Customers Bancorp (CUBI) Q4 2024 earnings call transcript

Thank you, Sarah, and good morning, everyone. Thank you for joining us for the Customer Bank Corp earning his webcast for Q4 and the full year 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 www. customersbank. com. You can scroll to Q4 and full year 24 results and click download presentation. You can also download a PDF of the full press release at the spot. Our investor presentation includes important details that we will walk through in this morning's webcast. I encourage you to download and use the document. Before we begin, we would like to remind you that some of the statements we make today may be considered forward-looking.

These forward-looking statements are subject to a number of risk 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 10K and 10Q, for a more detailed description of the risk factors that may affect our results. Copies may be obtained from the SEC or by visiting the investor relations section of our website. At this time, it's my pleasure to introduce customer's bank court chair, Jay Sedoo.

Jay?

Thank you, David, and good morning, ladies and gentlemen. Welcome to our 2024 fourth-quarter earnings call. I hope you all had a wonderful holiday season and are off to a great start in 2025. Joining me this morning on this call, our president and CEO of Customer's Bank, Sam Sedoo, and Customer's Bank Corp, CFO, Phil Watkins. I am this morning pleased to share with you that in 2025, we'll be celebrating the 15-year anniversary of starting customer's bank court. From the humble beginnings of our family and friends making a 17 million equity capital infusion to take full controlling interest in what was at that time a 200 million asset, new century bank, and which had only $70 million in core deposits, but also had 30% non-performing assets from those kind of beginnings.

Today, Customer's Bank Corp has been built into a thriving 22 billion asset bank, a high-performing bank. Please join me in congratulating and thanking our team members and our board of directors who have worked very hard to make all this happen. For those of us who made the 17 million investment in Customer's Bank Corp 15 years ago, we also can celebrate because we have made about seven times our money over this 15-year period, even though we are still trading today at below book value. We believe that the best days of Customer's Bank Corp actually lie ahead. That's just one of the reasons why the entire management board, or what many people call the executive and senior management team, this year has elected to take their entire 2024 bonus in stock rather than in cash.

We are a future focus bank through the hard work of our exceptional team we built a franchise that is extremely ready for the future with diversified deposit and lending platforms that, in our opinion, are truly unique. We are very well positioned to continue our evolution from a small community bank to a well-diversified regional business bank with a national presence in several niche businesses and a business model that truly reflects the single point of contact for our customers. Our strong results this last quarter and over the past several quarters and years underscores this transformation and the progress we've made. Reflecting on 2024, it was truly a pivotal year for us and a year of strategic investments in our foundation for the future.

We believe this will stand out as one of the most transformative periods in our company's history and like I stated earlier, we are very excited about the future of our company. Moving now to slide three, most of you are familiar with the customer bank franchise. For those that are new to our story, let me briefly highlight what makes our model unique. We are not a traditional bank. We are very well positioned, diversified, tech-forward institution operating across community banking, corporate banking, and digital banking franchises. We believe we are building a bank of the future. Our goal is to provide clients with the breadth of products and services that you'd expect from a larger bank while delivering the personalized high touch service of a private bank.

This is what we mean by single point of content. Exceptional client service is not just a priority for us. It's the cornerstone of our culture and the key to our success. This focus is so central to who we are. It's embedded in our name. Our dozens of teams of outstanding and experienced bankers deliver for their clients through a high touch single point of contact model supported by a high tech platform.

We have been a consistent recruiter also of top talent and that we believe is a major strength of our company. While the front line teams that I've talked about that we've added over the last several years get most of their attention, we believe we've added excellent leaders and team members across the entire organization including credit, risk management, compliance, marketing, treasury management, human resources, and of course technology just to name a few.

Their efforts are continuing to level up the way we operate and are fueling the next phase of our group. With that, I'll pass it over the call over to Sam on slide five to add to this and share with you the highlight to the quarter and the year.

Thanks Jay and good morning everyone to the couple hundred live participants who've already joined the call. Really appreciate your interest. I'm thrilled to have an opportunity to walk you through our excellent quarter in more detail but first I wanted to take a minute to reflect on what this incredible organization my colleagues have accomplished since I had the privilege of joining the management team which is exactly five years ago this week. As you can see on slide five over this time period we have delivered exceptional franchise enhancing deposit lead growth. The bank has essentially doubled in size over the last five years ending 2024 with over 22 billion dollars in assets led by an impressive 10 billion dollars of net deposit growth which is 17 percent annually.

