BKU - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the BankUnited, Inc. 2019 Fourth Quarter and Fiscal Year Earnings Conference Call. At this time, all participant lines are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference maybe recorded. [Operator Instructions] I’d now like to introduce your host for today’s call, Ms. Secretary. Corporate Greenfield, Susan ahead. go Please

Susan Greenfield

you, Liz. us year you joining and earnings Good on our morning today fiscal call. thank fourth conference for Thank quarter XXXX and

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

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

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

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

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

Raj Singh

our Susan. in, time. us Welcome, your everyone, you, Thank call. to dialing for Thank giving you earnings

Miami We’re and beautiful coming and beautiful more very the on closed earnings. the to even strong because year quarter day a it’s you of We very, our from with note. a beautiful

For $XXX that’s per the at came income share. million, $X.XX little a year net just XXXX, over it

this excluding from we that perspective think EPS EPS year, I makes a few highest the our that benefit ago. tax an got years

happy hitting EPS numbers, record very this is very without we’re and about just, performance, that. we’re with So, remember first-year so the share this is loss our happy we’re

the comparison share. $X.XX, a loss $XXX do me that The of to or quick year. EPS million our prior an Let was prior year, so, earnings included

EPS $X.XX and look to I to in think if XX%. getting at loss] X% you just earnings, share from XXXX were about grew this compare the the EPS earnings non-loss growth. So, fact about even to year’s with included $X.XX And share them [that year actually in is a

and ROA XX.X%. in came basis at at came XX in ROE points

we year share. of is For the million the or let reporting per $XX.X the forward, net in when looking you a recap. we about, guidance, just quarter, of which we but $X.XX we’re This will are talk before we me give time income second,

think was also I January. of earnings on quarter the of first in our XX XXXX release

think we exactly said mid-single earnings digits. digits. So, not X.X said will efforts grow that single shrink – we’ll would deposits digits, At expenses we we on, Later hardest always margin, we around was ago, to finalized, mid-single [XXX will be to said, range. the but thing said actually so grow that to low some you in gave loans which you and we would a time, XXX] do, year they were guidance the grow we probably

I all EPS obviously never EPS talk targets. about you but we guidance, think, out put And

collectively I that little be of. we DDA, in XX% grew year, expectation that very but you think deposits very, about came on time proud [mid-X.XXs] X%, compare I we’re about was out, growth if this off your which was X%, think so. a loans I grew last could where or the to the think, I year, number, deposit grew of by non-interest X%

to to that months XX expectation EPS, part BankUnited efforts large in of the X.X ago. X.X% by shrank actually and the was a nicely expenses is all solved what than And of better which $X.XX

are out we think in with where and very will in all XXXX more about we excited happy how headed happy So, we’re came we were all, and XXXX. we even –

last meaningful you in expectation basis here XX came down and had more the could the this X.XX points. earnings that X.XX by quarter the third a We expect XX it numbers detailed year. a in quarter XXXX from was the biggest that in the point set and this deposit to on just fourth few news drop costs quarter quick quarter. basis is at of So, call fourth The

hold to able been we’ve our that through NIM flat. Largely,

bit details the by guidance behind of more actually we quarter deposits growth came basis will get the that. gave a DDA third we but X.XX. XXX XXX grew grew points, total a into for so fourth little Leslie flat down may by we we think million quarter, did couple was that we I and earnings million. be and in in at DDA

the For XXX came year, growth and in at growth million XXX deposit million. DDA was total

X% so was growth Loans the details think year is, for more XX% Tom I the most in for rate will So, XXX of. where the million DDA I the minutes of XXX few had and quarter that’s was year and X.X pretty proud that get billion, we’re about or that from growth widespread. that came around which a and into ago, thing for as grew had so it growth, said

give we’ve quarter. credit. and C&I XX take Florida portfolio you increase the on to this that provision last talked points the in XX was loan loan taking basis move and basis on at from region, last me NPLs been Let points as had one that the largely the attributed my increased to in that working special we quarter for quarter

increased rest to XX that loans we SBA that largely particular was put on is by of guarantees. one XX which attributed So, total NPAs non-accruals, that million, loan. are The

So, XX that’s million. about

majority. between up that two So, vast those things makes our

loans couple our Now, classified while of up, you NPLs basis notice, will points. actually criticized and are a have down gone

accruing is, million happened was category and quarter stuff last criticized these non-accruing. has loans classified, but So, made what within we that XX that

other. we on overall eye of it’s keep moving bucket by very a The that loans to X close basis [X.XX bucket from points went the down X.XX]. that actually So, from to

