BKU - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2019 BankUnited, Inc. Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes.

It is now my pleasure to hand the conference over to Mrs. Susan Greenfield, Corporate Secretary. begin. may you Ma'am,

Susan Greenfield

Good our thank conference second Brian. us call. for today on quarter morning you, you and joining Thank XXXX earnings

President Cornish, our On Singh, Operating Officer. our morning this Chief Financial and Chairman, Chief Tom the Lunak, CEO; and are Officer; Leslie call our Raj

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

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

factors cause found forward-looking our could the in to or earnings undertake materially concerning or to results information the Additional future. any in by from that update now not at revise statements differ any actual SEC We release those in do any time indicated obligations statements filings. such be can our forward-looking

that, turn like call Raj. to to over I’d With the

Rajinder Singh

earnings Thank you, call. to Welcome, everyone, Susan. our

everyone thank time strong attention for your you special we about know the A Robert on have for joining. competition we going are. at with for today We Mueller as same

So who much. hear so in story, dialed our those have and you to want thank all for

Let printed me last income, million saying start a very from $X.XX $XX.X up This share. is net quarter. for us. was strong $X.XX a quarter by We this

were The a long the $X.XX quarter a in share. feels non-loss year second share. share like of $X.XX which time quarter second the But XXXX a ago was earnings last

of a from performance. $X.XX So is quarter, hell a or $X.XX last year $X.XX last

in very months Actually, period $X.XX. including we share share Today, ago. is loss at and loss what loss share six a our just short even is have more year very, was time interesting $X.XX last that of expired EPS no total we're

we happy profitability metrics posted. So, overall, with the I'm very that

two are so ROA last and at return trend I three or is think, I little a quarters. XX think over which a the of basis or healthy points equity very over, on we XX%

million grew total growth, all looks for growth more you grew year reflective strong deposits was to $XXX we'll think than very talk of loans. deposit grew but most that. to $XXX DDA then about year, go It just terms which a agree first DDA would DDA million us. last let's of Deposits which I of million $XXX was our

$XXX in one quarter happy. had of makes - million me we it Now is growth which very

pause will about I've last say I the I at saying numbers five for is annualize for look Always a XX-month or do and calls growth. six here at minute look what and the think not quarterly trailing think you been number it. when any on

quickly So, the before this we did math. call, just

you million the think last deposit loan months, which I DDA of was XX $X.XX and was if over growth $X.XXX about $XXX billion. was see about growth our total billion

of more numbers, on and nevertheless is $XXX of where back, So DDA million growth growth reflective very this a be Every going there the the quarter, day. can downs ups franchise quarter. that is is. solid but take any We’ll

deposits The X cost up of edged basis points. by

of up So curve I points. XX had we inflect. quarter, basis funds finally that Last think cost our gone seeing are

- next some inflection this impending we funds deposits point, was for decline. like pricing. basis quarter, to But, some the all markets. in Competition points. shakedown I we’re it in strong And cost quarter, This expect expecting X said, our with deposit and obviously, only of remains reversal

ago. a from loans everyone, account originated loans into that loans. from These sales. Loans these to few held million held that To went held moved before sales investment $XXX of law into municipal loans, for taking grew - to loans million. the were tax moved remind prior to $XXX are change for That's are quarters we effect Pinnacle for

the tax environment. lower. new the tax in much originated a profitability So in of environment is loans higher they And were hence, these

are we to earnings. These way a this. on for not transaction And of trying impact the closed. any in And par. loans So for we've clear to expect get been have I looking back this middle will tear this to of above some

we’ll The gave current for the outlook of for you loan guidance year, of April. stick the back the the at I’m we that back the with deposit and growth beginning - growth year rest or in sorry,

we growth points down are X.XX%, We same X.XX% we came X.XX% at about. kind last from of X.XX%, the NIM quarter. for looking still we guidance to deposit you this The way, quarter, the talked which X by was loan basis growth that and to of out that gave

For a NIM the bit year, be will under think I little of pressure.

up of we - But does end just in we the the and a of. aware will instead maybe X.XX%, probably as ending the you not below, yield NIM, all where help of tad might in X.XX%. are So, - sort that's curve

loans talk Non-performing five are last metrics pretty credit remained consistent when to couple points about about Leslie of can more the Annualized charge-off at and microphone very we pass quarters. and the her. over basis low that

back the to continue quarter. to $XXX buy And we our we subsequent actually quarter-end, completed share repurchase. million through the buyback, shares Share

last in So we buy left. end three to and authorization that executed. back quarter, the our the been But bit at we or weeks, had fully the continue has two little a under of still XXbX-X plan,

a bit look it's environment, on we when we at a of Before I don't it pass want - about strong just portfolio, looks Tom, concerns. any doing, again, see look economy. are clients sort the how our at we to this a macro And talk I our environment. very story little our like when it's to - what a The -

you and us give signs when at our obviously, capital from of at However, terminals, Bloomberg markets curve warning pause. and look you coming look the shape the the

in are So, more into not standard place are from where leading risk. a perspective, we we a we are

would say three been so. about be now, we'll And have I defensive to We for continue quarters.