Incredibly we accomplished all of this while growing our capital ratio significantly with CET1 up 400 basis points providing us tremendous flexibility today.

Slide six shows how the execution of our unique strategy has resulted in a huge increase in our earnings power and profitability. Net interest income is up 19 percent annually and our core EPS is up over two and a half times over the last five years. This is even with the significant investments we've made in 2024. Our margin has also increased by 40 basis points over that time.

As we've said many times before we believe sustainable growth in revenue, EPS and tangible book value are the key metrics for long-term performance in bank stocks. Customers has delivered an awesome annual growth of 15 percent revenue, 20 percent EPS and 16 percent in book value which is higher than the top quartile of banks between 10 and 100 billion dollars in assets. This has resulted us in being the top performing publicly traded US bank stock two of the last four years. We're proud of what the team has achieved but even more excited about the prospects and momentum going forward in 2025.

With that I'll move to slide seven and touch on our areas of focus. The top priorities for our company and senior management in many ways look very similar to last year which highlights the consistency of our strategy. Our clients are at the forefront of everything we do. Every decision we make is guided by the understanding that our clients are the foundation of our success. It is their trust and partnership that enable us to grow and thrive.

When our clients succeed we succeed and we also believe what gets measured gets done as evidenced by our best-in-class NPS. We're committed to building on this momentum and we will continue to look for ways to enhance the client experience and deliver moments that truly make our clients say well. Next our top financial priority remains improving our deposit franchise even further coming off of a year of incredible success. In 2024 we were opportunistic in hiring and continued to gain market share allowing us to reduce our wholesale funding and other high cost deposits. Our cost of funding improved in 2024 and with the tailwind of rate cuts we have achieved an impressive total deposit beta of 64% thus far in the easing cycle.

This is an amazing accomplishment especially considering we had industry leading loan growth of 12% over the same time period. This provides us great momentum for 25 and as a result we think the opportunities ahead are even stronger. We'll continue to look to grow the loan portfolio as we see strong opportunities across our diversified verticals for franchise enhancing loan growth from holistic relationships. We believe that a pro-business government agenda should lead to higher industry loan demand though we're not counting on that in order to meet our goals. As we continue to execute on both sides of the balance sheet we will seek to grow our net interest income above the industry average. As we've said many times before uniquely the easiest path for us to do so is by lowering our interest expense.

2024 was a year of investment for us one of the key areas of investment is our risk management infrastructure as we strive to meet and exceed our own and regulatory expectations with enhancements across people processes and technology. If we achieve the goals we've set for ourselves we believe risk management can be a strength and competitive advantage for customer bank. We will continue to undertake operational excellence initiatives to increase fee income and reduce expenses in certain areas to provide the fuel to reinvest into our franchise.

We will not hesitate to make investments that will position us for the long term. We are so focused on finding efficiencies across the platform and to be able to make and we're privileged to be able to make those investments while still achieving positive operating leverage. We will do all this with not taking our eye off of other key risk management areas ensuring we have we maintain strong capital liquidity and credit quality.

Turning to slide eight you'll see that the many accomplishments that delivered a strong fourth quarter are also providing great momentum for 25. We once again had a billion dollars of gross deposit inflows in the quarter and we continued to remix out our higher cost deposits. This led to a lower deposit cost of 39 basis points. We bucked the market trend growing our loan portfolio at an industry leading 19% annualized pace.

The combination of these factors resulted in a net interest income growth in the quarter of 6% and also increased margin by five basis points. As I mentioned we executed an operational excellence initiatives and are on track to achieve our target of 20 million dollars which will be able to reinvest into the franchise. As part of this I'm thrilled to say that as we fully transferred all CBIT customers to our in-house developed Cubics platform which both improves our controls and is providing a five million dollar annual run rate fee income as well as third-party technology expense reduction supporting the transition. We achieved all of this while maintaining strong credit quality. Advancing to slide nine you'll see our gap financials and then moving to slide 10 I'll run through the core financial highlights for the quarter and the full year.

