DA Davidson Upholds Buy Rating on Customers Bancorp amid Mixed Earnings Signals

DA Davidson has affirmed its Buy recommendation and a target price of $93.00 on Customers Bancorp (NYSE:CUBI), highlighting the bank’s recent earnings report as a foundation for its positive stance. The price target suggests an approximate 25 percent gain from the stock’s last recorded price of $74.35, although market valuation data implies that the current trading price might exceed its estimated Fair Value. In the earnings announcement, Customers Bancorp reported diluted earnings per share (EPS) of $1.98. This figure incorporated a $2.8 million expense related to the redemption of preferred stock, translating to an impact of $0.08 per share. Excluding this charge, core EPS amounted to $2.06, which fell marginally short of DA Davidson’s forecast of $2.07 but slightly overshot the broader analyst consensus estimate of $2.04. Over the trailing twelve months, the bank achieved a solid profitability measure with basic EPS totaling $5.12, corresponding to a price-to-earnings ratio of 15.26. The bank’s pre-provision net revenue (PPNR) declined by $7.0 million sequentially, settling at $119.6 million. This outcome closely aligned with the $120.0 million projection from DA Davidson. The decrease in PPNR was attributable to elevated operational expenses, yet this headwind was counterbalanced by an increase in total revenues, which rose by $5.1 million quarter-over-quarter to $236.9 million. This revenue performance exceeded DA Davidson’s estimate of $229.6 million. A significant highlight emphasized by the research firm pertains to Customers Bancorp’s net interest income, which expanded by $2.5 million despite a contraction of six basis points in the net interest margin. This growth was primarily driven by strong average loan portfolio expansion. Additionally, DA Davidson noted meaningful progress in restructuring and enhancing the bank’s deposit franchise, an aspect that underpins their sustained optimistic view on the stock's trajectory. In a separate disclosure concerning its fourth-quarter financials, Customers Bancorp reported adjusted earnings per share of $2.06, outpacing analyst expectations of $2.03. However, the associated revenue figure of $214.61 million fell below the forecasted $228.35 million, a shortfall that has drawn particular market attention. These earnings and revenue figures remain pivotal metrics for investors as they evaluate the institution’s financial health and future outlook. Taken together, these financial markers and operational developments reflect a nuanced performance by Customers Bancorp. While earnings metrics largely align with expectations and show strength in core banking activities like loan growth, the challenges in revenue generation and increased expenses inject some uncertainty into the overall outlook. Nonetheless, progress in deposit transformation and consistent profitability help sustain investor confidence in the bank’s medium-term prospects.