Profit machinery upgraded while volume still arriving

Customers Bancorp, Inc. (CUBI) — this company's answers

The model's full reasoning — Q3 2018 call → NOWe need to determine if the transcript conveys both: (1) a realized, company-made step-up in per-unit economics, and (2) volume arriving now and early, with most still ahead. Let's analyze the transcript. Management discusses several things: They sold low-yielding securities and repaid borrowings, which improves NIM. They expect NIM to expand gradually. They have a target NIM of 2.75% within 12-18 months. They say "We hit a trough in Q3 on the margin, and you should expect margin to gradually expand starting with the fourth quarter." That is a forward-looking statement, not yet realized. They also mention they are not originating loans below 5.25% in Q4. That is a current action but not yet realized in results. They talk about deposit growth: "core deposit growth as part of strategy accelerated immensely in Q3 2018" and they list reasons: escrow balances increased, launched CB digital bank, BankMobile deposits increased. So deposits grew in Q3. That is volume growth already occurring. They also say "we expect significant growth in low cost BankMobile white label deposits starting sometime in next year" and "we think that within 12 months after the launch of our relationship with our white label partner, which is T-Mobile, that we expect deposits to be about $500 million" - that's future. They talk about C&I loans growing 15% year-over-year, and multi-family declining. They expect to grow C&I and consumer loans. They say "We expect multi-family loans to end 2018 at about $3.3 billion and continue to head lower, and next year we believe they could be down at least 20%." So they are reducing multi-family. They talk about strategic priorities: "create shareholder value through significantly improved profitability" - they target ROA of 1.25% within three years, NIM of 2.75% by end of next year. These are targets. They talk about BankMobile: "We expect the fourth quarter loss not to exceed this number." They are working on making it profitable by end of next year. That's future. They talk about "operating expenses decreased to 17% over the prior year" - that's a cost reduction, but they also say they are investing in technology.

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