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BankUnited, Inc.’s (BKU - Free Report) second-quarter 2021 earnings per share of $1.11 handily surpassed the Zacks Consensus Estimate of 84 cents. The reported figure reflects a rise of 38.8% from the prior-year quarter’s number.
Results were primarily aided by an improvement in net interest income (NII) and provision benefits. The loans and deposit balances remained strong in the quarter. Capital ratios witnessed improvement. However, a rise in expenses and lower fee income were the undermining factors. Probably due to these negatives, shares of the company lost 3.8% following the release.
Net income was $104 million, up 35.9% year over year.
Revenues Improve, Expenses Rise
Net revenues were $231.1 million, up 1% year over year. However, the top line lagged the Zacks Consensus Estimate of $232.2 million.
NII totaled $198.3 million, up 4.2% year over year. The improvement was driven by a fall in interest expenses.
Net interest margin contracted 2 basis points (bps) year over year to 2.37%.
Non-interest income was $32.8 million, down 14.6% from the year-ago quarter. The decline was due to a fall in net gain on investment securities, net gain on sale of loans and lease financing.
Non-interest expenses were up 11.4% from the year-ago quarter to $118.5 million. This resulted from a rise in technology and telecommunications expenses, employee compensation and benefits costs, depreciation of operating lease equipment-related costs and other non-interest expenses.
As of Jun 30, 2021, net loans were $22.7 billion, down from $23.6 billion recorded as of Dec 31, 2020. Total deposits amounted to $28.6 billion, up from $27.5 billion recorded as of Dec 31, 2020.
Credit Quality: A Mixed Bag
In the reported quarter, the company recorded a recovery of credit losses worth $27.5 million against provisions of $25.4 million in the prior-year quarter. As of Jun 30, 2021, the ratio of net charge-offs to average loans was 0.24%, down from 0.26% as of Dec 31, 2020.
However, the ratio of non-performing loans to total loans was 1.28%, up from 1.02% as of Dec 31, 2020.
Capital Ratios Improve
As of Jun 30, 2021, Tier 1 leverage ratio was 8.8%, up from 8.6% as of Dec 31, 2020. Common Equity Tier 1 risk-based capital ratio was 13.5%, up from 12.6% recorded as of Dec 31, 2020. Total risk-based capital ratio was 15.4%, up from 14.7%.
Our Take
The company’s efforts to strengthen fee income sources and a strong balance-sheet position are expected to keep supporting it in the days to come. However, lower interest rates and higher expenses remain major concerns.
BankUnited, Inc. Price, Consensus and EPS Surprise
Fifth Third Bancorp (FITB - Free Report) reported second-quarter 2021 adjusted earnings of 94 cents per share, beating the Zacks Consensus Estimate of 83 cents. Results compared favorably with the prior-year quarter’s earnings of 23 cents per share.
Comerica (CMA - Free Report) delivered a second-quarter 2021 earnings surprise of 43.2%. Earnings per share of $2.32 easily surpassed the Zacks Consensus Estimate of $1.62. The bottom line compared favorably with 84 cents reported in the prior-year quarter.
M&T Bank Corporation (MTB - Free Report) reported a second-quarter 2021 negative earnings surprise of 6.76%. Net operating earnings per share of $3.45 lagged the Zacks Consensus Estimate of $3.70. The bottom line, however, compared favorably with $1.76 per share reported in the year-ago quarter.
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BankUnited (BKU) Stock Declines 3.8% Despite Q2 Earnings Beat
BankUnited, Inc.’s (BKU - Free Report) second-quarter 2021 earnings per share of $1.11 handily surpassed the Zacks Consensus Estimate of 84 cents. The reported figure reflects a rise of 38.8% from the prior-year quarter’s number.
Results were primarily aided by an improvement in net interest income (NII) and provision benefits. The loans and deposit balances remained strong in the quarter. Capital ratios witnessed improvement. However, a rise in expenses and lower fee income were the undermining factors. Probably due to these negatives, shares of the company lost 3.8% following the release.
Net income was $104 million, up 35.9% year over year.
Revenues Improve, Expenses Rise
Net revenues were $231.1 million, up 1% year over year. However, the top line lagged the Zacks Consensus Estimate of $232.2 million.
NII totaled $198.3 million, up 4.2% year over year. The improvement was driven by a fall in interest expenses.
Net interest margin contracted 2 basis points (bps) year over year to 2.37%.
Non-interest income was $32.8 million, down 14.6% from the year-ago quarter. The decline was due to a fall in net gain on investment securities, net gain on sale of loans and lease financing.
Non-interest expenses were up 11.4% from the year-ago quarter to $118.5 million. This resulted from a rise in technology and telecommunications expenses, employee compensation and benefits costs, depreciation of operating lease equipment-related costs and other non-interest expenses.
As of Jun 30, 2021, net loans were $22.7 billion, down from $23.6 billion recorded as of Dec 31, 2020. Total deposits amounted to $28.6 billion, up from $27.5 billion recorded as of Dec 31, 2020.
Credit Quality: A Mixed Bag
In the reported quarter, the company recorded a recovery of credit losses worth $27.5 million against provisions of $25.4 million in the prior-year quarter. As of Jun 30, 2021, the ratio of net charge-offs to average loans was 0.24%, down from 0.26% as of Dec 31, 2020.
However, the ratio of non-performing loans to total loans was 1.28%, up from 1.02% as of Dec 31, 2020.
Capital Ratios Improve
As of Jun 30, 2021, Tier 1 leverage ratio was 8.8%, up from 8.6% as of Dec 31, 2020. Common Equity Tier 1 risk-based capital ratio was 13.5%, up from 12.6% recorded as of Dec 31, 2020. Total risk-based capital ratio was 15.4%, up from 14.7%.
Our Take
The company’s efforts to strengthen fee income sources and a strong balance-sheet position are expected to keep supporting it in the days to come. However, lower interest rates and higher expenses remain major concerns.
BankUnited, Inc. Price, Consensus and EPS Surprise
BankUnited, Inc. price-consensus-eps-surprise-chart | 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) reported second-quarter 2021 adjusted earnings of 94 cents per share, beating the Zacks Consensus Estimate of 83 cents. Results compared favorably with the prior-year quarter’s earnings of 23 cents per share.
Comerica (CMA - Free Report) delivered a second-quarter 2021 earnings surprise of 43.2%. Earnings per share of $2.32 easily surpassed the Zacks Consensus Estimate of $1.62. The bottom line compared favorably with 84 cents reported in the prior-year quarter.
M&T Bank Corporation (MTB - Free Report) reported a second-quarter 2021 negative earnings surprise of 6.76%. Net operating earnings per share of $3.45 lagged the Zacks Consensus Estimate of $3.70. The bottom line, however, compared favorably with $1.76 per share reported in the year-ago quarter.