this to X.X. little So you bit update in with an and talk detail that, more also I a the on will turn Tom about over business who’ll give BankUnited

Thomas Cornish

Raj. Great. Thanks,

vigorously We've So, and executing we're all shape. few feel X.X. of excellent progress, happy we in to over like so we're months initiatives been and BankUnited pass our far, along strategies the last our on

far pretax of annual cost as impact were those are $XX targets on million overall our mid-XXXX on we targets, financial meet think on lift. So, an savings million track revenue by financial incremental as we which and to $XX

like are. to where starting feel very positive of about see we feel already we're impact we the we that and So,

a operational Just of of initiatives comments on relates some BankUnited couple the of the it major of as X.X components driving and to excellence.

of of entities. have We reorganization operating quarter in all the business now commercial small completed and the last realignment our

process And that them. of rollout the this credit begun we've And implementation and to efficiencies. robotic operational functions the increase process go We've with structure reengineered back-office initiated departmental of support automation. our

to company. operational excellence drive exciting the those throughout of are help all initiatives us So,

in the increase and to of efforts commercial have seeing increases P-card our area support implemented of management programs. card the our enhancements, XXXX which very we penetration card We've launch existing and new to build significant the and director the structures, technology In base, about. started client the re-aligned revenue hired excited were we with very of out program commercial treasury sales team and the product fee we're to

days experience days, in obviously We Center time went Credit from both live XX is dramatic that X we've our with our and and our improvement for which decreased client loans efficiency new from cycle to happens a that. mid-sized

we're so on is days, five that. in narrowing target Our

improvement will that very for significant a us. be So

We branch new our in Winter opened execute Park. optimization continue a to branch We've up strategy.

a market Winter the be sought location long Park terrific in which a of area have to Orlando in. We is

opened the we we in to up And company. excellence that And analytics quarter. So this presence continuing enhance established our that we're for data last our market. of also center

the us entire for So and big data new that's initiative a process. management

very So, about overall, implemented we've excited continues we're with made the and and progress that X.X so be far. and to enthusiasm executed vigor

So, overall a overall the to In it on start all loan on production billion was deposit yield met bit commercial with saying us pivot our loan just happy goals. side out by in X.X% an which excellent that, average for with go production growth. and about a had for We weighted little businesses, the and were into $X.XX of quarter of I our quarter. we

quarter. grew in space $XXX continuing loans components is and million particularly we So consistent York look Multifamily at bit the our in loans exposure by decline tear little if market. individual kind more New $XXX of strategy million our the for down by residential with multi-family the to of a this

That C&I banking loans Overall, $XXX other growth of ended principally $XX which industrial quarter. categories flat by offset segments. and million office the within up by was and leaving grew our inquiry commercial for decline banking million CRE basically corporate

For national business, the it was business warehouse grew a $XX quarter for by strong million. mortgage

growth an quarter excellent leasing million equipment of both and and $XX business lending the bridge divisions. franchise across have franchise Our

a we the saw balance a excellent production nice think growth an So, I reasonable portfolio and across level. and overall,

that the million a time increased was by good money Interest-bearing million. On said, in and that $XXX market the non-interest strong continues deposit grew our million and Raj as DDA decline $XXX for million a of $XX by by story DDA to $XXX be side, offset categories. deposits savings of

But product management overall of increase overall percentage significantly of very penetration continuing continues I our increasing non-interest accounts work treasury non-interest as DDA to think all and to our effort hard better our the at the this be across to of deposits. company, strategy a DDA percentage

the that, of summary kind it I'll over the deposits. with And of to that’s Leslie. So, turn

Leslie Lunak

Thanks Tom.

