Customers Bancorp, Inc. (CUBI) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents a strong financial outlook with increased guidance for deposit, loan, and net interest income growth. The Q&A session reveals optimism for fee income and loan growth, despite some vague responses on digital assets. The cubiX platform's expansion and AI utilization are positive indicators. The market cap suggests moderate volatility, leading to a positive stock price prediction.
Key Financial Performance
Core EPS $7.61 per share, up from $5.60 per share in 2024, representing a 36% year-over-year increase. This growth was attributed to strong financial performance across the board, including deposit and loan growth, as well as improved efficiency.
Low-cost core deposits Grew at a 16% compounded annual rate over the last 6 years. This growth was driven by a focus on deposit-led growth and improving the quality of the deposit franchise.
Net Promoter Score (NPS) Increased to 81, up 8 points from 73 last year. This improvement reflects enhanced customer satisfaction and service quality.
Payments volume $2 trillion in 2025, a 30% increase from $1.5 trillion in 2024. This growth was driven by the success of the cubiX platform and its utilization across payment rails.
Deposits Grew by $2 billion or 10% year-over-year, led by new commercial banking teams that added $1.6 billion in deposits. This growth was supported by a focus on relationship-based granular deposits.
Loans Grew by 15% year-over-year, with broad-based growth across commercial real estate, healthcare, and mortgage finance.
Net interest income Increased by 15% year-over-year, reaching $204 million in Q4 2025. This was driven by higher average loan and deposit balances and a decline in blended cost of deposits.
Efficiency ratio Dropped by over 6 percentage points year-over-year, reflecting improved operational efficiency.
Tangible book value per share Grew by 14% year-over-year, continuing a multiyear trend of 15% annualized growth. This growth was achieved while maintaining strong capital ratios and supporting asset growth.
Return on equity (ROE) Increased by 450 basis points year-over-year, reflecting improved profitability.
Return on assets (ROA) Increased by 33 basis points year-over-year, reflecting improved profitability.
Noninterest-bearing deposits Grew by over $500 million year-over-year, apart from increases from cubiX clients. This growth was driven by the performance of new commercial banking teams.
Net charge-offs Declined by 10% in Q4 2025, with commercial net charge-offs remaining low at 16 basis points annualized, excluding the small consumer portfolio.
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Operating Highlights
cubiX Payments Platform: Achieved $2 trillion in payments volume in 2025, a 30% increase from 2024. Positioned as the #1 commercial payments network in the U.S., surpassing major players like Max and VISA.
AI Integration: Implemented AI across the organization, with employees reporting a 20% productivity gain. Over half of the workforce is using enterprise-level AI platforms.
Deposit Growth: Deposits grew by $2 billion (10%) in 2025, with $1.6 billion contributed by new commercial banking teams.
Loan Growth: Loans increased by 15% in 2025, driven by diversified sectors such as commercial real estate, healthcare, and mortgage finance.
Operational Excellence Initiative: Targeting $20 million in run-rate proceeds through revenue and expense initiatives to reinvest in strategic growth areas.
Efficiency Ratio: Improved efficiency ratio to 49.5%, reflecting strong cost management and operational efficiency.
Team Recruitment: Focused on recruiting top-performing teams, with active discussions underway. Recent hires contributed significantly to deposit growth.
Payments Expansion: Expanding payments capabilities to deepen and broaden the cubiX network, targeting new verticals like real estate for low-cost deposit growth.
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Risk or Challenges
Regulatory Compliance: The company acknowledges that forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially. This indicates potential challenges in meeting regulatory requirements and adapting to changes in securities laws.
Deposit Growth and Cost Management: While the company achieved significant deposit growth, maintaining low-cost deposits and managing deposit betas effectively in a changing interest rate environment could pose challenges.
Loan Growth and Credit Quality: The company targets 8%-12% loan growth, but maintaining credit quality amidst this growth could be a challenge, especially in diversified loan portfolios.
Technology Investments and AI Integration: The company is heavily investing in AI and technology to enhance client experience and productivity. However, the success of these initiatives depends on effective implementation and adoption, which could be a challenge.
