BankUnited (BKU) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $53.7 million ($0.72 per share), up from $48.0 million in Q1 2024 but down from $58.0 million in Q2 2023; EPS beat consensus of $0.65.

• Net interest income rose to $226 million, up 5% quarter-over-quarter, with margin expanding to 2.72% from 2.57%.

• Non-brokered deposits grew by $1.3 billion, with non-interest DDA up $826 million; total deposits increased by $736 million.

• Core C&I and CRE loans expanded by $589 million, while residential loans declined by $212 million as part of strategic objectives.

• Asset quality remained strong, with annualized net charge-offs at 0.12% and non-performing asset ratio at 0.50%, though office CRE risk increased.

Financial highlights

• Net interest income for Q2 2024 was $226.0 million, up from $213.9 million in Q2 2023; non-interest income was $24.2 million.

• Net interest margin improved to 2.72%; average cost of total deposits declined to 3.09% from 3.18% last quarter.

• Book value per share grew to $36.11 and tangible book value to $35.07 at June 30, 2024.

• Loans to deposits ratio improved to 88.7% from 89.6% sequentially.

• Return on average assets was 0.61% and return on average equity was 8.0% for Q2 2024.

Outlook and guidance

• Net interest margin is expected to continue expanding, ending the year in the high 2% range.

• Management expects seasonally slower DDA growth in the second half of 2024, with core new relationship growth to continue.

• Non-interest expense guidance remains a mid-single-digit increase year-over-year, with some railcar refurbishment costs expected.

• Franchise and equipment finance segments are being de-emphasized; no significant new loan originations expected in these areas.

• ACL expected to gradually build, likely approaching 1% of loans by year-end.