Customers Bancorp (CUBI) Q3 2025: Non-Interest Deposits Climb to 31% Amid $1.4B Deposit Surge
Customers Bancorp’s third quarter saw a decisive acceleration in deposit transformation, with non-interest-bearing balances hitting a record 31% of total deposits. The bank’s balance sheet expanded by over $1.5 billion, as granular deposit growth and disciplined loan expansion drove positive operating leverage. Leadership’s guidance upgrades and continued team recruitment signal confidence in sustaining above-peer growth into 2026.
Summary
- Deposit Franchise Shift: Non-interest-bearing deposits now comprise a peer-leading 31% of total balances.
- Margin Expansion Momentum: Net interest margin improved for a fourth straight quarter as deposit costs declined.
- Guidance Raised Across Board: Upward revisions in loan, deposit, and net interest income growth reflect management’s bullish outlook.
Performance Analysis
Customers Bancorp delivered another quarter of outperformance, with total deposits rising $1.4 billion to $20.4 billion, underpinned by a $900 million increase in non-interest-bearing balances. This growth was driven by both the Cubix platform, a payments and digital asset network, and new commercial banking teams. The loan book expanded 6% sequentially, supported by broad-based contributions and a disciplined credit approach.
Net interest margin (NIM) expanded by 19 basis points to 3.46%, marking the fourth consecutive quarterly improvement. Net interest income rose 14% quarter over quarter, aided by both core trends and a $10 million benefit from loan accretion related to repurchased participated loans. Efficiency ratio improved again, reaching 45.4%, placing CUBI in the top quartile among peers. Tangible book value per share grew over 6% sequentially, compounding at a 25% annualized pace.
- Deposit Transformation Impact: The shift toward granular, low-cost deposits has materially reduced funding costs and improved balance sheet stability.
- Capital Raise Strengthens Position: A $163 million common equity raise, oversubscribed 10x, further boosted capital ratios and investor confidence.
- Credit Quality Remains Robust: Non-performing assets held at 25 basis points of total assets, and commercial net charge-offs stayed low at 16 basis points annualized.
Operating leverage was further enhanced by expense discipline, with non-interest expenses falling despite ongoing investments in technology and risk management. FDIC assessment reductions and lower professional fees contributed to the improved cost profile.
Executive Commentary
"We generated $1.4 billion of deposit growth led by our new commercial banking teams and Cubix clients. Our net interest margin expanded meaningfully by 19 basis points quarter over quarter, and our net interest income increased by 14% in the quarter. Our efficiency ratio improved again, even as we continued to invest in new teams, technology, and risk management."
Sam Sidhu, President and CEO, Customers Bank; CEO, Customers Bancorp
"Net interest margin expanded by 19 basis points this quarter to 3.46%, marking the fourth consecutive quarter of improvement. Our net interest income increased by about 14% to $202 million for the quarter. Our efficiency ratio improved again, now at 45.4%, placing us firmly among the top quartile of peers, even as we continue to invest in this growth."
Mark McCollum, Chief Financial Officer, Customers Bank and Customers Bancorp
Strategic Positioning
1. Deposit Transformation and Cubix Platform
CUBI’s deposit base has undergone a rapid transformation, with nearly $7 billion in new deposits from Cubix and new banking teams since late 2022. Cubix, a payments and digital asset platform, now accounts for approximately 19% of deposits and is credited with driving both deposit growth and fee income. The bank’s focus on granular, relationship-based funding has reduced reliance on wholesale CDs and kept deposit costs flat despite industry-wide increases.
2. Talent Acquisition and Team-Based Growth
Recruitment of high-performing banking teams continues to be a core growth engine. Seven new deposit-focused teams were onboarded in 2025, with a strong referral culture accelerating talent acquisition. These teams have contributed to a 50% growth in the commercial client base and are expected to further scale deposit and loan pipelines into 2026.
3. Asset Sensitivity and Risk Management
CUBI has actively managed its interest rate risk profile, layering in $800 million of received fixed swaps to moderate asset sensitivity. The bank remains modestly asset sensitive, but management expects core growth to offset any modest NIM compression from further rate cuts. Credit risk discipline remains central, with diversified loan growth and a decade-long track record of zero losses in key specialty lending verticals.
