Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks, utilizing various valuation metrics to uncover potential opportunities [1][2] Company Overview: Customers Bancorp (CUBI) - Customers Bancorp (CUBI) holds a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential for value investors [3] - The stock has a P/E ratio of 9.81, significantly lower than the industry average of 11.22, suggesting it may be undervalued [3] - CUBI's Forward P/E has fluctuated between 6.09 and 9.81 over the past 52 weeks, with a median of 7.92 [3] Valuation Metrics - CUBI's P/B ratio is 1.26, which is attractive compared to the industry average of 1.90, indicating a favorable market value relative to its book value [4] - The P/B ratio has ranged from 0.78 to 1.26 in the past 12 months, with a median of 0.95 [4] - The P/S ratio for CUBI is 1.64, lower than the industry average of 2.27, reinforcing the perception of undervaluation [5] - CUBI's P/CF ratio stands at 13.56, compared to the industry average of 16.71, highlighting its strong cash flow outlook [6] - The P/CF ratio has varied from 7.09 to 13.56 over the past year, with a median of 9.24 [6] Investment Outlook - The combination of these valuation metrics suggests that Customers Bancorp is likely undervalued, making it an attractive option for value investors [7]

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment. While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. ...

Core Viewpoint - Investors are seeking growth stocks that can deliver above-average growth and exceptional returns, but identifying such stocks can be challenging due to inherent risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system helps identify promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - Customers Bancorp (CUBI) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is crucial for investors, with double-digit growth being a strong indicator of future stock price gains [3] - Customers Bancorp has a historical EPS growth rate of 3.8%, but projected EPS growth for this year is 22.4%, significantly surpassing the industry average of 15% [4] Group 3: Cash Flow Growth - High cash flow growth is essential for growth-oriented companies, allowing them to fund new projects without external financing [5] - Customers Bancorp's year-over-year cash flow growth is 12.3%, well above the industry average of 0.2% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 14.6%, compared to the industry average of 5.7% [6] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with near-term stock price movements [7] - Current-year earnings estimates for Customers Bancorp have been revised upward, with the Zacks Consensus Estimate increasing by 9.3% over the past month [8] Group 5: Overall Positioning - Customers Bancorp has achieved a Growth Score of B and a Zacks Rank 2 due to positive earnings estimate revisions, positioning it well for potential outperformance [10]

Part I - Financial Information [Item 1. Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Customers%20Bancorp%2C%20Inc.%20Consolidated%20Financial%20Statements) This section presents Customers Bancorp, Inc.'s unaudited consolidated financial statements and detailed accounting policy notes [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) Key Financial Highlights (Q2 2025 vs Q2 2024) | Financial Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Interest Income** | $176.7 million | $167.7 million | | **Net Income** | $60.9 million | $58.1 million | | **Net Income Available to Common Shareholders** | $55.8 million | $54.3 million | | **Diluted EPS** | $1.73 | $1.66 | Key Financial Highlights (Six Months Ended June 30) | Financial Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Interest Income** | $344.1 million | $328.0 million | | **Net Income** | $73.9 million | $107.8 million | | **Net Income Available to Common Shareholders** | $65.4 million | $100.2 million | | **Diluted EPS** | $2.02 | $3.06 | Consolidated Balance Sheet Summary (As of June 30, 2025) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $22.55 billion | $22.31 billion | | **Total Loans and Leases, net** | $15.23 billion | $14.31 billion | | **Total Deposits** | $18.98 billion | $18.85 billion | | **Total Liabilities** | $20.69 billion | $20.47 billion | | **Total Shareholders' Equity** | $1.86 billion | $1.84 billion | - For the six months ended June 30, 2025, net cash provided by operating activities was **$256.3 million**, a significant shift from the **$12.7 million** used in the same period of 2024. Net cash used in investing activities increased to **$619.2 million**, while financing activities provided **$80.5 million** in cash, compared to using **$426.7 million** in the prior year period[26](index=26&type=chunk)[27](index=27&type=chunk) [Notes to Consolidated Unaudited Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Unaudited%20Financial%20Statements) - Customers Bancorp is a bank holding company operating through its subsidiary, Customers Bank. It serves businesses and residents in several states including Pennsylvania, New York, New Jersey, Massachusetts, and California, and offers specialized loan and deposit products nationwide[29](index=29&type=chunk)[30](index=30&type=chunk) - The company adopted ASU 2023-08 and ASU 2025-02 related to crypto assets on January 1, 2025, which did not have a material impact on its financial statements. The company is still evaluating the impact of new standards related to income tax disclosures (ASU 2023-09) and expense disaggregation (ASU 2024-03 & ASU 2025-01)[34](index=34&type=chunk)[35](index=35&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, net income, income/expense drivers, and balance sheet analysis of loans, deposits, and capital [Overview and Critical Accounting Policies](index=60&type=section&id=Overview%20and%20Critical%20Accounting%20Policies) - The company highlights macroeconomic uncertainties, including elevated inflation and interest rates, and geopolitical conflicts. In response, Customers has maintained high liquidity, strong capital ratios, and shifted its loan portfolio towards lower-risk, floating-rate commercial loans. As of June 30, 2025, the bank had **$5.1 billion** in immediate available liquidity and its exposure to the higher-risk commercial real estate office sector was minimal at approximately **1%** of the loan portfolio[184](index=184&type=chunk) - The Allowance for Credit Losses (ACL) is identified as a critical accounting policy requiring complex and subjective judgments. The ACL is estimated using macroeconomic forecasts from external sources (Moody's) and internal factors. The increase in the ACL as of June 30, 2025, was primarily due to a slight deterioration in macroeconomic forecasts and higher loan balances[188](index=188&type=chunk)[189](index=189&type=chunk)[193](index=193&type=chunk) - A sensitivity analysis indicates that using a **100%** adverse economic scenario instead of the baseline forecast would result in an incremental quantitative impact to the ACL of approximately **$82 million** at June 30, 2025, highlighting the significant influence of macroeconomic forecasts on the provision[196](index=196&type=chunk) [Results of Operations](index=65&type=section&id=Results%20of%20Operations) Condensed Statements of Income (Q2 & YTD) | (dollars in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net interest income** | $176,703 | $167,653 | $344,149 | $328,038 | | **Provision for credit losses** | $20,781 | $18,121 | $49,078 | $35,191 | | **Total non-interest income** | $29,606 | $31,037 | $5,116 | $52,268 | | **Total non-interest expense** | $106,626 | $103,452 | $209,397 | $202,621 | | **Net income** | $60,939 | $58,085 | $73,851 | $107,811 | | **Net income available to common shareholders** | $55,846 | $54,300 | $65,369 | $100,226 | - Net interest income for Q2 2025 increased by **$9.1 million** YoY to **$176.7 million**, driven by lower deposit interest expense and higher income from specialized lending. The Net Interest Margin (NIM) decreased slightly by **2 basis points** to **3.27%**[201](index=201&type=chunk)[218](index=218&type=chunk) - Non-interest income for the six months ended June 30, 2025, decreased by **$47.2 million** YoY. This was primarily due to a **$51.3 million** impairment loss on AFS debt securities sold to improve liquidity and the non-recurrence of an **$11.0 million** unrealized gain on an equity method investment recorded in 2024[207](index=207&type=chunk) - Non-interest expense for the six months ended June 30, 2025, increased by **$6.8 million** YoY, mainly due to higher professional services (**$13.3 million**) and salaries (**$7.6 million**). This was partially offset by a **$16.4 million** decrease in technology and bank operations expense, which included a **$7.1 million** prior-period fee recorded in 2024[209](index=209&type=chunk) [Financial Condition](index=74&type=section&id=Financial%20Condition) Condensed Balance Sheet Data | (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $22,550,800 | $22,308,241 | | **Total Loans and Leases Receivable** | $13,719,829 | $13,127,634 | | **Total Deposits** | $18,976,018 | $18,846,461 | | **Total Shareholders' Equity** | $1,863,558 | $1,836,683 | - Total assets increased by **$242.6 million** since year-end 2024, driven by growth in various loan categories, partially offset by a **$282.4 million** decrease in cash and cash equivalents as excess cash was deployed into loans[261](index=261&type=chunk)[264](index=264&type=chunk) - The loan portfolio grew, with commercial loans reaching **$14.0 billion**, representing **91.0%** of the total loan portfolio. The growth was notable in specialized lending and mortgage finance[276](index=276&type=chunk) - Total deposits increased by **$129.6 million** since year-end 2024, with growth in savings/MMDA and time deposits offsetting declines in demand deposits. Non-interest bearing demand deposits decreased by **$127.2 million**[311](index=311&type=chunk)[312](index=312&type=chunk) - Shareholders' equity increased by **$26.9 million** to **$1.9 billion**. The increase was driven by retained earnings and a positive change in AOCI, partially offset by the redemption of **$55.6 million** in Series E Preferred Stock and **$5.6 million** in common stock repurchases[325](index=325&type=chunk) [Liquidity and Capital Resources](index=91&type=section&id=Liquidity%20and%20Capital%20Resources) - The company maintains a strong liquidity position with **$8.6 billion** immediately available, consisting of cash on hand and borrowing capacity from the FHLB and FRB. This liquidity covers approximately **115%** of uninsured deposits[335](index=335&type=chunk) - The loan-to-deposit ratio was **81%** at June 30, 2025[335](index=335&type=chunk) Regulatory Capital Ratios (Customers Bancorp, Inc.) | Ratio | June 30, 2025 | December 31, 2024 | Basel III Compliant Minimum | | :--- | :--- | :--- | :--- | | **Common equity Tier 1 capital** | 12.050% | 12.087% | 7.000% | | **Tier 1 capital** | 12.587% | 13.011% | 8.500% | | **Total capital** | 14.489% | 14.878% | 10.500% | | **Tier 1 leverage** | 8.583% | 8.694% | 4.000% | - As of June 30, 2025, the company's regulatory capital ratios reflected the full impact of the CECL transition provisions, having fully phased in the cumulative impact from its adoption[127](index=127&type=chunk)[344](index=344&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=94&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk via income scenario modeling and EVE analysis, showing asset-sensitive net interest income and liability-sensitive EVE - In Q2 2025, the company transitioned to a new balance sheet forecasting model to enhance the modeling of interest rate sensitivity, which resulted in changes to principal assumptions for investment performance, loan prepayments, and deposit modeling[351](index=351&type=chunk) Interest Rate Sensitivity Analysis (Net Interest Income) | Rate Shock | % Change from Base (June 30, 2025) | | :--- | :--- | | Up 3% | 6.7% | | Up 2% | 4.6% | | Up 1% | 2.2% | | Down 1% | (1.5)% | | Down 2% | (4.4)% | | Down 3% | (7.7)% | Interest Rate Sensitivity Analysis (Economic Value of Equity - EVE) | Rate Shock | % Change from Base (June 30, 2025) | | :--- | :--- | | Up 3% | (9.0)% | | Up 2% | (5.2)% | | Up 1% | (2.2)% | | Down 1% | 1.7% | | Down 2% | 3.1% | | Down 3% | 4.4% | [Item 4. Controls and Procedures](index=95&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2025, with no material changes to internal financial reporting controls - Based on an evaluation as of the end of the period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[356](index=356&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal controls[357](index=357&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=96&type=section&id=Item%201.%20Legal%20Proceedings) The company faces a federal securities class action lawsuit and formed a Special Litigation Committee to investigate alleged disclosure deficiencies - A federal securities class action complaint was filed against the company in December 2024. In June 2025, a court denied the plaintiff's motion for appointment as lead counsel. The company intends to defend itself against this action[167](index=167&type=chunk) - In June 2025, the Board of Directors received a demand letter concerning alleged deficiencies in disclosures related to anti-money laundering and bank secrecy compliance. A Special Litigation Committee of independent directors was formed in July 2025 to investigate[168](index=168&type=chunk) [Item 1A. Risk Factors](index=96&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the company's Annual Report on Form 10-K - The company states there are no material changes from the risk factors included within its 2024 Form 10-K[359](index=359&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=96&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company redeemed Series E Preferred Stock for $57.5 million and does not anticipate paying common stock dividends soon - On June 16, 2025, Customers redeemed all **2,300,000** outstanding shares of its Series E Preferred Stock at **$25.00** per share, for a total of **$57.5 million**[360](index=360&type=chunk) - The company has not historically paid cash dividends on its common stock and does not anticipate doing so in the foreseeable future[361](index=361&type=chunk) [Item 3. Defaults Upon Senior Securities](index=97&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[364](index=364&type=chunk) [Item 4. Mine Safety Disclosures](index=97&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[365](index=365&type=chunk) [Item 5. Other Information](index=97&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, terminated, or modified any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - No director or officer adopted, terminated, or modified any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025[366](index=366&type=chunk) [Item 6. Exhibits](index=98&type=section&id=Item%206.%20Exhibits) This section lists Form 10-Q exhibits, including corporate governance documents, employment agreements, and CEO/CFO certifications - The exhibits include certifications from the CEO and CFO pursuant to Sarbanes-Oxley Act Sections 302 and 906, an employment agreement with Mark R. McCollom, and the Form of Amended Long-Term Incentive Performance Stock Unit Award Agreement[368](index=368&type=chunk)

Chief Financial Officer, Customers Bank — Mark McCollum Need a quote from a Motley Fool analyst? Email [email protected] TAKEAWAYS Core Earnings Per Share-- Core EPS was $1.80 for Q2 2025, supported by broad-based performance across the business. Return on Equity-- 13.3% core ROE for Q2 2025, reflecting continued capital efficiency. Image source: The Motley Fool. Friday, July 25, 2025 at 1:00 p.m. ET CALL PARTICIPANTS Chairman — Jay Sidhu President and Chief Executive Officer — Sam Sidhu Chief Financial Off ...

