Customers Bancorp, Inc. (CUBI) | Investment Case

1. Company Snapshot

1.a. Company Description

Customers Bancorp, Inc.operates as the bank holding company for Customers Bank that provides financial products and services to individual consumers, and small and middle market businesses.The company offers deposits products, including checking, savings, MMDA, and other deposits accounts.

It offers loan products, including commercial mortgage warehouse loans, multi-family and commercial real estate loans, business banking, small business loans, equipment financing, residential mortgage loans, and installment loans.It also offers traditional banking activities, including mobile phone banking, internet banking, wire transfers, electronic bill payment, lock box services, remote deposit capture services, courier services, merchant processing services, cash vault, controlled disbursements, positive pay, cash management services, such as account reconciliation, collections, and sweep accounts.It operates 12 full-service branches, as well as limited production and administrative offices in Southeastern Pennsylvania, including Bucks, Berks, Chester, Philadelphia, and Delaware Counties; Harrisburg, Pennsylvania; Rye Brook and New York; Hamilton, New Jersey; Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire; Manhattan and Melville, New York; Washington D.C.; Chicago, Illinois; Dallas, Texas; Orlando, Florida; and Wilmington, North Carolina.

Customers Bancorp, Inc.was founded in 1994 and is headquartered in West Reading, Pennsylvania.

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1.b. Last Insights on CUBI

Customers Bancorp's recent performance was negatively impacted by a securities investigation initiated by Bronstein, Gewirtz & Grossman, LLC. The law firm is investigating potential claims on behalf of purchasers of Customers Bancorp securities prior to March 1, 2024. This investigation could lead to potential regulatory or legal issues, which may negatively impact the company's financials and reputation.

1.c. Company Highlights

Last Price	70.95
Change Percentage	-0.24%
Open	70.69
Previous Close	71.12
Market Cap ( Millions)	2248
Volume	159936
Year High	72.83
Year Low	40.75
M A 50	66.56
M A 200	59.33

FCF Yield	14.62%
Dividend Yield	0.00%
ROE	9.18%
Debt / Equity	69.49%
Net Debt / EBIDTA	538.93%
Price To Book	1.08
Price Earnings Ratio	13.0
Price To FCF	6.84
Price To sales	1.71
EV / EBITDA	13.92

2. Customers Bancorp's Strong Q3 2025 Earnings: A Closer Look

Customers Bancorp, Inc. reported robust third-quarter 2025 earnings, with core EPS of $2.20, surpassing estimates of $1.9. The company's core ROE and ROA stood at 15.5% and 1.25%, respectively, indicating a strong financial performance. The net interest margin expanded by 19 basis points to 3.46%, and net interest income increased by 14% to $202 million. The efficiency ratio improved to 45.4%, and tangible book value per share grew to $59.72, up 6.2% sequentially or 25% annualized.

Publication Date: Oct -28

                                    📋 Highlights
                                    Strong Core Earnings::
                                                Reported core EPS of $2.20, with ROE of 15.5% and ROA of 1.25%, reflecting robust profitability.
Deposit Growth::
                                                Total deposits surged $1.4 billion to $20.4 billion, driven by noninterest-bearing deposits ($6.4 billion; 31% of total).
Margin and Income Expansion::
                                                Net interest margin rose 19 bps to 3.46%, with net interest income up 14% to $202 million.
Capital Strengthening::
                                                Raised $163 million in equity, boosting common equity Tier 1 ratio to 13% and tangible common equity to 8.4%.
Efficiency Improvements::
                                                Efficiency ratio improved to 45.4%, while tangible book value per share grew 6.2% to $59.72 sequentially.

                                

Deposit-Led Growth

The company's deposit-led growth resulted in a $1.4 billion increase in deposits, led by new commercial banking teams and cubiX clients, ending at $20.4 billion. Noninterest-bearing deposits grew $900 million, reaching a record $6.4 billion, and now represent 31% of total deposits. The bank's cubiX payments platform saw significant growth, with $800 million in deposits, and is expected to sustain growth, driven by increased institutional activity and adoption.

Loan Portfolio Growth

The bank's loan portfolio grew with franchise-enhancing relationships, and its tangible book value grew 15% over the last 5 years. The loan pipeline is broad-based, with growth coming from different segments, and a pull-through of deals expected to drive growth in the fourth quarter, albeit at a lower level than the third quarter.

Valuation and Outlook

With a Price-to-Tangible Book Value (P/TBV) ratio of approximately 1.05 (using the given P/B ratio as a proxy, considering tangible book value is a significant component of book value for banks), the stock appears reasonably valued. Analysts estimate next year's revenue growth at 9.6%. The company's guidance for 2025 expects deposit growth of 8-10%, loan growth of 13-14%, and net interest income growth of 13-15%, with an efficiency ratio below 50%. Given the bank's strong performance and growth prospects, its current valuation metrics, including a P/E Ratio of 12.62, seem to be in line with expectations.

Digital Asset Space and Future Prospects

The company has a significant presence in the digital asset space, with a large network and brand loyalty. It sees opportunities for growth in this area, with expectations of increased adoption of stablecoins, particularly among non-US domiciled customers and in countries with high inflation. The cubiX platform is expected to continue its growth trajectory, with over 60% of demand deposits now on the platform.

