Business Context and Reporting Period
Company: Customers Bancorp, Inc. (Customers Bancorp)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Customers Bancorp is a bank holding company operating through its wholly owned subsidiary, Customers Bank. The company employs a "high-tech, high-touch" branch-light strategy, focusing on commercial and consumer banking across the Northeast, Mid-Atlantic, and select national markets (California, Nevada). Key business verticals include specialized lending (fund finance, technology/venture, healthcare), mortgage finance, commercial equipment financing, and digital payments via its proprietary platform, cubiX.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Total Assets | $24.9 billion | $22.3 billion | +11.6% |
| Total Loans and Leases (Net) | $16.6 billion | $14.3 billion | +16.0% |
| Total Deposits | $20.8 billion | $18.8 billion | +10.3% |
| Net Interest Income | $750.5 million | $654.4 million | +14.7% |
| Net Interest Margin (NIM) | 3.32% | 3.15% | +17 bps |
| Provision for Credit Losses | $98.0 million | $73.5 million | +33.4% |
| Net Income | $224.1 million | $181.5 million | +23.5% |
| Net Income Available to Common Shareholders | $209.2 million | $166.4 million | +25.7% |
| Diluted EPS | $6.26 | $5.09 | +23.0% |
| Allowance for Credit Losses (ACL) | $155.7 million | $136.8 million | +13.8% |
| Non-Performing Assets (NPA) | $72.3 million (0.29% of assets) | $55.8 million (0.25% of assets) | +29.6% |
| Shareholders' Equity | $2.1 billion | $1.8 billion | +15.2% |
Material Changes vs. Prior Period
- Revenue Growth: Net interest income increased by $96.1 million, driven by a 17 basis point expansion in NIM to 3.32%. This expansion was primarily due to a favorable shift in deposit mix (lower cost of funds) and higher purchase discount accretion on commercial loans, partially offset by lower yields on investment securities.
- Expense Management: Total non-interest expense rose 3.6% to $431.9 million. Notable increases included professional services (+$15.4 million) and salaries (+$13.2 million). However, technology and communication expenses decreased significantly by $21.7 million, largely due to the cessation of deposit servicing fees to a third-party provider (BM Technologies) in 2025.
- Asset Quality: Net charge-offs decreased to $59.4 million (38 bps of average loans) from $68.3 million (50 bps) in 2024. The provision for credit losses increased to $98.0 million, reflecting higher loan balances and a $20.7 million provision for credit losses on available-for-sale debt securities.
- Capital Actions: The company redeemed all outstanding Series E and Series F Preferred Stock ($142.5 million aggregate payment) in 2025, resulting in a $4.7 million loss on redemption. Additionally, the company issued $100 million in 6.875% Subordinated Notes in December 2025.
Guidance, Outlook, and Risks
Management Commentary & Outlook: Management anticipates continued organic growth in core loans and deposits. The company is actively managing interest rate risk, transitioning from an asset-sensitive position as rates decline. The Federal Reserve's recent rate cuts are expected to impact net interest income, though management is utilizing derivative hedging and portfolio rebalancing to mitigate sensitivity. The company remains focused on its "high-tech, high-touch" model to drive low-cost deposit growth.
Key Risks and Contingencies:
- Regulatory Actions: In August 2024, the company entered into a Written Agreement with the Federal Reserve and a Consent Order with the Pennsylvania Department of Banking regarding compliance risk management, specifically concerning digital asset services, anti-money laundering (AML), and OFAC compliance. A Special Litigation Committee was formed in July 2025 to investigate related shareholder demands.
- Legal Proceedings: A securities class action lawsuit filed in December 2024 regarding disclosures related to the CFO's departure and regulatory agreements was voluntarily dismissed without prejudice in October 2025.
- Digital Asset Exposure: The company's proprietary payments platform, cubiX, serves clients concentrated in the digital currency industry. While loan exposure to this sector is not significant, deposit concentration and reputational risks remain material.
- Commercial Real Estate (CRE): The company holds significant multifamily exposure in New York State ($1.2 billion), which faces regulatory risks related to rent stabilization laws. Management monitors these assets closely for potential impairment.
Investor Verification Checklist
- Regulatory Compliance Status: Verify the current status of the August 2024 Written Agreement with the Federal Reserve and the Consent Order with Pennsylvania regulators, specifically regarding remediation of AML and digital asset compliance issues.
- Digital Asset Deposit Concentration: Assess the stability of deposits derived from the digital currency industry and the potential impact of regulatory changes (e.g., GENIUS Act) or market volatility on this funding source.
- Investment Securities Impairment: Review the $51.3 million impairment loss on debt securities recorded in 2025 and the remaining unrealized losses in the Available-for-Sale (AFS) portfolio to understand future earnings volatility.
- Preferred Stock Redemption: Confirm the impact of the $142.5 million preferred stock redemption on future dividend obligations and capital ratios.
- Interest Rate Sensitivity: Evaluate the company's asset sensitivity profile in a declining rate environment and the effectiveness of its hedging strategies.