Core Viewpoint - Customers Bancorp (CUBI) reported quarterly earnings of $1.8 per share, exceeding the Zacks Consensus Estimate of $1.5 per share, and showing an increase from $1.49 per share a year ago, representing an earnings surprise of +20.00% [1][2] Financial Performance - The company posted revenues of $206.31 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.72%, compared to $198.69 million in the same quarter last year [2] - Over the last four quarters, Customers Bancorp has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Customers Bancorp shares have increased approximately 28.5% since the beginning of the year, significantly outperforming the S&P 500's gain of 8.1% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.65 on revenues of $202.71 million, and for the current fiscal year, it is $6.27 on revenues of $748.16 million [7] - The estimate revisions trend for Customers Bancorp was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Banks - Southeast industry, to which Customers Bancorp belongs, is currently ranked in the top 9% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this sector [8]

Q2 2025 Performance Overview [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) The company reported strong Q2 2025 results with GAAP net income of **$55.8 million** ($1.73 per diluted share) and core earnings of **$58.1 million** ($1.80 per diluted share), alongside a 14 basis point quarter-over-quarter increase in Net Interest Margin (NIM) to **3.27%**, loan growth of **2.1%**, an improved CET1 ratio of **12.0%**, and growth in tangible book value per share to **$56.24** Q2 2025 Key Performance Indicators | Metric | Q2 2025 Value | Change from Q1 2025 | | :--- | :--- | :--- | | Net Income (Common) | $55.8 million | - | | Diluted EPS | $1.73 | - | | Core Earnings* | $58.1 million | - | | Core Diluted EPS* | $1.80 | - | | Total Loans & Leases Growth | $319.0 million | +2.1% | | Net Interest Margin (NIM) | 3.27% | +14 bps | | Provision for Credit Losses | $20.8 million | Decreased from $28.3 million | | CET 1 Ratio | 12.0% | Increased from 11.7% | | Tangible Book Value/Share* | $56.24 | +2.7% | - The company redeemed all outstanding shares (**$57.5 million**) of its Series E Preferred Stock on June 16, 2025[3](index=3&type=chunk) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) CEO Jay Sidhu emphasized the strength of the company's business model, evidenced by a **14 basis point** Net Interest Margin (NIM) increase due to attractive loan yields and managed interest expenses, highlighting successful deposit gathering efforts and a strong liquidity position covering **150%** of uninsured deposits, alongside robust asset quality with minimal exposure to office commercial real estate - Net interest margin increased by **14 basis points** in Q2 2025 compared to Q1 2025, driven by sourcing loans at attractive yields and managing interest expenses[5](index=5&type=chunk) - Deposit-focused teams recruited since March 2023 manage **$2.4 billion** (13% of total deposits), contributing to a **60% increase** in commercial deposit accounts since year-end 2022[6](index=6&type=chunk) - The company maintains a strong liquidity position of **$8.6 billion**, covering approximately **150%** of uninsured deposits, with asset quality remaining strong as evidenced by a non-performing asset (NPA) ratio of **0.27%** and minimal exposure (approx. 1% of loan portfolio) to the higher-risk commercial real estate office sector[7](index=7&type=chunk) [Financial Highlights](index=3&type=section&id=Financial%20Highlights) Quarter-over-quarter, GAAP net income surged **486.4%** to **$55.8 million**, and diluted EPS rose to **$1.73** from $0.29, largely due to the absence of prior-quarter impairment charges, while year-over-year, GAAP net income increased by **2.8%**, and core earnings grew a robust **19.7%** to **$58.1 million**, with the balance sheet expanding as total assets were up **7.7%** and total loans up **13.1%** Q2 2025 vs. Q1 2025 Financial Comparison | Metric | Q2 2025 | Q1 2025 | % Change | | :--- | :--- | :--- | :--- | | Net Income (Common) | $55.8 million | $9.5 million | +486.4% | | Diluted EPS | $1.73 | $0.29 | +496.6% | | Core Earnings* | $58.1 million | $50.0 million | +16.3% | | Net Interest Margin | 3.27% | 3.13% | +14 bps | | Total Assets | $22.55 billion | $22.42 billion | +0.6% | | Total Loans & Leases | $15.41 billion | $15.10 billion | +2.1% | Q2 2025 vs. Q2 2024 Financial Comparison | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Income (Common) | $55.8 million | $54.3 million | +2.8% | | Diluted EPS | $1.73 | $1.66 | +4.2% | | Core Earnings* | $58.1 million | $48.6 million | +19.7% | | Total Assets | $22.55 billion | $20.94 billion | +7.7% | | Total Loans & Leases | $15.41 billion | $13.63 billion | +13.1% | | Tangible Book Value/Share* | $56.24 | $50.70 | +10.9% | Financial Condition Analysis [Loan and Lease Portfolio](index=5&type=section&id=Loan%20and%20Lease%20Portfolio) Total