as on the million the loan the interest of X.XX% said, quarter quarter years second covered X.XX% reflecting a reduction of result in for quarter to all this then and decreased X.XX% XXXX down sale from expected declined the from but loans Ron an of the prior flat as last the quarter good as year, accretion was prior place year and second those from prior the that from that quarter year in $XX late two Net about to at and So XXXX, before of again perspective. earnings team. income covered the end of loans, by sale took the quarter the

quarter immediately the a quarter The quarter increase X.XX% an year the loans of second yield and linked remains comparable for non-covered up resets. quarter Duration it very up down X.XX% was from there. to couple coupon Yield the low. the quarter so due up quarter of points XXX, mainly the investment for X on was when from the preceding of from XXXX, points prior on to basis from X.XX% X.XX% this portfolio of this portfolio basis

compression we over the do expect two mentioned, Raj NIM quarters. next As

rate has in assumed the Fed the for forecast three of by rest XXXX. Our baked cuts

the reprice some next those expect on our quarters before we do over compression assets predicated down So two NIM our as liabilities. assumptions

of the a and some of provision, if was I loan a that had was and quarter. the releases provision specific of you've of loan reserves. reserves one that of and credits. particular release reserves those situation this We release large favorably to had a We we net by think to credit that where were all a for losses one couple primarily able pay on restructure off led noticed Reserves driven

non-interest $X.X the included guidance, some specifically X.X primarily branch to costs. closure-related related for expense second fees, of Expenses BankUnited and quarter professional cost also million severance

For $XX.X the months, six these totaled million. costs

full I down amortization. If exclude X.X year X% flat professional down such of be for XXXX, XXXX year onetime would BankUnited operating the expect indemnification total to and excluding For to asset would expect expense fees that’s the to the I X.X, prior BankUnited to inclusive related costs the that as be compared slightly I X%. the costs to to

that, And open Raj it any we closing to I'll questions. remarks with for up turn for before over

Rajinder Singh

Sure.

Deposit predict measure I side are past, to to Like both on loan the in. loan and that success what talk and can pipelines do generally based I accounts didn't deliver about the only think pipelines deposit I coming in of but said side are predict, the thing more on. on be is we harder strong. sort much easy pipelines remain the new

doing. book, in in but lot book, as indicator the the mind movement well new and There's living we new in as of clients breathing for bank just that’s the is about really existing opening how are a long accounts, bringing my a

business And United new which never about to Bank at very are robust. healthy on and that front, been the has pipeline that and is get here, of

we pretty to that, for of you, the over will questions. So, feel good we guys, turn with it rest about year. And the

Operator

with Zerbe our And from come Ken line Instructions] question [Operator Stanley. the Morgan will first of

open. Your line is now

Ken Zerbe

and just terms maybe New or York York or the office heard the growth off, guess the then I say growth of guys in Is flatness other terms multifamily non-New growth, was I've CRE I down, any by New you that declining it CRE York that and but coming starting of is CRE? that in was in of from industrial. suppose, offset

Rajinder Singh

both. quarter be production It We had had would in production both. a industrial loans No, as York it would good New office in quarter and be and a particularly well. Florida good

Ken Zerbe

some given where point you you actually these of could the York Okay. believe at And New trends? are stabilize

Rajinder Singh

It's stabilizing. also some The that issues more We're intensely a the regulation it of the going are rate on. in has has looking come bit lower rent at than down past. as been

been the that's of multifamily. a sort the in So, dynamics significant market change of

extent we think that in but pace the the to closely, some we're start start asset decline York will there's down if activity reasonable of that slow the to will. market And the to definitely So, continues in activity see over space, growth that's in you to we growth period of get time categories New that market. another enough to where watching we'll the some

Ken Zerbe

And from does be sort there loans that to of sell or to Pinnacle, held basket the complete the additional in for terms of moved want are loans loan loans for your held - - could are that that sale? you potentially of sale you

Thomas Cornish

And portfolio prior to originated looking is are We large. were loans at XXXX. fairly that that

opportunistic to we be on will the be comes I now, we'll planning along but will sales, we right more we’re if is There and right it. it. opportunistic. no act that this do is plans like all and now about opportunity But But said

Ken Zerbe

I And I’d then last this one basically heard additional was question your if from share over here? you think point? have could. appetite at any Do I for repurchases authorization just

Rajinder Singh

Yes.

least, board or agenda board I strategy a wouldn't to GAAP certainly of and up capital coming forward. surprised the end wants the to discussed, will up a capital capital. the CECL if lead August some an is but be CECL meeting regulatory, at because have deep We be see into impact dive at that not going item

to, whether a but up all do do to want of that. wait need numbers. warm maybe more sort There's nail of we to decide some a act the will now of, what to board then we to or buyback, more down months. And room So CECL couple

Operator

Fargo question And Wells from of will Securities. come Shaw line the with our next Jared

Your now open. line is

Jared Shaw

multi-family of that impacted the up are control of just properties legislation? billion is rent by City $X.X the tied the to on the I was following of New York end at How much quarter. that

Leslie Lunak

So, a as disclosed what's of hasn't - the changed process number deep we number as sure that real of was to that how of I number that in right we're dive very into portfolio And going it much of I'm that $X.X of expect billion but impacted. May now don't of kind of and there don't of be end doing the billion. about $X.X previously. I has in in is loans terms But end May. the each that was moved. had

Jared Shaw

the you the in And then, rate then cuts on margin three the discussion, that for could said that you're And scenario we assuming margin X.XX%. in under full-year that XXXX. be

So...

