Customers Bancorp, Inc

Hello everyone, thank you for joining us and welcome to the Customers Bancorp, Inc. second quarter 2026 earnings webcast. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Phil Watkins, Executive Vice President, Head of Corporate Development and Investor Relations. Phil, please go ahead.

Thank you Ellen and good morning everyone. Thank you for joining us for the Customers Bancorp's earnings webcast for the second quarter of 2026. We'd like to remind you that today's presentation may contain Thank you for joining us. Thank you for joining us. 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 CEO, Sam Sidhu.

Thanks, Phil. Good morning, everyone, and welcome to Customers Bancorp's second quarter 2026 earnings call. I'm joined this morning by our Chief Financial Officer, Mark McCollum. I'll take you through a few key highlights from the second quarter, give you an update on our strategic priorities, and then Mark will provide additional 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 four, in the second quarter, 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. NII increased 9% year over year. Tangible book value per share across $65, a period and record up 16% year over year, extending our industry leading pace. That's 16 consecutive records for book value, four for loans and seven 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 five, you can see our priorities for 2026, the same four we've been executing against all year. I'll provide an update on each again this quarter, starting with AI on slide six. Last quarter, we told you we were operationalizing AI and automation across customers bank. We're 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're driving this through two complimentary tracks, top-down strategic initiatives and extensive bottoms-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 a strategic collaboration with OpenAI, an expansion of a relationship that began back in 2023. This isn't a typical enterprise licensing relationship with a frontier model provider. It's 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-agentic 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'm thrilled to say that we piloted this tool this quarter and successfully closed CNI and CRE loans that utilize this underwriting engine within a week. That's an 85% reduction in readiness 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 on this next quarter. On payments, we're 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're advancing on is a modernized, fully routable network for 24-7 cross-border payment settlement on our Cubix network that will share more detail as it develops. Now for a few examples from the bottom-up side, which is reaching every corner of our institution. We're equipping bankers to drive increased conversion, which has led to 110% improvement in select front office areas prospecting success rates. To help make that tangible, just one commercial deposit group has averaged $2 million per month in non-interest-bearing deposit growth since the launch of the tool. In the back office, we're using agentic orchestration to enable products for new deposit customers, reducing setup times from an hour down to a couple of minutes. In risk and compliance, we're leveraging AI-powered KYC screening, which allows our team to boost their productivity by 50%. And in corporate functions, we're reviewing legal documents in minutes, not hours, tracking accuracy across regulatory filings, and have shortened our month-end closing cycle by 60%. Everything I've walked you through here is proprietary and purpose-built in-house by Customers Bank employees. To give you some context on the impact we're 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 FTEs. They've built more than 600 agents and custom GPTs, up 20% in the last 60 days alone. 100% of our team members are now AI-licensed, up from 75% last quarter, and we're providing extensive training and support to our entire organization. and I'm personally leading a 40 person and growing team today representing about 5% of our workforce focused on AI workflow transformation. How will this translate for financially for us? Well, we've set a goal of getting to a low 40s run rate efficiency ratio in 2027 versus the 50% or so we're at today through a combination of revenue growth and increased productivity. I've said it before and I'll 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 seven and QBICS. We've said for some time that excelling in payments is critical to future success in our industry. Let me first frame where our QBICS industry expansion stands. DA 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. and many more. and importantly, the unit count of transactions is continuing to accelerate. To put that in perspective, year to date, we've processed over 200,000 cubic internal transfers, which is double from the same time last year. And 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 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 eight, 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, 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 who bring clients and service expertise starting the cycle over again. And you can see the output on the right of the slide. We're the number one core EPS compounder and number two intangible book value per share compounder among our peers. and our organic growth deposit rate is roughly at two times the pure median. None of this works though without the right people. And that brings me to our team recruitment strategy update, which I'll cover on the next slide. The teams we've 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've built roughly one fifth of this bank through recruiting. and 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 half a billion dollars in deposits across 1600 accounts or over 6% of our total commercial accounts. They're incredibly granular, today averaging about $340,000 per account. Due to the smaller balances and operational nature, 63% are non-interest bearing and a spot cost of about 70 basis points. And similar to last quarter, the non-interest bearing deposit pipeline for new teams is incredibly around 250 million in the next 90 days or so. And the economics are compelling. Similar to our 2024 teams, our 2025 teams have already reached profitability in approximately three quarters. They run at roughly 1.7 times deposits to loans, generating a spread of around 500 basis points on top of the excess low-cost deposits they bring. And I'm happy to share a quick preview of what we've accomplished with our 26 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. We're optimistic that these teams could similarly turn profitable within 12 months. With that, I'll turn it over to Mark to talk you through the financials in more detail.

