BKU - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the BankUnited 2019 Third Quarter Earnings Conference Call.

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

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

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

Additional information concerning factors that could cause actual results to differ materially from those indicated by the forward-looking statements, can be found in the company’s earnings release and SEC filings. undertake statements to time now, future. not any or in does forward-looking such or company any update obligation revise the The at any

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

Rajinder Singh

for strong $X.XX much. $XX.X so million this strong our Thank had everyone, Thank per EPS joining with growth. you We very Welcome, us. quarter, morning income, share strong earnings EPS. of to call. net you earnings, earnings reported another We

of were in. $X.XX, last And year time think about, so year, EPS XX% in the this loss out we I represents that $X.XX $X.XX that year, pretty share. happy growth but given environment had these if loss that's this included progress. share at last cop good which you earnings, to very we're about earnings, compared we $X.XX. I’m

expect in to And a we even payment at December. sure But account came rate of not of taken. a are we be cost meaningful costs funds, in we’ve one the that the already later if come probably market's deposit second deposit X cost expect actions the one trajectory more to based that’s costs. that, on this the even pretty don't more on there to acceleration cuts down basis of into that basis quarter - Happy least which sure down be we I has happen, current And that small runway deposits taking pretty will meaningfully month, those to down and turned. is this a say XXX announce Officially, increase what now in curve this points points.

environment. comment start with a - these usually about I Let me calls the

The go back stays bit talk stays economy i.e. let - environment. the about things me healthy. little our from we point, don't control vantage So a just and

portfolio, part i.e. way solid. we next concerned things as at at lot our the you this. Wall look be loan year. of Street signs at there Main to a own looking we to When Street, look you obviously into So at I’ll look look head give two are When about pretty

attention of but both we’re and take way cautious being landscape seeing to sort risk, that's on now. the So those things, to the excessive not we're paying and trying right

The I I interest remains curve it environment like it's been but how has Right challenging. quarters, I broken the think rate don’t quarter, a entire last keeps record, sound this the challenging. the inverted. getting many - and now, challenging, more for know

move third Now, for next environment the for to Fed to a has nevertheless it's the will addressing spread. time and margin probably few curve, about days, in and a moved challenging is that a fact twice already, flat but the

with short of very taking light and grew to money end view the what markets have growth Deposits In grow was obviously only of defensive at we're what growth curve numbers. we walk if this a and through. evident of been quarter. our end, as is at of down, will $XXX really savings, is marginally the all coming Tom year, million, at seeing came entire And look our you the the trying about. all game from which DDA, in this for you is growth there Loan

million changes year. parts of came for saw but quarter of of aggressively. just parts Some growth very, the in very that's quarter. the runoff, loan by bank Other again a the $XXX bank But

last you over account billion, did we're a $X as we taking in quarter. that at told $XXX little about million think Pinnacle about, loans, we sell I into

about, and plans I years and come in next X.X BankUnited would to targets. In come think as terms give to X.X, for April had out laid what want two some of well. - to a quick update on be I We as that you, given back you the

them we be see The think we have million tad we just where timing. million that tad you side, you it's revenue the update in $XX are a total right be, And side, benefit lift. billion. ahead for it $XX in I at on today. it, Overall, comfortable the on terms expense $XX is of six behind. in bogey, cost now revenue we're probably bit bit the we're combine a very $XX probably We and this, into implementing XXXX would that if a said where would that million will about still We’re months

and about Today, So down when comfortable even months were than today pretty pretty on did more feel ago we're journey. good it. we six we embarking this feeling far we just

Again, a yield in he’ll fairly what talk of about terms little which you to the asset side with free happened bit you the like around can Credit, down to I quarter through interest rate contracted, curve, of that ask last margin walk XXX NPAs, came But NPL that. feel all environment, deposit steady. I’ll given color ratios, Tom, to from more XXX. Leslie give said, it.

I basis they think point, down X points. NPLs basis down, a NPAs were down

loan classified Florida. criticized X to an rest that stayed are basis particular update It is issue. is industrywide loans. It's in $XX was The issue a not about workout. Charge-offs that is relationship that points. one an of and XX and million is unique There buyback borrower, in in the course and buyback. mention. that wanted We that CNI August, to a that other $XXX finish on $XXX months. in another the over or but was announced loan the we few It next bunch million will be million our it's announced working $XXX that and of few of I weeks did loans, million

it turn With Tom. to that, will I over

Tom Cornish

more Want that bit initiatives mentioned. Raj. on X.X you, Raj BankUnited a the little some just of Thank detail to Okay. give

into of commercial support more credit geographic the lending and and centered essentially our a have centric We less teams, customer and completed realignment silo.

