- BankUnited posted better-than-expected credit costs, driving a core earnings beat, but pre-provision profits were well short of expectations on higher operating costs.
- Management has been shifting the loan book away from riskier lending categories, but charge-offs are still likely to accelerate in 2021, with loan growth accelerating later in the year.
- Higher-than-average deposit costs have been a negative for a while, but holding on to the low-cost deposits that have come during the pandemic could help drive higher long-term ROE.
- BankUnited does seem poised for above-average earnings growth, but the risk profile is also higher than average and the prospective returns don't stand out as particularly attractive.
For further details see:
Credit Risk Fading For BankUnited, But The Valuation Already Assumes Above-Average Growth