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BankUnited (BKU) Stock Down 2.9% Despite Q3 Earnings Beat

BankUnited, Inc.’s BKU third-quarter 2021 earnings per share of 94 cents surpassed the Zacks Consensus Estimate of 88 cents. The bottom line jumped 34.3% from the prior-year quarter.

Results primarily gained from higher net interest income (NII) and provision benefits. The loans and deposit balances remained strong in the quarter. However, a rise in expenses and lower fee income were the undermining factors. Probably due to these negatives, shares of the company lost 2.9% following the release.

Net income was $86.9 million, up 30.5% year over year.

Revenues Down, Expenses Rise

Net revenues were $220.6 million, down 1.4% year over year. The top line, also, lagged the Zacks Consensus Estimate of $235 million.

NII totaled $195.1 million, up 4.1%. The improvement was driven by a fall in interest expenses. Net interest margin rose 1 basis point (bps) year over year to 2.33%.

Non-interest income was $25.5 million, plunging 29.8%. The decline was due to a fall in all components except for deposit service charges and fees.

Non-interest expenses were up 8.7% to $118 million. This mainly resulted from a rise in technology and telecommunications expenses, employee compensation and benefits costs, depreciation of operating lease equipment-related costs, and other non-interest expenses.

As of Sep 30, 2021, net loans were $22.6 billion, down from $23.6 billion recorded as of Dec 31, 2020. Total deposits amounted to $28.1 billion, up from $27.5 billion recorded on Dec 31, 2020.

Credit Quality: A Mixed Bag

In the reported quarter, the company recorded a recovery of credit losses worth $11.8 million against provisions of $29.2 million in the prior-year quarter. As of Sep 30, 2021, the ratio of net charge-offs to average loans was 0.19%, down from 0.26% as of Dec 31, 2020.

However, the ratio of non-performing loans to total loans was 1.21%, up from 1.02% as of Dec 31, 2020.

Capital Ratios Improve

As of Sep 30, 2021, Tier 1 leverage ratio was 8.6% on par with the Dec 31, 2020 level. Common Equity Tier 1 risk-based capital ratio was 13.4%, up from 12.6% recorded as of Dec 31, 2020. Total risk-based capital ratio was 15.3%, up from 14.7%.

Share Repurchase Update

During the quarter, BankUnited repurchased almost 3.2 million shares for $129.4 million.

Further, on Oct 20, 2021, BankUnited 's board of directors authorized the repurchase of up to an additional $150 million in shares. This is in addition to $58.3 million remaining as of Sep 30, 2021 under the prior authorization.

Our View

BankUnited’s efforts to strengthen fee income sources and a strong balance-sheet position are expected to keep supporting it in the days to come. However, lower interest rates and higher expenses remain major concerns.

BankUnited, Inc. Price, Consensus and EPS Surprise

BankUnited, Inc. Price, Consensus and EPS Surprise
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

Hancock Whitney Corporation’s HWC third-quarter 2021 adjusted earnings of $1.45 per share outpaced the Zacks Consensus Estimate of $1.29. The bottom line improved 61.1% from the prior-year quarter.

Commerce Bancshares Inc.’s CBSH third-quarter 2021 earnings per share of $1.05 surpassed the Zacks Consensus Estimate of $1.00. The bottom line, however, declined almost 1% from the prior-year quarter.

Zions Bancorporation’s ZION third-quarter 2021 net earnings per share of $1.45 surpassed the Zacks Consensus Estimate of $1.38. The bottom line represents an increase of 43.6% from the year-ago quarter’s number.


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