giving excellent also group be a to across to to company, us this across the strategy us, great whatnot leverage the an deal organization, efficiencies. and entire of strategies operational expect We areas specific develop our ability better for an our go-to-market expertise practice and more

the strengthening really that our environment across a we and production good areas that Raj on is investment growth of from Despite focused really continuing deliver teams sales us verticals the are the in helping industry perspective. business segments, and quality mentioned, challenging

We’re of of initiatives relates per also ahead been progress expectations, we're as part deepening number trends. revenue sales, about early and very happy relationships, strong the expanded area treasury it and that. our to as has in client, seeing, products that X.X, management And revenue of very

and new segments middle the we in has wonderful of one very team It’s did middle lending this the hired in the the market, think optimistic quarter opened in up the some business Atlanta opportunities a lending banking a got both from is, weeks and we're launched that in for commercial One had us, traditionally We've Atlanta the corporate in we few office deposit we Georgia Atlanta a us. ago, for about in a market. of market, a US. market. Atlanta We team major prospects loan things side an great market and the largest past

on bit and little more A growth. loan lease color the

Raj slam great portfolio growth for $XXX million was the of million grand $XXX They was quarter by warehouse It had loan mentioned, quarter, a a in really outstandings. quarter. As driven mortgage growth of of overall grew The Ginnie which early the growth portfolio. and for commitments. buyout Mae that terms growth was of both team, residential million million, by in $XXX in $ XXX in

increase. change of $XXX areas, amount of through of market and gone these the was significant in commercial of York did a portion New some were multifamily market, rent good in see Most recently. million. We we most a was that's core in areas in runoff In down multifamily the that it regulated our

production We’re down offs X$XX a and of we're some what were million good. the line pay Overall, was was in our these the CRE, CNI in segments. businesses of It other we for expected, but million. great $XX in quarter to see deal down continuing with

as we grew volatility the would transactional of in next Pinnacle BFG, some accounts some DDA of modestly, million that quarter, we a and volume quarter, as In a seen. the end. DDA. good we atypical that out $XX loan well we of look I had couple pipelines funding, commercial started of deposit think and mentioned, quarters, terms the October in quarter for moderate at of of up look few At the we've by which Raj bit in non-interest and Deposits But say, $XX we were sort had new closing, the portfolio. just was the in end large by runoff million actually

So I’ll to turn Leslie. over with that, it

Leslie Lunak

quarter of net the yields prior interesting in XXX rate the declined in of XX share $XX.X bonds were due terms Start prior QX Tom. from declined to the is This of ended about quarter this portfolio the XX, while Thanks, by front the to XXX. taking few of of declines funds decline. from terminations to on interest to minutes the NIM quarter. XXX LIBOR, coverage decreases talk basis income year, mainly income. lagging deposits, interest to for sale agreement third given June the final These expected, points the extent loss of million XXX leading in decreased declines Fed in NIM compared of in some to a cost The assets, Net by XXXX.

and the quarter. the accelerated backed at points a securities, NIM on on for The impact purchased mortgage prepayments X residential impacted premium loans by of basis

amortization of decline accelerated that, the there. in residential So premium from most came X to of XX the that due and points basis were portfolio,

impactful XXX driver for quarter, the are The that to decline of resets yield floating was on most immediately loans preceding tied on most LIBOR. this rate was The from month coupon quarter. one of which XXX loans, down

of higher year of decline primarily that. would loss on Although was and prior than year, average, is you payoffs as quarter the also expect, contributed agreements of to XXX. covered third sale. yield share expiration the The prior the attributable loans at the the portfolio The to loan loans the from the for rates

portfolio Duration the prior linked lower decrease adjustments, That combination XXX decline basis which Yield compared at remains a from investment of resets, was of accounted due points quarter. coupon of the to rates, and low of quarter accounting on the of retrospective third year. XXX. the X to reinvestment decline. the portfolio XXX was for flat The

quarter, Our quarter. see a will kind the we basis of current expectation but shouldn't or stabilize saw point is NIM that this next decline down the two, we maybe

probability on at we between we're quarter making is For put for high would about of time case. in XXX. on repricing, this which assumptions the our based a consensus which all another that dependent are estimates forward in modest year, the more somewhere curve, the and think full together, October, impact on a a we’ll cut of have XXX any a Obviously land and minimal December, we in probability cut of the deposit and called

last we that quarter, included quarter the about expense the to loans had commercial of $X.X for Those items this non-interest the the $X.X this of of of couple weighted of for some also took in FHLB the a higher a REO XXX. Pinnacle gain the sale FHLB extinguishment unusual on loans had related the one end on for this quarter. we and of of in loss to included million comments a moved quarter. average $X.X advances to And A income rate We loss million quarter property sale of gains held million advances. sale related at cost sale on

of all little a So those, bit unusual.

