Executive Summary

Core results were resilient: core EPS $1.36, +1% q/q (vs $1.34), while GAAP EPS fell to $0.71 on a strategic securities repositioning loss; NIM expanded 5 bps to 3.11% and NII grew 6% q/q on deposit cost reductions .
Deposits and funding mix improved: total deposits +4% q/q to $18.85B with non‑interest bearing +20% q/q to $5.61B (29.7% of total); cost of deposits fell 39 bps to 3.07% .
Balance sheet growth and credit solid: loans +4% q/q to $14.65B; NPAs 0.25% of assets; reserves/NPLs 316% (up from 281% in Q3) .
2025 outlook introduced: loan growth 7–10%, deposit growth 5–9%, NII +3–7%, core efficiency low‑mid 50s, CET1 ~11.5%, tax rate 22–25% (top‑quartile ambition) .
Potential catalysts: continued NIM/NII tailwinds from deposit remix and lower funding costs, sustained NIB mix (cubiX) and fee ramp, plus operating leverage as elevated risk‑management spend tapers by mid‑year 2025 .

What Went Well and What Went Wrong

What Went Well
- Deposit franchise execution: >$1B gross inflows; deposit cost −39 bps q/q to 3.07%; NIB mix to 29.7% of deposits .
- Margin and NII: NIM +5 bps to 3.11% and NII +6% q/q, driven by liability repricing and higher average NIB balances .
- Digital platform migration and fees: 100% transfer of instant payments clients to in‑house cubiX; ~$5M annual run‑rate fee contribution and lower third‑party tech costs; Q4 cubiX fees nearly $2M; management: “we fully transferred all CBIT customers to our in‑house developed cubiX platform” .
What Went Wrong
- GAAP earnings impact from securities repositioning: ~$26.7M pre‑tax loss (≈$20.0M post‑tax) to improve structural liquidity and reduce asset sensitivity; GAAP EPS fell to $0.71 .
- Operating expenses: core non‑interest expense rose ~$2.2M q/q (ex Q3 one‑time credit) primarily on professional services for risk‑management enhancements .
- Slight uptick in credit provisioning: total provision for credit losses increased to $21.2M (vs $17.1M in Q3), including $3.0M on AFS securities; NPAs rose modestly to 0.25% of assets .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Core Revenue ($M)	$191.4	$167.5	$193.5
Net Interest Income ($M)	$172.5	$158.5	$167.8
Non‑Interest Income ($M)	$18.7	$8.6	$(0.4)
Diluted EPS ($)	$1.79	$1.31	$0.71
Core EPS ($)	$1.90	$1.34	$1.36
Net Interest Margin (%)	3.31%	3.06%	3.11%
Cost of Deposits (%)	3.39%	3.46%	3.07%
Provision for Credit Losses ($M)	$13.5	$17.1	$21.2
Net Charge‑offs ($M)	$17.3	$17.0	$14.6

Balance & Capital	Q4 2023	Q3 2024	Q4 2024
Total Deposits ($M)	$17,920.2	$18,069.4	$18,846.5
Non‑Interest Bearing Deposits ($M)	$4,422.5	$4,670.8	$5,608.3
Total Loans & Leases ($M)	$13,202.1	$14,053.1	$14,653.6
CET1 Ratio (%)	12.2%	12.5%	12.0%
TBV/Share ($)	$47.61	$52.96	$54.08
NPAs / Assets (%)	0.13%	0.22%	0.25%
Reserves / NPLs (%)	499%	281%	316%

KPIs and Operating Drivers

Gross deposit inflows: “over $1B” in Q4; NIB share 29.7% (spot), up from 25.9% in Q3 .
Deposit beta/tailwinds: average deposit cost −39 bps q/q; management cited 64% beta so far in easing cycle; margin largely liability‑led .
Instant payments platform (cubiX): full migration completed; ~+$5M annual fee run‑rate; Q4 fees almost $2M; spot balances ~$3.6B at year‑end (held in cash) .

Segment and Mix (selected)

FY’24 Loan Growth by Vertical (Δ, $B): Mortgage Finance +0.4; Fund Finance +0.4; Commercial Banking Teams +0.4; Healthcare +0.3; Equipment Finance +0.2; Multifamily +0.1; Consumer Installment −0.2; Other −0.1; Total +1.6 .

Estimates vs. Actuals

Wall Street consensus (S&P Global) was unavailable at time of writing due to access limits; therefore we cannot show beat/miss for EPS or revenue. Values were not retrieved from S&P Global due to API limits.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Deposit Growth	FY 2025	—	5% – 9%	New/initiated
Loan Growth	FY 2025	—	7% – 10%	New/initiated
Net Interest Income	FY 2025	—	+3% – +7% y/y	New/initiated
Core Efficiency Ratio	FY 2025	—	Low–mid 50s	New/initiated
CET1	FY 2025	~11.5% target (framework)	~11.5% target	Maintained
Effective Tax Rate	FY 2025	18%–20% for 2024 (Q3 guide)	22%–25%	New (period reset to 2025)

