Customers Bancorp (CUBI)

Regional banking company Customers Bancorp (NYSE:CUBI) announced better-than-expected revenue in Q4 CY2025, with sales up 22.5% year on year to $236.9 million. Its non-GAAP profit of $2.06 per share was 0.8% above analysts’ consensus estimates.

Company Overview

Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp (NYSE:CUBI) is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Customers Bancorp competes with regional banks like Valley National Bancorp (NASDAQ:VLY), Webster Financial (NYSE:WBS), and Fulton Financial (NASDAQ:FULT), as well as larger national institutions including PNC Financial Services (NYSE:PNC) and Truist Financial (NYSE:TFC) in its markets.

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees. Luckily, Customers Bancorp’s revenue grew at a solid 13.9% compounded annual growth rate over the last five years. Its growth beat the average banking company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Customers Bancorp’s recent performance shows its demand has slowed as its annualized revenue growth of 6.8% over the last two years was below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Customers Bancorp reported robust year-on-year revenue growth of 22.5%, and its $236.9 million of revenue topped Wall Street estimates by 2.4%.

Net interest income made up 89% of the company’s total revenue during the last five years, meaning Customers Bancorp barely relies on non-interest income to drive its overall growth.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last five years, Customers Bancorp’s efficiency ratio has increased by 8 percentage points, going from 39.4% to 54.5%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

Customers Bancorp’s efficiency ratio came in at 49.5% this quarter, falling short of analysts’ expectations by 208 basis points (100 basis points = 1 percentage point). This result was 16.3 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects Customers Bancorp to rein in some of its expenses as it anticipates an efficiency ratio of 48.9%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Customers Bancorp’s spectacular 15.4% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Customers Bancorp’s flat two-year EPS was bad and lower than its 6.8% two-year revenue growth.

Diving into the nuances of Customers Bancorp’s earnings can give us a better understanding of its performance. A two-year view shows Customers Bancorp has diluted its shareholders, growing its share count by 8.8%. This has led to lower per share earnings. Taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q4, Customers Bancorp reported adjusted EPS of $2.06, up from $1.36 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Customers Bancorp’s full-year EPS of $7.60 to grow 6.7%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

Customers Bancorp’s TBVPS grew at an incredible 16.9% annual clip over the last five years. TBVPS growth has recently decelerated to 13.9% annual growth over the last two years (from $47.61 to $61.77 per share).

Over the next 12 months, Consensus estimates call for Customers Bancorp’s TBVPS to grow by 11.9% to $69.14, mediocre growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Customers Bancorp has averaged a Tier 1 capital ratio of 12.6%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Customers Bancorp has averaged an ROE of 16.7%, excellent for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows Customers Bancorp has a strong competitive moat.

It was encouraging to see Customers Bancorp beat analysts’ revenue expectations this quarter. We were also happy its net interest income outperformed Wall Street’s estimates. On the other hand, its EPS slightly beat. Overall, this print had some key positives. Investors were likely hoping for more, and shares traded down 2.7% to $78.98 immediately following the results.

Updated: January 22, 2026 at 5:10 PM EST

Are you wondering whether to buy Customers Bancorp or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

There are some positives when it comes to Customers Bancorp’s fundamentals. To kick things off, its revenue growth was solid over the last five years. And while Customers Bancorp’s worsening efficiency ratio shows the business has become less productive, its anticipated efficiency ratio over the next year signals it will gain leverage on its fixed costs.

Customers Bancorp’s P/B ratio based on the next 12 months is 1.2x. Looking at the banking landscape right now, Customers Bancorp trades at a pretty interesting price. If you trust the business and its direction, this is an ideal time to buy.

Wall Street analysts have a consensus one-year price target of $87 on the company (compared to the current share price of $78.98), implying they see 10.2% upside in buying Customers Bancorp in the short term.