BKU - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen. And welcome to BankUnited third quarter earnings conference call. At this time, all participants are on listen-only mode. Later, we will conduct a question-and-answer session with instructions following at that time. [Operator Instructions] And as a reminder, this conference is being recorded. the Vice to President. turn Shim host, I'll Senior [ph], now, conference your over Lisa And Please begin.

Unidentified Company Representative

call. this and Officer. us President Officer; third conference and today morning and on our Good thank our our our quarter you CEO; Leslie Tom XXXX Chief Singh, Cornish, are Raj morning for Lunak, joining On our call Financial earnings Operating Chief

the forward-looking like laws. Before everyone contains the remind I'd call to statements we US meaning of start, this that within securities

uncertainties risks, vary to assumptions and indicated subject these may are statements and actual results materially in Forward-looking those from statements.

cause Additional future. any results call be information concerning to obligation And revise any to our the to SECF statements factors that by like turn and the statements release differ could indicated from update or can or the filings. earnings forward-looking anytime forward-looking in actual those with such We undertake materially not over now I'd our in that, found to do Raj.

Rajinder Singh

morning, you, everyone. Thank Good Lisa.

I'm Leslie Before the ahead. actually then to call. Leslie, to start and statement start, we'll we a go make going ask

Leslie Lunak

million state that there million just On growth in two something went we to segments. the clarify out the $XXX runoff of page multifamily in the portfolio, Raj. I offset release, release Thanks, this press $XXX want morning. was in of is of that that by other portfolio

numbers. embedded those million between multifamily loans in over and of a real fact, $XXX a commercial categories of In is little reclassification other

to that you. it to We morning. will back be filing going a release, X-K/A an turn this earnings with Raj, I'm corrected clarifying over

Rajinder Singh

you. All right. Thank

of We're York extremely a our us Thank everyone. live dry Florida. you from third New Good joining and let's Now, call. you start quarter call. earnings to this for What month coming morning, for no, the National part I September. morning also this season. told, Service over. officially was, it And to Weather now I be was hurricane November hurricane season considers the that is checked

net income. we this share. a That's be of $XX.X Nevertheless, about our posted will million soon. over earnings $X.XX it quarter, So,

were think, ago, couple checked, Bloomberg of $X.XX. last on estimates I days I a our earnings

about beating year-to-date quarter, is XXXX, as in this quarter comparable quarter we're X.XX% about $XX.X same a or in about almost XX%. we as growth. by down $X.XX. prior it at from was covered Also, up in from I So, about EPS quarter for came which earnings know, The same about over I look this year quarter declined, think in about $XX.X and interest you last our this perspective, reason by And cents. in the all contraction, Net for $X.XX income had if million loans. the which very to Margin happy X% at XXXX. X.XX% nicely, dollars high-yielding obviously, predicted. is for compares X.XX% is million increased you

long been XX headwind That's expected they've beginning runoff, had they last X% the over year. a As over $XX.XX. for X% little for to of but producing at the we've us growth better time, Tangible done much value this months. a grew we book – about this than

was blow. that or in because to Or portfolio that as loan much Irma other Miami. to words, a was about did hit this about this had This that could our is story not the a early facilities directly The the if was September. We actually as damage in Let have me really good hit lot of Irma glancing could of and say very would worse Irma were talk part little it been I as Irma to a bit be. premises. quarter. our by highlight the

is of have be September. an fine. growth our slow. September one months our day, turned It has at just year. to I in of the is generally August momentum busiest think the everything, on end impact of out of the

while growing very To quarter lot about which down give SPF, businesses, disproportionate our the XX% XX% they Florida, of our business book national, and Florida Pinnacle is really were of impacted Third we national example, think have book exposure. or a or It of a little some they're share do September, September. growing you of a I in Pinnacle's loan Pinnacle, in terms as shut of more And, maybe than for such any about in an Florida-based. practically business. is also

businesses impacted as were those So, well.

million loan about for We losses. million are charge or taking $X.X charge $X.X a – allowance

Just safe on side. the be to

thorough the of on on of our portfolio process still completing side. commercial the have We a pretty done a residential in review review the side. We're

seen a taking hurricane. of So of anything. not far, out overabundance $X.X build million just reserve are But we've of caution, we because

our is The last you numbers valuation – in taxi story as other $XXX,XXX a this had We for solved provision. know, for medallion the quarter. we quarter of had each big

of with over came And whatever up, even of This methodology, of we've come a the they've the number valuation the the some we happened more seen methodology again. marketplace discounted $XXX,XXX. new conservative. quarter, been light In over and we place, in all we kind have flow using wanted same we numbers ran transactions using that and the of a that the cash to discount XX% same be

took for that of this on XX% So, number. numbers haircut another our we calculating for quarter, top

And always DCF us. We another us. aggressive about that's a brought perspective. this valuations It is took down just to that trying only transactions the we methodology be our XX% one a That million, discount top our that took we take. trying backup, be for happened, – taxi. that this to of it of light from And for To it. addressing is took problem and problem product under X.XX%. to to solved bothers a we XX% some our we're a $XXX,XXX. about $XX.X on tad under provision $XXX,XXX. in that that, Brought quarter discount of is $XXX,XXX push have blunt, behind just we're So,

the the put that losses, better that items. way, million and for $XX much expected, we growth and on securities. pretty numbers of our quarter. gain actually on was of And details Leslie in talk million The between or quarter. business was day will rest is out of we We October this into of the about allocated this only provision We've than million taxi took The these all in lot in, $XX that a two a – due XXX% potential losses But took even Irma-related which provision $X.X the So, it of not the take let's of for closings, million or bought holding did sale we're those the been to portfolio almost through seeing doing happen then balance walk to volume $XX.X get banks from we less September, happen you And that. pushed quarter the sitting had she'll Irma. the should largely we sheet these for that. it's and XXXX.

