Executive Summary

Strong quarter with both GAAP and core profitability up sequentially: diluted EPS $1.73 and core EPS $1.80; net interest margin expanded 14 bps QoQ to 3.27% on loan growth and lower funding costs .
EPS and revenue beat consensus: EPS $1.80 vs $1.52* and revenue $185.5M vs $171.7M*; six EPS and three revenue estimates. Guidance raised for FY25 loan growth to 8–11% and NII to 7–10% (from 3–7% in Q4) with efficiency ratio bias to low end of low–mid 50s .
Credit quality improved: NPLs/loans fell to 0.18% (from 0.29% in Q1); reserves-to-NPLs jumped to 518% (from 324%); NPAs/Assets stable at 0.27% .
Capital and TBVPS stronger: CET1 12.0% (up 30 bps QoQ); TBVPS $56.24 (+$1.50 QoQ); TCE/TA 7.9% (+20 bps) .
Potential stock catalysts: visible beat-and-raise quarter, NIM expansion amid deposit remix, and improved credit metrics; leadership continuity announced with CEO transition effective Jan-1-2026 may support confidence .

What Went Well and What Went Wrong

What Went Well

Net interest margin expansion of 14 bps QoQ to 3.27% driven by higher average loan balances, increased loan yields, and deposit cost management; net interest income rose to $176.7M .
Credit metrics improved: NPLs/loans declined to 0.18%; reserves-to-NPLs rose to 518%; provision eased QoQ to $20.8M from $28.3M .
Management raised FY25 guidance: loan growth to 8–11%, NII to 7–10%, and efficiency ratio bias to the low end of low–mid 50s, reflecting confidence in deposit transformation and pipelines .

Quote: “We demonstrated the strength of our unique business model... NIM increased 14 basis points... we’ve increased commercial deposit accounts by approximately 60% since year end 2022... Asset quality remains strong... TBVPS grew to $56.24… TCE/TA increased to 7.9%” — Jay Sidhu .

What Went Wrong

Core operating expenses increased QoQ to $106.6M (+$3.9M), largely from higher salaries and professional fees; efficiency ratio still 51.23% (core 51.56%) .
Non-interest bearing demand deposits fell modestly QoQ (-$72M), and average total cost of deposits ticked up 3 bps QoQ to 2.85% due to deposit mix including planned reduction of BM Technologies-serviced balances .
Non-interest income included losses on investment securities ($1.8M) and remained below prior year; other fees benefitted from loan origination program sunsetting, but BOLI income decreased vs Q1 .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Diluted EPS ($)	1.66	0.29	1.73
Core EPS ($)	1.49	1.54	1.80
Net Interest Income ($M)	167.7	167.4	176.7
Core Revenue ($M)	188.3	195.1	206.8
Net Interest Margin (tax eq., %)	3.29	3.13	3.27
Cost of Deposits (%)	3.40	2.82	2.85
Net Income to Common ($M)	54.3	9.5	55.8
Provision for Credit Losses ($M)	18.1	28.3	20.8

Estimates vs Actual (Q2 2025):

Primary EPS Consensus Mean: 1.52* vs Core EPS 1.80 (beat).
Revenue Consensus Mean: $171.7M* vs $185.5M (beat).
EPS estimates count: 6*; Revenue estimates count: 3*.
Values retrieved from S&P Global.

Segment Loan Composition (Held for Investment, $000s)

Segment	Q2 2024	Q1 2025	Q2 2025
Specialized Lending	5,528,745	6,070,093	6,454,661
Mortgage Finance	1,122,812	1,477,896	1,625,764
CRE – Non-Owner Occupied	1,202,606	1,438,906	1,497,385
CRE – Owner Occupied	805,779	1,100,944	1,065,006
Multifamily	2,067,332	2,322,123	2,247,282
Construction	163,409	154,647	98,626
Total Commercial	11,982,829	13,665,724	14,026,408
Consumer Installment	756,682	866,168	802,172
Residential	481,503	496,772	520,570
Manufactured Housing	35,901	31,775	30,287
Total Consumer	1,274,086	1,394,715	1,353,029
Total Loans HFI	13,256,915	15,060,439	15,379,437

Key KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
NPLs / Loans (%)	0.35	0.29	0.18
Reserves / NPLs (%)	279.52	324.22	518.29
NPAs / Assets (%)	0.23	0.26	0.27
CET1 Ratio (%)	12.8	11.7	12.0
TCE / TA (%)	7.7	7.7	7.9
TBVPS ($)	50.70	54.74	56.24
Total Deposits ($000s)	17,678,093	18,932,925	18,976,018

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Loan Growth	FY 2025	7%–10% (Q4 outlook)	8%–11%	Raised
Net Interest Income Growth	FY 2025	3%–7% (Q4 outlook; 6%–10% normalized)	7%–10%	Raised
Core Efficiency Ratio	FY 2025	Low–mid 50s	Bias to low end of low–mid 50s	Improved bias
CET1 Target	FY 2025	~11.5%	~11.5% (maintained)	Maintained
Tax Rate	FY 2025	22%–25%	22%–25% (maintained)	Maintained
Deposit Growth	FY 2025	5%–9%	Not reiterated; deposit remix continues	N/A