Leslie Lunak

high-XXXs. Yes, call it,

Jared Shaw

decline high-XXXs. …a - pretty in significant

On side… deposit the

Leslie Lunak

Well, fairly practically, but… they’re of set on assumptions, broad predicated

Jared Shaw

Right.

that through sort assumption to - assumptions, three of do any rate deposits? we think quarter, - you remained with the On that flows money that see you to in cost the starting on competitive. and side, said you especially there are three promotional the relief deposit of the on Florida? Last any much to market’s how pricing cut see Are still pullback rate highly starting new

Rajinder Singh

after So we change the market so I move - quarter fairly have has the that the significant meaningfully. to market come is moved rates it’s have commercial that that in move. big have and this seen the actually broker down going was leading that announces. day literally suspect Retail But much. Brokerage and market not market, Fed

forward that a curve but rate some or look cut. want the to wait market For rate waits the they at cut of reason, doesn't for the probability

that. some So will expecting that that reduction. There move to market been and has happen at we're shortly

but quarter over more deposit the was talk big best was the not and of players some pressure. And antidote always on deposit online BDA about. to course, generating much for this pricing Some pulled back have relief seeing pressure brokered. there for Really we're relief been -

Jared Shaw

Okay.

Thomas Cornish

you add our might question stabilized I is predominant today $X.X that on the in all billion, The multi-family loans. asked. exposure

a currently Those significantly repossession actually that be regulation. modest loans by be very would would most perspective. the would exposure in that be impacted we So have level loans today to the or value-add a

would to makes things and impact more our portfolio very up share this is portfolio negatively overall that of stabilized our exposure be So modest. lion's the immediately

Jared Shaw

I quarter-over-quarter, as for to the directly move color to process X.X of that. guess the finally BKU is related with on it And how layers for sort Thanks assume the me down of much just the [indiscernible] on that in? expenses

Leslie Lunak

in Some BU of it is is the directly the to other the servicing our X.X place took significant quarter. termination back of and mortgage which operation residential first

in closure that the took second place seeing you’re of two branch back components quarter. some impact Those full that with largest in are along activity So the XXXX. the

I that servicing together, that to And this I it's but be - dollars there's carve say sounds to because lot point. of and it Y the tried of the all is actually is three added than operations those it X components. this actually moving up don't this harder but is So do are the parts largest termination a would of mortgage our at dollars

Operator

next the question Brady from Gailey of line with KBW. come our will And

open. now is line Your

Brady Gailey

I'm if loan just a the nature loss of in releases, figure quantify all I’m one-time if reserves to been quarter? how what provision just trying you have out, you in exclude in XQ. wondering those would could specific much the released you kind

Leslie Lunak

$X.X It’s Brady. million, Yes.

Brady Gailey

of that for can to quarterly forecast, of half provision the growth would the rate and by transition million be So, the range. are look to at look level. a if you couple more if before of one, pretty quarters provision million in know mean still I to hard of year? run expect $XX a you - of back back kind at I to the kind $XX the provision but you low driven million you this kind $XX up

Leslie Lunak

in say. the which you're down, happened are of been can always in have is our what the So there. part provision parts to you're trends which specific really historical move which the reserves either loss it’s And pretty seeing. What in framework - Brady, defined rates, but for, the mean the reserve the our I qualitative there's then moving factors, hard those trending seeing elusive to reason a direction.

to new provision there, up expect to of in which would respect for the difficult or really reserve, put absence production reflect to one-off you I specific have where here is the provisioning new to mainly credit predict. production a for provisioning the

Rajinder Singh

ago. And million reserves talking or Leslie two that into probably a it $X.X is remember, was Brady, quarter this about, put

got So, you you here as back from - it well. out there out back to it

things these do So, happen.

