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Customers Bancorp (CUBI)
NYSE:CUBI
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Customers Bancorp
(NYSE:CUBI)
72Outperform
Positive Factors
Earnings
The company reported higher-than-expected earnings per share mainly due to a wider net interest margin and growth in net interest income.
Management Actions
Senior management took 100% of 2024 bonuses in stock, aligning their interests with those of shareholders.
Negative Factors
Regulatory Challenges
CUBI entered into a Written Agreement with the Federal Reserve owing to significant deficiencies in AML/BSA related to its digital asset business.
Customers Bancorp (CUBI) vs. S&P 500 (SPY)
Market Cap
$1.51B
Dividend YieldN/A
Average Volume (3M)266.70K
Price to Earnings (P/E)9.5
Beta (1Y)1.83
Revenue Growth-3.61%
EPS Growth-29.58%
CountryUS
Employees714
SectorFinancial
Sector Strength77
IndustryBanking
Share Statistics
EPS (TTM)5.08
Shares Outstanding31,467,243
10 Day Avg. Volume287,536
30 Day Avg. Volume266,699
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.38
Price to Cash Flow (P/CF)3.00
P/FCF Ratio1.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$69.50Price Target Upside44.19% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
Customers Bancorp Business Overview & Revenue Model
Company DescriptionCustomers Bancorp, Inc. (CUBI) is a bank holding company that operates primarily through its subsidiary, Customers Bank. The company provides a range of banking and financial services to small and medium-sized businesses, professionals, individuals, and families. Its core offerings include commercial and consumer loans, deposit products, and cash management services. Customers Bancorp focuses on delivering high-quality, technology-driven banking solutions to its clients, leveraging digital platforms to enhance customer experience and operational efficiency.
How the Company Makes MoneyCustomers Bancorp generates revenue primarily through interest income from its lending activities, including commercial real estate loans, commercial and industrial loans, and consumer loans. The company earns interest on the loans it provides to businesses and individuals, which constitutes a significant portion of its income. Additionally, Customers Bancorp earns non-interest income through fees and service charges associated with its deposit accounts, cash management services, and other banking activities. The bank also benefits from strategic partnerships and its focus on digital banking solutions, which help in attracting and retaining a diverse client base, thereby contributing to its overall earnings.
Customers Bancorp Financial Statement Overview
Summary
Customers Bancorp exhibits strong revenue growth and a solid balance sheet with no debt, though challenges exist in profitability, as seen in declining net profit margin and return on equity.Income Statement
Customers Bancorp has demonstrated strong revenue growth with an impressive increase from $683 million in 2023 to $1.33 billion in 2024, resulting in a revenue growth rate of 94%. The gross profit margin remains high at 100% due to financial services nature. However, the net profit margin declined from 37% to 14%, indicating increased expenses or reduced efficiency. The EBIT margin remained robust at 99.7% in 2024.85
Very Positive
Balance Sheet
The company maintains a strong equity position with an equity ratio of 8.2% in 2024, supported by a rising stockholders' equity. The absence of total debt in 2024 indicates a solid financial base. However, the return on equity has decreased from 15.3% in 2023 to 9.9% in 2024, suggesting challenges in generating returns for shareholders.78
Positive
Cash Flow
Operating cash flow decreased slightly from $125 million in 2023 to $115 million in 2024, while free cash flow grew significantly due to capital expenditure management. The free cash flow to net income ratio improved from 33% to 63%, indicating better cash generation relative to net income. However, the operating cash flow to net income ratio is less favorable at 0.64, showing room for improvement.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.33B | 683.40M | 632.38M | 748.54M | 502.28M | Gross Profit |
| 1.33B | 683.40M | 632.38M | 748.54M | 502.28M | EBIT |
| 1.32B | 406.34M | 552.95M | 401.59M | 175.96M | EBITDA |
| 0.00 | 360.64M | 318.45M | 462.88M | 208.27M | Net Income Common Stockholders |
| 181.47M | 250.14M | 228.03M | 314.65M | 132.58M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.08B | 3.85B | 3.44B | 4.34B | 1.90B | Total Assets |
| 22.31B | 21.32B | 20.90B | 19.58B | 18.44B | Total Debt |
| 1.41B | 1.53B | 1.41B | 1.10B | 1.16B | Net Debt |
| -56.79M | -2.34B | 949.73M | 586.73M | 462.08M | Total Liabilities |
| 20.47B | 19.68B | 19.49B | 18.21B | 17.32B | Stockholders Equity |
| 1.84B | 1.64B | 1.40B | 1.37B | 1.12B |
| Cash Flow | Free Cash Flow | |||
| 116.00M | 83.39M | -134.17M | 238.21M | 104.16M | Operating Cash Flow |
| 116.00M | 124.73M | -20.82M | 271.16M | 133.03M | Investing Cash Flow |
| -418.00K | 3.16B | -1.30B | -1.20B | -6.42B | Financing Cash Flow |
| -62.20M | 108.09M | 1.26B | 754.77M | 6.77B |
Customers Bancorp Technical Analysis
Negative
48.20
Price Trends
52.58
Negative
51.97
Negative
50.77
Negative
Market Momentum
-1.41
Positive
29.11
Positive
13.44
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CUBI, the sentiment is Negative. The current price of 48.2 is below the 20-day moving average (MA) of 53.40, below the 50-day MA of 52.58, and below the 200-day MA of 50.77, indicating a bearish trend. The MACD of -1.41 indicates Positive momentum. The RSI at 29.11 is Positive, neither overbought nor oversold. The STOCH value of 13.44 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CUBI.
