Customers Bancorp, Inc. Q4 FY2025 earnings call

• Jay Sidhu congratulated Sam Sidhu on his CEO appointment and highlighted the bank's growth from a $175 million troubled bank to a $25 billion asset institution over 16 years. - Sam Sidhu noted the Net Promoter Score increased to 81, up 8 points from the prior year, and outlined 2026 priorities including organic growth, team recruitment, payments leadership, and AI adoption. - Mark McCollom discussed deposit quality improvement, deposit beta at 54% in Q4 with a strong 71% on interest-bearing deposits only, loan growth diversification, noninterest expense details including unique items, and capital position strengthened by sub debt issuance.

In the quarter, total deposits grew almost $400 million, ending at just under $21 billion for the quarter, with full-year deposits up about $2 billion or 10%. Loans grew approximately $500 million or 3% quarter-over-quarter, led by commercial real estate, health care, and mortgage finance. Net interest income increased 22% year-over-year to $204 million, and the net interest margin expanded by 29 basis points to 3.4%. Tangible book value per share grew to $61.77, up 3% sequentially or 14% annualized. Deposits were led by new commercial banking teams adding $1.6 billion in 2025, noninterest-bearing deposits had 9 figures of growth in Q4, and loans showed broad-based growth with diversification across businesses.

• Loan growth target for 2026: 8% to 12%. - Deposit growth net of remixing for 2026: 8% to 12%. - Net interest income expected for 2026: $800 million to $830 million (7% to 11% growth). - Noninterest expenses projected for 2026: $440 million to $460 million (2% to 6% growth). - Common equity Tier 1 target for 2026: 11.5% to 12.5%. - Effective tax rate expected for 2026: 23% to 25%.

• Volatility in cryptocurrency prices could impact cubiX-related deposits. - Regulatory and compliance matters related to digital assets and the cubiX platform. - Dependence on successful team recruitment and integration of new teams for continued growth.

Q: About fee income growth and monetization for 2026?

A: Sam says noninterest income has averaged about $30 million quarterly, and 2026 focus is on better monetizing mature fee income businesses.

Q: Deposit growth from cubiX and digital assets?

A: Sam states no major contribution from digital assets, deposit growth guided is driven by the core commercial bank.

Q: Teams hiring and deposit growth?

A: Sam discusses team hiring efforts, focusing on low-cost deposit gathering, with new teams starting to pick up by mid-2026.

Q: CubiX platform resiliency in face of cryptocurrency volatility?

A: Sam talks about network activity and balance stability, with balances operating within a plus or minus 10% threshold.

Q: Credit quality and NPL increase?

A: Mark says NPA was 29 basis points of total assets, with the NPL increase being from one transaction expected to be resolved in Q1.

Q: CubiX competition and network effects?

A: Sam states cubiX has a barrier to entry with strong network effects, making it difficult for others to compete.

Q: AI efforts and processes?

A: Sam discusses AI governance, training, data transformation, and workflow automation across the bank for improved efficiency.