BankUnited's Net Interest Margin Expands Again to 3.16%

The Tip Desk · October 27, 2026 · 3 min read

Tax-equivalent net interest income rose about $5.5 million to $264.7 million as the margin reached 3.16% and deposit costs fell to 1.99%.

BankUnited, Inc. (BKU), the bank holding company with $34.6 billion in total assets, expanded its net interest margin a second consecutive quarter, reaching 3.16% in the three months ended September 30, 2026, after a 7 bps lift in the second quarter.

Tax-equivalent net interest income rose about $5.5 million, or 2%, from the prior quarter to $264.7 million, and $11.0 million, or 4%, from the year-earlier quarter. Chairman, President and Chief Executive Officer Rajinder Singh said the margin came in ahead of the company’s guidance.

The company attributed the sequential gain to cheaper funding, a higher tax-equivalent yield on investment securities after selling lower-yielding paper and reinvesting into higher-yielding securities, and a 5 bps rise in commercial-loan yields from repricing and mix. Average cost of deposits improved 6 bps to 1.99%, continuing the decline that took it to 2.05% in the second quarter from 2.12%.

Average non-interest-bearing demand deposits held at $9.03 billion, up $824 million, or 10%, from a year ago, after a $564 million, or 7%, increase in the second quarter. Ending NIDDA fell $821 million, or 8%, from the prior quarter on seasonal normalization after record second-quarter inflows and were 32.2% of total deposits. Average total deposits excluding brokered declined $385 million from the prior quarter after an $811 million increase in the second quarter.

Average core loans decreased $147 million, or 1%, from the prior quarter after a $195 million, or 1%, increase in the second quarter, and were up $706 million, or 4%, from a year ago. Total average loans decreased $314 million on continued runoff of non-core loans and remained stable from a year ago. Average CRE loans increased $75 million, or 1%, from the prior quarter and $624 million, or 10%, from a year ago. Average C&I loans decreased $306 million, or 4%, from the prior quarter. Average mortgage warehouse lending increased $133 million, or 18%, from the prior quarter and $226 million, or 35%, from a year ago. Average residential loans decreased $151 million, or 2%, from the prior quarter, consistent with the company’s balance-sheet repositioning.

Net charge-offs remained 0.11% annualized, flat from the prior quarter and down from 0.25% a year ago. Non-performing loans rose $40 million, or 18%, from the prior quarter after a $51 million, or 19%, decline in the second quarter, and were down $116 million, or 30%, from a year ago; the NPA ratio was 0.77%. Criticized and classified loans decreased $10 million, or 1%, from the prior quarter and $176 million, or 14%, from a year ago. The provision for credit losses was $9.0 million, down from $15.6 million in the prior quarter; the allowance ended at $221.5 million, or 0.93% of loans.

Non-interest income fell to $19.8 million from $29.2 million in the prior quarter, including a $2.3 million loss on investment securities from a strategic sale of about $1.0 billion of lower-yielding securities. Capital markets income decreased $1.8 million from the prior quarter to $6.3 million on market conditions and loan-production timing. Non-interest expense was $174.6 million, essentially unchanged from the prior quarter, with higher employee compensation and deposit-related costs versus a year ago.

Net income was $72.2 million, or $1.01 a share. Excluding the impact of securities sales, net income was $73.9 million, or $1.03 a share. Return on average assets was 0.82% and return on average equity 9.6%.

CET1 declined 20 bps to 12.1% from the prior quarter and 40 bps from a year ago; the tangible common equity ratio was 8.0%. Tangible book value per share was $39.10. The company repurchased approximately 2.1 million shares for $97.0 million in the third quarter, versus about 1.1 million shares for $50.1 million in the second quarter.