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BankUnited (BKU) Q1 Earnings Top Estimates, Revenues Jump

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BankUnited, Inc.’s BKU earnings per share of $1.06 handily surpassed the Zacks Consensus Estimate of 74 cents. Notably, the figure reflects a substantial rise from the prior-year quarter.

Results primarily benefited from an improvement in fee income, interest income and provision benefits. Also, solid deposit balances and sound capital position were positives. However, higher expenses and decline in loans were headwinds.

Net income for the quarter came in at $98.8 million against the prior-year quarter’s net loss of $31 million.

Revenues Improve, Expenses Rise

Net revenues of $226.5 million for the quarter lagged the consensus estimate of $229.5 million. However, the top line gained 11% year on year.

Net interest income totaled $196.2 million, up 8.7% year over year, on a rise in interest income.

Net interest margin expanded 4 basis points (bps) year on year to 2.39%.

Non-interest income was $30.3 million, up 30% from the year-ago quarter. This upside stemmed from an increase in net gain on investment securities.

Non-interest expenses flared up 3.6% from the year-ago quarter to $123.3 million. This resulted from a rise in technology and telecommunications expense as well as deposit insurance expense.

As of Mar 31, 2021, net loans were $23.1 billion, down from $23.6 billion recorded on Dec 31, 2020. Total deposits amounted to $27.7 billion, up from $27.5 billion recorded as of Dec 31, 2020.

Credit Quality Bolsters

The company recorded net recovery of credit losses of $28 million against provision of $125.4 million recorded in the prior-year quarter. As of Mar 31, 2021, the ratio of net charge-offs to average loans was 0.17%, down from 0.26% as of Dec 31, 2020.

Also, the ratio of non-performing loans to total loans was 1%, down from 1.02% as of Dec 31, 2020.

Capital Ratios Improve

As of Mar 31, 2021, Tier 1 leverage ratio was 8.7%, up from 8.6% as of Dec 31, 2020. Moreover, Common Equity Tier 1 risk-based capital ratio was 13.2%, up from 12.6% recorded as of Dec 31, 2020. Total risk-based capital ratio was 15.2%, up from 14.7%.

Our Take

The company’s to strengthen fee income sources and a strong balance-sheet position are expected to support BankUnited in the days to come.  However, lower interest rates and uncertainty related to the pandemic-related economic impact are major concerns.

BankUnited, Inc. Price and EPS Surprise

BankUnited, Inc. Price and EPS Surprise

BankUnited, Inc. price-eps-surprise | BankUnited, Inc. Quote

Currently, BankUnited 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

Fifth Third Bancorp (FITB - Free Report) delivered an earnings surprise of 34.7% in first-quarter 2021. Earnings of 93 cents per share surpassed the Zacks Consensus Estimate of 69 cents. Results also compared favorably with the prior-year quarter’s earnings of 13 cents.

Comerica (CMA - Free Report) delivered first-quarter earnings surprise of 76.1%. Earnings per share of $2.43 comfortably beat the Zacks Consensus Estimate of $1.38. Also, the bottom line compared favorably with the loss of 46 cents reported in the prior-year quarter.

M&T Bank Corporation (MTB - Free Report) reported first-quarter earnings surprise of 15%. Net operating earnings per share of $3.41 topped the Zacks Consensus Estimate of $2.96. The bottom-line figure also compared favorably with the $1.95 per share reported in the year-ago quarter.

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