XX were and it basis to in higher, excluding came year was it running points, but charge-offs so ex-taxi taxi, points taxi year, previous compares in basis was in This XXXX. including we points. basis points XX Net even X X basis points XX basis or for about at the XXXX

So, progress over there.

eye than that what so keeping very portfolio us. about we space, XXX the of terms or close we’re and any we portfolio. franchise portfolio, other a is see are in restaurant the don’t seeing, place which where concerns In see in anywhere only credit still That’s issues the only risk systemic for on size a systemic million systemic on we are in finance the

Quickly talking half point effort. of about half in at two-year way BankUnited terms we way the are of kind this X.X,

with we’ve we’re would quarter, cost progress made. I where little we in think not at, and terms further happy ahead the be of a This we side, last on that behind very the what We’re thought thought. further the is I numbers. Like revenue little side, said that than at we’re a we

of confident the timing had with the but timing, Numbers we in a it on we them is to which and and costs very gave benefit achieving I’m we’re referring so still is the of about in comfortable total million we you, than out we’re XX it side, the XX came better numbers of what cost $XX easily. revenue achieve still very terms expected those will little that both worse, revenue.

mid-single quickly you for next year. growth, I just you say, last that the to see to growth, that be X.X% if you look we’ve made within year, a Guidance year, our last lot from we DDA. to focus this continue at digits X.X. would fact, loan deposits will gave line Mid-single similar the deposit of success expense In that down progress in it’s year. goes digits our that very – what

number million. expenses, but the but higher number it’s last still was predict, difficult this this be XXX DDA it think year. to before will for think be year was year, The love that will year. in be notoriously a to growth. it similar XXX would On even million to we XXXX flat I we

us X%, to nothing I you will grow help expenses, X%, the with flat. done tend what with about do they If expenses, be keep basically estimates will in X.X think

$XXX that we continue opportunistically Share buyback, are that this over We educate on buyback we X million of did the and quarter under there course program. million quarter to this the from on. and will of about

you the more me to With Tom. numbers. give little on He’ll that, let over a turn color

Tom Cornish

Thanks, Raj.

quarter Raj loan portfolio earlier, a As with million growth the XXX force. perspective was solid for quarter mentioned from

of within key We’re business really across to company. happy growth had the we that many our really lines see broad

Our in real by C&I grew million book estate. $XXX commercial

markets. had grew growth by in multi-family, both Excluding the for quarter $XXX million and we

Residential had $XX the $XX of in Group. million. million just We business Bridge Funding grew by over growth

a broad it spread, quarter nice business. all of really lines So, was across

Multi-family million I’d on flat, decline remained just happy for comment of had that within a bit, XX to were that. million of relatively growth thought by portfolio York XX New a Florida, was in portfolio. we So, the we quarter, little offset the see which multi-family

to New warehouse business grow that seasonality quarter, it bit time multi-family the was of that In our and portfolio seasonally. down year, QX, the area. of reflective York of million, $XXX declined in actually businesses For faster our kind see a Mortgage tend commitments lighter million, kind was $XXX expectation. the growing overall continue but in-line newer to just by of it which down one normal under utilization that we in with by was

continue economic obviously the markets see ahead that in. Looking operate good we still in to overall conditions XXXX, we in

seeing both We’re corporate good Florida growth quality residential focused, small finance see non-multifamily real continue commercial estate estate and lending to York, commercial and expect banking in business portfolio. we in growth growth. in growth opportunities lending, businesses. in Florida lines in to portfolio the expect our growth our real specialty and New Overall the area, continue the commercial

real the maturities portfolio are to overall commercial a will in of group in off real multi-family New in certainly York XXXX, large York there opportunities world, have we estate XXXX. portfolio continue as a in run New estate the While with the growth offset likely fairly

we in run-off to see net So, expect area. that

a which encouraging on treasury and million to all growth continue non-interest operating XX% mentioned business energy of Raj the time similar accounts we growth. lines, all of story, effort our invest to than also of see. operating in virtually fee-based business, across across substantial Raj was is a as that deposit increasing mentioned and side, again lines. $XXX good of and amounts major management of business, DDA, our As

quarter, So, a loan solid from us. think for deposit and quarter very a I overall

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

Leslie Lunak

the quarterly yields by fourth Thank first in but to the declined prior the net $XXX essentially the as primarily little a quarter-over-quarter, of Okay. income due income to results. loans. the from margin, year. you million more of Obviously, about that Getting you, some recovered normal quarter know on bit was Talking million, interest in reduction all flat was the interest detail net interest $XXX Tom. into compared