4. Efficiency and Technology Investments
Efficiency improvements are being delivered alongside investment in technology and risk infrastructure. The bank’s efficiency ratio is now below 50%, with further reductions expected. AI adoption is delivering early productivity gains, and over 100 agentic AI use cases are in development to drive future operational leverage and client experience enhancements.
5. Capital and Shareholder Value Creation
Capital strength has been reinforced by the recent equity raise, supporting both growth and regulatory ratios. Tangible book value growth remains industry-leading, and management continues to emphasize long-term shareholder value creation over short-term gains.
Key Considerations
This quarter underscores Customers Bancorp’s successful execution on a multi-year transformation strategy, leveraging technology, talent, and disciplined risk management to drive sustainable growth and margin expansion.
Key Considerations:
- Deposit Mix Evolution: The shift to 31% non-interest-bearing deposits reduces funding costs and enhances earnings resilience.
- Cubix Platform Scale: With Cubix deposits at 19% of the total, the platform’s payments activity and fee income potential are becoming increasingly material.
- Team-Based Growth Model: Ongoing recruitment and integration of deposit-focused teams are expected to keep fueling above-peer growth in both deposits and loans.
- Asset Sensitivity Management: Use of swaps and cash balances positions the bank to weather further rate volatility without significant NIM erosion.
- Efficiency Gains: Investments in AI and process automation are already delivering productivity lifts, with further savings and client experience improvements anticipated.
Risks
Concentration risk in digital asset-related deposits remains a watchpoint as Cubix’s share of the deposit base grows, even as balances are held in cash for stability. Further rate cuts could pressure net interest income, though management expects growth to offset margin compression. Regulatory scrutiny and competitive dynamics in digital payments and fintech banking could also intensify, requiring continued investment in compliance and technology. Uninsured deposit balances and the potential for outflows in volatile market conditions should be monitored closely.
Forward Outlook
For Q4 2025, Customers Bancorp guided to:
- Continued above-peer loan and deposit growth, though Q3’s pace may not be matched due to pull-forward of closings
- Repetition of the $10 million net interest income benefit from loan accretion before it drops off in Q1 2026
For full-year 2025, management raised guidance:
- Deposit growth: 8-10% (previously 5-9%)
- Loan growth: 13-14% (previously 8-11%)
- Net interest income growth: 13-15% (previously 7-10%)
- Efficiency ratio: below 50% (down from 56% in 2024)
- CET1 ratio: ~13%
Management highlighted:
- Strong pipelines in loans, deposits, and team recruitment heading into 2026
- Continued focus on credit discipline and franchise-enhancing growth
Takeaways
Customers Bancorp’s Q3 performance demonstrates the power of its deposit-led, tech-forward banking model.
- Deposit Quality Drives Margin: The shift to granular, low-cost deposits has created a durable funding advantage and margin tailwind, supporting earnings growth even as rates move.
- Platform and People Scale: The Cubix platform and new team recruitment have fundamentally altered the growth trajectory, positioning CUBI for continued outperformance in 2026.
- Watch Digital Asset Exposure: As Cubix’s share of deposits grows, investors should monitor both the upside from payments and fee income and the risk of concentration in volatile sectors.
Conclusion
CUBI’s third quarter results highlight a successful execution of deposit transformation, margin expansion, and disciplined growth. With a strengthened capital base and clear strategic focus, the bank is positioned to sustain above-peer performance, though digital asset exposure and rate volatility will remain key risk factors to monitor.
Industry Read-Through
CUBI’s results signal that regional banks with differentiated payments platforms and granular deposit strategies can outperform peers in both growth and margin metrics. The rapid scaling of Cubix underscores the rising importance of digital asset infrastructure and payments in banking, while the team-based growth model may become a template for others seeking to drive organic deposit and loan growth without traditional M&A risk. As digital asset-related deposits become a larger share of funding bases, the sector will need to balance innovation with risk management and regulatory compliance. Efficiency gains from early AI adoption further highlight the competitive imperative for banks to invest in next-gen technology to sustain operating leverage.