We delivered core earnings per share of a dollar 36 in the quarter on net income of 44 million. For the full year this was a hundred and eighty three million dollars in core net income or 560 in EPS which represented a full year core ROE and ROA of 11.4 and 92 basis points respectively. These results while strong included a year of transition and significant investment which impacted profitability in the short term. But Q4 represents a nice jumping off point and provides great momentum as we head into 2025. As we see positive operating leverage from the benefits of investments we've been making we expect our ROE to improve to the mid-teens and ROA north of 1% respectively over the medium term.

On that note I'll cover our deposit transformation on slide 11. We are once again thrilled with the team with the team's efforts to improve our deposit franchise which was firing on all cylinders. To recap some of the incredible results total deposits increased by more than 775 million or 4%. Non-interest bearing deposits led by our cubic platform increased to 5.6 billion dollars or 30% of total deposits now standing at about the top quartile of banks between 10 and 100 billion. We reduced our broker deposits by around an estimated 500 million dollars in the quarter and once again brought in over a billion dollars of gross deposits. Importantly this continues our streak since early 2023 now at seven quarters in a row averaging at about a billion dollars in deposit inflows per quarter which we're using for remix.

As I mentioned by successfully running a deposit playbook we reduced our average cost of deposits by 39 basis points in the quarter or 64% beta so far in the down cycle. As a reminder our deposit beta on the way up was about 60% so we're off to a great start and importantly we had strong stability and deposits in connection with the re-pricing efforts. The teams we brought in since early 23 are doing incredible work. They manage relationships with over 1.7 billion dollars of granular low-cost relationship-based deposits approaching about 10% of our deposit base in just 18 months. The new commercial banking teams we hired last year managed about 900 million deposits at year end and about a billion as of this week.

We've increased the commercial client count of our franchise by almost 50% in the last two years which is just exceptional. Through their efforts and across the company we've already transformed the deposit franchise. To recap and put this in perspective since March of 23 we've paid down four and a half billion dollars of wholesale CDs and borrowings. Over that same time period we've increased our non-interest bearing deposits by over two billion dollars and in the next phase we've been reducing the level of higher cost and less strategic deposits at a consistent clip. With the deposit pipeline of over two billion dollars led by our new teams and with contributions across the franchise we are still in the very early innings as we walked you through last quarter.

As I mentioned earlier we believe we are well positioned to reduce our interest expense further to drive NIM and NII higher. With that let's turn to slide 12 on the loan portfolio.

The fourth quarter was another exceptional quarter of loan growth for us. We delivered 670 million dollars of franchise enhancing loan growth which was diversified across our platform. This quarter the largest contributors were from fund finance, our new commercial banking teams, commercial real estate, health care and mortgage finance. We continue to be able to step into the void in the commercial real estate lending market as we provided fulsome relationship based loans accompanied by significant deposits.

To put that in perspective the 340 million dollars in multi-family and commercial real estate loan book increase over the last two quarters has been more than self-funded with real estate industry related deposits coming from high quality institutional owners looking for a new relationship bank.

As you can appreciate this type of self-funding is really unheard of in the real estate industry and underscores the void we are filling in the market. Our lending is also very granular with an average loan size of around six million dollars originated in the quarter.

Despite our modest growth our concentration remains under 200% which is proving to be a significant competitive advantage against our peers. For the year we grew the entire loan book by 1.6 billion dollars which was about 12.3% growth and within our 10 to 15% target. This really bucked industry trends with most banks seen very little increases in loan balances. Importantly this growth has been well diversified coming from the many groups and channels of our franchise. Despite this growth our loan balances are still below where they ended in 2022. We have focused on replacing the less strategic portions of our loan book that we exited over the last two years with strategic franchise enhancing and holistic relationships.

While our deposit franchise and transformation gets more focused the franchise transformation is frankly evident on both sides of the balance sheet. We're seeing great opportunities to continue this momentum as we go into 2025.

With that I'll pass it to Phil. Thanks.

Thanks Sam and good morning everyone. On slide 13 we've provided the components of our net interest income which was 168 million dollars in the quarter and our net interest margin which increased to 311. The five basis points of expansion in the quarter was driven by the liability side of the balance sheet as we lowered deposit costs and had higher levels of average non-interest bearing deposits. You can really see this in the breakdown of the components of our six percent growth in NII. Well interest income was down modestly we were able to drive down our interest expense by about seven percent. This led to the increase in NII for the quarter and also helped expand our margin.

