CUSTOMERS BANCORP INC 2026 Q3 Earnings Call

Please go ahead. Thank you, Ellen, and good morning, everyone.

Thank you for joining us for the Customers Bancorp's earnings webcast for the third quarter of 2026. The presentation you will see during today's webcast has been posted on the investors webpage of the bank's website at www.customersbank.com. You can also download a PDF of the full press release on the same page. I'd like to remind you that today's presentation may contain forward-looking statements, which are subject to uncertainty and changes in circumstances. Actual results may differ materially from management's expectations due to a variety of factors, which are described in our earnings materials and our SEC filings. We also reference non-GAAP financial measures, so it's important to review our GAAP results in the presentation and the reconciliations in the appendix. At this time, it's my pleasure to introduce Customers Bancorp CEO, Sam Sidhu.

Thanks, Phil. Good morning, everyone, and welcome to Customers Bancorp's third quarter 2026 earnings call. I'm joined this morning by our Chief Financial Officer, Mark McCollom. I'll take you through a few key highlights from the third quarter, give you an update on our strategic priorities, and Mark will provide additional detail on our financials. Simply put, it was a great quarter. We delivered record deposits and loans, real wins in AI, a more diversified cubiX platform, and continued success recruiting teams. On top of that, we have strong momentum to finish the year and a very positive outlook as we move to 2027. Turning to slide 4. Our third quarter results reflect strong execution across the franchise. To give a few highlights, deposits grew 4% in the quarter and 11% year over year to a record $22.6 billion.

Non-interest-bearing deposits grew by $300 million to $7.2 billion, a third consecutive quarterly record. Total loans grew 3% in the quarter and 14% year over year to a record $18.5 billion. NII increased 8% quarter over quarter. EPS was $2.25, up 10% quarter over quarter. ROE rose to 14%, up more than 70 basis points quarter over quarter. Our efficiency ratio improved by approximately 340 basis points in the quarter, and tangible book value per share increased 10% year over year. That's 17 consecutive quarterly records for book value, five for loans, and eight for total deposits. We delivered these results with strong credit quality and solid capital while growing the balance sheet and returning capital through share buybacks. Slide 5 shows our priorities for 2026, which remain unchanged. I'll provide an update on each again this quarter, starting with AI on slide 6.

Over the past several quarters, we've shared our AI journey. We're currently in a phase of reimagining and automating end-to-end workflows coupled with rapid product development. We're shipping new capabilities every quarter that make banking faster and simpler for our clients and free up our team to focus on higher value work. Everything we're doing is aimed at a better experience for our customers and importantly, our employees. in Q3, we advanced our top three top-down priorities. In lending, we scaled our AI-powered loan underwriting process, adding functionality and increasing utilization. The cycle time for this process is down 95%. This will allow the same team to handle significantly more loan throughput. In deposits, we piloted our rebuilt commercial deposit onboarding process in just 10 weeks. It allows us to open complex commercial accounts in minutes instead of days at other institutions.

That represents an over 90% reduction in cycle time. In payments, we enabled programmable sub-accounts on cubiX, enhancing our product offering for existing clients, as well as broadening potential agentic payment use cases. Using AI and automation tools, we now have an ability to rapidly ship new products. Just to give you a few examples.