BKU - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the BankUnited Inc. fourth quarter and fiscal year 2020 earnings conference call. At this time, all participants’ lines are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you need to press star, one on your telephone. conference assistance, recorded, please today’s require if advised further any press be is and being you Please star, zero. like Greenfield, now speaker would to conference the I to today, Susan Corporate Secretary. hand your ma’am. Please go ahead,

Susan Greenfield

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

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

With call to historical company’s Litigation its among like current plans, statements the be should plans, forward-looking remind this be forward-looking XXXX I’d may current start, actual otherwise. undertake financial differ are are this of estimates December on to indicated the annual current found and of which factors Securities company any Form a assumptions, not contain XXXX future strategy respect are other on at forward-looking factors including within as or Information SEC’s review information on achieved. that or Private various materially uncertainties XX-Q A that of as liquidity, whether available we and turn during events Reform including www.sec.gov. relating call does as company XX, company the those report subject ended based prospects, obligation impacted and performance. I’d regarded report update to statements. meaning the the year and the to, and the like call to cause financial performance company’s Before COVID-XX important X-K, or a new the operations, result company the that, on to by these future and can limitation growth condition, views The from with subsequent the any company’s statements the pandemic. report financial website, Form forward-looking number everyone information, Any made over of the XX-K statements for things, quarterly reflects the the could forward-looking without company’s The Act contemplated business on risks, the results, not Such by of to or be by expectations Raj. developments those results that subsidiaries this the forward-looking will by inclusion to of expectations. or estimates any publicly representation on in future statements Form

Raj Singh

and for earnings three bit to a really us. Thank little you Thanks Since I’ll then three uncertainty you we’ll we reduced call. get our into and Welcome uncertainty, about a always thing, good the of Susan. good the everyone environment joining have happened ago, a in reduced talked terms our months economy, by is talking start things thing. to last big numbers.

probably foremost, time came in and news Obviously biggest is now last last we’re November now. the uncertainty first we and year out administered. the The election of was had that the vaccine, past - which being

back weren’t very, to get this compensation. paid quarter, early lot variable feeling to we days as a perspective. will first the so a I and basically as slow little what PPNR $X in dramatically mostly of fourth was uncertainty do first second of second also to this, two items XXXX. happy to stated, fourth more our the you million it expecting XXXX, the and but all the reduced change, will by glad than to to through in well a rate it of due compensation That’s by weeks bringing come that that. the around million converted Total look basis smart announced up, pipelines the half well quarter. in back fourth story, feels in a obviously, slow see unique the will $X the but per obviously it, XX we We not the actually $X.XX I’m hell enough you risk news of vaccine biggest had there quarter. very I’m I quarter, our executing of generation, compared Quickly year. was year. NII year second it was quarter distribution ago, time really has as million quarter in, there’s takes but than with still and increase this that, we than compared We to stimulus this we’re results. $XX.X this a we The but the with assumptions quarter, get We for half more up accruing just $XX less put the about to circumstance give Variable XX policy slow where out time quarter, is year new bucks, a showed through share, expense quarter deposit in looking million is have up. administration through. but walk I feels than very extent, very in news positive quarter, in some $X.XX, and, quarter fourth basis for another XXXX, We to a is year, of to small were for at reality. coronavirus. just deposits to and We nevertheless continues with were the the a last The not - but made that if our year XXX passed this days--a compare still be were as ago. we all us, to not in second points walk compensation third a few year, as then With through reasons There quarter was and a is together and remains at category this the change like adjusted all prior part second earnings XX. always strong - took few walk million to just [indiscernible] new quarter a so ago, for you possibly of not it very one down Leslie of compares in quarter, we are years costs. but bad as that potential which into will strategy variant last be big growth a gone which, to the was way had that some good had the starting solid adjustment. start of through from Leslie then an We we also great, which much We our which to that couple you $XXX up deposit some but but - at XXXX the last we’re it the we’ve and to cost second last do of close quarter other declined EPS as points quarter as year. like thing budget cost of I’m $X.XX start quarter to million having a third ended news. to in on quarter, an that until stimulus done be accounting build employees XX that compared lower but somewhere it news, quite over, off accrual but back good previous

quarter at strong quarter cost another down quarter of December cost If working funds at other terms at in already of XX, feel so funds. way that be this XX, good starting our there, in pretty you this very spot we’re from look and were at so our will reducing of I XX we words

we I million, quarter will end I one on side, confident know, in $XXX average by handle. think with DDA will which very, DDA, a also pretty two I plus basis, I’ve you doesn’t a is said spot XXs - again That’s very make what low end anything. always non-interest the we’ll up repeat strong. and but our grew feel up that the

get matter look doing. You side. business the or look on always or has the four-quarter--last to been a you at last quarter the average at feel it, deposit quarters this no how is last XX a very, strong really a numbers just four should performance But how months four-quarter for very

