For the third quarter in a row, we had a decline in our interest expense this quarter by $5 million.

Philip Watkins: Thanks, Sam, and good morning, everyone. On slide 11, we have provided the components of our net interest income, which grew by over $7 million, or about 5% in the quarter.

Philip Watkins: Net interest margin expanded by 19 basis points to 329, outpacing what much of the banking industry is experiencing right now.

Philip Watkins: Included in the expansion was an approximately five basis point impact of prepayment income on loans and securities.

Philip Watkins: Even adjusting for this, we still would have experienced about 14 basis points of NIM expansion in the quarter.

Philip Watkins: For the third quarter in a row, we had a decline in our interest expense, this quarter by five million dollars.

Phil Watkins: We are the only bank in our proxy peer set that has reduced interest expense three quarters in a row. While period and loan balances were up $358 million in the quarter, net interest income was only impacted by an average loan balance increase of $223 million. In the third quarter, we will benefit from those additional balances that came on late in Q2. We also completed some strategic hedging activity in the quarter. We executed a forward starting swap converting an excess of $1 billion of our fixed rate liabilities to floating in order to reduce our overall asset sensitive position.

Philip Watkins: We are the only bank in our proxy peer set that has reduced interest expense three quarters in a row. While period-end loan balances were up $358 million in the quarter, net interest income was only impacted by an average loan balance increase of $223 million.

Philip Watkins: We are the only bank in our proxy peer set that has reduced interest expense three quarters in a row.

Philip Watkins: While period end loan balances were up $358 million in the quarter, net interest income was only impacted by an average loan balance increase of $223 million.

Philip Watkins: In the third quarter, we will benefit from those additional balances that came on late. We also completed some strategic hedging activity in the quarter. We executed a forward starting swap converting in excess of $1 billion of our fixed rate liabilities to floating in order to reduce our overall asset sensitive. The transaction will impact NIM by an estimated one basis point for full year 2024 with an estimated four basis point impact in Q.

Philip Watkins: In the third quarter, we will benefit from those additional balances that came on late in Q2.

Philip Watkins: We also completed some strategic hedging activity in the quarter. We executed a forward starting swap converting in excess of $1 billion of our fixed rate liabilities to floating in order to reduce our overall asset sensitive position.

Phil Watkins: The transaction will impact NIM by an estimated one basis point for full year 2024, with an estimated four basis point impact in Q4. While our sensitivity position has been a creative, we believe it was prudent to continue bringing our interest rate positioning closer to neutral. With continued positive catalysts, we remain confident in our ability to achieve our previous NIM target guidance, with Q4 being impacted by the hedging I just discussed.

Philip Watkins: The transaction will impact NIM by an estimated one basis point for full year 2024 with an estimated four basis point impact in Q4.

Philip Watkins: While our sensitivity position has been accretive, we believe it was prudent to continue bringing our interest rate positioning closer to neutral. With continued positive catalysts, we remain confident in our ability to achieve our previous NIM target guidance, with Q4 being impacted by the hedging I just discussed. Moving on to slide 12, we'll discuss some of the components of our second quarter expenses; our core non-interest expenses increased to $101 million in the second quarter, roughly $10 million in compensation for Technology and Business Development.

Philip Watkins: While our sensitivity position has been accretive, we believe it was prudent to continue bringing our interest rate positioning closer to neutral.

Philip Watkins: With continued positive catalysts, we remain confident in our ability to achieve our previous NIMH target guidance with Q4 being impacted by the hedging I just discussed.

Phil Watkins: Moving on to slide 12, we'll discuss some of the components of our second quarter expenses. Our core non-interest expenses increased to $101 million in the second quarter. The primary - We did roughly $10 million in compensation and technology business development.

Philip Watkins: Moving on to slide 12, we'll discuss some of the components of our second quarter expenses.

Philip Watkins: Our core non-interest expenses increased to $101 million in the second quarter.

Philip Watkins: contributed roughly $10 million in compensation

Phil Watkins: We were able to more than offset the costs associated with the new teams this quarter from a gain we realized on a purchase of an equity investment, equity method investment at a discount in the quarter. Other drivers of the increase in core expenses in the quarter included about $1.2 million of increased reserves for unfunded loan commitments from increased loan balances, which we recorded non-interest expense, and about a million dollars of increased expense in connection with our consumer HFS program, which came with associated revenue. We would note that even with this higher level of non-interest expense, our core non-interest expense as a percent of average assets is still top core tile among our regional bank peers.

Philip Watkins: We were able to more than offset the cost associated with the new teams this quarter from a gain we realized on a purchase of an equity method investment at a discount during the quarter. Other drivers of the increase in core expenses in the quarter included about $1.2 million of increased reserves for unfunded loan commitments from increased loan balances, which we record in non-interest expense, and about a million dollars of increased expenses in connection with our consumer HFS program, which came with associated revenue.

Philip Watkins: Technology and Business Development.

Philip Watkins: We were able to more than offset the costs associated with the new teams this quarter from a gain we realized on a purchase of an equity method investment at a discount in the quarter.

Philip Watkins: Other drivers of the increase in core expenses in the quarter included about $1.2 million of increased reserves for unfunded loan commitments from increased loan balances, which we record in non-interest expense.

Philip Watkins: and about a million dollars of increased expense in connection with our consumer HFS program, which came with associated revenue.

Philip Watkins: We would note that even with this higher level of non-interest expense, our core non-interest expense as a percent of average assets is still top quartile among our regional bank peers. We believe it is prudent to invest in a business in a disciplined way to generate long-term shareholder value, and we continue to invest in our current and future team members and technology infrastructure. Finally, as we previously stated, the investment in the new teams will temporarily elevate our efficiency ratio for a few quarters, but we remain on track to generate incremental revenues to fully offset these expenses within 12 months of their onboarding.

Philip Watkins: We would note that even with this higher level of non-interest expense, our core non-interest expense as a percent of average assets is still top quartile among our regional bank peers.

Phil Watkins: We believe it is prudent to invest in the business in a disciplined way to generate long-term shareholder value, and we continue to invest in our current and future team member and technology infrastructure.

Philip Watkins: We believe it is prudent to invest in the business in a disciplined way to generate long-term shareholder value, and we continue to invest in our current and future team member and technology infrastructure.

Phil Watkins: Finally, as we previously stated, the investment in the new teams will temporarily elevate our efficiency ratio for a few quarters, but we remain on track to generate incremental revenues to fully offset these expenses within 12 months of their onboarding. We are confident in our ability to return to a mid-40s efficiency ratio over the medium term.

Philip Watkins: Finally, as we previously stated, the investment in the new teams will temporarily elevate our efficiency ratio for a few quarters, but we remain on track to generate incremental revenues to fully offset these expenses within 12 months of their onboarding.

Philip Watkins: We are confident in our ability to return to a mid 40s efficiency ratio over the medium term. On slide 13, we focus on a key driver of shareholder value, tangible book value per share growth. Our tangible book value exceeded $50 this quarter, ending at nearly $51 per share, and we still have more than $4 per share of AOCI anticipated to be recovered over time. Tangible book value per share grew by an impressive 20% year over year.

Philip Watkins: We are confident in our ability to return to a mid-40s efficiency ratio over the medium term.

Phil Watkins: On slide 13, we focus on a key driver of shareholder value, tangible book value per share graph. Our tangible book value exceeded $50 this quarter, ending at nearly $51 per share, and we still have more than $4 per share of AOCI anticipated to be recovered over time. Tangible book value per share grew by an impressive 20% year over year.

Philip Watkins: On slide 13, we focus on a key driver of shareholder value, tangible book value per share growth.

Philip Watkins: Our tangible book value exceeded $50 this quarter, ending at nearly $51 per share, and we still have more than $4 per share of AOCI anticipated to be recovered over time.

Philip Watkins: This compares extremely favorably to our peers with a comparable number in the low single digits. Our 15% CAGR over the last five years ranks in the top five among all US banks with assets between $10 and $100 billion. We expect to continue to deliver these types of growth metrics over time. Moving to slide 14, we are thrilled to announce that just halfway through the year, we've achieved our 7.5% TCE to TA ratio target.

Philip Watkins: Tangible book value per share grew by an impressive 20% year over year. This compares extremely favorably to our peers with a comparable number in the low single digits.

Phil Watkins: This compares extremely favorably to our peers with a comparable number in the low single intelligence. Our 15% caker over the last five years ranks in the top five among all U.S. banks with assets between $10 and $100 billion. We expect to continue to deliver these types of growth metrics over time.

Philip Watkins: Our 15% CAGR over the last five years ranks in the top five among all U.S. banks with assets between $10 and $100 billion.

Philip Watkins: We expect to continue to deliver these types of growth metrics over time.

Phil Watkins: Moving to slide 14, we are thrilled to announce that just halfway through the year we've achieved our 7.5% TCE to TA ratio target. This ratio increased by approximately 40 basis points in the quarter and is increased by approximately 170 basis points over the last year. Our risk-based capital levels continued to be very strong, as evidenced by CET1 of 12.8%, providing us with ample capacity to deploy risk-based capital in strategic, franchise-enhancing loan growth.

Philip Watkins: Moving to slide 14, we are thrilled to announce that just halfway through the year, we've achieved our 7.5% TCE to TA ratio target.

Philip Watkins: This ratio increased by approximately 40 basis points in the quarter and has increased by approximately 170 basis points over the last year. Our risk-based capital levels continued to be very strong, as evidenced by CET1 of 12.8%, providing us with ample capacity to deploy risk-based capital to strategic, franchise-enhancing loan growth. Our board of directors authorized a share repurchase plan for approximately 500,000 shares last month. This authorization was for an equal number of shares unused under the previous program that expired last September.

Philip Watkins: This ratio increased by approximately 40 basis points in the quarter and has increased by approximately 170 basis points over the last year.

Philip Watkins: Our risk-based capital levels continued to be very strong, as evidenced by CET1 of 12.8%, providing us with ample capacity to deploy risk-based capital to strategic franchise-enhancing loan growth.

Phil Watkins: Our Board of Directors authorized a share repurchase plan for approximately 500,000 shares last month. This authorization was for an equal number of shares unused under the previous program that expired last September. We continue to believe the most valuable form of capital deployment for the bank is franchise-enhancing organic growth. And we have tremendous opportunities that we are currently executing on. We will continue to closely monitor the best opportunities to deploy capital for our shareholders, and now once again have a share repurchase program in our toolkit.

Philip Watkins: Our Board of Directors authorized a share repurchase plan for approximately 500,000 shares last month.

Philip Watkins: This authorization was for an equal number of shares unused under the previous program that expired last September .

Philip Watkins: We continue to believe the most valuable form of capital deployment for the bank is franchise-enhancing organic growth, and we have tremendous opportunities that we are currently executing. We will continue to closely monitor the best opportunities to deploy capital for our shareholders and now, once again, have a share repurchase program in our tool kit. Turning to slide 15, we remain focused on maintaining robust levels of liquidity. While we did utilize some excess cash balances to fund loan growth and reduce higher-cost deposits, our liquidity ratios remain robust. Our coverage of immediately available liquidity to uninsured deposits is extremely strong at 193%.

