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Why Customers Bancorp Inc (CUBI) Is One of the Best Stocks to Buy for 2018

By U.S. News & World Report

Customers Bancorp Inc (NYSE: CUBI) isn’t the sexiest stock in the world, but when you’re looking for a bargain on Wall Street, that’s usually a good thing. CUBI is no exception, and despite its low-key profile, there’s a laundry list of reasons this small-cap bank stock is quietly one of the best stocks to buy for 2018.

But first, for the uninitiated: What exactly is Customers Bancorp?

Company profile. Customers Bancorp is a small-cap bank holding company based in Wyomissing, Pennsylvania, with a valuation around $850 million at the beginning of 2018. It’s important to think of CUBI as a bank holding company because it has two distinctly different lines of business. In fact, the businesses are so different that one of them will soon be spun off.

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The largest and most profitable business CUBI operates is its retail banking segment, Customers Bank. It sells financial products to small- and mid-size businesses, has branches in six states throughout the Northeast, where it offers consumer banking services to the general public, and finances both multi-family real estate projects and mortgage companies. This conservatively managed community bank is the bread and butter for CUBI shareholders.

The second business is BankMobile, which, while currently unprofitable, is a valuable CUBI asset. It offers digital-only checking accounts to handle disbursements that colleges and universities need to make to their students.

“Whether the school owes the student money in the form of a financial aid refund, or if a student is working on campus and needs to be paid, or if they’ve dropped a class and they’re owed credits, the school needs to disburse this money,” says Luvleen Sidhu, co-founder, president and chief strategy officer at BankMobile.

“And it’s very costly, especially with paper checks, antiquated systems, Department of Ed, compliance reporting — and so we save on average these schools about $250,000 a year by using our technology and our systems,” Sidhu says.

Students find the offering compelling too, wooed by the free, mobile-only checking account and a network of 55,000 feeless Allpoint ATMs to access their cash.

Ultimately, not only is BankMobile a good way to acquire lifelong customers, but more importantly, it’s a dirt-cheap way for CUBI to grow its deposits.

Spinoff. Here’s where CUBI stock starts to get interesting. Customers Bancorp has decided to spin off BankMobile, which management feels is necessary due to a provision in Dodd-Frank that slashes the interchange fees a bank can earn when it has more than $10 billion in assets. Essentially, BankMobile must be spun off to retain its business model.

The spinoff, scheduled to happen by mid-2018, will actually be a spinoff-merger; BankMobile will merge with a company called Flagship Community Bank, and CUBI shareholders will receive about $3.57 per share in equity in the newly formed publicly traded stock.

Shareholders can choose to sell immediately or hold on to the new stock. In addition, management has said that BankMobile will have announced new partnerships by that time that will improve its profitability.

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The math behind CUBI’s attractiveness. Assuming shareholders immediately sell the new issue, they’re then left with CUBI, which is just Customers Bank — the profitable part. Analysts currently expect earnings per share in 2018 of $2.42. That’s lower than it was a few months ago, but the stock had enough of a cushion that shares still look attractive.

If shares go for just 14 times earnings a year from now, CUBI stock will be worth $33.88. Add in the $3.57 per share from the BankMobile spinoff, and the total shareholder value would be $37.45 — a 44 percent gain from its year-end 2017 price.

More bullish math; great business environment. Current analyst estimates were made before CUBI revealed, on Jan. 2, that the corporate tax cuts would boost CUBI stock’s earnings per share by 22 percent in 2018 — and in all subsequent years. Shares start to look dirt cheap pretty quickly at that rate.

Also, before tax cuts were passed in late 2017, CEO Jay Sidhu announced the company was setting a goal to boost EPS to $4 in four years. If 2021 EPS is $4, and CUBI trades at just 14 times earnings, shares will be worth $56, implying a 100 percent return in four years — before factoring in the additional return courtesy of the BankMobile spinoff.

Rising rates, a steepening yield curve and a strengthening economy certainly don’t hurt the prospects for bank stocks either.

“U.S. economic growth is accelerating and will be boosted by the corporate tax cuts,” says Robert Johnson, president and CEO of the American College of Financial Services in Bryn Mawr, Pennsylvania.

“Capital spending is on the rise, and more corporations will commit to capital investment, buying plant and equipment,” Johnson says, also pointing to growth in credit cards, auto loans and deposits that should boost financials.

Factor in a strong trend toward deregulation and you’ve got another secular tailwind for CUBI stock.

The hidden value pick of 2018. Behind this little-covered, overlooked stock is a company that’s well-managed and a C-suite dedicated to boosting shareholder value.

[See: 7 of the Best Tech Stocks to Buy for 2018.]

Especially if you consider yourself a patient investor or a fan of value investing, give CUBI a close look now, before the market wakes up to just how attractive this stock is. Value is all about limiting your downside, and this conservatively managed (and priced) stock doesn’t just have limited risk but awfully attractive reward opportunities as well.

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Why Customers Bancorp Inc (CUBI) Is One of the Best Stocks to Buy for 2018 originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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