minutes a talk I CECL what give some expect be. of couple to CECL, to want we and about guidance the to impact about take

forecast parallel the run. XX in of to and reserve current our economic range portfolio our XX%. currently we're expect a other we Based assumptions, increase to mix, So on

having that will of XX points. increase XX compared to And a the to credit XX ratio lead points to of in to a expect in the the basis loans XX% XX range we allowance So us allowance basis current losses. to total the for

models the rather of losses, to estimates in forecast, And and million implementation implementation, portfolio front $X of model a course We model, reserve and Obviously related provisioning providing our do today and probably - conditions our which methodologies estimate changes of. at incurred first loss expected we expect few refinement allowance review loss loss primarily an million. transition the economic and updates incurred increase to lifetime after the mix, quarter. all increases for a losses, these month are X in new this fourth any on in to of emergence The over our an using economic further dependent increased also expect XX the estimates and period. volatility to time generally we reserves on commitments, of of from than our

September and ended well words million couple severance for that Most expenses. fees, costs. of A XX, months cost quarter respectively expense as million Non-interest some specifically to branch closure the on related of nine BankUnited and $X included X.X. as is and $XX.X professional of

to compared X.X that implementation X% we you, done not XXXX, BU in been increase expect To had is be probably If phase. BankUnited OpEx. XXXX, full X%. in the about X to total have down we the For year a to operating remind expense would to X X.X,

an So of in on total, expenses. that's $XXX X% worth about million swing

pretty So about happy that. we're

To I'm calculating of related don't costs numbers, exclude onetime be an the size lease, and operating - the depreciation which fluctuate will that for X.X I’m clear equipment and about those as implementation, exclude we the FDIC also asset expense, numbers how operating under amortization really including of to this portfolio. my XXXX, not view BU with I

non-interest continue to XXXX from to expense decline We also XXXX. to do expect

We’re a in now. of middle budgeting the right season

call. and guidance have about pace the on expected we'll specific more of our So amount next declines

it I with turn will Raj remarks. that, back any for to over And closing

Rajinder Singh

the the to again I’m came over it earnings very with way happy questions, I’ll So before say, out. turning

ahead mantra of from not to estimates, last which aggressively, the for few growing the front get I think on instead in order, which good. let's hike it's bank And core consensus side. this earnings of be, environment. it year used Fed to the up, this is is are of bad a coming. increase is given always try the we're in in times leaning rate in particular year, and the choosing XX% When and deposit that out, especially rates going to wait

is - XXX so and reversed put we to let's up. because is rates growth, DDA month just And the the that totally two which fact that grew let’s term has everyone lower wait that used to success The be now about, all, recently be say, it that and be months $XXX is million driver. DDA, that totally totally very deposit nine for focus focus And on and scrambling, ahead and stop bank in sentiment trying year, are because is out is going XXX year, we next next eventually the this itself that or month (pulse) on DDA the a of everybody for or quarter, talking the our growth. of says to going deposits know on long

it I can that, with will we for operator, over start. So turn Q&A.

Operator

instructions). (Operator

Brady question first KBW. from with Our comes Gailey

open. now is line Your

Brady Gailey

Thank Good you. guys. morning

Leslie Lunak

Morning Brady.

Brady Gailey

previously CECL, for you I can thank over still guidance, covered but loans? I So CECL level you to the a yield do of wanted that XX% wanted to on accretion. elevated - start for I have ask, impact those Leslie, banks, FDIC fairly of know some

you do to sort BankUnited, impact on covered expect loans? For yield the any previously of those

Leslie Lunak

I do not expect the impact to be material.

Brady Gailey

shrinking. stand Okay. And they've last the in were quarter? They where third been did know $XXX quarter. those loans around million I

Leslie Lunak

I I number it's a on just it XX I quarter Yes. to my of in check. for third the the third here. believe have at I'm of - end the believe million yield going notes quarter. XX $XXX the

Brady Gailey

bit. classifieds Raj, then comments, little were opening I talked and about in And Okay. a up heard your how you criticized

by, quarter? levels and as of that how the million end mentioned the over You just can are $XX where of - increase the But did what go loan. much you those

Rajinder Singh

for we're the at bank. X.X% I think

Leslie Lunak

Yes.

Rajinder Singh

number we've little million, we But one us has mostly did So overall - a loan, on for for our got after over it had pretty been … client books modest. this $XX by which the with increase is

Tom Cornish

years. Seven

Rajinder Singh

Seven years, something that, they're paying seven, it. a the and made last half, eight of just bad for years, decisions bunch a year and over and like

we. so And are

Brady Gailey

that there's you concerned you're there? credit think a Is potential that about? loss Do

Rajinder Singh

quarter, the the the not first quarter. which or looking performance of in credit up that we’ll It's on probably still this means performing, good, action maybe some but taking itself is end company fourth

credit. probably quarter. provisions the middle We line be in it basically the some forward are the We’re on are now. this group work There that working on right will and the moved coming of to it from