an very to way come very a in it. it up up We're conservative discussion quarter when see then the interesting Yeah. is an the later Anyway we and quarters. We resolved issue two should two loan. reserve we're a are or the reversing and then quick put for be they next

going it's you think I very, see. to very interesting how And discussion seasonal adopt think to you because act is framework results amount of a It about robust be will decide we company had to all internally will of to interesting CECL. earnings will bank volatility going a the and to very in for get quarter-over-quarter how the as tremendous we’ve when in

Brady Gailey

doubt on loss if guys points, range, the ready are bigger XX topic, CECL you reserve then at well around And loan BankUnited's that's I average. picture, to below I of peer mean but disclose look basis you a

be right impact BankUnited’s average? it think the peer will is greater So, than to CECL that

Leslie Lunak

fact can we're will incurred I speak are because a longer-term loss from an reserve Brady, going no can't of an view fair to includes model, number model the that I expected had do to what the that I portfolio But expect peers - because and into do. say, loss I to what to increase. the the moving loans of I absolutely is

reserve fair over longer do this to prepared of portions have that and point is much, the expected that I'm that of the driver the that will increase, primary to by life. at say to the it's that expect how concept the say be I increase not but contractual loss portfolio

Operator

with come JPMorgan. question Steven line next our the And will of Alexopoulos from

is Your now open. line

Steven Alexopoulos

you deposit in Just the growth that and drove the balances Raj, side. what start sticky strong. give the obviously Can is are? color non-interest on bearing on how more very

Thomas Cornish

growth DDA our quarter, across very uniform been this had our until up business lines. So,

and more general skewed little how a much a the It deposit moves in national line. sticky move? business up. around. How will basis, strongly moves saw But literally we be, it direction the day-to-day does towards quarter is week-to-week This it around very it because

That's million said the quarter. clearly Because than if like DDA why that had last the at I months I growth $XX one quarter, look remember numbers or better to XX it's we of right. rather something any

Steven Alexopoulos

Yes. Right.

Thomas Cornish

isn't So, to $XX term. right million want think about isn't million right you long $XXX and if

only quarters You got look think about stable amount. number emerges of and more a average a at you to if few which sort

DD&A. it's accounts So, these hard around quite day-out on bit using day-in moves It people really basis. because because especially a a are

days number In two very days that different. or or two different. close have three it been number the three quarter, would before closed would after, have that If been very the

way I four at than an rather average this. looking of prefer of one quarter any So, quarters a as

wish the something But I quarter. over even more it's fact in $XXX maybe this more that DDA that be. we've $XXX think million to quarter I million $XXX months, XX was last than to than will and it next the million it grown celebrate

Steven Alexopoulos

Yes.

Rajinder Singh

XX non-interest-bearing, over billion so the $X $X.X of the deposit or is is But growth months actually $XXX which real story. that billion a million and of is plus interest-bearing of last

Thomas Cornish

this. to add might I So,

tied balance as very relationships sales. TM generally look about accounts, pointed Raj you're virtually If DDA to about number relationships out the there while you a complex of implementation of you're growth underlying that of talking non-interest the and the talking relationships are all product DDA obviously at heavily coming move, and commercial from is is

the lines and we fluctuate, balances the and the So while business overall stickiness is the think solidity business trend itself, of good. the may

Steven Alexopoulos

be the Fed Can basis from that? guidance. the here lowering think on approximate funds you terms what then the the parse NIM margin potentially change trying change for new every point I'm help in you do in from to the out just XX us Fed to And of the rates in impact rate about

Leslie Lunak

of Steve, me. those specific I numbers have in front don't

one, with funds I Fed tended a lead LIBOR think little phenomenon NIM compression, to has seeing bit. the you're

our repriced seeing liabilities. assets before our we're So

a The perspective manage as interest some an pretty is to a see down liabilities when reprice of can as managed down. whole will from balance neutral assets - we and reprice sheet a between we but it as lag level rate when risk

short-term looking in cost over going we're couple high that's But based something again, year to so our the off. next at compression best And as NIM estimate for the quarters it some of XXXs whole. before - the a levels today

Thomas Cornish

So, we from Steve, one they've of than we've about last or of we not cost against XX the the our well. banks versus or that four of of we three cost benchmarking things - been do banks move over to kind have biggest peers faring smaller at us. peers, us. deposits what And that quarters look are the funds had And even

betas been Our higher. have

So points by up or. for our basis of moved XX last example cost deposits quarter

This points. quarter, in names, the we basis we list while bottom. were of three moved were we XX that And near somewhere

of This we the reported, last three. number quarter, everyone had not I had we reported, who but saw people we think were were we are

up, the would as sheet. the thing If you worst fairly world So, same and say to into hit try be that, I if our an is optimistic there what will not balance up. will high actually I down But way hurts make it in on a it lot I'm marketplace inherently to way was in of deposit should get of for did fact, lowering the mostly way the that assumptions basing estimation people is down. rates the it do beta, an our the high. help on statement you built but Certainly, technical, has