XXX, were of decline at of quarter quarter-over-quarter end termination the share expected remains high-yielding covered XXX sale the of again for agreement of loans. Those portfolio fourth given flat loans final the in XXXX, to those from down the towards primarily year. the covered lost NIM last due the of in The decreases

preceding on the resets at floating-rate for coupon due yields for attributable loans loans rate quarter X.XX prior down demise higher quarter. on overall to again, share pay The fourth new is decline of the the immediately on. X.XX in of the originations quarter, coming this and on loans X.XX, The to decline was from was of mainly portfolio. some the loss the off loans Yield year the

know I value because The million. value, XX, this, you XX.XX guys the XX% yield that carrying of expect XX% going at quarter we those to was fairly time. the forward to to and and are on carrying $XXX The loans rate decline formerly and for between covered yield and on last those I’m current those loans continue for consistently loans talking the ask going was, be December the about the at to hopefully a me balance

the lower preceding on quarter down portfolio X.X. was immediately due and quarter decline fourth for quarter-over-quarter the the a of a quarter to and rates, remains fees premium compared to X.XX the The for higher X XXXX, accounted yield owned portfolio investment securities X.XX was Duration on points at of at XXXX. X.XX decline primarily basis reinvestment prepayment the for fourth coupon of this for to year. low with resets, that The

to mentioned fourth deposits preceding and of was flat to cost quarter compared was cost this X.XX quarter linked-quarter XX XXXX. to quarter the down Raj basis to previously, X.XX interest-bearing X.XX, total of the deposits compared As The point the of for relatively X.XX. so

XX% for XX.X% deposits the ending compared were prior to XX.X% and year. just of deposits the demand over year, average of deposits, Non-interest-bearing for

XXXX, deposits, great there. so average the were of total quarter of average fourth non-interest-bearing the For XX.X% deposits progress

the back our and come as, on half an little assumption are First bit running spreads forward than know, yields, coupon a based asset of will expect and XXXX. both guidance, resets that be on NIM one We asset there loans going tighter that do at continue Fed you cut in securities, is off. of pressure on some rate assets

rates XXXX to expect XXXX. costs However, said, NIM cost only think loan. in CD in to fewer the we On for to if pretty as book, to decline, be quarter deposit the reducing projecting deposit fourth XXXX of also there much though catalysts balance, flat for may Raj Fed the continue cuts the be we’re the particularly I on

for Turning a was actually the of had because quarter little part quarter we in time provision, that about and $X.X reserves million offset we we partially this bit Raj anticipating mentioned. provision at million expected the to of and reserves than the the the necessarily to initially in lower that last did that quarter's the commercial relationship we were related $XX the call, provisioning recovery

in provision, recoveries, – loss ratios on increase we in that down. the reserves, that reduction million reserves in addition to Within the offsetting the is buried drive as portfolio in of past there continue an historical specific had come those $XX.X an to but

in between an million increase current the our current That of $XX the CECL, XX in to a to to $X will reserve commitments loans, points, initial for we to that our of $X is and bring reserve on reserve. expect million of the ratio XX% adjustment estimate and to $XX adoption adoption. a to the somewhere of compared moment million unfunded basis a also XX% for total million Talking increase upon

which with trying to be find because forecast, you, forecast a change to challenging is impossible do. I'll provision, CECL your to honest pretty forecast The in much yourself pretty is you economic

challenging points is around due of an to to do, to to range losses, we obviously, remain CECL say losses but that increase basis reserve and XXXX a versus lifetime initial would for in expect incurred those basis of throughout points expect level thing the it I provisioning that providing XX XX So, currently we in XXXX. just forecast,

forecast, saw However, I sales of briefly were you in and mix. and be of my CECL. prepayment securities be $X.X volatile can opportunistic know, to gains economic that original related forecasted by comments portfolio I want acquisition things holding emphasize of gains impacted those you securities bank failed fees the some the that in That that it on XXXX. quarter. from will back, as was changes such comment on million to we still this way the our

rated grade that we Most segment below of investment of that clean of the gain the just to we recorded continued relate majority took the – be kind this and related to the and those opportunity were up – rated – quarter of to. portfolio