Payments Infrastructure Expansion: The company aims to expand its payments capabilities and maintain its position as a leader in commercial payments. However, scaling these operations and ensuring seamless integration with existing systems could be challenging.
Recruitment and Retention of Talent: The company emphasizes team recruitment as a key strategy. Attracting and retaining top talent in a competitive market could be a challenge.
Economic and Market Conditions: The company operates in a dynamic economic environment, and changes in market conditions, such as interest rate fluctuations, could impact its financial performance.
Operational Efficiency: The company is targeting $20 million in operational excellence initiatives. Achieving these cost savings while maintaining service quality and investing in growth could be challenging.
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Guidance & Outlook
Loan Growth: Targeting loan growth of 8% to 12% for 2026, driven by commercial teams onboarded and continued recruitment.
Deposit Growth: Expecting deposit growth net of remixing of 8% to 12% for 2026, supported by strong pipelines and commercial team performance.
Net Interest Income: Projected to be $800 million to $830 million for 2026, representing growth of 7% to 11%.
Noninterest Expenses: Expected to range between $440 million to $460 million for 2026, reflecting growth of 2% to 6% due to investments in people and technology.
Capital: Targeting common equity Tier 1 of 11.5% to 12.5% for 2026, supported by strong organic earnings potential.
Effective Tax Rate: Expected to be between 23% and 25% for 2026.
Payments Infrastructure: Plans to deepen and broaden the existing payments network and product offerings, targeting additional networks of prospective clients within the real estate industry to drive meaningful low-cost deposit growth.
AI Integration: Continuing to leverage AI for enhanced client experience and productivity gains, with a focus on orchestrating workflows and delivering products and services faster.
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Shareholder Return Plan
5-year total shareholder return: Over 300%, placing the company at the top of its peers in the financial services industry.
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Key Q&A
Q:What are the expectations for fee income growth in 2026?
A:Management highlighted a diversified portfolio of fee income businesses, with different businesses stepping to the forefront each quarter. They averaged about $30 million in fee income from Q2 to Q4 of 2025 and expect to better monetize matured businesses in 2026.
Q:What is the outlook for deposit growth in 2026?
A:Deposit growth is expected to be driven by the core commercial bank, with new banking team hires contributing significantly. The company achieved $2 billion in deposit growth in 2025, and management highlighted the potential for additional growth through payments expertise and the cubiX platform.
Q:What are the plans for hiring additional teams in 2026?
A:Management is in discussions with half a dozen teams, focusing on low-cost deposit gathering. Hiring in 2026 will primarily impact 2027, while hires from 2025 are expected to contribute significantly in 2026.
Q:How does the $50 billion transaction volume relate to deposits?
A:The $50 billion transaction volume is tied to existing customers and aims to strengthen relationships and operational efficiency. Management expects $500 million in non-digital asset cubiX-related deposit growth in 2025 to be the floor for 2026.
Q:What is the guidance for loan growth in 2026?
A:Loan growth is expected to be diversified across segments, with no particular segment being more bullish than others. Management anticipates strong performance throughout the year, with typical seasonal variations.
Q:Does the expense guidance for 2026 include team hiring?
A:Yes, the expense guidance accounts for ongoing team hiring, supported by operational excellence initiatives to offset costs. Professional fees are expected to decline as risk infrastructure build-out costs decrease.
Q:What are the opportunities for the cubiX platform outside digital assets?
A:Management sees opportunities in industries like mortgage finance, retail, and commercial real estate closings. They aim to deepen existing relationships and expand into new customer relationships, particularly in less tech-savvy industries.
Q:How resilient is the cubiX platform to cryptocurrency market volatility?
A:The platform benefits from increased trading activity during market volatility. Balances generally operate within a plus or minus 10% threshold, and management has seen a step function increase in balances since Q4 2024.
Q:What are the priorities for deepening client relationships in 2026?
A:Management plans to add new payment rails, enhance fiat and digital asset on-off ramps, and provide bespoke functionalities to strengthen client relationships and operational efficiency.
Q:What is the credit quality outlook for 2026?
