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BankUnited, Inc.’s (BKU - Free Report) second-quarter 2022 earnings per share of 82 cents lagged the Zacks Consensus Estimate of 90 cents. The bottom line also declined 26.1% from the prior-year quarter.
Results were largely hurt by lower non-interest income, a rise in provisions and higher expenses. Deposit balances witnessed a fall on a sequential basis. Profitability ratios deteriorated. Nevertheless, growth in net interest income was a tailwind. Higher rates and loan growth aided the net interest margin (NIM). Probably, because of this, shares of the company gained 2.1% following the earnings release.
Net income was $65.8 million, plunging 36.7% year over year.
Revenues Improve, Expenses Rise
Net revenues were $239.9 million, up 3.4% year over year. The top line missed the Zacks Consensus Estimate of $244.4 million.
Net interest income was $225.4 million, up 13.7% year over year. The improvement was driven by higher interest income and a fall in interest expenses. NIM rose 26 basis points (bps) year over year to 2.63%.
Non-interest income was $13.5 million, plunging 58.9% year over year. The decrease was mainly due to a net loss on investment securities, along with lower other non-interest income and lease financing income.
Non-interest expenses jumped 7.6% year over year to $127.4 million. The rise was due to higher employee compensation and benefits costs, professional fees, technology and telecommunications costs, and other non-interest expenses.
As of Jun 30, 2022, net loans were $24 billion compared with $23.6 billion as of Dec 31, 2021. Total deposits amounted to $28.5 billion, down from $29.4 billion at the end of December 2021.
Credit Quality: A Mixed Bag
In the reported quarter, the company recorded a provision of credit losses worth $24 million against recovery of $27.5 million in the prior-year quarter.
As of Jun 30, 2022, the ratio of net charge-offs to average loans was 0.23%, down 6 bps from Dec 31, 2021. The ratio of non-performing loans to total loans was 0.60%, down 27 bps.
Capital & Profitability Ratios Deteriorate
As of Jun 30, 2022, Tier 1 leverage ratio was 7.5%, down from 8.4% as of Dec 31, 2021. Common Equity Tier 1 risk-based capital ratio was 11.3% compared with 12.6%. The total risk-based capital ratio was 13.0%, down from 14.3% in the prior period.
At the end of the second quarter, return on average assets was 0.72%, down from 1.17% in the year-earlier quarter. Return on average stockholders’ equity was 9.7%, down from 13.3%.
Share Repurchase Update
During the quarter, BankUnited repurchased 6.1 million shares for $243.6 million at an average price of $39.94 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
Truist Financial’s (TFC - Free Report) second-quarter 2022 adjusted earnings of $1.20 per share surpassed the Zacks Consensus Estimate of $1.17. However, the bottom line declined 22.6% from the prior-year quarter.
TFC’s results were aided by average loan growth and higher rates, which drove net interest income. However, lower non-interest income and a rise in provisions were major headwinds.
Bank of America’s (BAC - Free Report) second-quarter 2022 earnings of 73 cents per share lagged the Zacks Consensus Estimate of 77 cents. The bottom line compared unfavorably with $1.03 per share earned in the prior-year quarter.
As expected, BAC’s investment banking business did not perform well. Also, the asset management business did not offer much support. However, driven by robust loan growth and rising interest rates, the company recorded an improvement in NII. BAC’s trading numbers were good.
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BankUnited (BKU) Gains Despite Q2 Earnings Miss, Revenues Rise
BankUnited, Inc.’s (BKU - Free Report) second-quarter 2022 earnings per share of 82 cents lagged the Zacks Consensus Estimate of 90 cents. The bottom line also declined 26.1% from the prior-year quarter.
Results were largely hurt by lower non-interest income, a rise in provisions and higher expenses. Deposit balances witnessed a fall on a sequential basis. Profitability ratios deteriorated. Nevertheless, growth in net interest income was a tailwind. Higher rates and loan growth aided the net interest margin (NIM). Probably, because of this, shares of the company gained 2.1% following the earnings release.
Net income was $65.8 million, plunging 36.7% year over year.
Revenues Improve, Expenses Rise
Net revenues were $239.9 million, up 3.4% year over year. The top line missed the Zacks Consensus Estimate of $244.4 million.
Net interest income was $225.4 million, up 13.7% year over year. The improvement was driven by higher interest income and a fall in interest expenses. NIM rose 26 basis points (bps) year over year to 2.63%.
Non-interest income was $13.5 million, plunging 58.9% year over year. The decrease was mainly due to a net loss on investment securities, along with lower other non-interest income and lease financing income.
Non-interest expenses jumped 7.6% year over year to $127.4 million. The rise was due to higher employee compensation and benefits costs, professional fees, technology and telecommunications costs, and other non-interest expenses.
As of Jun 30, 2022, net loans were $24 billion compared with $23.6 billion as of Dec 31, 2021. Total deposits amounted to $28.5 billion, down from $29.4 billion at the end of December 2021.
Credit Quality: A Mixed Bag
In the reported quarter, the company recorded a provision of credit losses worth $24 million against recovery of $27.5 million in the prior-year quarter.
As of Jun 30, 2022, the ratio of net charge-offs to average loans was 0.23%, down 6 bps from Dec 31, 2021. The ratio of non-performing loans to total loans was 0.60%, down 27 bps.
Capital & Profitability Ratios Deteriorate
As of Jun 30, 2022, Tier 1 leverage ratio was 7.5%, down from 8.4% as of Dec 31, 2021. Common Equity Tier 1 risk-based capital ratio was 11.3% compared with 12.6%. The total risk-based capital ratio was 13.0%, down from 14.3% in the prior period.
At the end of the second quarter, return on average assets was 0.72%, down from 1.17% in the year-earlier quarter. Return on average stockholders’ equity was 9.7%, down from 13.3%.
Share Repurchase Update
During the quarter, BankUnited repurchased 6.1 million shares for $243.6 million at an average price of $39.94 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-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
Truist Financial’s (TFC - Free Report) second-quarter 2022 adjusted earnings of $1.20 per share surpassed the Zacks Consensus Estimate of $1.17. However, the bottom line declined 22.6% from the prior-year quarter.
TFC’s results were aided by average loan growth and higher rates, which drove net interest income. However, lower non-interest income and a rise in provisions were major headwinds.
Bank of America’s (BAC - Free Report) second-quarter 2022 earnings of 73 cents per share lagged the Zacks Consensus Estimate of 77 cents. The bottom line compared unfavorably with $1.03 per share earned in the prior-year quarter.
As expected, BAC’s investment banking business did not perform well. Also, the asset management business did not offer much support. However, driven by robust loan growth and rising interest rates, the company recorded an improvement in NII. BAC’s trading numbers were good.