XX million specifically included expense non-interest BankUnited of for bit ended X.X. A to the little year on expenses, December cost $XX.X related

pretty For about insignificant, the fourth $XXX,XXX. quarter, those costs were only

as XXXX, As year to, expenses if and going will compared let to you those are impact you for you Raj of know, alluded nothing remain you in normal a X% X.X, BankUnited XXXX, just know, just go of full-year people give to total. the do their the know, you and do your expenses, X% things up, run, year-over-year think what not. Because merit we increases flat to

we that to I line of probably the as to you start that some say item of those that expense been XXXX line the is instead aggregate flat part think the the that you’ll some begin down. of technology would expenses the we the that’s in P&L, next making increase hit I be notice one the we reason think of some will in through in move and impacts as technology see year see we’ve investments will

came that fourth realized fine-tuned of those quarter down quarter. benefit know, and, portion our filed really was of was Income that and we of that had the on the few of we quarter me at in let a you the minutes. this estimates our made we for Obviously, ETR we returns XX.X, all of all all that factors, comment this the low the very portion and state around fact taxes, a result factors

see forward. continue ETR next that the going the will for I XXXX. that reflected XX.X% to to year we expect benefit with be between in year where consistent for is lower and for ETR which landed We XX%,

also quarter, The gave actually so corporate other fourth rate its thing happened that in benefit. percentage is a reduced the Florida point some that us on tax like

With remarks. back any to closing for that, I’ll Raj it turn over

Raj Singh

New look of continue story, ago, least screens, all looking primary on we obviously to aging our Main Street, our at a a our Yes, thing cycle. of which it at York, Bloomberg it add, talk at when extremely would but that the know we impacts We signs I both for think the them only don’t business markets, an were couple Florida don’t forgot as something well. environment. just was and don’t I see happy different months see about I we’re do to we generally but it. It’s and is control, numbers. we I

Street we very as view far as can is see, the Main on good. So,

turn will Q&A. it for guys to that, we over With you

Operator

[Operator the Gailey Brady of with line comes Instructions] from KBW. Our first question

Your now open. line is

Brady Gailey

you. Hi, Good morning, guys. thank

Raj Singh

Good morning.

Leslie Lunak

Good morning, Brady.

Brady Gailey

So, you pretty it in In first back Is year half know, tangible. of times aggressive mean stocks? you half we do that’s up of XXXX the the slowed. about more back I XXX get really you much or repurchased company. still the cheap X% of look over company. in and half Raj, it buybacks think of of it was I Last the about X%. the relatively even step XXXX repurchased, repurchasing have mean stock or the X% buyback you was not is only XXXX, year, if at – you'll

Raj Singh

technically that start, and of we give up know, before kind if kept we day was two, stock day we caught parameters were – really brokers, and back Yes, chasing it. we low room, the or go a never stock within started board you literally in the to know, maybe discussions at could a just Brady, and some see or the the of and if or those you that sort mean, you we authorized, to the time day don't and that our having before even very or, buyback I go was two buyback set, literally when when

good to So, problem have.

But don't a try or to we once here stock you should We even and and just We it there’s or that. magic – better predict. We then know sit twice directions trade an don’t give it’s other no, the problem. be. and it. anything no quarter like We let

So, we of as that’s of and why a a see were buyback. couple you bucks much just always a – little don’t behind

marketplace, our today not still and of – is mean know, great you market We a right. forward. reasons, buyback and going is I where Last down There just the a a in as, year, for it love stock what fundamental been lot has at up investment and the see more lot, our stock but was volatility doing.

So, December we coming know, also create it never for you would back thought be us and but, saw we in you that so lot an Brexit of opportunity, stock noise, happened. to buy a know, cheap, and

buyback like said, obviously I You know, strategy. a we’ll it not This but with buy a you the know, of reduces that, to the but, continue discontinuation buyback, I’m back. is happy

will position and and it’s Board do done, this at the our We we’ll buyback when again. to back we’ll look then go capital

One at at is to Board meeting, I mention, say thing well. out going are just policy look also we me as our the dividend that that forgot let to February

So, but for what comes the off only agenda meeting. Board of happens, it will on that meeting the be when is that February published

going it at February. Board time, dividend a $X.XX a in and for at quarter very is has long Our been to look the

Leslie Lunak

to the Then we the anything past. the disclosed I we capital haven’t that would is that, Brady, to you in other about thing changed you that, add targets know,

Brady Gailey

all then, the that took I it Alright, in $XX credit? you as fourth the you as mentioning that you of last as, is that know, quarter, loan now? And And on briefly other provision I happening remember I quarter, said billion color you what then, C&I on credit, know any that’s helpful. what’s mark a Florida that far with on mean, the

