The market is about right: lending profits should improve, but funding competition and thinner tangible capital limit the upside. My twelve-month target is $70.83, without assuming easier capital rules or a shrinking share count.
Key points
- $6.16 a share is my 2027 earnings estimate, with no net share reduction.
- 2.13% was the third-quarter interest-bearing deposit cost, still rising.
- $70.83 a share is my twelve-month target; retain exposure rather than add.
The call
The price requires only modest progress. At my assumed earnings multiple, today's share price requires $5.51 of annual earnings. That is below my 2027 forecast, but rising funding costs keep the gap from becoming a compelling buying opportunity.
Deposit growth favors more expensive accounts ($ billions)Source: October 16, 2026 earnings release; September quarter-end balances.
I expect recovery, not a breakout. Expiring interest-rate hedges and replacement of older, lower-yielding assets should lift lending profits. Private Bank adds customers and fees, but its deposit growth increasingly funds its own loans. The next year's results must demonstrate that earnings can grow without consuming scarce capital.
Valuation
| Driver | My estimate |
|---|
| 2027 revenue | $9.96 billion |
| 2027 diluted earnings | $6.16 a share |
| Base bank earnings multiple | 11 times |
| Private Bank franchise premium | 0.5 times |
| Twelve-month target | $70.83 a share |
My forecast uses $215 billion of average earning assets and a 3.33% lending margin, the spread earned after funding costs. It includes $5.80 billion of expenses, $650 million of credit provisions, a 22% tax rate, $132 million of preferred dividends and 423 million diluted shares in 2027.
The modest franchise premium rewards repeat customer relationships; stalled deposits and wealth growth would remove it. Tangible capital, equity excluding goodwill and similar assets, fell despite stronger earnings, limiting the multiple. Recent underperformance supports caution: the upside does not compensate enough for funding and credit surprises to justify buying.
The deposit battle decides the targetOur 2027 margin scenarios; other forecasts unchanged; target dollars per share, October 16, 2026.
Risks
- Deposit competition could overwhelm asset repricing; watch funding costs and the lending margin each quarter.
- Higher long-term rates could weaken capital further; watch securities losses and repurchase restraint.
- Property loans could require larger reserves; watch missed payments and provisions exceeding loan write-offs.
What would change my mind
A lending margin above 3.40% by September 2027, alongside recovering tangible capital and stable credit losses, would support a higher target.