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BankUnited (BKU) Up on Q2 Earnings Beat, NIM & Deposits Rise
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Shares of BankUnited, Inc. (BKU - Free Report) gained 4.5% in response to better-than-expected second-quarter 2024 results. Quarterly earnings of 72 cents per share surpassed the Zacks Consensus Estimate of 65 cents. In the prior-year quarter, the company had reported earnings of 78 cents.
Earnings were aided by an increase in deposits. However, lower net interest income (NII) and non-interest income, loan balance, along with higher expenses, were the undermining factors.
Net income was $53.7 million, down 7.4% year over year. Our estimate for the metric was $48.2 million.
Revenues Decline & Expenses Rise
Quarterly net revenues were $250.2 million, down 4.5% year over year. However, the top line surpassed the Zacks Consensus Estimate of $243.5 million.
NII was $226 million, down 5.7%. Net interest margin (NIM) expanded 25 basis points (bps) to 2.72%. Our estimates for NII and NIM were $218.2 million and 2.60%, respectively.
Non-interest income of $24.2 million fell 5.1% from the prior-year quarter. The decline was due to a fall in all the components except other non-interest income. We had projected a non-interest income of $24.4 million.
Non-interest expenses rose 8.6% to $157.7 million. The increase was mainly due to a rise in all the components except depreciation of operating lease equipment. Our estimate for non-interest expenses was $157.1 million.
As of Jun 30, 2024, total loans were $24.63 billion, down 1.7% from the prior quarter. Total deposits amounted to $27.76 billion, up 2.7%. Our estimates for total loans and total deposits were $24.51 billion and $27.62 billion, respectively.
Credit Quality Decline
In the reported quarter, BankUnited recorded a provision of credit losses of $19.5 million, up 25.9% from the prior-year quarter.
As of Jun 30, 2024, the ratio of net charge-offs to average loans was 0.12%, up 3 bps from the Jun 30, 2023, level.
Capital Ratios Improve, Profitability Ratios Deteriorate
As of Jun 30, 2024, the Tier 1 leverage ratio was 8.2%, up from 7.6% as of Jun 30, 2023. The Common Equity Tier 1 risk-based capital ratio was 11.6%, up from 11.2%. The total risk-based capital ratio was 13.6%, up from 13% as of Jun 30, 2023.
At the end of the second quarter, the return on average assets was 0.61%, down from 0.63% in the year-earlier quarter. Return on average stockholders’ equity was 8%, down from 9.2%.
Our View
BankUnited’s efforts to grow fee income, low-cost deposits and higher interest rates are expected to support revenue growth. However, an increase in expenses and significant exposure to commercial real estate and residential loans might affect financials.
BankUnited, Inc. Price, Consensus and EPS Surprise
F.N.B. Corporation’s (FNB - Free Report) second-quarter 2024 adjusted earnings per share of 34 cents lagged the Zacks Consensus Estimate by a penny. Moreover, the bottom line reflected a decline of 12.8% from the prior-year quarter.
FNB’s results were primarily affected by higher provisions, higher expenses and lower NII. Nonetheless, a higher non-interest income and a rise in average loans and deposit balance offered some support.
First Horizon Corporation’s (FHN - Free Report) second-quarter 2024 adjusted earnings per share (excluding notable items) of 36 cents lagged the Zacks Consensus Estimate by a penny. Moreover, the figure declined 7.7% year over year.
FHN’s results were adversely impacted by a fall in NII and non-interest income. Also, lower deposits and higher provisions were other negatives. Nonetheless, lower expenses and an increase in loan balances offered some relief.
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BankUnited (BKU) Up on Q2 Earnings Beat, NIM & Deposits Rise
Shares of BankUnited, Inc. (BKU - Free Report) gained 4.5% in response to better-than-expected second-quarter 2024 results. Quarterly earnings of 72 cents per share surpassed the Zacks Consensus Estimate of 65 cents. In the prior-year quarter, the company had reported earnings of 78 cents.
Earnings were aided by an increase in deposits. However, lower net interest income (NII) and non-interest income, loan balance, along with higher expenses, were the undermining factors.
Net income was $53.7 million, down 7.4% year over year. Our estimate for the metric was $48.2 million.
Revenues Decline & Expenses Rise
Quarterly net revenues were $250.2 million, down 4.5% year over year. However, the top line surpassed the Zacks Consensus Estimate of $243.5 million.
NII was $226 million, down 5.7%. Net interest margin (NIM) expanded 25 basis points (bps) to 2.72%. Our estimates for NII and NIM were $218.2 million and 2.60%, respectively.
Non-interest income of $24.2 million fell 5.1% from the prior-year quarter. The decline was due to a fall in all the components except other non-interest income. We had projected a non-interest income of $24.4 million.
Non-interest expenses rose 8.6% to $157.7 million. The increase was mainly due to a rise in all the components except depreciation of operating lease equipment. Our estimate for non-interest expenses was $157.1 million.
As of Jun 30, 2024, total loans were $24.63 billion, down 1.7% from the prior quarter. Total deposits amounted to $27.76 billion, up 2.7%. Our estimates for total loans and total deposits were $24.51 billion and $27.62 billion, respectively.
Credit Quality Decline
In the reported quarter, BankUnited recorded a provision of credit losses of $19.5 million, up 25.9% from the prior-year quarter.
As of Jun 30, 2024, the ratio of net charge-offs to average loans was 0.12%, up 3 bps from the Jun 30, 2023, level.
Capital Ratios Improve, Profitability Ratios Deteriorate
As of Jun 30, 2024, the Tier 1 leverage ratio was 8.2%, up from 7.6% as of Jun 30, 2023. The Common Equity Tier 1 risk-based capital ratio was 11.6%, up from 11.2%. The total risk-based capital ratio was 13.6%, up from 13% as of Jun 30, 2023.
At the end of the second quarter, the return on average assets was 0.61%, down from 0.63% in the year-earlier quarter. Return on average stockholders’ equity was 8%, down from 9.2%.
Our View
BankUnited’s efforts to grow fee income, low-cost deposits and higher interest rates are expected to support revenue growth. However, an increase in expenses and significant exposure to commercial real estate and residential loans might affect financials.
BankUnited, Inc. Price, Consensus and EPS Surprise
BankUnited, Inc. price-consensus-eps-surprise-chart | BankUnited, Inc. Quote
Currently, BKU carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
F.N.B. Corporation’s (FNB - Free Report) second-quarter 2024 adjusted earnings per share of 34 cents lagged the Zacks Consensus Estimate by a penny. Moreover, the bottom line reflected a decline of 12.8% from the prior-year quarter.
FNB’s results were primarily affected by higher provisions, higher expenses and lower NII. Nonetheless, a higher non-interest income and a rise in average loans and deposit balance offered some support.
First Horizon Corporation’s (FHN - Free Report) second-quarter 2024 adjusted earnings per share (excluding notable items) of 36 cents lagged the Zacks Consensus Estimate by a penny. Moreover, the figure declined 7.7% year over year.
FHN’s results were adversely impacted by a fall in NII and non-interest income. Also, lower deposits and higher provisions were other negatives. Nonetheless, lower expenses and an increase in loan balances offered some relief.