loans and leases held for investment grew by **$319 million** (**2.1%**) quarter-over-quarter to **$15.4 billion** at the end of Q2 2025, primarily driven by increases in specialized lending (+$385 million) and mortgage finance loans (+$148 million), with the portfolio expanding by a significant **$2.1 billion** (**16%**) year-over-year, again led by specialized lending Loan Portfolio Composition (June 30, 2025) | Loan Category | Amount (in millions) | % of Total | | :--- | :--- | :--- | | Specialized lending | $6,454.7 | 42.0% | | Multifamily | $2,247.3 | 14.6% | | Mortgage finance | $1,625.8 | 10.6% | | Commercial real estate non-owner occupied | $1,497.4 | 9.7% | | Other Commercial | $2,201.3 | 14.3% | | Total Consumer Loans | $1,353.0 | 8.8% | | **Total Loans Held for Investment** | **$15,379.4** | **100.0%** | - Quarter-over-quarter loan growth was led by a **$385 million** (**6%**) increase in specialized lending and a **$148 million** (**10%**) increase in mortgage finance loans[14](index=14&type=chunk) - Year-over-year, loans held for investment grew by **$2.1 billion** (**16%**), with specialized lending increasing by **$926 million** and mortgage finance loans by **$503 million**[15](index=15&type=chunk) [Credit Quality and Allowances](index=6&type=section&id=Credit%20Quality%20and%20Allowances) Asset quality remained strong and improved during the quarter, with the non-performing loan (NPL) ratio decreasing to **0.18%** of total loans from 0.29% in Q1 2025, while the provision for credit losses was **$18.5 million** for loans and leases, a decrease from the prior quarter, and the allowance for credit losses provides robust coverage at **518%** of non-performing loans, a significant increase from 324% in the previous quarter Asset Quality Metrics | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | NPLs to total loans and leases | 0.18% | 0.29% | 0.35% | | Reserves to NPLs | 518.29% | 324.22% | 279.52% | | NPAs to total assets | 0.27% | 0.26% | 0.23% | - The provision for credit losses on loans and leases was **$18.5 million** in Q2 2025, down from $21.4 million in Q1 2025, primarily due to lower balances in the consumer installment loan portfolio[18](index=18&type=chunk) - Net charge-offs decreased to **$13.1 million** in Q2 2025, compared to $17.1 million in Q1 2025 and $18.7 million in Q2 2024[17](index=17&type=chunk) [Investment Securities](index=7&type=section&id=Investment%20Securities) The total investment securities portfolio was **$2.7 billion** as of June 30, 2025, down from $3.0 billion in the prior quarter, with the Available for Sale (AFS) debt portfolio of **$1.8 billion** having a spot yield of **5.78%** and an effective duration of **3.0 years**, while the Held to Maturity (HTM) portfolio was smaller at **$0.9 billion**, representing only **3.8%** of total assets, with a spot yield of **3.79%** and a duration of **4.2 years** Investment Securities Portfolio Composition | Security Type | June 30, 2025 (in millions) | March 31, 2025 (in millions) | | :--- | :--- | :--- | | Debt securities, available for sale | $1,846.6 | $2,024.4 | | Debt securities, held to maturity | $853.1 | $938.2 | | Equity securities | $30.8 | $33.1 | | **Total Investment Securities** | **$2,730.5** | **$2,995.7** | - The AFS debt securities portfolio has a spot yield of **5.78%**, an effective duration of approximately **3.0 years**, and is **64% AAA rated**[26](index=26&type=chunk) - The HTM debt securities portfolio represents only **3.8%** of total assets, with a spot yield of **3.79%** and an effective duration of approximately **4.2 years**[27](index=27&type=chunk) [Deposits and Borrowings](index=8&type=section&id=Deposits%20and%20Borrowings) Total deposits increased slightly by **$43 million** quarter-over-quarter to **$19.0 billion**, with non-interest bearing demand deposits constituting **28.9%** of the total, and the average cost of deposits rising by **3 basis points** to **2.85%**, while the bank maintains strong liquidity, with immediately available funds covering approximately **150%** of its **$5.7 billion** in estimated uninsured deposits, and total borrowings increased by **$62 million** to **$1.5 billion**, primarily from FHLB advances Deposit Composition (June 30, 2025) | Deposit Type | Amount (in millions) | % of Total | | :--- | :--- | :--- | | Demand, non-interest bearing | $5,481.1 | 28.9% | | Demand, interest bearing | $4,912.8 | 25.9% | | Money market | $4,206.5 | 22.2% | | Time deposits | $3,000.5 | 15.8% | | Savings | $1,375.1 | 7.2% | | **Total Deposits** | **$18,976.0** | **100.0%** | - Total estimated uninsured deposits were **$5.7 billion**, or **30%** of total deposits, with immediately available liquidity covering approximately **150%** of this amount[28](index=28&type=chunk)[30](index=30&type=chunk) - Total borrowings increased by **$62 million** (**4%**) QoQ to **$1.5 billion**, mainly from a **$60 million** draw in FHLB