A:Credit quality remains strong, with low nonperforming loans. A $10-11 million credit is under agreement for resolution in Q1 2026. Multifamily loans saw a $2 million increase, but overall credit quality is stable.
Q:What is the starting point for the net interest margin (NIM) in 2026?
A:The starting point for NIM in 2026 is around 3.25%, with potential for growth throughout the year. Management noted modest asset sensitivity and expects improvement as the year progresses.
Q:What is the size of the customer base for the cubiX platform?
A:The cubiX platform serves hundreds of customers, with a focus on broadening the network and adding traditional finance nodes to strengthen the ecosystem.
Q:What is the status of the regulatory order?
A:The company is substantially done with its plan as of the end of 2025 and aims to put the regulatory order behind them in 2026.
Q:What are the yields on new loan originations?
A:New commercial loan originations yield between 225 and 275 basis points over Fed funds or SOFR, with some business lines approaching 300 basis points.
Q:What are the competitive advantages of the cubiX platform?
A:The platform benefits from network effects, operational scale, and significant investments in risk and compliance. Few institutions can compete due to the high barriers to entry and the platform's established market position.
Q:How is AI being utilized within the organization?
A:AI is being used for digital onboarding, CRM enhancements, credit underwriting support, risk and compliance automation, and workflow orchestration. The goal is to transform operations and customer interactions across the bank.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the contribution of digital assets to deposit growth, the exact impact of new payment rails on traditional wire and ACH business, and the precise timeline for resolving the regulatory order. Additionally, responses on AI implementation and cubiX platform advantages were broad and lacked detailed examples or metrics.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI client
AI effort
Bancorp
DDA
Directors
Full
ability interest
bank
banking
basis point
book value
capability
capital equity
client vertical
core highlight
credit
cubiX client
deposit balance
deposit beta
effort focus
expense
firm
future
industry
interest income
investment
leader
loan
network
noninterest
payment
peer
priority
quartile
ratio
return
service
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CUBI Transcript
Customers Bancorp, Inc. (CUBI) Q4 2025 Earnings Call Transcript
Positive1-23
The earnings call summary presents a strong financial outlook with increased guidance for deposit, loan, and net interest income growth. The Q&A session reveals optimism for fee income and loan growth, despite some vague responses on digital assets. The cubiX platform's expansion and AI utilization are positive indicators. The market cap suggests moderate volatility, leading to a positive stock price prediction.
Sanofi (SAN:CA) Q3 2025 Earnings Call Transcript
Positive10-24
The earnings call summary reflects a positive sentiment with strong financial performance, increased guidance, and strategic positioning in the digital asset industry. The Q&A section supports this sentiment with confidence in resolving FDA questions, positive growth expectations, and a disciplined M&A strategy. Despite some uncertainties in regulatory discussions, the overall outlook remains favorable, especially with strong product differentiation and market strategies. The company's market cap suggests moderate stock price movement, leading to a prediction of a positive stock price reaction (2% to 8%) over the next two weeks.
Customers Bancorp, Inc. (CUBI) Q3 2025 Earnings Call Transcript
Positive10-24
The earnings call highlights several positive factors: increased loan growth and net interest income guidance, strong loan pipelines, and the promising cubiX platform with growing institutional adoption. Despite potential rate cuts, the company expects sufficient growth to offset any margin compression. The Q&A section reinforces positive sentiment with strong deposit growth, low credit risk, and AI-driven productivity improvements. Although management avoided some specifics, the overall outlook, including stablecoin growth and a competitive moat for cubiX, suggests a positive stock price movement.
Customers Bancorp, Inc. (CUBI) Q2 2025 Earnings Call Transcript
Positive7-25
The earnings call summary indicates strong financial performance, with impressive deposit transformation, loan growth, and operational excellence. The Q&A section highlighted positive sentiment towards the bank's strategic initiatives and growth potential, despite some uncertainties in management responses. The reaffirmed guidance for loan growth and net interest income, along with strong capital ratios, supports a positive outlook. Given the bank's market cap of approximately $1.48 billion, the stock price is likely to react positively, falling within the 2% to 8% range over the next two weeks.
CUBI Slides
CUBI Report
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