Philip Watkins: We continue to believe the most valuable form of capital deployment for the bank is franchise-enhancing organic growth.

Philip Watkins: and we have tremendous opportunities that we are currently executing on.

Philip Watkins: We will continue to closely monitor the best opportunities to deploy capital for our shareholders and now once again have a share repurchase program in our toolkit.

Phil Watkins: Turning to slide 15, we remain focused on maintaining robust levels of liquidity while we did utilize some excess cash balances to fund loan growth and reduce higher-cost deposits. Our liquidity ratios remain robust. Our coverage of immediately available liquidity to uninsured deposits is extremely strong at 193%. Our loan to deposit ratio continues to provide us funding flexibility at only 75% compared to peers at 89%. Our borrowings as a percent of total liabilities declined from 8% to 7% in the quarter and remains in line with peers.

Philip Watkins: Turning to slide 15, we remain focused on maintaining robust levels of liquidity.

Philip Watkins: While we did utilize some excess cash balances to fund loan growth and reduce higher cost deposits, our liquidity ratios remain robust.

Philip Watkins: Our coverage of immediately available liquidity to uninsured deposits is extremely strong at 193%.

Philip Watkins: Our loan to deposit ratio continues to provide us funding flexibility at only 75% compared to peers at 89%. Our borrowings as a percent of total liabilities declined from 8% to 7% in the quarter and remains in line with. Moving to slide 16, NPAs as a percentage of total assets ended the quarter at 23 basis points and remain low. We did see a modest uptick in the quarter off of an extremely low base. However, our 23 basis point NPA ratio is below the 43 basis points of our regional bank.

Philip Watkins: Our loan-to-deposit ratio continues to provide us funding flexibility at only 75% compared to peers at 89%.

Philip Watkins: Our borrowings as a percent of total liabilities declined from 8% to 7% in the quarter and remains in line with peers.

Phil Watkins: Moving to slide 16, NPAs as a percentage of total assets ended the quarter at 23 basis points and remain low. We did see a modest uptick in the quarter off of an extremely low base. Our 23 basis point NPA ratio is below the 43 basis points of our regional bank peers. Additionally, our level of criticized and classified loans was down for the second consecutive quarter by about $35 million, or 7%. Q2 levels are down 18% from the level we had in the fourth quarter of 2023.

Philip Watkins: Moving to slide 16, NPAs as a percentage of total assets ended the quarter at 23 basis points and remained low. We did see a modest uptick in the quarter off of an extremely low base.

Philip Watkins: Our 23 basis point NPA ratio is below the 43 basis points of our regional bank peers.

Philip Watkins: Additionally, our level of criticized and classified loans was down for the second consecutive quarter by about $35 million or 7%. Q2 levels are down 18% from the level we had in the fourth quarter of 2023. Consumer installment HFI loans now account for about 6% of total HFI loans, and Office Cree, a perceived area of higher risk, accounts for only about 1% of our loans.

Philip Watkins: Additionally, our level of criticized and classified loans was down for the second consecutive quarter by about $35 million, or 7%.

Philip Watkins: Q2 levels are down 18% from the level we had in the fourth quarter of 2023.

Phil Watkins: Consumer installment HFI loans now account for about 6% of total HFI loans, and office Cree, a perceived area of higher risk, accounts for only about 1% of our loan portfolio.

Philip Watkins: Consumer installment HFI loans now account for about 6% of total HFI loans. And Office Cree, a perceived area of higher risk, accounts for only about 1% of our loan portfolio.

Sam Sadoo: And with that, I'll now pass the call back over to Sam before we open up the line for.

Philip Watkins: And with that, I'll now pass the call back over to Sam before we open up the line for, Thanks, Phil. On slide 17, I wanted to wrap up with a few concluding themes. Firstly, we. Next, our net interest margin expanded, and this trend is outpacing the broader industry because of the opportunities we have on both the asset and liability sides of our balance sheet. Fourth, our deposit transformation story continues to progress incredibly well. The reduction in wholesale CDs is largely complete.

Philip Watkins: And with that, I'll now pass the call back over to Sam before we open up the line for questions.

Sam Sadoo: Thanks, Phil.

Sam Sadoo: On slide 17, I wanted to wrap up with a few concluding themes. Firstly, be. In relation. Next, our net interest margin expanded, and this trend is outpacing the broader industry because of the opportunities we have on both the asset and liability sides of our balance sheet. Fourth, our deposit transformation story continues to progress incredibly well. The reduction in wholesale CDs is largely complete. The next chapter of our deposit transformation is to continue improving the cost and granularity and mix of our deposit base. We're well on our way, but have a significant opportunity ahead of us.

Samvir S. Sidhu: Thanks, Phil. On slide 17, I wanted to wrap up with a few concluding themes.

Samvir S. Sidhu: in relationships.

Samvir S. Sidhu: Next, our net interest margin expanded and this trend is outpacing the broader industry because of the opportunities we have on both the asset and liability sides of our balance sheet.

Speaker Change: Fourth, our deposit transformation story continues to progress incredibly well. The reduction in wholesale CDs is largely complete. The next chapter of our deposit transformation is to continue improving the cost and granularity and mix of our deposit base.

Samvir S. Sidhu: The next chapter of our deposit transformation is to continue improving the cost, granularity, and mix of our deposits. We're well on our way, but we have a significant opportunity ahead of us. The momentum from the new teams is exceptional, and we'll look for this to significantly enhance the effort.

Sam Sadoo: The momentum from the new teams is exceptional, and we'll look for this to significantly enhance the efforts. Next, as Jay and Phil previously noted, our tangible book value increased over $50 to over $50 this quarter, growing 20% year over year. And sixth, we have achieved the capital targets we previously stated. We believe operating with these at these higher levels of capital is prudent in an uncertain environment and are excited for the opportunity to deploy the incremental capital we are generating to further drive shareholder value.

Speaker Change: We're well on our way, but have a significant opportunity ahead of us. The momentum from the new teams is exceptional, and we'll look for this to significantly enhance the efforts.

Samvir S. Sidhu: Next, as Jay and Phil previously noted, our tangible book value increased from over 50 to over $50 this quarter, growing 20% year over year. Sixth, we have achieved the capital targets we've previously stated. We believe operating at these higher levels of capital is prudent in an uncertain environment and are excited for the opportunity to deploy the incremental capital we are generating to further drive shareholder value. And finally, we added a share repurchase program to our capital.

Speaker Change: Next, as Jay and Phil previously noted, our tangible book value increased.

Jay: to over $50 this quarter, growing 20% year over year.

Speaker Change: Sixth, we have achieved the capital targets we previously stated.

Speaker Change: We believe operating at these higher levels of capital is prudent in an uncertain environment and are excited for the opportunity to deploy the incremental capital we are generating to further drive shareholder value. And finally, we added a share repurchase program to our capital toolkit.

Sam Sadoo: And finally, we added a share repurchase program to our capital toolkit.

Brianna: With that, we'd be happy to take any questions. Thank you. We will now open the line up for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand. And join the queue. If you would like to withdraw your question, please press star one again.

Samvir S. Sidhu: With that, we'd be happy to take any questions. Thank you. We will now open the lineup for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, please press star 1 again. If you are called upon to ask your question and are listening via the loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: With that, we'd be happy to take any questions.

Speaker Change: Thank you. We will now open the line up for questions.

Speaker Change: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, please press star 1 again.

Brianna: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asked your question.

Speaker Change: If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

Peter Winter: Our first question comes from the line of Peter Winter with DA Davidson. Please go ahead.

Brianna: Our first question comes from the line of Peter Winter with D.A. Davidson. Please go ahead. Thanks. Good morning.

Speaker Change: Our first question comes from the line of Peter Winter with D.A. Davidson. Please go ahead.

Peter Winter: Thanks.

Peter J. Winter: It was nice to see loan growth after five quarters of loans declining. Can you just talk about the loan composition and the kind of drivers for loan growth going forward? Yeah, Peter, good morning.

Peter Winter: Good morning. It was nice to see loan growth after five quarters of the loans declining.

Peter J. Winter: Thanks. Good morning. It was nice to see loan growth after five quarters of the loans declining. Can you just talk about the loan composition and kind of drivers to loan growth going forward?

Sam Sadoo: Can you just talk about the loan composition and kind of drive us to loan growth going forward? Yeah, hey, Peter. Good morning. Yes, I know our team members across the organization were excited. You know, as we talked about last quarter to really be able to restart all a lot of that franchise relationship-based loan growth. As you saw in the materials in the quarter, it was really driven, you know, in large part by our corporate and specialized verticals. So really seeing good activity across that organization, but the largest components coming from fund finance, which is both lender finance and capital call equipment finance, health care.

Unknown Executive: Yes, I know our team members across the organization were excited, you know, as we talked about last quarter, to really be able to restart a lot of that franchise relationship-based loan growth. You know, as you saw in the materials, in the quarter, it was really driven, you know, in large part, by our corporate and specialized verticals. So really seeing good activity, you know, across that organization, but the largest components coming from fund finance, which is both lender finance and capital call, equipment, finance, healthcare, but we really saw some contributions across that portfolio.

Speaker Change: Yeah, hey, Peter, good morning. Yes, I know our team members across the organization were excited, you know, as we talked about last quarter to really be able to restart a lot of that franchise relationship based loan growth.

Speaker Change: You know, as you saw in the materials, in the quarter, it was really driven, you know, in large part by our corporate and specialized verticals.

Speaker Change: So really seeing good activity, you know, across that organization, but the largest components coming from

Unknown Executive: And then when we look forward, you know, candidly, it's probably more of the same. We're seeing good opportunities across that entire franchise. Sam mentioned, you know, we could look for, you know, for some of our strongest relationships for a little bit of commercial real estate in the back half of the year.

Speaker Change: Fund Finance, which is both Lender Finance and Capital Call, Equipment Finance, Health Care, but we really saw some contributions across that portfolio.

Sam Sadoo: But we really saw some contributions across that portfolio. And then when we look forward, you know, candidly, it's probably more of the same. We're seeing good opportunities across that entire franchise. Sam mentioned, you know, we could look for, you know, for some of our strongest relationships for a little bit of commercial real estate in the back half of the year. And then I'd say the one change from the second quarter looking forward is obviously the new teams that were onboarded. While again there predominantly deposit, you know, focus they are obviously credit needs for, you know, for holistic relationships and instances as well.

Speaker Change: And then when we look forward, you know, candidly, it's probably more of the same. We're seeing good opportunities across that entire franchise.

Speaker Change: Sam mentioned, you know, we could look for, you know, for some of our strongest relationships for a little bit of commercial real estate in the back half of the year. And then I'd say the one change from the second quarter looking forward is obviously the new teams that were onboarded. While again, they're predominantly deposit, you know, focus, they are obviously credit needs for, you know, for holistic relationships and instances as well. So we will look for them to contribute to some of that growth in the second half of the year.

Unknown Executive: And then I'd say the one change from the second quarter looking forward is obviously the new teams that were onboarded, while again, they're predominantly deposit focus, they are, they're obviously credit needs for, you know, for holistic relationships and instances as well. So we will look for them to contribute to some of that growth in the second half of the year.

Sam Sadoo: So we will look for them to contribute to some of that growth in the second half of the year.