Thanks, Sam, and good morning, everyone. My comments will begin on slide 10. We're only showing you gap earnings this quarter as we did not have any material adjustments to these gap 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. Thank you for joining us. As you can see on the top right chart, over the last two years we've increased our non-interest bearing deposit percentage from 25% to 29% to 32% of total deposits, top quartile among regional bank peers. Excluding our DA channel, non-interest 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've added over $840 million of non-interest-bearing deposits outside of the DA channel, a direct result of the commercial team recruitment strategy Sam 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 non-interest-bearing deposits within our peer group, and we're 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 when 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 link 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 317 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 a surge in loan growth in the second half of 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. Non-interest expense was $114.9 million in the quarter which included about $1 million of severance. Thank you for joining us. Robert Fischer, Lyle Walsh, Last quarter, we raised that to $30 million by adding $10 million to Phase 2. I'm pleased to report that we have now achieved the full $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. Thank you for joining us. up 3% quarter over quarter and 16% year over year. That's approximately two and a half times where we stood at the end of 2019, a CAGR of roughly 15% compared to about a 5% CAGR for regional bank peers over this 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 remained stable across the board. Non-performing assets as a percent of total assets remained below the regional bank peer median. Net charge-offs continued to perform well, with commercial charge-offs remaining low at just 18 basis points and our smaller consumer portfolio performing well. Reserve coverage was solid at 293%. I'll 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 for many different verticals. For deposits, the account and balance momentum from our new teams and 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 non-interest expense we're 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 and with that I'll pass the call back to Sam 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 of our core lending, deposit onboarding, and payments infrastructure. Our commercial payments platform surpassed $5 trillion in cumulative activity, and we're continuing to expand into new verticals and use cases. Deposits grew 15% year-over-year, and non-interest-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, NII increased 9% year-over-year, and our EPS grew 18% year-over-year. And lastly, we continue to deliver strong positive operating leverage while investing meaningfully, as you heard from Mark and people in technology. With that, we'll now open up the line for questions.

We will now begin 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 star 1 to raise your hand and to withdraw your question, press star 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 stand by 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.

Good morning and nice quarter here. Sam, maybe just starting off with your comments here. You mentioned you're looking to get the real estate payments, real estate vertical to be about 20% of payments here. Just kind of curious as to how you're 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, you know, operationally how we think about sort of units and, you know, payments volume. So we do think that's sort of a medium term goal. Okay. Got it.

And then just kind of thinking about, you know, You have a lot of drivers here with regard to deposit growth. And clearly a lot of nitrous barium added this quarter. Just kind of curious, what's the marginal cost of deposits these days that you're bringing on? It seems like it's probably lower than we were thinking about in the past. And how much of a cadence maybe could we see in terms of funding cost declines if the Fed holds steady at current levels.

Yep. So I'm happy to take that, Steve. So really, I think you hit the nail on the head. We are basically, I think, seeing a convergence of two of our top priorities. One is organic loan and deposit growth. So the teams that we're recruiting are bringing in 25 to 30, as high as sometimes 35% on interest-bearing deposits and operating accounts. and then our payments related commercial teams are bringing in almost exclusively non-interest bearing deposits and hence you're getting that over 50% and that's really what's driving this and so we do continue to see this level of very high index non-interest 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, what does that mean? Let's say the marginal cost of deposits, just for ease of simplicity, is at Fed funds, and you're bringing in 60% at non-interest-bearing. Majority of our loan growth is coming in at about a 6% NIM. So we'll see. Our interest-bearing cost of deposits did go down this quarter. We remixed about $600 million or so of higher-cost funding, which is happening on the level of the deposits, and we'll continue to hopefully see tailwinds in our margin. in addition to NII growth, which we've always sort of said is paramount for us.

Okay. Great. Appreciate that. And I'll just sneak one last one in. You know, on the loan pipeline, good to see, you know, another quarter of loan growth. Just curious, like, I mean, obviously, Sierra is the strongest quarter. How is that loan pipeline these days? And, you know, I know it bounces from quarter to quarter, but any colleagues you'd give in terms of strength of verticals here?

