Customers Bank’s AI Boost Drives 20% Productivity Gains

Date of Call: Jan 23, 2026

Financials Results

• EPS: Core EPS for full year 2025 was $7.61 per share, up 36% from $5.60 in 2024. Core EPS for Q4 was $2.06.

Guidance:

• Loan growth target of 8% to 12%.
• Deposit growth (net of remixing) target of 8% to 12%.
• Net interest income expected to be $800M to $830M, representing 7% to 11% growth.
• Noninterest expenses projected at $440M to $460M (2% to 6% growth).
• Common equity Tier 1 ratio target of 11.5% to 12.5%.
• Effective tax rate expected between 23% and 25%.

Business Commentary:

Strong Financial Performance and Organic Growth:

• Customers Bancorp reported a core EPS of $7.61 for 2025, up from $5.60 in 2024, and a ROE of 13.8% for the fourth quarter.
• The growth was driven by the bank's strong deposit-led growth, low-cost core deposits increasing at a 16% compounded annual rate over the last 6 years, and an increase in net interest income by 15%.

Deposit and Loan Growth:

• Total deposits grew by $2 billion or 10% in 2025, led by new commercial banking teams adding $1.6 billion.
• Loans grew by 15% in 2025, with record net interest income growth, supported by strong credit performance and diversified loan growth across various segments.

Payments Platform and AI Integration:

• cubiX, the in-house developed payments platform, facilitated over $2 trillion in payments volume in 2025, establishing Customers Bank as the #1 commercial payments network in the U.S.
• The bank is leveraging AI to enhance client experience and productivity, with employees reporting a nearly 20% productivity gain using AI tools, focusing on workflow orchestration and customer service improvements.

Capital Strength and Credit Quality:

• Customers Bancorp strengthened its capital position with a sub debt issuance providing $100 million of additional Tier 2 capital, achieving a tangible common equity ratio of 8.5%.
• Credit performance remained stable with NPAs at 29 basis points of total assets, and net charge-offs declining by 10% in the quarter, supported by a strong credit culture and risk management infrastructure.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'very strong quarter,' 'exceptional full year,' and 'incredible results.' They expressed excitement for 2026, citing strong pipelines, deposit-led growth, and a competitive moat in payments. Quotes include 'Our best years are still ahead of us' and 'We're incredibly excited about the prospects for this company in 2026 and beyond.'

Q&A:

• Question from Sun Young Lee (TD Cowen): Concerns about expectations for fee income growth and optimism for that line item in 2026.
  Response: Management expects fee income to average around $30 million per quarter, similar to recent trends, with potential for better monetization from maturing businesses.

• Question from Sun Young Lee (TD Cowen): Deposit growth assumptions for 2026 and the expected contribution from cubiX, plus the impact of digital asset adoption.
  Response: Deposit growth guidance is driven primarily by core commercial banking teams, not digital assets. Management sees potential upside from expanding payments expertise and onboarding new verticals.

• Question from Stephen Moss (Raymond James): Nature of teams being hired (new verticals vs. additive) and how to translate $50 billion in transaction volume to deposits.
  Response: Hiring is a mix of strategic verticals and inbound opportunities. The $50 billion volume targets existing customers, with focus on new verticals to drive low-cost deposits, aiming for $500 million of noninterest-bearing deposit growth as a floor.

• Question from Stephen Moss (Raymond James): Puts and takes for loan growth expectations and upside potential.
  Response: Loan growth is diversified across segments with no single leader; each quarter different verticals will drive growth, but the full-year target is supported by strong pipelines.

• Question from Kelly Motta (Keefe, Bruyette): Whether expense guidance factors in team hiring and includes professional fees.
  Response: Expense guide assumes continued investment in team recruitment, supported by operational excellence initiatives. Professional fees, including legal expenses, are expected to decline.

• Question from Kelly Motta (Keefe, Bruyette): Examples of cubiX use cases outside digital assets.
  Response: Highlighted mortgage finance and retail/escrow industries as verticals where cubiX can facilitate customer transactions and deepen relationships.

• Question from Brian Wilczynski (Morgan Stanley): Resiliency of cubiX platform amid crypto volatility and stability of deposits.
  Response: Volatility drives trading activity and balances; the platform has shown strength with balances operating within a stable range, supported by increased product offerings and network expansion.

• Question from Brian Wilczynski (Morgan Stanley): Examples of additional products/services to deepen cubiX client relationships.
  Response: Focus on enabling more payment rails, helping customers with traditional fiat on-ramps, and bespoke functionality to support their business operations.

• Question from Peter Winter (D.A. Davidson): Details on credit quality increases and outlook.
  Response: Nonperforming loans increased slightly due to one $10-11 million credit under agreement for restructuring; overall credit quality remains strong with low NPA/NPL ratios.

• Question from Peter Winter (D.A. Davidson): Expected starting point for Q1 margin and its trajectory.
  Response: Q1 margin likely around 3.25-3.27%, a good starting point to build from in 2026.

• Question from Tyler Cacciatori (Stephens Inc.): Size of cubiX customer base and context.
  Response: Has hundreds of customers; adds counterparties and traditional finance nodes to broaden network, enhancing stickiness and quality.

