Customers Bancorp, Inc. (CUBI) Q2 2026 Earnings Call Transcript

Welcome to the Customers Bank Inc. Second Quarter 2026 Earnings Webcast. To withdraw your question, press 1 again. I will now hand the conference over to Philip Watkins, Executive Vice President, Head of Corporate Development and Investor Relations. Philip, please go ahead.

Thank you, Ellen, and good morning, everyone. Thank you for joining us for Customers Bancorp's earnings webcast for the second quarter of 2026. We would like to remind you that today's presentation may contain forward-looking statements, which are subject to uncertainty and changes in circumstance. 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 is important to review our GAAP results in the presentation and the reconciliations in the appendix. The presentation you will see during today's webcast has been posted on the Investors webpage of the bank's website, www.customersbank.com. You can also download a PDF of the full press release. Please refer to our SEC filings, including our most recent Form 10-K and 10-Q, and our current reports on Form 8-K for a more detailed description of the assumptions and risk factors related to our business. Copies of these filings may be obtained from the SEC or by visiting the investor relations section of our website. At this time, it is my pleasure to introduce Customers Bancorp's Vice Chairman, President & CEO, Samvir S. Sidhu.

Thanks, Philip. Good morning, everyone. And welcome to Customers Bancorp's Second Quarter 2026 Earnings Call. I am joined this morning by our Chief Financial Officer, Mark R. McCollom. I will take you through a few key highlights from the second quarter, give you an update on our strategic priorities, and then Mark will provide detail on our financials. Customers Bank continues to deliver for our customers and shareholders with this quarter's results once again reflecting strong, consistent financial results that come from disciplined execution of our differentiated strategy by a best-in-class team. Turning to slide 4. The second quarter was further evidence of our core strategy firing on all cylinders with consistent and reliable financial performance and growth. A few highlights: Total loans grew 4% in the quarter, and 17% year over year to a record $18 billion. Total deposits grew over $140 million to a record $21.7 billion. Noninterest-bearing deposits hit a second consecutive record at $6.9 billion or 32% of total deposits. Net interest income increased 9% year over year. Tangible book value per share crossed $65, a period-end record up 16% year over year, extending our industry-leading pace. That is 16 consecutive records for book value, 4 for loans, and 7 for total deposits. And we did all of this while maintaining pristine credit quality and robust capital levels even while growing the balance sheet and modestly buying back shares. On slide 5, you can see our priorities for 2026. The same four we have been executing against all year; I will provide an update on each again this quarter starting with AI on slide 6. Last quarter, we told you we were operationalizing AI and automation across Customers Bank. We are seeking transformational change with a goal of becoming the nation's leading AI-native regional bank. To give you some color on what that means, let me start by saying that none of this happens by chance. Every use case we build moves through the same repeatable cycle. We create AI agentic pods by pairing our engineers with subject matter experts that own the work, shadow the real workflow, and build agents in our own data and systems, starting with the highest-impact opportunities. And we then validate and measure the real impact first, and only then does it get absorbed into the operations of the bank. We are driving this through two complementary tracks: top-down strategic initiatives and extensive bottom-up use cases being built organically by our teams. Our top-down roadmap spans three domains: lending, deposits, and payments. That top-down work took a huge step forward in April when we announced the strategic collaboration with OpenAI, an expansion of a relationship that began back in 2023. This is not a typical enterprise licensing relationship with a frontier model provider; it is embedding OpenAI engineers side by side with our team building custom capabilities bespoke for our processes. Let me start by giving you an update on the first top-down initiative, loans. Our engineers have architected a multi-agent credit underwriting process that can allow us to be ready to close commercial loans in seven days or less versus industry norms of 30 to 60 days. I am thrilled to say that we piloted this tool this quarter and successfully closed C&I and CRE loans that utilized the underwriting edge engine within a week. That is an 85% reduction in time to close, which should result in huge productivity and revenue gains through more business, but more importantly, it will deliver an enhanced client experience and confidence in our bank. Moving to deposits. We kicked off an effort to rebuild our commercial onboarding process from scratch, with an ambitious target of opening complex commercial accounts in minutes, not hours. We expect to have real progress and an update for you next quarter. On payments, we are way ahead of the curve here. We believe we were the first bank to publish an MCP, or model context protocol, last year for our commercial payments customers. One revenue-generating use case we are advancing is a modernized, fully routable network for 24/7 cross-border payment settlement on our cubiX network that we will share more detail about as it develops. Now for a few examples from the bottom-up side, which is reaching every corner of our institution. We are equipping bankers to drive increased conversion — this has led to a 110% improvement in select front-office prospecting success rates. To help make that tangible, just one commercial deposit group has averaged $2 million per month in noninterest-bearing deposit growth since the launch of the tool. In the back office, we are using agentic orchestration to enable product setup for new deposit