) reported first-quarter 2013 earnings of 47 cents per share,
marginally beating the Zacks Consensus Estimate of 45 cents.
However, this compares unfavorably with the year-ago earnings of
BANKUNITED INC (BKU): Free Stock Analysis
COMERICA INC (CMA): Free Stock Analysis
M&T BANK CORP (MTB): 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 lower fee revenues. Further, growth in loan
and deposit balances as well as strong capital and profitability
ratios were the tailwinds. However, deterioration in credit
quality was the downside.
Net income for the reported quarter came in at $48.2 million,
down 4.2% from $50.3 million in the year-ago period. Net income
in the prior-year quarter included $5.3 million of bargain
purchase gain related to the acquisition of Herald National Bank.
BankUnited's total revenue reached $194.2 million, declining 6.0%
from $206.7 million in the year-ago quarter. However, total
revenue surpassed the Zacks Consensus Estimate of $180.0 million.
Net interest income surged 11.6% year over year to $153.8
million. The elevation was mainly attributable to higher interest
income and lower interest expenses. However, net interest margin
decreased 16 basis points (bps) from the prior-year quarter to
Non-interest income stood at $17.8 million, plunging 51.0% 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. These were partly offset by higher gain on sale of
investment securities available for sale and rise in income from
resolution of covered assets.
Non-interest expense was $80.5 million, down 4.3% from the
prior-year quarter. The decrease was mainly a result of lower
employee compensation and benefits and impairment of other real
estate owned costs. However, these were partially offset by
higher occupancy and equipment expenses, deposit insurance costs,
professional fees along with other expenses.
Asset quality deteriorated during the quarter. The ratio of total
nonperforming loans to total loans increased 12 bps year over
year to 0.74%. Likewise, net charge offs to average loans surged
56 bps year over year to 0.73%.
Further, provision for loan losses increased 36.5% from the
prior-year quarter to $12.0 million.
Loans and Deposits
As of Mar 31, 2013, total loans, net of discount and deferred
fees and costs, stood at $5.8 billion, up 3.6% 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 $8.7 billion, up 2.4% from $8.5 billion as of
Dec 31, 2012. The increase was primarily due to the higher levels
of demand deposits as well as savings and money market deposits.
Profitability and Capital Ratios
BankUnited's capital ratios were a mixed bag. As of Mar 31, 2013,
tier 1 leverage ratio was 13.64%, up from 13.16% as of Dec 31,
2012. However, Tier 1 risk-based capital ratio was 31.14%, down
from 33.60% as of Dec 31, 2012. Total risk-based capital ratio
came in at 32.35%, dipping from 34.88% as of Dec 31, 2012.
Though profitability ratios remained strong, there was a slight
deterioration. The return on average assets was 1.55%, decreasing
from 1.74% as of Dec 31, 2012. As of Mar 31, 2013, return on
average stockholder equity came in at 10.67%, declining from
12.76% as of Dec 31, 2012.
Performance of Other Major Regional Banks
M&T Bank Corporation
) reported better-than-expected first-quarter earnings. For
M&T Bank, earnings were primarily aided by reduced provision
for credit losses, partially offset by rise in expenses and
declining top line. Comerica's results reflected reduced
expenses, partly offset by a decline in revenues.
) was aided by reduced non-interest expenses and a lower
provision for credit losses, as the company's first-quarter
earnings were in line with the Zacks Consensus Estimate.
BankUnited is comfortably placed to grow through organic and
inorganic means on account of strong liquidity levels. Further,
robust capital deployment plans will prove accretive to its
overall growth going forward. However, escalating expenses,
compressed net interest margin, exposure to perilous residential
loans and competitive markets will likely weigh down its
financials in the near to mid term.
BankUnited currently retains a Zacks Rank #3 (Hold).