Executive Summary

Q1 2025 delivered stable profitability with diluted EPS of $0.78, slightly above consensus, while “Revenue” (S&P-defined as net interest income after provision + non-interest income) missed as NIM compressed 3 bps to 2.81% due to hedge roll-off and lower floating-rate coupons . EPS beat of ~$0.02 vs $0.76 consensus; “Revenue” missed by ~$$23.27MM (~8.8%) vs consensus* .
Funding remix progressed: NIDDA rose $453MM to 29% of deposits, non-brokered deposits +$719MM; wholesale funding down $1.1B; loan-to-deposit ratio fell to 85.5% (from 87.2%) .
Credit trends normalized: annualized net charge-offs 0.33%; ACL-to-loans steady at 0.92%; NPLs ticked up to 1.08% (one office loan previously drove NPL increase in Q4) .
Guidance unchanged: management still targets NIM expansion through year (path to ~3% by YE 2025), maintains mid-single-digit expense growth, and pauses buybacks given macro uncertainty; dividend raised 7% to $0.31 .

What Went Well and What Went Wrong

What Went Well

Deposit mix improvement and funding costs down: average cost of total deposits fell 14 bps QoQ to 2.58%; spot APY down to 2.52% (from 2.63%) .
NIDDA strength and wholesale funding reduction: NIDDA +$453MM to 29% of deposits; wholesale funding (FHLB + brokered) down $1.1B, lowering funding risk and cost .
Management reaffirmed margin expansion narrative despite rate volatility: “We’re not changing our guidance… loan growth, deposit growth, margin, expenses…” and path to ~3% NIM by YE 2025 .

Selected quotes:

CEO: “We’re happy to start the year on a strong note, and remain fairly optimistic…” .
CFO: “Without [hedge expiration], the NIM would have been flat” (3 bps impact) .
CEO: “We’re not changing our guidance… the cone of uncertainty is much bigger” .

What Went Wrong

Net interest income down and NIM compressed: NII fell $6.1MM QoQ; NIM down 3 bps to 2.81% due to hedge roll-off and floating-rate resets .
Loans contracted: total loans -$308MM QoQ; core CRE/C&I -$106MM amid seasonal slowdown, high payoffs, and selective exits; residential and franchise/equipment/municipal collectively -$196MM .
Credit normalization: annualized NCOs rose to 0.33% (TTM 0.24%), slight uptick in NPLs to 1.08%; provision increased to $15.1MM .

Financial Results

Headline Trend (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Diluted EPS ($)	$0.81	$0.91	$0.78
“Revenue” (Net interest income after provision + Non-interest income, $USD MM)	$247.77*	$253.46*	$240.30*
Net Interest Margin (%)	2.78%	2.84%	2.81%
Net Interest Income ($USD MM)	$234.13	$239.26	$233.14
Provision for Credit Losses ($USD MM)	$9.25	$11.00	$15.11
Non-Interest Income ($USD MM)	$22.89	$25.21	$22.27
Net Income ($USD MM)	$61.45	$69.30	$58.48

Note: “Revenue” values retrieved from S&P Global.*

Q1 2025 Actual vs Wall Street Consensus (S&P Global)

Metric	Consensus	Actual	Surprise
Diluted EPS ($)	$0.76333*	$0.78	+$0.02
“Revenue” ($USD MM)	$263.57*	$240.30*	-$23.27 (~-8.8%)*

Note: Values retrieved from S&P Global.*

Balance Sheet & Funding KPIs (oldest → newest)

KPI	Q3 2024	Q4 2024	Q1 2025
Total Deposits ($USD MM)	$27,856	$27,866	$28,058
Non-Interest DDA ($USD MM)	$7,635	$7,616	$8,069
NIDDA as % of Deposits	27%	27%	29%
Loan-to-Deposit Ratio	87.6%	87.2%	85.5%
Avg Cost of Total Deposits (%)	3.06%	2.72%	2.58%
Spot APY – Total Deposits (%)	2.93%	2.63%	2.52%
CET1 Ratio (Consolidated)	11.8%	12.0%	12.2%
TCE / TA (%)	7.6%	7.8%	8.1%
NPLs / Total Loans (%)	0.92%	1.03%	1.08%
ACL / Loans (%)	0.94%	0.92%	0.92%
Annualized Net Charge-Offs (%)	0.12%	0.16%	0.33%

Loan Portfolio Composition

Segment ($USD thousands)	Dec 31, 2024	Mar 31, 2025
Non-owner occupied CRE	$5,652,203	$5,602,711
Construction & land	$561,989	$603,385
Owner occupied CRE	$1,941,004	$1,967,984
Commercial & industrial	$7,042,222	$6,916,996
Core C&I + CRE subtotal	$15,197,418	$15,091,076
Franchise & equipment finance	$213,477	$165,095
Pinnacle – municipal finance	$720,661	$688,986
Mortgage warehouse lending	$585,610	$580,248
Residential	$7,580,814	$7,464,494
Total Loans	$24,297,980	$23,989,899