Brady Gailey

on hear fourth Okay. It to last the me expect that And for is some you then just the margin. was in nice quarter. stability

you some year, we slippage? think margin As or fairly I your towards mean, next you that continued do can is pure see do it XXX XXXX, maintain average. think we'll look below already

Rajinder Singh

say. It's to really hard

Leslie Lunak

there's impact going I so that's Brady, to much, that. think

I does, try does. on we to in season. a we call after prognosticate Our very some curve quarter DDA, there. It's will give think budgeting that, There’s premature our non-interest to the growing get success very, fourth yield of what guidance what Fed lot variables through the but

Brady Gailey

Thanks fair. for guys. the color, that's Yes,

Rajinder Singh

Brady. Thanks,

Operator

from And Thank Fargo you. Securities. Jared comes Shaw question our Wells next with

now is line Your open.

Jared Shaw

morning. Good

Leslie Lunak

Jared. Morning,

Jared Shaw

is looking a of that a guess little I see Or to loan it sort deposit portfolio. the we particular and for without have loan opportunity would maybe accelerate at loan been deposit - third the growth, the more in ramp obviously contraction mortgage growth? lower looks loan could without growth a was before of get that great warehouse, growth should see in it without to quarter but up even a it Are really cost we like you accelerating? waiting bit quarter that,

Rajinder Singh

last been of that And guess. loan you're would and say a has is thing Production very we're I payoffs seeing. try to this. year. level with attributable that's growth that the in seeing, line early completely hard almost that The to lower

So quarter this to quarter, actually in kind quarter this the quarter pay they first everyone saw going all quarter We were was pretty was lower painful. who we caught finally in off were quarter the doing decent. thought first that. of first up, was and particularly and happy because by it a Actually the runoff, third much we

and quarter, and from do both in healthy seen a that. well. so. hard the continue growth they and much business, too. So over commitments from coming - very which a in that's from we've very to, warehouse just last with are from The where It's the they're lot unbelievable come of pipelines year an perspective, line very or we're also they they But seeing production refer predict is and what what both it's to very had utilization CRE, and obviously CNI to

So went also and it's clients, which that decent but the up, and utilization is not growth up. in of lot business, new just put And on yes, coming utilization new margins. we healthy whole a very was all at

pretty continue So that's again, being come hell in like saying basis quarter, more keep quantity costs good but see not quarter. goes on and next we a strong about I a into what comfortable will we will say margin deposit will on which I lot quality that deposit meaningfully, here, saying so a Leslie the choose over pricing. quite next side, points why feel the to you feel X down of is line very somewhat deposit stable that

could you where you a growth So deposit next again quarter have quarter. and more see growth loan

Tom Cornish

relatively tend I last numbers variability production. one the the is back net thing that other your quarter, would to we and too. the growth from and XX% is in add production take-outs, on variability went of that XX production production If in and the to side market quarters any small. of the gross private refinancings, of levels at of one off growth looked capital we ultimate correlated activities impact equity really payoffs, growth

or and be payoffs to tends we're it and refinancings It be happy around when around tend usually usually So production. unhappy, doesn't to asset sales.

Leslie Lunak

and are focused The us, purely right inverted both that focused this the the of of bit sides thing the that less curve of balance balance other mix we a presents in the a on on little to the and with the would yield say, on now. sheet, what's Jared, I lot optimizing more growth sheet, environment, challenge

Rajinder Singh

were at X% over between a under, lot spread there The spread out of a lowest at deposits done historically right? system getting being level, not and X%, low That’s at are highest liability, to in is are loans yielding even against. those, There assets the yielding put capital X%. sometimes generated that and there the the

later then when using when letting and pretty stock and times, at straightforward. buying that margin, off a better is capital better X.X your much that especially there’s go trading curve better with or just stock back You're date either it, at that's

to capital, a so putting on liabilities, usage, capital is not holding MBA eventually do. figure and and it's X% funding we’re - smart thing You best looking don't way, and at over very a flying X% out. need to and that the what's asset high X%

Jared Shaw

decline? Okay, then look to quarter of Do the at the October the do seeing feel, appreciate that, the thanks. you that I pace thoughts the need margin, in decline. just potential And deposit of deposit right on already pricing cut Or are that as you pricing now? you the around you sort timing accelerate of

Rajinder Singh

look internally, to the is tell and almost pricing meaningfully I’ll - quarter. at daily cut already surprises fourth lower on we It's deposit October there number deposit be third us, in you for costs has a meaningfully. expect down than still basis. that I come if Fed so the quarter Even no

operationally Now, fourth numbers. two goes quarter, sometimes actually a have it into takes trickle can when it in, to we month before months a deposit

actually in that fourth help October take would October first more the partially help it So help further, quarter. but down, quarter, the will will and

we're cut. still the working on rate So September

happen, be So meaningful a October costs. but doesn't still certainly will help, if it'll October in deposit drop

Jared Shaw

Okay, Thanks. great.

