Executive Summary

Strong quarter with broad-based growth and clear upside vs Street. Q3 diluted EPS was $2.20, core EPS $2.20, NIM expanded 19 bps sequentially to 3.46%, and efficiency improved to 45.4% as deposits rose $1.4B and non-interest-bearing (NIB) balances hit a record $6.4B (31% mix) .
Capital strengthened via a ~$163M common equity raise; CET1 rose ~100 bps to 13.0%, TCE/TA to 8.4%, and tangible book value per share (TBVPS) grew ~6% QoQ to $59.72 .
Guidance raised: 2025 deposits growth to 8–10% (from 5–9%), loans 13–14% (from 8–11%), NII +13–15% (from +7–10%), and core efficiency “below 50%,” CET1 ~13% YE25; management cited momentum in deposit franchise and loan pipeline as key drivers .
Consensus beats: EPS $2.20 vs $1.93 and Revenue $205.6M vs $185.1M; trajectory shows accelerating NIM tailwinds and operating leverage. Preferred Series F full redemption announced for Dec 15, 2025 (9.06% coupon), a favorable capital/COF optimization catalyst * .
Stock drivers: accelerated low-cost/NIB deposit mix (cubiX scaling), consecutive NIM expansion, capital optimization (equity raise + preferred redemption), and strengthened 2025 outlook support estimate revisions higher.

What Went Well and What Went Wrong

What Went Well
- Rapid deposit-led growth and remix: Total deposits +$1.4B QoQ to $20.4B with NIB +$0.9B to a record $6.4B (31% of deposits), aiding margin and funding costs .
- NIM and NII acceleration: NIM +19 bps QoQ to 3.46% (fourth straight expansion); NII +$25M QoQ to $201.9M; core efficiency improved to 45.4% .
- Capital and TBVPS: CET1 13.0% (up ~100 bps QoQ) after ~$163M equity raise; TBVPS $59.72 (+6% QoQ); TCE/TA 8.4% .
- Management quote: “Net interest margin continued to expand… deposit led loan growth, growth in non-interest bearing and lower-cost deposits, and well managed funding costs.” — President Sam Sidhu .
What Went Wrong
- Credit costs elevated vs Q2: Provision rose to $26.5M (from $20.8M) and NCOs to $15.4M (from $13.1M), driven mainly by consumer installment losses; commercial NCOs remained low .
- Non-interest income quality mixed: Q/Q uplift partly from warrant settlements; prior quarters included securities losses and program wind-down fees; volatility in noninterest lines remains a watch item .
- Regulatory/FDIC: While FDIC assessments declined QoQ by ~$3.4M, the fee remains a headwind; management highlighted the complex, risk-based nature of the calculation .

Financial Results

Sequential performance (Q1–Q3 2025)

Metric	Q1 2025	Q2 2025	Q3 2025
Diluted EPS ($)	0.29	1.73	2.20
Core EPS ($)	1.54	1.80	2.20
Net Interest Income ($M)	167.4	176.7	201.9
Net Interest Margin (%)	3.13	3.27	3.46
Core Efficiency Ratio (%)	52.69	51.56	45.40
Total Deposits ($B)	18.93	18.98	20.41
NIB Deposits ($B)	5.55	5.48	6.38
Total Loans & Leases ($B)	15.10	15.41	16.30
Provision for Credit Losses ($M)	28.3	20.8	26.5
Net Charge-offs ($M)	17.1	13.1	15.4

Year-over-year (Q3 2024 vs Q3 2025)

Metric	Q3 2024	Q3 2025
Diluted EPS ($)	1.31	2.20
Net Interest Income ($M)	158.5	201.9
Net Interest Margin (%)	3.06	3.46
Efficiency Ratio (%)	62.40	45.39
Total Deposits ($B)	18.07	20.41
NIB Deposits ($B)	4.67	6.38
Total Loans & Leases ($B)	14.05	16.30
NPLs / Loans (%)	0.34	0.17
ROAA (%)	0.88	1.26
ROCE (%)	10.44	15.57

Loan growth by vertical (QoQ, Q3 2025)

Vertical	QoQ Change ($M)
Fund Finance	505
CRE (Investment/Construction/Multifamily)	218
Venture Banking	99
Consumer Installment HFI	88
Commercial Banking Teams	22
Equipment Finance	15
Healthcare	6
Other	-13
Mortgage Finance	-49
Total	893

KPIs and balance sheet quality

KPI	Q3 2024	Q2 2025	Q3 2025
Cost of Deposits (%)	3.46	2.85	2.77
NPLs / Loans (%)	0.34	0.18	0.17
Reserves / NPLs (%)	281.36	518.29	534.14
CET1 (%)	12.46	12.05	13.0
TCE / TA (%)	7.7	7.9	8.4
cubiX Avg Deposits ($B)	2.6 (Q3’24)	3.1 (Q2’25)	3.9 (Q3’25)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Deposit Growth	FY 2025	5%–9%	8%–10%	Raised
Loan Growth	FY 2025	8%–11%	13%–14%	Raised
Net Interest Income Growth	FY 2025	7%–10%	13%–15%	Raised
Core Efficiency Ratio	FY 2025	Low–mid 50s (bias low end)	Below 50%	Raised (better)
CET1	YE 2025	~11.5% (prior baseline)	~13%	Raised
Tax Rate	FY 2025	22%–25%	22%–25%	Maintained

