Customers Bancorp's (CUBI) deposit transformation is gaining momentum into 2026 and beyond, but the stock's risk-reward profile remains balanced, Morgan Stanley said in a note Monday.

The investment firm said the bank has been revamping its deposit franchise since 2022, driving low-cost deposit growth through the expansion of commercial banking teams and increasing adoption of its real-time payments platform, cubiX.

Morgan Stanley expects Customers Bancorp to continue narrowing the gap with peers on total deposit costs through the end of 2026, supported by continued growth in low-cost deposits and potential rate cuts.

Loan growth is forecast to remain above peer levels over the next several quarters, while credit quality is expected to remain stable as interest rates move lower, the brokerage said.

However, the firm noted that earnings are highly sensitive to changes in cubiX-related, non-interest-bearing deposits and their pricing, as balances depend on activity in the digital asset ecosystem. Increased competition from other banks could also pressure balances and pricing over time.

Morgan Stanley initiated coverage of Customers Bancorp with an equal-weight rating and set a $90 price target.

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