Operator

Thank Ebrahim you, America. Bank Poonawala with question comes and from of next our

Your line is now open.

Ebrahim Poonawala

guys. Morning Good

Rajinder Singh

Morning.

Leslie Lunak

Morning, Ebrahim.

Ebrahim Poonawala

but I guess missed at I sorry first - coming the it, if terms on question just around originations I’m loan new of provide what the are you yield? did in the

Leslie Lunak

sorry. Can you repeat I'm that?

Ebrahim Poonawala

booked Yes. The new loan are Like what origination getting loans at? yields? new the

Leslie Lunak

fours quarter Mid on this average.

Ebrahim Poonawala

market, And you, also Got Atlanta, moving about just highly very and it separately is Raj, a guess it. for competitive. talking I

or around acquiring and over into team timing was it the at just we give quarters color strong thought time, Just from the you have going growth markets some could do why the that if to metro you an coming new progress expect prospects? and Atlanta, months of should of a these opportunistic more

Rajinder Singh

Yes.

announcement of looking BB&T create two chaos which to been is going we're harder the three it a lot over while, Atlanta the an or at for a What at distance. market would the Atlanta the of looking a next from us look deal, really got SunTrust even but to we've was I take in years. So say

team acquiring be the and and think comes it, this we next right So business, see on two, three over along, we piece when it, acquiring acted found both will the years, team And on you on an we a good business. opportunity, we the nice of also right right? people. move And

ago, branch Just We don't like with Jacksonville. in Jacksonville. we few this did a years have any

there branches Our exact built it. in and was we’ve But the a years few numbers, and happy beyond recall and that we’re the found I no in a with Jacksonville, the don't footprint - Orlando. business built, we deposits loans team around really to in but ago we very what it’s done. million $XXX thing few We're we've trying same Atlanta. a replicate And

teams culture, the always to that for Jersey We're in discussions will in looking as been some that will fit not good trying over New We've but the turned the southeast, in and hasn't fit but the we're Atlanta looking there yet That businesses in well. teams or northern too. build, northeast. we're with just up, in also

Ebrahim Poonawala

have the Like near get of bankers when how making we deal stocks. Understand. potential of your a think would about deal the that should making, for about for would one but you're and get thoughts the love M&A to you thoughts sector. it That’s terms just how terms your over hand, talking in in been again, hearing imply see you significant any you're sort of - term. challenges more around in mean, and helpful. dislocation of consolidation revenue on what would to think And on terms to there's I other the in

Rajinder Singh

Yes.

are is years that then right? the that obviously number we're But change in, there it which should a why I regulatory think depressed. stock there there be road. environment a scales lot couple biggest of deals, of the down price everybody’s are being The hurdle might reasons of also, hurdles a and where

nature stock like like it's why or They You say feel stock can for a relative deal, rather look gains this? human work do at to and a always use their just and more buyback else’s, just down everybody it wait want quite a it’s out. that. I'd I but in doesn't than price stock would

way So doing deals. in that the of is getting

stock deals own merger and deals last were four doing then which been received issues. more a not the their couple announced well. acquirers majority of have are The have equals, or set been And have years, been not deals, of well, have three of termed recently, over vast the quite announced of of that as that the they

While issues, easy a they the numbers to pull little a and to might they're have digest, not of integration easier lot will look off.

M&A the announced, remain is something think about still a to game, sort talk I about, I got of difficult so. talk quarter. deal this I So we would still the has and mean, quarter, yield the think deal - through. it it election deals think in deals a been announced The always to I an get after there a your risk But and getting to will will not we've the continue done want even there get take to time in of next I April extent to of you aren’t year, half that May be second by of less or year. next

Ebrahim Poonawala

questions. the taking for you Thank Understood.

Operator

JP our and with from question next Steven comes Morgan. Alexopoulos you, Thank

Your is line open. now

Unidentified Analyst

Alex for morning. on This Good Hi. Steve. is

Rajinder Singh

Hi.

Leslie Lunak

Morning, Alex.

Unidentified Analyst

you're pretax X.X, BU you track that mentioned $XX on million the by mid-XXXX. in on So for

ROE a achieved? be also timeline So of as targets the guidance, could provided targets you do Or initial and not, XX%. when to this same Are if sense have this you on track ROA the you provided you of under X% well? achieve when of

Rajinder Singh

Yes.

about you took ROA, will ROE it to think the I that if $XX off gets of but I million ask go and $XX So added achieving, What we to that we ROA, it, numbers my good numbers gets quarter back said - the was, that you and take add announced pretty over said you that feel to you which million head, I and ROE. call you had the quarter, remember listen top of you that to you don’t it benefit, XX% and the call. we over on X% announce we that

the of keeping is earnings premise, what on dependent The the what underlying the company, with sort happens environment, in - core the right, mind of economy. environment rate course the of the that with which and are happens

do target set $XX We’re not to with now, would than on that and so and little god that. we and get the stays and the gets lump probably the and better do. that franchise, better. X%. then we going if is always say a this not then happens we’ll economy But environment curve what - a the This healthy, get which margin. target environment, goal, rate weighing in recession We’ll benefit, was do be the that it's - an will we'll core there what happens was next million a - interest through better XX% will But forbid is right year, there's sum a probably that

Unidentified Analyst

clarifying the also for terms of credit have any or there earlier, you New regulated quality that. whether runoff in York in Thanks this observations the marketplace, And it. rent Do evaluation you in some it’s Got multifamily. mentioned portfolio?