• Question from Tyler Cacciatori (Stephens Inc.): Update on regulatory order status.
  Response: Substantially done with the plan; focus in 2026 is to move past it, with the work now creating a competitive advantage and moat.

• Question from Kyle Gierman (Hovde Group): Yields on new loan originations and read on lending competition.
  Response: New commercial loan yields are between 225-275 bps over Fed funds/SOFR. Competition is managed via diversified loan growth across verticals, with pricing pressure mitigated by deposit cost improvements.

• Question from Harold Goetsch (B. Riley Securities): Whether new payment rails cannibalize traditional wire/ACH or are incremental.
  Response: Currently incremental to traditional rails; different customer preferences for channels, with evolution ongoing but not a major tectonic shift.

• Question from Harold Goetsch (B. Riley Securities): Sources of competitive advantage for the cubiX platform.
  Response: Barrier to entry driven by network effects and operational scale; competition is limited, and the platform creates strong stickiness.

• Question from Harold Goetsch (B. Riley Securities): Examples of AI improving processes and efficiency.
  Response: AI is used for governance, data transformation, and micro-use cases like loan deposit automation and CRM enhancement; full transformation across the bank is in progress.

Contradiction Point 1

Deposit Growth Contribution from cubiX Platform

Contradiction on whether digital asset deposits are a major contributor to overall deposit growth guidance.

What portion of the 8%-12% 2026 deposit growth guide is attributed to cubiX digital asset balances, and how is institutional adoption influencing these trends? - Janet Lee (TD Cowen)

2025Q4: No major contribution is assumed from digital asset balances in 2026. Deposit growth guidance is primarily driven by the core commercial bank. - Samvir Sidhu(CEO)

What is the expected pace of deposit growth from new banking teams in 2026, and is the $200M-$350M quarterly growth sustainable, depending on hiring ~4 teams per quarter, with risks of saturation from 2024 hires? - Sun Young Lee (TD Cowen)

2025Q3: The deposits brought in by these teams are high-quality... providing a ~25% lift to the growth rate. - Samvir Sidhu(CEO)

Contradiction Point 2

AI Strategy and Productivity Impact

Contradiction on the current tangible productivity gains from AI versus its future strategic potential.

Are there examples of AI improving processes, saving costs, or enhancing underwriting? - Harold Goetsch (B. Riley Securities, Inc.)

2025Q4: AI is in the early stages of broad enablement... The next phase involves creating a workflow orchestration layer... - Samvir Sidhu(CEO)

What are the current and potential future benefits of AI for the bank? - Peter Winter (D.A. Davidson & Co.)

2025Q3: AI is a foundational initiative for efficiency and client experience. ... various areas already seeing a ~10% productivity lift. - Samvir Sidhu(CEO)

Contradiction Point 3

Credit Risk and Loan Growth Outlook

Contradiction on the credit quality and growth prospects for a specific loan segment (NDFI).

Could you provide details on the $15 million increase in C&I and $2 million in multifamily nonperforming loans, and update the credit outlook? - Peter Winter (D.A. Davidson & Co.)

2025Q4: The increases are from a single $10–11 million credit currently under agreement for restructuring/resolution in Q1 2026. Overall credit quality remains very strong, with NPL ratios extraordinarily low... - Mark McCollom(CFO)

What are the largest NDFI lending verticals, and what ensures their credit quality? - Kelly Motta (Keefe, Bruyette, & Woods, Inc.)

2025Q3: The lender finance business, in which the bank has operated for over a decade, has 0 defaults and 0 losses. ... The bank's long-standing relationships with fund managers (average 5-year track record) further mitigate credit risk. - Mark McCollom(CFO)

Contradiction Point 4

Contribution and Future Expectations for cubiX Digital Asset Deposits

Contradiction on the role and growth potential of digital asset deposits in overall strategy.

For the 8-12% 2026 deposit growth guidance, what growth is attributed to cubiX balances and how is institutional adoption affecting trends? - Janet Lee (TD Cowen)

2025Q4: No major contribution is assumed from digital asset balances in 2026. Deposit growth guidance is primarily driven by the core commercial bank. - Samvir Sidhu(CEO)

What were cubiX deposits this quarter, and what's the outlook for growth and risk management? - Kelly Motta (KBW)

2025Q2: The legislation reinforces that digital assets are here to stay... Deposits are expected to grow modestly as network strength and product offerings increase. - Samvir Sidhu(CEO)

Contradiction Point 5

Expense Growth Guidance and Investment Focus

Contradiction on the funding source and strategic focus for expense growth.

Does the 2026 expense guidance include additional team hiring and assumptions regarding professional fees? - Kelly Motta (Keefe, Bruyette, & Woods, Inc.)

2025Q4: Yes, the expense guide assumes continued investment in team recruitment. An operational excellence initiative targets $20 million in run-rate proceeds to fund this growth. - Mark McCollom(CFO)

Was the previous expense growth funded by broader investment in AI/automation rather than a targeted $20M initiative? - N/A (Transcript not accessible)

2025Q1: [Implied from missing transcript] Previous expense growth guidance was likely tied to investment in AI and automation infrastructure, not a specific operational initiative. - Mark McCollom(CFO)