grew help year. growth will beginning slightly targets from we which is quarter. Deposits a than loan third is a this the row actually that little we one loans. more that get than So, the of the at some of This stated deposit growth, had more quarter in our

XX%. turn over where in I I move down back of we're XX We'd ratio NPLs points Our it to it my believe, taxis it and points XX – more. at happy now – will are happy. points. is, some notes, actually, net But about have but ratio And – With our we're loan-to-deposit is. love XX% X%, at charge-off non-covered And to XX attributable at that was annual for loans basis taxi. basis basis is that,

then talk who With will Just a the turn it about over it loan turning to who'll out. wanted P&L. to detail Tom Leslie, I'll deposit before talk in growth more to that, point growth and that about little

Thomas Cornish

Raj. Thanks, Great.

portfolio So, our Today, from in national was first portfolio our at XX% remains the the New close billion; York. XX% portfolio $X.X loan and loans in XX/XX, and New portfolio, well non-covered diversified the on at $X.X in billion. Florida national our and across $X.X billion; Florida, at leases, at XX% platform York very

some million So, groups, our had million when our platforms the decline strong, by you has by New business geographies, at $XXX in of growing the national looking at the grew million. and of quarter, look $XXX $XXX million, for quarter. in $XXX of continued by York Kind a activity C&I Florida

business million. grew X-X by $XXX Our residential

And continued growth, now Our year-to-date. million, commitments up mortgage which $XXX $XXX is strong warehousing the in total are million business $XXX that quarter. for million business

Within On million. see multifamily we are $XXX a the CRE significantly. Florida particularly side, grew long-term York declined million. $XX significant transactional very volume, combined down market, that, of units by experienced of to million, which multifamily Florida large while New $XX competition and market, by New continue contraction York sales net And and a is this

category to type decline that essentially that we're seeing, reached our kind the but make of loans. asset to we're continuing So,

as $XX And now capital Our Irma also a in as substantial saw other have Raj our platforms, and risk-based million. concentration XXX%. which national percentage business from impact was mentioned, of that, declining Florida, regulatory some CRE

more we're summary, balanced geographies seeing, growth and more categories. the in growth the product units individual So, and across expected, as across balanced

below deposit all of lost is account units, goal which loss have occurrence with our On We've across despite now one us. quarter, million platforms, XXX%. ratio was for the all that during this And our we million that, of the during a loans very then, through account. ratio been deposit $XXX Having the higher and That significantly XX%, grew growth well-balanced growth by would unusual which mentioned, of the as quarter. been obviously, maintaining consistent Raj side, than a million. a our $XXX and is large is $XXX

the give more now will Leslie So, details results. quarterly on

Leslie Lunak

Good morning, everybody.

will remains given currently middle We're the business planning XXXX First show rest in of I unchanged. for you process. we've forecasting guidance and that annual the our thing of is you the

to NIM what XXXX prepared for unchanged. we've But the not of XXXX out remains call we're put XXXX. there growth expense rest for So, discuss around or expectations whatnot this and and on

each down loans were points due up the a XX As on covered basis the the up, though continued X.XX%, X.XX% interest primarily from from this to even of net the and as category, of assets to covered yield basis basis XX and was non-covered loans. quarter the investment linked-quarter. Cost deposits loans, of on was the margin, individual of runoff interest-earning to points total to securities percentage points loans that's yield X

typical As loans expected, going asset on start June materialize and to see knew that for the quarter. yield costs we covered given this FDIC were hike, our the late to quarter the The combined we I in rate and the XX.X% sales. that numbers quarter, between to our not, we XX% come little execute did XX%. this bit now loan was because moved around Those a year. covered for quarterly in expect

the that of that is not same just month It's and of easy the picture in bit. hurricane timing just changed executing there where the changed hurricane kind loan sell in those a to of flows a sale. concentration The that hits. cash way got little of covered So, some in that a Florida loans

hopefully, them the want that believe did some to agreement. unusual. bonds quarter took the Many Those pretty provisioning is loss offset every little at that portfolio portfolio just we quarter. and the were of gains all addition we those of be impact deep had quarterly back it. in to are with We on we'll the think things taxi we'll normally or sales So, under the gone portfolio. in A grade assess this of that below those this hurricane and more gains of rated either initially bonds hold forward. we that have related continue the covered failed process going of quarter report. we to We to rated in shared securities some provisioning the and taxi investment to around acquisition track see that help did what gains don't BankUnited fourth acquired to we through are the quarter the bit that we've in the not discounts We some kind don't about commercial around XXXX and bonds outside

process the performing any each with by we'll that the on of borrower exists, inspection. borrower areas. credit, where of up in storm very the indications including a borrower impact extensive in analysis are We impact collateral follow damage contacting If of of FEMA-designated

And million The specific provision result $XXX,XXX date, have $X that located to relate in that And around the some down temporary $XX about of XX% as million delinquencies million And and or to of that's portfolio. and loans commercial mean $X.X provided about has billion as million XX in those in the saw borrowers that's been the and $XX We we properties yesterday. or and contacted see due million million that's that's were below XX/XX. $X total the impacted majority storm $XX type customers of and those a of residential our worth in residential the total in $X XX-day of in classified impacted to of To But the loans. commercial during based about about just of by in $X areas insignificant reserves commercial borrowers. to that where impacted what portfolio that areas commercial don't the $XX payment Raj in categories payment think of The some October. loan downgraded release about only did the of billion we're to expect operations damage. payment in not the We we XXX% of million been residential million on that there's really month the at balances bucket XX/XX. been to worth of in $X.X most collateral Our borrowers, nature the provided. release term is that to of provided TDRs residential to of We have suggest exposure with total past been due payments impact. we kind we've storm. today. of so area downgrades these under short I about mentioned of seeing of the spike another saw at come