Samvir S. Sidhu: And, you know, just on the 10 banking teams, could you talk about whether you need any additional products or services to meet customer needs? And, you know, with the new team supposed to break even by the end of the first quarter next year, what type of deposit growth do you need to achieve that? Hey Peter, this is Sam.

Peter Winter: You know, just on the 10 banking teams, you know, could you talk about do you need any additional products or services to meet the customer needs? And, you know, with the new teams both to break even by the end of the first quarter next year, what type of deposit growth do you need to achieve that? Hey, here.

Speaker Change: Got it. And you know, just on the 10 banking teams,

Speaker Change: You know, could you talk about, do you need any additional products or services to meet the customer needs? And, you know, with the new team supposed to break even by the end of the first quarter next year, what type of deposit growth do you need to achieve that?

Samvir S. Sidhu: Good morning, and I apologize if I missed part of the question; please let me know at the end. We had a little bit of a break in our, at least on our side here. But, you know, I believe you asked about breakeven for the new deposit teams and, you know, just to sort of recap, we have over 1000 accounts; just a small amount are funded with material balances, and we continue to be adding significant account growth as well as unfunded deposit accounts being funded and new accounts being opened at a faster pace than even that.

Phil Watkins: Sam, good morning, and I apologize if I missed part of the question. Please let me know at the end. We had a little bit of a break in our, at least on our side here, but, you know, I believe you asked about break even of the new new deposit teams and, you know, just to sort of recap, you know, we've over 1000 accounts, just a small amount are funded with material balances, and we continue to be adding, you know, significant account growth, as well as unfunded deposit accounts being funded, and new accounts been opened to faster pace than even that.

Speaker Change: Hey Peter, this is Sam. Good morning and I apologize if I missed part of the question please let me know at the end. We had a little bit of a break, at least on our side here.

Speaker Change: But, you know, I believe you asked about breakeven of the new deposit teams. And, you know, just to sort of recap.

Speaker Change: You know, we've over a thousand accounts, just a small amount are.

Speaker Change: are funded with material balances. And we continue to be adding significant account growth as well as unfunded deposit accounts being funded and new accounts being opened at a faster pace than even that.

Samvir S. Sidhu: Last quarter, if you recall, we shared a little bit of a matrix that had, you know, sort of deposits on the left side and cost deposit savings on the right side. I think that gives you a really good sense. It's conservative from the perspective that it's really just focusing on interest expense reduction as the driver of revenue growth, as opposed to also, you know, including, as you heard from Phil, there's a little bit of interest income as well that's coming.

Phil Watkins: Last quarter, if you recall, we shared a little bit of a matrix, which had, you know, sort of deposits, you know, on the left side and cost deposit savings on the right side. I think that gives you a really good sense. It's conservative from the perspective that it's really just focusing on interest expense reduction as the driver of revenue growth, as opposed to also, you know, including, as you heard from Phil, there's a little bit of interest income as well. That's coming. You know, I think we have an example. We had about 30 million or so, just in the second quarter that came from new relationships associated with the new teams. So, long way of saying that, you know, the break even is expected to be closer to the top right end of that matrix, which is lower on the deposit range, because we are currently seeing, based upon the information we have, both in what has been booked as well as the pipeline, about 30% of deposits being non-interest bearing and the blended cost being at or around 3%.

Speaker Change: Last quarter, if you recall, we shared a little bit of a matrix which had, you know, sort of deposits, you know, on the left side and cost of deposit savings on the right side.

Speaker Change: I think that gives you a really good sense. It's conservative from the perspective that it's really just focusing on interest expense reduction as the driver of revenue growth.

Speaker Change: As opposed to also, you know, including, as you heard from Phil, there's a little bit of interest income as well that's coming. You know, I think as an example, we had about 30 million or so just in the second quarter that came from new relationships associated with the new teams.

Samvir S. Sidhu: You know, as an example, we had about 30 million or so just in the second quarter that came from new relationships associated with the new teams. So, the long way of saying that, you know, the breakeven is expected to be closer to the top right end of that matrix, which is lower on the deposit range because we are currently seeing, based upon the information we have, both in what has been booked as well as the pipeline, about 30% of deposits being non-interest bearing and the blended costs being at or around 3%. I got it.

Speaker Change: So, long way of saying that, you know, the breakeven is expected to be closer to the top right end of that matrix, which is lower on the deposit range, because we are currently seeing, based upon the information we have, both what has been booked as well as the pipeline.

Speaker Change: About 30% of deposits being non-interest bearing and the blended costs being at or around 3%.

Peter Winter: Got it.

Peter Winter: Just one last question.

Peter Winter: Just, you know, expenses came in a little bit higher than I was forecasting this quarter.

Unknown Executive: Just one last question, expenses came in a little bit higher than I was forecasting this quarter. Do you still think you can get to near a 50% efficiency ratio by year end? Hey Peter.

Speaker Change: Got it. Just one last question. Expenses came in a little bit higher than I was forecasting this quarter. Do you still think you can get to near a 50% efficiency ratio by year-end?

Phil Watkins: Do you still think you can get to near a 50% efficiency ratio? By your end.

Phil Watkins: Hey, Peter. Yeah, we're still targeting that, but as you can appreciate, there's a lot of moving pieces with these investments. And, you know, as Sam mentioned, there's a number of steps in taking market share. And so the exact timing, you know, can be challenging to predict. So, you know, while obviously the timing could move around by a quarter, we think we're, you know, going to be, we're making good progress towards that.

Unknown Executive: Yeah, we're still targeting that. But, as you can appreciate, there are a lot of moving pieces with these investments. And, you know, as Sam mentioned, there are a number of steps to taking market share. And so the exact timing, you know, can be challenging to predict.

Speaker Change: Hey, Peter. Yeah, we're still targeting that. But as you can appreciate, there's a lot of moving pieces with these investments. And, you know, as Sam mentioned, it's there's a number of steps in taking market share. And so the exact timing, you know, can be challenging to predict.

Speaker Change: So, you know, while obviously the timing could move, you know, around by a quarter, we think we're, you know, going to be, we're making good progress towards that. And then that ultimate step down, as we've talked about towards a mid 40s efficiency ratio over the medium term.

Peter Winter: And then that ultimate step down, as we talked about, towards a mid 40s efficiency ratio over the medium term. Got it.

Steve Moss: Our next question comes from the line of Steve Moss with Raymond James. Please go ahead. Good morning.

Peter J. Winter: Got it. Thanks, Phil.

Speaker Change: Our next question comes from the line of Steve Moss with Raymond James. Please go ahead.

Unknown Executive: So, you know, while obviously, the timing could move, you know, around by a quarter, we think we're, you know, going to be making good progress towards that. And then that ultimate step down, as we've talked about, towards a mid 40s efficiency ratio over the medium. Got it. Thanks so much.

Unknown Executive: Our next question comes from the line of Steve Moss with Raymond James. Please go ahead. Good morning. Good morning, Raymond.

Steve Moss: Good morning, Steve. Just going back to the deposit here. Sam, just curious, you know, if you just talk a little bit about, well, maybe just starting first with the, you know, potential for interest rate cuts here. Just curious how you guys are thinking about your deposit data. If we get some cuts going forward. Sure. I'd be happy to take that. So Steve, I think our accumulated deposit beta blending to especially some of the positive mixed shifts we've seen over the last year really peaked in somewhere in that 55 to 60% range. You know, we'd expect something similar, you know, on the way down from a deposit perspective.

Stephen M. Moss: Good morning.

Stephen M. Moss: Just going back to the deposits here. Sam, just curious, you know, if you could just talk a little bit about, well, maybe just start with the, you know, potential for interest rate cuts here. Just curious how you guys are thinking about your deposit beta if we get some cuts going forward. Sure, I'd be happy to take that.

Steve: Morning. Morning, Steve. Just going back to the deposits here. Sam, just curious, you know, if you just talk a little bit about well, maybe just start first with the, you know, potential for interest rate cuts here. Just curious how you guys are thinking about your deposit data if we get some cuts going forward.

Philip Watkins: So Steve, I think our cumulative deposit beta lending to, especially some of the positive mix shifts we've seen over the last year really peaked at somewhere in that 55 to 60% range. You know, we'd expect something similar on the way down from a deposit perspective. The X factor is the continued mix shift that we're also seeing.

Samvir S. Sidhu: Sure, I'd be happy to take that. So Steve, I think our cumulative deposit beta lending to especially some of the positive mix shifts we've seen over the last year really peaked at somewhere in that 55 to 60% range.

Steve: We'd expect something similar on the way down from a deposit perspective. The X factor is the continued mix shift that we're also seeing. So independent of a rate cut, we're actually seeing our deposit costs go down. In fact, we've seen our interest expense reduced three quarters in a row, as an example.

Sam Sadoo: The X factor is as the continued mixed shift that we're also seeing. So, independent of a rate cut, we're actually seeing our deposit costs go down. In fact, we've seen our interest expense reduced three quarters in a row. Has an example.

Steve Moss: Okay, great.

Philip Watkins: So independent of a rate cut, we're actually seeing our deposit costs go down. In fact, we've seen our interest expense reduced three quarters in a row, as an example. Okay, great.

Sam Sadoo: And then in terms of just the ongoing remixing, just curious about, you know, where your broker deposits levels are these days, Sam, and just kind of, you know, how you're thinking about the goal as the year progresses. Sure, you know, so Steve, as I walk through, you know, as we look forward, we talked about from a remix perspective, our primary focus is reducing deposits that are higher costs and also in some case classified, you know, as brokered. So, you know, our ability, our desire is to remix these deposits, you know, as the in the coming quarters, in addition to sort of the higher cost, more concentrated deposits that we talked about before.

Steve: Okay, great. And then in terms of just the ongoing remixing, just curious about, you know, where your broker deposit levels are these days, Sam, and just kind of, you know, how you're thinking about the goal as the year progresses.

Philip Watkins: And then, in terms of just the ongoing remixing, just curious about, you know, where your broker deposit levels are these days, Sam, and just kind of, you know, how you're thinking about the goal as the year progresses. Sure, you know, so, Steve, as I walk through, you know, as we look forward, as we talked about from a remix perspective, our primary focus is reducing deposits that are higher cost and, also, in some cases, classified, you know, as "brokered."

Samvir S. Sidhu: Sure, you know, so, Steve, as I walk through, you know, as we look forward, we talked about from a remix perspective, our primary focus is reducing deposits that are higher cost and also in some case, classified, you know, as brokered. So, you know, our ability, our desire is to remix these deposits.

Philip Watkins: So, you know, our ability, and our desire is to remix these deposits, you know, as the in the coming quarters, in addition to sort of the higher-cost, more concentrated deposits that we talked about before. At the end of the day, what we're seeing is, you know, a 30% non-interest-bearing mix within the new customers that are being onboarded, and they're being used to, you know, remix 100% interest-bearing deposits, as an example, which includes our broker deposits. Our broker deposits are expected to increase slightly this quarter, but they will, you know, they have peaked, and they will plateau, and we'll be reducing them significantly in the coming quarters. That's our expectation.

Samvir S. Sidhu: as the in the coming quarters in addition to sort of the higher cost more concentrated deposits that we talked about before.