Steven Alexopoulos

how saves Just one Jared’s of wasn't are the clear to much follow-up the to me. expected $XX run now cost million question, rate? in It

Rajinder Singh

that you to It's give hard out. number. very can't We tease that

tried. have We

Leslie Lunak

definitely a that are better starting We've do get these we right couple positive It’s into we it's little still dollar But down be that. happen. and does phase difficult of little seeing tease to. more we'll And, if to implementation to Steven. dollar just relates to - a versus road, gotten all the - trends to quarters what and by a things a think now, relate we're this have can out I are ability just that what encouraged it this

Rajinder Singh

a behind fair this still started we're and journey us. not We it majority say is is But quarter… only just of of to us that the ahead one seven-quarter

Leslie Lunak

fair, absolutely that's Raj. Yes,

Operator

Inc. our from with next Austin will come And Stephens, Nicholas question

Your line open. is now

Austin Nicholas

the Appreciate comments guess the to liabilities the dovetail to fair say last couple your reprice on is the going that, rate it's than kind we for be your I XXXX. impact think hike just you more on first guide? a to have that than guess your less margin impactful as faster but fair of as into I kind you bit assets little Is you say to enter and as that probably impact margin of - about the

Rajinder Singh

the way I have think And what higher the I'm up. beta on saying logic from benefit down. by is a on we that way suffered beta that we should from higher a

our peers. peers’ assets a It's make making liabilities pricing I'm more liabilities our comment to on our So our not liability. deposit trying versus versus comparison, a our repricing. I'm versus

basis up that We're deposits this three with seeing cost of points. moving already our quarter

four than basis at were move our I even more X, moved points. think I X, Fargo and size and XX and saw JPMorgan basis and Wells that banks BofA point

our turns - So future. the than benefit going less deposits others already at we're growth up will for a seeing and least this when deposit beta we see quarter go of the higher of and way, cost the starts hopefully other having curve the to foreseeable

Austin Nicholas

overall there. associate targets. there then know you kind that the deposits, you’ve we're spoken And And kind the but feel businesses team of were on any just the deposit group. about national deposits can that past to give about I maybe if of update what deposits, with drove just then a any specific us types that for able of disclose type talking you in you’d of maybe maybe growth the this as maybe

Rajinder Singh

on industry So, What the they has deposit just changed, changed. gratification in tend rather I size, Larger growth. just tend dramatically. focus ticket to we - and taken instant times a on is be one down have quickly quite price. focused that just to average more volume not tougher has that the importantly, on total accounts growth you DDA talked But about much numbers. several and But bring on have give than

quite $XX you accounts. even our majority look millions that accounts, even million. is big and $XX changed at of - have vast this below no those but year, we the longer So, it’s $XXX million, there are Well pipeline single-digit accounts million, we’ve couple million it sometimes - and are meaningfully stuff so if of far $XX million, won $X

on but to any here is not new than in. a the accounts, about while story the focusing to seeing they in for a to success. and honestly at and get past, been we’re more less now we’ve we’re it focusing more time long And sticky. bring on tend be take that which So, sensitive, harder price talked we’ve smaller industry But what

Austin Nicholas

then have those? on on to Do the just unpaid portfolios. And covered you accretion previously the principle and maybe happen balance

Leslie Lunak

of value The I I million. the yield. number me. $XXX carrying don’t total do have front is in accretion the have

I think confirm going going it. I is XXs I’m according I it’s Jorge balance accretion me don’t to in maybe somewhere $XXX the here for want get show No. have He's in I the - don’t I the to definitely looking number guess is - low press the have to release. is that but in me. a minute million. somebody to yield I'm so. The looking. say

Austin Nicholas

then And just last one. one

were think loans. spoke how within had really loan. underwritten stabilized we rent clarify that higher can to the about actually with strategy you is may assumption? there strategy loans what I - value-add up - rents of it the New increasing business the or value-add appreciate portfolio within their about in Is market York that and rents comments maybe be that think you borrowers it constitute on I But the just the multi-family