advances[31](index=31&type=chunk) [Capital Position](index=9&type=section&id=Capital%20Position) The company's capital position strengthened in Q2 2025, with the Common Equity Tier 1 (CET1) ratio increasing to an estimated **12.0%** from 11.7% in the prior quarter, and the Tangible Common Equity to Tangible Assets (TCE/TA) ratio rising to **7.9%**, while tangible book value per common share grew by **$1.50**, or **2.7%**, during the quarter to **$56.24**, driven by earnings Key Capital Ratios | Ratio | June 30, 2025 (est.) | March 31, 2025 | | :--- | :--- | :--- | | Common Equity to Total Assets | 7.9% | 7.7% | | Tangible Common Equity to Tangible Assets* | 7.9% | 7.7% | | CET 1 Capital Ratio | 12.0% | 11.7% | | Total Risk Based Capital Ratio | 14.5% | 14.6% | - Tangible book value per common share increased to **$56.24** from $54.74 in the prior quarter, a growth of **2.7%** QoQ or **11% annualized**[3](index=3&type=chunk)[35](index=35&type=chunk) - The increase in common equity was primarily driven by earnings of **$56 million**, partially offset by a **$4 million** increase in unrealized losses on investment securities[35](index=35&type=chunk) Profitability Analysis [Net Interest Income and Margin](index=10&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income (NII) for Q2 2025 was **$176.7 million**, an increase of **$9.3 million** from the previous quarter, primarily driven by higher interest income from loan growth, particularly in specialized lending and mortgage finance, consequently, the net interest margin (NIM) expanded by **14 basis points** to **3.27%** compared to Q1 2025 - Q2 2025 Net Interest Income increased by **$9.3 million** from Q1 2025, driven by a **$13.1 million** increase in interest income from loan growth[39](index=39&type=chunk) - The Net Interest Margin (NIM) expanded by **14 basis points** quarter-over-quarter to **3.27%**, reflecting the benefits of strong loan growth and well-managed deposit costs[3](index=3&type=chunk)[40](index=40&type=chunk) - Compared to Q2 2024, NII increased by **$9.1 million**, primarily due to lower interest expense from a favorable shift in deposit mix and higher interest income from loan growth[41](index=41&type=chunk) [Non-Interest Income](index=10&type=section&id=Non-Interest%20Income) Non-interest income for Q2 2025 was **$29.6 million**, a significant recovery from a loss of **$24.5 million** in Q1 2025, with the substantial quarter-over-quarter increase primarily due to the absence of a **$51.3 million** impairment loss on AFS debt securities that was recorded in the prior quarter, while year-over-year, non-interest income decreased slightly due to a large one-time gain on equity method investments in Q2 2024 Non-Interest Income Breakdown (Q2 2025) | Category | Amount (in millions) | | :--- | :--- | | Commercial lease income | $11.1 | | Loan fees | $9.1 | | Other | $7.8 | | Bank-owned life insurance | $2.2 | | Net loss on sale of investment securities | ($1.8) | | **Total Non-Interest Income** | **$29.6** | - The **$54.1 million** QoQ increase in non-interest income was primarily due to a **$51.3 million** impairment loss on certain AFS debt securities recorded in Q1 2025 that did not recur[42](index=42&type=chunk) [Non-Interest Expense](index=11&type=section&id=Non-Interest%20Expense) Total non-interest expense was **$106.6 million** in Q2 2025, an increase of **$3.9 million** from the prior quarter, primarily driven by higher salaries and employee benefits (+$3.2 million) due to increased headcount and incentives, and a **$2.0 million** increase in professional fees, despite these investments in the franchise, the company achieved positive operating leverage and a lower efficiency ratio Non-Interest Expense Breakdown (Q2 2025) | Category | Amount (in millions) | | :--- | :--- | | Salaries and employee benefits | $45.8 | | Professional services | $13.9 | | FDIC assessments, non-income taxes and regulatory fees | $11.9 | | Technology, communication and bank operations | $10.4 | | Commercial lease depreciation | $8.7 | | **Total Non-Interest Expense** | **$106.6** | - The QoQ increase in expenses was mainly due to a **$3.2 million** rise in salaries and benefits and a **$2.0 million** increase in professional fees[44](index=44&type=chunk) - Despite increased investment, the efficiency ratio declined, indicating **positive operating leverage**[45](index=45&type=chunk) [Income Taxes](index=11&type=section&id=Income%20Taxes) The company recorded an income tax provision of **$18.0 million** in Q2 2025, a significant shift from a **$1.0 million** benefit in Q1 2025, primarily due to higher pre-tax income, with the effective tax rate for the quarter being **22.8%** - The effective tax rate for Q2 2025 was **22.8%**[47](index=47&type=chunk) - Income tax expense increased by **$19.0 million** from Q1 2025, mainly due to higher pre-tax income and fewer discrete tax benefits from share-based compensation[47](index=47&type=chunk) Outlook and Corporate