Customers Bancorp ((CUBI)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Customers Bancorp recently held its earnings call, showcasing a positive sentiment overall. The discussion revealed substantial growth in various financial metrics, including deposits, assets, and profitability. The bank also highlighted strong loan growth and operational efficiency achievements. Despite facing challenges such as elevated professional services expenses and moderate impacts from securities repositioning, the company’s outlook remains optimistic, supported by robust capital and credit performance.
Exceptional Deposit-Led Growth
Customers Bancorp has experienced remarkable deposit-led growth, doubling in size over the past five years. By the end of 2024, the bank boasted over $22 billion in assets, fueled by an impressive $10 billion increase in net deposits, reflecting an annual growth rate of 17%.
Strong Earnings and Profitability
The bank reported a 19% annual increase in net interest income, while core earnings per share (EPS) soared over 2.5 times during the last five years. Additionally, the bank’s margin improved by 40 basis points over the same period.
Successful Deposit Franchise Transformation
Deposits at Customers Bancorp increased by more than $775 million, or 4%, with noninterest-bearing deposits growing to $5.6 billion, accounting for 30% of total deposits. This transformation underscores the bank’s strong deposit franchise.
Record Loan Growth
The bank achieved record loan growth, with its loan portfolio expanding by $670 million this quarter, representing a 19% annualized pace and a 12.3% growth for the year, defying industry trends.
Operational Excellence and Efficiency Achievements
Customers Bancorp is on track to achieve $20 million in annual efficiency through fee income growth and expense savings. The cubiX platform alone is expected to contribute $5 million to the annual run rate fee income.
Strong Capital and Credit Performance
Non-performing assets (NPAs) remained low at just 25 basis points, and net charge-offs declined during the quarter. The commercial net charge-off rate decreased to 13 basis points, highlighting strong credit performance.
Moderate Impact from Securities Repositioning
The bank exited approximately $480 million in low-yielding securities, with reinvestment leading to modest net growth in interest income, indicating a moderate impact on their financials.
Elevated Professional Services Expenses
Customers Bancorp experienced higher professional services expenses due to enhancements in risk management infrastructure, slightly impacting short-term profitability.
Concerns Over Deposit Cap in Digital Assets
The bank exceeded its previous 15% cap on digital asset deposits, holding $3.6 billion in spot balances. This raises potential concerns related to liquidity management.
Forward-Looking Guidance
Looking ahead, Customers Bancorp provided robust guidance for 2025, anticipating growth across several key metrics. The bank expects net interest income to grow by 7% to 10% and aims for a 7% to 10% increase in its loan portfolio. Additionally, the bank plans to enhance its deposit franchise by targeting $1.5 billion to $2 billion in new deposits while focusing on reducing high-cost deposit sources. Efficiency targets are set for the low to mid-50s in 2025, with a long-term goal in the mid-40s.
In summary, Customers Bancorp’s recent earnings call portrayed an optimistic view with significant growth in deposits, assets, and profitability. Despite certain challenges, the bank’s strong capital and credit performance support its positive outlook, as it positions itself for top-tier industry performance in the coming year.
