BKU - BankUnited Posting Good Loan Growth But Margin Pressures Loom

Summary

• BankUnited posted weak fourth quarter results, with softer spread income, higher expenses, weaker pre-provision profits, and higher provisioning expense.
• Management delivered excellent C&I loan growth, and this remains an important driver, but CRE loan growth softened and management sounded more cautious on office and retail categories.
• I'm not concerned about credit quality at this point, but I see risk to management's spread margin assumptions and guidance for 2023 could be at risk as the year develops.
• A high-$30s fair value, weak near-term pre-provision profit growth, and downside risk to management estimates aren't a compelling combination to me.

For further details see: