Executive Summary

Core results were strong despite GAAP noise: normalized EPS (S&P “Primary EPS”) was $1.54 versus $1.30 consensus (beat), while GAAP diluted EPS was $0.29 due to a $51.3M securities impairment tied to a balance sheet repositioning to fund loan growth and de‑risk the portfolio . Primary EPS consensus and actual from S&P Global; see Estimates Context.*
Net interest margin expanded 2 bps to 3.13% as average deposit costs fell 25 bps to 2.82%; deposit remix and new team wins remain the key earnings lever into 2H25 .
Credit stayed solid (NPAs/Assets 0.26%, Reserves/NPLs 324%), but provision rose to $28.3M on modest macro model softening and loan growth; net charge‑offs were $17.1M (0.48% annualized) .
Management reaffirmed 2025 guide (loan growth 7–10% with bias to high end; NII +3–7% or +6–10% normalized; core efficiency low‑mid 50s; CET1 ~11.5%) and does not expect further securities repositioning .
Potential stock catalysts: sustained NIM/NII expansion from lower funding costs, deposit pipeline (> $2B) and team adds, plus clarity that repositioning is complete; watch credit provisioning cadence and digital-asset (cubiX) noninterest-bearing flows .

What Went Well and What Went Wrong

What Went Well
- Deposit franchise transformation: total cost of deposits down 25 bps QoQ to 2.82%; noninterest-bearing remained ~29% of deposits; management cites >$2B low-cost pipeline and continued remix .
- Margin and core profitability: NIM rose to 3.13% (+2 bps QoQ); core EPS $1.54; core efficiency ratio improved to 52.69% as operational excellence delivered ~$30M annual run‑rate impact (>$20M target) .
- Prudent capital/liquidity and credit: CET1 11.7%, TCE/TA 7.7%; immediately available liquidity covers ~155% of uninsured deposits; NPAs/Assets 0.26% and Reserves/NPLs 324% .
What Went Wrong
- GAAP earnings volatility: $51.3M AFS impairment and higher provision reduced GAAP EPS to $0.29; noninterest income was a loss of $24.5M in Q1 (driven by the impairment) .
- Provision higher QoQ/YoY: total provision for credit losses $28.3M (loans $21.4M; AFS $6.9M), reflecting macro model softening and loan growth .
- Slight uptick in NPAs: NPAs/Assets rose 1 bp QoQ to 0.26%; NCO ratio increased to 0.48% (from 0.41% in Q4), largely within recent ranges .

Financial Results

Quarterly trends (oldest → newest):

Metric	Q1 2024	Q4 2024	Q1 2025
GAAP Diluted EPS ($)	1.40	0.71	0.29
Core EPS – diluted ($)	1.42	1.36	1.54
Net Interest Income ($M)	160.4	167.8	167.4
Revenue (S&P “Revenue” $M)	164.546*	146.236*	114.659*
Provision for Credit Losses ($M)	17.07	21.19	28.30
Noninterest Income ($M)	21.23	(0.39)	(24.49)
NIM (tax‑equiv. %)	3.10%	3.11%	3.13%
Avg Cost of Deposits (%)	3.45%	3.07%	2.82%
Core Efficiency Ratio (%)	54.24%	56.12%	52.69%

Estimates comparison (S&P Global):

Metric	Q1 2025 Estimate	Q1 2025 Actual
Primary EPS (S&P normalized) ($)	1.299*	1.540*
Revenue (S&P “Revenue”) ($M)	165.123*	114.659*
EPS – # of Estimates	7*	—
Revenue – # of Estimates	6*	—

Values marked with * retrieved from S&P Global.

Explanatory note: S&P “Revenue” for banks is typically defined as net interest income after provision plus noninterest income; Q1’25 “actual” of $114.659M aligns with $139.149M NII after provision plus $(24.490)M noninterest income .

Segment/Balance mix:

Deposits ($M)	Q1 2024	Q4 2024	Q1 2025
Demand, noninterest‑bearing	4,688.9	5,608.3	5,552.6
Demand, interest‑bearing	5,661.8	5,553.7	5,138.0
Savings	2,080.4	1,131.8	1,327.9
Money Market	3,347.8	3,844.5	4,057.5
Time	2,182.5	2,708.2	2,857.0
Total Deposits	17,961.4	18,846.5	18,932.9

Loans HFI ($M)	Q1 2024	Q4 2024	Q1 2025
Specialized Lending (C&I)	5,104.4	5,842.4	6,070.1
Other C&I	1,113.5	1,062.6	1,062.9
Mortgage Finance	1,071.1	1,440.8	1,477.9
Multifamily	2,123.7	2,252.2	2,322.1
CRE Owner‑Occupied	806.3	1,100.9	1,139.1
CRE Non‑Owner‑Occupied	1,182.1	1,359.1	1,438.9
Construction	185.6	147.2	154.6
Consumer (incl. Installment)	1,312.5	1,243.3	1,394.7
Total HFI	12,899.2	14,448.8	15,060.4

KPIs and capital:

KPI	Q1 2024	Q4 2024	Q1 2025
NPAs / Total Assets	0.17%	0.25%	0.26%
NPLs / Loans	0.27%	0.30%	0.29%
Reserves / NPLs	373.86%	316.06%	324.22%
Net Charge‑offs ($M)	17.97	14.61	17.14
NCO Ratio (annualized)	0.55%	0.41%	0.48%
CET1 (Bancorp)	12.6%	12.1%	11.7%
TCE / TA	7.3%	7.6%	7.7%
TBV / share ($)	49.18	54.08	54.74