Steve, good morning. This is Mark. As you know, we always say that quarter to quarter, different verticals are going to step to the forefront and be the leader in that loan growth. Our loan pipelines feel good. We have not changed our guidance here mid-year, but we feel very optimistic about continuing strong loan growth in the back half of the year.

Okay, great. I'll step back to you here. Thank you very much, guys.

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

Good morning. Thanks for the question. I guess kicking it off on the balance sheet, it looks like the average cash balances were down a bit, which weighed on your NII. Can you provide color? Was that related? was related to declines in average QGIS. I apologize. I didn't see that stat in the deck.

Thanks. Good morning, Kelly. You were coming in and out a little bit, and I think I heard the full question. Let me know if I missed anything. I think that what I would sort of say as it relates to your question about Thank you very much. But total Cubix balances were roughly flat in the quarter. And that's really a testament to sort of the growth in the real estate payments vertical. So and I think I'd also just highlight that what's interesting about Cubix is, you know, Steve touched on in a little bit of percent of units as we look out in the next sort of 12 to 18 months, but also just on our existing platform, the number of transactions actually doubled, you know, year over year. So we continue to deepen and integrate with our customer base today.

Okay. And I see those spot balances in the deck for the footnote were about $3.8 billion, which didn't fall as much as I had expected. Do you have what happened with the average balances there?

Yeah, so on a spot basis, it was about $200 million. I don't have the exact average. I think it's about $300 million on specific to that DA, but we made that up in granular real estate cubics deposits by June 30th.

Got it. That's helpful. And then with the NAI guide reiterated, it implies a ramp in the second half of the year, you know, given kind of this, I think Q2 is What you've described as the low point kind of jumping off. What gives you confidence in being able to really ramp that NII to get into that range? Thank you.

Yeah, that's right, Kelly. Hey, good morning. It's Mark. Yeah, that's exactly right. It's really the exit point at June 30, both in the pipelines on the deposit side, plus actual loan balances that 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 just the momentum from our different verticals give us confidence for the back half of the year, both on a NII basis and on a margin basis.

I'll step back. Thank you so much.

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

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

Hey, good morning, Mike. Specifically, you know, as we talked about earlier in the year, we sort of migrated some of our mortgage finance customers onto Cubix who are looking for sort of that operational, you know, payments lift. Then we added new to the bank, you know, real estate customers. Those two in aggregate are about a billion dollars, you know, today. And we expect that we are hopeful our internal target is getting that to about a billion and a half by the end of the year.

Okay, great. And then on slide six, there's a lot of great metrics here on the AI efforts. On an expense basis, you guys already gave some good context on how it's benefiting the company today, but are you able to quantify at all how much an expense savings you've sort of recognized already from these AI efforts?

So, you know, I think that, you know, we're really, these aren't software plugins or we're, you know, we're actually building proprietary software and some of the larger lifts actually take quarters, not, you know, weeks. The tech that we're sort of dealing with that has really helped us work on transformational workflow automation is really only about six months old or so. So we're seeing productivity lifts today. That'll help us sort of think about, you know, reducing expense investment in the future. But really, our focus is decoupling our expense base from our revenue growth as we get into 2027. So I think we put a very ambitious 27, you know, run rate goal out there. And that kind of combines the two of those together. Thank you.

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

Hey, good morning. I guess just headed back to digital assets. I just wanted to clarify that $3.8 billion, that's exclusive of the mortgage finance and real estate balances, right?

That's right.

And then those are all non-interest-bearing?

That's right.

Great, thank you. And then just moving to broker deposits, if you could update us on the balance of the quarter end. Just looking at the color poor last quarter, there seemed to be a large decline and was just wondering if there was a makeshift or reclassification of some items there.

Yeah, that's correct. Hi, this is Mark. Yeah, our balances for the end of the second quarter track pretty closely to where we ended the first quarter.

Okay, helpful. And then just one more quick one for me. I was wondering if you had the spot total cost of deposits at quarter end. Thank you for taking my questions.

Yeah, this is Mark again. The spot costs would be pretty close to where we ended the quarter on an average balance basis as well within a couple of 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. Maybe just going back to the loan growth guidance for the year, you mentioned that you're reiterating the guidance range. If we look on a year-to-date basis, loans are already up about 7% versus the fourth quarter of 2025. I was wondering if When you think about the outlook for the full year, does it seem like the higher end of the loan growth guidance is becoming more likely? Is there anything that you're seeing that could indicate a slowdown, or does it feel like things are skewed towards the higher end of the range?

