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1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problemsCAGR, or compound annual growth rate, is the steady annual rate that would connect a bank metric’s starting value to its ending value over a specified period. It helps summarize change, but it does not show the year-by-year path, predict future growth, or tell you whether the stock is attractively valued. To interpret it, first identify the metric, dates, and reporting basis.
What CAGR measures
The formula is:
CAGR = (ending value ÷ starting value)^(1 ÷ number of years) − 1
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For example, a bank’s deposits, earnings per share (EPS), tangible book value per share, total assets, and share price can each have a different CAGR over the same period. The rate is an annualized summary of the two endpoints: it answers what constant compound rate would link them. It does not mean the measure actually rose by that percentage in every year.
For a meaningful result, the starting value, ending value, and elapsed time must be clear. A period from 2019 through 2025 spans six elapsed years, even though it includes observations labeled with seven calendar years.
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Why the metric matters for a bank stock
A bank’s operating growth and a shareholder’s stock return are different things. Growth in earnings or book value can inform an assessment of the business, but share-price performance also reflects how investors value those results. Total shareholder return may also include dividends. Do not treat a bank’s asset, deposit, EPS, or book-value CAGR as the stock’s return.
Bank profitability and valuation provide context for growth. The Reserve Bank of Australia (RBA) says return on equity (ROE) is widely used to assess bank profitability, while noting that ROE reflects both asset profitability and leverage. It also explains that price-to-book ratios are related to ROE and cost of equity, and that goodwill accounting can affect comparisons. The RBA’s March 2017 discussion is a framework for interpreting those relationships, not a current benchmark for every bank or market.
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What different bank CAGRs can tell you
- EPS CAGR: Summarizes change in earnings per share. Check whether the figure is reported or adjusted, and whether changes in share count affected the per-share result.
- Tangible book value per share CAGR: Tracks change in a per-share book-value measure. Check the bank’s definition and whether it is a non-GAAP measure.
- Deposit or asset CAGR: Shows change in a balance-sheet total. It does not establish that growth was organic, profitable, or accompanied by improved credit quality.
- Share-price CAGR: Summarizes change in the share price between endpoints. It is not the same as total shareholder return if dividends are excluded.
A dated example: Customers Bancorp, 2019–2025
In its April 15, 2026 shareholder letter, Customers Bancorp reported the following company figures for 2019–2025. The interval is six elapsed years. Its reported CAGRs are company-reported, not forecasts or recommendations.
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| Measure | 2019 value | 2025 value | Reported CAGR |
|---|---|---|---|
| Total assets | $11.5 billion | $24.9 billion | 14% |
| Total loans | $10.1 billion | $16.8 billion | 9% |
| Total deposits | $8.6 billion | $20.8 billion | 16% |
| Core EPS | $2.35 | $7.61 | 22% |
| Tangible book value per share | $26.17 | $61.77 | 15%+ |
These figures come from Customers Bancorp’s 2026 shareholder letter. The letter identifies core EPS and tangible book value measures as non-GAAP and provides qualifications about its peer set and measurement date. Use those definitions and qualifications when making comparisons; the figures should not be read as directly comparable to another bank’s differently defined measures.
How to compare banks’ growth rates
Before drawing a conclusion from a CAGR, align the underlying data. Use the same metric, elapsed period, accounting definition, and treatment of adjusted measures for each bank. Per-share metrics need particular care because issuance or repurchases can change the share count; balance-sheet growth should be checked for acquisitions and other non-organic sources.
| Comparison axis | What to check |
|---|---|
| Measure | Compare EPS with EPS, deposits with deposits, and so on. Do not mix operating measures with share-price returns. |
| Period | Use matching start and end dates and the same number of elapsed years. |
| Calculation basis | Distinguish reported from adjusted or non-GAAP figures; check definitions and share-count treatment. |
| Growth quality | Review annual results and whether growth was organic, acquisition-driven, or influenced by a sharp decline or rebound at an endpoint. |
| Bank economics | Consider ROE and leverage alongside capital and risk disclosures. |
| Valuation | Consider price-to-book in the context of profitability and cost of equity; growth alone does not establish fair value. |
What CAGR cannot tell you
Two banks can post the same CAGR while following very different paths: one may grow steadily, while another suffers a decline and then rebounds. The endpoint calculation cannot distinguish those histories. Check annual reports and other relevant disclosures for the intervening results, credit quality, capital, and any acquisition or one-off effects.
Nor is CAGR a forecast or a buy signal. It summarizes past change in a selected measure; it does not establish that the rate will continue or that the stock is undervalued. The RBA’s analysis of ROE, cost of equity, price-to-book, and goodwill offers historical context, but its examples and statistics concern Australian banks and an article published in 2017—not a current universal benchmark. For company-specific definitions and data, consult the bank’s own filings, such as Bank of America’s 2025 Form 10-K, filed in February 2026.
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