Sam Sadoo: At the end of the day, what we're seeing is, you know, a 30% non-interest bearing mix within the new customers that are being on boarded, and they're being used to, you know, remix 100% interest-bearing deposits as an example, which includes our broker deposits. Our broker deposits are expected to increase slightly this quarter, but they will, you know, they have peaked and they will be plateaued and will be reducing them significantly in the coming quarters as that's our expectation.

Philip Watkins: And if I can sneak one more in here, I just wanted to clarify, I wasn't sure if you said in your prepared remarks, Sam, about the 30% non-disparing deposit mix, if that's kind of what you guys are expecting going forward, or if it's going to be a little bit higher. So, one clarification. Sure. So we were, you know, I think we guided last quarter. We talked about at least in range with our current mix, which is 25%. From an overall franchise perspective, we're seeing it coming in a little bit higher, which is better than expected.

Samvir S. Sidhu: At the end of the day, what we're seeing is a 30% non-interest-bearing mix within the new customers that are being onboarded, and they're being used to remix 100% interest-bearing deposits, as an example, which includes our broker deposits.

Samvir S. Sidhu: Our broker deposits are expected to increase slightly this quarter, but they have peaked and they will be and plateaued and we'll be reducing them significantly in the coming quarters. That's our expectation.

Steve Moss: Great, and if I can sneak one more in here, I just wanted to clarify; I wasn't sure if you said in your prepared mark, Sam, about the, you know, on the 30% non-interest-bearing deposit mix, if that's kind of what you guys are expecting going forward, if it's going to be a little bit higher.

Speaker Change: Okay, great. And if I can sneak one more in here, I just wanted to clarify, I wasn't sure if you said in your prepared remarks, Sam, about the, you know, on the 30% non-disparing deposit mix, if that's kind of what you guys are expecting going forward, or if it's going to be a little bit higher.

Sam Sadoo: So one clarification there. Sure, so we were, you know, I think we guided last quarter. We talked about at least in range with our current mix, which is 25% you know, an overall franchise perspective. We're seeing it coming in a little bit higher, which is better than expect expectations. Having said that, this is just on a couple hundred million dollars of balances, so we don't want to over read.

Speaker Change: So, one clarification there.

Samvir S. Sidhu: Sure, so we were you know, I think we guided last quarter we talked about at least in range with our current mix Which is 25% you know of an overall franchise perspective. We're seeing it coming in a little bit higher

Speaker Change: which is better than expect expectations having said that this is just on

Steve Moss: I think the main of the main, you know, focus what's interesting from a tailwind perspective is that if these are being used at 25% or 30 or 33% non interest bearing to remix interest bearing deposits, that's going to have a tailwind on our mix shift. Okay, great.

Speaker Change: A couple hundred million dollars of balances, so we don't want to over read. I think that the main of the main.

Speaker Change: focus. What's interesting from a tailwind perspective is that if these are being used at 25% or 30% or 33% non-interest bearing to remix interest bearing deposits, that's going to have a tailwind on our mixed shift.

Philip Watkins: Having said that, this is just on a couple hundred million dollars of balances. So we don't want to overread. I think that the main, the main, you know, focus, what's interesting from a tailwind perspective is that if these are being used at 25%, or 30, or 33%, non interest-bearing to remix interest-bearing deposits, that's going to have a tailwind, you know, on I appreciate all the callers. Thank you very much. Our next question comes from David Bishop with HubD Group.

Steve Moss: I appreciate all the colors. Thank you very much.

Speaker Change: Okay, great. I appreciate all the color. Thank you very much.

David Bishop: Our next question comes from the line of David Bishop with Hubby Group, please go ahead. Yeah, good morning, gentlemen. Hey, Sam, I'm talking to you. You mentioned maybe in a some delay or you know, the longer process and sort of onboarding the new clients and such.

Speaker Change: Our next question comes from the line of David Bishop with Hupty Group. Please go ahead.

David Jason Bishop: Please go ahead. Yeah, good morning, Kelly. Hey, Sam, I wonder if you could talk about the U.S. and maybe some delay or, you know, the longer process and sort of onboarding new clients and such. Just curious, from an outsider perspective, what is the average lead time and lag time to sort of get these new clients onboarded that may be longer than maybe an outsider may expect? Sure, absolutely, Dave. Good morning.

David Bishop: Yeah, good morning, gentlemen.

David Bishop: Hey, Sam, I wonder if you could talk in a U.S. and...

Speaker Change: Maybe, you know, some delay or, you know, the longer process of sort of onboarding the new clients and such.

David Bishop: Just curious, you know, from an outsider perspective, what sort of an average lead time and last time to sort of get these new clients on board is that that may be longer than maybe an outsider may expect. Sure, absolutely, Dave. Good morning. So I think what's interesting is I think we know as individuals, if we had to change our bank account, you know, from bank X to bank Y, you have to sort of think about your W2, your payroll, your auto pays, etc. For commercial customers, that's a lot more complicated because there are different sources of revenue and a lot more complex payables, as well as recurring costs.

Speaker Change: Just curious, you know, from an outsider perspective, what, what sort of the average lead time and lag time to sort of get these, these new clients on boarded that, that may.

Samvir S. Sidhu: So I think what's interesting is that, you know, as individuals, if we had to change our bank account, you know, from bank X to bank Y, you have to sort of think about your W-2, your payroll, your auto payments, etc. For commercial customers, that's a lot more complicated, because there are different sources of revenue and a lot more complex payables, as well as recurring costs. And then you add on some sort of technological complexities, as well as, in some cases, cash management and check deposits.

Speaker Change: be longer than maybe an outsider may expect.

Speaker Change: Sure, absolutely, Dave. Good morning. So

Speaker Change: I think what's interesting is, I think we know as individuals, if we had to change our our bank account, you know, to from Bank X to Bank Y.

Speaker Change: You have to sort of think about your W-2, your payroll, your auto pays, et cetera. For commercial customers, that's a lot more complicated because there are different sources of revenue and a lot more complex payables as well as recurring costs.

Sam Sadoo: And then you add on sort of technology complexities, as well as in some cases, cash management and check deposits, and you can appreciate that's a complicated, you know, effort. The good news is our team really is an extended back office for many of our customers, really help them with this onboarding integration. Typically, you know, we're seeing us as short as 30 days, as long as 90 days, you know, for customers, for the bulk of customers, you know, to be able to migrate and move over bounces to the bank. Got it.

Samvir S. Sidhu: And you can appreciate that's a complicated, you know, effort. The good news is our team really is an extended back office for many of our customers to really help them with this onboarding integration. Typically, you know, we see as short as 30 days, as long as 90 days, you know, for customers, for the bulk of customers, to be able to migrate and move over balances to the bank.

Speaker Change: and then you add on sort of technology complexities, as well as in some cases, cash management and, and check deposits and you can appreciate that's a complicated, you know, effort.

Speaker Change: The good news is our team really is an extended back office for many of our customers to really help them with this onboarding integration.

Speaker Change: Typically, you know, we're seeing as short as 30 days, as long as 90 days, you know, for customers, for the bulk of customers, you know, to be able to migrate and move over balances to the bank.

Samvir S. Sidhu: And then the call sort of broke up a little bit when you were talking about expected inflows. Just curious to hear in the billions of dollars over the next couple of quarters in terms of inflows from these. That's right, in aggregate. Dave, what I said on the call was $500 million to a billion dollars per quarter.

David Bishop: And then the call sort of broke up a little bit when you're talking about expected inflows, just here in the billions of dollars over the next couple quarters in terms of inflows from these new teams. That's right, and aggregate.

Speaker Change: Got it. And then the call sort of broke up a little bit when you were talking about expected inflows. Just curious to hear.

Speaker Change: in the billions of dollars over the next couple of quarters in terms of inflows from these new teams.

Samvir S. Sidhu: And to put that in perspective, you know, we had 600 million in commercial inflows this quarter and a billion dollars or more the previous four. So it kind of gives you a sense of where we expect this pace that we've been on for the last year, more than a year to continue. Okay, got it. And then any details you can provide on the swap later this quarter? Are you there?

Sam Sadoo: Dave, what I said of the call was if it broke up, was 500 million to a billion dollars per quarter. And to put that in perspective, you know, we were 600 million of commercial inflows this quarter and a billion dollars or more the previous four. So kind of gives you a sense where we expect this pace that we've been on for the last year, more than a year, to continue. Okay, got it.

Speaker Change: That's right, in aggregate.

Dave: Dave, what I said on the call was, if it broke up, was $500 million to $1 billion.

Speaker Change: per quarter. And to put that in perspective, you know, we were 600 million of commercial inflows this quarter, and a billion dollars or more the previous four. So it kind of gives you a sense where we expect this pace that we've been on for the last year, more than a year to continue.

David Bishop: And then any details you can provide on the clock later on this quarter.

Speaker Change: Okay, got it. And then any details you can provide on the swap later on this quarter?

Speaker Change: www.customersbancorp.com

Unknown Executive: Are you there? Please allow us one moment. We are experiencing technical delays.

Speaker Change: Are you there?

Speaker Change: www.customersbancorp.com

Speaker Change: www.customersbancorp.com

Unknown Executive: Please allow us one moment; we are experiencing technical delays. [inaudible] Hey, Sam, can you hear me? Yes, I can, Dave. Hey, I don't know if you're my follow-up question. Any other details you can provide on the swap that you layered in this quarter? Sure, Dave. Good morning. It's it's Phil.

Speaker Change: Please allow us one moment. We are experiencing technical delays.

Speaker Change: Hi Bob, how's it going?

David Bishop: Thank you very much. Can you hear me? Yes, I can, Dave.

Philip Watkins: Yeah, as I mentioned, it was about a little over a billion dollars of fixed rate liabilities that we converted to floating. And so that was a forward starting swap that we executed early in the second quarter. So that'll take effect starting in the fourth quarter, and it was the basis point of impact in the fourth quarter and four next. No, with four basis points in the fourth quarter, which would, you know, be a full year 2024 basis, full year 2024 impact of about one basis point. Obviously, you know, the exact impact on 25 will be dependent on, you know, where the rate trajectory goes, but we'd actually expect it to be roughly break even in 2025 and then obviously accreted from there.

Speaker Change: Hey, Sam, can you hear me?

Phil Watkins: Hey, I don't know if you're my follow-up question. I need any details to provide on the swap that you layered in the quarter.

Samvir S. Sidhu: Yes, I can, Dave.

Speaker Change: Hey, I don't know if you're my follow-up question. Any details you can provide on the swap that you layered in this quarter?

Phil Watkins: Sure, sure, Dave.

Phil Watkins: Good morning. It's, it's filled. Yeah, as I mentioned, it was about a little over a billion dollars, fixed rate liabilities that we converted to floating. And so that was a forward starting swap that we executed early in the second quarter. So that'll take effect. Yeah, starting in the starting the fourth quarter. And it was a basis point impact in the fourth quarter and four next year, no, with four basis points in the fourth quarter, which would be a full year 2024 basis, full year 2024 impact of about one basis point. Obviously, you know, the exact impact on 25 will be dependent on, you know, where the rate trajectory goes, but we'd actually expected to be roughly pretty even in 2025.

Speaker Change: Sure, Dave. Good morning. It's Phil. Yeah, as I mentioned, it was about a little over a billion dollars of fixed-rate liabilities that we converted to floating. And so that was a forward-starting swap that we executed early in the second quarter, so that'll take effect starting in the fourth quarter.

Speaker Change: And it was a basis point of impact in the fourth quarter and four next year.

Speaker Change: No, with four basis points in the fourth quarter, which would, you know, be a full year 2024 basis, full year 2024 impact of about one basis point. Obviously, you know, the

Speaker Change: The exact impact on 2025 will be dependent on where the rate trajectory goes, but we'd actually expect it to be roughly break-even in 2025 and then obviously accreted from there.

Phil Watkins: And then, obviously, a creative from there. Got it.

David Bishop: And then the final question to any color on the, the DDA, how close we saw this quarter was curious, but in that related to maybe the additional assets that. Yeah, Dave, I'll take that. You know, I think that the way to think about this is sometimes our period of balance is based on customer activity increases in your favor. Sometimes it decreases and then, you know, in this, in this case, it was slightly decreased quarter over quarter. I think the key important thing here is that non interest bearing operating accounts grew into quarter and our pipelines continue to be real fast.

Philip Watkins: Got it. And then the final question, any color on the DDA outflows we saw this quarter? I was curious if any of that related to maybe the digital asset segment. Yeah, Dave. I'll take that.

Speaker Change: Got it.

Speaker Change: And then, final question, any color on the DDA outflows we saw this quarter? I was curious if any of that related to maybe the digital asset segment.

Samvir S. Sidhu: You know, I think the way to think about this is sometimes our period imbalances based on customer activity increase in your favor. Sometimes they decrease, and, you know, in this case, it was slightly decreased quarter over quarter. I think the key important thing here is that non-interest bearing operating accounts grew by a quarter and our pipelines continue to be robust. So, you know, we're seeing tailwinds, as I talked about before. So this is really just a factor of client to client activity, as opposed to customer growth or negative mixed shift. We're actually seeing the opposite.

Speaker Change: Yeah, Dave, I'll take that. You know, I think the way to think about this is sometimes our period imbalances based on customer activity increases in your favor, sometimes it decreases. And you know, in this in this case, it was slightly decreased quarter over quarter.

Speaker Change: I think the key important thing here is that non-interest bearing operating accounts grew in the quarter, and our pipelines continue to be robust. So, you know, we're seeing tailwinds, as I talked about before. So this is really just a factor of client-to-client activity, as opposed to customer growth or negative mix shift. We're actually seeing the opposite.

Phil Watkins: So, you know, we're seeing tailwinds, as I talked about before. So this is really in just a factor of clients' client activity as opposed to customer growth or negative mixture; we're actually seeing the opposite.

David Bishop: Yeah, thank you.

Speaker Change: Got it. Thank you.

Matthew Breese: Our next question. Come on, of Matthew, breeze with Stephen think, please go ahead. Hey, good morning.

Samvir S. Sidhu: Got it. Thank you. Our next question is from Matthew Breese with Stephens Inc. Please go ahead. Hey, good morning. Morning, Matt.

Speaker Change: Our next question comes from Matthew Breese with Stephens Inc. Please go ahead.

Phil Watkins: 40 minutes. I was hoping just given the prepayment income commentary, give us just a little more sense for the name cadence through year and it sounds like from now until year and we'll see some expansion but the third quarter. I could use some help with the third quarter and where you expect it to be at. Yeah, sure.

Matthew M. Breese: Hey, good morning.

Matt: Boarding man

Matthew M. Breese: I was hoping, just given the prepayment income commentary, you could give us just a little bit more sense for the NIMC cadence through year-end. It sounds like from now until year-end, we'll see some expansion, but the third quarter, I could use some help with the third quarter and where you expect that exit to be at.

Matthew M. Breese: I was hoping, given the prepayment income commentary, give us just a little bit more sense for the NIM cadence through year end. It sounds like from now until year end, we'll see some expansion, but the third quarter, I could use some help with the third quarter and where you expect that exit to be. Yeah, sure. Hey, Matt. Good morning. It's Phil.

Phil Watkins: Hey, hey, Matt. Good morning. It's still. Yeah, so, you know, I think we tried to sort of reset. If you take that prepayment income down, sort of, you know, reset that baseline basically would have been sort of closer to 325 in the in the second quarter. And then, you know, I think we've said that, you know, we'd look to get above the, you know, to the higher end of our range by, you know, by Q4, with obviously Q4 now being a bit impacted by that hedging. So I think most folks, you know, maybe yourself included, were somewhat sort of linearly stepping up like that.

Philip Watkins: Yeah, sure. Hey, hey, Matt. Good morning. It's Phil.

Philip Watkins: Yeah, so, you know, I think we tried to sort of reset it so that if you take that prepayment income down, sort of, you know, reset that baseline would basically be, you know, sort of closer to $325,000 in the second quarter. And then, you know, I think we've said that, you know, we'd look to get above the, you know, to the higher end of our range by, you know, by Q4, with obviously Q4 now being a bit impacted by that hedging.

Philip Watkins: Yeah, so you know, I think we tried to sort of reset if you take that that prepayment income down sort of, you know, reset that that baseline basically would have been, you know, sort of closer to 325 in the in the second quarter. And then, you know, I think we've said that, you know, we'd look to get above the, you know, to the higher end of our range by, you know, by Q4, with obviously Q4 now being a bit impacted by that hedging.

Philip Watkins: So, I think most folks, you know, maybe yourself included, were somewhat sort of linearly stepping up like that. So, yeah, I think you could see, you know, kind of less in the third quarter and then more of a boost back in the fourth quarter. Got it.

Speaker Change: So I think most folks, maybe yourself included, were somewhat sort of linearly stepping up like that. So yeah, I think you could see, you know, kind of less in the third quarter and then more of a boost up back in the fourth quarter.

Phil Watkins: So yeah, I think you could see, you know, kind of less in the third quarter and then more of a new stuff back in the fourth quarter. Got it.

Philip Watkins: Okay. And then I was hoping you could talk a little bit about, you know, the deposits coming in, and balance sheet size expectations. And then as you fund loan growth, there's still excess cash and securities rolling off. So I would love a few different guardrails, one being expectations around cash to assets, securities to assets, and then an overall balance sheet size over a three-year end and maybe 2025. Yeah, hey, hey,

Phil Watkins: Okay, then I was hoping you could talk a little bit about, you know, the deposits coming in, you know, balance sheet size expectations. And then, as you've won Long Road, there's still lots of cash securities rolling off. So I would love a few different guard wells, one being expectations around cash to assets, securities to assets. And then, and then overall balance. balance sheet size over, you know, three-year-end and maybe in 2020.

Speaker Change: Got it, okay. And then I was hoping you could talk a little bit about...

Speaker Change: You know, the deposits coming in, you know, balance sheet size expectations, and then as you fund loan growth, there's still excess cash, securities rolling off. So I would love a few different guardrails, one being expectations around cash to assets, securities to assets.

Speaker Change: and then an overall balance sheet size over a three-year end and maybe 2025.

Phil Watkins: Yeah, hey, hey, Matt. So, you know, I think we're, you know, I think we said sort of, we were, we were a, but well above 30 last quarter. I think we moved down to around 30. I think we sort of said, you know, anywhere in that 25 to 30% range feels like a, you know, a reasonable spot. Obviously, we'll, you know, continue to monitor that. But, as you highlight it, there's, there is some extra room there that we do want to continue to maintain higher levels of liquidity. You know, as far as balance sheet size, you know, as Sam mentioned, you know, the majority of this, we've looked to, you know, continue to, you know, to continue to remix as well on the deposit side.

Philip Watkins: So, you know, I think we're, I think we said sort of we were, we were well above 30 last quarter, and I think we moved down to around 30. And we sort of said, you know, anywhere in that 25 to 30% range feels like a, you know, a reasonable spot. Obviously, we'll, you know, continue to monitor that. But, as you highlighted, there is some extra room there that we do want to continue to maintain higher levels of liquidity.

Speaker Change: Yeah, hey, hey, Matt. So, you know, I think we're, you know,

Speaker Change: I think we said sort of we were well above 30 last quarter. I think we moved down to around 30, and we sort of said anywhere in that 25 to 30% range feels like a reasonable spot. Obviously we'll continue to monitor that, but as you highlighted, there is some extra room there that we do want to continue to maintain higher levels of liquidity. Yeah, as far as balance sheet.

Philip Watkins: You know, as far as balance sheet size is concerned, as Sam mentioned, the majority of this we'd look to, you know, continue to, you know, continue to remix as well on the deposit side. Though, you know, you could see, we've talked about, roughly flattish balance sheets, though you could see, you know, a little bit of modest growth, but roughly flat. Got it.

Speaker Change: Size

Speaker Change: You know, as Sam mentioned, you know, majority of this, we'd look to, you know, continue to, you know, to continue to remix as well on on the deposit side, though, you know, you could see, we've talked about, you know, roughly flattish balance sheet, though, you could see, you know, a little bit of modest growth, but but roughly flat.

Phil Watkins: Though, you know, you could see a, we've talked about, you know, roughly flatish balance sheet, though you could see, you know, a little bit of modest script, but, but roughly flat in 24. Got it. Okay.

Philip Watkins: Okay. And then turning to expenses, does this quarter's operating expense base fully reflect the new teams, or should we continue to expect a little bit of upward migration? It is so to work.

Speaker Change: and so on and so forth.

Phil Watkins: And then turning to expenses, do, does this course, you know, operating expense base, does that fully reflect the new team or to continue to expect a little bit of upward migration? Yeah, it does. You know, I'll use fully. Obviously, some of them joined, you know, a couple of weeks or two in, you know, in April, but basically does fully include that. And so, you know, it's a; we think it's a reasonable run rate.

Speaker Change: And then turning to expenses, does this quarter's operating expense base, does that fully reflect the new teams or should we continue to expect a little bit of upward migration?

Philip Watkins: Yeah, it does, you know, I'll use it fully. Obviously, some of them joined for a couple of weeks or two and, you know, into April, but it basically does fully include that. And so, you know, it's a reasonable run rate. Obviously, you could have some, some of your normal inflationary pressures, like our mid-year merit increases and those types of things, but it should be, it should be a reasonable run rate.

Speaker Change: It's so to where?

Speaker Change: Yeah, it does, you know, I'll use fully, obviously, some of them joined, you know, a couple a week or two and, you know, into April , but but basically does fully include that. And so, you know, it's a, we think it's a reasonable run rate, obviously, you could have some, some of your normal inflationary pressures, like our mid year merit increases and those types of things, but, but it should be, it should be a reasonable run rate.

Phil Watkins: Obviously, you could have some, some of your normal inflationary pressures like our mid-year merit increases and those types of things. But, but it should be; it should be a reasonable run rate.

Phil Watkins: Okay.

Philip Watkins: Okay, and then, and then my last one was just, you know, Michael Barr was out in May, you know, testimony just talking about some of what needs to be done in terms of responding to the March Madness events last year and some of the unexpected deposit upflows and the extent. In that testimony, he specifically mentions, you know, deposits from crypto and venture capital firms; you can tie that with individuals, and So, you know, one thing I would just like some updates in terms of crypto exposure and the plan there.