that So, due whatnot a those lot XX/XX a commercial past $X and that bucket been is In XX/XX just think million the that at there only to XX-day we mail portfolio, was past about led storm. due hadn't of payments delays in couple the late. coming before weeks in of the I had

going our not on seeing delinquencies, with have a material in our bank. is conversations So, to seeing we're seeing we're not on that's – borrowers, that anything based anything that quality what impact at downgrades, indicates credit the this

a recorded and again reserves commercial As railcar additional also to there customers $XXX,XXX time qualitative impairment material. credit number. expect for No securities the final $X We the total XX/XX and the approximately related I deep yet, don't few certain a be related waive material don't total material reiterate refund an to credits $X.X out. related Obviously, September, impact and did at fees that for that Expenses a little there. into that any. is about and to the expect done for date deposit We to know The dive wasn't recorded taxi date been related but be that expect quarters late reserve to hurricane that portfolio, both to million. be perspective. and exposure I to bit the Raj we downgraded And loan from a impact don't assessment the in grow ongoing. A the said, put to million we've totaled has storms the were portfolio, more won't period we've ultimately we the of to portfolio. $XXX,XXX. some we

XX/XX, that down Total $XX.X exposure That's in million. was was As portfolio down million of to mostly million now were total you losses million at to Cash to million. little in between million this $X related $XXX There is $X to portfolio $XXX for from charge-offs. off can the per due $X flows quarter range see, and loan million our tend pay-downs. quarter. provision that $XX.X over taxi.

What of valuation based flow nonaccrual this and was to for As That We've quarter cash have of of given down to $XXX,XXX moved as Raj the we collateral loans to non-accrual. medallions. move last have use decided, methodology long-term all to also for debated surrounds $XXX,XXX and nature of amortization template ahead valuation. our the this $XXX,XXX this quarter future that it a valuing to we've a of the loans, methodology compared quarter industry cash the that the level medallions we to solved portfolio and continued the flow uncertainty of these We've charged lot the said, done just this quarter. entire this go prudent status. portfolio

of that portfolio. cash applied little the of will is, point flow amortization see One from of comes that be in to benefits We'll faster the bit all principal. this forward, the a

We of in as on partial downward price to valuation, net That date, the million. place XX% trend charge-downs In XX% option at the after the additional quarter activity to below – took of translate put modified haircut. or on XXX,XXX of a the up specific continued an that at charge-offs on to $XX reserve take XX% been a valuation. TDRs. to $XX haircut of some portfolio addition did this and only the To million out $XXX,XXX, of up still or XX/XX. have took lower portfolio kind charge-downs that million put XXX,XXX, although in speak, didn't XX% little so a well based additional we $XXX,XXX. we reserve Total recognition total specific the as under that sitting that about And delinquency sheet would to the the balance a of leaves $XX a

have majority are of pay. on X total actually Charge-offs to continuing foreclosed of and We to that totaled quarter. date million of loans current the the in million a to $XX.X medallions was $XX.X these date. So,

haven't much So, that. to do had of too

remarks. you So, with to update behind a to details turn an going the bit to did little Raj taxi And that, this it over what back with we I'm that make of on some quarter. closing gives

Rajinder Singh

I So, been for we came we growth. very earnings happy an think this XX%, on milestone important has hitting overall, of on I'm on equity out is Return where earnings. out which came where I'm happy company us.

it. about be Last one model the We than on it XX% I'm because you I evaluation be peers plus trying Taxi, also print our of this equity. more me want to glad bothered conservative most had always quarter, which XX% a see us, plus. actually is to aggressive of return get business said to can conservative. we're when

also and the million in end we at of over So, of Puerto done. certainly long quarter could to try provision how some for to that blunt not that thankful run aggressive the did million taxis. We kind for of it's there look every pretty I provisions We time at a Irma taxi that. in taxi. have the the We're to momentum have that fortunate good Despite sort take I'm sitting did for going business. damage only been the momentum don't and we on expect sales, I'm are. this like have At the of reminded $XX slowdown seeing security on in of commercial the from took of we with have very with a October. portfolio. I'm stand not slowdown happy this, day it September, And that level. flipside is the $XXX have in Rico that gain day, pain we're rainy a

I'm October rest first sure look or out So, question, inevitable for solid be year turned one, of this the it a It what the very, is, like. will us. to try which so be and answer even the asked. quarter very I'll month before The is very is

think we that pipeline was have or already think we've and done $XXX to quarter, it which the the was I business the I looks on second production thereabouts. it low based million similar month, this

be add here. number coming in added had utilization different back up I the lot the mortgage the to tailwind of it from That's how warehouse there we way not quarter, lending a second was will than case quarter, it up. just up where, think second will that

Florida more be really to would own. its CRE about back coming it Here,

think we Florida be the not then Christmas at looking and it in the bigger for generally, where end something that really of the CRE dips than we first But, year. dip towards three up. end it will started starts is to around Mortgage variability I warehouse combined. quarters first quarter. sure the fourth I'm could quarter

very So, businesses. business happy quarter to want is said, hard tell it's one business lending, to but will that overall with growth mortgage pipeline grown. very, a sort that this warehouse honestly, the We're But be fluctuates about to predict And as I've Florida, you has of my commitment the strong. that's what in just mortgage strong, much warn the Deposit strong. very variability. underlying doing the York and In predict. like also still thing very would pipeline our hand trends I it and always Again, way that is it's I'm very, that harder the I lot. well. New national raise warehouse in is because, But wouldn't

weeks. deposits irrational If what see the time behavior, you business are stable. The better classes. see And back from feeling a tight been most year continued asset say terms in ask few competitiveness, tough about be also has New places the to to me bond I that bit pricing, pricing – York little last very irrational where see this but pricing, all the I just in little amongst of I multifamily, is might Deposit behavior. time would I going

see see, And I is been going for stable back come its not I rates. that eight December, it's it's sort I'm plus and will right the that in And of up rates weeks again. So, the from irrationality bares to what chance head going ugly anymore. around raises happy raise Fed six time the But, to there's now. an the think or XX% the about always Fed competition

With I guys But, far, questions. up so to in stable. that December. over we're that, you for will it's fairly So, for happening gearing any it turn

Operator

question Instructions] Brady is [Operator from Thank you. of Gailey Our KBW. first

line open. Your is

Brady Gailey

guys. Hey, good morning,

Leslie Lunak

Good morning, Brady.