Raj Singh

fine-tune think the number. work less It up number. it’s us Alright. feel out come is a $XX while. provision a for comfortable and is all that It’s with very very with than we’ve It’s number to safe in of to about we quarter – what million taken we a and little be that going took the the

we where, we’re thing it's months this an in know, say while, million this and bankruptcy we’ll is a and liquidate kind know, taken. one so $X.X we’ve or of just four not reserved situation we The for everything, ongoing you adequately loan that but so of, can be you think liquidation will three work concern, out with

Leslie Lunak

He Right. the CAO say, about hits to what be going for And to me. under an but feel he unchanged. I’ll my that CECL, am I if We like loan hit [indiscernible]. here, didn’t so me, sitting think reserve that’s retract is I appropriate

Brady Gailey

finally there? investment the maybe Raj, you you’re commercial then in on Atlanta And front, know, me, two make about you’re or team how hiring on you last Atlanta about kind any to and a update quarter – mentioned going a couple for the of thinking

Raj Singh

three you new drive investment these Yes, I are races. next these an so know, it years but the but but not the and a for it to in sowing analysis we in be that seeds and two. team four not is to four year or say are your off here. XX we down going next It’s material They in are think road, have or the later market. months, will sow actually impact years are the would we seeds will the three that, works, over

weeks. – team, early in numbers They have that pipeline, and we’re with be progress a few the the will happy very but first they’ve So, think on. made the decent the with small I

Brady Gailey

color Thanks it. Got guys. the for

Raj Singh

Yes.

Operator

Our comes next America. Poonawala of Bank from with question Ebrahim

Your open. line is now

Ebrahim Poonawala

morning. Good

Raj Singh

morning. Good

Leslie Lunak

morning, Good Ebrahim.

Ebrahim Poonawala

want $XXX think expense, $XXX BKU one to quick the depreciation It's right looking make so on and Leslie, When the the about think and clarification, million Just for about is sure side. million it? And right just flat X.X we at way about the amortization the to then… expenses, we’re expense numbers. adjusted

Leslie Lunak

fluctuate total cost, which equipment, your the operating the will depreciation with our of then, the just to the it’s [XX.X yes, and point, minus and X.X] BKU portfolio. But, right. sounds That lease

Ebrahim Poonawala

that there XXXX? expect remaining much X.X in And should in costs is we

Leslie Lunak

in they those, costs as associated where and I maybe investments we’ll in of making two thing think those disclose significant, are but some revenue, so platforms I with them, that The only the closures of going branch be incur something generate forward some if some some the significance probably that some that you’ll place be there that forward. we categories a we’ll think will the and going be to we’re technology putting you’ll see of the see will

Ebrahim Poonawala

Got at the X.X if it’s the savings, think if decline how look expensive and or obvious just BKU see medium term beyond should accomplished in if Raj, more we means for but and XXXX, it. flat what And or changed what keeping side, a that the looking has into step impact we that back, we it that could a like XXXX, on out and to the beyond BankUnited you talk the like done, how we has took about expense/efficiency outlook the company? like as

Raj Singh

could It’s just current thing have you of I It’s and know, It’s in particular in. we’ve here don’t detail, mean, branch production optimization, want is it’s lot little changing one process and about many because of I that to made. some XX of a me, know, could which optimization, points the [indiscernible], automation, organizational more to Leslie things. I there now that bots There’s of it’s that I the have you prepared, into process. we investments go robotic in bank digital at I out. point bullet no that front talk level get

it retooling plumbing but adds and of is All changing phase really $XX up to, buy of you you about, we or million to about thing company is out together, one not themselves, the it $XX so talk of growth. nimble put as expenses revenue, and all exciting know, but the these remains of of it any the next efficient as to it that get when million

were years done ago, are we and we in toady we've billion, bank $XX So, a years $XX $XX this not XX major retooling and XX billion billion.

kind that this for as of as fast companies major grown. grow we’ve retooling So, needed is

design again we’re years’ and of processes what XX are probably terms will on. needed it’ll XX, we doing in so XX grown organizational have whatever company; billion-dollar in because we time, think I if today and be a

one happy biggest Maybe I’m design point know, want know, to thing more you I the in organizational to detail you really you it biggest So, me, the thing talk if lot – be to. can, to a isn’t that but call would change… you

Leslie Lunak

And some of the technologies.

