Dj Ibd: Bankunited Clears Key Benchmark, Hitting 80-Plus Rs Rating

As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the regional banks industry, including BankUnited and its peers.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

The 94 regional banks stocks we track reported a satisfactory Q3. As a group, revenues missed analysts’ consensus estimates by 1.1%.

In light of this news, share prices of the companies have held steady as they are up 4.3% on average since the latest earnings results.

BankUnited

Born from the ashes of a failed Florida thrift during the 2009 financial crisis, BankUnited is a regional bank that provides commercial lending, deposit services, and treasury solutions to businesses and consumers primarily in Florida and the New York metropolitan area.

BankUnited reported revenues of $275.7 million, up 7.3% year on year. This print fell short of analysts’ expectations by 1.3%. Overall, it was a slower quarter for the company with a miss of analysts’ net interest income estimates and a slight miss of analysts’ revenue estimates.

"We continued to deliver on improved profitability this quarter, with gains in EPS, ROA and ROE. We achieved our near-term target of a 3% margin as well." said Rajinder Singh, Chairman, President and Chief Executive Officer.

Interestingly, the stock is up 20.5% since reporting and currently trades at $44.40.

Read our full report on BankUnited here, it’s free for active Edge members.

Best Q3: Customers Bancorp

Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.

Customers Bancorp reported revenues of $232.1 million, up 38.9% year on year, outperforming analysts’ expectations by 7%. The business had a stunning quarter with a solid beat of analysts’ net interest income estimates and an impressive beat of analysts’ revenue estimates.

The market seems content with the results as the stock is up 4.3% since reporting. It currently trades at $68.36.

Is now the time to buy Customers Bancorp? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: The Bancorp

Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.

The Bancorp reported revenues of $174.6 million, up 38.8% year on year, falling short of analysts’ expectations by 10%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue estimates and a significant miss of analysts’ net interest income estimates.

As expected, the stock is down 16.6% since the results and currently trades at $64.41.

Read our full analysis of The Bancorp’s results here.

S&T Bancorp

Tracing its roots back to 1902 in western Pennsylvania's industrial heartland, S&T Bancorp is a Pennsylvania-based bank holding company that provides retail and commercial banking services, cash management, trust services, and investment advisory solutions.

S&T Bancorp reported revenues of $103 million, up 6.9% year on year. This print met analysts’ expectations. Aside from that, it was a mixed quarter as it underperformed in some other aspects of the business.

The stock is up 11.8% since reporting and currently trades at $39.89.

Read our full, actionable report on S&T Bancorp here, it’s free for active Edge members.

WesBanco

Tracing its roots back to 1870 in West Virginia, WesBanco is a bank holding company that provides retail and commercial banking, trust services, insurance, and investment products through its subsidiaries across several Midwestern and Mid-Atlantic states.

WesBanco reported revenues of $261.6 million, up 73.5% year on year. This result was in line with analysts’ expectations. Zooming out, it was a mixed quarter as it also recorded a beat of analysts’ EPS estimates but a slight miss of analysts’ net interest income estimates.

The stock is up 4.4% since reporting and currently trades at $32.73.

Read our full, actionable report on WesBanco here, it’s free for active Edge members.

What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official boosted hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Regional Banks company East West Bank jumped 4.1%. Is now the time to buy East West Bank? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Columbia Banking System jumped 4.1%. Is now the time to buy Columbia Banking System? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Cathay General Bancorp jumped 4.1%. Is now the time to buy Cathay General Bancorp? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company BankUnited jumped 4%. Is now the time to buy BankUnited? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Axos Financial jumped 4.1%. Is now the time to buy Axos Financial? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Cathay General Bancorp (CATY)

Cathay General Bancorp’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was about 1 month ago when the stock dropped 6.2% on the news that disclosures from two lenders raised concerns about deteriorating loan quality across the industry. The drop was triggered by specific incidents that have spooked investors. Zions Bancorp announced a $50 million charge-off—a debt the bank doesn't expect to collect—on a single loan. Separately, Western Alliance Bancorp revealed it was dealing with a borrower who had failed to provide proper collateral. These events are compounding existing anxieties about the regional banking sector, which is already under pressure from elevated interest rates and declining commercial real estate values. The news heightened investor concerns that more cracks could appear in borrowers' creditworthiness, potentially leading to increased loan losses and reduced profitability for other banks in the sector.

Cathay General Bancorp is up 1.5% since the beginning of the year, but at $47.81 per share, it is still trading 11.2% below its 52-week high of $53.85 from November 2024. Investors who bought $1,000 worth of Cathay General Bancorp’s shares 5 years ago would now be looking at an investment worth $1,637.