Customers Bancorp CEO Says Rival 24-7 Payment Rails Have Caused 'No Material Change' In Crypto Deposits
Digital-asset deposits on its cubiX platform stand at about $3.1 billion, CEO Sam Sidhu told analysts on the third-quarter call.
Customers Bancorp, a bank holding company that lends to businesses and serves fintech clients, says competing 24-7 payment networks have not pulled activity off its cubiX platform, CEO Sam Sidhu told analysts on the company's third-quarter earnings call. Digital-asset deposits on cubiX are about $3.1 billion, he said.
A question about zero-cost deposits
An analyst from D.A. Davidson noted that one of the largest crypto exchanges now has direct payment access and a settlement deal with another bank, and that some of the biggest banks have launched 24-7 settlement too. The analyst asked whether clients are moving balances to those rails and whether zero-cost deposits might eventually have to pay interest.
Sidhu said there is "really no material change in our customer activity as a result of perceived" competition. He pointed to a large network effect and barrier to entry, and said banks, custodians and investors were active on the network even before newer banking charters became available.
Under 70% digital assets
Sidhu said cubiX balances have shifted from 100% cash to 100% digital assets, then 80%, and now under 70% digital assets, which he credited to diversification across customers. Balances outside digital assets are about $1.4 billion, he said, against the $1.5 billion year-end goal he cited last quarter.
A title-company team contributed roughly $150 million on a spot basis, he said. Asked about interest costs, he said the deposits are predominantly non-interest bearing, with a very small portion, tens of millions, carrying a little expense. When an analyst from Stephens suggested 90-something percent were non-interest bearing, Sidhu answered "99, maybe."
He also said cubiX accounts grew 19% in the quarter, and real estate and mortgage finance now make up more than 30% of cubiX deposit balances.
Regulator lifts its order
Pennsylvania's Department of Banking and Securities has lifted its order, which Sidhu called a good recognition. He said it does not change day-to-day operations, and that agreements with the Federal Reserve are essentially the same. He added: "I can confidently say that risk management is now becoming a real strength for us."
The bank, which has $22.6 billion in deposits, said total deposits rose 4% in the quarter and 11% from a year earlier. Loans rose to $18.5 billion, and the company raised its full-year loan growth guidance to 12% or higher.
Mark McCollum, the bank's chief financial officer, said 2027 expense guidance and other key metrics will come on the fourth-quarter call in January.
Sources
- Document — sec.gov
- Customers Bancorp: Q3 Earnings Snapshot — Associated Press
- Customers Bancorp (CUBI) Tops Q3 Earnings and Revenue Estimates — Yahoo Finance
- Gear Up for Customers Bancorp (CUBI) Q3 Earnings: Wall Street Estimates for Key Metrics — Yahoo Finance
- Here's What Key Metrics Tell Us About Customers Bancorp (CUBI) Q3 Earnings — Yahoo Finance
