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BankUnited (BKU) Q4 Earnings & Revenues Beat, Stock Down 6.48%

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BankUnited, Inc.’s (BKU - Free Report) fourth-quarter 2021 earnings per share of $1.41 surpassed the Zacks Consensus Estimate of $1.14. The bottom line also jumped 58.4% from the prior-year quarter.

Results primarily benefited from higher revenues and rise in loans and deposit balances. However, a rise in expenses and poor credit quality were the undermining factors. Probably due to these concerns, shares of the company tanked 6.5% following the release.

Net income was $125.3 million, up 46.1% year over year.

In 2021, earnings of $4.52 per share beat the consensus estimate of $4.26 and were up substantially from $2.06 in 2020. Also, net income of $414.9 million was substantially up from $197.9 million in 2020.

Revenues & Expenses Rise

Net revenues were $251.6 million, up 10% year over year. The top line beat the Zacks Consensus Estimate of $229.2 million.

In 2021, net revenues increased 5.1% to $929.8 million. The top line surpassed the consensus estimate of $910.5 million.

Net interest income totaled $206 million, up 6.5%. The improvement was driven by a fall in interest expenses. Net interest margin rose 11 basis points (bps) year over year to 2.44%.

Non-interest income was $45.6 million, increasing 29.3%. The increase was due to a rise in all components, except for gain on investment securities and other incomes.

Non-interest expenses surged 52.3% to $187.9 million. The rise was mainly due to discontinuance of cash flow hedges.

As of Dec 31, 2021, net loans were $23.63 billion, up from $23.61 billion recorded as of Dec 31, 2020. Total deposits amounted to $29.4 billion, up from $27.5 billion recorded on Dec 31, 2020.

Credit Quality Worsens

In the reported quarter, the company recorded a provision of credit losses worth $0.2 million against recovery of $1.6 million in the prior-year quarter. As of Dec 31, 2021, the ratio of net charge-offs to average loans was 0.29%, up 3 bps year over year.

Ratio of non-performing loans to total loans was 0.87%, down 15 bps from the prior-year quarter.

Capital Ratios Deteriorates

As of Dec 31, 2021, Tier 1 leverage ratio was 8.4%, down from 8.6% as of Dec 31, 2020. Common Equity Tier 1 risk-based capital ratio was 12.6%, at par with the prior-year period level. Total risk-based capital ratio was 14.3%, down from 14.7%.

Share Repurchase Update

During the quarter, BankUnited repurchased almost 4.4 million shares for $181.8 million, at an average price of $41.45 per share.

Our View

BankUnited’s efforts to strengthen fee income sources and a strong balance-sheet position are expected to keep supporting financials in the days to come. However, higher expenses and poor credit quality remain major concerns.

BankUnited, Inc. Price, Consensus and EPS Surprise

BankUnited, Inc. Price, Consensus and EPS Surprise

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

Currently, BankUnited carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Schedule of Other Banks

Zions Bancorporation (ZION - Free Report) is scheduled to release fourth-quarter and full-year 2021 results on Jan 24.

Over the past 30 days, the Zacks Consensus Estimate for Zions Bancorporation’s quarterly earnings has remained unchanged at $1.33. This implies a 19.9% decrease from the prior-year quarter.

Prosperity Bancshares (PB - Free Report) is scheduled to release fourth-quarter and full-year 2021 results on Jan 26.

Over the past 30 days, the Zacks Consensus Estimate for Prosperity Bancshares’ quarterly earnings has remained unchanged at $1.37. This suggests a 7.4% decrease from the prior-year quarter.

East West Bancorp, Inc. (EWBC - Free Report) is slated to report fourth-quarter and full-year 2021 results on Jan 27.

Over the past 30 days, the Zacks Consensus Estimate for East West Bancorp’s quarterly earnings has remained unchanged at $1.55. This indicates a 34.8% increase from the prior-year quarter.