BankUnited Hits 52-Week High: How Should You Play the Stock Now?

Core Viewpoint - BankUnited Inc. (BKU) shares have reached a 52-week high, driven by optimism over potential interest rate cuts and strong performance compared to industry peers and broader market indices [2][9]. Performance Summary - BKU stock has gained 30.8% over the last six months, outperforming the industry growth of 17.6% and the S&P 500 Index's increase of 17% [2]. - In comparison, Fifth Third Bancorp (FITB) and Hancock Whitney Corporation (HWC) saw gains of 13.7% and 13.8%, respectively, during the same period [3]. Growth Drivers - Organic Growth: BankUnited has experienced top-line growth supported by strong loans and deposit balances, with a compound annual growth rate (CAGR) of 2.4% in revenues over the five years ending in 2024 [6]. - Deposit Strategy: As of September 30, 2025, non-interest-bearing demand deposits made up 30.1% of total deposits, with management projecting mid-single-digit growth in total deposits for 2025 and double-digit growth in non-interest-bearing demand deposits [7][10]. - Revenue Estimates: The Zacks Consensus Estimate for BKU's revenues in 2025 and 2026 is $1.08 billion and $1.13 billion, indicating year-over-year growth rates of 6.9% and 4.7%, respectively [10]. - Net Interest Margin (NIM): NIM has improved, rising to 2.73% in 2024 from 2.56% in 2023, with expectations to reach approximately 3% in 2025 [11][12]. - Capital Distribution: BankUnited has been increasing its dividend payouts annually since 2022 and has a share repurchase program authorized for up to $100 million [13][14]. Challenges - Expense Growth: The company's expenses have seen a CAGR of 5.7% from 2019 to 2024, driven by higher employee compensation and technology costs, with expectations for continued elevated costs in 2025 [15][16]. - Asset Quality: BankUnited's asset quality has deteriorated, with a CAGR of 44% in provisions over the past five years, although provisions and net charge-offs have declined in the first nine months of 2025 [19]. Market Outlook - BankUnited is positioned for continued top-line growth due to improving deposit mix and loan demand, with NIM expected to benefit from solid loan growth and stabilizing funding costs [20]. - Analysts have mixed views on BKU's earnings growth prospects, with the 2025 earnings estimate revised upward, while the 2026 estimate has been revised downward [21][22].