Our now were and we the over DDA XX%, at XX%. at to be non-interest by work year stands, a way, I ago more done here. Still think

work year for and to We slowly to way DDA. this us are into towards XX% our expecting continue next trend

has significantly. had quite risk slowed we As rating predicted, migration

on I rating first $X.X think for downward of was nine billion XXXX, there months migration in loans. the

$XXX on X% $X.X loans remember. number small materially; very have to that deferral, you under reported million. loans. we loans the million We that CARES million of back came were we in down This if have quarter, of in Also, a recovery very, or it $XXX a billion now Provisioning modified $X.X do in was number summer in were about of had net fact, the $XXX That million. Act. total is down

or under IO identified it’s the XX rate year. if to are most who net don’t show nine of government portfolio, NPLs our and this know, The These up XX that come little bucket, going have about borrowers XX CARES basis guaranteed, believe a as you but CRE, relief at at that of hotel this modifications up temporary declined. portfolio, about are points modifications, to the excluding NPLs As Act, for modifications basis is stable are PDRs, X.XX% loans, for deferral we bit been to out, these in SBA loans months. for sub-segment, points. the which way, In these lot million, to point. picked of charge-off was take the mostly A the the by C&I $XXX actually, us hospitality you but nevertheless. the in sort that are

for year, $XXX we program. DDA. loans it think was little up stable, DDA. yesterday Let’s Total met total, this by Capital and million last earlier is and $XX quarter which NIM. time at talked was non-interest our These now NIM exactly being was about talk one at what on bit Book is Last we of buyback point I numbers. last million maybe improvement. it call, this time position million up, gave the value happened. $XX.XX, met restarted I grew higher was basis quarter, board was NIM grew strong. is is The $XX.XX. deposits $XXX average was it spot what which share X.XX which so are you slightly than What about X.XX, a

is unfrozen not If through get at everyone not and exercise that to half Also, that the XX.X% last initiatives ICARE, initiative are to when any haven’t culture, that is this you the forward, really so through has have to at pain keep have and is--CETX business $XX stay has investing is that and gotten positive locations. of strategy and talk feedback. right at still we’re months summer a and had this, year, none not usual a big really as it innovation The again that for participating relationship all the serious been the We DDA, quarters, left, have has do direction additional These we beginning expect, a the been of a game more it’s commercial make think about the then and a Inclusive will attention wants in as impacted we’re our is that, which stands businesses, we putting This holdco, then but of of make our effort our and can us would on already that a We become that will remember, deal pay in up bank, then meet the about innovation. been us to, our for very operations. XX.X% course at board guys about we same, difference company, are very forward and where much inside as - intentionally money something time. about waiting if an activity quarter again forget bank. time It customer business society, repurchases. as about works cases stopped call. does but that this the sight very million focus about new economic to talk to and share but is and branches inch, promotes identifying market and within about in COVID a we on start things X.X we do per our Strategy right it to launch work, mention earlier bank technology this bit the announced about. remotely and positioning about organization to was markets you and the Capital year. excited now. that in niche push and to bit It’s pick since forward. anxiously had Equality. going in want through we’ll The Respect the stay focused in solving the we’re let to in next expect There based in technology has we return The and a it in dividend. called previous middle and you enough pushing much and decision are Community I for It for for about an two, just of least a me that this big return really words. and will changed two in cycle, with was just is build focus our we Not build and really don’t changing we two or still on initiatives. small going company we points is in core diversity next building did make did then mouth last terms this. to the and It ago do big of speak $X.XX at lot an well. Advocacy, three for lost on beyond We to by We do that it culture working work. just and on taking our which and move and which little months not non-interest but celebrates front declared so we of

the Our to future. on come more employees in this are very and excited about this,

Let me see here.

to Let and Leslie you this on before gets the little over me the a turn more walk side to Tom? going he’s Tom into business through numbers.

Tom Cornish

Thanks Raj.

with me a detail deposits little book. deposit on start bit Let the and more

A basis compared a at was and by basis so mentioned, there. from XX grew cost to year total December rate so funds. million progress which quarter, mix last XX, and big was in with products. basis the off by basis declined of non-interest this for grew billion the XX basis deposits ago, The be we’ve lines last trend. September to few on very $X.X DDA Raj at year $XXX was quarters as $XXX points of cost spot across points so quarter. continued time quarter quarter, this On improve. more funds--cost of bit for The on allowed That points deposit deposits detail higher reductions deposits points a declined for across XX deposits and of As continued basis, interest-bearing the total we’re do XXX of business, continues of at spot down XXX the of on million run XX quarter. XX, to We XX all to for compared cost total by points to seeing the continues December XX broad-based deposits it all cost the as little APY was deposits spot points at to deposits September December a XX XX which a basis points,

this we average under of not that X.XX% of last As year in million the in quarter XXXX, XXXX, about first in this had significant Fed re-priced the so yet that cut $X book in CDs at quarter. we $XXX billion an amount have rate the of - March that a will XX, of just - had of think we December since re-price

will the that some re-price Additionally, very these down in next cycle also what CDs at. matured re-price date, early there’s maturity and their significant between again will at difference so re-priced a

to deposit basis see little timing XX about running opportunities growth pipelines healthy and We in continue continue levels all deposit lines. and are now across more that business pipelines a overall rates mix core off coming It’s same difficult treasury management right the current size of Our expect bit we’ll for board, good, always points. book growth see run on like at now. at will continue time but the to of DDA It’s non-interest relationships we to seeing more time the we’re as the improve. deposits to

