) second-quarter 2013 earnings came in at 52 cents per share,
beating the Zacks Consensus Estimate of 43 cents. Moreover, this
compares favorably with the year-ago earnings of 48 cents.
BANKUNITED INC (BKU): Free Stock Analysis
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Better-than-expected results were primarily aided by growth in
net interest income and a decline in operating expenses,
partially offset by a significant decline in non-interest income.
Further, growth in loan and deposit balances was the tailwind for
the quarter. Moreover, capital and profitability ratios as well
as credit quality were a mixed bag.
Net income for the reported quarter came in at $54.0 million, up
10.4% from $48.9 million in the year-ago period.
BankUnited's total revenue reached $192.2 million, declining 2.7%
year over year. However, total revenue surpassed the Zacks
Consensus Estimate of $182.0 million.
Net interest income surged 12.5% year over year to $164.1
million. The elevation was mainly attributable to higher interest
income and lower interest expenses. Moreover, net interest
margin increased 22 basis points (bps) from the prior-year
quarter to 6.14%.
Non-interest income stood at $6.1 million, plunging 71.9% from
the prior-year quarter. The fall was primarily due to
amortization of Federal Deposit Insurance Corporation (FDIC)
indemnification asset and net loss on indemnification asset along
with reduced FDIC reimbursement of costs of resolution of covered
assets, decline in mortgage interest income and other
non-interest income. These were partly offset by higher gain on
sale of available investment securities, rise in income from
resolution of covered assets and higher service charges and fees.
Non-interest expense was $78.3 million, down 5.6% from the
year-ago quarter. The decrease mainly resulted from a decline in
employee compensation and benefits and impairment of other real
estate owned costs, foreclosure expense, deposit insurance
expense, and other non-interest expense. However, these were
partially offset by higher occupancy and equipment expenses,
other real estate owned (OREO) expense, professional fees, and
telecommunication and data processing fees.
Asset quality was a mixed bag during the quarter. The ratio of
total nonperforming loans to total loans stood at 0.54% as of Jun
30, 2013, down 8 bps from Dec 31, 2012.
However, net charge offs to average loans was 0.61% as of Jun 30,
2013, up 44 bps compared with 0.17% as of Dec 31, 2012. Further,
provision for loan losses increased 79.1% from the prior-year
quarter to $4.9 million.
Loans and Deposits
As of Jun 30, 2013, total loans, net of discount and deferred
fees and costs, stood at $6.8 billion, up 21.4% from $5.6 billion
as of Dec 31, 2012. The augmentation largely came from increases
in new loans, partly offset by reduced covered loans.
Total deposits were $9.0 billion, up 5.9% from $8.5 billion as of
Dec 31, 2012. The increase was primarily due to the higher levels
of non-interest bearing deposits, interest bearing deposits as
well as savings and money market deposits.
Profitability and Capital Ratios
BankUnited's capital and profitability ratios were a mixed bag.
As of Jun 30, 2013, tier 1 leverage ratio was 13.69%, up from
13.16% as of Dec 31, 2012. However, Tier 1 risk-based capital
ratio was 27.93%, down from 33.60% as of Dec 31, 2012. Total
risk-based capital ratio came in at 28.94%, falling from 34.88%
as of Dec 31, 2012.
The return on average assets was 1.69%, rising from 1.59% as of
Jun 30, 2012. As of Jun 30, 2013, return on average stockholder
equity came in at 11.62%, declining from 11.76% as of Jun 30,
Performance of Other Major Regional Banks
M&T Bank Corporation
) reported better-than-expected second-quarter earnings. For
M&T Bank, earnings were primarily aided by higher revenues on
the back of increased net interest and non-interest income.
Comerica's results reflected increased non-interest income and
) was aided by reduced non-interest expenses and a lower
provision for credit losses, as the company's second-quarter
earnings were in line with the Zacks Consensus Estimate.
BankUnited is favorably positioned to grow both organically and
inorganically due to its strong liquidity levels. However,
mounting expenses, exposure to perilous residential loans and
competitive markets are expected to weigh upon the company's
financials in the near term.
BankUnited currently carries a Zacks Rank #4 (Sell).