Opinions
Darren Sissons
BankUnited, Inc
BKU-N
PAST TOP PICK
Feb 03, 2015
Stock price when the opinion was issued
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Regional, commercial bank. It doesn’t loan much to consumers. Florida and New York Metro area. One of the best management teams in the banking industry. Their capital structure is very conservative and they are well capitalized. They guided down on future growth. They are going to hold off on growth until times get better and he likes that.
A regional bank that has a lot of exposure to small business loans, but trading at rather high valuations, and we are not really seeing the growth. There are more attractive regional banks that are seeing better growth, such as Zions Bank (ZION-Q). BankUnited would be a Hold, or just stay away.
Within the US banks, he prefers the regionals. This one is a commercial bank, not a retail bank. It loans money to companies and real estate developers, etc. in Florida and the New York metropolitan market. Exceedingly well capitalized. Very well-run. He likes that it is very picky on its loans. They have cut back on some of their commercial lending because it has gotten too competitive and the margins have been squeezed. This will definitely be a beneficiary of higher interest rates. Dividend yield of 2.66%.
(Top Pick Sept. 9/16, Up 6.84%) It went bankrupt during the crisis and was rescued and recapitalized. It is headquartered in Florida and takes retail business, but is mainly a commercial bank. It is dependent on loan growth more than interest rate growth. Loan growth has been a little sluggish, but he feels it will go up. He is putting new clients into it.
(A Top Pick Jan 30/14. Down 3.69%.) This is a freshly recapitalized bank. Relative to the Canadian landscape, it would be “best of breed” tier 1 ratio capital. Very, very strong. Fundamentally all the banks and insurance companies are going to work on an interest rate rise, and until we see that, the profitability engines are just not kicking out the profit that would be expected. You could buy it here and it might move sideways for a little while, but once the interest rates start to move this will benefit. He likes it looking forward.