Management color: 2025 NII could have upside depending on deposit remix timing; ex 2024 venture accretion, they see 7%–10% NII growth on a comparable basis; internal focus on deposit‑led loan growth and positive operating leverage as elevated professional services taper by mid‑year .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Deposit transformation & cost	Q2: −5 bps CoD to 3.40%, remix out higher‑cost consumer, new teams building pipeline ; Q3: +$1.1B gross inflows, CoD 3.46%, remix continued .	CoD −39 bps q/q to 3.07%; NIB to 29.7%; >$1B gross inflows .	Improving
cubiX/real‑time payments	Q2: platform as treasury and payments lever, teams to lower funding cost .	100% migration; ~$5M annual fee run‑rate; Q4 fees nearly $2M; balances ~ $3.6B held in cash .	Scaling monetization
NIM/NII drivers	Q2: NIM +19 bps to 3.29%, liability and asset mix improved . Q3: NIM dip to 3.06% from accretion/prepay decline and asset remix; guided Q4 flattish .	NIM +5 bps to 3.11%; NII +6% q/q on lower deposit costs and higher NIB .	Stabilizing ↑
Securities repositioning	Q2: ~$220M rotation to reduce asset sensitivity .	Sold ~$480M low‑yielding; reinvest to higher‑yield loans/securities; ~5.5% pre‑tax loss; 5 bps NIM pickup in 2025 expected .	Positioning for 2025
Risk management spend	Q3: noted elevated outside services for enhancements .	~$5.5–$6.0M peak pro services in Dec/Jan; tapering to normalized by mid‑2025 .	Nearing peak; to decline
Regulatory backdrop	Q3: capital targets reiterated (CET1/TCE) .	Mgmt expects more favorable macro/regulatory tone in 2025; will maintain higher capital near‑term .	Constructive
Credit quality	Q2/Q3: NPAs ~0.22–0.23%, strong reserves; consumer mix shift lower .	NPAs 0.25%; NCOs down q/q; reserves/NPLs 316%; office CRE ~1% of book (press release) .	Stable

Management Commentary

“We once again had $1 billion of gross deposit inflows… reduced our average cost of deposits by 39 basis points… we bucked the market trend growing our loan portfolio at a 19% annualized pace… NII growth in the quarter of 6% and also increased margin by 5 basis points.” .
“We fully transferred all CBIT customers to our in‑house developed cubiX platform… providing a $5 million annual run rate fee income as well as third‑party technology expense reductions.” .
“Core earnings per share of $1.36 in the quarter… full year core ROE and ROAA of 11.4 and 92 basis points, respectively.” .
“Our CET1 remains in excess of our 11.5% target… TBV per share increased to $54… NPAs remained low at just 25 basis points.” .
2025 plan: “Loan portfolio to increase by about 7% to 10%… NII to conservatively grow by about 7% to 10% [ex 2024 venture accretion]… core efficiency back down to low to mid‑50s.” .

Q&A Highlights

Loan growth cadence and payoffs: Pipeline ~$400–$500M; Q1 seasonally slower; ~$1B of Q4 payoffs yet still strong net growth; expect fewer payoffs in 2025 but opportunistic refis possible .
Deposit mix and cubiX balances: Year‑end spot ~$3.6B; above past 15% cap but fully held in cash; management evaluating new limits; Q4 fees ~ $2M; “$5M+” annual minimum guide .
NII guidance assumptions: Base case includes two rate cuts; wide range of 0–5 cuts considered .
Range drivers (NII 3–7% 2025 headline): rate trajectory and loan growth; average NIB levels are a variable; franchise has sustained +19% annualized NII growth over 5 years .
Asset quality detail: Increase in NPAs related to a security placed on NPA; reserve build driven by loan growth; coverage ratios stable .
Expense outlook: Professional services peaked ~$5.5–$6.0M monthly in Dec/Jan; tapering through H1’25 to normalized by mid‑year .
Securities repositioning timing and NIM: Sales late in quarter; ~5 bps incremental NIM pickup in 2025 .
Brokered deposits: Continued reduction with ~$500M remix scheduled in Q1; targeted overlap with higher‑cost deposits around 4.5% .

Estimates Context

S&P Global consensus estimates were unavailable due to data access limits at the time of analysis, so we cannot present formal beat/miss figures. We will update with S&P Global consensus when accessible.

Key Takeaways for Investors

Deposit‑led NIM/NII upside: 39 bps q/q drop in deposit costs, rising NIB mix, and a $2B+ high‑quality deposit pipeline provide tangible tailwinds to NII and NIM into 2025 .
Digital payments flywheel: cubiX migration complete, fee monetization underway, and balances are large but conservatively managed in cash; diversifies revenue and lowers funding costs .
Repositioning creates 2025 earnings leverage: Q4 GAAP EPS absorbed ~$26.7M pre‑tax loss; reinvestment at higher yields and reduced asset sensitivity point to incremental NIM in 2025 (~5 bps) .
Operating leverage potential: elevated risk‑management spend should taper by mid‑2025; management targeting core efficiency low–mid 50s in 2025 .
Credit remains a differentiator: NPAs 0.25%, NCOs down, reserves/NPLs 316%, limited office CRE exposure (~1% of book) .
2025 guide credible but conservative: loan growth 7–10% with deposit‑led discipline, NII +3–7% headline (with upside from remix timing), and CET1 ~11.5% target sustained .
Watch list: trajectory of NIB balances (seasonality/market activity), pace of brokered runoff/remix, and rate‑cut path relative to asset sensitivity—all key to the NII range .

Additional Notes and Press Releases

Preferred dividends declared on Series E ($0.61678915) and Series F ($0.59290165) payable March 17, 2025 (record Feb 28) .
Q4/FY’24 earnings materials released Jan 23, 2025; webcast Jan 24, 2025 .

Sources: Company press release, 8‑K and investor presentation (Jan 23, 2025), and Q4’24 earnings call transcript (Jan 24, 2025). All citations inline.

Customers Bancorp, Inc. (CUBI)·Q4 2024 Earnings Summary