BankUnited (NYSE:BKU) reported first-quarter 2026 earnings of $62 million, or $0.83 per share, as management emphasized seasonal patterns that typically pressure results early in the year before improving in the second quarter. Chairman, President, and CEO Raj Singh urged investors to focus on year-over-year and trailing-12-month comparisons rather than quarter-to-quarter changes, citing recurring first-quarter softness in deposit balances and commercial loan production.
Quarter results show year-over-year improvement
Singh said first-quarter net income increased from $58 million, or $0.78 per share, in the year-ago quarter. Net interest margin (NIM) rose to 2.99% from 2.81% a year earlier, while pre-provision net revenue (PPNR) increased to $106 million from $95.2 million.
Mackey noted two items that were “notable” in the quarter but “largely offset each other”: year-end compensation-related items tied to strong prior-year performance and stock performance, and the reversal of previously accrued FDIC special assessments.
Deposits: NIDDA growth, pricing discipline, and seasonality
Singh and Chief Operating Officer Tom Cornish both spent significant time discussing seasonality in deposits—particularly non-interest-bearing demand deposit accounts (NIDDA)—and how it can affect margins and earnings early in the year. Singh said NIDDA typically declines in mid-to-late December, bottoms “deep in the first quarter,” then rebounds late in the first quarter and rises strongly in the second quarter.
Despite those seasonal pressures, Singh said deposits grew in the quarter. Non-broker deposits increased by $277 million from the prior quarter, and the company used most of that inflow to pay down brokered deposits, resulting in net deposit growth of about $7 million.
On a trailing 12-month basis, Singh said non-broker deposits increased $1.4 billion and NIDDA rose $875 million. Cornish added that NIDDA represents 30% of total deposits and described the company’s deposit strategy around three priorities:
- Driving NIDDA growth: Cornish said period-to-period NIDDA growth was $875 million, or 11%, and average NIDDA rose $1.05 billion.
- Expanding fee-based relationships: Cornish said service charges on deposits increased 18.8% year-over-year, outpacing NIDDA growth, which he viewed as evidence of cross-selling and “sticky” client relationships.
- Managing deposit costs: Cornish said average deposit cost declined 6 basis points quarter-over-quarter, from 2.18% to 2.12%, and described ongoing repricing efforts.
Cornish also said wholesale funding declined by $70 million from the prior quarter and by $749 million from the prior year.
Asked about the title business and related deposits, Singh said BankUnited was adding “more than 40” new customers per quarter on average—closer to 50 over the last three quarters—adding that relationship intake had increased and market share momentum remained positive. Mackey clarified that this is “net client relationship growth.” Singh said average relationship size is about $3 million. He also said BankUnited has added personnel in both front-office and back-office fulfillment functions and is pursuing “two large technology projects” to upgrade its treasury and payments platforms.
On competition, Singh said there is “certainly more competition today than a year or two ago,” including from larger banks and smaller institutions, but he said competitors have not replicated BankUnited’s model and that the company’s scale, operational experience, and integration with ERP providers provide an advantage.
Loan trends and margin drivers
Loan growth was modest in the quarter. Singh said loans were up $9 million in the first quarter, while loans increased $906 million over the past year. Cornish said CRE and mortgage warehouse lending increased $76 million and $77 million, respectively, while C&I declined $144 million from the previous quarter, which he attributed in part to quarter-end utilization patterns and seasonal timing around financial statements for new business.
On CRE, Cornish said the portfolio is “just under 30%” of the overall loan book and described it as well-balanced by asset class. He cited a weighted average debt service coverage ratio of 1.84 and average loan-to-value of 55.4%. Cornish also pointed to continued improvement in the office portfolio, with weighted average debt service coverage rising to 1.78 from prior levels in the 1.54–1.55 range, alongside improvements in leasing and a narrowing gap between physical and economic occupancy as abatements roll off.
Mackey said the quarter’s NIM decline from the fourth quarter reflected “a variety of small things,” including the full-quarter impact of prior Fed rate cuts flowing through the balance sheet (particularly in securities coupons resetting), higher reliance on broker deposits due to NIDDA seasonality, and certain investment portfolio actions. He also noted broker deposits were “a little more expensive this year than historical,” and said it was unclear what drove the elevated costs.
In Q&A, Singh said the balance sheet is “very neutrally hedged” and only “very slightly asset sensitive,” adding that the biggest risks to guidance are competitive lending spreads and meeting NIDDA growth expectations, rather than whether the Fed cuts rates once or twice.
Credit: NPLs fall, charge-offs elevated, and qualitative reserves added
Management reported improved credit trends. Singh said non-performing loans (NPLs) declined $98 million, or 26%, during the quarter, and criticized and classified loans fell $146 million, or 12%. Mackey added criticized and classified loans were down $333 million, or 24%, from a year ago. Singh said the allowance for credit losses (ACL) to NPL coverage ratio improved from 59% to 76%.
Charge-offs were elevated in the quarter. Mackey said net charge-offs were $36 million, driven largely by “just a few C&I loans,” bringing the trailing 12-month charge-off rate to 37 basis points—above the company’s preference of “closer to 25.” Singh identified the two main charge-off industries as healthcare and transportation, and said one was in Atlanta and one in Florida.
Provision expense was $25 million. Singh and Mackey said the company added $8 million in qualitative reserves to account for uncertainty in the geopolitical environment, including the conflict in the Middle East. Mackey said the company’s models would have suggested releasing more reserves, but management chose to add the qualitative overlay. He said the allowance for credit losses totaled $209 million, down $11 million from the prior quarter, and the ACL ratio ended at 87 basis points. Mackey also noted that while charge-offs have been concentrated in C&I, the C&I coverage ratio is about 160 basis points.
Singh said he expects non-performing assets (NPAs) to decline through the remainder of the year, though “probably not at the same clip.” In response to questions about the drivers of NPA improvement, Cornish cited refinancings in longer-term capital markets, payoffs by other lenders in lending groups, and upgrades in performance. Singh said his optimism is based on “granular knowledge of the portfolio” and upcoming resolutions, rather than broader macro assumptions.
Fees, expenses, buybacks, and guidance
Non-interest income totaled $25 million, up $2 million from a year earlier. Mackey said that excluding securities gains, non-interest income was “basically flat,” while the company felt good about capital markets fee activity and remained aligned with its expectations and guidance. Singh described capital markets income as tied to loan production and larger transactions such as syndications, noting the business can be “lumpy.” Cornish and Singh also discussed foreign exchange (FX) as an early-stage growth area, with Cornish saying client additions to the FX platform over the last six months were “impressive” and that the raw number is up over 100% from the prior year.
Non-interest expense was $167 million, up from a year ago, which Mackey attributed to prior investments in new markets and talent as well as compensation and cost-of-living increases. In response to a question, Cornish said certain compensation-related items were included in the previously provided expense guidance.
On capital returns, Singh said BankUnited repurchased 1.3 million shares during the quarter and had “just a hair under $200 million” remaining under its authorization. Mackey said the company is “steadily work[ing] towards the target of about 11.5% CET1.”
Management reiterated its full-year guidance with “no change.” Mackey said provision expense is expected to be more front-end loaded, and Singh and Cornish both pointed back to the company’s seasonal patterns—particularly in deposits and margins—as context for expected performance through the year.
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.
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