customers, reducing setup times from an hour down to a couple of minutes. In risk and compliance, we are leveraging AI-powered KYC screening, which allows our team to boost their productivity by 50%. And in corporate functions, we are reviewing legal documents in minutes, not hours, improving accuracy across regulatory filings, and have shortened our month-end closing cycle by 60%. Everything I have walked you through here is proprietary and purpose-built in house by Customers Bank employees. To give you some context on the impact we are experiencing, our team has now saved at least 46,000 hours through AI-enabled workflow automation, up about 65% from last quarter and equivalent to 24 full-time equivalents. They have built more than 600 agents and custom GPTs, up 20% in the last six months alone. One hundred percent of our team members are now AI licensed, up from 75% last quarter, and we are providing extensive training and support to our entire organization. I am personally leading a 40-person and growing team today representing about 5% of our workforce focused on AI workflow transformation. How will this translate financially for us? We have set a goal of getting to a low-forties run-rate efficiency ratio in 2027, versus the roughly 50% we are at today, through a combination of revenue growth and increased productivity. I have said it before, and I will say it again: we believe AI is the most significant opportunity in a generation for a bank of our size, and we intend to be the one that proves what serious adoption looks like. Now moving to slide 7 and cubiX. We have said for some time that excelling in payments is critical to future success in our industry. Let me first frame where our cubiX industry expansion stands. 24/7 settlement was our foundation. Then we moved to mortgage finance clients. And now real estate has become a fast-growing vertical. To put it in perspective, from what was essentially a startup vertical based on adoption and pipeline, we now project this vertical could represent 20% of all payment units. Capital markets is an opportunity ahead — think traditional finance exchanges as the whole industry moves toward continuous around-the-clock trading. We are also looking at incubating new verticals facilitating 24/7 cross-border and other 24/7 settlement transactions as customers and, in some cases, their agents continue to expect faster payments. The combination of a cutting-edge product with a best-in-class team is already producing strong results. Quarter over quarter in the real estate payments vertical, transaction volume is up roughly 7x, spot deposit balances are up more than 4x — $400 million in just a few quarters — and we have added approximately 350 new deposit accounts. A major milestone in the quarter is that we surpassed $5 trillion in cumulative transaction activity. That is a truly staggering figure and shows just how mission critical this payments network is to our clients. Importantly, the unit count of transactions is continuing to accelerate. Year-to-date, we have processed over 200,000 cubiX internal transfers, which is double the same time last year. We remain in the early innings of unlocking the full value of this platform. At the end of last year, I told you we did not expect this to be a growth vertical. However, based on the tangible progress we are seeing through the end of this year, we now expect cubiX to be a growth area in 2027 as these new verticals continue to scale with granular, diversified low-cost deposits. Turning to slide 8, I want to discuss what we believe is a driving engine behind our success: our organic growth flywheel. It starts with service. Our net promoter score is 81, nearly double the industry benchmark of 41 and puts us at the top of the industry. That level of service drives deeper client engagement, stronger retention, and more referrals. That engagement builds momentum and financial performance. That performance allows us to reinvest into people and technology. That investment helps us attract and retain top teams whose clients and service expertise starts the cycle over again. And you can see the output on the right of the slide. We are the number one core EPS compounder and number two intangible book value per share compounder among our peers. Our organic growth deposit rate is roughly two times the peer median. None of this works, though, without the right people. That brings me to our team recruitment strategy update, which I will cover on the next slide. The teams we have recruited since 2023 now represent 18% of our deposit base — about one-fifth of the entire franchise. Let that sink in. In just 36 months, entirely organically, we have built roughly one-fifth of this bank through recruiting. These new teams are extremely accretive to the bank's efficiency ratio, with mature vintages operating at efficiency ratios in the 20% to 30% range. We want to spotlight the 2025 vintage hired in the last 12 months. These teams already hold more than $500 million in deposits across 1,600 accounts, or over 6% of our total commercial accounts. They are incredibly granular, today averaging about $340,000 per account. Due to the smaller balances and operational nature, 63% are noninterest-bearing and have a spot cost of about 70 basis points. Similar to last quarter, the noninterest-bearing deposit pipeline for new teams is strong, around $250 million in the next 90 days or so. The economics are compelling. Similar to our 2024 teams, our 2025 teams have already reached profitability in approximately three quarters. They run at roughly 1.7x deposits to loans, generating a spread of around 500 basis points on top of the excess low-cost deposits they bring. A quick preview of what we have accomplished with our 2026 vintage: year to date, about 30 team members have joined or are in advanced discussions to join, with four teams expected to join this quarter. These teams already have a nine-figure loan and deposit pipeline to capture by year-end, and we are optimistic that these teams could similarly turn profitable within 12 months. With that, I will turn it over to Mark to talk you through the financials in more detail.