Rajinder Singh

take let this. I’ll Tom

Tom Cornish

Yes.

it's in saw apartments. think that. happening say evidence in sharply. When area, process mean, I a data last is investors the few days valuations of the on more we with early what's on clearly is valuations, rent obviously some increasing you look market what happening are lesser what's seeing appetite at in free regulated I the to you buy into to still which

strategy would versus early what's valuations. to say you people free market towards tilting It's investment expect, are As happening their with rent regulated.

infrastructure, right than have think going than market. see move within property in thing. and a the to manage a be for see properties, market to able among the better owners asset I upwards the appetite expect process investors. And rent tilt consolidation of be grab free But a through significant now, will XX to there there's owners, will mass a and fragmented regulated expected line. say, sort lot market that kind other than be next today that think think to this I will this We valuations, other consolidation able think And more lesser we clearly I trading in to the of of not over in trend sort as is to investors valuations, you strategy XX are what hold of acquiring critical months

Leslie Lunak

these add changed. I not cash are thing Tom’s but I and that add performing, The is, I loans would comments to agree and valuation, with that about has that other flowing would to that

Tom Cornish

Correct.

Unidentified Analyst

my Thanks for question. taking

Operator

comes you, next Tyler Thank and our question with Stafford from Stephens.

open. now is line Your

Tyler Stafford

positive costs the sound guys Hey, the CD cost on on you where Raj, could just end seen so and the give Thanks improvements. at I funding the any question. of deposit then update, point. magnitude guys. morning if clearly us at good was curious far. just Hey, where an rates stood guys of taking sense deposit the us to improvement this are kind you just give of quarter, new have of comment a you And

Rajinder Singh

the We give past, start I don't so pricing. to in a precedent. you have will disclosed not I CD that want

will the pricing, XX CDs XXX range. off typical CD our So month XXX, back to

at it down of running markets not pushing month well. but an at down still and advertising take X%, are will You just are and look that XXX a month the pricing it - give a in would eight the at the we're deposit month but as information. special, you piece yesterday range. I to September. June take asked really Money of I of for

So it's October. even not

what X costs of just the September, decline the was June were at basis looking points. month So deposit versus the

and in certainly September, October. include that happened really doesn't anything doesn't So happen what will post include that

I will even So will than decline higher the you number. overall that see, think be

Tyler Stafford

curious are you thanks. lastly me, franchise then and seeing Energy if was helpful. what any guys Thanks. there. BRIDGE around comments make you portfolio just can I trend division, Okay, credit restaurant And the for the Very

Rajinder Singh

So let franchise. talk me about

We also over large fitness fitness I but industry. franchise about portfolio, franchise is it's our - to have there. quick industry. the good very service exposure very, feel So solid. Return is the restaurants, have very no the issues we

costs, low being on quick side, the restaurant as are is. pressure unemployment given labor as restaurants, we On the service seeing it

sort also I’m we're getting a and here, actually, over about big we’re pressure delivery which of desserts, items. probably franchise want Energy, solid. becoming is seeing the gross that's very, of on from some Delivery high energy? not margin and is sort to And tends monitoring to trend but customer the over that deal, include preferences. detail into too drinks changing coming much And the you very good there Leslie, side is fitness talk on side. very margins

Leslie Lunak

Yes.

portfolios. the lease, other. is a At where that helicopters off the on exposure of million car. September we million in looking XX portfolio. some that is. assets million BRIDGE of did XXX all million to exposure little We lease energy of equipment $XXX is BRIDGE rail obviously that, and is $XXX the XX, is energy in $XX The had $XX to That's is the exposure in portfolio. equipment operating majority over have vessel. Our about XXX we're release.

now leases of those right performing leases are of with so those - all exception, All that now.

