) first-quarter 2014 earnings per share of 53 cents surpassed the
Zacks Consensus Estimate of 44 cents primarily on the back of
growth in non-interest income. The reported figure also compared
favorably with 47 cents earned in the prior-year quarter.
Notably, the results included net gain on the sale of covered
commercial and consumer loans as well as commercial other real
estate owned (OREO).
Our quantitative model had also conclusively projected that
BankUnited would beat the Zacks Consensus Estimate, as it had the
right combination of two key components - a positive
and a Zacks Rank #2 (Buy).
Better-than-expected results were primarily attributable to
growth in non-interest income and net interest income, partially
offset by higher operating expenses. A continuous rise in loan
and deposit balances was the tailwind. Profitability ratios and
credit quality were mixed bags while capital ratios deteriorated
in the quarter.
Net income for the quarter came in at $55.3 million, up 14.7%
from $48.2 million in the year-ago period.
BankUnited's total revenue was $220.8 million, up 12.3% year over
year. The rise was driven by increase in both interest income and
Net interest income (excluding provision for loan loses)
increased 8.2% year over year to $166.5 million. However, net
interest margin decreased 88 basis points (bps) from the
prior-year quarter to 5.05%.
Non-interest income improved 50.0% from the prior-year quarter to
$30.2 million. The rise was primarily due to gains from the sale
of loans and increases in other non-interest income as well as
service charges and fees. These were partly offset by net loss on
indemnification asset and lower gain on investment securities
available for sale.
Non-interest expense increased 23.8% year over year to $102.5
million. The rise mainly resulted from an increase in all the
components, except foreclosure and other real estate owned
expenditures, professional fees, telecommunications and data
processing as well as other non-interest expense.
As of Mar 31, 2014, net loans were $9.9 billion, up 10.2% from
$9.0 billion as of Mar 31, 2013. Total deposits were $11.1
billion, up 5.6% from $10.5 billion as of Mar 31, 2013.
Asset quality was a mixed bag during the quarter. The ratio of
total nonperforming loans to total loans was 0.30% as of Mar 31,
2014, down 9 bps from Dec 31, 2012.
Further, provision for loan losses declined 29.8% year over year
to $8.4 million. However, net charge-offs to average loans was
0.35%, up 5 bps from 0.31% as of Dec 31, 2013.
Profitability and Capital Ratios
BankUnited's capital ratios deteriorated while profitability
ratios were a mixed bag. As of Mar 31, 2014, Tier 1 leverage
ratio was 12.12%, down from 12.42% as of Dec 31, 2013. Tier 1
risk-based capital ratio was 19.42% versus 21.06% as of Dec 31,
2013. Total risk-based capital ratio came in at 20.27% against
21.93% as of Dec 31, 2013.
The return on average assets came in at 1.46%, declining from
1.55% as of Mar 31, 2013. However, as of Mar 31, 2014, return on
average stockholder equity came in at 11.41%, increasing from
10.67% as of Mar 31, 2013.
Rising expenses and intensely competitive markets are expected to
weigh upon the company's financials in the near term. However,
given its steady balance sheet position, BankUnited is well
poised to grow both organically and inorganically in the coming
Performance of Other Major Regional Banks
Among other major regional banks,
SunTrust Banks, Inc.
The Bank of New York Mellon Corp.
) surpassed the Zacks Consensus Estimate. While SunTrust
benefited from prudent expense management and lower provisions,
KeyCorp's results were driven by lower expenses, a decline in
provision for loan and lease losses and higher fee income.
For BNY Mellon, results benefited from growth in net interest
revenue and fee income, along with decreased operating expenses.
However, lower benefit from provision acted as a dampener.
BANK OF NY MELL (BK): Free Stock Analysis
BANKUNITED INC (BKU): Free Stock Analysis
KEYCORP NEW (KEY): Free Stock Analysis Report
SUNTRUST BKS (STI): Free Stock Analysis
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