BankUnited NYSE: BKU reported second-quarter 2026 net income of about $71 million, or $0.97 per share, as management highlighted record non-interest-bearing demand deposit growth, improved profitability metrics and a more cautious approach to loan growth amid heightened competition.
Raj Singh, BankUnited’s chairman, president and chief executive officer, said the quarter marked an important milestone for the company’s deposit franchise. Non-interest-bearing demand deposits, or NIDDA, reached 34.4% of total deposits, which Singh said was an all-time high for the company and exceeded the previous high-water mark set during the COVID-era period of near-zero interest rates.
“NIDDA growth is the most important thing for us,” Singh said, referencing comments he made on the prior quarter’s call. “If we take care of that, everything else will take care of itself.”
Singh said period-end NIDDA was just shy of $10 billion, calling it “a pretty big sort of battle cry inside the company.” He added that over the past 10 years, BankUnited has grown its deposit portfolio by about $10 billion, with roughly $7 billion of that increase coming from NIDDA and without acquisitions.
Deposit growth drives margin improvement
BankUnited said total deposits excluding brokered deposits increased by $1.1 billion during the quarter, while NIDDA increased $991 million on a period-end basis and average NIDDA rose $564 million. Tom Cornish, chief operating officer, said commercial operating balances remained strong and that the company continued to add new client relationships and core operating balances across business units.
On an average basis, Singh said NIDDA was up 13% year over year, running slightly ahead of the company’s prior full-year guidance of about 12%. Average core deposits were up about 7% year over year, in line with the company’s earlier expectations.
The stronger deposit mix helped improve net interest margin. Jim Mackey, chief financial officer, said net interest income rose $6 million from the first quarter and $9 million from a year earlier. Net interest margin increased seven basis points from the prior quarter to 3.06%, and was up 13 basis points from a year ago.
Mackey attributed the improvement largely to funding mix, including higher average NIDDA balances and reduced reliance on higher-cost wholesale funding. Average deposit costs declined seven basis points from the first quarter and 42 basis points from a year earlier. Average wholesale funding balances declined $636 million from the first quarter and $1.2 billion from a year earlier.
Singh said BankUnited also reduced brokered deposits to just over 10% of total deposits, a level he said had not been seen since the peak of the COVID period. However, he cautioned that period-end deposit costs can be misleading because the second quarter includes seasonal deposit strength, particularly from the title business. Management said average NIDDA is the more relevant measure for margin and earnings.
Loan growth trails earlier expectations as competition intensifies
While deposit performance was strong, BankUnited’s loan growth came in below its earlier outlook. Singh said average core loans were up about 4% year over year and about 1% quarter over quarter, but that was behind the company’s initial guidance.
Management said competitive pressure in lending has increased, with banks returning aggressively to commercial real estate lending and pricing spreads tightening faster than expected. Singh said the company is seeing “mispricing of credit from time to time” and less discipline from competitors in requiring broader client relationships, including deposits.
“We have let some business go,” Singh said, noting that BankUnited made about $230 million to $240 million of strategic exits during the quarter because pricing and relationship terms did not meet the company’s standards.
Cornish said loan production remained solid, and growth during the quarter came mainly from commercial real estate and mortgage lending. Commercial real estate balances increased $120 million point to point, while mortgage warehouse balances increased $72 million. C&I balances declined due to selected exits tied to pricing or structure-related terms.
Management said loan pipelines for the second half of the year appear strong, consistent with BankUnited’s usual seasonal pattern in which the third and fourth quarters are stronger for lending. Cornish said the company is seeing opportunities across C&I, commercial real estate and small business lending, with growth in newer markets including Dallas, Atlanta and Charlotte. BankUnited also expanded its Dallas office, opened an office in Charlotte and continued investing in Tampa.
Singh emphasized that BankUnited’s credit standards have not changed. He said the company is winning fewer deals because it has not moved its “credit box” to match market pricing. Cornish also said BankUnited has avoided some areas that would offer balance growth but not relationship benefits, including data center lending and certain private credit-type opportunities.
Credit metrics improve after elevated first-quarter charge-offs
Credit trends improved during the quarter. Singh said charge-offs were $6.4 million, down from $36 million in the prior quarter. He said nonperforming loans declined 19% from the first quarter and were down 40% year to date, while criticized and classified loans were essentially flat during the quarter.
Mackey said the charge-off ratio was 11 basis points and that provision expense was under $6 million, down $9 million from the first quarter. The company increased its allowance coverage ratio to 91 basis points. Mackey also said nonperforming loans were down 40% from a year earlier, while criticized and classified loans were down 14% year over year.
Fee income and expenses move higher
BankUnited reported strength in fee income, including capital markets activity, interest rate swaps, commercial card and service charges. Cornish said service charge income was up 18.6% year to date compared with the prior-year period, reflecting the company’s focus on treasury sales, commercial relationships and fee-generating business.
Mackey said non-interest income was generally tracking to plan and that swap activity tends to follow lending activity. He said the company also sees opportunities in foreign exchange, loan syndication fees and other market-dependent areas.
Expenses increased from both the prior quarter and the year-earlier period. Mackey said the increases were generally in line with expectations, including seasonal deposit-related costs and some competition-driven expenses. He also noted elevated operational losses of about $1 million and real estate owned disposition expense tied to one property. BankUnited’s REO balance declined to $1.5 million from more than $7 million a year earlier.
Guidance adjusted as management balances deposits, loans and margin
BankUnited revised parts of its full-year 2026 outlook, which management described as fine-tuning rather than a major change. Mackey said the company now expects core loan growth of 4% to 5%, down from the original projection of 6%, reflecting competitive conditions and slower year-to-date growth.
The company raised its outlook for average NIDDA growth to 12% to 13%, while lowering expected net interest income growth to 5% to 6% because of timing, loan mix and the year-to-date shortfall versus prior expectations. Revenue growth guidance was also reduced to 5% to 6%, largely due to lower net interest income expectations, while non-interest income guidance was increased slightly.
Mackey said expenses are now expected to be slightly higher than previously guided, driven by deposit-related costs and compensation, including incentive payouts and opportunistic hiring of revenue producers. Provision expense is expected to be around the original guidance to slightly higher, depending on loan balances and charge-offs.
BankUnited ended the quarter with a common equity tier 1 ratio of 12.3%, up 10 basis points. The company repurchased just over $50 million of stock during the quarter and had about $146 million remaining under its current board-approved authorization. Singh said management expects to use the remaining authorization this year and return to the board later in the year to discuss the next authorization.
Management said its outlook assumes a strong economic environment and one interest rate hike late in the year. Singh said the economy is doing well, though he noted that geopolitical developments and inflation remain risks. He said BankUnited remains focused on building deposits and being disciplined about when to deploy capital.
About BankUnited (NYSE:BKU)
BankUnited, Inc is a bank holding company based in Miami Lakes, Florida, operating through its subsidiary BankUnited, National Association. The company provides a broad range of commercial banking products and services, including deposit accounts, commercial lending and treasury management. It serves middle-market and small-business clients, offering tailored financing solutions across a variety of industry sectors.
The bank's lending portfolio includes commercial and industrial loans, commercial real estate loans and construction financing, as well as residential mortgage lending.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider BankUnited, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and BankUnited wasn't on the list.
While BankUnited currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The space race is growing fast, and you don’t have to have gotten in early on SpaceX to profit. This report shows seven space stocks you can buy today that may grow as rockets, satellites, defense, space internet, and new space technology become more important.
Get This Free Report