As Sam mentioned further interest expense reduction is our strongest lever for continuing margin and NII growth in 2025. In the quarter we exited about 480 million dollars in low yielding securities and we reinvested about a third of the proceeds in securities with 250 basis points higher yield and the balance into loans. As most of you know over the last few quarters we've taken steps to gradually reduce our asset sensitivity. Even so we feel that our modest asset sensitive profile gives us good option out optionality and that's really proving out today. Generally a higher for longer rate environment with an upward sloping yield curve should be a tailwind for customer's bank and importantly the organic actions on both sides of the balance sheet would be expected to more than offset any impact from potentially falling rates.

As a result we feel we are well positioned regardless of the near term rate trajectory. On slide 14 we'll cover non-interest expenses. Core non-interest expense was 108.6 million for the quarter. This was up about 2.2 million compared to Q3 adjusted for the one-time credit in non-income taxes we had last quarter. The primary driver of the increase was higher professional services expense including in connection with the enhancements we're making to our risk management infrastructure. Even with these higher levels of investment our core non-interest expense as a percent of average assets is still top quartile among our regional bank peers. On slide 15 I'll recap the progress of the operational excellence initiatives we discussed last quarter. On the last call we outlined a target of 20 million dollars of annual efficiency through a combination of fee income growth and expense savings to reinvest in our business.

I'm pleased to say that as of your end we are on track to achieve this target most of which has already been realized. On the revenue side as Sam mentioned the increased treasury management fee income from clients utilizing our cubic platform is already contributing at least five million dollars in annual fee income. Additionally through the efforts undertaken across our human and technology infrastructure we are on track to realize about 15 million dollars in annual expense savings. As we stated previously we undertook these initiatives to provide the capacity for the investments we are and will continue to make in our franchise to position us for success both in the near term and over the long term.

With that I'll move to slide 16. Here you can see our tangible book value increased to fifty four dollars per share this quarter. This is up about six dollars and fifty cents per share for the year which is around fourteen percent. This this keeps up with our 16 percent annual growth rate over the past five years. We believe TBV compounding is a key performance metric and our results put us among the top of our peers.

Moving to slide 17 our capital ratios across the board remain robust and provide us with substantial flexibility for organic growth opportunities. At 12 percent we remain in excess of our eleven and a half percent CET1 target despite utilizing some risk-based capital for loan growth in the quarter. Our TCE ratio was just ten basis points lower in the quarter even with four percent growth in the size of our balance sheet and the security portfolio repositioning. On slide 18 we continue to be pleased overall with our credit performance which has been a strength of our organization. NPA's remain low at just twenty five basis points. Net charge-offs declined in the quarter and to break that down a little further total net charge-offs declined by two point four million dollars or fourteen percent in the aggregate which resulted in a nine basis point decline in the NCO ratio and our commercial net charge-off rate declined to thirteen basis points in the quarter.

This is the second consecutive decline in our net charge-offs despite the continued growth in our loan portfolio and with that I'll pass the call back over to Sam before we open up the line for Q&A.

Thanks for that Phil. From an external perspective macroeconomic factors and confidence continue to point to a very positive outlook in twenty twenty five. As Phil mentioned the upward sloping yield curve should lead to a much better environment for the banks as a whole. The new administration sentiment is also pointing to a more favorable regulatory backdrop for the industry. As we look forward to the year we expect a resumption of discipline growth in the balance sheet. On deposits I'd point out that while we're targeting modest net growth we expect gross originations as in the past to be higher as we continue to remix out less strategic deposits especially in the first half of the year. On the loan side we're seeing very good opportunities to originate franchise enhancing loans across our various verticals but we're being very selective and from those opportunities we'd look for the loan portfolio to increase by about seven to ten percent or even more over the course of the year.

Importantly we will be very disciplined around deposit led loan growth. On NII when backing out the venture accretion income in twenty four we expect NII to conservatively grow by about seven to ten percent without adjustment. We do have levers for upside but it depends on deposit remix timing but this is already at these levels at the top of the industry at the current market rate curve.

Through the operational efficiency efforts including fee income growth from the cubic platform we'll look to bring our efficiency ratio back down to the low to mid 50s this year and then continue that progression to our mid 40s ultimate target over the medium term as the execution of our strategic priorities take hold and as we sunset some of our outsized investments. We'll continue to operate with higher levels of capital in the near term but with our current position and strong organic earnings potential we are well positioned to continue to support our clients with strategic growth.