Raj Singh

technology the yes. investments, Yes,

Ebrahim Poonawala

client That’s upgrading offline. other anything I I’ll you – around that any around show up of color investments, be core you’re the that point undertaking kind technology back provide investments should fine; facing or circle if year systems? just revenue driven the if Is wonder just next later year? you is And may can this there this

Raj Singh

journey. journey I two big the way buckets the say be completely would of through than So, more know, we’re you are half year. by end we cloud bank moving the to and are, that this That will complete the

that in big not ways. that we which of started. doing So, that’s infrastructure part has many improves the one and X.X. thing, started of that was that before – We to X.X bank the Honestly even is coming ahead and that

live it’s just also start infrastructure are happening technology, are robust. digital facing also with space cost; the much that which as There big making more about on well not investments customer about go clients. the It’s in to

being roll-out quarter starting franchise. the for roll-out, I be the of think rest an will on are investments also commercial and bigger quarter There made side. payment is this then next employee the

just because effort this revenue. but will that. lot like we’re just dollars in making, eventually this is project like in early not that a you we the to That’s years. year but to has off say kicked technology, more okay, We’re investment we because me for It’s these couple all take many investments leads this going know, in. of and There difficult a of are revenue, is

big four out that So, revenue, or some in take will three they pan years, are and the all driven next our assumption of will numbers. some that year but to are

Tom Cornish

deposit They’re the also the yes. all side of impactful very business, on

Leslie Lunak

Oh! so lending on the Yes. side. Probably more

Tom Cornish

lending Right, side of business, yes. yes, on the the

Raj Singh

origination Yes, system. not it’s heard loan word not – the you’ve

it’s infrastructure geared payments, deposits of the our is whether they cloud, more investments whether these are and all digital commercial of All it towards and loans.

Ebrahim Poonawala

it. Got Bowl. my questions. to BKU for ad in seeing the Super forward taking look the I That’s Alright,

Tom Cornish

well that some doing We as front [indiscernible] are on by way. marketing the

it, for that’s social media. look If be more you going on to want to

Operator

Our of next the D.A. from with line question Davidson. Bishop Dave comes

now open. is line Your

Dave Bishop

Yes, good morning.

Raj Singh

Good morning.

Leslie Lunak

Dave. morning, Good

Dave Bishop

the back A there of said X.X, in question Raj, little bit… BKU circling you a terms is

Leslie Lunak

trouble We little have you. a hearing

Dave Bishop

delay is Yes, you revenue that bit products, achieved just in side? of terms terms think a you of and side curious the X.X, new some that’s still of said up a XXXX timing, revenue on to in the little by systems the terms ramp the of just and remind of products us that the going are there the in BKU

Raj Singh

Yes.

made bit up Anything the to bucket $XX that of a that existing already little existing do that and whether product being maybe or what people with we number track on into track. new technology on the of million. new added Anything So, to are up again, had have was, revenue products had a with a probably we thought. about hire taken ahead we’re product on, falls developed has or that that expertise, than and to that new we of or things quarter platforms category of longer

we third step we pushed is launch were to quarter. after of the quarter now So, thought in year this second going

twice that ahead thought or we will But expense three we So, worth I’ll the it's revenue you and as months we expense four delay, side, as that’s on know, four the tell months so big be the will or of three where were, you you know, are about, be. of the delay.

we that are are. The that So, program overall a revenue you we’re it is question, little going feel ahead, where that’s down delay. and we but know, expenses products, we card a commercial break new your three-month launch, the on a between to just I bit if to program, for

right hire IT is longer in we and would while took a negotiating do it – team. going it talked out, team It bit the That it launch to we so that’s little a took more April, August. [obviously] for with where be – in vendors We but to build the are.

making in certainly four-month underwriting, on also We’re also new we’re ad that know, automating call this it a launch or to would early won’t small changes it We in summer. it you but product, – a we it, probably and process that a late it delay. call new will is ticket happen year, I talked is the three

have up hire four to new people more. we or it taking maybe things months develop where that like things it’s new new or So, launch three ended products, or

Dave Bishop

then, [rail that And Got portfolio? franchise finance of it. update what a quick in on the terms portfolio in seeing car] maybe you’re

Raj Singh

– franchise or you just The car franchise? said rail

Dave Bishop

Both…

Raj Singh

restaurant for the question think is the I on franchise.

Dave Bishop

Correct.

Raj Singh

Okay.

our me is or $XXX franchise the million, which first the piece of businesses about talk about restaurant of let take give – two-thirds So, business. about

is So, rest, let’s which which million so. non-restaurant, say the about The things or is like… $XXX

Tom Cornish

Fitness.