Thomas Cornish

former. No. the It's

does an the And the so, cover there there on is debt the not in-place is in that cash value-add, flow cash meet in-place service strategy service coverage in ratio a long-term to there's order debt times. X:X necessarily but enough flow

though right extremely portfolio Our value-add small now. is

Operator

Markets. line from Lana with our question Chan come of And next Capital will the BMO

open. is line Your now

Lana Chan

reserves values property a given on reform, down there bit? I One already. declines to on terms potential those multi-family rent come having to a you value that risk in have that with on is see potentially asked of just build questions had in been the risk the few as any profit things do a portfolio, follow-up a

Leslie Lunak

don’t do refinance as as event. element potentially cost. is potential not although of have But credit these the see it case see really reason any that maybe forward, impact to see I would opportunities I the we performing long don’t it going as that where expect situation an material of which portfolio less borrowers for not. be a on today refinancing some today credit to being there risk are that Lana, don't expect I a in

Lana Chan

the of Okay. as your CDs, in those billion $X And said marketplace? be of would much pretty have meaningfully rates of how you've the down come broker deposits

Leslie Lunak

our of are I Lana. money the but XX% have market. total front CDs deposits about a it’s don't of broker, deposits XX% and breakdown that in are About that's broker. of And combination me, total of

Lana Chan

likely XXXX, I the then as expenses expenses, excluding last BKU year-over-year, excluding lower think onetime X.X as away costs should XXXX impact costs? in onetime into on those question to think even those be expect drop And just we we of the about

Leslie Lunak

XXXX? For

Lana Chan

Yes.

Leslie Lunak

not precision I'm quantify with is the Yes. the but to yet, that overall to prepared quite answer question And yes.

Operator

And Sandler Stephen come O'Neill. line with will Scouten the from of our next question

now is line Your open.

Stephen Scouten

Leslie, as curious, you slightly Is onetime quarter when really items, that’s guidance down the the excluding of are we're your expense the guidance same the I'm flat X% to ahead on progress? X%. expense that schedule last or with guys guidance versus

Leslie Lunak

overhead. Slightly

Stephen Scouten

significantly lot tied down that have the LIBOR I then and if to correctly, months that guys loans obviously of a are was thinking remembered pretty in quarter. And about the NIM, you three

Leslie Lunak

month one LIBOR. It's

Stephen Scouten

LIBOR. month one It’s

Okay.

Leslie Lunak

Yes.

Stephen Scouten

the So, LIBOR? that to-date in seen already move encapsulated? seen we've in of the impact yields Is you most in loan XQ already have from

Leslie Lunak

may that of what be not LIBOR. end see with we But the Yes.

Stephen Scouten

back the In what Sure. know beta deposit down No. a any Absolutely. Yes. do subsequent you deposit the don't I And if target assuming of absence for pricing But side, thought on cuts? or rate and guys of missed a have a further the way you’re for cuts. this. I on then

Leslie Lunak

in There's a our very an granular on - level depending analyze extremely we deposit base. betas range, wide on

Fed So, have we of that tied because beta to overly some of be think, will them, are a funds. some relationships one, we

a down with the think went So, are beta one. one. - it’ll beta a we up everything beta those There of come we will down with with think one, of come of

be you small market, But less. going if in it’s get significantly money down business to into the

beta the what Raj’s to on hopeful similar up. the way point, the down, to very way We’re were on that is are they

Operator

question next our And will with UBS. come line from Vandervliet of Brock the

Your line is now open.

Brock Vandervliet

I Or the there? in didn’t Are see they the And return, have I disappeared? just they ROA them? the see targets - ROE didn’t deck.

Leslie Lunak

them. - have not changed They’re we not

and haven't have curve now, we of will with something which That’s caveat that to guidance But, both all control. around as changed the we and those changed uncertainty I only is ROA whatnot. the we The out. impact haven’t environment targets. will put ultimately rate the ROE. That put of and over now right the no We

Brock Vandervliet

And about push and a perhaps release quarter, also qualitative like CECL issue can reserve you're the out but risk just this real you're enough large it flagging to be qualitative back reserve? that the talk maybe and that the factors. is the could reserve going sounds Why calculation. reserve you And releasing You buyback.

