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BankUnited Q1 Earnings Lag Estimates as Expenses & Provisions Rise Y/Y
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Key Takeaways
BankUnited Q1 earnings rose year over year but missed estimates due to higher costs and provisions.
BKU saw NII and fee income growth, while loan balances dipped and deposits edged higher.
BankUnited's credit metrics weakened with higher provisions, charge-offs and NPAs.
BankUnited, Inc. (BKU - Free Report) reported first-quarter 2026 earnings of 83 cents per share, which missed the Zacks Consensus Estimate of 97 cents. The bottom line was up 3.4% from the prior-year quarter.
Results were primarily hurt by a rise in non-interest expenses and higher provisions for credit losses. A decline in loan balance was also a headwind. However, growth in net interest income (NII) and fee income provided some support. Also, a modest increase in deposit balance acted as a tailwind.
Net income totaled $61.9 million, up 5.8% from the year-ago quarter. Our estimate for the metric was $70.4 million.
BankUnited’s Revenues Rise, Expenses Up
Quarterly net revenues were $273.7 million, up 7.2% year over year. However, the top line missed the Zacks Consensus Estimate of $284.7 million.
In the reported quarter, NII was $249 million, which rose 6.8%. Net interest margin (NIM) expanded 18 basis points (bps) to 2.99%. Our estimates for NII and NIM were $256.4 million and 3.07%, respectively.
Non-interest income of $24.7 million increased 10.9% from the prior-year quarter. The rise was mainly driven by higher deposit service charges and fees, gains on investment securities and other non-interest income. We had projected a non-interest income of $26.5 million.
Non-interest expenses increased 4.5% to $167.3 million. The rise was due to higher employee compensation and benefits costs and other non-interest expenses, partially offset by lower depreciation of operating lease equipment costs, deposit insurance benefit, occupancy and equipment costs and technology costs. Our estimate for non-interest expenses was $172.4 million.
As of March 31, 2026, total loans were $24.1 billion, down marginally from the prior quarter. Total deposits amounted to $29.4 billion, slightly up from the previous quarter. Our estimates for total loans and total deposits were $24.1 billion and $28.8 billion, respectively.
BKU’s Credit Quality Worsens
In the reported quarter, BankUnited recorded a provision for credit losses of $24.6 million, up 62.9% from $15.1 million in the prior-year quarter. We had expected the metric to be $15.4 million.
As of March 31, 2026, the ratio of net charge-offs to average loans was 0.61%, up 28 bps year over year. Also, the non-performing assets ratio was 0.79%, up 3 bps.
BKU’s Capital & Profitability Ratios: Mixed Bag
As of March 31, 2026, the Common Equity Tier 1 risk-based capital ratio was 12.2%, the same as of March 31, 2025. The total risk-based capital ratio was 14%, down from 14.3%.
In the reported quarter, the return on average assets was 0.72%, up from 0.68% in the year-earlier quarter. Return on average stockholders’ equity was 8.1%, down from 8.2%.
Share Repurchase
During the quarter, BankUnited repurchased approximately 1.3 million shares for $60 million.
Our View on BankUnited Stock
An elevated expenses base, along with significant exposure to commercial real estate and residential loans, is expected to weigh on BankUnited’s profitability. Additionally, weak credit quality remains a near-term headwind. However, higher NII, diverse fee income and stabilizing funding cost are expected to offer some support.
BankUnited, Inc. Price, Consensus and EPS Surprise
First Horizon Corporation (FHN - Free Report) posted first-quarter 2026 earnings per share of 53 cents, surpassing the Zacks Consensus Estimate of 49 cents. This compares favorably with 42 cents in the year-ago quarter.
FHN’s results benefited from higher NII and a rise in non-interest income, along with improved credit quality. However, the rise in expenses remains a headwind.
WaFd, Inc.’s (WAFD - Free Report) second-quarter fiscal 2026 (ended March 31) adjusted earnings of 83 cents per share beat the Zacks Consensus Estimate of 74 cents. The bottom line also jumped 27.7% year over year.
WAFD’s results reflected higher NII and non-interest income. However, elevated expenses and provisions were the undermining factors. A decline in loans and deposits was another headwind.