We haven't the had That’s had any take. impairment we've to where is. that charges But what there. that's exposure is

Rajinder Singh

not there. grow And looking to we’re

the also and We’re well. restaurant business looking conservative view as franchise exposure, on we're not a taking grow the fairly to energy

Tom Cornish

just detail that. And support maybe bit little a to more

$XXX It’s service in book is overall a of quick of About number million. franchise food. among it Our concepts. XX% diversified around pretty roughly is

food other mentioned, in less the states, typically number And of about other in are fitness, Jiffy or XX% things food XX% the franchise Lube of businesses, on the that's the in which that's the be the the business and parts the are would the So concepts. remaining areas Raj is stressed XX% non-franchise fitness service, remainder like on that predominantly portfolio. and

appreciate there. you the Great. all Thank really that. detail for I

Operator

question Bishop D.A. comes you, next our from Thank and David with Davidson.

line now open. Your is

David Bishop

morning. good Hey,

Rajinder Singh

Hey David.

Leslie Lunak

Morning.

David Bishop

Quick for demand that in I focus you deposit sort a in from growth. go-forward on, rate set number some the Raj. the know the growth year quarter. key on deposits, of in guess XX% non-interest there’s year basis? on Hey you’ve I over that volatility bearing Is past, the keying Raj. to sort the of XX, and you're question

Rajinder Singh

we've a months at it's growth. XX nine as over about say, a was feel ago? would deposit deposit I had easier. unlike pipeline billion of hard lot yes. loan Absolutely. of $XXX and is last the I the growth And Loan six pipeline, looking months, $X.X strong DDA the predict But total I growth. do mean, is about months as growth, it or million growth especially to Yes,

David Bishop

it. the drove what of Got lower. share curious off that maybe of capital? seeing related And this sort were the to preservation warehouse, quarter. that growth you then a little Is just the it mortgage buybacks bit Just in like pace looks of backed

Leslie Lunak

from completed We that board. gave million the $XXX but until had million our initial $XXX They us authorization, authorization didn't that another September. get we we

we’ve new So started million under $XXX buybacks now authorization. that

of really one the was completion of between just the the timing and it next. So granting authorization the the

Rajinder Singh

few in between. a just weeks With

Leslie Lunak

on was going there. That's what

David Bishop

year then charges service like Got And on growth deposit I the over it. year looks guess a on basis. narrative, nice

there’s I revenue the in else $XX As I terms on falls revenue that of that million $XX us that can million could part what to X.X, within of give size? our BankUnited you enhancements. guess know drive hang of purview. Anything else hats

Rajinder Singh

is cross that the collecting right it's - hits products absolutely we seeing on new was don't So are already, commercial better will what for and take that don't waive first it, I penetration full launching, better This quarter were we sell you're revenue, service in charges, those basically early third to existing until that waiving The time. going things a card next you which is have base. the to year. it, our treasury customer the take sell program that to some in of card we example. it's year probably develop. think commercial are That’s management of not and to

side. XXXX. it the We in thing XX as So fully take in but than develop of on the investing that well. some making for piece about heavy second and launched the pretty that. more And small Same rather to it's will business it. be small investments business be next and will just benefit We're the of months, time running - harvesting

David Bishop

color. it. the Got Appreciate

Operator

Scott. from our Christopher Marinac and with comes you, Thank next Janney question Montgomery

open. line now Your is

Christopher Marinac

drill New of Thanks. sort backyards, need that specials south you execute do, X.X as Good rate either are to strategy. that deposit or kind to on want I the and in either of Florida down being or York you done morning. in cost your

Rajinder Singh

and competition consumer. and York both clear, and Florida, is Deposit New much in still very both in commercial

debates want in the way for not even at front the priced what to grow which market, money is you CDs. is quarter. you if to is And plus today, if we’re of X%. Where for still ones, X% actually We’re runoff, actually this XXX, in the seeing high you close see

fairly week basis the But comes next There’s number that news, We’re high of hoping down price. a move. level been competitors with slow have irrationality to points. in still the by Fed XX

Christopher Marinac

think you these year? that changes? make sort next of it do does that Or again, Raj, challenging Fed care of to the more us for with takes execute

Rajinder Singh

on term what It all just too. but the depends what Fed eventually does the not long does,

not a Now, curve, fast the some inverted and a helpful. I'd has the love a at down term, moving we the severely that someone been last having reduces It's be and will XX there after had years for it curve, curve. Fed stable. long if at as stay But over flat summer, we XXX. quarter, come fairly to get least -

Christopher Marinac

quarter? then stability follow quality the numbers for see classified is - a And would it. the in this saw in kind the we on just Got Q of credit whomever NPAs up Tom or we track

Leslie Lunak

No.

in I total will to think going that up see to to $XX that classified of you're about X.X% Raj and as loans. uptick Raj spoke And mentioned, criticized. and about a million earlier, come

Christopher Marinac

Okay.

for offsets going> So it was is where that no

Leslie Lunak

number. That’s net. that’s No, net a

Tom Cornish

It’s net example. that number were talking a first about we

Christopher Marinac

much. Got Great. very Thanks it.

Operator

question from comes next Chan Thank you. our And Lana Capital with BMO Markets.

