On Jun 26, 2015, we issued an updated research report on BankUnited, Inc. BKU. Consistent improvement in loan and deposits continued to be the strength while weak expense management remained an undermining factor.
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 is well positioned to grow, given its strong capital base.
Moreover, BankUnited continues to report appreciable growth in loan and deposits. The bank has been changing its deposit mix to ease top-line pressure along with lowering exposure to risky residential loans. Moreover, the growth momentum is expected to continue with management anticipating strong loan growth witnessed in 2014 to continue throughout 2015 in the range of $4–$5 billion.
On the flip side, the constantly mounting expenses remain a challenge for BankUnited. The 11% increase in non-interest expenses in the first quarter of 2015 emphasized on the need for improved expense management. However, management’s forecast of a moderate single digits rise in core non-interest expenses diminish any hope to attain the same in the near term.
Though the bank’s net interest margin (NIM) and revenues continue to be under pressure owing to a still low interest rate scenario, the optimistic expectations from the impending interest rate hike and the bank’s efforts to be investor friendly by returning capital to its shareholders through dividends has helped it gain investors’ confidence. This is evident from the 27% year-to-date increase in the share price.
Analysts hold mixed views about BankUnited’s future prospects. Over the last 30 days, the Zacks Consensus Estimate remained stable for 2015 while it increased nearly 1% for 2016.
BankUnited currently carries a Zacks Rank #3 (Hold). Some better-ranked banks include SVB Financial Group SIVB, Commerce Bancshares, Inc. CBSH and KeyCorp. KEY. All these stocks hold a Zacks Rank #2 (Buy).
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