BankUnited in Miami Lakes, Fla., posted higher quarterly earnings as increased revenue offset higher expenses and ongoing issues in its taxi medallion lending operations.

The $28 billion-asset company said in a press release Tuesday that its first-quarter profit rose 13.5% from a year earlier to $62.3 million. Earnings per share of 57 cents topped the average estimate of analysts compiled by FactSet Research Systems.

Net interest income increased 11.4% to $231 million. Average loans increased by 16% to $19.3 billion, while the net interest margin narrowed by 13 basis points to 3.70%.

"Most banks don't have the tons of cash and liquidity that we have," says Raj Singh, the COO of BankUnited, which has been retaining more mortgages as investments.
BankUnited, led by CEO Rajinder Singh, set aside more funds in the first quarter to cover troublesome taxi medallion loans.

The loan-loss provision more than tripled to $12.1 million.

BankUnited said about three-fourths of the provision was tied to its taxi medallion lending business. The company said it had $59.4 million in nonperforming taxi medallion loans at March 31, a slight decrease from Dec. 31.

Noninterest income rose 21% to $28 million. The quarter included a $4.6 million gain on the sale of loans and higher lease financing income.

Noninterest expense increased 10% to $156.6 million. Employee compensation and benefits rose by 8%, to $60 million, while professional fees more than doubled to $5 million.