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BankUnited (BKU) Tanks 6.6% on Q1 Earnings & Revenue Miss

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Shares of BankUnited, Inc. (BKU - Free Report) lost 6.6% in response to lower-than-expected first-quarter 2021 results. Earnings per share of 79 cents lagged the Zacks Consensus Estimate of 85 cents. The bottom line also declined 25.5% from the prior-year quarter.

Results were largely hurt by lower non-interest income, rise in provisions and fall in loan balance. Also, the quarter recorded higher expenses. However, growth in net interest income acted as a tailwind.

Net income was $67.2 million, plunging 32% year over year.

Revenues Down & Expenses Rise

Net revenues were $222.9 million, down 1.6% year over year. The top line missed the Zacks Consensus Estimate of $236.4 million.

Net interest income was $208.6 million, up 6.3%. The improvement was driven by a fall in interest expenses. Net interest margin rose 11 basis points (bps) year over year to 2.50%.

Non-interest income was $14.3 million, plunging 52.8%. The decrease was mainly due to net loss on investment securities and lower other non-interest income.

Non-interest expenses jumped 2.5% to $126.3 million. The rise was mainly due to higher employee compensation and benefits costs.

As of Mar 31, 2022, total loans were $23.37 billion, down 1.7% from the prior quarter. Total deposits amounted to $28.54 billion, down 3%.

Credit Quality: A Mixed Bag

In the reported quarter, the company recorded a provision of credit losses worth $7.8 million against recovery of $28 million in the prior-year quarter.

As of Mar 31, 2022, the ratio of net charge-offs to average loans was 0.15%, down 14 bps from Dec 31, 2021 level. Ratio of non-performing loans to total loans was 0.65%, down 22 bps.

Capital & Profitability Ratios Deteriorates

As of Mar 31, 2022, Tier 1 leverage ratio was 8.3%, down from 8.4% as of Dec 31, 2021. Common Equity Tier 1 risk-based capital ratio was 12.5% compared with 12.6%. Total risk-based capital ratio was 14.3%, on par with the prior period level.

At the end of the first quarter, return on average assets was 0.76%, down from 1.14% in the year-earlier quarter. Return on average stockholders equity was 9%, down from 13.2%.

Share Repurchase Update

During the quarter, BankUnited repurchased 1.9 million shares for $82.1 million, at an average price of $42.50 per share.

Our View

BankUnited’s efforts to grow organically driven by higher loan demand and a strong balance-sheet position are expected to keep supporting financials. However, higher expenses and rising provisions remain 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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Commerce Bancshares Inc.’s (CBSH - Free Report) first-quarter 2022 earnings of 97 cents per share easily surpassed the Zacks Consensus Estimate of 89 cents. The bottom line, however, declined 8.5% from the prior-year quarter.

Results benefited from an improvement in net interest income, a slight rise in loan balance and provision benefit. However, an increase in non-interest expenses and lower non-interest income were the major headwinds for CBSH.

Hancock Whitney Corporation’s (HWC - Free Report) first-quarter 2022 earnings of $1.40 per share handily outpaced the Zacks Consensus Estimate of $1.32. The bottom line improved 15.7% from the prior-year quarter.

Results benefited from a fall in non-interest expenses, a slight rise in loan balance and provision benefit. However, a decline in net interest income, which reflected relatively lower interest rates and reduced non-interest income, were the undermining factors for HWC.

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