BankUnited Inc. said Wednesday that second quarter net income fell 14% compared with a year earlier partly because of lower payments coming from the Federal Deposit Insurance Corp. related to its loss-share agreement.
Miami Lakes, Fla.-based BankUnited posted second quarter net income of $44 million compared with $51.2 million a year ago.
Earnings were down slightly because of a 36% drop in nontinterest income to $53 million. Non-interest income fell mainly because the company received lower payments from the FDIC as part of its loss-share agreement as it continued to reclassify BankUnited's legacy assets, called indemnification assets. The company said it expected revenues from indemnification assets, which fell 60% to $14.9 million, to continue a steady decline.
Expenses were also up from a year earlier as the company continued to aggressively target commercial business in Florida by hiring troughs of commercial loan officers.
"We are less focused on current earnings than we are on building a strategically important bank here in Florida," said BankUnited's chairman, president and chief executive, John Kanas, in the conference call Wednesday. "Pennies one way or the other in the earnings line are much less important to me than the trajectory of growth of the assets and liabilities that we are focusing on."
The company added more than $302 million in loans during the quarter that were not covered by the Federal Deposit Insurance Corp., though BankUnited's total portfolio continued to shrink from BankUnited's legacy loans. Despite the shrinkage, Kanas said loan growth was "off to a very strong start again" in the third quarter.
The bank had a total risk-based capital ratio of 41.5% at June 30.
During the conference call, Kanas also addressed the pending lawsuit filed his month by his previous employer, Capital One Bank. Kanas reiterated that himself, along with BnakUnited's vice chairman and chief lending officer, John Bohlsen, were "in compliance with" the noncompete agreement and "will continue to be in compliance with it." He did not expect the suit to have a material impact on BankUnited.
Capital One filed the suit after BankUnited announced a deal to acquire Herald National Bank in New York in June. The noncompete agreement expires next August.
With regard to other acquisitions in Florida, Kanas said the company is actively talking with institutions "either literally or on paper." But FDIC-deals are "not very attractive financially anymore" and as for open-bank deals, Kanas said they can't "get our arms around asset marks" of the seller to meet a reasonable price.