It has been about a month since the last earnings report for BankUnited, Inc. (BKU Quick QuoteBKU - Free Report) . Shares have added about 17.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is BankUnited due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

BankUnited's Q3 Earnings Beat on Higher NII & Fall in Provisions

BankUnited’s third-quarter 2024 earnings of 81 cents per share surpassed the Zacks Consensus Estimate of 73 cents. The bottom line compares favorably with 63 cents in the prior-year quarter.

Results were aided by growth in NII, lower provisions and a slight improvement in deposit balance. However, lower non-interest income, a fall in loan balance and a jump in expenses were the undermining factors.

Net income was $61.5 million, jumping 30.8% year over year. Our estimate for the metric was $54.4 million.

Revenues Grow, Expenses Rise

Quarterly net revenues were $257 million, up 6% year over year. However, the top line missed the Zacks Consensus Estimate of $258.7 million.

NII was $234.1 million, growing 9%. We expected NII to be $230.9 million.

NIM expanded 22 bps to 2.78%. Our estimate for the metric was the same as the reported figure.

Non-interest income of $22.9 million fell 17.4% from the prior-year quarter. The decline was due to a fall in lease financing. We had projected a non-interest income of $22 million.

Non-interest expenses rose 11.9% to $164.6 million. The increase was due to a rise in all the components except depreciation of operating lease equipment and deposit insurance expense. Our estimate for non-interest expenses was $161.3 million.

As of Sept. 30, 2024, total loans were $24.4 billion, down 1% from the prior quarter. Total deposits amounted to $27.9 billion, up marginally. Our estimates for total loans and total deposits were $24.5 billion and $28.1 billion, respectively.

Credit Quality Weakens

In the reported quarter, BankUnited recorded a provision of credit losses of $9.2 million, which plunged 72% from the prior-year quarter. We expected the metric to be $17.6 million.

As of Sept. 30, 2024, the ratio of net charge-offs to average loans was 0.12%, up 5 bps year over year. Also, the non-performing assets ratio was 0.64%, jumping 24 bps.

Capital & Profitability Ratios Improve

As of Sept. 30, 2024, the Common Equity Tier 1 risk-based capital ratio was 11.8%, up from 11.4%. The total risk-based capital ratio was 13.9%, increasing from 13.4% as of Sept. 30, 2023.

At the end of the third quarter, the return on average assets was 0.69%, up from 0.52% in the year-earlier quarter. Return on average stockholders’ equity was 8.8%, rising from 7.2%.

Outlook

Management expects the average non-interest-bearing deposits and year-end deposits to remain flat to a slight decline in the fourth quarter of 2024 from the prior quarter.

For 2024, management anticipates a mid-single-digit increase in NII.

NIM is expected to be flat sequentially in the fourth quarter of 2024.

Management anticipates loan growth in the mid-single digits in 2024. Commercial and industrial (C&I) and CRE loans are projected to grow in the mid-single-digit range in 2024.

Non-interest expenses are expected to grow in the upper mid-single digits for 2024. This excludes the FDIC special assessment charge of $35.4 million incurred in the fourth quarter of 2023. It includes $8 million in railcar retrofit costs in the fourth quarter of 2024. 

The effective tax rate is anticipated to be 26.5% for 2024, excluding discrete items.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -8.06% due to these changes.

VGM Scores

At this time, BankUnited has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, BankUnited has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

BankUnited is part of the Zacks Banks - Major Regional industry. Over the past month, KeyCorp (KEY Quick QuoteKEY - Free Report) , a stock from the same industry, has gained 11.4%. The company reported its results for the quarter ended September 2024 more than a month ago.

KeyCorp reported revenues of $1.6 billion in the last reported quarter, representing a year-over-year change of +2.8%. EPS of $0.30 for the same period compares with $0.29 a year ago.

For the current quarter, KeyCorp is expected to post earnings of $0.32 per share, indicating a change of +28% from the year-ago quarter. The Zacks Consensus Estimate has changed -1% over the last 30 days.

KeyCorp has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.