BankUnited’s second quarter results slightly surpassed Wall Street’s revenue and profit expectations, driven by growth in non-interest-bearing deposit accounts and disciplined management of funding costs. Management attributed the strong performance to a favorable shift in the deposit mix, with Chairman and CEO Raj Singh noting, “NIDDA is now 32% of total deposits,” reflecting a strategic milestone. The bank also benefited from a notable reduction in deposit costs and a corresponding expansion in net interest margin, offsetting only modest loan growth and continued runoff in the residential portfolio. Credit quality trends were mixed, with improvement in criticized and classified loans but some expected migration of office-related loans into nonperforming status.

Is now the time to buy BKU? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions BankUnited’s Q2 Earnings Call

• Jared Shaw (Barclays) asked about the process for reappraising and reserving for office loans moving to nonperforming status. CFO Leslie Lunak explained that properties are reappraised prior to moving to nonaccrual and charge-offs are based on updated valuations.
• Wood Lay (KBW) inquired about the drivers behind above-trend deposit growth and the process for entering new markets. CEO Raj Singh attributed success to onboarding new client relationships and a focus on hiring strong local teams in targeted regions.
• Ben Gerlinger (Citi) questioned the timing of potential improvement in nonperforming asset levels. Lunak acknowledged that office-related credit normalization will take time, and the inflection point is not expected in the immediate quarters.
• Timur Braziler (Wells Fargo) pressed for specifics on margin and return forecasts for the second half of the year. Lunak stated that margin expansion is expected to continue but declined to commit to a specific quarterly timing due to inherent seasonality.
• David Bishop (Hovde Group) sought details on loan repricing dynamics and the remaining low-yield loans in the portfolio. COO Tom Cornish shared that new loan production carries significantly higher spreads, with only a small portion of thinly priced credits left to address.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) whether BankUnited can sustain double-digit year-over-year growth in core deposits despite seasonal headwinds, (2) evidence that net interest margin expansion continues amid a stable rate environment and competitive lending landscape, and (3) further signs of credit stabilization, especially within the office-related commercial real estate segment. Progress on market expansion initiatives and leadership transition will also serve as important execution checkpoints.

BankUnited currently trades at $37.73, down from $38.77 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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