Your line open. now is

Lana Chan

questions, got CRE multifamily morning. the two I’ve you. one on portfolio. Thank Good

through expect balances other In how are business? could in maturities a be do do much of you year words, portfolios? growth you think down of coming in headwind this the Given of into year, up move that to that continue sort those next to prepayments

Tom Cornish

expect se of York, be you bulk portfolio year would and I XXXX XXXX would Yes, will multifamily think maturing a see within loans - we it prepayments year. of say to portfolio, big sort the come significant to of per amount the don't loans New continue a was I five specifically have in vintage the because down. was because has it

loans. a portfolio good in maturities market, of have although up there's coming So type point, and amount XXXX, at is regulated portion little that this repositioned a rent around within the of significant exposure we very

government from the which the a of lot taking estate real existing lenders, lot of to So out are see particularly expect the term we that sponsored long in in now markets. would market, loans competition a

that particular So I down the continue segment in think will to of York we XXXX. that portfolio go see New

Lana Chan

Okay, And that. to related thank you. just

there penalties terms of prepayment this XQ? In the margin any were in elevated quarter,

Leslie Lunak

outsized an this it the there had the I to impact the but some, compared but quarters. think elevated, were material margin last on don't was don't to quarter I little, particularly several Lana. think It margin, for not no.

Lana Chan

Okay.

question, Just Leslie. more one

couple done the the be to of pace think stock in to that about should buyback, three terms you've roughly In last the we similar quarters?

Rajinder Singh

weeks day on I phrase and We our some sort this or would brokers don't price. we give execute on the say depends a day get try so. they and generally every We and a basis. to two guidelines it report stock of

higher, it's end So lower, stock the not to go go day, the investors. of to If going the traders faster. it's like the is thinking is but if stock we're slower, or going little at a

the of return of thinking will happen just it months. on weeks this and over the the next course few just capital, and as We’re

Lana Chan

you thank very Okay, much.

Operator

Thank with David you. And our next question Chiaverini Securities. comes to Wedbush

Your line is now open.

David Chiaverini

Hi. Thanks for the questions. taking

could opportunity, you the their much at So first say size Atlanta and prior they overseeing the on perhaps were team, firm? how

Rajinder Singh

But they do I'd It's that also will and rather a in over is are generation course that three market. of just I going but team, lending, we’re But responsible CNI it be just commercial say - a success team, deposit if. the not the going years, XX again, to not we're for to they what over months. not. measure their over not next

David Chiaverini

you similarly few million years? to that earlier of Jacksonville in over think Should few alluded we team. sized as and terms next of it a And XXX the

Tom Cornish

country. a be mean, I Jacksonville years. we've over Atlanta good say. It’s in. markets. lot of the our being by market the three to hard that's than great benefit think and is franchises is the of well market done biggest one fortunately we in excellent last Atlanta markets, It’s in middle I in to bigger certainly. a market. segments a entire It’s biggest Jacksonville the middle one

is would out but kind it throw too far targets. to our that hope early we well, So of be do obviously

Leslie Lunak

to Premature guidance. give specific

Tom Cornish

Yes.

David Chiaverini

the the shifting was the basis came to in meaningfully? X.XX%. rate down will to more down That it And I then Got of for looking advances, X quarter, $X long that. your these quarter. points billion so for at liability, it. How Thanks the third saw reprice second in HFLB take

Leslie Lunak

years. couple of least a At

the the and other use rate risk advances explain hedge things the balance instrument obviously strategy on sheet. one of that that around funding exposure So We for interest a let But to HFLB - advances. me our rate back as is HFLB up source. interest we use

rates we downturn if us some So here. a down rates, to a for into materially example, from hedges in in entered go pickup our because were against sensitivity showed protracted protect to recently analysis

And we so do with that we purchased insurance - that as a use so against tool. some hedging

move won't down see you as cost hedging of most that it because the on tool. a used a dime is of So is hedged and

David Chiaverini

cuts, it'll still we if even be So more a get this rate couple in XXX.

Leslie Lunak

will lot But mean, a lot that over A I the down, of it of in, is - come sure. duration. it of out some that portion is hedged

rate in paper like it's effectively So some cases. fixed

So it the hedging we’ve doesn't a of move strategies based as LIBOR as say loan, quickly because that employed.

David Chiaverini

Got it. me. All for much. right. Thanks very That's it

Operator

any call to Singh like closing Raj back to I'd turn remarks. you. the for Thank

Rajinder Singh

growth us. for We'll we XX you where environment. look on Thank XX% last to to happy you next to we're with And earnings, Once again joining so forward optimistically next we in quarter days. year. you and year again mean came feat this out is in Bye. again, much. over talk no Thank

Operator

this and you Ladies today's for conference call. participating. Thank gentlemen, concludes

You may disconnect now

BankUnited (BKU) 23 Oct 192019 Q3 Earnings call transcript