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BankUnited Q1 Earnings Lag Estimates as Expenses & Provisions Rise Y/Y
Key Takeaways
BankUnited, Inc. (BKU - Free Report) reported first-quarter 2026 earnings of 83 cents per share, which missed the Zacks Consensus Estimate of 97 cents. The bottom line was up 3.4% from the prior-year quarter.
Results were primarily hurt by a rise in non-interest expenses and higher provisions for credit losses. A decline in loan balance was also a headwind. However, growth in net interest income (NII) and fee income provided some support. Also, a modest increase in deposit balance acted as a tailwind.
Net income totaled $61.9 million, up 5.8% from the year-ago quarter. Our estimate for the metric was $70.4 million.
BankUnited’s Revenues Rise, Expenses Up
Quarterly net revenues were $273.7 million, up 7.2% year over year. However, the top line missed the Zacks Consensus Estimate of $284.7 million.
In the reported quarter, NII was $249 million, which rose 6.8%. Net interest margin (NIM) expanded 18 basis points (bps) to 2.99%. Our estimates for NII and NIM were $256.4 million and 3.07%, respectively.
Non-interest income of $24.7 million increased 10.9% from the prior-year quarter. The rise was mainly driven by higher deposit service charges and fees, gains on investment securities and other non-interest income. We had projected a non-interest income of $26.5 million.
Non-interest expenses increased 4.5% to $167.3 million. The rise was due to higher employee compensation and benefits costs and other non-interest expenses, partially offset by lower depreciation of operating lease equipment costs, deposit insurance benefit, occupancy and equipment costs and technology costs. Our estimate for non-interest expenses was $172.4 million.
BankUnited’s Loans Decrease & Deposits Increase Sequentially
As of March 31, 2026, total loans were $24.1 billion, down marginally from the prior quarter. Total deposits amounted to $29.4 billion, slightly up from the previous quarter. Our estimates for total loans and total deposits were $24.1 billion and $28.8 billion, respectively.
BKU’s Credit Quality Worsens
In the reported quarter, BankUnited recorded a provision for credit losses of $24.6 million, up 62.9% from $15.1 million in the prior-year quarter. We had expected the metric to be $15.4 million.
As of March 31, 2026, the ratio of net charge-offs to average loans was 0.61%, up 28 bps year over year. Also, the non-performing assets ratio was 0.79%, up 3 bps.
BKU’s Capital & Profitability Ratios: Mixed Bag
As of March 31, 2026, the Common Equity Tier 1 risk-based capital ratio was 12.2%, the same as of March 31, 2025. The total risk-based capital ratio was 14%, down from 14.3%.
In the reported quarter, the return on average assets was 0.72%, up from 0.68% in the year-earlier quarter. Return on average stockholders’ equity was 8.1%, down from 8.2%.
Share Repurchase
During the quarter, BankUnited repurchased approximately 1.3 million shares for $60 million.
Our View on BankUnited Stock
An elevated expenses base, along with significant exposure to commercial real estate and residential loans, is expected to weigh on BankUnited’s profitability. Additionally, weak credit quality remains a near-term headwind. However, higher NII, diverse fee income and stabilizing funding cost are expected to offer some support.
BankUnited, Inc. Price, Consensus and EPS Surprise
BankUnited, Inc. price-consensus-eps-surprise-chart | BankUnited, Inc. Quote
Currently, BKU 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
First Horizon Corporation (FHN - Free Report) posted first-quarter 2026 earnings per share of 53 cents, surpassing the Zacks Consensus Estimate of 49 cents. This compares favorably with 42 cents in the year-ago quarter.
FHN’s results benefited from higher NII and a rise in non-interest income, along with improved credit quality. However, the rise in expenses remains a headwind.
WaFd, Inc.’s (WAFD - Free Report) second-quarter fiscal 2026 (ended March 31) adjusted earnings of 83 cents per share beat the Zacks Consensus Estimate of 74 cents. The bottom line also jumped 27.7% year over year.
WAFD’s results reflected higher NII and non-interest income. However, elevated expenses and provisions were the undermining factors. A decline in loans and deposits was another headwind.