Thanks, Samvir, and good morning, everyone. My comments will begin on slide 10. We are only showing you GAAP earnings this quarter as we do not have any material adjustments to these GAAP results. We delivered EPS of $2.05, up roughly 4% from last quarter and 18% year over year, continuing the consistent high-quality earnings growth this franchise has delivered. ROE and ROA came in at 13.2% and 1.13%, respectively. Turning to slide 11 and the broader deposit franchise: total deposits ended the quarter at $21.7 billion, an increase of $2.7 billion year over year. While total deposit growth for the quarter was more measured, there may have been a lot of activity under the surface. First, we continue to remix less strategic deposits of over $600 million in the quarter, picking up 150 basis points and bucking industry trends. Second, the quality continued to improve, and I will highlight a few stats. Noninterest-bearing deposits grew by about $175 million in the quarter to a second consecutive period-end record of $6.9 billion. As you can see on the top-right chart, over the last two years, we have increased our noninterest-bearing deposit percentage from 25% to 29% to 32% of total deposits, top quartile among regional bank peers. Excluding our DDA channel, noninterest-bearing balances grew approximately $375 million during the quarter. This is up 14% quarter over quarter and 37% year over year. In the last 12 months, we have added over $840 million of noninterest-bearing deposits outside of the DDA channel, a direct result of the commercial team recruitment strategy Samvir just walked through. I want to be clear about our ambition here because it helps you understand the potential we see in the franchise: our goal is to have the highest percentage of noninterest-bearing deposits within our peer group, and we are almost there. Turning to slide 12 and loans: total loans grew $624 million, or 4% in the quarter, to $18 billion, double the 2% linked-quarter growth for the industry. On a year-over-year basis, loans are up 17%. Just as important as the pace of growth is the breadth. Commercial growth was diversified across the franchise, led by verticals like commercial real estate, real estate specialty finance, and community C&I, with smaller contributions from multiple other verticals. As we always say, the mix of top contributors may shift from quarter to quarter, but the diversified nature of our origination platform increases the confidence in our guidance as it lets us grow while remaining disciplined on structure and pricing. Slide 13 covers our net interest income and margin. We view the second quarter as the inflection point for the year. Net interest income was over $193 million, up $16 million, or 9% year over year, driven by higher average loan balances and a lower cost of funds. On a linked quarter annualized basis, net interest income grew about 4%. We remain focused on that NII growth, which continues to be strong as I just outlined. As we signaled last quarter, our second-quarter net interest margin of 3.17% is expected to be the low point for 2026. We expect our net interest margin to move back toward first-quarter levels in the third quarter and to build from there. We also expect net interest income to be stronger in the back half of the year. This NIM and NII trajectory is grounded in a few factors: our deposit pipelines are robust and are expected to convert into continued low-cost deposit gathering; we have continued deposit remixing opportunities in the second half of the year; the 2025 teams have hit their stride and are helping to drive that momentum; and the surge in loan growth in the second quarter creates momentum for the third quarter as well as a strong pipeline for the third quarter. Despite the headwinds the industry is facing, we continue to have levers on both sides of the balance sheet and we remain optimistic about strong NII growth and steady margin tailwinds during the second half of 2026. Moving to slide 15 and expenses: noninterest expense was $114.9 million in the quarter, which included about $1 million of severance. The story here continues to be positive operating leverage. Through the first six months of 2026, our core efficiency ratio improved by approximately 200 basis points and revenue growth outpaced expense growth, generating roughly 430 basis points of positive operating leverage over the same period last year. Our noninterest expense as a percent of average assets was 1.82%, among the lowest of any regional bank peer. I would underscore that we are delivering this efficiency while investing heavily in people and technology. The ability to grow the franchise and improve efficiency at the same time is supported by our second operational excellence initiative, OE2, which I will cover on slide 16. Coming into the year, OE2 targeted $20 million in annual run-rate benefits. Last quarter, we raised that to $30 million by adding $10 million to Phase 2. I am pleased to report that we have now achieved the $30 million run-rate target. Roughly $4 million of this comes from revenue initiatives, and about $26 million came from expense initiatives. Stepping back, that makes two consecutive years of over $30 million in operational excellence accomplishments. These savings are being reinvested directly into the franchise. It is how we have been able to both hire 18 new teams delivering $3.9 billion of deposit growth since 2023 while maintaining a top-decile OpEx ratio compared to our peers. This has become a repeatable muscle for us and a key component of sustaining positive operating leverage. On slide 17, tangible book value per share grew to $65.20, up 3% quarter over quarter and 16% year over year. That is approximately 2.5x where we stood at the end of 2013, a CAGR of roughly 15% compared to about a 5% CAGR for regional bank peers over the same period. We view tangible book value compounding as the clearest long-term measure of shareholder value creation. Turning to slide 18: our capital position remains strong and continues to provide meaningful strategic flexibility. Our CET1 ratio was 12.8%, and our TCE to TA ratio grew 40 basis points year over year to 8.3% even as tangible assets grew 18% over the same period. Strong organic earnings position us to support continued balance sheet growth and, when appropriate, to return capital to our shareholders. On slide 19, credit quality remains stable across the board. Nonperforming assets as a percent of total assets remain below the regional bank peer median. Net charge-offs continued to perform well, with charge-offs remaining low at just 18 basis points, and our smaller consumer portfolio performing well. Reserve coverage was solid at 293%. I will close with our management guidance on slide 20 in which we are reaffirming all key metrics. For loans, as I mentioned earlier, we continue to see good growth opportunities across many different verticals. For deposits, the account and balance momentum from our new teams and the real estate payments vertical are looking strong going into the second half of the year. The combination of loan and deposit growth opportunities should result in solid growth in net interest income. On noninterest expense, we are maintaining our target even as we continue to invest significantly in people and technology. And lastly, on capital and taxes, we have no changes to our targets. Taken as a whole, we believe this guidance sets up for a strong second half to 2026. With that, I will pass the call back to Samvir for closing remarks before we open up the line for your questions.