Customers Bancorp Risk Analysis
Customers Bancorp disclosed 85 risk factors in its most recent earnings report. Customers Bancorp reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Customers Bancorp Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Performance Comparison
CUBI
Customers Bancorp
48.20
-4.05
-7.75%
CMA
Comerica
56.97
7.86
16.00%
WAL
Western Alliance
73.65
16.08
27.93%
Customers Bancorp Earnings Call Summary
Earnings Call Date: Jan 23, 2025 | % Change Since: -4.27% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in deposits, assets, and profitability, with strong loan growth and operational efficiency achievements. Despite some challenges, such as elevated professional services expenses and a moderate impact from securities repositioning, the overall outlook remains positive with strong capital and credit performance.Highlights
Exceptional Deposit-Led Growth
The bank has doubled in size over the last 5 years, ending 2024 with over $22 billion in assets, led by an impressive $10 billion of net deposit growth, which is 17% annually.
Strong Earnings and Profitability
Net interest income is up 19% annually, and core EPS is up over 2.5x over the last 5 years. Margin increased by 40 basis points over that time.
Successful Deposit Franchise Transformation
Deposits increased by more than $775 million or 4%. Noninterest-bearing deposits increased to $5.6 billion or 30% of total deposits.
Record Loan Growth
Loan portfolio grew by $670 million this quarter, with a 19% annualized pace; 12.3% growth for the year, bucking industry trends.
Operational Excellence and Efficiency Achievements
On track to achieve $20 million in annual efficiency through fee income growth and expense savings, with $5 million annual run rate fee income from cubiX platform.
Strong Capital and Credit Performance
NPAs remained low at just 25 basis points. Net charge-offs declined in the quarter, and commercial net charge-off rate declined to 13 basis points.
Lowlights
Moderate Impact from Securities Repositioning
Exited about $480 million in low-yielding securities, reinvestment led to modest net growth in interest income.
Elevated Professional Services Expenses
Higher professional services expense in connection with enhancements to risk management infrastructure, impacting short-term profitability.
Concerns Over Deposit Cap in Digital Assets
Exceeded their previous 15% cap on digital asset deposits, holding $3.6 billion in spot balances, raising potential liquidity management concerns.
Company Guidance
During the Customers Bancorp Q4 2024 earnings call, management provided robust guidance for 2025, highlighting anticipated growth across several key metrics. The bank expects net interest income to grow by 7% to 10%, with significant opportunities for reducing interest expenses further, driving net interest margin higher. They aim for a loan portfolio increase of 7% to 10%, leveraging strong pipelines in diversified verticals. Customers Bancorp also plans to enhance its deposit franchise with a target of $1.5 billion to $2 billion in new deposits, maintaining a focus on reducing high-cost deposit sources. Notably, noninterest-bearing deposits reached $5.6 billion, comprising 30% of total deposits, contributing to a total deposit beta of 64%. The bank's core expenses are managed tightly, with an efficiency target for the low to mid-50s in 2025 and a long-term goal in the mid-40s. Capital ratios remain strong, with CET1 at 12%, supporting strategic growth opportunities. Overall, Customers Bancorp positions itself for top-tier industry performance in the coming year.Customers Bancorp Corporate Events
Business Operations and StrategyFinancial Disclosures
Customers Bancorp Reports Strong 2024 Financial Results
Positive
Jan 23, 2025
Customers Bancorp reported its fourth quarter and full year 2024 financial results, highlighting significant growth in deposits and loans. The company achieved a net income of $23.3 million in Q4 2024 and $166.4 million for the full year, driven by strategic deposit inflows and securities portfolio repositioning. Enhancements in deposit management led to cost reductions and increased non-interest-bearing deposits. Despite repositioning its securities portfolio, the company maintained strong liquidity and asset quality, with a modest increase in non-performing assets. Customers Bancorp’s strategic investments and disciplined risk management are expected to position the company for continued success in the future.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.