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BankUnited (BKU) Q1 Earnings Top Estimates, Provisions Drop
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BankUnited, Inc.’s (BKU - Free Report) first-quarter 2018 earnings per share of 77 cents surpassed the Zacks Consensus Estimate of 72 cents. Moreover, the bottom line compared favorably with the prior-year quarter’s earnings of 57 cents per share.
Results were primarily driven by an increase in net interest income and lower provisions. Moreover, the company’s overall loans and deposit balances remained strong. However, higher expenses and lower non-interest income were the undermining factors.
Net income for the quarter was $85.2 million, up from $62.3 million recorded in the prior-year quarter.
Net Interest Income Improves, Costs Escalate
Net revenues for the quarter were $275.8 million, surpassing the Zacks Consensus Estimate of $265.3 million. Further, the reported figure increased 6.6% year over year.
Net interest income for the quarter came in at $247.8 million, increasing 7.5% year over year, led by higher interest income, partially offset by rise in interest expenses.
Net interest margin contracted 14 basis points year over year to 3.56%.
Non-interest income was $28 million, edging down nearly 1% from the year-ago quarter. The fall was primarily due to lower net income from resolution of covered assets.
Non-interest expenses increased 3.4% from the year-ago quarter to $161.8 million, primarily due to rise in employee compensation and benefit costs, depreciation of equipment under operating lease and other non-interest expenses.
Credit Quality: Mixed Bag
As of Mar 31, 2018, the ratio of net charge-offs to average loans was 0.20%, decreasing from 0.38% as of Dec 31, 2017. Also, provision for loan losses for the quarter was $3.1 million, down from $12.1 million in the prior-year quarter.
However, non-performing loans to total loans was 0.91%, increasing from 0.81% as of Dec 31, 2017.
Solid Balance Sheet & Capital Ratios
As of Mar 31, 2018, net loans totaled $21.3 billion, almost in line with the prior quarter’s figure. Total deposits amounted to $22.2 billion, increasing from $21.9 billion as of Dec 31, 2017.
As of Mar 31, 2018, Tier 1 leverage ratio was 9.6%, while Tier 1 risk-based capital ratio was 13.0%. Further, total risk-based capital ratio was 13.7% as of the same date.
Profitability Ratios Improve
At the end of the reported quarter, return on average assets was 1.14%, increasing from 0.91% reported in the prior-quarter end. Also, return on average stockholders’ equity was 11.28%, up from 10.08% at the end of the prior-year quarter.
Our Take
Supported by consistent growth in loans and deposits, BankUnited remains on track for top-line improvement in the future. Also, given a solid liquidity and balance sheet position, the bank is well poised to grow through acquisitions.
However, persistently increasing expenses and continued margin pressure (despite increase in interest rates) remain major near-term concerns.
BankUnited, Inc. Price, Consensus and EPS Surprise
BB&T Corporation’s first-quarter 2018 adjusted earnings of 97 cents per share outpaced the Zacks Consensus Estimate of 92 cents. Results reflected slight rise in revenues and lower operating expenses. However, higher credit costs and a decline in loan balance were the undermining factors.
Comerica Incorporated (CMA - Free Report) reported adjusted earnings per share of $1.54 in first-quarter 2018, up from the prior-year quarter adjusted figure of $1.02 on high interest income. The Zacks Consensus Estimate was $1.49. Higher revenues and improved credit metrics were recorded. Moreover, rise in loans was another tailwind. Nonetheless, lower deposits and rise in expenses were undermining factors.
KeyCorp’s (KEY - Free Report) first-quarter 2018 earnings of 38 cents per share were line with the Zacks Consensus Estimate. Improvement in both net interest income and fee income drove results. Further, a decline in provision for credit losses and improving loans acted as tailwinds. However, an increase in expenses was on the downside.
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BankUnited (BKU) Q1 Earnings Top Estimates, Provisions Drop
BankUnited, Inc.’s (BKU - Free Report) first-quarter 2018 earnings per share of 77 cents surpassed the Zacks Consensus Estimate of 72 cents. Moreover, the bottom line compared favorably with the prior-year quarter’s earnings of 57 cents per share.
Results were primarily driven by an increase in net interest income and lower provisions. Moreover, the company’s overall loans and deposit balances remained strong. However, higher expenses and lower non-interest income were the undermining factors.
Net income for the quarter was $85.2 million, up from $62.3 million recorded in the prior-year quarter.
Net Interest Income Improves, Costs Escalate
Net revenues for the quarter were $275.8 million, surpassing the Zacks Consensus Estimate of $265.3 million. Further, the reported figure increased 6.6% year over year.
Net interest income for the quarter came in at $247.8 million, increasing 7.5% year over year, led by higher interest income, partially offset by rise in interest expenses.
Net interest margin contracted 14 basis points year over year to 3.56%.
Non-interest income was $28 million, edging down nearly 1% from the year-ago quarter. The fall was primarily due to lower net income from resolution of covered assets.
Non-interest expenses increased 3.4% from the year-ago quarter to $161.8 million, primarily due to rise in employee compensation and benefit costs, depreciation of equipment under operating lease and other non-interest expenses.
Credit Quality: Mixed Bag
As of Mar 31, 2018, the ratio of net charge-offs to average loans was 0.20%, decreasing from 0.38% as of Dec 31, 2017. Also, provision for loan losses for the quarter was $3.1 million, down from $12.1 million in the prior-year quarter.
However, non-performing loans to total loans was 0.91%, increasing from 0.81% as of Dec 31, 2017.
Solid Balance Sheet & Capital Ratios
As of Mar 31, 2018, net loans totaled $21.3 billion, almost in line with the prior quarter’s figure. Total deposits amounted to $22.2 billion, increasing from $21.9 billion as of Dec 31, 2017.
As of Mar 31, 2018, Tier 1 leverage ratio was 9.6%, while Tier 1 risk-based capital ratio was 13.0%. Further, total risk-based capital ratio was 13.7% as of the same date.
Profitability Ratios Improve
At the end of the reported quarter, return on average assets was 1.14%, increasing from 0.91% reported in the prior-quarter end. Also, return on average stockholders’ equity was 11.28%, up from 10.08% at the end of the prior-year quarter.
Our Take
Supported by consistent growth in loans and deposits, BankUnited remains on track for top-line improvement in the future. Also, given a solid liquidity and balance sheet position, the bank is well poised to grow through acquisitions.
However, persistently increasing expenses and continued margin pressure (despite increase in interest rates) remain major near-term concerns.
BankUnited, Inc. Price, Consensus and EPS Surprise
BankUnited, Inc. Price, Consensus and EPS Surprise | BankUnited, Inc. Quote
BankUnited currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Major Regional Banks
BB&T Corporation’s first-quarter 2018 adjusted earnings of 97 cents per share outpaced the Zacks Consensus Estimate of 92 cents. Results reflected slight rise in revenues and lower operating expenses. However, higher credit costs and a decline in loan balance were the undermining factors.
Comerica Incorporated (CMA - Free Report) reported adjusted earnings per share of $1.54 in first-quarter 2018, up from the prior-year quarter adjusted figure of $1.02 on high interest income. The Zacks Consensus Estimate was $1.49. Higher revenues and improved credit metrics were recorded. Moreover, rise in loans was another tailwind. Nonetheless, lower deposits and rise in expenses were undermining factors.
KeyCorp’s (KEY - Free Report) first-quarter 2018 earnings of 38 cents per share were line with the Zacks Consensus Estimate. Improvement in both net interest income and fee income drove results. Further, a decline in provision for credit losses and improving loans acted as tailwinds. However, an increase in expenses was on the downside.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>