3. NewsRoom

Customers Bancorp: With The Preferred Being Called, One High-Yield Option Remains

Dec -01

Source: seekingalpha.com

Customers Bancorp (CUBI) Chairman and CEO Sells 7,479 Shares for $524K

Nov -29

Source: fool.com

Wall Street Analysts Believe Customers Bancorp (CUBI) Could Rally 30.38%: Here's is How to Trade

Nov -20

Source: zacks.com

Customers Bank Expands Physical Presence with New Offices in Five Growing West Coast Markets

Nov -18

Source: businesswire.com

Customers Bancorp, Inc $CUBI Stake Reduced by Mutual of America Capital Management LLC

Oct -31

Source: defenseworld.net

Customers Bancorp, Inc. Declares Quarterly Cash Dividend on Its Series F Preferred Stock and Announces Full Redemption of Series F Preferred Stock

Oct -30

Source: businesswire.com

Customers Bancorp (CUBI) Upgraded to Strong Buy: Here's Why

Oct -29

Source: zacks.com

Customers Bancorp, Inc. (CUBI) Q3 2025 Earnings Call Transcript

Oct -24

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Banking and Related Activities

Expected Growth: 4.0%

Customers Bancorp's 4.0% growth in Banking and Related Activities is driven by increased loan originations, expansion of commercial banking services, and strategic partnerships. Additionally, the company's focus on digital transformation, cost savings initiatives, and a favorable interest rate environment have contributed to its growth momentum.

7. Detailed Products

Commercial Banking

Provides a range of commercial banking services, including cash management, lending, and deposit services, to small and medium-sized businesses.

Consumer Banking

Offers a variety of consumer banking products, including checking and savings accounts, credit cards, and personal loans.

Mortgage Banking

Provides mortgage lending services, including residential and commercial mortgage loans, to individuals and businesses.

BankMobile

Offers a digital banking platform, providing mobile banking, online banking, and mobile deposit services.

Custodial Services

Provides custodial services, including safekeeping, reporting, and settlement services, to institutional clients.

8. Customers Bancorp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Customers Bancorp, Inc. is medium because while there are some alternatives to traditional banking services, they are not yet widely adopted and do not pose a significant threat to the company's business model.

Bargaining Power Of Customers

The bargaining power of customers for Customers Bancorp, Inc. is low because the company's customers are primarily small businesses and individuals who do not have significant bargaining power.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Customers Bancorp, Inc. is medium because while the company relies on a few large suppliers for its technology and infrastructure, it also has some flexibility to negotiate prices and terms.

Threat Of New Entrants

The threat of new entrants for Customers Bancorp, Inc. is low because of the significant regulatory barriers to entry in the banking industry, as well as the need for significant capital and infrastructure investments.

Intensity Of Rivalry

The intensity of rivalry for Customers Bancorp, Inc. is high because the banking industry is highly competitive, with many established players and low switching costs for customers.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	48.03%
Debt Cost	8.94%
Equity Weight	51.97%
Equity Cost	12.32%
WACC	10.70%
Leverage	92.41%

11. Quality Control: Customers Bancorp, Inc. passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Enterprise Bancorp

A-Score: 6.5/10

Value: 6.3

Growth: 5.3

Quality: 6.7

Yield: 4.0

Momentum: 8.0

Volatility: 8.3

1-Year Total Return ->

South Plains Financial

A-Score: 6.3/10

Value: 6.6

Growth: 5.9

Quality: 6.6

Yield: 4.0

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

Investar Holding

A-Score: 6.1/10

Value: 6.3

Growth: 6.0

Quality: 5.9

Yield: 4.0

Momentum: 7.5

Volatility: 6.7

1-Year Total Return ->

United Bancorp

A-Score: 6.0/10

Value: 4.4

Growth: 4.9

Quality: 4.5

Yield: 10.0

Momentum: 6.5

Volatility: 6.0

1-Year Total Return ->

QCR Holdings

A-Score: 5.7/10

Value: 6.3

Growth: 8.3

Quality: 7.6

Yield: 0.0

Momentum: 4.5

Volatility: 7.3

1-Year Total Return ->

Customers Bancorp

A-Score: 5.0/10

Value: 6.5

Growth: 6.8

Quality: 3.8

Yield: 0.0

Momentum: 8.0

Volatility: 4.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-5.69%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.70%

Customers Bancorp, Inc. - US23204G1004

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CUBI

1.c. Company Highlights

Higher Growth

Strong Momentum

More Volatile

Earnings Beats

Revenues Beats

Cheaper

Lower Yield

Earnings Miss

Revenues Miss

Fairly Valued

Weak Momentum

Average Quality

Average Growth

Lower Quality

Medium Volatility

Stable Momentum

2. Customers Bancorp's Strong Q3 2025 Earnings: A Closer Look

Deposit-Led Growth

Loan Portfolio Growth

Valuation and Outlook

Digital Asset Space and Future Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Banking and Related Activities

Expected Growth: 4.0%

7. Detailed Products

Commercial Banking

Consumer Banking

Mortgage Banking

BankMobile

Custodial Services

8. Customers Bancorp, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Customers Bancorp, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

70.95$

Current Price

70.95$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA