KBRA Affirms Ratings for Customers Bancorp, Inc.; Revises Outlook to Positive

KBRA affirms the senior unsecured debt rating of BBB, the subordinated debt rating of BBB-, and the short-term debt rating of K3 for West Reading, Pennsylvania-based Customers Bancorp, Inc. (NYSE: CUBI or “the company"). KBRA also affirms the deposit and senior unsecured debt ratings of BBB+, the subordinated debt rating of BBB, and the short-term deposit and debt ratings of K2 for the subsidiary, Customers Bank ("the bank"). The Outlook for all long-term ratings is revised to Positive from Stable.

Customers Bancorp, Inc. is the $24 billion asset BHC for Customers Bank, which operates seven full-service bank branches plus several limited purpose offices in various regions of the U.S. Strategically, CUBI remains focused on diversifying and strengthening the bank’s deposit base to lessen exposure to large single name depositors as well as other potentially volatile sources of funds, maintaining existing capital levels, driving relationship-based loans and deposits, and building fee income sources.

The bank’s loan portfolio remains positioned towards commercial lending, including several specialized loan verticals, such as commercial lender and residential warehouse finance and tech and VC finance, in addition to traditional C&I lending. The bank also engages in syndicated, equipment, and consumer finance. Multifamily loans constitute the largest CRE segment and are primarily collateralized by properties in the NYC area, including rent-controlled units. The deposit base is commercially oriented, anchored by various deposit channels including cubiX, the bank’s dedicated payments platform that serves clients that operate in the digital assets’ ecosystem.

Management signed an agreement with the FRB in 2024 to address deficiencies in policies and practices tied to digital asset services and has made substantial investments to rectify these weaknesses. In September 2025, the company raised $165.9 million in common equity via a secondary offering; use of proceeds includes the planned retirement of remaining preferred stock of $85 million in 4Q25. Earlier in 2025, $57.5 million in preferred shares were retired.

Key Credit Considerations

The Outlook revision to Positive is premised on sustained regulatory capital ratios – bank and consolidated – enhanced recently by the secondary offering; progress to improve the mix and cost of total deposits; and maintenance of robust asset liquidity measures. While improvements in deposit funding are evident, strong capital levels remain prudent, with the reliance on potentially volatile sources of funding, including large deposit relationships.

Regulatory capital ratios have been notably strengthened, beginning in 2021, and have been maintained at levels commensurate with KBRA rated peers. KBRA anticipates that the consolidated CET1 ratio will be maintained in the 12% range, while the bank CET1 ratio will likely be managed at a somewhat greater level. Although the TCE and Leverage capital ratios exhibit a positive trend, they continue to lag rated peers. KBRA recognizes that the bank operates with substantial asset liquidity, which can create a differential for capital ratios that use nominal vs. risk-weighted assets. Given the higher reliance on potentially volatile sources of funds, strong liquidity measures remain appropriate in KBRA’s judgment.

The deposit mix has shown steady improvement in diversification, including the proportion of noninterest-bearing deposits (32% of total deposits as of 3Q25). There have been two key drivers regarding the deposit mix-shift and cost improvement. The first factor is tied to management’s strategic decision to strengthen the bank franchise by increasing the degree of client-based lending and deposit relationships. This has been primarily accomplished by hiring bankers and banking teams in certain geographical areas of the U.S., most notably in NY and CA, and has led to higher commercial deposit balances. The second contributor to the improvement in deposit funding is connected to the cubiX payments and deposit business. This business was started prior to the U.S. bank funding turmoil that engulfed the sector in 2023, and due to Customers Bank’s relative financial stability during this period and the failure of direct competitors in this business, it was able to take market share and effect changes in the pricing dynamic of these deposits. Deposits of cubiX principally consist of working capital balances used to settle transactions for clients’ own accounts and transactional activity amongst other clients of the bank.

Rating Sensitivities

The ratings would most likely be upgraded within 1-2 years if deposit metrics remain stable, reliance on potentially volatile sources of funding continues to decline, asset liquidity remains in the current range (~25% of total assets), and the consolidated CET1 ratio is maintained in the 12% range. Conversely, a deterioration in deposit funding (unanticipated outflows, substantial adverse mix change, or a negative trend in the cost of total deposits) would most likely result in an Outlook or ratings reassessment. A deterioration in loan quality that would have the potential to compromise annual earnings would also cause a reassessment of the ratings.

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