A month has gone by since the last earnings report for BankUnited, Inc. (BKU). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is BankUnited due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for BankUnited, Inc. before we dive into how investors and analysts have reacted as of late.
BankUnited's Q4 Earnings Beat on Higher NII & Fee Income
BankUnited’s fourth-quarter 2025 adjusted earnings of 94 cents per share surpassed the Zacks Consensus Estimate of 85 cents. Further, the bottom line was up 3.3% from the prior-year quarter.
Results were aided primarily by a rise in non-interest income and net interest income (NII). Higher loan balance and improved deposits were the other positives. However, higher expenses and provisions were the undermining factors.
Quarterly results in the reported quarter excluded a one-time charge related to a write-down on capitalized software. After considering it, net income totaled $69.3 million, marginally down from the year-ago quarter. Our estimate for the metric was $62.9 million.
For 2025, earnings per share of $3.53 beat the Zacks Consensus Estimate of $3.49. The figure represented a rise of 14.6% from the previous year. Net income was $268.4 million, up 15.4% year over year. Our estimate for net income was $262 million.
Revenues Rise, Expenses Up
Quarterly net revenues were $288.2 million, up 4.5% year over year. The top line beat the Zacks Consensus Estimate of $278.3 million.
For 2025, net revenues were $1.09 billion, up 7.9%. The top line surpassed the Zacks Consensus Estimate of $1.08 billion.
In the reported quarter, NII was $258.2 million, which rose 7.9%. Net interest margin (NIM) expanded 22 basis points (bps) to 3.06%. Our estimates for NII and NIM were $252.3 million and 3.01%, respectively.
Non-interest income of $30 million increased 19% from the prior-year quarter. The increase was mainly driven by higher deposit service charges and fees, capital markets income and other non-interest income. We had projected a non-interest income of $25.5 million.
Non-interest expenses grew 7.7% to $173 million. The rise was due to higher employee compensation and benefits costs and other non-interest expenses, partially offset by lower depreciation of operating lease equipment costs, deposit insurance expense, occupancy and equipment costs and technology costs. Our estimate for non-interest expenses was $172.1 million.
Loans & Deposits Increase
As of Dec. 31, 2025, total loans were $24.3 billion, up 2.4% from the prior quarter. Total deposits amounted to $29.4 billion, up 2.6% from the previous quarter. Our estimates for total loans and total deposits were $24.3 billion and $29.3 billion, respectively.
Credit Quality Worsens
In the reported quarter, BankUnited recorded a provision for credit losses of $25.6 million, up substantially from $11 million in the prior-year quarter. We had expected the metric to be $20 million.
As of Dec. 31, 2025, the ratio of net charge-offs to average loans was 0.30%, up 14 bps year over year. Also, the non-performing assets ratio was 1.08%, up 35 bps.
Capital & Profitability Ratios: Mixed Bag
As of Dec. 31, 2025, the Common Equity Tier 1 risk-based capital ratio was 12.3%, up from 12%. The total risk-based capital ratio was 14.1%, same as of Dec. 31, 2024.
At the end of the fourth quarter, the return on average assets was 0.78%, the same as in the year-ago quarter. Return on average stockholders’ equity was 8.9%, down from 9.7%.
2026 Outlook
Management projects total average deposits (excluding brokered) to grow 6%, with non-interest-bearing demand deposits to rise 12%.
Management expects the loan balance to rise 2-3%, with core loans projected to jump 6%. This will be offset by 8% run-off of the residential and other loan portfolio.
Management anticipates NII growth to 9%. NIM is expected to grow throughout the year and touch roughly 3.20% by the end of the fourth quarter. The company assumes tighter spreads and two Fed rate cuts.
Non-interest income is projected to increase 6%, driven by organic growth in the company’s core commercial businesses, led by deposits/payment products.
Total revenues are anticipated to rise 8%.
Non-interest expenses are expected to increase 4%.
Provisions are expected to be relatively stable at the 2025 level of $68 million and non-performing loans are likely to keep declining.
The company expects the CET 1 ratio to be 11.6%.
The effective tax is anticipated to be 26%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 9.71% due to these changes.
VGM Scores
Currently, BankUnited has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock has a grade of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise BankUnited has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
BankUnited belongs to the Zacks Banks - Major Regional industry. Another stock from the same industry, M&T Bank Corporation (MTB), has gained 5.4% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.
M&T Bank reported revenues of $2.48 billion in the last reported quarter, representing a year-over-year change of +3.8%. EPS of $4.72 for the same period compares with $3.92 a year ago.
For the current quarter, M&T Bank is expected to post earnings of $4.03 per share, indicating a change of +19.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.8% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for M&T Bank. Also, the stock has a VGM Score of D.
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BankUnited, Inc. (BKU): Free Stock Analysis Report M&T Bank Corporation (MTB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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