UPDATE: Deutsche Bank Color On BKU Initiation

Deutsche Bank, which initiated coverage of BankUnited BKU, is providing some color on the stock.

“We believe BKU is well positioned for long-term growth (and returns) given its strong balance sheet and a proven mgmt team,” Deutsche Bank writes. “However, the success of BKU's growth strategy will depend on how effectively excess capital is deployed—which could take time to play out given an increasingly competitive market for both lending and M&A. With the stock trading at 2.0x year-end 2011 tangible book, near-term upside may be modest until further progress in deploying capital.

“BKU has some of the highest capital ratios in the industry, giving it a meaningful amount of excess capital—$350m currently and we estimate $525-550m by the end of 2012. This positions BKU well to take advantage of growth opportunities— both organic and M&A. Additionally, given BKU's FDIC loss sharing agreements, credit risk is limited. This makes BKU's capital even stronger vs. other banks— many of which likely still have credit losses imbedded in their balance sheets.”

BankUnited closed Monday at $28.10.