Based on the industry outlook to date achieving this guidance would put us at the top of the industry in all metrics and while we have levers for upside we want to be conservative as the timing of deposit generation is not as certain as loan generation. Now to wrap up on slide 20 with the momentum generator from our accomplishments in 2024 we believe we are incredibly well positioned to continue to increase our franchise value. The strategy we employ to transform our institution is to empower top tier talent to lead with client service and it's really showing its power.

Our deposit franchise transformation efforts will continue with the goal of even further improving both the cost and quality of our deposits. We were able to effectively leverage our client relationships and new deposit generation to significantly reduce deposit costs in 2024 and we expect to further that effort in 25 independent of rate cuts. The teams we've recruited over the past few years across a focus set of diversified verticals positions us extraordinarily well to continue to win new client relationships and also take advantage of any industry expansion during the current environment. We feel confident in our ability to execute on these initiatives and will be well positioned to grow our NII and experience positive operating leverages from our investments.

At customers bank court we wake up in the morning to compete for our shareholders the management team is 100% in line as you heard from Jay in advancing the company's goals and continuing to deliver for our shareholders. We believe we have the right team along with a client centric culture to allow us to continue executing it on this strategy and drive franchise value in 2025 and beyond.

With that we'd be happy to take your questions.

Yeah, Steve, good morning. The pipelines are definitely strong. We continue to build with the pipelines at least sort of in the four to $500 million range. I will say as you normally know Q1 is usually a bit slower time. Obviously we had a very strong fourth quarter with closings that to get done by year end and so usually that rebuilds a bit.

There's also the question of some of the unexpected payoffs which is actually something we've been seeing a fair amount in some of our portfolios sort of earlier in the year. I think we definitely feel good about it. As Sam mentioned, there could be potential upside there and we'll certainly continue to support clients as we see that franchise enhancing loan growth. But we do want to remain disciplined and we're certainly not chasing any loan only relationships. It's very much holistically focused.

Yeah, and Phil, if I could just add to that. I think that the point about payoffs is very important. We had a number of payoffs in 2024 to put it in perspective. We had about a billion dollars of payoffs and paydowns in the fourth quarter, which really shows that the net growth that we experienced despite that was quite substantial and that actually gives us good confidence in going forward. We do anticipate that a lot of the payoffs have sunsetted mostly in 24. Having said that, I think that as there's a stronger commercial environment, you could see some refinancing activity across the portfolio, especially in some of our fund finance type private capital businesses. But I think we also added that slide on our loan growth slide, to really the chart to exemplify the really the diversification.

I think that's what's really important is we have a number of levers to pull as a year progresses.

Sure, absolutely. Firstly, I'll start with saying, Steve, your intuition is correct. Most of that non-interest-bearing deposit growth came from our cubic platform customers. And after the election, in our clients experience a tremendous amount of increased market activity, which as you can imagine leads to higher balances, which we supported in order to serve our clients when they needed us most.

We'll wait and see where things fully settle in. But it's worth noting at the end of the year, we had about $3.6 billion in spot balances there. And on the point of our limits and targets, yes, it's above 15%. But importantly, we are holding all of these balances in cash to mitigate any perception of liquidity risk. And our management team is going to continue to evaluate limits and targets and take a holistic risk-based approach as we assess these levels going forward. So I think that's the important way that we're approaching this. At the end of the day, we want to make sure that we're there to serve our customers. You also heard me talk about the migration to our own in-house platform, which is not even in beta.

It's 100% switchover that we've made. And it's also helped us level up in fees. We had almost $2 million in fees in the fourth quarter related to our cubic platform and the customers. Now, obviously, there's increased market activity there. You also heard Phil talk about 5 million plus is where we're guiding to a minimum. But we'll wait and see how things settle in. October was slow. In November was slow for the first week. And things have been pretty active. In the first two weeks of January as an example, we're also in slow. So increased client activity leads to higher balances. Higher balances leads to interest income. And it also leads to higher fee income.

Yes, Steve. Our base case had two rate cuts, which were including one early in the year in March. Obviously that trajectory moves around a lot, but we look at a pretty wide range anywhere from zero to five rate cuts. Okay, great. Appreciate all of Paul and I'll step back here.