Also post-quarter: announced full redemption of 9.06% Series F Preferred on Dec 15, 2025, reducing higher-cost capital going forward .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Deposit transformation & NIB mix	Q1: cost of deposits fell 25 bps; NIB 29.3% . Q2: deposits flat QoQ (+$43M), mix improved; commentary on BM Tech runoff and remixing .	+$1.4B deposits QoQ; NIB +$0.9B to $6.4B (31%); cost of deposits down to 2.77% .	Improving
NIM trajectory	Q1: 3.13% (up 2 bps) . Q2: 3.27% (+14 bps) .	3.46% (+19 bps), 4th straight quarter of expansion .	Improving
cubiX platform	Q1/Q2: positioning as mission-critical payments; growing client base .	cubiX avg deposits $3.9B (vs $3.1B Q2, $2.6B Q3’24); institutional adoption momentum .	Scaling
Capital actions	Q1: redeemed Series E preferred; TCE/TA 7.7% . Q2: CET1 to 12.0% .	~$163M common raise; CET1 13.0%; TBVPS to $59.72; announced Series F preferred redemption .	Strengthening
Credit quality	Q1/Q2: NPL ratio down to 0.18%; reserves/NPLs rose to 518% .	NPLs 0.17%; reserves/NPLs 534%; commercial NCOs remain low (16 bps annualized) .	Stable
Operating leverage	Q1/Q2: core efficiency 52.7%→51.6% .	45.4% with lowest OpEx/avg assets among peers per MRQ .	Improving
FDIC/Reg fees	Q1/Q2: elevated vs prior-year; reinvestment in risk and tech .	FDIC assessments down ~$3.4M QoQ; ongoing complex, risk-based calc .	Moderating

Management Commentary

“Net interest margin continued to expand in the quarter as we realized the benefits of deposit led loan growth, growth in non-interest bearing and lower-cost deposits, and well managed funding costs.” — Sam Sidhu, President .
“We successfully raised $163 million of common equity… which further strengthened our already solid capital position and gives us flexibility to potentially redeem the remaining tranche of preferred stock… in Q4 2025.” — Jay Sidhu, Chairman & CEO .
“We believe that our $24 billion balance sheet is stronger than ever, with very robust capital ratios, strong credit quality and reserves, and ample liquidity to support our growing pipelines.” — Sam Sidhu .

Q&A Highlights

Guidance raised across deposits, loans, NII, and efficiency on momentum and visibility; management noted some 3Q pull-forward may temper 4Q growth but still expects above-industry growth into 2026 .
cubiX institutional adoption: balances maintained/increased post GENIUS Act; deposit growth heavily driven by existing institutional clients, with further adoption anticipated .
FDIC assessments: risk-based model; achieved a reduction this quarter, ~56% tied to retroactive adjustments for 1H25; ongoing progress expected as balance sheet de-risks .
Credit framing: Commercial portfolio credit remains strong; consumer installment drives majority of NCOs; reserve coverage robust at 534% of NPLs .

Estimates Context

Metric	Q1 2025	Q2 2025	Q3 2025
EPS Consensus Mean ($)	1.2986*	1.5217*	1.9300*
EPS Actual ($)	1.54*	1.80*	2.20*
Revenue Consensus Mean ($M)	165.12*	171.73*	185.10*
Revenue Actual ($M)	114.66*	185.53*	205.56*

Q3 2025 beats: EPS +$0.27 and Revenue +$20.46M vs S&P Global consensus. Management’s stronger FY outlook suggests Street estimates likely move higher on deposits/loan momentum, NIM expansion, and better efficiency.
Values retrieved from S&P Global.*

Key Takeaways for Investors

Deposit-led growth and remix are accelerating — record NIB (31%), cost of deposits down to 2.77%, supporting a fourth straight quarter of NIM expansion to 3.46% .
Operating leverage is inflecting — core efficiency improved to 45.4% despite reinvestment; expect sub-50% for FY25, implying sustained earnings power .
Capital optimization ongoing — CET1 13.0% post equity raise; TBVPS compounding; Series F preferred full redemption removes a 9.06% coupon drag heading into 2026 .
Credit remains manageable — commercial credit solid; consumer losses elevated but provisioned; reserves/NPLs strong at 534% and NPL ratio improved to 0.17% .
cubiX scaling is a strategic differentiator — larger, granular, low-cost institutional balances underpin NIM and liquidity, while new team hires deepen franchise reach .
Raised 2025 guidance (deposits, loans, NII, efficiency) should drive upward estimate revisions and multiple support if execution continues .
Watch items: pace of consumer-installment normalization, sustainability of cubiX balances amid rate path, and FDIC/regulatory cost cadence .

Additional Details and Cross-Checks

Q3 highlights: Net income to common $73.7M; ROAA 1.26%, ROCE 15.57% .
Liquidity and uninsured deposits coverage: immediately available liquidity ~146% of uninsured; total liquidity ~$10.9B .
Balance sheet scale: Total assets $24.26B; total loans and leases $16.30B; deposits $20.41B at 9/30/25 .
Tax rate: 24.5% in Q3 2025 .

Footnotes: Values retrieved from S&P Global.*

Customers Bancorp, Inc. (CUBI)·Q3 2025 Earnings Summary