Customers Bancorp NYSE: CUBI executives highlighted strong first-quarter fiscal 2026 growth in deposits and loans, expanding non-interest-bearing balances, and continued investment in technology and risk management during the company’s quarterly earnings call. Management also reaffirmed its full-year outlook and detailed initiatives around AI adoption and its cubiX payments platform.
Leadership transition and customer service metrics
President and CEO Sam Sidhu opened the call by noting that Jan. 1 marked his first day as CEO of Customers Bancorp, following a “careful multi-year succession process.” Sidhu said Executive Chairman Jay (referred to by first name) remains engaged during the transition and emphasized that the company’s strategy and culture are not changing.
Sidhu pointed to the company’s Net Promoter Score as evidence of service differentiation, stating that it rose to 81 this year, up eight points from last year and “nearly twice the banking industry average of 41.”
Quarterly performance: deposits, loans, and profitability
Management reported that deposits and loans grew at double-digit annualized rates during the quarter. Sidhu said total deposits grew 16% and total loans grew 15% on an annualized basis in Q1. CFO Mark McCollom reported deposits increased by more than $800 million in the quarter to $21.6 billion, up $2.7 billion, or 14%, year over year. Loans rose by more than $600 million to $17.4 billion, representing 15% annualized growth.
McCollom said the company generated GAAP and core EPS of $1.97, with core return on equity and return on assets of 13.1% and 1.13%, respectively. He attributed year-over-year core EPS growth of 28% to “consistent execution,” while also pointing to operating leverage: year-over-year core revenue growth outpaced core expense growth by nearly two times, contributing to a 300-basis-point improvement in the core efficiency ratio.
Net interest income (NII) for the quarter was $191.4 million, up $24 million, or 14%, from the prior year. McCollom said the expected sequential decline in NII and net interest margin was primarily due to roughly $10 million of fourth-quarter accretion income that did not repeat and a lower day count in the first quarter. He also noted the planned redemption of $110 million of higher-cost subordinated debt late in the quarter, which he said should help NII in the second quarter.
Non-interest expense totaled $112 million. McCollom said that excluding about $5 million of discrete fourth-quarter expenses previously flagged, expenses were “pretty much flat” sequentially. Core non-interest expense as a percent of average assets was 1.82%, which he described as “among the top decile of regional bank peers.”
Deposit mix improvement and commercial team momentum
A major theme of the call was continued progress in deposit composition. McCollom said non-interest-bearing deposits grew by more than $400 million in the quarter, including $200 million from “spot balance increases” in the digital assets channel and approximately $230 million from the “traditional commercial franchise.” Total non-interest-bearing deposits reached a record $6.7 billion, representing over 31% of total deposits, which McCollom described as roughly top decile among regional bank peers.
Average total deposit cost declined 8 basis points to 2.46% during the quarter, while the cost of interest-bearing deposits declined 18 basis points. Executives attributed the improvement to a mix shift toward relationship-based deposits.
McCollom also highlighted production from newer commercial banking teams. Ten teams launched in April 2024 now manage more than $2.1 billion in deposit balances across roughly 8,000 accounts, with 32% non-interest-bearing balances at an average total deposit cost of around 2%. He said those teams generated a deposit-to-loan ratio of about 2.7x and became profitable in roughly three quarters.
In total, the company added more than 1,100 net commercial accounts in Q1, a 5% increase in the commercial account base in a single quarter. McCollom said more than 50% of net growth came from 2025 vintage teams, which have produced “low nine-figure” deposit balances at an “extremely attractive blended cost of about 50 basis points,” though he cautioned that deposit funding typically lags account openings; less than 15% of accounts opened during the quarter were meaningfully funded.
During Q&A, Sidhu said the company’s historical “$2 billion-ish” deposit pipeline is “significantly higher” now, driven by the ramp of recently hired teams and increased inbound interest.
AI, cubiX payments expansion, and outlook
Sidhu outlined four priorities for 2026: AI and automation, payments and the cubiX ecosystem, organic balance sheet growth and talent recruitment, and “risk management excellence.” He argued that the regulatory environment around payments and digital assets is becoming more constructive and said the company intends to be viewed as “a model for risk management.”
On AI, Sidhu said Customers is moving “aggressively to operationalize AI across Customers Bank,” with initial commercial bank focus areas including loan onboarding and credit underwriting, deposit customer onboarding, and payments orchestration. He said 75% of team members have AI licenses, more than 500 agents and custom GPTs have been built internally, and AI-enabled workflows have saved more than 28,000 hours, “unlocking the equivalent of almost 15 FTEs.” Sidhu said the company recently signed a partnership “with a large frontier model provider,” without naming the provider, and said more details would follow.
Sidhu also disclosed that his prepared remarks were delivered by an AI clone as “a live demonstration” of the company’s AI efforts.
On payments, Sidhu described cubiX as a platform providing access to multiple rails, including wire, ACH, RTP, FedNow, and an intrabank instant payments platform. He said cubiX is “one of the largest commercial payments platforms in the country by transaction volume.” Despite declines in digital asset industry volumes and prices, Sidhu said balances were “relatively stable” and the bank processed $500 billion in transaction activity for digital asset clients in the first quarter.
McCollom said period-end cubiX deposits were “right around $4 billion,” with quarterly average balances around $3.6 billion. Sidhu said mortgage finance and real estate currently represent about 20% of cubiX deposits and highlighted a near-term focus on growing real estate transaction settlement relationships, which he said could drive non-interest-bearing deposit growth. He told analysts the bank expected about $250 million of non-interest-bearing deposit growth related to new cubiX verticals “just in the next 90 days.”
Executives also discussed loan growth drivers, with McCollom citing fund finance, mortgage finance, and healthcare as top contributors in the quarter. He said the mix can shift quarter to quarter, but emphasized a diversified multi-vertical platform and a “very defined credit box” in areas such as lender finance.
Credit performance was described as stable. McCollom said non-performing assets as a percent of total assets remained low and below peers, and net charge-offs declined modestly sequentially. Addressing an increase in multifamily non-performers, he said one loan was moved to non-accrual and charged down to collateral value, though it was still performing under contractual terms.
Tangible book value per share rose to $63.54, up 3% quarter over quarter and 16% year over year, McCollom said. The tangible common equity ratio was 8.3%, up 60 basis points year over year. During the quarter, the company repurchased about 620,000 shares at a weighted average price of about $68 and redeemed the $110 million subordinated debt issuance, while noting prior redemptions of more than $140 million in preferred stock over the past year.
For 2026, McCollom reaffirmed the company’s full-year outlook, including projected net interest income growth of 7% to 11% over 2025 and non-interest expense of $440 million to $460 million. He said there were no changes to capital or tax rate targets.
About Customers Bancorp NYSE: CUBI
Customers Bancorp, Inc NYSE: CUBI is a bank holding company headquartered in Phoenixville, Pennsylvania, and the parent of Customers Bank, a federally chartered institution. The company offers a full suite of commercial and consumer banking services, combining traditional deposit and lending products with modern digital banking platforms. As a publicly traded entity, Customers Bancorp focuses on delivering tailored financial solutions to mid‐market companies, small businesses, professionals and individuals across the United States.
Through its commercial banking division, the company provides term loans, lines of credit, real estate financing, asset‐based lending and treasury management services.
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