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Loan Growth, Acquisitions Aid BankUnited's (BKU) Revenues

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On Jun 18, we issued an updated research report on BankUnited, Inc. (BKU - Free Report) . It remains well positioned for revenue growth, supported by continued rise in loans and deposits along with efforts to strengthen fee income sources. Moreover, given a solid capital position, the company is expected to continue enhancing shareholder value through efficient capital deployment activities.

Moreover, it has been witnessing upward estimate revisions of late, reflecting that analysts are optimistic about its earnings growth potential. The Zacks Consensus Estimate for the company’s current-year earnings has increased marginally over the past 30 days. Thus, the stock currently carries a Zacks Rank #2 (Buy).

Its price performance also seems impressive. Shares of BankUnited have gained 15.2% over the past six months, outperforming 13.8% growth recorded by the industry.

Looking at its fundamentals, the company’s revenues recorded a four-year (2015-2018) CAGR of 11.7%. With steady increase in demand for loans and efforts to improve fee income, its top line is expected to grow further in the quarters ahead.

Moreover, given strong capital and balance sheet position, BankUnited remains on track to grow through acquisitions. The company rapidly expanded across the New York metropolitan market and Florida.

BankUnited’s loan portfolio is geographically well diversified. It continues to take initiatives to maintain a healthy loan portfolio by reducing the concentration of risky residential loans, which are affected by volatility in the housing sector.

Further, in order to ease pressure on the top line, the company has been concentrating on increasing the proportion of non-interest bearing demand deposits. The same witnessed a three-year (2016-2018) CAGR of 10.6%. Management has been strategizing on increasing these low-cost deposits, which will likely provide some support to net interest margin (NIM).

However, continued margin pressure (despite higher interest rates) remains a major near-term concern for the company. Also, increasing expenses due to rise in compensation costs are expected to hurt bottom-line growth to some extent.

Other Stocks to Consider

Some other top-ranked stocks from the finance space are Hilltop Holdings Inc. (HTH - Free Report) , Cadence Bancorporation (CADE - Free Report) and M&T Bank Corporation (MTB - Free Report) . Each of these stocks currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past 60 days, Hilltop Holdings witnessed an upward earnings estimate revision of 11.5% for the current year. Its share price has increased 19.6% in the past six months.

Cadence Bancorporation’s Zacks Consensus Estimate for earnings in 2019 has been revised 8.8% upward over the past 60 days. Its shares have gained nearly 14.2% in the past six months.

Over the past 60 days, M&T Bank witnessed a marginal upward earnings estimate revision for the current year. Its share price has rallied 18.3% in the past six months.

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