Yeah, sure. I'll start off and then Phil, let me know if I missed anything. As you can imagine, the two biggest drivers of a range would be rates and pace of loan growth. So focusing on the high and it's actually based on the current rate curve, which is two cuts. And if you sort of normalize for backing out the accretion as I walk through in the script, that really puts us at about 10% or the high end of the industry. And we do have potential levers to do better, but we're sitting in January. There's a lot of things that can change as the year progresses, including the rate curve, which has been moving as you know, materially on a week to week basis.

So that's hopefully a bit of context on the range. But I would just also point you back to the power of the franchise. And if you noticed on the slide we had, our NII has grown by 19% annually over the last five years.

We hope to continue, obviously, not necessarily at that pace, but at industry leading pace going forward.

Yeah, hey, Peter. So again, a couple of things. One, as Sam mentioned, we are still modestly asset sensitive. So with two rate cuts in there, that would have some downward impact. And the other level lever is also, as Sam mentioned earlier, sort of just where some of the non-interest average non-interest bearing balances set on.

And to kind of put that in perspective, Peter, you can see that on our NII slide, we broke out interest income and interest expense. So you can see that our interest income only slightly declined in the quarter, despite the fact that you had the full impact of September through December rate cuts. So I think that really just speaks to, as Phil mentioned, the mixed shift that we had across the franchise and those things need to sort of take time to stabilize it.

Yeah, hey, Peter. So I think you're referencing there was about an $8 million increase in NPA's. It's actually not Oreo. It was a security that we put on NPA in the quarter, which we're in the final stages of restructuring with the issuer and Phil were well reserved, but put that on in the quarter. So that's actually where that's coming from. On the, on the loan ACL side, that's really related to increase in the loan book. So if you see our coverage ratios there were relatively stable, but obviously the increase loan volume is going to require increased provisioning.

Sure. Good morning, Kelly. So I think that first of all, you're touching a couple things. One thing I just sort of highlight is broker deposits, we continue to reduce. I'd also just sort of talk about, I think we spent some time on the timing of deposit remix. I think last quarter we talked about about a north of 500 million that we were planning to remix in the fourth quarter. I believe four, seven or four, eight percent cost of funds. Similarly, we've scheduled about 500 million dollars in the first quarter, which is currently at about four and a half, to kind of put that in perspective and put the scale of the continued remix. If you look at our spot cost of deposit, I think that's a pretty good indicator of giving you a sense of how the first quarter will trend down from a cost of deposit perspective.

And then I'll point you back to, while the pipeline is two billion, we talked about our goals for the new teams. And we think the new team should really be able to drive one and a half to two billion dollars or so in 2025, which is at that sort of call it about 500 million or so. On average a quarter, it'll be lumpy, it won't be necessarily perfectly consistent and linear. Having said that, that's sort of where we expect.

Those deposits are coming in 150 to 200 basis points below our cost of funds. I think that sort of helps give you some perspective on how we're sort of seeing the overall remix and some of the levers and puts and pulls.

Sure, absolutely. Kelly, let me just address one thing on the non-transparent deposits. While we had a big driver from our cubic client customers, we still had nine figure deposits, which would have been a highlight of the quarter across the overall bank and non-transparent deposit growth, even with as you know, sort of Q4 type taxes and payments that kind of go out towards the end of the year. But to get to your question, I think post November's election, I think it's really reinforced that digital assets are here to stay. And banks are going to handle this over time, just like any other banking services that are being provided. And at customers' bank, we have the benefit of being a first mover, only mover that has a network, and it's very difficult to replicate.

So we're sitting in the primary seat with operating and transaction accounts with the largest and most institutional customers in the space. So obviously, there are early green shoots of clarity on regulation for our customer base, which I think is going to provide overall clarity for how banks can operate, which will really benefit the overall industry. And I think we feel fortunate that we've been able to support our customers, build very long deep relationships, and also really have a superior technology service that we've been able to support and provide to our customer base and also prove to them that on our own platform now, that we have the technology prowess to continue to support them in the future.

Yeah. Hey, Matt. Good morning. As we kind of said on the last call, it really settled into a spot where it's been pretty immaterial. So it was low single digit basis point impacts are really not much. And again, we've realized essentially the vast majority of the discount accretion here now through 2024.

