Customers Bancorp reports strong Q4 2024 earnings, shares climb 13%

Customers Bancorp, Inc. (NYSE: CUBI) recorded a remarkable stock performance following its fourth-quarter 2024 earnings announcement, with shares surging by 13% to $56.94 on Friday. This growth reflects strong investor confidence, as the bank outperformed analyst predictions with adjusted earnings of $1.36 per diluted share, exceeding FactSet’s forecast of $1.20 per share.

The West Reading, Pennsylvania-based bank holding company also showcased impressive growth in its operational metrics. Total loans and leases rose by 11% year-over-year, reaching $14.65 billion, while deposits grew by 5.2%, amounting to $18.85 billion. These figures highlight the company’s successful efforts in maintaining robust asset quality while implementing strategic deposit-focused initiatives.

How did strategic initiatives improve earnings and liquidity?

A core factor behind Customers Bancorp’s strong performance was its strategic repositioning of securities portfolios, which aimed to enhance structural liquidity and reduce asset sensitivity. This move, coupled with proactive deposit management, significantly lowered deposit costs during the quarter. The bank’s net interest margin (NIM) climbed to 3.11%, up from 3.06% in the previous quarter, driven by these efficiency measures.

During the fourth quarter, the bank generated over $1 billion in deposit inflows, enabling it to reduce reliance on higher-cost deposits. Notably, non-interest-bearing demand deposits increased by 20.1%, representing nearly 30% of total deposits by the end of 2024. CEO Jay Sidhu credited this growth to the bank’s focus on granular, sticky relationships and an expanded commercial deposit pipeline developed since early 2023.

“Our deposit pipelines continue to expand with significant conversion ratios,” Sidhu said, adding that specialized teams recruited since March 2023 now manage $1.7 billion, or 9% of total deposits. These efforts not only improved the company’s liquidity but also positioned it to achieve sustained profitability in a competitive market environment.

What does the Q4 performance reveal about asset quality?

Customers Bancorp has consistently demonstrated its ability to manage risk effectively, reflected in its strong asset quality metrics. At the end of Q4 2024, the bank’s ratio of non-performing assets to total assets stood at 0.25%, while its allowance for credit losses on loans and leases equaled a robust 316% of non-performing loans.

Moreover, total net charge-offs declined by $2.4 million, signaling careful risk mitigation. The company’s exposure to higher-risk sectors, such as commercial real estate office properties, remains minimal, constituting just 1% of its loan portfolio.

As of December 31, 2024, the bank reported a Common Equity Tier 1 (CET1) capital ratio of 12%, maintaining its commitment to preserving strong regulatory capital levels. Additionally, tangible book value per share rose to $54.08, reflecting both quarterly earnings growth and reduced accumulated other comprehensive income (AOCI) losses.

What does this mean for Customers Bancorp’s 2025 outlook?

Sidhu expressed optimism about the company’s trajectory in the coming year, citing a potentially more favorable banking environment. “We believe our unique strategy, combined with the exceptional talent in our organization, positions us for success in 2025 and beyond,” he said.

The bank plans to continue prioritizing loan production within holistic and primary relationships while leveraging its enhanced deposit franchise for sustainable growth. In 2024, loans and leases held for investment increased by $1.6 billion, marking a 12.3% annual growth rate.

Additionally, Customers Bancorp has invested heavily in technology-enabled solutions to enhance customer satisfaction. Its Net Promoter Score (NPS) of 73, significantly above the U.S. banking industry average of 41, underscores its customer-centric approach. Sidhu attributed this achievement to the dedication of the bank’s employees and the trust of its clients.

Why does Customers Bancorp’s performance matter to investors?

The bank’s Q4 2024 results highlight a blend of strategic growth, disciplined cost management, and robust risk mitigation that sets it apart in the regional banking sector. With total liquidity of $9.1 billion, representing 159% of uninsured deposits, Customers Bancorp is well-positioned to navigate economic uncertainties while expanding its market presence.

The company’s unique “Single Point of Contact” model, tailored lending products, and focus on long-term deposit growth are expected to further enhance its competitive edge. Combined with its history of delivering value to shareholders—evidenced by a 16% compound annual growth rate (CAGR) in tangible book value per share over five years—the bank’s outlook remains strong for 2025.