Rajinder Singh

Good morning.

Brady Gailey

fourth grew look And means $X that million you you over look the the loan and quarter, million XXXX loans if will if right all Raj, that in So, is billion trend, – have you in XXXX. growth billion around in grown actually, $XXX for $X.X XXXX. assume at you loans $X.X at if you

XXXX. in billion You did about $X

do a put and you XXXX you the you guidance forward is head think think up loan year. billion. rate look recovery to $X.X you give think do in not we growth up are run ready yet, all you're like as the towards going we'll trend XXXX? growth some next XXXX's XXXX way you how or that to but good Now, just Do of I to guys BankUnited at see at know about

Rajinder Singh

giving XXXX, I year, York New a don't say going guidance want multifamily a else relying away is our to transformation. I growth, this. to of us, will venture transition grow year the really into business from our loan York have line, to for but of been year-and-a-half you is came Remember, And biggest now, last for half which small growth actually not from than on declining. more that book. everything was multifamily. that instead posting And This New

fairly change. growth – So, It and time. think the But natural implemented. what don't that is has a large rates. things doesn't We beyond to happen overnight. that has to businesses It unnatural just strategy want been do we try are takes that grow

thing. So, would that as one I say

don't we to three growth, grow stand actually back I we Do ago? to is We right? that, XX% And Second, level when need what to maybe FDIC was we I I years strong growing earnings I seen we which at think at three do billion, declining you if were for to us And would assets that would is growth two want also didn't that, $X.X from, off. today, earnings the year grow there solve need of running ago, growth? at try and every or years a billion where what the earnings. deliver $X do loans were did a say was want so. year have actually think we range, have like level. significantly what we

want That's we'd deposit we growth. of double-digit like the have And have still double-digit sort to the growth. earnings to We double-digit think earnings of goal to company. I growth. want have

Brady Gailey

to maybe XX% Okay, has just multifamily down year-to-date, that to XX%. level much reclass specifically bottomed or multifamily all issue. what of if on as the it from to And That's of is out? it's done right. has loans continue pretty shrink Maybe you from a gone helpful. think of then, this due look you XX% about this issue, at loans will Do multifamily some percentage

Rajinder Singh

I just shrink at is if stay where I and continue are, which don't such of there and change. high I see think But will it I pricing, unless where because can they market if pricing, look what we right stays better certainly to now, capital stay to at look spreads get it where is in it the pipeline they you put conditions don't could the runoff, at spreads. to work want it the terms in are

Brady Gailey

quarter. from capital Okay. bit you me, CRE have feels number? down like think this I a X.XX It finally, an And then, little quarter. that's last probably to was Do updated

Rajinder Singh

I think it is XXX.

Leslie Lunak

XXX.

Brady Gailey

great. Thanks guys. Okay, for the color,

Operator

is next Shaw Wells of Our question Fargo. from Jared

line is Your open.

Jared Shaw

morning. good Hi,

Rajinder Singh

Good morning, Jared.

Leslie Lunak

Jared. morning, Good

Jared Shaw

Just was sort looking the at XXX you range the look it past the the the like median. XXX of weaker looking to Or the the at coming quarter, I in looked market? when at flows at medallions? looking ridership taxi What Cash the trends how medallion at to the you actually sales medallion were it were Was levels? much was that sales? as business, if looked of

Rajinder Singh

XXXs, the So, XX%, us that And large $XXX,XX. fire and to were $XXX,XXX under over of also fire DCF that high many, XXX. quarter place. that that that fares But the result the foreclosure to was They sale just look there medallion you but take we they you of sale ridership an average not going analysis, at a and in sales sales, do a a the so gives and sort collect aren't on. were mentioned. there XX% at were That look from another sales. TLC. come we evaluation from the the data don't down when our then you discount We in XXXs, if all there few happened – medallion the that were this a The

let's want that. on trying one we our the based at data they point, haircut to XXX place. the to solve lean and this another And said of XX% basically So, we take not of top and all try for on were and over be off looked calculations conservative,

Jared Shaw

thanks. Okay,

are repositions your had you actually right own said seven medallions How this You many now? quarter.

Leslie Lunak

That's the had of seven. Since beginning the we total, time, yes, seven.

Jared Shaw

the Okay, your that okay. All to on ability still – delayed. the loan you covered said million sales right, this have sales quarter then shifting, loan – impact were XX-month that Does $XXX a thanks. the sell period. And you

should more quarter? fourth quarter we than that expect – be to maybe actually normal double could So, the see

Rajinder Singh

It may is next what sales. not just is be our couple or number allowed about get often will do of double. levels What slightly loan XXX higher have of quarters we'll still will the we sales XXX, the the done. for loan year, we And

date. going sales XX, May not sales. have we're of second do – quarter two anniversary bigger is fourth We'll calculated quarter quarter, first just to slightly which and and the is So, this off

that's how to So, we're going do it.

