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BankUnited (BKU) Q4 Earnings Meet, Revenues & Provisions Fall Y/Y
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BankUnited, Inc.’s (BKU - Free Report) fourth-quarter 2023 adjusted earnings of 72 cents per share met the Zacks Consensus Estimate. In the prior-year quarter, the company reported earnings of 82 cents. The reported quarter’s earnings excluded expenses related to FDIC special assessment and a loss on sale of operating lease equipment.
Results were aided by a decline in provisions. However, lower net interest income (NII) and non-interest income, along with higher expenses, were the undermining factors.
Net income was $20.8 million, plunging 67.6% year over year. Our estimate for the metric was $50.8 million.
For 2023, earnings per share of $2.38 missed the Zacks Consensus Estimate of $3.15. The figure represents a decline of 32.8% from the previous year. Net income was $178.7 million, down from $285 million. Our estimate for net income was $206.3 million.
Revenues Decline & Expenses Rise
Quarterly net revenues were $234.3 million, declining 13.2% year over year. Also, the top line missed the Zacks Consensus Estimate of $244.1 million.
Full-year net revenues were $960.6 million, down 3% year over year. The top line missed the Zacks Consensus Estimate of $996 million.
Quarterly NII was $217.2 million, decreasing 10.6% year over year. The net interest margin (NIM) contracted 21 basis points (bps) year over year to 2.60%. Our estimates for NII and NIM were $218 million and 2.58%, respectively.
Non-interest income of $17.1 million was down 36.3% from the prior-year quarter. The decline was mainly due to a fall in lease financing income. We had projected non-interest income of $23.4 million.
Non-interest expenses grew 28.5% year over year to $190.9 million. The increase was mainly due to a rise in employee compensation and benefits costs, deposit insurance expenses, and other non-interest expenses. Our estimate for non-interest expenses was $145.3 million.
As of Dec 31, 2023, net loans were $24.4 billion, up marginally from $24.2 billion as of Sep 30, 2023. Total deposits amounted to $26.5 billion, up marginally from $26.1 billion at the end of the previous quarter. Our estimates for net loans and total deposits were $25.1 billion and $27.5 billion, respectively.
Credit Quality Improves
In the reported quarter, the company recorded a provision of credit losses of $19.3 million, down 51.4% from the prior-year quarter.
As of Dec 31, 2023, the ratio of net charge-offs to average loans was 0.09%, down 13 bps from the Dec 31, 2022, level.
Capital Ratios Improve, Profitability Ratios Deteriorate
As of Dec 31, 2023, the Tier 1 leverage ratio was 7.9%, up from 7.5% as of Dec 31, 2022. The Common Equity Tier 1 risk-based capital ratio was 11.4%, up from 11%. The total risk-based capital ratio was 13.4%, up from 12.7% as of Dec 31, 2022.
At the end of the fourth quarter, the return on average assets was 0.23%, down from 0.69% in the year-earlier quarter. Return on average stockholders’ equity was 3.2%, down from 10.3%.
Our View
BankUnited’s efforts to grow fee income, along with higher interest rates, are expected to support revenue growth. However, an increase in expenses might hamper profits.
BankUnited, Inc. Price, Consensus and EPS Surprise
The Bank of New York Mellon Corporation’s (BK - Free Report) fourth-quarter 2023 adjusted earnings of $1.28 per share surpassed the Zacks Consensus Estimate of $1.12. However, the bottom line reflects a fall of 1.5% from the prior-year quarter.
Results were primarily aided by increases in net interest revenues and fee revenues. The assets under management (AUM) balance witnessed a rise, which was another major positive for BK. However, higher expenses hurt the results to some extent. Also, the credit quality was weak in the reported quarter.
Northern Trust Corporation’s (NTRS - Free Report) fourth-quarter 2023 adjusted earnings per share (excluding the impacts of loss on available-for-sale debt securities and FDIC special assessment fees) of $1.46 surpassed the Zacks Consensus Estimate of $1.33. However, the bottom line declined 11.5% year over year.
Rising fee income was a positive for NTRS. Also, an increase in total assets under custody and AUM balances supported financials. Nonetheless, a fall in net interest income and a deterioration in the credit quality were headwinds.
