Customers Bancorp (CUBI) Q1 2026: Non-Interest Deposits Reach 31%, AI and Payments Diversification Accelerate Growth

2026-04-24 | By EarningsIQ Research

Customers Bancorp’s first quarter delivered a clear demonstration of its differentiated model, with non-interest-bearing deposits surging to 31% of total balances and AI-driven operational leverage beginning to show tangible impact. The bank’s focus on payments innovation, organic talent expansion, and risk management is driving both growth and franchise durability, while management’s posture signals a multi-year platform-building phase rather than near-term pivot. Investors should watch for continued deposit remixing, Cubix ecosystem scaling, and AI-enabled efficiency improvements as structural advantages emerge.

Summary

  • Deposit Mix Transformation: Relationship-driven, low-cost deposits now comprise nearly one-third of funding base.
  • AI and Automation Execution: Workflow orchestration is moving from pilot to production, unlocking measurable efficiency gains.
  • Payments Platform Diversification: Cubix expansion into real estate and mortgage finance is set to drive further growth and deposit stickiness.

Performance Analysis

Customers Bancorp’s Q1 performance underscores the power of its organic growth model—eschewing M&A in favor of talent acquisition and platform buildout. Total deposits grew 14% year over year, with non-interest-bearing balances hitting a record $6.7 billion, now representing 31% of total deposits—placing CUBI in the top decile of regional peers for funding mix. Loan growth was similarly robust at 15% annualized, with broad-based contributions across verticals such as fund finance, mortgage finance, and healthcare.

Operating leverage remains a standout, as core revenue growth outpaced expense growth by nearly twofold, driving a 300 basis point improvement in efficiency ratio and 28% growth in core EPS. Notably, deposit cost remixing continued, with average total deposit costs declining by 8 basis points sequentially, and the marginal cost of new deposits running well below legacy funding. The bank’s capital position remains strong, with tangible book value per share up 16% year over year and capital actions including share repurchases and debt redemption executed at attractive levels.

  • Deposit Quality Shift: Non-interest-bearing deposits from commercial teams and digital asset clients are driving sustained margin advantage.
  • Expense Discipline: Flat non-interest expense, combined with operational excellence initiatives, is reinforcing positive operating leverage.
  • Loan Growth Breadth: Asset generation remains multi-vertical, with no outsized concentration risk emerging despite segment shifts.

Fee income, while still a smaller contributor, saw nearly 50% growth year over year, with commercial lease income and SBA loan sales providing a more stable base. Credit performance remains solid, with net charge-offs low and reserve coverage maintained, though management is monitoring macro and geopolitical uncertainty closely.

Executive Commentary

"Entrepreneurial urgency, a differentiated approach centered on service and technology, an obsession with earning the right to serve each client every day. Those don't change. The clearest proof that this model is working is our net promoter score. It came in at 81 this year, up eight points from last year and nearly twice the banking industry average of 41."

Sam Sidhu, Chief Executive Officer

"Year over year, core revenue growth outpaced core expense growth by nearly two times. As a result, our core efficiency ratio improved by 300 basis points and core EPS grew 28% over the same period. That's very strong positive operating leverage, and we believe this is what disciplined high-quality growth should look like."

Mark McCollum, Chief Financial Officer

Strategic Positioning

1. AI and Automation as Structural Advantage

Customers Bancorp is positioning itself as an early mover in AI-enabled banking, with 75% of employees now licensed for AI tools and over 500 agents and custom GPTs developed internally. The focus extends beyond productivity, targeting new revenue streams and risk reduction, with initial use cases in loan onboarding, deposit onboarding, and payments orchestration. The bank’s CEO is personally leading the transformation, signaling conviction that AI will drive compounding benefits and structural efficiency.

2. Cubix Payments Platform Expansion

Cubix, the in-house payments platform, processed $500 billion in digital asset client transactions in Q1, maintaining stable volumes despite industry volatility. The platform is being deliberately expanded beyond digital assets into mortgage finance and real estate settlement, with new verticals already accounting for 20% of Cubix deposits. Management expects $250 million in new non-interest-bearing deposits from these verticals within the next 90 days, with a broader ambition to serve traditional capital markets as exchanges migrate to 24/7 settlement.

3. Organic Talent and Relationship Banking

The bank’s growth engine is its ability to attract and onboard high-performing banking teams, with 20 new bankers joining or signing offers in Q1 alone. These teams are driving both deposit and loan growth, and the pipeline for further hiring remains robust. The model emphasizes relationship-based, low-cost funding, with new teams quickly reaching profitability and generating attractive spreads.