Jared Shaw

seen first declining movement is accretable schedule any we've accretable Okay. you seen quarter slow. the the to where or the And then, from this and amortization guidance yield? the for we've accretion provide Can for further remaining where update really non-accretable

Leslie Lunak

the have We'll we that do. XX-Q disclosed number in always as

isn't million. expect we release? accretable think The the balance accretable press Yes. there an rolled yield this press release. remaining of is of in page That's $XXX yield I forward – on five

middle And what's XXXX that left between most of come so, will and based that's forecast. the now roughly in cash flow our on recent

Jared Shaw

Yeah.

middle the should I In the it terms FY – thoroughly guess, XXXX? through timing, be of fairly consistent, of though,

Leslie Lunak

the horizon certainly, That's bit is think a timing to and is little bit coming short. now of getting then you're some of amount harder harder see a time the model, these little but is between But to – going that's that to forget. and flows pretty we now cash

quarter the think little it less bit timing of becomes a significant. I So, to quarter

Jared Shaw

you. Okay, great. Thank

Operator

Scouten of is question Stephen from Sandler O'Neill. next Our

is open. line Your

Stephen Scouten

question Appreciate you. everyone. thanks, A Hey, for it.

that or off you had any reductions. you of touch Can from level further do. in not standpoint OCC us might for the update on what year half the guys freer at maybe questioning – you how be impetus have Raj, the you you Brady's of take a on and previously, status or the multifamily lower? I kind have that's you'd know, a rein wanted guys kind of impediment following of do to of line there a kind regulatory a Is Just to point? back of give you lighter up on this an that though mentioned with to

Rajinder Singh

forgot in remarks. actually I my So, mention this to

gets Whether any whether weeks. few I a not them portfolio plays the certainly itself doing is. of say months were fronts. what it gets happy regulator. an having profile over has we said every than way in has change, collateral various And the the there that. because our doing, about reasonable been the regards their of probably are But in examination is that tone changes and that, in think very us The they of York that. think runoff, thing we're few credit much gotten only than approach few risk. the from in them from what are our a changed. better. in are sort better that class New very we're seeing last too remarkable whatever of concerns those refi points they're portfolio that are even asset change is we that out, what might multifamily And OCC at about different well. weeks risk, better of the tone combination we're are and in No I the don't have couple valuation the don't different OCC's cookie and last So, a a reduced on box things, year. last ahead The very weeks be, fact that about meeting from I'm risk itself of is that less still – seeing whether and OCC a it's perspective seeing or long-term which are drawn But very with quarter and think our or makes the OCC top-down a feel and shouldn't the and that's But exit happy few it concerned months, optimistic. more there our box political They and that sure. as And type that has multifamily, production views shrinking question is pricing I we with I'm landscape, that I'm to for. a

Stephen Scouten

ex color. pertains growth. the almost and essentially, million reserve, helpful loss zero guess, kind the of impact Raj. in to $XXX was And really the Irma there that's Okay, as Thanks, taxi maybe I impact, reserves, it loan

moving movements we – expect the losses how or the could growth kind XX you to But the there ex as of commentary Leslie, forward? those line moves portfolio been do seeing you loan strength think in more new would I about – on releases So, provision to of XX you entire know, bps think it with core this further we've can of quarter. gave on be

Leslie Lunak

loan bit. your and did bit provision quarter So, we essentially is, our reserve. ex determine come coupled this in happened point, growth quantitative net hurricane. to what to a resulted little with down use did see in lower a Those reduction to zero That close a that charge-offs factors little we taxi the

specific up. also had term it in and to over I believe this near signs loans things longer-term, the where reserves see with reduction I that some All think that we'll to allowance those specific We to combined a through we creep steady of begin as be a continue would And that we are today. – moving quarter. cycle ultimately loans percentage that continue for impaired will credit see is pretty a in

see So, dramatic there. changing I don't really anything

Stephen Scouten

for And me. great. one Okay, last one

I no know change As we in a year to bigger it than obviously, But, in kind quarters. seen NIM, to you the X.XX% we of quarter full this cost other that guidance. pertains said deposit to X.XX$ saw had move real

a in you be seen especially more we to slightly by why a I than reason maybe comment the but bit specific think the some other I quarter little of with hike? front. a there. demand seems obviously quarters, rate on past than there was that it's can interest-bearing hikes, rate had to driven greater know the Anything

Leslie Lunak

No, I or think [indiscernible] less. more

Rajinder Singh

Yeah.

getting four then wait not why Some customers move. say, minute, and moves till oh, suddenly wake happened call or three up first am the on and rates. wait rate higher I a have interest Others very

betas and and become get expect as rate higher did with proactive. we So, more higher customers to each more move,

not it's So, anything had different we than expected. what

Stephen Scouten

And so, the result? as think there's fourth of some still that quarter do into you a effect carryover

Rajinder Singh

of looking rate hike you [indiscernible] they've steady. But you think been before even the quarter – hike usually, I last have rate the the weeks, I'm December will calling sort X over start the at X pretty to rates happens. fourth coming up. And

will phone we after probably Thanksgiving. start So, right calls seeing

part will already what most is But has our have that I in the happened probably impact. think for costs. So, deposit an

Stephen Scouten

color. guys. Thanks, the all Appreciate great. Okay,

Operator

question Zerbe Ken of Morgan The from Stanley. is next

Your line is open

Ken Zerbe

hurricanes growth, morning. get if Great, talked quarter? an the loan of easy you kind I deposit outpacing your have impact comp, of range? in Did the loan but, on Raj, obviously, the growth the growth can know given quarter plus thanks. quarter. Good of this this hurricanes any growth And do you about million is growth claims $XXX on think those impact you make you still do sort this actually next deposit loan

