BankUnited Inc (BKU) Q3 2023 Earnings: Net Income Drops Amid Economic Slowdown Preparations
BankUnited Inc (NYSE:BKU) reported Q3 2023 net income of $47.0 million, down from $58.0 million in Q2 2023 and $87.9 million in Q3 2022.
The company's net interest margin expanded to 2.56% from 2.47% in the preceding quarter.
Non-brokered deposits grew by $484 million for the quarter ended September 30, 2023.
The provision for credit losses was $33.0 million, driven by a less favorable economic forecast.
BankUnited Inc (NYSE:BKU) released its earnings report for the quarter ending September 30, 2023, on October 19, 2023. The company reported a decrease in net income compared to the previous quarter and the same quarter in the previous year. However, the company highlighted significant progress on key strategic priorities, including improvements in margin, funding mix, asset mix, capital, and liquidity.
Financial Performance and Highlights
For Q3 2023, BankUnited Inc (NYSE:BKU) reported a net income of $47.0 million, or $0.63 per diluted share. This is a decrease from $58.0 million, or $0.78 per diluted share, in the preceding quarter and $87.9 million, or $1.12 per diluted share, for Q3 2022. The decrease in earnings was primarily due to an increase in the provision for credit losses, driven by a less favorable economic forecast. Despite this, the company's annualized net charge-offs remained low at 0.07%.
The company's net interest margin expanded to 2.56% from 2.47% in the preceding quarter. Non-brokered deposits grew by $484 million, while total deposits grew by $274 million. The company also reported a decline in residential loans and securities, while its core C&I and commercial real estate portfolios grew by a net $147 million.
Asset Quality and Credit Losses
The provision for credit losses for Q3 2023 was $33.0 million, leading to an increase in the ACL to total loans ratio to 0.80% from 0.68% in the preceding quarter. The main driver for this increase was a less favorable economic forecast. Non-performing assets remained low, totaling $140.5 million at the end of Q3 2023, compared to $120.8 million at the end of Q2 2023.
Capital Position and Liquidity
BankUnited Inc (NYSE:BKU) maintained a robust capital position, with CET1 increasing to 11.4% at the holding company and 13.2% at the Bank. The company also maintained ample liquidity, with total same-day available liquidity standing at $14.4 billion.
Outlook
Despite the decrease in net income, BankUnited Inc (NYSE:BKU) remains optimistic about its strategic progress and robust capital position. The company continues to prepare for a possible economic slowdown while executing on near-term strategic priorities.
This article first appeared on GuruFocus.