Raj Singh

are and, extremely know, and doing …fitness other concepts well. you

So, about concerned that. we’re not

not ordering I number and of where so Eats One that because impacted under Grubhub of which delivery is in of, to got changing higher a do priced or And DoorDash on, driven happy of is rate because coming model and pressure is like We’re drinks of it revenue changes when low higher gets and unemployment customer rather restaurant cost. delivery and for Uber of grow often you're is about customer putting desserts. XXX is. Two, some business. stuff to happening. is the likely reasons. margins labor behavior a part think the being the a you with to mostly on know, into million stress Restaurant, in stuff the It’s lot terms happens, behavior a

is And that know, that’s that product then, to delivery we putting can When be you pressure the challenge. talk go product going on. on. and pizza, about used primary I So, now

is Now available [indiscernible]. everything

from food McDonald's Wendy's everything concept Starbucks the they worry to just everybody pizza have new pressure from under so, now to They and And but delivers. have competition. and delivery, about to about the Panera, only is Chinese worry

coupled the on that putting the So, change borrowers. financials tight you with in that what is our, is of model business labor pressure market is know, happening

Tom Cornish

day towards happen of moving pizza the see having one are, automated methods. to you’re manufacturing. a produce have know, that these some of add more We you clients other now would where you I pizza, labor machine instead

in and So, working more this just the franchise to adjust where cost is markets, and the so it’s labor just an new time it's the franchisees we’re be business, business happening food to margins but our of new on are to point. pressure side trying while to restaurant going are markets this on cautious area there at

Dave Bishop

classified? And – non-performing any that of are or it. that Got is [indiscernible]

Leslie Lunak

Any sorry. what? I’m

Tom Cornish

have those been of classified. Any loans

Dave Bishop

Yes.

Leslie Lunak

and disclosed exact Q, me, was for front last don’t but XX-K yes. some, will it the number I in are in are sure. There of be some in there the disclosed the have but

Dave Bishop

million question, impairment final Got the it. charge… $X.X One

Leslie Lunak

Yes.

Dave Bishop

I in maybe think provided on release, you press color the that?

Leslie Lunak

lease. the had enough, it under and equipment was Interestingly systemic. than think it even said, that, it value I and it, found residual. little we that’s equipment another to market reevaluate current when don't we wasn't it market lower the that lease don't I be railcar, and value know, in It’s the was equipment throughout of a equipment. pervasive railcar, portfolio other some form our portfolio. like you we the wasn’t that off expect back that I was Yes, of exiting the residual value of and equipment,

Dave Bishop

Got for it. the Thanks color.

Operator

Our question of line the with Stephens. comes from Stafford next Tyler

now line Your is open.

Tyler Stafford

Hi, good the question. thanks morning taking guys, for and

Raj Singh

morning. Good

Tyler Stafford

know, the at the up with outlook nature as flat I offsetting expense complete the back of expenses. to been for about reduction by have expense will fully any growth, we is you there X.X think just wanted I you would way XXXX? to would X.X, XXXX it? end savings, be be XXXX, to confirm, And lingering X.X, fall to not just X% expenses think given that of of to be those on benefits appreciate then, mentioned, X%, right as about the so but otherwise the the

Leslie Lunak

be happening XXXX, branch be would optimization, bit – still might of done. that’s is a after little to that the Tyler, certainly There but bulk related

Tyler Stafford

the out last that called Wells one out lease Okay. week just questions an railcar asked I portfolio, elevated just prior the of that portfolio. following And then, of around charge-offs don't so think up on was got

I BKU. $XXX or for think it's around million so

out you're what that on comment you seeing portfolio? if curious trends Just wise of

Leslie Lunak

it impairment – railcar impairment we a you XX, not in as in. know, and haven’t have additional I and have values any balance railcar you mean, all are reevaluation this was million – thorough and in we on as continue did know, I at – haven’t sitting $XXX values any the fourth and very of we took the of in charges But so quarter portfolio, we’ve not what sheet, is the December appraised monitor taken charges to and other coming obviously say, we those to when done reappraisal the take. we quarter, I would it explained. just

Tom Cornish

deep at deep, QX we with results. Yes, it satisfied look the and took we’re in

Tyler Stafford

Okay. Alright, great. That’s it for me, thanks.

Leslie Lunak

Thanks.

Operator

Our next question comes Steven from Capital Markets. Duong RBC of the with Tu line

is line Your now open.