Rajinder Singh

fairly us. happy I happen, we hurts growth, account like that an when think, account, really Ken, often. lose, did lose was But we deposit were for it very Tom it explained, was doesn't happen but to one not see that there quarter. large had the And does which

to us. and in ready in So, and to in it. it impact put August, deposit closing that distracts, basically growth? much let's Irma. we're not pipeline about of way. go million than It the Was the loan does trying as Because distract when lot growth. September. But had was because we growth keep was $XXX have That's Some. for almost bank case the the much no on Not was as and to the there more what work, late absolutely that wasted the of for back, a running? remember, appraisals re-underwrite of all to growth loan to us you, some stuff growth. impact loan the impact deposit it deposit But question We that do lot a growth, in up the had

Ken Zerbe

next different assume outlook, loan dollars that going trying City it New to outlook. the is guidance, that quarter, terms the would of runoff like to piece I between you're it grow, national call seems if this in quarter's growth, question, think further next entirely $XXX is have that you of the and right into do just fits Got the York right? million, it, plus to it, more is quarter, we're know, piece to $XXX in split don't little another, growth the York okay. that And Florida. it if with because a it's the I'm going do I runoff Florida New then, just XXX-plus-million Or guess, how of it imply right million

Rajinder Singh

So, guess York our not York talking overall. New in runoff about of I'm CRE – New best

the runoff, New it not it but It the coming there. payoffs what less less how what much quarter. matter is York third now. CRE up flat. was It activity just be of third right little we much in and in will are quarter quarter. will next be a than than That's had for pay-off is of be It's will over right bit it a

Florida quarter than from looking Florida, more that said that, better perspective. could combined. little lot is the it CRE. a have especially So, Florida we're CRE first a mentioned like quarters a doing bigger – fourth business in which Having is I about three

to from pushed fourth quarter. some is of the getting And of hurricane, things it the out because third

our is to is we created for plenty us CRE of been XXX%. to CRE close sort has that room of room grow up momentum XXX% coming the as in Some building you there's just threshold, the in finally it and of think have – of without if

to this not So, it's New have to number Florida does massive quarter. be negative going It's York quarter. more that's growth, smaller like number next be negative a but next going

Thomas Cornish

I would across to also businesses see expect add we we markets are very both in that good that growth in. the C&I

Ken Zerbe

Got Do you next think quarter positive be it. New in total? could York

Rajinder Singh

so, think I yes.

Ken Zerbe

Great.

Okay, thank very much. you

Operator

Poonawala is question of next Our from Bank of America. Ebrahim

open. is line Your

Ebrahim Poonawala

Good morning, guys.

Rajinder Singh

morning. Good

Ebrahim Poonawala

the Do just I is terms stand excess today things guess buy credit? to two rate to back and in bank growth had the you that use ago. the think expectations? of – about grow of Can of in think the Raj, view at terms stock and talk two have needing you comments questions. capital level growth how when where One, some of you capital or terms you years could of stock you your to right where you in about you about capital, the not what

Rajinder Singh

our capital a stock deploy time, we As have of course have peers. if to stock then to at go this our make of we and ahead excess buy feel can of XX is months. quickly the could right buyback We you point with wait new we meaningful do do And out ahead fairly compared we things next amount buyback. the that go over Or lagging stand have you can you do now, and some we back it. we two If because could issue any do argument capital. capital the this to and do and will go

and in this strategy capital. deploy to has with keep down head our been So, mind, that our just

get deployed, buyback becomes If for get going to more talk the place where not interesting to immediately buyback a feel want that much is is we which not I it and to But buyback just we about. capital to did. issue all, you that to then have at don't a case then the

we'll ROE So, there is of – so. this are ways. you or can next both the months think, build XX I we is And deploy now, over course capital where right

Ebrahim Poonawala

that high-level you thoughts assets Understood. if period. around end guess, just portfolio. the And get of FDIC XXXX, within you can loss we option at how talk think the about up the some just your nine-month will about once exercise then, to I that rate comes May those sell you

about generate That's some going make to think you to that expect some lost can how also you and capital. we up about earnings deploy that. well? talk just do as for How If should

Rajinder Singh

us their FDIC has little this matter, be for at they go year-old spoke the they The their what and to a and share in about the would the us them people them various that's extend FDIC ask automatically based not I've option information. the And of closer extend last and But time will on a that charge share have get That's remember, to talked to is all almost us parts portfolio. years. not closer and we and through this. to option are, to to to then let time. to whatever they it, what to as preference had I intend talk what to want would the loss who two to views Because, know in But we do. them sell dated. do be, asked I sale. we it preference some the let do not as said they or FDIC of get I loss

have We years. not will to extend probably the to this and it of Will guess sell another to I best still of end be that think part portfolio, not portfolio. all all of is it – two might the done. impact? but analysis an is And earnings sell we it, that they to is my want will but have be

Leslie Lunak

In not. theory, should it

Rajinder Singh

In theory, impact. it should not have an earnings

We are in our year. planning cycle this

we – plan We earnings in we we that have first the years. always give XXXX, We're for might three going – more are obviously, do you guidance little to a bit in it XXXX, that but guidance about at as around specifically, not well, as not XXXX ready relates just you I'm XXXX, this to But give a point. do to little matter. more this

Ebrahim Poonawala

of be? this leverage but about the that can you some selling need is as get of that you follow-up we at that, associated point with quantify, that there could significant don't to start where assets, I least recall flex. talk how you that some degree when expense And before you Can you to those of sort mentioned to a

Rajinder Singh

to at at point. ready a date. We're it not do future We do would this that

Ebrahim Poonawala

Understood. Thanks for questions. my taking

Operator

JP of Steven Morgan. from Alexopoulos is question Next

Your line is open.

Steven Alexopoulos

everybody. morning, good Hey,

Rajinder Singh

Hey, Steve.

