BKU's Q1 Earnings Beat on Higher NII & Lower Provisions, Stock Down

BankUnited, Inc.’s BKU first-quarter 2025 earnings of 78 cents per share surpassed the Zacks Consensus Estimate of 74 cents. The bottom line compares favorably with 64 cents in the prior-year quarter.

Results benefited from growth in net interest income (NII) and a decline in provisions. A marginal rise in deposits was another positive. However, a fall in loan balance, lower non-interest income and weak asset quality were the undermining factors. Shares of BKU lost 1.6% during yesterday’s trading session in light of these headwinds.

Net income totaled $58.5 million, up 21.9% from the year-ago quarter. Our estimate for the metric was $56.6 million.

BankUnited’s Revenues Rise, Expenses Up

Quarterly net revenues were $255.4 million, up 5.7% year over year. However, the top line lagged the Zacks Consensus Estimate of $261.7 million. 

NII was $233.1 million, growing 8.5%. Net interest margin (NIM) expanded 24 basis points (bps) to 2.81%. Our estimates for NII and NIM were $234.3 million and 2.84%, respectively. 

Non-interest income of $22.3 million declined 17.1%. The fall was mainly due to a 62.3% decrease in lease financing income. We had projected a non-interest income of $24.8 million.

Non-interest expenses rose marginally to $160.2 million. The rise was due to higher employee compensation and benefits costs, technology costs and other non-interest expenses, partially offset by lower depreciation of operating lease equipment costs. Our estimate for non-interest expenses was $167.1 million.

As of March 31, 2025, total loans were $24 billion, down marginally from the prior quarter. Total deposits amounted to $28.1 billion, up slightly. Our estimates for total loans and total deposits were $24.2 billion and $29.3 billion, respectively.

BKU’s Credit Quality Weakens

In the reported quarter, BankUnited recorded a provision of credit losses of $15.1 million, down 1.1% from the prior-year quarter. We had expected the metric to be $16.1 million.

As of March 31, 2025, the ratio of net charge-offs to average loans was 0.33%, up 31 bps year over year. Also, the non-performing assets ratio was 0.76%, jumping 42 bps.

BKU’s Capital & Profitability Ratios Improve

As of March 31, 2025, the Common Equity Tier 1 risk-based capital ratio was 12.2%, up from 11.6%. The total risk-based capital ratio was 14.3%, increasing from 13.7% as of March 31, 2024.

At the end of the first quarter, the return on average assets was 0.68%, up from 0.54% in the year-earlier quarter. Return on average stockholders’ equity was 8.2%, rising from 7.3%.

Our View on BankUnited Stock

BankUnited’s efforts to grow fee income, low-cost deposits and relatively higher interest rates are expected to support revenue growth. However, an increase in expenses and significant exposure to commercial real estate and residential loans might affect financials.
 

BankUnited, Inc. Price, Consensus and EPS Surprise

BankUnited, Inc. price-consensus-eps-surprise-chart | BankUnited, Inc. Quote

Currently, BKU carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Performance of BankUnited’s Peers

Webster Financial WBS reported first-quarter 2025 earnings per share of $1.30, which lagged the Zacks Consensus Estimate of $1.38. Nonetheless, the reported figure compared favorably with earnings of $1.23 a year ago. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Webster’s results were affected by higher non-interest expenses and provisions, along with lower non-interest income. Nonetheless, a rise in NII and higher loan and deposit balances offered support.

Associated Banc-Corp’s ASB first-quarter 2025 earnings of 59 cents per share surpassed the Zacks Consensus Estimate of 57 cents. Also, the bottom line compared favorably with 52 cents earned in the prior-year quarter.

Results benefited from an increase in NII and adjusted non-interest income. A rise in loans and deposit balances and lower provisions acted as tailwinds. However, higher expenses were the undermining factor for Associated Banc-Corp.

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