That is correct. It does seem at this point that the higher end of the range would be more likely.

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

Yeah, I would say it's been consistent with what we saw in the last quarter, where depending on the vertical, you could be anywhere from 200, 225 over SOFR to 300 over SOFR, depending on the vertical.

Okay, 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. Just following up on the loan yield question earlier, so the second quarter seems to have been impacted by, I guess, the due loan yields, new commercial loan yields coming on at a little... lower yields versus what was on the book. Should we assume that loan yields are starting off better than 625 that was reported in the second quarter for the third quarter?

Yeah, that's right. I think when you look at now being down at 625 for the total loan book in the second quarter, going into the third quarter, then you only need SOFR plus 250, 260 to kind of equal that and then to go up from there.

Okay. Got it. Maybe could you talk about what your view is on the Clarity Act and how that could impact customers Bancorp either on QBIC's side or just any side of your bank, whether are you going to be a beneficiary of it or what's the prospect around the Clarity Act for you?

Hey, Janet, good morning. I think that I've said this publicly a number of times. I think we're very, very supportive of market structure and clarity from a regulation, pun intended, perspective. While the Clarity Act would require legislative approval in Washington, D.C., I think the signaling that you've heard from other agencies, including the SEC and the CFTC, is that independent of whether the Clarity Act passes through Congress, that those agencies would be ready with proposed rulemaking and guidance that should hopefully provide structure. So I think that either of those paths would be a net benefit to customers bank existing customer base, but also open up new channels of potential, you know, verticals that are adjacent to our core DA 24 seven trading.

Got it. Do you appreciate you You know, reiterated all the guidance across different line items, including NII. Do you have any sense around whether it's coming in at, do you have any bias around like lower end, higher end, based on the trajectory so far in the first half of the year?

Yeah, I think, you know, there's obviously still a lot of levers on both sides of the balance sheet that can impact that. I would say right now, where the street is at, you know, feels like a good place to start.

Thank you.

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

Good morning. Just to fine tune the NIM expectation, do you have a June NIM or like end of period NIM to kind of get a sense for the jumping off point for the back half of the year rebound?

We don't usually talk about monthly results, but even with that, because a lot of the growth and the pipeline that we saw really came in the second half of the month, even if we would quote those kind of numbers, I think that's not really indicative of the optimism we see for the third quarter. You know, again, we just feel, you know, and I'll reiterate that we feel confident in saying that our third quarter NIM is going to be closer to our first quarter net interest margin and in the pipelines that we see plus the actual loan growth that we put on in the month of June gives us confidence for the commensurate NII growth as well.

I appreciate that. Remind me how you continue to handle QBICS funds. When do you become more comfortable with DA assets being deployable beyond cash or the CRE funds, real estate funds deployable from day one? Just kind of your thoughts on how you, to this point, have been very conservative with your handling of those funds, how that moves and develops going forward.

Yeah, sure, Manuel. Thanks. Thanks for the question. I think that, you know, on the DA side, you rightfully, you know, have noted we have and continue have continued to be, you know, conservative there and have said that we'll, you know, evaluate over time, how we think about a conservative approach on, you know, some, maybe even minority deployment of cash, you know, on and also, rightfully so on the real estate side. Those are incredibly granular. I think there are just a couple hundred thousand dollars per account today and traditional business lines that many commercial banks have. have with the extra sort of payments edge that we have. So we will plan to be deploying those. That sort of gets back to the 6% NIM on those deposits that I sort of mentioned as we continue to grow. And I think what's interesting is we're taking a portion of while we saw a little bit of quarter decline on one side of that business, the other side of the business saw an incredibly granular quarter over quarter increase.

I appreciate that color. I mean, the balances, even in the DA side, have kind of held in maybe better than folks had expected. And maybe at some point that could become, your conservatism could shift. How much closer are we to having that shift?

Yeah, so I think that we've basically been flattish, you know, on the overall balances, you know, including the new verticals. and I think that, you know, the next quarter or two, I'll be able to sort of give some, you know, some more confidence. I think what you're saying, what you're hearing from us right now is we feel very confident that by the end of the year and the turn, you know, we should be able to get there. Maybe we get there a little bit sooner, but 2027 should be a growth year for Cubix, you know, related deposits.

I appreciate the comment. Thank you.

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

Well, thank you everyone for your continued investment and 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.