Steven Alexopoulos

the do Raj, third-quarter what the of production, being was the from Irma? growth loan terms estimate hurricane, by loan to In impacted you impact

Rajinder Singh

range. that Tom the morning million, talking Maybe about it this saying hard to before $XXX million. We $XXX It's call. in $XXX probably were actually say, but million. is million, $XXX

Thomas Cornish

$XXX million.

Steven Alexopoulos

you you growth commercial estate color that? $XXX give million? really few in behind mentioned real us the in that was that? quarter. strong times And, some What's Thank fourth Can Raj, driving Florida you. Okay. a

Rajinder Singh

that applied a had CRE, south. the ago on it north and about we brakes year Steve, really

if going was think. quarter started harder, gears Okay? a where the this York said, middle CRE on wasn't it New We this supposed for that business. happen It It to as And was the to going multifamily, keep the even changing we and sort would happen okay, couple south the quarters of growing of to happen. for we're takes still you when brakes year probably we're quickly of Irma. to start doesn't as but

pushed it's fourth gotten now, So, to quarter.

four about fourth it changing ago, coming of own and it's growth will its doing just quarter. that started natural it's and months or in six gears sort a So, months realize the we to

Steven Alexopoulos

okay. OCC they multifamily, My York you CRE, Do Okay, City not thrilled with the diversified in understanding up you might okay agree over New like with putting that is, Florida. whereas are be is that?

Rajinder Singh

That's correct.

Steven Alexopoulos

on some you lost Raj, And that large Can million. color a this account? said why lost large you rate? such account to that give you Okay. you Was then, tied deposit $XXX us

Rajinder Singh

No it it was cash. like to rate tied – where leave that. We It situation account. lost not it. But was it's a high not it about I'll we not rate. – uses other at lost of another No, question it was to it it was bank. to listen, a

Steven Alexopoulos

got Okay, you.

squeeze are a balances? one could the you you a they out, guys us they the over Can deposit year ago are more give Okay, of thanks. And job today? cost I in, it's that deposit if now. team listed are good a sense of have large how doing? Thanks. What the What

Rajinder Singh

Yeah.

are They've year for job. is been last About us with now. Leslie? five a So, came great when doing they they over. quarters May Right,

they've a are they've year And very quarter, business. a they for the been quarter. first productive, is bringing in slow second They solid last that really, when had been so,

business where quarter. we of time. the plan would we that three would as behind on thought at be point I together in of I launched sort quarter, put to we this but months a compared are, business quarterly we're and what good three-year we that at that Third basis, say, If they I second was would about say decent, not when the look as

we of for of are the hundreds this happening they a they component. not cost exact billion, it's because numbers still have They of DDA funds north where millions. haven't high they But given build time. don't high what well as point overall, The is in DDA the a So, but out would at do, speak. is are of of very we

to our heard front about year build name. people name our money was had trying in first market all The who and getting never of

really, the a and out first to I of half business, getting that So, as up DDA building about year was there funds and [indiscernible]. But, cost our builds year, name drop. that in expect

Steven Alexopoulos

questions. my taking for Thanks great. Okay,

Operator

Our of next question is from Deutsche Bank. Rochester Dave

line Your open. is

Dave Rochester

Hey, good morning, guys.

Rajinder Singh

Good morning.

Leslie Lunak

Dave. morning, Good

Dave Rochester

that On because that the this this going big think expense way wondering asset about single quarter. feel wondering if expenses up still how that guidance, think in you XQ. up ex was I the just was digits FDIC into I pretty was about just expense, year implies step a that. you I

Leslie Lunak

possibility guidance a be lower little to really want put than there. out but a it is don't will I There revised bit that,

Dave Rochester

have Sure, you guidance I seen about today, into okay. year, And you're are that growth drive you thinking now? of anything any acceleration factors going then, just as expense on an you're to next would today looking out XXXX, really that know XXXX not right give but

Leslie Lunak

really and next of to just XXXX any the off hold I in budgeting forecasting No, now the We're – I don't and want the the right to until miss middle guidance giving call. process want on

Dave Rochester

Sure, okay.

threshold cross won't guys Just that and switching be you the Are just there. this color you XXX% at that could appreciated to concentration, CRA you? helpful thinking point for

Rajinder Singh

I the future, stay XXX%. think foreseeable for we'll under

Dave Rochester

insurance not Okay. at that? deposit growth, Is either fair real [indiscernible] that And you're from from any on positive Irma to like sounds point. it then, expecting just impact like anything say this

Rajinder Singh

in wasn't It big a of damage terms it story Yeah. as the just that did.

just it Katrina any like resulting will insurance situation I pretty of a large. that the insurance don't amount Rico, really and and have in the claims that damage you what's the have impact. material money think proceeds FEMA from that If then happening are or can Puerto the be

Dave Rochester

last just Okay. And then one one.

are deposits, In you your change your terms of on at all? the guys competitors that? seeing And did competition earnings credit you rate do

Rajinder Singh

back time a It's on asking for one-off time, are But seeing commercial of earnings it's more customers credit change. basis rate. wholesale We from and the that are rather sophisticated the across larger, than more portfolio. higher happen. sort a But to coming not

Dave Rochester

the is compare changed your market Have you right you and guys do how where now? versus

Rajinder Singh

in have rates where interest made has of It's of it just how deposits, credit cash. in another is ECR. I talking it We sense. on right? just rate interest interest kind of earnings think That's way instead about And changed

have. wholesale. on the Fed have you rate moves try just gone again, rates do So, interest ECRs given as don't and it up, deposits But,

then you to. calling this on it do and that try the customers in negotiate often, it You the demanding wherever is you and and have profitability customer. result it of of And based

Dave Rochester

the any market a line Are lower, in little bit just with of finding you guys that color? you're sort you're where or is generally higher,

Rajinder Singh

But Signature, in on friends are most has line. of we First it banks, if our think somebody of including Horizon, compare lower you But, Bank to. have But the yourself rates name, edge. to America, again, us. like that, our midsize compare line. depends banks I an who then pick size, we bigger are us obviously, ECR than in you a

Dave Rochester

Okay, great. Thanks, guys.