Yeah, sure. So, you know, it's a great question. And as you pointed out, it has been declining, but that's really as a result of a mix shift. If you look at our sort of corporate and commercial and consumer, you know, reserve levels, they've been stable or even on the commercial side, you know, some slight increases. So, you know, that was really mostly mixed driven. I think we as we kind of have the outlook looking forward, we still feel like those levels as we sit today, you know, probably feel like the right respective, you know, around the right respective levels. But as I mentioned earlier with increased loan growth, you know, you could see some increased provisions.

So, you know, well, we don't have a formal guide on it. I think the directional range we've given in the past is kind of 18 to 22 million. You could see that probably be a bit higher, just given the higher, you know, the continued loan growth.

Yeah, sure. So, you know, I'll start with the new customers. I think you're referencing something about sort of third parties or payment providers. But at the end of the day, we supported existing customers, and really it was sort of increased market activity, you know, with existing customers. And I think I touched on this, you know, before is we're holding all of this in cash. That's our risk, but again, you know, 15% was actually something that we said, you know, a couple years ago, you know, for this vertical, you know, prior to becoming the primary, you know, banking institution, we've held to it and as customer activity increased, you know, we we supported our customers. And in terms of the new, you know, a new level, it's to be determined.

It's got to go through sort of our typical, you know, process, and we have to be thoughtful thinking about, you know, how what our customers need. We also want to see where things settle in. It's only been, you know, 60 days or so. So I think we'd like to see where things settle in. If you look back to last year, it's tough to remember that in January you had the ETFs and that were approved in the fourth quarter, you had the election in the first quarter, you know, there's additional activity. So we'd like to see, you know, and get some more, you know, history of client activity. And then, you know, we'll be able to sort of make much more of an informed call then.

Yeah, sure, Matt. So I'll start and fill, you know, I don't have the numbers exactly in front of me, but I think we've gone down by a couple hundred million dollars over the last, you know, couple quarters. And I think you heard me talk about my script about another 500 million or so in the fourth quarter, you know, which you'll see sort of filed in the near term. You know, I'd also say that the 500 million or so of deposit remix that we've scheduled, you know, has a good overlap, you know, with our broker deposits. So higher costs, less strategic, you know, deposits are going to be the focus areas of our deposit remix. So as we bring in those deposits, you could imagine that, you know, broker deposits or deposits, you know, that have been classified as broker, I think, is also an important distinction.

You know, as you think about sort of the overall FDIC rules and how that has evolved are going to be part of our target universe.

Sure. Good morning, Hal. Thank you so much. As I mentioned last quarter, I think the easiest way to sort of summarize this is we're working on enhancements as he described in sort of the punch list across people, process and technology, you know, on the people side, you know, we had had hired at that time and since hired even more, you know, senior, seen, seasoned executives and they're helping to level up the overall risk management infrastructure and helping us build the bank of the future.

From a process perspective, we talked about some of the third party services and getting top tier firms to help us with design implementation that also have sort of a good mastery of the external environment. And from technology perspective, we stated our goal was to transition to in-house and I'm proud to say that this was a long time coming and something we started in 2023. But as of the end of the year, we fully transitioned to, you know, all of our real-time payments clients to Cubics.

Sure. So as I mentioned, it's a bit of a last quarter. It's a bit of a bell curve. So I think we peaked at, you know, five and a half to somewhere between five and a half and six million dollars and a quarter related to these efforts. December, January is the peak. It's going to taper off, you know, down a little bit from there. And then, you know, by the middle of the year, we'll get back to sort of typical, you know, normalized levels. So, you know, we're past the 50% point, I guess, is the best way to think about it. But, you know, month to month, we'll see where we get to, but we're really, you know, have a well-executed plan that we hope to put behind us in the first half of the year.

Sure. Hey, Kelly. So, yeah, the sales did occur, you know, kind of late in the quarter through the halfway park and then through the halfway point, so kind of later in the quarter. And then the reinvestment was also kind of gradual. You can imagine the securities happened a little bit earlier, but again, still pretty late in the quarter. And then the loans were just kind of organically as they as they came on. And you can probably imagine the majority of that loan growth always seems to come right around December 31st at the end of the year, so tended to be a bit more towards the tail. But generally, we sort of think about it as probably having about, you know, five basis points of incremental, and then pick up in 25.

Thank you, everyone, for your continued interest in and in support of customers' bank Corp and the incredible franchise that we're building. We look forward to speaking with you next quarter. Thank you. Have a great day and a great weekend.