) second-quarter 2014 earnings per share of 46 cents surpassed the
Zacks Consensus Estimate of 44 cents, mainly aided by growth in top
line. However, the reported figure came in lower than 52 cents
earned in the prior-year quarter.
Better-than-expected results were primarily attributable to growth
in non-interest income and net interest income, partially offset by
higher operating expenses and a rise in the provision for loan
losses. A continuous rise in loan and deposit balances acted as the
tailwind. Credit quality was a mixed bag, while both capital and
profitability ratios deteriorated in the quarter.
Net income came in at $48.5 million, down 10.1% from the year-ago
BankUnited's total revenue was $212.2 million, up 6.5% year over
year, driven by an increase in both interest income and
Net interest income (excluding provision for loan loses) inched
down 0.3% year over year to $158.7 million. Further, net interest
margin decreased 147 basis points (bps) from the prior-year quarter
Non-interest income improved 54.8% from the prior-year quarter to
$20.5 million. The rise was primarily attributable to a fall in the
net loss on indemnification asset, and a rise in other non-interest
income. These were, however, partly offset by a fall in net income
from resolution of covered assets and no net gains on net
investment securities available for sale.
Non-interest expense increased 24.7% year over year to $106.6
million. The rise was mainly due to an increase in all the
components, except foreclosure and other real estate-owned
expenditures, professional fees, as well as telecommunications and
data processing expenses.
As of Jun 30, 2014, loans were $10.50 billion, up 16.9% from $8.98
billion as of Dec 31, 2013. Total deposits were $12.04 billion, up
14.3% from $10.53 billion as of Dec 31, 2013.
Asset quality represented a mixed bag. The ratio of total
nonperforming loans to total loans was 0.27% as of Jun 30, 2014,
down 12 bps from Dec 31, 2013.
Net charge-offs to average loans was 0.20%, down 11 bps from 0.31%
as of Dec 31, 2013. However, provision for loan losses increased
47.3% year over year to $7.2 million.
Profitability and Capital Ratios
BankUnited's capital ratios deteriorated. As of Jun 30, 2014,
Tier 1 leverage ratio was 11.60%, down from 12.42% as of Dec 31,
2013. Tier 1 risk-based capital ratio was 17.70% versus 21.06% as
of Dec 31, 2013. Total risk-based capital ratio came in at 18.51%
against 21.93% as of Dec 31, 2013.
Profitability ratios also performed badly. The return on average
assets came in at 1.19%, declining from 1.69% as of Jun 30, 2013.
Further, as of Jun 30, 2014, return on average stockholder equity
came in at 9.70%, down from 11.62% as of Jun 30, 2013.
Rising expenses and intensely competitive markets are expected to
weigh upon the company's financials in the near term. However, with
its steady balance sheet position, BankUnited is well poised to
grow both organically and inorganically in the coming quarters.
BankUnited currently holds a Zacks Rank #3 (Hold).
Performance of Other Major Regional Banks
) second-quarter earnings from continuing operations came in at 27
cents per share, surpassing the Zacks Consensus Estimate of 25
State Street Corp.
) reported second-quarter operating earnings of $1.39 per share,
outpacing the Zacks Consensus Estimate of $1.26, driven by an
increased non-interest income.
The Bank of New York Mellon Corp.
) second-quarter adjusted earnings per share of 62 cents beat the
Zacks Consensus Estimate of 56 cents, reflecting strong growth in
assets under management (AUM).
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