Matt: And then my last one was just, you know, you know, you know, Michael Barr was out in May, you know, testimony. It's just talking about some of what needs to be done in terms of responding to the March banner events last year. And some of the unexpected deposit uploads, we've spent in that testimony; he specifically mentions, you know, deposits from crypto and venture capital forms. You can tie that with individuals. And so, you know, one, I would just like some update in terms of crypto exposure and the planning to just given that you call that venture capital deposits.

Speaker Change: Okay, and then my last one was just, you know, you know,

Michael Barr: Michael Barr was out in May, you know, testimony just talking about some of what needs to be done in terms of responding to the, you know, March Madness events last year and some of the unexpected deposit outflows and the extent.

Speaker Change: In that testimony, he specifically mentions, you know, deposits from crypto and venture capital firms and tie that with individuals and

Philip Watkins: But two, just given that he called out venture capital deposit. Are there any balance sheet limitations as you look to grow that business? Or did that comment strike you in any way? Just some color there.

Speaker Change: So, you know, one, I would just like some update in terms of crypto exposure and, and the plan there. But two, just given that he called out venture capital deposits, are there any balance sheet limitations as you look to grow that business? Or did that comment strike you in any way?

Sam Sadoo: Are there any balance sheet limitations as you look to grow that business, or did that comment strike you in any way? Just some culinary. Yep. Sure, Matt. So I'll be happy to take that. So firstly, starting on the, you know, see the balances. No change, you know, to our previous guidance and are also, you know, self-imposed limitation of approximately 15% spot all in, which includes any, you know, digital asset customers. So that's the answer to your first question, and this quarter was consistent, you know, with past quarters. So no changes there. More broadly, I think you heard me and I prepared remarks talk about, you know, self-imposed, you know, limits on both sides of the balance sheet, frankly, from a concentration perspective.

Samvir S. Sidhu: Yep, sure, Matt. So firstly, starting on the CBIT balances, no change, you know, to our previous guidance and our also, you know, self-imposed limitation of approximately 15% spot all-in, which includes any, you know, digital asset customers. So that's the answer to your first question. And this quarter was consistent, you know, with past quarters. So no changes there.

Speaker Change: Just some colored errors.

Speaker Change: Yeah.

Matt: Sure, Matt.

Speaker Change: So I'd be happy to take that. So firstly, starting on CBIT balances.

Speaker Change: No change, you know, to our previous guidance and our also, you know, self-imposed limitation of approximately 15% spot all in, which includes any, you know, digital asset customers.

Speaker Change: So that's the answer to your first question, and this quarter was consistent.

Samvir S. Sidhu: More broadly, I think you heard me in my prepared remarks talk about, you know, self-imposed limits on both sides of the balance sheet, frankly, from a concentration perspective. You know, this is informed from a customer's bank perspective, not only from the events of last March, but if you actually take a step back, you know, we were pleased to say that, you know, we actually imposed these limits or, and in some cases, targets earlier in the quarter. I think it was January or February of this year, right?

Speaker Change: With past quarter. So.

Speaker Change: No changes there. More broadly, I think you heard me in my prepared remarks talk about, you know, self-imposed

Sam Sadoo: You know, this is informed from a customer's bank perspective, not only, you know, from the events of last March, but if you actually take a step back, you know, we were pleased to say that, you know, we actually, you know, imposed these limits. Or, and in some cases, targets earlier in the quarter. I think it was January or February of '23, right? So it shows that, as a management team and a board, you know, we were ahead of the curve, you know, thinking about the concentration level.

Speaker Change: limits on both sides of the balance sheet, frankly, from a concentration perspective. You know, this is informed from a customer's bank perspective, not only, you know, from the events of last March, but if you actually take a step back, you know, we were pleased to say that, you know, we actually imposed these limits and in some cases targets.

Samvir S. Sidhu: So it shows that as a management team and a board, you know, we were ahead of the curve in thinking about, you know, concentration levels specific to, you know, venture banking. It's a great business; this is a great business for us. You know, I think that we have deep customer relationships. I think, you know, historically, when we started this business, if you go back to some of our management meetings and board meetings, we talked about our desire to get this to, you know, a top 10 type business within a 5 year period.

Speaker Change: Earlier in the quarter, I think it was January or February of 23, right? So it shows that as a management team and a board that we were ahead of the curve, you know, from thinking about concentration levels.

Sam Sadoo: specifically to venture banking. It's a great business for us. I think that we have deep customer relationships. I think historically, when we started this business, if you go back to some of our managing meetings and board meetings, we talked about our desire to get this to a top 10 type business within a five year period, and you heard we talk about that for any of our niche verticals or national verticals. You know, please to say, you know, we've already, we're, you know, hands down, understood the industry to be top five, you know, already. And in most cases, we're aware of a win rate, you know, of 30% or so, which is really a testament to the success of the incredible team that we've hired and onboarded and the receptiveness they've had in the market.

Samvir S. Sidhu: And you heard me talk about that for any of our niche verticals or national verticals, you know, pleased to say, you know, we've already, we're, you know, hands down understood the industry to be top 5, you know, already. And in most cases, we're at a win rate of 30% or so, which is really a testament to the success of the incredible team that we've hired and onboarded and the receptiveness they've had in the market. I think that there's some specificity to thinking about us.

Speaker Change: Specific to, you know, venture banking.

Speaker Change: It's a great, this is a great business for us. You know, I think that we have deep customer relationships. I think, you know, historically, when we started this business, if you go back to some of our management meetings and board meetings, we talked about our desire to get this to, you know, a top 10 type business within a five year period. And you heard me talk about that for any of our niche verticals or national verticals.

Speaker Change: You know, pleased to say, you know, we've already, we're, you know, hands down understood the industry to be top five.

Speaker Change: [inaudible]

Sam Sadoo: When, you know, I think that there's some specificity of thinking about a specific institution that may have that concentrated deposits, that bring it back to concentration deposits and household and networking as opposed to having any deposits from specific industry. This helps us from a diversification standpoint; these deposits have been sticky, their relationship focus, and they're insured at, at least, at or at least the same levels as our entire institution is insured. I believe that it's different from the historical view. Understood. I appreciate all that. Thank you all for that. Thanks.

Samvir S. Sidhu: Unknown Executive, Casey Haire, Philip Watkins, Samvir Sidhu, David Patti, Michael Perito, Harold Goetsch, Unknown Executive, Casey Haire, Philip Watkins, Samvir Sidhu, David Patti, This helps us from a diversification standpoint. These deposits have been sticky, they're relationship-focused, and they're insured at least at or at least the same levels as our entire And I believe that it is different from the historical.

Speaker Change: I think that there's some specificity of thinking about us.

Speaker Change: Pacific Institution that may have had concentrated deposits. I bring it back to concentration of deposits.

Speaker Change: and Household Internetworking, as opposed to having any deposits from

Speaker Change: [inaudible]

Unknown Executive: Understandable. I appreciate all that. Thank you. I'll step back.

Speaker Change: Understood. I appreciate all that. Thank you. I'll sit back.

Kelly Ann Motta: Thanks, Bob. Our next question comes from the line of Kelly Motta with KBW. Please go ahead.

Kelly Mata: Our next question comes from the line of Kelly Mata with KBW. Please go ahead.

Bob: Thanks, Bob.

Bob: Our next question comes from the line of Kelly Motta with KBW. Please go ahead.

Kelly Mata: Hi, thanks so much for the question. I was hoping to circle back on the expense side. You know, I appreciate the commentary that.

Philip Watkins: Hi, thanks so much for the question. I was hoping to circle back on the expense side. I appreciate the commentary that, you know, you've obviously added a lot of teams, and there could be some timing with that with regard to achieving your efficiency targets. But as you look at the expense base, and it was running still a bit higher than I had expected, just wondering if there were any other things not related to teams that also may be driving those a bit higher than we initially thought at this time last quarter. Yeah, hey, Kelly. Good morning. It's Phil.

Kelly Ann Motta: Hi, thanks so much for the question. I was hoping to circle back on the expense side, you know, I appreciate the commentary that

Phil Watkins: You know, you obviously added a lot of teams, and there could be some timing with that with regards to achieving your efficiency targets. But as you look at the expense base, and it was running so a bit higher than where I had expected, just wondering if there was any other things not related to teams that. Also, maybe, you know, driving those a bit higher than we initially thought at this time last quarter.

Speaker Change: You know, you've obviously added

Speaker Change: a lot of teams, and there could be some timing with that with regards to achieving your efficiency targets, but

Speaker Change: As you look at the expense base, and it was running still a bit higher than where I had expected. Just wondering if there was any other things not related to teams that also may be, you know, driving those a bit higher than we initially thought at this time last quarter.

Phil Watkins: Hey, Kelly, good morning. It's still thanks for the question. So yeah, it has outlined it is, you know, that it is mostly related to the team. That was the largest driver of it, but I did highlight in my prepared remarks two other items in there that were in there. This quarter. So one was actually tied to our loan growth. So we record our reserves for unfunded commitments through non-interest expense. So that higher loan volume, again, especially given enough it was in our specialized C and I categories with the off balance sheet aspect of that, you know, unfunded portion of that as well.

Philip Watkins: Thanks for the question. So yeah, as outlined, it is mostly related to the team. That was the largest driver of it. But I did highlight in my prepared remarks or two other items in there that were in there this quarter. So one was actually tied to our loan growth. We record our reserves for unfunded commitments through non-interest expense.

Speaker Change: Yeah. Hey, Kelly. Good morning. It's Phil. Thanks for the question.

Speaker Change: So yeah, as outlined, it is mostly related to the team. That was the largest driver of it.

Speaker Change: But I did highlight in my prepared remarks, sort of two other items in there that were in there this quarter. So one was actually tied to our loan growth. So we record our reserves for unfunded commitments through non-interest expense.

Philip Watkins: So that higher loan volume, again, especially given it was in our specialized C&I categories with the off-balance sheet aspect of that, you know, unfunded portion of that as well. So that was about $1.2 million in the quarter. And there was also about $1 million worth of expenses associated with one of our HFS programs that, again, are almost similar to our equipment finance business, where you can have increased expenses there with increased sort of associated revenue. So those were two other larger drivers in the quarter.

Speaker Change: So that higher loan volume.

Speaker Change: Again, especially given enough it was in in our specialized C&I categories with the off balance sheet aspect of that, you know, unfunded portion of that as well. So that was about a million two in the quarter. And there was also about a million dollars worth of expenses

Phil Watkins: So that was about a million to in the quarter, and there was also about a million dollars worth of expenses associated with one of our HFS programs. But again, almost similar to our equipment finance business, where you can have increased expense there with increased sort of associated revenue. So those were two other drivers, larger drivers, in the course.

Speaker Change: Associated with one of our HFS programs that again almost similar to our equipment finance business where you can have increased expense there with with increased sort of associated revenue. So those were two other drivers larger drivers in the quarter.

Kelly Mata: Got it, thanks Phil. That's helpful.

