Customers Bancorp NYSE: CUBI reported third-quarter earnings per share of $2.25, up about 10% from the prior quarter, as loan and deposit growth, higher net interest income and productivity initiatives supported profitability.
Chief Financial Officer Mark McCollom said the bank generated a 14% return on equity and a 1.16% return on assets during the quarter. He noted that Customers Bancorp has “virtually no goodwill” on its balance sheet because it has grown organically rather than through bank acquisitions, and said its ROE ranked in the top quintile among banks with $10 billion to $100 billion in assets.
Record Deposits and Loan Growth
Total deposits reached a record $22.6 billion at quarter-end, increasing 4% sequentially and $2.2 billion year over year, McCollom said. Non-interest-bearing deposits rose by about $300 million during the quarter to a record $7.2 billion, or 32% of total deposits. Brokered deposits declined by about $370 million and represented less than 20% of total deposits at quarter-end.
Loan balances increased nearly $500 million, or 3% from the prior quarter, to $18.5 billion. Loans were up 14% year over year, with growth led by fund finance, healthcare and commercial real estate, more than offsetting lower mortgage warehouse and real estate specialty finance balances.
Management raised its full-year loan growth outlook to 12% or more. It expects deposits to increase at least 9% in 2026, despite intentionally reducing roughly $1 billion of higher-cost deposits during the year.
During the question-and-answer session, management said customer activity and loan demand remained generally strong, although it characterized sentiment in commercial real estate as somewhat more cautious. McCollom also noted that much of the quarter’s loan growth occurred during September, positioning average loan balances higher in the fourth quarter.
Net Interest Income and Margin Outlook
Net interest income exceeded $208 million, rising $15 million, or 8%, from the second quarter. The net interest margin expanded 2 basis points to 3.19%, while September’s run-rate margin was approximately 3.25%.
McCollom said the timing of deposit growth earlier in the quarter and loan funding later in the quarter limited reported margin expansion. He said gross loan originations carried a spread of about 4% over deposit inflows during the period, and that new loan yields averaged 6.83%, compared with an overall portfolio yield of 6.33%.
The company tightened its 2026 net interest income outlook to a range of $805 million to $810 million. McCollom said momentum is supported by low-cost deposit growth, diversified lending and an opportunity for fixed assets to reprice heading into 2027.
Management said the deposit beta during the first 30 days following September’s rate increase was about 33%, compared with around 60% during the previous rising-rate cycle. McCollom said deposits brought in by newly recruited commercial banking teams generally carry an all-in cost in the low-2% range.
AI, Recruiting and cubiX Expansion
Chief Executive Officer Sam Sidhu said the company has expanded its use of artificial intelligence and automation in lending, deposits and payments. Its AI-powered underwriting process has reduced cycle times by 95%, according to Sidhu, while a rebuilt commercial deposit onboarding process can open complex accounts in minutes rather than days.
The bank has more than 60 employees focused on AI transformation, along with forward-deployed engineers from technology partners working alongside internal teams. Sidhu said Customers Bancorp doubled its deployed AI agents, estimated cumulative time savings at 76,000 hours and identified more than $15 million of annualized capacity.
Revenue per employee increased 13% year over year on an annualized basis, while pretax profit per employee rose 34%, Sidhu said. The company is targeting a low-40% run-rate efficiency ratio by the end of 2027.
The bank’s cubiX payments platform continued to diversify beyond digital assets. cubiX accounts increased 19% in the third quarter, with real estate and fund finance representing more than 30% of cubiX deposit balances. Management said network activity is on pace to exceed last year’s $2 trillion volume.
In response to analyst questions, Sidhu said non-digital-asset cubiX balances totaled roughly $1.4 billion, while digital asset deposits were approximately $3.1 billion. He said the bank had not seen material changes in customer activity due to perceived competition in digital asset payments and described cubiX deposits as predominantly non-interest-bearing.
Customers Bancorp is also developing extended-hours trading capabilities, correspondent banking services and cross-border payment functionality, according to management.
Expenses, Capital and Credit
Non-interest expense totaled $113.4 million, down $1.5 million from the second quarter. The efficiency ratio improved by approximately 340 basis points sequentially, and non-interest expense as a percentage of average assets was 1.68%, McCollom said.
The company updated its full-year non-interest expense guidance to $460 million to $465 million. Management expects expenses to increase in the fourth quarter, citing incentive compensation, technology investment and deposit-growth initiatives.
Tangible book value per share rose 10% year over year to $65.66. The company estimated its common equity tier 1 ratio at 12.6% and its tangible common equity-to-tangible assets ratio at 8%. During the quarter, it repurchased nearly 500,000 shares, or about 1.5% of common shares outstanding.
Credit quality remained stable, with nonperforming assets declining 8% from the prior quarter. Nonperforming assets represented 29 basis points of total assets, while net charge-offs improved to 28 basis points from 34 basis points in the second quarter. McCollom said the bank continues to monitor potential pressure from loan rate resets, which could require some borrowers to be restructured to maintain repayment capacity.
About Customers Bancorp (NYSE:CUBI)
Customers Bancorp, Inc is a bank holding company headquartered in Wyomissing, Pennsylvania. Through its principal subsidiary, Customers Bank, the company provides banking and financial services to businesses, entrepreneurs, professionals and consumers in the United States.
Customers Bank offers commercial and industrial lending, commercial real estate financing, small business lending, mortgage warehouse financing, venture banking and other specialized credit products. Its services also include business and consumer deposit accounts, cash management, treasury services, online banking and payment solutions.
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