The recent decision by BankUnited to quarantine its taxi loans paid dividends as the Miami Lakes, Fla., company’s first-quarter profit soared.
The $30 billion-asset company’s net income rose 37% year over year to $85 million. Earnings per share of 77 cents were a nickel better than the mean estimate of analysts compiled by FactSet Research Systems.
Net interest income after the loan-loss provision increased 12% to $245 million as a result of higher average balances of loans and investment securities and improved yields.
BankUnited’s loan-loss provision tied to taxi medallion loans declined 71% to $2.8 million. The bank placed its entire taxi medallion loan book on nonaccrual status in the third quarter. Other institutions, including BankUnited’s archrival Signature Bank in New York, have also recently struggled with problem taxi loans.
Noninterest income was little changed at $28 million. Improved income from lease financing was offset by lower gains on the sale of loans and from investment securities, and lower income from the resolution of covered assets.
Noninterest expense climbed 3% to $161.8 million on higher salaries and employee benefits, and a decline in amortization of the bank's Federal Deposit Insurance Corp. indemnification asset. BankUnited’s effective income tax rate dropped to 23.1% from 30.8%.
Average deposit balances rose nearly 13% from the first quarter of 2017 to $22 billion. However total deposits rose just 1% from the fourth quarter. The average cost of deposits climbed 32 basis points from a year earlier, and 10 basis points from Dec. 31, to 1.04% at March 31.
“We remain encouraged by positive tailwinds from tax reform, a strong job market and economic growth,” CEO Rajinder Singh said in a news release Wednesday.