Thanks, Mark. To wrap up, in the second quarter we delivered strong, consistent growth across every major dimension of the franchise. AI continues to integrate into the operating fabric to transform our core lending, deposit onboarding, and payments infrastructure. Our commercial payments platform surpassed $5 trillion in cumulative activity, and we are continuing to expand into new verticals and use cases. Deposits grew 15% year over year, and noninterest-bearing deposits hit another record. Our new teams added about $600 million so far this year, and our second wave of 2026 teams should be starting in the third quarter. Loans grew 17% year over year. Net interest income increased 9% year over year. EPS grew 18% year over year. And lastly, we continue to deliver strong positive operating leverage while investing meaningfully, as you heard from Mark, in people and technology.

With that, we will now open up the line for the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press 1 to raise your hand. And to withdraw your question, press 1 again. We ask that you pick up your handset when asking a question for optimum sound quality and if muted locally, please remember to unmute your device. Please standby while we compile the Q&A roster. Your first question comes from the line of Steve Moss with Raymond James. Your line is open. Please go ahead.

And nice quarter here. Samvir, maybe just starting off with your comments here, you mentioned you are looking to get the real estate payments vertical to be about 20% of payments. I'm just kind of curious as to how you are thinking about the timing of that 20% goal.

Hey, Steve. Good morning. That is a 2027 goal. We sort of forecasted a little bit about operationally how we think about units and payments volume, so we do think that is a medium-term goal.

Okay, got you. And then just kind of thinking about — you have a lot of drivers with regard to deposit growth, and clearly a lot of noninterest-bearing added this quarter. I'm just kind of curious what the marginal cost of deposits is these days that you are bringing on. It seems like it is probably lower than what we were thinking about in the past. And how much of a cadence could we see in terms of funding cost declines if the Fed holds rates steady at current levels?

Yep. So I am happy to take that, Steve. You hit the nail on the head. We are basically seeing a convergence of two of our top priorities. One is organic loan and deposit growth — the teams that we are recruiting are bringing in 25% to 30%, and sometimes as high as 35%, in interest-bearing deposits and operating accounts. And then our payments-related commercial teams are bringing in exclusively noninterest-bearing deposits, and hence you are getting that over 50%. That is really what is driving this. We continue to see very high incremental noninterest-bearing deposit growth coming from our commercial teams, which I think is a testament to our heads-down focus and dedication to our priorities. As you think about that, for ease of simplicity, you could think of the marginal cost of deposits around Fed funds and that you are bringing in a large portion at noninterest-bearing. The majority of our loan growth is coming in at about a 6% NIM. So we will see our interest-bearing deposit costs come down; we remixed about $600 million of higher-cost funding, which is happening at the deposit level, and we will continue to hopefully see tailwinds in our margin in addition to NII growth, which we have always set as paramount for us.

Okay, great. Appreciate that. Let me just sneak one last one in. On the loan pipeline, good to see another quarter of loan growth. How is the loan pipeline these days? I know it bounces from quarter to quarter, but any color on the strength of verticals?

Yes, Steve. Good morning. As you know, different verticals step to the forefront quarter to quarter. Our loan pipelines feel good. We have not changed our guidance midyear, but we feel very optimistic about continuing strong loan growth in the back half of the year.

Okay, great. I will step back in here. Thank you very much, guys.

Your next question comes from Kelly Motta with KBW. Your line is open. Please go ahead.

Good morning. Thanks for the question. Kicking off on the balance sheet, it looks like average cash balances were down a bit, which weighed on your NII. Can you provide color? Was that related to declines in average cubiX balances? I apologize, I did not see that data in the deck. Thanks.

Good morning, Kelly. You were coming in and out a little bit, so let me know if I miss anything. On your question about noninterest-bearing deposits and linking it back to cubiX: digital asset trading was down in the second quarter, especially in May and June, and so lower trading activity leads to lower payments float. In the presentation, we referenced digital asset balances at $3.8 billion, but total cubiX balances were roughly flat in the quarter, which is a testament to growth in the real estate payments vertical. I would also highlight that the number of transactions actually doubled year over year, so we continue to deepen and integrate with our customer base.

Okay. I see those spot balances in the deck footnote were about $3.8 billion which did not fall as much as I had expected. Do you have what happened with the average balances there?

On a spot basis, the digital asset balance change was about $200 million. I do not have the exact monthly average here, but I think the average was about $300 million specific to digital assets, and we made that up in granular real estate cubiX deposits by June 30.

Got it, that is helpful. And then with the NII guide reiterated, it implies a ramp in the second half of the year given you described Q2 as the low point. What gives you confidence in being able to ramp NII into that range?

That is exactly right, Kelly. The June 30 exit point is important. Both the pipelines on the deposit side and the loan balances we saw — much of our loan growth in the second quarter came in the month of June — so the exit points of both loans and deposits, plus momentum from our different verticals, give us confidence for the back half of the year on both NII and margin.

Got it. I will step back. Thank you so much.

Your next question comes from the line of Anthony Elian with JPMorgan. Your line is open. Please go ahead.

This is Mike on for Tony. On cubiX, saw some good traction with the real estate vertical this quarter, added about $300 million. You mentioned reaching the 20% goal is a 2027 event, but you also mentioned that vertical has a nine-figure pipeline per quarter through year-end. How much of that pipeline do you expect to convert in 2026 more specifically into actual deposit growth?

Good morning, Mike. Specifically, we migrated some mortgage finance customers onto cubiX who were looking for operational payment rails, and we added new-to-the-bank real estate customers. Those two in aggregate are about $1 billion today, and we expect, with our internal target, to get that to about $1.5 billion by year-end.

Great. And on slide 6 you provided a lot of metrics on the AI efforts. On an ex-expense basis, are you able to quantify how much in expense savings you have already recognized from these AI efforts?

So we are building proprietary software, not just plug-ins. Some of the larger transformational lifts take quarters, not weeks. The tech we are using for workflow automation is really only about six months old, so we are seeing productivity lifts today that will help reduce expense investment over time. Our focus is decoupling our expense base from our revenue growth as we get into 2027. We have put a very ambitious 2027 run-rate goal out there that combines revenue growth and productivity gains, but much of the expense benefit is expected to accrue as these initiatives mature into 2027.

Your next question comes from the line of Tyler Cacciatori with Stephens. Your line is open. Please go ahead.

Just circling back to digital assets. Just wanted to clarify: that $3.8 billion is exclusive of the mortgage finance and real estate balances, right?

That is right. And then those are all noninterest-bearing?

Great. Thank you. Then on broker deposits, can you update us on balances at quarter end? Looking at the call report last quarter, there seemed to be a large decline — was there a mix shift or reclassification?

Hi Tyler, this is Mark. Yes, our balances at the end of the second quarter track pretty closely to where we ended the first quarter.

