BankUnited (BKU) Focuses On Improving Top Line, Costs A Woe
Zacks Investment Research | Sep 10, 2017 09:40PM ET
On Sep 8, we issued an updated research report on BankUnited, Inc. (NYSE:BKU) . The company remains committed to boost its top line by increasing the proportion of low-cost deposits. Also, it has a geographically well-diversified loan portfolio. However, increasing expenses and pressure on margins are major concerns.
Shares of BankUnited have lost 17.5% year to date, versus the industry ’s marginal growth.
The Zacks Consensus Estimate for current-year earnings have remained stable at $2.40 over the last 30 days. Thus, the stock carries a Zacks Rank #3 (Hold).
In order to ease pressure on the top line, BankUnited has been concentrating on increasing the proportion of non-interest bearing demand deposits. These low-cost deposits have witnessed a compound annual growth rate (CAGR) of 12% over the last three years (ended 2016).
BankUnited’s loan portfolio is geographically well diversified. Further, it continues to take initiatives to maintain a healthy loan portfolio by reducing the concentration of risky residential loans, which are affected by volatility in the housing sector.
However, BankUnited’s mounting expenses remain a key concern. It witnessed a five-year (ended 2016) CAGR of 17.7%. Expenses are likely to remain high in the near term, on expectations of a rise in funding costs and M&A activities. Further, management expects operating expenses to rise at the high single-digit rate in 2017.
Also, the company’s net interest margin (NIM) continues to decline despite three rate hikes by the Fed since December 2016, because of its liability sensitive balance sheet. NIM declined to 3.73% in 2016 from 6.21% in 2011, with the trend continuing in first half of 2017. The company expects NIM to remain under pressure in 2017 due to run-off of the covered loans, rising deposits cost and a flatter yield curve.
Stocks to Consider
Some better-ranked stocks in the same space are The PNC Financial Services Group (NYSE:PNC) , State Street Corporation (NYSE:STT) and FB Financial Corporation (NYSE:FBK) . All these stocks carry a Zacks Rank #2 (Buy). You can see .
PNC Financial’s Zacks Consensus Estimate for current-year earnings was revised 1.8% upward for 2017, in the past 60 days. Also, its share price has increased 33.7% in the past 12 months.
State Street’s current-year earnings estimates were revised 3.6% upward, over the past 60 days. Further, the company’s shares have jumped 30.9% in a year.
Get The News You Want
FB Financial’s Zacks Consensus Estimate for current-year earnings was revised 2.7% upward, over the last 60 days. Moreover, in the past year, its shares have gained 64.1%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple (NASDAQ:AAPL) sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.