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
Deposit franchise transformation	Q4: -39 bps deposit cost; strong NIB growth; ongoing remix . Q1: -25 bps deposit cost; pipelines >$2B; new teams at $2.1B deposits .	Deposit teams managing $2.4B (13% of deposits); total deposits +$43M QoQ; cost of deposits 2.85% with mix impact from BMTX reduction .	Positive, continuing
NIM/NII drivers	Q4: NIM +5 bps; NII +6% on lower funding costs . Q1: NIM +2 bps; lower interest expense; strong loan growth .	NIM +14 bps; NII $176.7M; pipeline to remix and add loans .	Strengthening
Risk management & regulatory	Q4: elevated professional services to enhance risk framework . Q1: “operational excellence” realized; efficiency top quartile .	Efficiency improved QoQ; continued investment; core efficiency 51.56% .	Improving
Digital platform (cubiX) / payments	Q1: treasury fees ~$2.1M in quarter; run-rate ~$8M; platform fully in-house .	Platform highlighted as mission-critical; supports fee growth and deposit quality .	Building
Macro/regulatory backdrop	Q4: management expected better industry environment; CET1 > target . Q1: balance sheet optimization; asset sensitivity reduced .	FY25 guidance raised on performance momentum; CET1 12.0% .	Supportive
CRE exposure/credit	Q4/Q1: CRE concentrations under peer levels; self-funded CRE growth with deposit-linked relationships .	Office exposure minimal (~1% of portfolio); NPLs down .	Stable/Low risk

Note: A full Q2 2025 call transcript was not available in our document set; themes above use press release/investor presentation for current period and prior-quarter transcripts.

Management Commentary

Strategic focus: “We are pleased to share our second quarter results that highlight the company’s continued execution of its strategic priorities and underscore our success in growing franchise value” — Jay Sidhu .
Deposits and NIM: “NIM increased by 14 basis points… deposit focused teams… managed $2.4 billion or 13% of total deposits… significantly lowering our cost of deposits” — Jay Sidhu .
Credit and capital: “Asset quality remains strong… NPA ratio 0.27%… reserves robust at 518% of NPLs… TBVPS grew to $56.24… TCE/TA 7.9%” — Jay Sidhu .
Outlook: “We are updating our full-year 2025 targets for loan growth, net interest income growth, and core efficiency ratio… loan portfolio 8%–11%, NII 7%–10%” — Sam Sidhu .

Q&A Highlights

No Q2 2025 transcript available; recent Q1 themes included: deposit pipeline and mix (NIB share ~30%), balance sheet optimization (securities repositioning), and cubiX fee run-rate growth; management indicated selective loan growth with holistic deposit-led relationships .
Management reaffirmed discipline on deposit costs and loan growth while highlighting strong backlog despite market volatility .
Clarified lower utilization in fund finance lines and continued treasury fee momentum .

Estimates Context

EPS: CUBI delivered core EPS of $1.80 vs consensus $1.52* (beat).
Revenue: CUBI delivered ~$185.5M vs consensus ~$171.7M* (beat).
Estimates breadth: six EPS estimates and three revenue estimates*.
Values retrieved from S&P Global.

Key Takeaways for Investors

Beat-and-raise quarter: EPS and revenue beats alongside raised FY25 loan and NII guidance signal momentum in earnings power .
NIM expansion likely durable: deposit remix plus loan pipeline supports further margin and NII growth even across varying rate scenarios .
Credit quality a differentiator: materially lower NPLs and high reserves-to-NPLs (518%) reduce tail risk perception; office CRE exposure ~1% .
Capital and TBV accretion: CET1 12.0%, TCE/TA 7.9%, TBVPS up $1.50 QoQ to $56.24; supports organic growth and flexibility .
Operating leverage potential: efficiency ratio trending down with core ratio 51.56%; continued risk-management investments should taper per plan .
Deposit franchise transformation continues: deposits up QoQ; deposit teams now 13% of base; mix normalization impacts average costs but supports long-term funding quality .
Leadership transition announced: planned CEO succession to Sam Sidhu (effective Jan-1-2026) with Jay Sidhu as Executive Chairman preserves strategic continuity .

Appendix – Additional Data Points

Total deposits composition: NIB 28.9%, IB DDA 25.9%, Savings 7.2%, Money Market 22.2%, Time 15.8% (Q2 2025) .
Loans HFS decreased QoQ to $32.963M (from $37.529M) .
Provision detail: Loans & leases $18.457M; AFS securities $2.324M; unfunded commitments $1.594M .
Liquidity coverage: immediately available liquidity to uninsured deposits ~150% .

Customers Bancorp, Inc. (CUBI)·Q2 2025 Earnings Summary