Operator

next of is Our BMO Chan question from Lana Capital.

is line open. Your

Lana Chan

Hi. Good morning.

question a Just the around securities.

Could the build securities – talk the some had in you You of the despite end new portfolio the you the around and long the up volatility investments, of which saw buckets moved where about yields some curve. quarter this and

Leslie Lunak

securities this different several quarter. in invested we classes Actually,

other think CMO have spreads most majority, we've are in tight single muni out and also is the agency we opportunities. portfolios We – where liquidity our asset the attractive the a little there the now. I invested building our did That's pool investment the various the was that largest and classes agency some with bit where seeing build is been in space. in

agency quarter. when this things. A But was different the single you'll in the we the out. largest XX-Q area few So, see put

Rajinder Singh

This – year

Leslie Lunak

but entirely, particular. year quarter This in Yeah. this

yield the floaters. of lot adjustments we has coupon on that rate in from a got Additionally, pickup been

largest probably in of pickup been yield. the the that's single So, driver

Rajinder Singh

we As short securities peers. you know, portfolio our fairly compared keep our to

So, this helps environment. you in that

Lana Chan

pricing, New the seen then, competition curve? in less is because follow-up end of potentially the with you're it is the CRE, and a Florida York, on great. the just improvement Okay, better long it you've of seeing what recent in improving in versus And

Rajinder Singh

that away all to There all York. to and year CRE fixed is New not of in – terms I'm fixed-rate pretty actually in and get. York remarkable you our rate in pricing. Also, of being also of Florida New York, I'm in are big structure get New portfolio a can Florida. New a between of portfolio. is a difference in difference able kind comparing we CRE is York terms five versus which floating loan all with percentage multifamily There high comparing covenants Florida

there So, big difference. is a

Lana Chan

Okay, Thank very got much. you it.

Operator

next Zwick is Our Erik of question from Stephens.

is Your open. line

Erik Zwick

Good morning.

Rajinder Singh

Good morning.

Leslie Lunak

Eric. Good morning,

Erik Zwick

Maybe relative guess, were noncovered flat quarter-over-quarter. looking rate June they loan And, at hike. some the first had just given I yields, the expected improvement I potential maybe

yield do loans you originated check? quarter? on those And held yields the have what in average the maybe second, First, in

Leslie Lunak

questions around right on just average your both So, yield this new – under the loans average quarter X the X, portfolio. was across on

much it's much as of question, we Of the first one that an the seen, that why we of this quarter. this production just quarter, wasn't course, have didn't a – have impact production see which might the is is to big that as answer there your half of reasons we part of didn't

same dogs. of had connected bit quarter. prepayment pretty We dive a of But – cats actually had look interest penalties the questions. it's deep there. just more and a cats also quarter. had had lot there's because little in a a bit a We last and at We lot I dogs and We sat that down non-accrued more did last little

This put the on medallion we loans taxi non-accrual. on quarter,

interest that. we of So, to related had reversal a

much a see on little have really different big that just portfolio. of impact higher led size to just production But of the a we I the new phenomenon. growth didn't So, because we thing. lot things the big one that that to didn't No from think compared rates

Erik Zwick

with frame interest ready but makes what sense. rate give the NIM the maybe can December the if your Fed guess, understand not I view you And sensitivity to to you to guidance, then, for you're XXXX with I answer the funds impact to would expect be? And today? you increase, how That respect expectation

Leslie Lunak

the pretty very little. manage So, interest neutral to a is risk balance risk sensitivity, sheet interest position there an We rate from perspective. rate

neutral So, make sheet curve, shift, a a position. sensitive. impact pallet it in [indiscernible]. We But, the that balance don't frankly, the on up doesn't likely growth to is We asset down pretty hand managed a or huge us.

Erik Zwick

question income. quarter-over-quarter. And that decline down what was last fees by you me drove I any and noninterest on were Okay. I'm and curious charges impacted for fees for guess One hurricanes. service The the whether waived water the

Leslie Lunak

the the waived and impacted side fees were on during We fees, borrowers the did. waive we or for September. of not. certain they deposit Yeah, for whether fees both frankly, We did on Florida select everybody month in loan

do have of have they that but that don't I material, think that quarter-over-quarter. we're So in an fluctuation impact. me. certainly I seeing don't exact was that number in front it

Erik Zwick

the would to in ongoing rebound? impacts fourth some or quarter expect those Are you see

Leslie Lunak

waived We month September. for only the of

would think I the I would think it So, say, normalize, fourth should quarter. I in

Erik Zwick

taking my for Thanks Great. today. questions

Operator

turn would over Raj Singh to remarks. like conference are you. closing no further questions at I Thank time. this to the any There for

Rajinder Singh

to the at be for happy XX.X%. which the are evolution an we quarter with this big of I Like We're seemed of We're company, this at in happy talking in one the about quarter. September. highlight is, momentum ROE company. time hitting are were very seeing and the very me happy in hurricanes that. said, And about doing was not very time, good fourth we We where like all

bye. would I I'll thank joining for talk the XX like to And So, with days. that, in you Thanks, everyone us call. to on

Operator

in concludes gentlemen, This thank program. and your participation you for the today's conference. Ladies

now a day. Have may You disconnect. wonderful

BankUnited (BKU) 31 Oct 172017 Q3 Earnings call transcript