Easing of taxi medallion issues, loan growth boost BankUnited

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Third-quarter profits rose at BankUnited in Miami Lakes, Fla., on higher loan yields, lower taxes and a smaller provision for loan losses.

Net income for the $31.5 billion-asset BankUnited was $97.3 million, 43% higher than the third quarter of last year. Earnings per share were 90 cents, coming in 5 cents higher than the mean estimate of analysts polled by FactSet Research Systems.

BankUnited benefited from a much smaller provision for loan losses in this quarter — $1.2 million compared with $37.9 million a year earlier. Most of that earlier provision was related to taxi medallion loans.

BankUnited also paid a lower effective income tax rate of 18% this quarter, compared with 31.2% last year.

“Results for this quarter were marked by strong growth in both GAAP and non-loss-share EPS and by continued success increasing noninterest bearing [demand deposit account] balances,” President and CEO Rajinder Singh said in a press release Wednesday.

Net interest income after the loan loss provision rose 23% to $250.8 million, while the net interest margin narrowed by 11 basis points to 3.51%. BankUnited said the lower margin was due to several factors, including an increase in the cost of interest-bearing deposits and the lower federal tax rate’s impact on tax equivalent yields.

Average total loans increased 7.4% to $21.7 billion. The average yield on those loans rose 32 basis points to 5.47%.

Charge-offs related to taxi medallion loans totaled about $700,000 in the third quarter, compared with $35.3 million last year.

Noninterest income fell 27% to $38.7 million, mostly the result of a $26.5 million decrease in the company’s gain on investment securities.

Total deposits increased 5% to $22.3 billion. The majority of that growth was in noninterest bearing demand deposits, the bank said.

Noninterest expenses increased 8% to $170.8 million, much of that due to increased employee compensation and benefits, professional fees and telecommunications and data processing costs.

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