On Sep 24, 2014, we issued an updated research report on BankUnited, Inc. (BKU). Sustainable improvement in the top line as well as loan and deposits continued to be the growth drivers, while rising expenses remained the dampener.
BankUnited, with a goal to provide personalized services along with a diversified range of products and services to customers, continues to focus on organic as well as inorganic growth. The bank has been successfully expanding its business via acquisitions.
Moreover, BankUnited continues to report better-than-expected results aided by robust revenue generation and appreciable loan and deposits growth. The bank’s consistent efforts for revenue generation were reflected in the 9% rise in revenues in the first half of 2014. Also, its inclination towards expansion and development will further propel growth going forward.
On the flip side, the constantly mounting expenses remain a challenge for BankUnited. Non-interest expenses increased 24% year over year in the first half of 2014. Further, management forecasts higher compensation expenses in the upcoming quarters.
Though the bank make efforts to be investor friendly by returning capital to shareholders through dividends, the persistent low interest rate environment and its exposure to risky residential loans has failed to gain investors’ confidence. The uncertainty in the market regarding the company’s future performance is evident from the 6% year-to-date decline in the share price.
The weakness can also be observed in the Zacks Consensus Estimate for 2014, which remained flat over the last 30 days. For 2015, the estimate decreased by a penny over the same time frame.
Currently, BankUnited carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Other finance stocks worth considering include AllianceBernstein Holding L.P. (AB), Monroe Capital Corporation (MRCC) and Northrim Bancorp Inc. (NRIM). All these stocks sport a Zacks Rank #1 (Strong Buy).
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