Guidance Changes

Metric	Period	Previous Guidance (Q4’24)	Current (Q1’25)	Change
Loan Growth	FY 2025	~7%–10%	Reaffirmed with bias to high end	Raised bias
Deposit Growth	FY 2025	~5%–9%	Reaffirmed (focus on remix)	Maintained
Net Interest Income Growth	FY 2025	+3%–7% reported; +6%–10% normalized	Reaffirmed (drivers on both sides of balance sheet)	Maintained
Core Efficiency Ratio	FY 2025	Low‑mid 50s	On track (52.7% in Q1)	Tracking
CET1 Target	FY 2025	~11.5%	Reaffirmed (Q1 at 11.7%)	Maintained
Effective Tax Rate	FY 2025	22%–25%	Reaffirmed	Maintained
Securities Repositioning	Near‑term	Executed Q4’24	No additional actions expected	Clarified complete

Earnings Call Themes & Trends

Topic	Q3 2024 (Q‑2)	Q4 2024 (Q‑1)	Q1 2025 (Current)	Trend
Deposit remix & cost	Building momentum on lowering funding costs (context)	Avg cost down 39 bps; NIBs to ~30%	Avg cost down another 25 bps; >$2B pipeline; new teams key	Improving
NIM/NII drivers	Liability-side led NIM expansion expected	NIM +5 bps QoQ; interest expense down	NIM +2 bps; further expense reduction is key lever	Steady expansion
Loan growth	Diversified, deposit‑led growth; avg loan ~$6M	+19% annualized; CRE self‑funded growth	+12% annualized; backlog strong; bias to high end of guide	Above peer pace
Risk mgmt investments	Elevated professional services, ramping	Peak spend; tapering through mid‑year	Tapering; platform upgrades continue	Normalizing
Securities actions	Reduced lower‑yielding, extend duration	Repositioned ~$480M; reinvest higher yield	$51.3M impairment sale; no more expected	Completed
Digital assets (cubiX)	Platform transition; fee ramp	Fees ~$2M in Q4; NIB inflows	NIBs 100% non‑interest bearing; ~$1% industry liquidity share	Scaled, stable

Management Commentary

“Our deposit remix efforts…[drove] a 25 basis point reduction in our total cost of deposits during the quarter…Non-interest bearing deposits remained at a healthy level of 29.3% of total deposits” – Jay Sidhu, Chairman & CEO .
“We again delivered over $600 million of HFI loan growth…diversified, strategic and aligned with our franchise building model…with more than a 4% net spread between loans and deposits” – Sam Sidhu, President & CEO (bank) .
“The primary driver [of NIM improvement] was a significant reduction in interest expense…helped offset a decline in loan yields from lower benchmark rates” – Phil Watkins, CFO .

Q&A Highlights

Deposit mix dynamics: New teams delivered “over $250M” of NIB inflows, offset by ~$300M lower cubiX balances; average NIB balances up QoQ .
Securities repositioning complete: Sold corporates (~45%), CLOs and non‑agency CMBS (~40%), unrated privates (~15%); remaining corporates largely IG, CMBS agency‑backed; no further actions planned .
CRE capacity: Concentration well below peers (<200%); deposit‑led CRE growth earns ~4.4% net spread .
Fee income and tech spend: Treasury management fees on cubiX at a “pretty good run rate” with tech spend largely behind .
cubiX deposits: 100% non‑interest‑bearing; management welcomes industry participation but sees durable lead due to network/tech/capabilities .

Estimates Context

EPS: S&P “Primary EPS” $1.54 vs $1.30 consensus (beat), reflecting core profitability strength despite GAAP impairment charge; Q4’24 also beat ($1.36 vs $1.20) while Q1’24 was below higher prior‑year comp ($1.42 vs $1.63) [GetEstimates].*
Revenue: S&P “Revenue” $114.7M vs $165.1M consensus (miss), primarily due to (i) $51.3M AFS impairment booked in noninterest income and (ii) higher provision; S&P revenue for banks includes provision and noninterest income . Values retrieved from S&P Global.*

Implications: Expect upward revisions to core NII/NIM trajectory (funding cost tailwinds) but models may carry higher expected provisions near‑term; GAAP/normalized bridges should emphasize that securities repositioning is done and was strategic .

Key Takeaways for Investors

Core earnings power intact and improving: NIM expansion and deposit remix provide a visible path to sustained NII growth even with an uncertain rate path .
Loan growth outperformance is deposit‑led and diversified; guidance biased to high end with strong backlog and small average ticket sizes .
Balance sheet repositioning is complete; GAAP volatility should fade with mix shift to higher‑yielding loans/securities and lower funding costs .
Credit quality remains a differentiator (low NPAs, strong reserves/NPLs), though provision may remain constructive given growth and macro inputs .
Capital and liquidity provide flexibility (CET1 11.7%; liquidity covers ~155% of uninsured deposits), supporting organic growth and franchise wins .
Watch list: provisioning cadence, consumer installment NCOs, digital-asset NIB balance variability, and further efficiency gains as risk‑management spend normalizes .
Near‑term trading: EPS beat on normalized basis vs consensus is supportive; GAAP miss optics tied to one‑off impairment could create entry volatility; narrative hinges on continued NIM/NII delivery and confirmation of no further restructuring [GetEstimates]* .

Additional context: Customers Bank highlighted a top‑tier Net Promoter Score (73) and Forbes “America’s Best Banks” recognition, reinforcing the franchise and client‑service positioning .

Footnote: Values marked with * are retrieved from S&P Global (consensus/actuals from GetEstimates).

Customers Bancorp, Inc. (CUBI)·Q1 2025 Earnings Summary