BankUnited (BKU) of Miami Lakes, Fla., reported better-than-expected earnings in the fourth quarter as a surge in interest income more than offset a dip in fee income and the impact of a penalty for pre-paying Federal Home Loan bank advances.

The $12.4 billion-asset company said Tuesday that it earned $62.5 million in quarter, up 51% from the fourth quarter of 2011. Per-share earnings of 61 cents were 13 cents above the expectations of analysts polled by Bloomberg.

Net interest income rose 24%, to $175 million, thanks largely to $30 million it netted from the sale of a pool of credit-impaired loans. That sale also helped boost the net interest margin by 16 basis points, to 6.70%.

Meanwhile, the bank's portfolio of new loans expanded rapidly in 2012, growing by $450 million in the last three months of 2012 and $2 billion for the full year.

Profits were also aided by improved credit quality. BankUnited's provision for loan losses fell fourfold, to $1 million, compared to the year-prior period.

Noninterest income fell 59%, to $5.5 million, due to charges related to debt payments and the termination of an interest rate swap. The bank's mortgage-insurance income also fell 82%, to $862,000.

Also, the bank sold $526.7 million worth of loans in the quarter and used the proceeds to extinguish $520 million in Federal Home Loan Bank advances. This resulted in a prepayment charge of $23 million.

The holding company BankUnited has three subsidiaries: BankUnited in Florida, with $11.7 billion of assets and 98 branches; the wealth-management subsidiary BankUnited Investment Services; and Herald National Bank in New York City. The bank plans to open three branches in South Florida and three in Manhattan for its New York-based subsidiary in the first quarter of 2013, it said in the earnings release.

"We are greatly encouraged by the growth of our franchise as we continue to gain market share in south Florida," Chairman, President and Chief Executive John Kanas said in a news release. "Our upcoming expansion into New York combined with the anticipated continuation of improvement in the Florida economy underscores our optimism toward the future of BankUnited."

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