Information [Full Year 2025 Outlook](index=12&type=section&id=Full%20Year%202025%20Outlook) Following strong performance in the first half of the year, the company has raised its full-year 2025 targets, now expecting to increase the loan portfolio by **8% to 11%** and net interest income by **7% to 10%**, with the core efficiency ratio anticipated to be at the low end of the low to mid 50's range, as the strategic focus remains on transforming the deposit franchise, strengthening risk management, and improving profitability Updated Full Year 2025 Targets | Metric | Updated 2025 Target | | :--- | :--- | | Loan Portfolio Growth | 8% to 11% | | Net Interest Income Growth | 7% to 10% | | Core Efficiency Ratio | Bias to the low end of the low to mid 50's range | - Strategic priorities include continuing the transformation of the deposit franchise, strengthening risk management and compliance, improving profitability, and maintaining strong capital and liquidity[48](index=48&type=chunk) [Corporate Profile and Events](index=13&type=section&id=Corporate%20Profile%20and%20Events) Customers Bancorp, Inc. is a major U.S. bank holding company with over **$22 billion** in assets, ranking it among the 80 largest in the country, and has received several accolades, including being named the No. 1 top-performing bank in its asset class by American Banker in 2024, with a webcast to discuss the Q2 2025 earnings scheduled for July 25, 2025, at 9:00 AM EDT - The company is one of the **80 largest bank holding companies** in the U.S. with over **$22 billion** in assets[52](index=52&type=chunk) - An earnings webcast is scheduled for Friday, July 25, 2025, at **9:00 AM EDT**[50](index=50&type=chunk) - Recent accolades include being ranked **No. 1** on American Banker's 2024 list of top-performing banks with assets between $10 billion and $50 billion[54](index=54&type=chunk) Detailed Financial Statements (Unaudited) This section provides the detailed unaudited consolidated financial statements for Customers Bancorp, Inc., including statements of operations, balance sheets, and breakdowns of key financial metrics and portfolio compositions for the periods presented [Consolidated Statements of Operations](index=17&type=section&id=Consolidated%20Statements%20of%20Operations) The Consolidated Statements of Operations details the company's revenues, expenses, and profits over the specified periods, showing total interest income of **$328.0 million**, total interest expense of **$151.3 million**, resulting in net interest income of **$176.7 million**, and after provisions and non-interest items, net income available to common shareholders was **$55.8 million** [Consolidated Balance Sheet](index=18&type=section&id=Consolidated%20Balance%20Sheet) The Consolidated Balance Sheet presents a snapshot of the company's financial position at the end of the quarter, with total assets of **$22.55 billion**, supported by total liabilities of **$20.69 billion** and total shareholders' equity of **$1.86 billion**, and key assets including **$15.23 billion** in net loans and leases and **$3.50 billion** in cash and cash equivalents [Average Balance Sheet and Net Interest Margin Analysis](index=19&type=section&id=Average%20Balance%20Sheet%20and%20Net%20Interest%20Margin%20Analysis) This section breaks down the average balances of interest-earning assets and interest-bearing liabilities to analyze yields, costs, and the resulting net interest margin (NIM), with the average yield on interest-earning assets at **6.07%**, and the average cost of interest-bearing liabilities at **4.14%**, contributing to a tax-equivalent NIM of **3.27%** [Loan, Deposit, and Asset Quality Details](index=21&type=section&id=Loan,%20Deposit,%20and%20Asset%20Quality%20Details) These tables provide granular, period-end data on the composition of the loan and deposit portfolios, as well as detailed asset quality metrics by loan type, including allowances, non-performing loans, and net charge-offs, showing that as of June 30, 2025, commercial loans represented **91.2%** of the held-for-investment portfolio, and non-interest bearing deposits made up **28.9%** of total deposits Reconciliation of GAAP to Non-GAAP Measures This section provides detailed reconciliations of reported GAAP financial measures to non-GAAP measures such as Core Earnings, Core ROAA, Core ROCE, Core Efficiency Ratio, and Tangible Book Value, with these adjustments made to exclude items management believes are not representative of ongoing financial results, such as impairment losses, gains/losses on securities, and severance expenses, to enhance comparability between periods [Core Earnings and Performance Metrics Reconciliation](index=25&type=section&id=Core%20Earnings%20and%20Performance%20Metrics%20Reconciliation) For Q2 2025, GAAP net income of **$55.8 million** is reconciled to Core Earnings of **$58.1 million** by adjusting for items such as a **$1.4 million** after-tax gain on investment