Improved Digital Finance Will Drive Enduring Sector Leadership In 2028

Key Takeaways

• Differentiation through proprietary digital banking technology and targeted talent recruitment is fueling deposit, loan, and fee income growth while enhancing revenue quality and margins.
  
• Focus on underserved verticals, operational efficiency, and regulatory leadership is diversifying revenue streams and positioning the bank for sustainable, industry-leading earnings growth.
  
• Heavy exposure to digital assets and limited diversification raise regulatory, earnings, and competition risks that threaten profitability, revenue growth, and long-term financial stability.

Catalysts

Operates as the bank holding company for Customers Bank that provides banking products and services.

• The rapid digitization of commercial banking and payments is driving institutional clients to seek tech-focused, 24/7 banking solutions-a shift that Customers Bancorp capitalizes on through its proprietary cubiX platform. With payments volume of $1.5 trillion in 2024 and accelerating growth, ongoing regulatory clarity around digital assets and stablecoins positions Customers as the leading provider, supporting significant potential for deposit and fee income growth.
  
• The growing preference among younger and entrepreneurial clients for digital-first, relationship-based commercial banking creates long-term opportunities for Customers Bancorp to grow its granular deposit base and loan book through targeted recruitment of high-performing banking teams with established client relationships. This strategy is already delivering above-average, high-quality deposit growth and is set to enhance revenue and further improve net interest margins.
  
• Expansion into high-growth verticals underserved by traditional banks-such as digital asset companies, fintechs, and healthcare finance-positions Customers Bancorp to benefit from accelerated loan growth, new customer acquisition, and diversification of revenue streams, driving double-digit loan and tangible book value growth.
  
• Sustained investment in technology, automation, and operational efficiency (supported by AI and digitized processes) is reducing the bank's cost structure, as evidenced by top-quartile efficiency ratios and sequential improvement despite ongoing reinvestments; this is expected to continue boosting net margins and earnings.
  
• Recent regulatory progress (GENIUS Act, stablecoin legislation) and the bank's strong compliance infrastructure are making Customers Bancorp a partner of choice for institutional clients entering digital finance, building a competitive moat and setting the stage for increased fee-based revenues, stable deposit inflows, and industry-leading earnings growth over the medium to long-term.

Customers Bancorp Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Customers Bancorp's revenue will grow by 17.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 22.1% today to 43.1% in 3 years time.
• Analysts expect earnings to reach $417.4 million (and earnings per share of $12.61) by about August 2028, up from $131.6 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 7.0x on those 2028 earnings, down from 14.9x today. This future PE is lower than the current PE for the US Banks industry at 11.1x.
• Analysts expect the number of shares outstanding to decline by 0.29% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.15%, as per the Simply Wall St company report.

Customers Bancorp Future Earnings Per Share Growth

Risks

• Concentration risk in digital asset and stablecoin-related deposits, with cubiX deposits now exceeding previous self-imposed caps and constituting a significant share (16–17%) of total deposits, exposes Customers Bancorp to potential earnings volatility, regulatory changes, and rapid outflows if digital asset markets dislocate-negatively impacting net interest margin, liquidity, and future earnings.
  
• Growing reliance on fee and interest income from cubiX and digital asset platforms may be threatened by intensified competition from larger banks (e.g., JPMorgan, PNC), which could lower pricing power and compress margins, risking future revenue growth and sustainable profitability.
  
• Heavy investment in team recruitment, technology, and compliance, while driving operating leverage targets, introduces ongoing expense burdens; should revenue growth slow or network effects plateau, the bank's efficiency ratio advantage may erode, pressuring net margins and long-term earnings growth.
  
• Regulatory uncertainty and increased federal scrutiny of stablecoin infrastructure, payment rails, and BSA/AML standards pose heightened compliance risk for Customers Bancorp, potentially resulting in rising regulatory costs and limiting ability to scale digital asset activities-thus affecting net margin and fee income.
  
• Limited geographic diversification and significant exposure to select high-growth verticals (e.g., digital assets, New York/Northeast CRE), while fueling near-term growth, increases vulnerability to sector-specific downturns or regulatory shocks, which could cause elevated credit losses, weakening overall revenue and tangible book value trajectory.

Valuation

• The analysts have a consensus price target of $76.571 for Customers Bancorp based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $90.0, and the most bearish reporting a price target of just $62.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $967.6 million, earnings will come to $417.4 million, and it would be trading on a PE ratio of 7.0x, assuming you use a discount rate of 7.2%.
• Given the current share price of $62.03, the analyst price target of $76.57 is 19.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.