Helpful. And do you have the spot total cost of deposits at quarter end?

The spot cost would be pretty close to where we ended the quarter on an average balance basis as well, within a couple basis points.

Your next question comes from the line of Brian Wilczynski with Morgan Stanley. Your line is open. Please go ahead.

Hi, good morning. Thanks for taking my questions. Going back to loan growth guidance for the year: you mentioned you are reiterating the guidance range. If we look year to date, loans are up about 7% versus the fourth quarter of 2025. Does it seem like the higher end of the loan growth guidance is becoming more likely? Anything you are seeing that could indicate a slowdown, or does it feel skewed toward the higher end?

That is correct. At this point, it does seem that the higher end of the range is more likely.

Okay. And on loan pricing, can you give any color on what new loans are coming on to the balance sheet today and how we should think about the trajectory of loan yields in the second half of the year?

I would say it is been consistent with the last quarter where, depending on the vertical, you could be anywhere from roughly SOFR plus 225 basis points to SOFR plus 300 basis points, depending on the vertical.

Great. I appreciate the detail, and thank you for taking my questions.

Your next question comes from the line of Janet Lee with TD Securities. Your line is open. Please go ahead.

Good morning. Following up on the loan-yield question: the second quarter seems to have been impacted by new commercial loan yields coming on at a little lower levels versus what was on the book. Should we assume loan yields are starting off better than the 6.25% that was reported in the second quarter for the third quarter?

That is right. If you look at the total loan book at 6.25% in the second quarter, going into the third quarter you would only need SOFR plus roughly 250 to 260 basis points on new originations to equal that, and we expect to move up from there.

Got it. Maybe could you talk about your view on the Clarity Act and how that could impact Customers Bancorp, either on the cubiX side or any other side of the bank? Would you be a beneficiary of it, and what is the prospect around the Clarity Act for you?

Hey Janet, good morning. We are very supportive of market structure and clarity from a regulatory perspective. While the Clarity Act would require legislative approval in Washington, I think the signaling from other agencies, including the SEC and the CFTC, suggests that independent of whether the Clarity Act passes, those agencies would be ready with proposed rulemaking and guidance that should provide structure. I think either of those paths would be a net benefit to Customers Bank's existing customer base and could open up new channels of potential verticals adjacent to our core 24/7 trading.

Got it. I appreciate you reiterating guidance across different line items, including NII. Do you have any bias around the lower or higher end of the NII guidance based on the trajectory so far in the first half of the year?

There are still a lot of levers on both sides of the balance sheet that can impact that. Right now, where the Street is at feels like a good place to start.

Got it. Thank you.

Your next question comes from the line of Manuel Navas with Piper Sandler. Your line is open. Please go ahead.

Hey, good morning. Just to fine-tune the NIM expectation — do you have a June NIM or end-of-period NIM to give a sense for the jumping-off point for the back-half rebound?

We don't usually talk about monthly results, and a lot of the growth and pipeline came in the second half of June, so monthly numbers wouldn't be indicative of our third-quarter optimism. I will reiterate that we feel confident saying our third-quarter NIM will be closer to our first-quarter NIM. The pipelines we see plus the actual loan growth in June gives us confidence for the commensurate NII growth as well.

Appreciate that. Remind me how you continue to handle cubiX funds: when do you become more comfortable with digital asset (DA) balances being deployable beyond cash? Are the real estate funds deployable from day one? How do you think about moving beyond a very conservative handling of those funds?

Thanks, Manuel. On the digital asset side, as you know, we have been conservative and will continue to evaluate over time how we think about conservative deployment of funds. On the real estate side, those balances are incredibly granular — just a couple hundred thousand dollars per account today — and are traditional business lines with an extra payments edge. We plan to deploy those in the normal course of our business; that ties back to the roughly 6% NIM I mentioned on those deposits. While we saw a bit of a quarter decline on one side of that business, the other side saw an incredibly granular quarter-over-quarter increase. We have been relatively flat on overall balances including new verticals, and the next quarter or two will give us more confidence. We feel very confident that by the end of the year, and into 2027, cubiX-related deposits should be a growth area; maybe we get there a little sooner, but 2027 should be a growth year for cubiX-related deposits.

I appreciate the color. Thank you.

We have reached the end of the Q&A session. I will now turn the call back to Samvir S. Sidhu, CEO, for closing remarks.

Well, thank you, everyone, for your continued support of Customers Bancorp. Have a great day and a great weekend.

This concludes today's call. Thank you for attending. You may now disconnect.