securities, a **$1.9 million** loss on redemption of preferred stock, and a **$0.8 million** benefit from loan program termination fees, with these adjustments used to calculate non-GAAP performance ratios like Core ROAA (**1.10%**) and Core ROCE (**13.32%**) Q2 2025 GAAP to Core Earnings Reconciliation | Item | Amount (in millions) | | :--- | :--- | | **GAAP Net Income (Common)** | **$55.8** | | (Gains) losses on investment securities (after-tax) | $1.4 | | Loss on redemption of preferred stock (after-tax) | $1.9 | | Unrealized (gain) loss on loans held for sale (after-tax) | ($0.2) | | Loan program termination fees (after-tax) | ($0.8) | | **Core Earnings** | **$58.1** | [Tangible Common Equity and Book Value Reconciliation](index=31&type=section&id=Tangible%20Common%20Equity%20and%20Book%20Value%20Reconciliation) This reconciliation adjusts total shareholders' equity to derive tangible common equity, which is used to calculate tangible book value per share and the TCE/TA ratio, showing that for Q2 2025, GAAP shareholders' equity of **$1.86 billion** is reduced by preferred stock (**$82.2 million**) and goodwill/intangibles (**$3.6 million**) to arrive at tangible common equity of **$1.78 billion**, resulting in a tangible book value per common share of **$56.24** Q2 2025 Tangible Common Equity Reconciliation | Item | Amount (in millions) | | :--- | :--- | | **GAAP Total Shareholders' Equity** | **$1,863.6** | | Less: Preferred stock | ($82.2) | | Less: Goodwill and other intangibles | ($3.6) | | **Tangible Common Equity** | **$1,777.7** |

Core Viewpoint - The article emphasizes the importance of value investing and highlights Customers Bancorp (CUBI) as a strong value stock based on various financial metrics [2][8]. Group 1: Value Metrics - Customers Bancorp (CUBI) has a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential for value investors [4]. - CUBI's Forward P/E ratio is 9.41, significantly lower than the industry's average of 11.38, suggesting it may be undervalued [4]. - The stock's P/B ratio is 1.17, compared to the industry's average of 1.94, further indicating attractive valuation [5]. - CUBI's P/S ratio stands at 1.47, while the industry average is 2.24, reinforcing its value proposition [6]. - The P/CF ratio for CUBI is 13.17, compared to the industry's average of 17.13, highlighting its solid cash flow outlook [7]. Group 2: Historical Performance - Over the past year, CUBI's Forward P/E has fluctuated between a high of 9.68 and a low of 6.09, with a median of 7.82 [4]. - The P/B ratio for CUBI has ranged from a high of 1.31 to a low of 0.78, with a median of 0.95 [5]. - CUBI's P/CF ratio has seen a high of 13.55 and a low of 7.09, with a median of 9.04 over the past year [7]. Group 3: Investment Outlook - The combination of CUBI's strong value metrics and positive earnings outlook positions it as an impressive value stock currently [8].

Company Overview - Customers Bancorp (CUBI) is expected to report a year-over-year increase in earnings, with a projected EPS of $1.50, reflecting a change of +0.7% [3] - Revenues are anticipated to be $198.92 million, which is a slight increase of 0.1% from the previous year [3] Earnings Expectations - The consensus EPS estimate has been revised down by 0.9% over the last 30 days, indicating a bearish sentiment among analysts [4] - The Most Accurate Estimate for Customers Bancorp is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -0.89% [12] Historical Performance - In the last reported quarter, Customers Bancorp exceeded the expected EPS of $1.28 by delivering $1.54, achieving a surprise of +20.31% [13] - Over the past four quarters, the company has beaten consensus EPS estimates three times [14] Industry Context - Origin Bancorp (OBK), another player in the Zacks Banks - Southeast industry, is expected to report an EPS of $0.78 for the same quarter, indicating a year-over-year increase of +16.4% [18] - Revenues for Origin Bancorp are projected at $97.55 million, up 1.2% from the previous year, but it has an Earnings ESP of -7.3% [19]

Core Viewpoint - The article highlights Customers Bancorp (CUBI) as a strong value stock opportunity based on various financial metrics and its current Zacks Rank [4][8]. Financial Metrics - CUBI has a P/E ratio of 9.13, significantly lower than the industry average of 11.11, indicating potential undervaluation [4]. - The company's P/B ratio stands at 1.13, compared to the industry average of 1.90, suggesting a solid valuation relative to its book value [5]. - CUBI's P/S ratio is 1.48, while the industry average is 2.13, further supporting the notion of undervaluation based on sales performance [6]. - The P/CF ratio for CUBI is 12.76, which is lower than the industry average of 16.56, indicating a favorable cash flow outlook [7]. Investment Outlook - Given the strength of its earnings outlook and the various valuation metrics, CUBI is positioned as a compelling value stock at this time [8].