Unlocking Income Potential: The Strategic Case for Customers Bancorp's Series F Preferred Shares

In an era where traditional income assets like bonds are grappling with rising interest rates and inflationary pressures, high-yield preferred stocks have emerged as a compelling alternative for income-focused investors. Among the most intriguing candidates is Customers Bancorp Inc Non-Cumulative Perpetual Preferred Shares Series F (CUBI.PRF), which offers a forward dividend yield of 9.60% as of July 2025. This yield, coupled with the company's decade-long track record of consistent dividend payments and a robust institutional backdrop, positions Series F as a strategic play for those seeking reliable, non-cumulative preferred equity exposure in a top-performing regional bank.

The Allure of 9.60%: A Yield That Stands Out

The 9.60% forward dividend yield for CUBI.PRF is not merely a headline figure—it reflects a disciplined capital structure and a commitment to shareholder returns. With quarterly dividends of $0.59 per share (payable in September, December, March, and June), the security delivers a predictable cash flow stream that outpaces most corporate bonds and even many high-yield equities. For context, the average yield on investment-grade preferred stocks in the financial sector hovers around 7.5%, making Series F a standout.

This yield is further bolstered by the stock's premium to its $25 liquidation preference (trading at $25.65 as of July 2025). While this 2.6% premium might raise eyebrows, it's justified by the company's financial health: a 3.27% net interest margin (up 14 basis points quarter-over-quarter), $22 billion in assets, and a core return on equity (ROE) of 13.3%. These metrics underscore the bank's ability to sustain its dividend, even in a tightening rate environment.

A Decade of Consistency: The Power of Predictability

One of the most underrated aspects of CUBI.PRF is its decade-long history of uninterrupted dividend payments. Unlike common stocks, which are subject to earnings volatility and board discretion, preferred stocks like Series F offer a more stable income stream. While non-cumulative preferred shares (which do not accrue unpaid dividends) may seem riskier, Customers Bancorp's financial discipline—evidenced by its 27 basis points in non-performing assets and a 1.1% core return on assets (ROA)—mitigates this concern.

The company's recent performance reinforces this narrative. In Q2 2025, Customers Bancorp achieved $300 million in deposit growth, expanded its net interest margin for the third consecutive quarter, and raised its full-year loan growth guidance to 8-11%. These results reflect a business model that balances growth with prudence, a critical trait for preferred shareholders who prioritize income stability over capital appreciation.

Institutional Backing: A Silent Endorsement

While direct institutional ownership of CUBI.PRF is limited (ORG Partners LLC holds 17,350 shares as of July 2025), the parent company's common stock is held by 525 institutional investors, including heavyweights like BlackRock, Wellington Management, and Vanguard. Collectively, these institutions control 36.8 million shares of common stock, with BlackRock alone holding 13.5% and Wellington increasing its stake by 25.4% year-over-year. This institutional confidence in the parent company indirectly validates the preferred stock's creditworthiness.

Moreover, Customers Bancorp's strategic initiatives—such as its Kubix payment platform, which processed $1.5 trillion in 2024, and its recruitment of high-performing deposit teams—position the bank to sustain its growth trajectory. As digital asset regulations crystallize, the company is poised to capture market share in a sector where stablecoin issuers and institutional investors are increasingly active.

Risk Considerations and the Path Forward

No investment is without risk. The non-cumulative nature of Series F means that missed dividends are not retroactively paid—a factor that could deter conservative investors. Additionally, the stock's price is sensitive to interest rate movements, as higher rates could pressure its yield premium. However, the company's strong balance sheet and disciplined capital allocation provide a buffer against these risks.

For income-focused investors, the key is to evaluate Series F within a diversified portfolio. Given its 9.60% yield, decade-long consistency, and the parent company's institutional endorsement, it serves as a compelling alternative to traditional fixed-income assets. With the next dividend payment scheduled for September 2025 and the company's full-year guidance intact, the case for CUBI.PRF remains robust.

Final Take

Customers Bancorp's Series F preferred shares exemplify the best of both worlds: a high yield backed by a bank with a proven track record and a capital structure that prioritizes shareholder returns. While preferred stocks are often overlooked in favor of common equities or bonds, the strategic advantages of Series F—particularly in a low-yield environment—make it a standout for income seekers. As macroeconomic uncertainties persist, this security offers a rare combination of reliability and growth potential, making it a worthy addition to any income-oriented portfolio.