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

Core Viewpoint - BankUnited, Inc. (BKU) reported first-quarter 2025 earnings of 78 cents per share, exceeding the Zacks Consensus Estimate of 74 cents and up from 64 cents in the prior-year quarter [1] Financial Performance - Net income for the quarter was $58.5 million, reflecting a 21.9% increase from the previous year, surpassing the estimate of $56.6 million [2] - Quarterly net revenues reached $255.4 million, a 5.7% year-over-year increase, but fell short of the Zacks Consensus Estimate of $261.7 million [3] - Net interest income (NII) was $233.1 million, growing by 8.5%, while the net interest margin (NIM) expanded by 24 basis points to 2.81% [3] Income and Expenses - Non-interest income decreased by 17.1% to $22.3 million, primarily due to a 62.3% drop in lease financing income, which was below the projected $24.8 million [4] - Non-interest expenses rose slightly to $160.2 million, driven by increased employee compensation, technology costs, and other expenses, partially offset by lower depreciation costs [4] Loan and Deposit Trends - Total loans amounted to $24 billion, a slight decrease from the prior quarter, while total deposits were $28.1 billion, showing a marginal increase [5] Credit Quality - The provision for credit losses was $15.1 million, down 1.1% from the previous year, which was better than the expected $16.1 million [6] - The ratio of net charge-offs to average loans increased to 0.33%, up 31 basis points year-over-year, and the non-performing assets ratio rose to 0.76%, an increase of 42 basis points [6] Capital and Profitability Ratios - The Common Equity Tier 1 risk-based capital ratio improved to 12.2% from 11.6%, and the total risk-based capital ratio increased to 14.3% from 13.7% year-over-year [7] - Return on average assets was 0.68%, up from 0.54% in the prior year, and return on average stockholders' equity rose to 8.2% from 7.3% [7] Market Outlook - BankUnited's strategies to enhance fee income, attract low-cost deposits, and benefit from higher interest rates are expected to support revenue growth, despite rising expenses and exposure to commercial real estate and residential loans [8]