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BankUnited Management Still Optimistic On Loan Growth

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BMO Capital’s Lana Chan mentioned that BankUnited (NYSE: BKU)'s management continues to be optimistic about meeting the annual new loan growth target of $4.5-$5.0 billion, despite the slow start to Q1. Chan maintained an Outperform rating on the company, with a price target of $35.

Management Expectations

“To make the low end of its annual target, BKU needs a quarterly average of $1.3 billion for the rest of the year and it needs pay-down activity to slow from the elevated 1Q level of $179 million,” the analyst stated.

Chan expects loan originations to rebound from $532 million in Q1 to $1.1 billion.

Management also expects CRE concentration to rise from 270 percent of risk-based capital on March 31 to 300 percent in the near future.

BankUnited has been working on improving its data reporting and expects to meet regulators’ expectations by end Q2.

“On the deposit side, we await BKU’s announcement of a new national deposit program that it alluded to last quarter, that should accelerate deposit growth going into next year,” Chan said.

Estimates

Management guided to net interest margin in the range of 3.60-3.80 percent for FY16, while the analyst expects a margin decline of 9 bps to 3.74 percent in Q2 and margin of 3.68 percent for FY16.

The 2Q16 EPS estimate has been lowered to reflect a flatter yield curve, while the full year EPS estimates for 2016 and 2017 have also been lowered.

Latest Ratings for BKU

DateFirmActionFromTo
Oct 2019AssumesEqual-Weight
Oct 2019MaintainsEqual-Weight
Sep 2019Initiates Coverage OnBuy

View More Analyst Ratings for BKU
View the Latest Analyst Ratings

Posted-In: BMO Capital Markets Lana ChanAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas

 

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