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It has been about a month since the last earnings report for BankUnited, Inc. (BKU). 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%.