BKU's Q4 Earnings Beat on Higher NII & Lower Provisions, Stock Down

Core Insights - BankUnited, Inc. (BKU) reported fourth-quarter 2024 earnings of 91 cents per share, exceeding the Zacks Consensus Estimate of 71 cents and significantly up from 27 cents in the prior-year quarter [1][2] - The company's net income for the quarter was $69.3 million, a substantial increase from $20.8 million a year ago, and also surpassed the estimate of $50.9 million [3] - For the full year 2024, earnings per share (EPS) reached $3.08, beating the Zacks Consensus Estimate of $2.89, representing a 29.4% increase from the previous year [3] Financial Performance - Quarterly net revenues were $264.5 million, reflecting a 12.9% year-over-year growth and surpassing the Zacks Consensus Estimate of $259.7 million [4] - Full-year net revenues totaled $1.01 billion, up 5.5% year over year, meeting the Zacks Consensus Estimate [4] - Net interest income (NII) for the quarter was $239.3 million, growing 10.2% and exceeding the projected $234.8 million [4] - Non-interest income increased to $25.2 million, a 47.5% rise from the prior-year quarter, driven by lease financing and other non-interest income [5] Expense Management - Non-interest expenses decreased by 15.9% to $160.5 million, attributed to lower deposit insurance expenses and depreciation of operating lease equipment, which was better than the estimate of $181.9 million [5] - The net interest margin (NIM) expanded by 24 basis points to 2.84%, surpassing the estimate of 2.78% [4] Loan and Deposit Trends - As of December 31, 2024, total loans were $24.3 billion, a slight decrease from the prior quarter, while total deposits remained stable at $27.9 billion [6] Credit Quality - The provision for credit losses was $11 million, down 42.9% from the prior-year quarter, although it was higher than the expected $6.2 million [7] - The ratio of net charge-offs to average loans was 0.16%, an increase of 7 basis points year over year, and the non-performing assets ratio rose to 0.73%, up 36 basis points [7] Capital and Profitability Ratios - The Common Equity Tier 1 risk-based capital ratio improved to 12% from 11.4%, and the total risk-based capital ratio increased to 14.1% from 13.4% [8] - Return on average assets was 0.78%, up from 0.23% in the year-earlier quarter, while return on average stockholders' equity rose to 9.7% from 3.2% [8] Market Outlook - BankUnited's strategies to grow fee income, maintain low-cost deposits, and benefit from relatively higher interest rates are expected to support revenue growth [9] - However, rising expenses and significant exposure to commercial real estate and residential loans may pose challenges [9]