4. Risk Management as a Competitive Moat

Risk management is not only a compliance function but a strategic asset for CUBI, particularly as regulatory clarity improves around payments and digital assets. The bank has materially completed its written agreement work and is now seeing declining professional fees and FDIC costs, freeing up resources for reinvestment in talent and technology.

5. Capital Allocation Focused on Organic Growth

Capital deployment remains prioritized for organic growth, with share repurchases and debt redemptions executed opportunistically. Inorganic growth is primarily through team lift-outs rather than acquisitions, maintaining the integrity of the bank’s culture and operating model.

Key Considerations

This quarter marks a transition from foundational investment to platform scaling, with management emphasizing multi-year compounding over short-term optimization. The combination of AI adoption, payments innovation, and organic talent expansion is creating a differentiated franchise that is less reliant on rate environment or industry M&A trends.

Key Considerations:

  • Deposit Franchise Strengthening: Record non-interest-bearing balances and continued remixing are structurally lowering funding costs and supporting margin resilience.
  • AI-Driven Efficiency: Measurable productivity gains (28,000 hours saved, 15 FTEs equivalent) are only the beginning, with medium-term targets for revenue and profit per employee forthcoming.
  • Payments Ecosystem Diversification: Cubix’s expansion into mortgage and real estate verticals is broadening the deposit base and increasing stickiness, with significant cross-sell potential.
  • Expense Reinvestment Discipline: Operational excellence initiatives are generating $30 million in annual run-rate proceeds, being reinvested in talent and technology for sustained leverage.
  • Credit and Risk Vigilance: Credit quality remains strong, but management continues to monitor geopolitical and macro headwinds, with conservative provisioning practices in place.

Risks

Key risks include potential deposit volatility in digital asset channels if market conditions deteriorate, execution risk in scaling new verticals through Cubix, and the challenge of maintaining credit quality as loan growth accelerates. Regulatory landscape changes in payments and digital assets remain a wild card, though management views current trends as constructive. Geopolitical uncertainty and macroeconomic shifts could pressure both loan demand and funding costs.

Forward Outlook

For Q2 2026, Customers Bancorp management guided to:

  • Continued strong loan and deposit growth, supported by new team onboarding and Cubix vertical expansion.
  • Net interest income growth of 7% to 11% over 2025, with non-interest expense growth limited to 2% to 6% for the year.

For full-year 2026, management reaffirmed guidance across all key metrics:

  • Loan and deposit growth in the 8% to 12% range
  • Efficiency ratio improvement and stable credit performance

Management highlighted that the pipeline for both commercial accounts and non-interest-bearing deposit growth remains robust, with $250 million in new Cubix deposits expected in the next 90 days and a significantly elevated pipeline for traditional commercial deposits. Expense discipline and AI-driven productivity gains are expected to support further operating leverage.

  • Deposit remixing and Cubix diversification are expected to offset any digital asset volatility
  • Loan growth remains broad-based, with no outsized concentration risk

Takeaways

Customers Bancorp’s Q1 results reinforce its thesis as a high-growth, tech-forward regional bank with a durable funding base and expanding payments platform. The combination of AI-led efficiency, Cubix ecosystem scaling, and disciplined risk management is positioning CUBI to outperform peers on both growth and profitability metrics.

  • Structural Margin Advantage: Relationship-driven non-interest-bearing deposits and disciplined remixing are driving sustainable margin benefits and funding cost resilience.
  • Platform Scalability: AI and payments platform initiatives are moving from experimentation to production, with tangible productivity and revenue opportunities emerging.
  • Pipeline Visibility: Talent and account onboarding momentum, combined with Cubix vertical expansion, set up the franchise for continued outsized growth into 2027 and beyond.

Conclusion

Customers Bancorp’s Q1 2026 performance demonstrates a business in compounding mode, with strategic investments in AI, payments, and talent now translating into tangible operational and financial leverage. The franchise’s differentiated model and disciplined execution provide clear visibility for continued outperformance, though investors should monitor deposit stability and macro risks as the bank scales its platform.

Industry Read-Through

CUBI’s success in remixing its deposit base and scaling its payments platform offers a roadmap for regional banks seeking to offset traditional NIM pressure and funding volatility. The operationalization of AI—beyond simple productivity tools to full workflow orchestration—signals a new phase of tech adoption in banking, particularly for mid-sized institutions nimble enough to drive real change. The strategic pivot of payments platforms like Cubix from digital assets to broader real estate and capital markets use cases highlights the growing demand for 24/7 bank-grade payments infrastructure. Competitors lacking similar deposit franchise strength, technology adoption, or talent onboarding engines may find themselves at a structural disadvantage as these trends accelerate.

CUBI Financials Banking AI Payments Deposits Risk management Organic growth