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin	FY 2025	Path to ~3% by YE 2025 (from prior quarter commentary)	Path to ~3% by YE 2025	Maintained
Operating Expenses	FY 2025	Mid-single-digit YoY growth	Mid-single-digit YoY growth	Maintained
Loan Growth	FY 2025	Unchanged (seasonal Q1 softness; stronger Q2–Q4)	Unchanged	Maintained
Deposit Growth (NIDDA focus)	FY 2025	Unchanged (strong Q2 expected)	Unchanged	Maintained
Share Repurchase	Near-term	Paused pending macro clarity	Paused	Maintained
Dividend	Q1 2025	$0.29 prior	$0.31 (+7%)	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 & Q4)	Current Period (Q1 2025)	Trend
Funding remix & deposit costs	Spot APY down; average cost of total deposits improved (Q3: 3.06%; Q4: 2.72%)	Avg cost down to 2.58%; NIDDA 29%; wholesale funding -$1.1B	Improving
NIM trajectory	NIM up sequentially (2.78% → 2.84%)	NIM 2.81% with 3 bps hedge impact; guidance unchanged, target ~3% YE	Near-term slight compression; medium-term expansion
CRE office risk	Q4 NPL increase tied to one office loan	Office portfolio $1.7B; criticized office $414MM; office ACL 1.99%	Managed; stable-to-improving risk posture
Credit normalization	NCOs low (Q3: 0.12%; FY24: 0.16%)	NCOs annualized 0.33%; provision $15.1MM; ACL/loans 0.92%	Normalizing (higher NCOs)
Liquidity & capital	Same-day liquidity $15.0B (Q3); CET1 11.8–12.0%	Same-day liquidity $15.6B; CET1 12.2%; TCE/TA 8.1%	Robust
Macro/tariffs & guidance tone	Optimism on environment; storms impact negligible	Guidance held; “cone of uncertainty” wider; interest-rate risk focus	Cautious confidence
Technology & operations	N/A	GL conversion executed “flawlessly”	Operational enhancement

Management Commentary

CEO strategic tone: “We’re happy to start the year on a strong note, and remain fairly optimistic…” . “We’re not changing our guidance… loan growth, deposit growth, margin, expenses…” . “We are as prepared as anyone… more liquidity than we’ve ever had” .
CFO on NIM drivers: “Some cash flow hedges expired… had a 3 bps impact… without that, the NIM would have been flat” . “Average yield on loans declined from 5.60 to 5.48; securities from 5.31 to 5.07” .
COO on credit/portfolio: Office portfolio ~$1.7B; medical office ~20%; office charge-offs since 2020 total $16.2MM ($7.9MM this quarter) .

Q&A Highlights

Margin outlook and NII: Management expects margin expansion over the remainder of 2025 driven by mix-shift on both sides (higher-yielding core commercial loans; lower-cost deposits); target remains ~3% by YE; avoids quarter-specific guide .
Competitive dynamics: CRE spreads tightened in Q1; pipeline spreads improving; C&I spreads steady; securities spreads widened .
Credit & reserves: Migration between categories is “normal”; qualitative reserves increased to cover “wider cone of uncertainty”; April Moody’s scenario covered by existing overlays .
Capital return: Buybacks paused given uncertainty; dividend increased; management will reassess quarterly .
Exposure checks: No Florida condo market exposure ; brokered deposits down ~$528MM QoQ (to ~$4.7B) .

Estimates Context

EPS: Q1 2025 diluted EPS $0.78 vs consensus $0.76333 → small beat; management noted consensus ~$0.76 . Values retrieved from S&P Global.*
“Revenue”: Q1 2025 $240.30MM vs consensus $263.57MM → miss of ~~$$23.27MM (~~-8.8%); driven by lower asset yields and hedge expiration impacting NIM* . Values retrieved from S&P Global.*
Trailing quarters: Q4 2024 EPS $0.91 vs $0.73–$0.73 consensus; “Revenue” $253.46MM vs $261.71MM consensus (miss)* . Q3 2024 EPS $0.81 vs $0.73 consensus; “Revenue” $247.77MM vs $260.87MM consensus (miss)* .
Implication: Consensus may need modest downward adjustments to “Revenue” if rate resets persist; EPS resilience depends on deposit remix and loan growth pull-through.*

Key Takeaways for Investors

Funding remix is the core catalyst: NIDDA mix improvement and wholesale funding reductions are lowering costs and providing margin tailwinds into Q2–Q4; expect stronger deposit benefit in Q2 as NIDDA growth occurred late in Q1 .
Margin path intact despite near-term headwinds: 3 bps NIM compression tied to hedge roll-off; guidance to ~3% YE remains, contingent on continued mix-shift and rate curve dynamics .
Credit normalizing but contained: Higher annualized NCOs and slight NPL uptick offset by stable ACL/loans and robust office portfolio metrics (LTV ~64.5% in office; DSCR ~1.58) .
Capital and liquidity are strong: CET1 12.2%, TCE/TA 8.1%, same-day liquidity ~$15.6B; dividend raised to $0.31; buybacks on hold—income return anchored in dividend while remix progresses .
Loan outlook: Q1 seasonally soft with payoffs; pipelines robust across core; watch pull-through amid macro/tariffs; expect loan growth to recover in Q2–Q4 .
Trading setup: Near-term—neutral to constructive given EPS resilience vs “Revenue” miss; monitor NIM expansion signals (deposit costs, spreads, curve). Medium-term—margin expansion and funding remix support valuation as credit remains manageable .
Risk checks: Rate-volatility remains primary near-term risk; management prioritizing neutral rate positioning; CRE office concentrations benchmark below peer median; no Florida condo exposure .

Additional sources read:

Q1 2025 earnings press release and 8-K exhibits .
Q1 2025 earnings call transcript .
Q4 2024 and Q3 2024 press releases for trend analysis .
Q1 2025 related press releases (dividend increase; scheduling; management appointment) .

Note: “Revenue” consensus/actual figures and EPS consensus values retrieved from S&P Global.*

BankUnited, Inc. (BKU)·Q1 2025 Earnings Summary