Samvir S. Sidhu: Got it. Thanks, Phil. That's helpful. And then, second, for me, it was really, really nice to see both capital ratios at or above the targets that you've laid out. Just wondering how you guys are thinking about capital from here. I know you guys put out The Buy Back Program. Any thoughts on letting capital build versus, you know, capital return options and utilizing the buyback after the run of the stock price? Sure, Kelly. You know, I think that it's always good to have a buyback. Toolkit Perspective.

Kelly Mata: And then, second from me, it was really, really nice to see both capital ratios of at or above the targets that you've laid out.

Speaker Change: Got it. Thanks, Phil. That's helpful. And then second for me, it was really, really nice to see both capital ratios at or above the targets that you've

Phil Watkins: Just wondering how you guys are thinking about capital from here. I know you guys put out the buyback program, any thoughts on letting capital build versus capital return options in utilizing the buyback after the run of stock price.

Speaker Change: laid out. Just wondering how you guys are thinking about capital from here. I know you guys put out the buyback program. Any thoughts on letting capital build versus

Speaker Change: capital return options and utilizing the buyback after the run of stock price.

Sam Sadoo: Sure, Kelly. I think that it's always good to have a buyback with a toolkit perspective. I think stepping back when we sort of instituted this and brought this to the board, I think our shares were significant in the lower than they are today. But having said that, it's important to have, if nothing else, just from the perspective of cleaning up share assurances and making sure that you're over year, you know, we're in a situation where we do feel that there's consistency for the share perspective, outstanding share perspective. From a capital planning perspective, I think hitting these targets was important.

Speaker Change: Sure, Kelly. You know, I think that

Samvir S. Sidhu: I think stepping back, you know, when we sort of instituted this and brought this to the board, you know, I think, you know, our shares were significantly lower than they are today. But having said that, it's important to have, if nothing else, just from a perspective of, you know, cleaning up share issuances and making sure that, year over year, we're in a situation where we do feel that, you know, there's consistency from a share perspective, outstanding shares. You know, from a capital planning perspective, I think hitting these targets was important. We were very disciplined in our ability to make sure that we hit our targets.

Speaker Change: It's always good to have a buyback, you know, from a toolkit perspective.

Speaker Change: I think stepping back, you know, when we sort of instituted this and brought this to the board, you know, I think, you know, our shares were significant and lower than.

Speaker Change: than they are today. But having said that, it's important to have, if nothing else, just from a perspective of, you know, cleaning up share issuances and making sure that year over year, you know, we're in a situation where we do feel that, you know, there's consistency from a shared perspective, outstanding shared perspective.

Sam Sadoo: We were very disciplined in our ability to make sure that we hit these targets. The capital menu is generally the same for customers' bank, focusing on organic growth opportunities all the way down to more reactive from a buyback perspective, if and when needed. It will always be opportunistic there, but really, nothing has changed from the way that we're approaching capital, which is really pleased to not just re-create but substantially start getting past. I think that our organic growth for retained earnings across the franchise, as well as continuing, as you heard from Phil earlier, maintaining a flatish balance sheet, because both the remixing on both sides of the balance sheet is happening within the plus or minus $20,000,000, so we have $21 billion that we have today.

Speaker Change: You know, from a capital planning perspective, I think hitting these targets was important. We were very disciplined in our ability to make sure that we hit these targets.

Samvir S. Sidhu: You know, the capital menu is generally the same for customers banks, focusing on, you know, organic growth opportunities, you know, all the way down to sort of more, you know, reactive, you know, from a buyback perspective, if and when needed, it will always be opportunistic there. But really, nothing has changed, you know, from the way that we're approaching capital, which is really pleased to be to not just reach but substantially start, you know, getting past.

Speaker Change: You know, the capital menu is generally the same for customers bank focusing on, you know, organic growth opportunities.

Speaker Change: all the way down to sort of more, you know, reactive, you know, from a buyback perspective if and when needed. And we'll always be opportunistic there, but really nothing has changed, you know, from the way that we're approaching capital. We're just really pleased to be, to not just reach, but substantially start, you know,

Samvir S. Sidhu: And I think that our organic growth for retained earnings across the franchise, as well as continuing, as you heard from Phil earlier, maintaining a flattish balance sheet because the remixing on both sides of the balance sheet is happening within the plus or minus 20 billion dollars. So we have the 21 billion dollars that we have today.

Speaker Change: Getting past and I think that our organic

Speaker Change: Growth for retained earnings across the franchise as well as continuing as you heard from Phil earlier maintaining a flattish balance sheet Because for the remixing on both sides the balance sheet is happening within the plus or minus 20 billion dollars So we have 21 billion dollars that we have today So hopefully that gives you a little bit more color

Sam Sadoo: So hopefully that gives you a little bit more color.

Kelly Mata: That's very helpful.

Kelly Mata: Thank you all. Step back.

Speaker Change: That's very helpful. Thank you. I'll step back.

Hal Goetsch: Our next question comes from how goat with b-rily securities. Please go ahead.

Samvir S. Sidhu: So hopefully, that gives you a little bit. That's very helpful. Thank you. I'll step back. Our next question comes from Harold Goetsch with B. Reilly Securities. Please go ahead. Good morning, everyone.

Scott: Thanks, Scott.

Speaker Change: Our next question comes from Harold Goetsch with B. Reilly Securities. Please go ahead.

Hal Goetsch: Hey, good morning, everyone.

Harold Lee Goetsch: Hey, a terrific quarter. My question relates to loan growth. You've been, you know, very consistent this year with 10 to 15% loan growth, but in your comments today, you said that your low commercial real estate exposure is becoming a competitive advantage and more visible, and that may allow you to add more volume. I was just curious if you could elaborate on that more, or is this more of a momentum into 2025 type comment? Thank you very much.

Sam Sadoo: Hey, terrific quarter. My question relates to the long growth. You've been very consistent this year for 10 to 15 percent long growth, but in your comments, you said that your low commercial real estate exposure is becoming a competitive advantage and more visible, and that may allow you to add more volume.

Harold Lee Goetsch: Hey, good morning, everyone. Hey, terrific quarter. My question relates to the loan growth. You've been very consistent this year for 10 to 15% loan growth, but in your comments today.

Harold Lee Goetsch: You said that your low commercial real estate exposure is becoming a competitive advantage and more visible and that may allow you to add more volume. I was just curious if you could elaborate on that more or just more of a, you know, a momentum into 2025 type comment. Thank you very much.

Sam Sadoo: I was just curious if you could elaborate on that more or just more of a momentum into 2025, Ted Common. Thank you very much.

Samvir S. Sidhu: Sure, absolutely, Hal. And I'm happy to take that challenge. And, you know, I think that, as you can probably appreciate, especially in our home markets, where we have sort of experienced bankers in our geographies, be it in the Northeast, New York City, and, you know, and to a lesser extent, you know, on the West Coast, there are typically, you know, many of the competitive banks that serve these customers, which, to my earlier comments, have some, you know, concentration, provisioning, And that is not a one or two quarter type, you know, work through; it usually takes a little bit longer.

Sam Sadoo: Sure. Absolutely, Hal. I'm happy to take that.

Sam Sadoo: And I think that, as you can probably appreciate, especially in our home markets, where we have sort of experienced bankers and archeographies, be it in the Northeast, New York City, and the two lesser extent on the West Coast. There are typically many of the competitive banks that serve these customers. To my earlier comments, have some consideration provisioning credit, overhang type challenges that need to be worked through, and that is not a one or two quarter type work through as you take a little bit long. So I think that while these banks likely want to be servicing their customers, they may not have as much of an ability to.

Harold Lee Goetsch: Sure. Absolutely, Harold. I'm happy to take that. And I think that, as you can probably appreciate, especially in our home markets where we have sort of experienced

Harold Lee Goetsch: bankers in our geographies, be it in the Northeast, New York City, and to a lesser extent on the West Coast.

Harold Lee Goetsch: There are typically, you know, many of the competitive banks that serve these customers, you know, to my earlier comments.

Samvir S. Sidhu: So I think that while these banks likely want to be servicing their customers, they may not have as much of an ability to. So I think there's an opportunity, not only for us to step in, from a relationship and a platform and a financial strength perspective, but also to look at the type of vintage and underwriting that we would do in the second half of this year, were to selectively look at opportunities that, you know, would be very attractive.

Harold Lee Goetsch: have some, you know, concentration, provisioning, credit, overhang, you know, type challenges that need to be worked through and that is not a one or two quarter type, you know, work through usually takes a little bit longer.

Speaker Change: So I think that while these banks likely want to be servicing their customers, they may not have as much of an ability to. So I think there's an opportunity not only for us to step in.

Sam Sadoo: So I think there's an opportunity not only for us to step in from a relationship and a platform and a financial strength perspective, but also looking at the type of vintage and underwriting that we would do second half of this year. We’re to selectively look at opportunities that would be very attractive. So it would be win-win-win across the board from helping our customers, current as well as prospective customers, where they may not have as many other options.

Speaker Change: from a relationship and a platform and a financial strength perspective, you know, but to also looking at the type of vintage and underwriting that we would do in the second half of this year.

Samvir S. Sidhu: So it'd be a win, win, win across the board from, you know, helping our customers, current as well as prospective customers, where they may not have as many other options. But also, would be, you know, great franchise enhancement, and likely, credit managed and mitigated relationships, just given our conservative underwriting, which would be a very high bar in today's environment. Okay, thank you. Our next question comes from the line of Frank Schiraldi with Piper Sandler. Please go ahead. Good morning.

Speaker Change: were to selectively look at opportunities.

Speaker Change: would be very attractive. So it'd be win, win, win across the board from helping our customers.

Speaker Change: Current, as well as prospective customers, you know, where they may not have as many other options.

Sam Sadoo: But also, you know, would be great to, you know, franchise enhancing, you know, and likely, you know, credit managed to then mitigate it, relationships just given our conservative underwriting, which is the which would be a very high bar in today's environment.

Speaker Change: but also, you know, would be, you know, great, you know, franchise enhancing, you know, and likely, you know, credit managed and mitigated relationships, just given our conservative underwriting, which is, which would be a very high bar in today's environment.

Speaker Change: Okay, thank you.

Frank Schiraldi: Our next question comes from the line of Frank Schiraldi with Piper Sandler. Please go ahead.

Frank Joseph Schiraldi: Just in terms of the, just a point of clarification, Sam, I just want to make sure the deposits that are coming on as part of these teams, did you say it's 3% blended, does that include the non-interest bearing, or is that just 3% on the interest-bearing? It's a blend, Frank, you know, that includes them all. And, and do you have any reason to believe this will be, you know, much different in terms of sensitivity to rates?

Speaker Change: I hope you enjoyed this video. If you did, please give it a thumbs up and subscribe to my channel. I'll see you in the next video.

Speaker Change: and many more.

Speaker Change: Our next question comes from the line of Frank Schiraldi with Piper Sandler. Please go ahead.

Frank Schiraldi: Morning. Just in terms of the point of clarification, Sam, I just want to make sure the deposits that are coming on as part of these teams. Did you say it's 3% blended? Does that include the non-interest sparingers? That's just 3% on the interest sparing? It's a blind fact. That includes the non-interest. And do you have any reason to believe this will be much different in terms of sensitivity to race? Do you still think these betas will not move your total deposit beta significantly, and as you grow it, and also just an add on to that, following the hedging here.