Leslie Lunak

pick comments. in here things two I your

the think I buybacks. out may CECL we misconstrued us cause about would have said push I to think and buyback. CECL you remarks that don't

going So, going I the authorization, those to think what that definitive another before be. board more numbers what around want see was are said to some is they to do estimates Raj

different I think statements. two are those very

those XXXX, in to in now. And, exists I rules And follow. secondly, follow. are those going I have there's the calculating the to a gap are my it gap in And to XXXX. it's rules And have as as there's today reserve, starting exists that

of different in life fundamental driver reserve in CECL, that Not any make an changed would haven't about Does the reserve portfolio. quality. of increase credit assumptions my be anticipation I of the sense? and contractual So, the methodology

Brock Vandervliet

does. It

kind the the Just of accounting component above to be. absolute may over my understanding toggle that was what that calcs of qualitative allows a sort of management and

Leslie Lunak

defined something not not. just set is to going that’s it’s component framework need within It’s around No. confine that to that we The arbitrarily. framework. levels to built and and stay No, to qualitative us reserve to allow

Brock Vandervliet

on Appreciate the buyback. and CCEL color

Operator

will question Chiaverini come next of our David Wedbush line Securities. with the And from

Your line is open. now

David Chiaverini

you was A going in expect to do growth kind resi, the - weak mentioned loan of be about Should to for growth, about Starting just this is curious you forward? categories drive you. quarter. questions was loan of total I continue how what with CRE flattish, C&I I but somewhat couple outlook.

Rajinder Singh

Yes.

selling So, we of saw level equity lot activity. companies other particular of - if C&I if a we what quarter screen, we out, were saw that saw we the you and a around high was of on very sort production, private companies, This will, of that saw moving blips the things a look but actually very quarter, book, the radar payoff of very, you payoff kind activity. also good at in

most it units. say I would balanced be So across would the of

We continue residential. expect growth to in

BankUnited in bridge. a both to C&I business are business the continue and in expect growth initiatives launch business commercial We X.X. our we We’ll small embedded as in segments, the forward lot we'll segment. it see the Subsidiaries, banking in the corporate that in see it banking small of with

the Florida, we a broadly we’re that seeing quarters in across because be while it’d be all it’s also sales one the are CRE, in only categories. two in of and Probably space pretty asset lightest seeing been good in market. of think CRE I first multi-family we’re York So New seeing growth significant continued what will

very up it production. than moves So, on payoffs our overall ending production number tends good, but on is more to move

Our production is stable. actually pretty

Thomas Cornish

has that modest for had been we growth only has to even seeing origination and move some course, business loans the the line we're outside, now which the Pinnacle of last good Even sale. is that stabilized, not business year-and-a-half for held that

business or and has of to the stable core modestly. is outside stabilized So, that, beginning actually grow

David Chiaverini

less And curious loans? you you're on not I profitability of as new about environment. on paying profitable tax was is tax it how in because the interest mentioned the relates that to income are Pinnacle, the these these loans

Leslie Lunak

That's correct.

David Chiaverini

big now? is the Pinnacle how And portfolio

Rajinder Singh

for About including $X.X that the held moved billion we to loans sale.

Operator

And the Christopher of Montgomery. come from line our next question Marinac will Janney with

Your line open. now is

Christopher Marinac

should Leslie, NIM the first is change. way? a I ago to worse I we of was than curious opposite Steve’s if think you Fed callers cut question the it or the couple in talked know third, the about

Leslie Lunak

first the it than your I of to would it worse - So, third think quickly down so think the that of I than would going is being don't in more as more of first quarters couple liabilities. assets as your cut know more pressure cut much the see reprice you're I

that. than I timing - linear, So but number a it just thing about more of I think right isn't a it's - you're

Christopher Marinac

franchises just that is lending, appreciate would then That's just the a on restaurant? restaurants some growth besides question other that of or all And types be franchise that. the helpful. I of

Rajinder Singh

built like QSR a and type, component fitness auto significant portfolio. around a restaurants. in of significant multiple there franchise is portion of It's Yes. the strategy and - large the non-food of is component a also There's service that related things businesses,

Christopher Marinac

food the that Is just dependent? there any borrower particular good on trend or as area bad, side, sort of

Rajinder Singh

level something watching the continue I in and technology digital, I and in be to and people client opportunities. would in move And experience a carefully, business line that demand - demand trends investments as top say perspective. need the significant the the also think labor in the is resources cost structure that but business it's trends both are food that for from at reasonable there that business pressure we're in is towards that control

Operator

session over you. or Chief today. will for Officer, closing conclude It for pleasure Raj hand question-and-answer remarks. and our Chairman, my to comments to back President, Executive the now any is Thank This conference Singh,

Rajinder Singh

again we'll want to Once of out rest front the about even again, joining you, year. to us us the about you talk Bye. in Thank Brian. Thank months. I very we’re again. excited this in thank for more for quarter and and is of excited you everyone how just three And what turned

Operator

participation day. This and thank have our conclude for a all wonderful Ladies on today's program. gentlemen, conference. we you And your does disconnect. Everybody, may

BankUnited (BKU) 24 Jul 192019 Q2 Earnings call transcript