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BankUnited (BKU) Q4 Earnings Meet, Revenues & Provisions Fall Y/Y
BankUnited, Inc.’s (BKU - Free Report) fourth-quarter 2023 adjusted earnings of 72 cents per share met the Zacks Consensus Estimate. In the prior-year quarter, the company reported earnings of 82 cents. The reported quarter’s earnings excluded expenses related to FDIC special assessment and a loss on sale of operating lease equipment.
Results were aided by a decline in provisions. However, lower net interest income (NII) and non-interest income, along with higher expenses, were the undermining factors.
Net income was $20.8 million, plunging 67.6% year over year. Our estimate for the metric was $50.8 million.
For 2023, earnings per share of $2.38 missed the Zacks Consensus Estimate of $3.15. The figure represents a decline of 32.8% from the previous year. Net income was $178.7 million, down from $285 million. Our estimate for net income was $206.3 million.
Revenues Decline & Expenses Rise
Quarterly net revenues were $234.3 million, declining 13.2% year over year. Also, the top line missed the Zacks Consensus Estimate of $244.1 million.
Full-year net revenues were $960.6 million, down 3% year over year. The top line missed the Zacks Consensus Estimate of $996 million.
Quarterly NII was $217.2 million, decreasing 10.6% year over year. The net interest margin (NIM) contracted 21 basis points (bps) year over year to 2.60%. Our estimates for NII and NIM were $218 million and 2.58%, respectively.
Non-interest income of $17.1 million was down 36.3% from the prior-year quarter. The decline was mainly due to a fall in lease financing income. We had projected non-interest income of $23.4 million.
Non-interest expenses grew 28.5% year over year to $190.9 million. The increase was mainly due to a rise in employee compensation and benefits costs, deposit insurance expenses, and other non-interest expenses. Our estimate for non-interest expenses was $145.3 million.
As of Dec 31, 2023, net loans were $24.4 billion, up marginally from $24.2 billion as of Sep 30, 2023. Total deposits amounted to $26.5 billion, up marginally from $26.1 billion at the end of the previous quarter. Our estimates for net loans and total deposits were $25.1 billion and $27.5 billion, respectively.
Credit Quality Improves
In the reported quarter, the company recorded a provision of credit losses of $19.3 million, down 51.4% from the prior-year quarter.
As of Dec 31, 2023, the ratio of net charge-offs to average loans was 0.09%, down 13 bps from the Dec 31, 2022, level.
Capital Ratios Improve, Profitability Ratios Deteriorate
As of Dec 31, 2023, the Tier 1 leverage ratio was 7.9%, up from 7.5% as of Dec 31, 2022. The Common Equity Tier 1 risk-based capital ratio was 11.4%, up from 11%. The total risk-based capital ratio was 13.4%, up from 12.7% as of Dec 31, 2022.
At the end of the fourth quarter, the return on average assets was 0.23%, down from 0.69% in the year-earlier quarter. Return on average stockholders’ equity was 3.2%, down from 10.3%.
Our View
BankUnited’s efforts to grow fee income, along with higher interest rates, are expected to support revenue growth. However, an increase in expenses might hamper profits.
BankUnited, Inc. Price, Consensus and EPS Surprise
BankUnited, Inc. price-consensus-eps-surprise-chart | BankUnited, Inc. Quote
Currently, BKU carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
The Bank of New York Mellon Corporation’s (BK - Free Report) fourth-quarter 2023 adjusted earnings of $1.28 per share surpassed the Zacks Consensus Estimate of $1.12. However, the bottom line reflects a fall of 1.5% from the prior-year quarter.
Results were primarily aided by increases in net interest revenues and fee revenues. The assets under management (AUM) balance witnessed a rise, which was another major positive for BK. However, higher expenses hurt the results to some extent. Also, the credit quality was weak in the reported quarter.
Northern Trust Corporation’s (NTRS - Free Report) fourth-quarter 2023 adjusted earnings per share (excluding the impacts of loss on available-for-sale debt securities and FDIC special assessment fees) of $1.46 surpassed the Zacks Consensus Estimate of $1.33. However, the bottom line declined 11.5% year over year.
Rising fee income was a positive for NTRS. Also, an increase in total assets under custody and AUM balances supported financials. Nonetheless, a fall in net interest income and a deterioration in the credit quality were headwinds.