Steven Tu Duong

morning good guys. Hi,

Raj Singh

morning. Good

Leslie Lunak

morning. Good

Steven Tu Duong

the to your you Florida offset essentially morning. multi-family similarly we York Good perform year? On quarter your saw multi-family, City to expect New it this what for do

Raj Singh

say be would the would in so. larger say will light. will I the portfolio York was maturity XXXX. level not I and that It in larger be of quarter for New it in No, QX relatively XXXX first in

QX bit So that a in XXXX. an was of of level maturity aberration

Steven Tu Duong

And still then warehouse declines Appreciate this solid you guys grow lending industry Got it you Alright. had it. book originations, say, let's business, your this XX%, keep by that. possibly can the you growth year. or on where think do is it? If

Raj Singh

pretty the on time expectation a but will commitments. year, pipeline, the mortgage obviously Utilization in is on market based the grow to of have decent We what with also based happens continue so we’ll general. our fluctuate

else. than was quarter more anything seasonality has slowed, but So, amazing. out quarter third Fourth of

First quarter more. slow even will

as the pipeline then balances business in The out XX%. we over quarter we in to it’s look commitments utilization as really the in of don’t continuing terms to is grow I up again and – of decent. the in up I or then, outstanding in third build But start that and up bottom at look and gets utilization – where March, second February and at are much commitments. you know, Generally,

that concerned not we’re business. about growth in So,

Tom Cornish

we down, in I at that relationships the back, and we would and see cater you the levels relationships world have credit to add major less you we’re know when players tend our relationships. our their is in are in significant when that look volume clients commitment that well-positioned I think

Steven Tu Duong

that, Just curious how a this changed have in much fourth ago? the commitments versus year on quarter year

Raj Singh

have a year ago numbers. don’t I

Leslie Lunak

Give us a minute.

is Somebody looking right now.

Steven Tu Duong

Sure.

Leslie Lunak

when it. interject that we We’ll find

Steven Tu Duong

Okay. have quarter? any your of Did moving Yes. those buyout on loans then book. to this resi just And guys you

Raj Singh

Yes. loans. than in XXX% growth see the resi those that of from was you More

Steven Tu Duong

environment you for Okay. us. remind The current remains can correct? rate these And loans that is interest attractive

Raj Singh

Yes, correct.

Leslie Lunak

Absolutely. Yes.

Steven Tu Duong

to, in area, you narrowed a last one looking question, or work close what then just my, talked down maybe you of And open just back you are going terms great. you branches in branch is progress? where know closures, that another one, do in looking are you Okay, to have to about still

Raj Singh

of those two-year No, a decisions for optimization is all made, been decisions – the branch process. have implementation the but

already to some going already some been XXXX and So, are we we in act have on all XXXX, the in have but made. decisions acted on

Leslie Lunak

are about just a to They your back million of question shy $XXX Steven commitments. warehouse little mortgage year-over-year.

Steven Tu Duong

Thanks Awesome. appreciate. the color. for Great. Really

Operator

from comes Our question Sean Janney. next with Tobin

is open. line Your now

Sean Tobin

Good morning.

Raj Singh

morning. Good

Leslie Lunak

Good morning, Sean.

Sean Tobin

clarification the Just one on question margin.

including with is You fourth basically be said flat that with XXXX one quarter XXXX it rate of – flat cut? will margin and that the is

Leslie Lunak

yes. Including,

Sean Tobin

you get then contracts? Okay. at that other is are That’s are do within [loan your for something question, interest helpful. you one done they just possible today, XXXX all And commercial looking rate for to related floors]

Tom Cornish

Yes.

LIBOR but a time, of floors. a on fair rate the working LIBOR time are We we’re instituting based in the of are I actively successful XXX% floors. amount wouldn’t say successful we floating

Sean Tobin

had. helpful. questions. Thanks That’s That’s Okay. for I all taking my

Operator

the questions further back no turn closing Mr. in to at remarks. Singh for call like queue I’d showing this I’m time. to

Raj Singh

Thank you for us. joining

that made happy very with XXXX. the in We’re we’ve progress

We’re up. the number happy came where

I the leading think cost read that and last reduction continues the we’re XX in improve. to I was most funds of continue from quality basis far. at deposit so the happy number from reports of [indiscernible] deposits to least industry I’ve that grow points the think

about again months. three we into you happy we’re as Thanks, in get to XXXX. optimistic and we’re So, talk bye. We’ll all that

Operator

for call. Thank This Ladies conference and you participating. gentlemen. concludes today’s

disconnect. You now may

BankUnited (BKU) 23 Jan 202019 Q4 Earnings call transcript