BankUnited: Valuation And Deposit Costs Offset Sound Growth Investments

There are certainly things to like about BankUnited (NYSE:BKU). This bank has significant operations in an attractive fast-growing market (Florida) and is using an organic growth strategy to expand into attractive markets like Atlanta and Dallas. The bank has also been focused on addressing past deficiencies in its core deposit base, while also returning meaningful capital to shareholders.

Despite those positives, the shares have lagged the larger regional bank group since my last article (up about 9% versus up 25%), as my concerns about the bank's deposit costs and valuation have played out. At this point, BankUnited shares do look undervalued, but so do many other bank stocks, and without more meaningful differentiation in loan growth, spread margin, and/or operating leverage, I don't see what really ought to drive a "buy this, not that" call for BankUnited.

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BankUnited: Valuation And Deposit Costs Offset Sound Growth Investments