Frank Joseph Schiraldi: Do you still think these betas will not, you know, move your total deposit beta significantly and, you know, as you grow it? And also, just an add on to that, following the hedging here, how close are you guys to neutral? And what does a 25 basis point rate cut do in the near term? Sure.

Speaker Change: Morning.

Frank Joseph Schiraldi: Just in terms of the, just a point of clarification, Sam, I just want to make sure, the, the,

Frank Joseph Schiraldi: Deposits that are coming on as part of these teams, did you say it's 3% blended, does that include the non-interest bearing or is that just 3% on the interest bearing?

Samvir S. Sidhu: It's a blank fraction, you know, that includes the non-employees.

Speaker Change: And, and how do you have any reason to believe this will be, you know, much different in terms of sensitivity to race, do you still think?

Speaker Change #100: These betas will not move your total deposit beta significantly as you grow it. And also just an add-on to that, following the hedging here, how close are you guys to neutral and what does a

Frank Schiraldi: How close are you to having some neutral? What does a 25 basis point rate cut do in the near term? Sure.

Speaker Change: 25 basis point rate cut due in the near term.

Samvir S. Sidhu: So I'll start, and maybe Phil can take the hedging part of the question. So, you know, from a beta sensitivity perspective on a go-forward basis, we think we're generally going to be in a similar position with these new relationships in the sense that the interest-bearing deposits, just focusing on that component, are lower on an average, weighted average basis relative to our franchise, but they're still going to be rate sensitive, you know, on the way down. And, you know, I think that's just important from a, you know, an overall perspective. I'll let Phil talk more broadly about the hedging. Yeah, hey Frank, good morning.

Sam Sadoo: So I'll start, and we still can take the hedging part of the question. So, you know, from a beta sensitivity perspective on a go-forward basis, we think we're generally, you know, going to be in a similar position with these new relationships in the sense that the interest frame deposits, just focusing on that component, are lower on an average weighted average basis relative to our franchise. But they're still going to be great sensitive on the way down. And, you know, I think so. That's important from an overall perspective.

Speaker Change: Sure. So I'll start and maybe Phil can take the hedging part of the question. So, you know, from a beta sensitivity perspective, on a go forward basis, we think we're generally, you know, going to be in a similar position with these, these, you know, new relationships in the sense of the interest bearing deposits.

Philip Watkins: just focusing on that component.

Philip Watkins: are lower on an average, weighted average basis.

Philip Watkins: Relative to our franchise, but they're still going to be great sensitive, you know, on the way down.

Philip Watkins: And so that's just important from an overall perspective. I'll let Phil talk more broadly about our hedging.

Phil Watkins: But I'll let Phil talk more broadly about detail in our hedging.

Phil Watkins: Yeah, hey, Frank. Good morning. So, on the hedging side, I would say was, you know, that was definitely a larger chunk in order in terms of getting us down closer to neutral. We also did, and we provided some info on this as well, did a bit of a rotation within the securities within our AFS securities portfolio, which also organically got us, you know, a reduced sensitivity, which was rotating out some of our floating rate AFS to HQLA-based, HQLA-based securities. So we did a little bit there as well.

Philip Watkins: So on the hedging side, I would say it was, you know, that was definitely a larger chunk in order in terms of getting us down closer to neutral. We also did, provided some info on this as well, did a bit of a rotation within the securities, within our AFS securities portfolio, which also organically got us, you know, a reduced sensitivity, which was rotating out some of our floating rate AFS to HQLA-based security.

Philip Watkins: Yeah, hey, Frank, good morning. So on the hedging side, I would say it was, you know, that was definitely a larger chunk in order in terms of getting us down closer to neutral. We also did

Philip Watkins: And we provided some info on this as well, did a bit of a rotation within the securities within our AFS securities portfolio, which also organically got us, you know, a reduced sensitivity, which was rotating out some of our floating rate AFS.

Philip Watkins: So we did a little bit there as well. We'll obviously provide more disclosure in the queue. There's probably still a little bit of work left to do, but we think we've done a very nice amount and obviously, we thought it was the right thing to do at the right time. Okay, so it's just not that important now in terms of near-term impact on the margin for a given rate cut, given what you guys have done. Yeah, I think that's right. I mean, obviously, we were just modestly asset sensitive to start, and we brought it even closer to neutral.

Philip Watkins: to HQLA base.

Philip Watkins: HQLA based security. So we did a little bit there as well. So we'll provide obviously more disclosure in the in the queue, you know, there's probably still a little bit of work left to do. But we think we've done, you know, a very nice amount. And obviously, I think it was, you know, we thought it was the right thing to do at the right time.

Phil Watkins: So we'll provide obviously more disclosure in the queue. You know, there's probably still a little bit of work left to do, but we think we've done, you know, a very nice mountain. And obviously, I think it was, you know, we thought it was the right thing to do at the right time. Okay, so it's just not that important now in terms of near-term impact to the margin for a given rate cut, given what you've done on. Yeah, yeah, I think that's right. I mean, obviously we were just modestly at that sensitive to start, and we brought it even closer to neutral.

Speaker Change #101: Okay, so this is not that important now in terms of near-term impact to the margin for a given rate cut, given what you guys have done on this.

Speaker Change #102: Yeah, yeah, I think that's right. I mean, obviously, we were just modestly asset sensitive to start and we brought it even closer to neutral. So, you know, again, not saying that it won't have any impact, but but we continue to bring that down closer to neutral.

Phil Watkins: So, you know, again, nothing that it won't have any impact, but we continue to bring that down closer to neutral. Great.

Philip Watkins: So, you know, again, not saying that it won't have any impact, but we continue to bring that down closer to neutral. And then just lastly, on the reserves, just curious, you know, kind of broad strokes, as you build, continue to build these specialty verticals, I guess you continue to run down the consumer installment net worth, you know, what do you think we should expect from the reserve to loan ratio moving forward here? Yeah, hey, Frank. So you did hit it on the head.

Frank Schiraldi: And then just lastly on the reserve, just curious, you know, kind of broad strokes as you build, continue to build these, especially verticals. I guess you continue to run down the consumer installment net net. You know, what do you think we should expect from the reserve-to-loan ratio moving forward here? Yeah, hey, Frank, so you did hit it on the head. I mean, that is obviously that mixed shift away from the higher reserve, you know, consumer loans towards, especially given that the larger part of our growth on the commercial side is in our, you know, our specialty verticals, which typically have the, you know, sort of the lowest risk profile in them and, you know, the lowest reserves.

Speaker Change #102: Great.

Speaker Change #103: And then just lastly on the reserves, just curious, you know, kind of broad strokes as you build, continue to build these specialty verticals, I guess you continue to run down the consumer installment.

Speaker Change #104: Net net, you know, what do you think we should expect from the reserve to loan ratio moving forward here?

Philip Watkins: I mean, that is obviously a move away from the higher reserve, you know, consumer loans towards, especially given that the larger part of our, of our growth on the commercial side is in our, you know, our specialty verticals, which typically have the, you know, sort of the lowest risk profile in them. And, you know, and that's the lowest reserves. So, you know, I do think that that will continue to have some impact.

Speaker Change #104: Yeah, hey, Frank, so you did hit it on the head. I mean, that that is obviously that mixed ship.

Speaker Change #104: away from the higher reserve, you know, consumer loans towards, especially given that

Speaker Change #105: The larger part of our growth on the commercial side.

Speaker Change #105: is in our, you know, our specialty verticals, which typically have the, you know, sort of the lowest risk profile in them. And, you know, and that's the lowest reserves.

Phil Watkins: So, you know, I do think that that will continue to have some impact. Obviously, there's, there's the every quarter wild card of, you know, what happens with the macro economic factors. We did, you know, highlight that this quarter's levels on the commercial side were impacted by, you know, slight improvement in the, the expect, you know, macro economic forecast and implications. So, you know, that's always, you know, always a little bit out of our hands, but, you know, you can see we, that's what we tried to provide that level sort of by types, so that you can see basically assuming sort of static coverage ratios on that those loan types as that mixed shift changes, you, you should be able to see sort of where that would change with the reserves level as well.

Philip Watkins: Obviously, there's the every-quarter wildcard of, you know, what happens with the macroeconomic factors. We did, you know, highlight that this quarter's levels on the commercial side were impacted by, you know, a slight improvement in the, you know, macroeconomic forecast implications. So, you know, that's always, you know, always a little bit out of our hands. But, you know, we try and provide that level sort of by type so that you can basically, assume sort of static coverage ratios on that, those loan types, as that makeshift changes, you should be able to see sort of where that would change with the reserve level as well. Again, all things equal with, you know, macroeconomic factors and within the loan portfolio.

Speaker Change #105: So, you know, I do think that that that will continue to have some impact. Obviously, there's there's the every quarter wildcard of, you know, what happens with the macroeconomic factors. We did, you know, highlight that this quarter's levels on the commercial side were impacted by, you know.

Speaker Change #105: slight improvement in the expect, you know macroeconomic forecasting implications

Speaker Change #105: So, you know, that's always, you know, always a little bit out of our hands, but, you know, you can see we that's why we try and provide that level sort of by type so that you could see basically assuming sort of static coverage ratios on that those loan types.

Speaker Change #105: As that mix shift changes, you should be able to see sort of where that would change with the reserve level as well. Again, all things equal with, you know, with macroeconomic factors and within the loan portfolios.

Phil Watkins: Again, all things equal with, you know, with macro economic factors and within the loan portal is appreciate.

Philip Watkins: I appreciate it. Thanks, guys. Thanks, Frank.

Frank Schiraldi: Thanks, guys.

Unknown Executive: Frank.

Samvir S. Sidhu: Bye. This will conclude our question and answer session. Thank you all for your patience while we work through our technical difficulties. I would now like to turn the call back to Sam Sidhu for any closing remarks. Thanks, everyone. We really appreciate your interest in customers bank, and please reach out with any questions, and we look forward to speaking next quarter. This concludes today's conference call. Thank you all for your participation. You may now disconnect for any closing remarks.

Speaker Change #106: Appreciate it. Thanks, guys.

Sam Sadoo: This will conclude our question and answer session. Thank you all for your patience while we work through to our technical difficulties.

Frank Joseph Schiraldi: Thanks, Frank.

Frank Joseph Schiraldi: This will conclude our question and answer session. Thank you all for your patience while we work through our technical difficulties. I would now like to turn the call back to Sam Sidhu for any closing remarks.

Sam Sadoo: I would now like to turn a call back to Sam to do for any closing remarks. Thanks everyone. Really appreciate your interest in Customers Bank and, you know, please reach out with any questions. We look forward to speaking next quarter.

Samvir S. Sidhu: Thanks everyone, really appreciate your interest in Customers Bank and please reach out with any questions and we look forward to speaking next quarter.

Brianna: This concludes today's conference call. Thank you all for your participation. You may now disconnect.

Speaker Change #107: This concludes today's conference call. Thank you all for your participation. You may now disconnect.

Unknown Executive: For any closing remarks.

Speaker Change #107: Thank you for any closing remarks.

Speaker Change #107: www.customersbancorp.com www.customersbancorp.com