Shift In Customers Bancorp's Business Model Could Generate 7-8% Loan Growth, Says DA Davidson

A new business model, expanding efforts in high-growth markets and a high net worth client base could be promising catalysts for Customers Bancorp, Inc. CUBI, according to analysts at D.A. Davidson.

The Analyst

Russell E. T. Gunther of D.A. Davidson initiated coverage on Customers Bancorp with a Neutral rating, a $33 12-18 month price target and a $40 five-year price target. 

The Thesis

Customers Bancorp’s growth over the past six years has been driven in part by the company’s unique business model, Gunther said in a Tuesday note. (See the analyst's track record here.)

“CUBI employs a private banking service model via recruitment of talented teams targeting privately held businesses and high net worth families with a bespoke, single point of contact approach to driving an above-peer growth rate," the analyst said. 

CUBI, a "struggling $200-million institution" in 2009, now has $9.8 billion in assets, according to D.A. Davidson. 

Now, CUBI plans to focus its efforts on consumer and industrial loans, sending teams into high-growth markets in Washington D.C. and Chicago, Gunther said. 

Gunther expects this new model to generate 7-8 percent organic loan growth through 2020.

Price Action

At the time of publication, Customers Bancorp shares were up 0.54 percent at $29.83. 

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