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BankUnited's Q3 Earnings Beat on Higher NII & Fall in Provisions
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BankUnited, Inc.’s (BKU - Free Report) third-quarter 2024 earnings of 81 cents per share surpassed the Zacks Consensus Estimate of 73 cents. The bottom line compares favorably with 63 cents in the prior-year quarter.
Stay up-to-date with all quarterly releases: See ZacksEarnings Calendar.
Results were aided by growth in net interest income (NII), lower provisions and a slight improvement in deposit balance. However, lower non-interest income, a fall in loan balance and a jump in expenses were the undermining factors.
Net income was $61.5 million, jumping 30.8% year over year. Our estimate for the metric was $54.4 million.
BankUnited’s Revenues Grow, Expenses Rise
Quarterly net revenues were $257 million, up 6% year over year. However, the top line missed the Zacks Consensus Estimate of $258.7 million.
NII was $234.1 million, growing 9%. We projected NII to be $230.9 million.
Net interest margin (NIM) expanded 22 basis points (bps) to 2.78%. Our estimate for the metric was the same as the reported figure.
Non-interest income of $22.9 million fell 17.4% from the prior-year quarter. The decline was due to a fall in lease financing. We had projected a non-interest income of $22 million.
Non-interest expenses rose 11.9% to $164.6 million. The increase was due to a rise in all the components except depreciation of operating lease equipment and deposit insurance expense. Our estimate for non-interest expenses was $161.3 million.
As of Sept. 30, 2024, total loans were $24.4 billion, down 1% from the prior quarter. Total deposits amounted to $27.9 billion, up marginally. Our estimates for total loans and total deposits were $24.5 billion and $28.1 billion, respectively.
BKU’s Credit Quality Weakens
In the reported quarter, BankUnited recorded a provision of credit losses of $9.2 million, which plunged 72% from the prior-year quarter. We had expected the metric to be $17.6 million.
As of Sept. 30, 2024, the ratio of net charge-offs to average loans was 0.12%, up 5 bps year over year. Also, the non-performing assets ratio was 0.64%, jumping 24 bps.
BKU’s Capital & Profitability Ratios Improve
As of Sept. 30, 2024, the Common Equity Tier 1 risk-based capital ratio was 11.8%, up from 11.4%. The total risk-based capital ratio was 13.9%, increasing from 13.4% as of Sept. 30, 2023.
At the end of the third quarter, the return on average assets was 0.69%, up from 0.52% in the year-earlier quarter. Return on average stockholders’ equity was 8.8%, rising from 7.2%.
Our View
BankUnited’s efforts to grow fee income, low-cost deposits and relatively higher interest rates are expected to support revenue growth. Also, the company’s balance sheet restructuring strategy is supporting its financials. 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
Zions Bancorporation’s (ZION - Free Report) third-quarter 2024 earnings per share of $1.37 surpassed the Zacks Consensus Estimate of $1.16. Moreover, the bottom line increased 21.2% from the year-ago quarter.
Results were aided by lower provisions and higher NII. Also, higher loans and deposits were other positives. However, a decline in non-interest income and a rise in adjusted non-interest expenses were major headwinds for ZION.
F.N.B. Corporation’s (FNB - Free Report) third-quarter 2024 adjusted earnings per share of 34 cents lagged the Zacks Consensus Estimate of 36 cents. Moreover, the bottom line reflected a decline of 15% from the prior-year quarter’s level.
FNB’s results were primarily affected by higher expenses and lower NII. Nonetheless, a higher non-interest income, lower provisions and a rise in average loans and deposits balance offered some support.
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BankUnited's Q3 Earnings Beat on Higher NII & Fall in Provisions
BankUnited, Inc.’s (BKU - Free Report) third-quarter 2024 earnings of 81 cents per share surpassed the Zacks Consensus Estimate of 73 cents. The bottom line compares favorably with 63 cents in the prior-year quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Results were aided by growth in net interest income (NII), lower provisions and a slight improvement in deposit balance. However, lower non-interest income, a fall in loan balance and a jump in expenses were the undermining factors.
Net income was $61.5 million, jumping 30.8% year over year. Our estimate for the metric was $54.4 million.
BankUnited’s Revenues Grow, Expenses Rise
Quarterly net revenues were $257 million, up 6% year over year. However, the top line missed the Zacks Consensus Estimate of $258.7 million.
NII was $234.1 million, growing 9%. We projected NII to be $230.9 million.
Net interest margin (NIM) expanded 22 basis points (bps) to 2.78%. Our estimate for the metric was the same as the reported figure.
Non-interest income of $22.9 million fell 17.4% from the prior-year quarter. The decline was due to a fall in lease financing. We had projected a non-interest income of $22 million.
Non-interest expenses rose 11.9% to $164.6 million. The increase was due to a rise in all the components except depreciation of operating lease equipment and deposit insurance expense. Our estimate for non-interest expenses was $161.3 million.
As of Sept. 30, 2024, total loans were $24.4 billion, down 1% from the prior quarter. Total deposits amounted to $27.9 billion, up marginally. Our estimates for total loans and total deposits were $24.5 billion and $28.1 billion, respectively.
BKU’s Credit Quality Weakens
In the reported quarter, BankUnited recorded a provision of credit losses of $9.2 million, which plunged 72% from the prior-year quarter. We had expected the metric to be $17.6 million.
As of Sept. 30, 2024, the ratio of net charge-offs to average loans was 0.12%, up 5 bps year over year. Also, the non-performing assets ratio was 0.64%, jumping 24 bps.
BKU’s Capital & Profitability Ratios Improve
As of Sept. 30, 2024, the Common Equity Tier 1 risk-based capital ratio was 11.8%, up from 11.4%. The total risk-based capital ratio was 13.9%, increasing from 13.4% as of Sept. 30, 2023.
At the end of the third quarter, the return on average assets was 0.69%, up from 0.52% in the year-earlier quarter. Return on average stockholders’ equity was 8.8%, rising from 7.2%.
Our View
BankUnited’s efforts to grow fee income, low-cost deposits and relatively higher interest rates are expected to support revenue growth. Also, the company’s balance sheet restructuring strategy is supporting its financials. 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 BankUnited’s Peers
Zions Bancorporation’s (ZION - Free Report) third-quarter 2024 earnings per share of $1.37 surpassed the Zacks Consensus Estimate of $1.16. Moreover, the bottom line increased 21.2% from the year-ago quarter.
Results were aided by lower provisions and higher NII. Also, higher loans and deposits were other positives. However, a decline in non-interest income and a rise in adjusted non-interest expenses were major headwinds for ZION.
F.N.B. Corporation’s (FNB - Free Report) third-quarter 2024 adjusted earnings per share of 34 cents lagged the Zacks Consensus Estimate of 36 cents. Moreover, the bottom line reflected a decline of 15% from the prior-year quarter’s level.
FNB’s results were primarily affected by higher expenses and lower NII. Nonetheless, a higher non-interest income, lower provisions and a rise in average loans and deposits balance offered some support.