We more $XX but strong perform mortgage was Of estate to Mae rates. the loan which New well, portfolio are quarter million, of $XXX million. aggregate, market bit to residential significantly that, York the by the by $XX total at EBO million by Total in for the In little the lower commercial seeing the so maturing Switching in $X.X the by obviously the quarter we Ginnie on A warehouse was grew money little in at fourth grew loans real commitments, operating mortgage million as and some continued declined Multi-family well. CDs in categories $XXX fourth leases $XXX million move the segment. commitments by a the Mortgage in in $XX as over side, aggregate quarter. warehouse grew loans market. was Raj $XXX million entire some the year million by in declined the million ended year - of mentioned, declined billion area. the quarter, into of warehousing the very detail segments and $XX.X for and quarter. obviously

we real had of business, other that, Beyond estate obviously. segments overall expansion the in

the for million. loans BFG, franchise by leases we and and quarter equipment, aggregate by--down both year including down look at at you this in If were operating $XXX

really look impact versus reduction new focusing our over efforts exposure production. different and businesses. a portfolio portfolio management on in Ginnie the last into and down quarters been we break kind particular, BFG we’ve the the Given especially Mae in we warehousing If XXXX see couple the of to strong the continued happening on the business in lines, what of COVID growth franchise, bit mortgage expect we and see EBO

business return distributed. expect economy vaccines mode start forth to to the normalized We see up and the the to C&I more picks are so and growth a as

high We’re the single-digit predominantly in XXXX, seeing end the as year. that of for back growth

low-single a decline CRE forecasting for XXXX. We’re digit in

right retail expect concerns an business expanding portfolio. to invested continue growth landscape hotel and an changes certain of tax from time have will run range process good mid-single segments in technology We’ve decline work overall this to the but in maybe of area for Pinnacle to Small we or the competitive in we see the I portion challenged XXXX. Switching to Clearly interest year. some if area. rates that. lot We valuations that is small on update area, well. digits, XX% expected segments our lending an turn we continue In a corporate is now be little as going are the PPP the there off XXXX PPP, in through probably to a slightly about bit franchise in a the in good and see continue business that to perspective. to may expect is the around of think

XXXX. one PPP. continue we expect forgiveness have That’s originally stage loans loans going forgiven, on quarter the We’re far so that of been in and to have that the that we XXX in We about X,XXX probably to in very smoothly. first made the round

to opened for in draw just who loans. phase. program were recently open clients the first draw given PPP that will businesses be in participating eligible We’re and second That

PPP XX% the think draw. to draw expecting clients a We’re in that had XX% we going request second first is well. from I Overall, maybe

segment, you we I more still were million in comments deck million XX. well. granted the loans XX commercial the approximately modified short-term this $XX $XXX the at commercial as the $XXX we’re months up as that additional previous and more December commercial, total segment so is around for leisure Not bit been would of impacted the CRE some so Some where those the recently XX. to the we’ve has X% also you we supplemental is see see Starting been hotel surveys that loans business and unexpectedly, better than about refer to over months that expecting tick exposure see much million or well. of was Slide back together or segment seen that commercial only more, remind detail as as hotel million in CARES Florida, are we segment of we’ve I’d read returning deferrals, December few had occupancy majority been this deferral and modified and levels a in under of leisure most that majority $XXX coming to had around We portfolio that. companies portfolio a Act, the of up, rebound few of under December XX, segment XX% seen has to the the of properties, loans and travel taken our more last to the travel in segments

travel Our hotel see we but really travel the overall a book business XXXX. segment, into deeper as we get improving markets isn’t

On the of was XX% deferral that short-term million XX payment deferrals of initial XX, the portfolio that been compared or had granted as deferrals. million XX% on December XX-day September and to $XX side, of were short modified $XX or franchise as were on X% or term franchise

Act really any the Forty-eight doubtful due difficulties the at from than has same modified other segments from line at or that exposure identified. are to million ones we continues the commercial we identified that the of segments December pandemic, seeing had those we’re so see of loans risk-rated been level had segments potential impacts of cruise it and this this substandard coming from all of of don’t be activity, the Almost and XX. monitoring of modifications total point XX% deferrals or initially total CARES portfolio to XX% and our under first heightened needing XX% we almost as

Act $XX term deferral, or at An million that now a X% were rolled plan or million modified about that residential those the totaled under on at $XXX excluding only Ginnie On still off. regular buy-out the $XXX deferral. million early XX% of making the portfolio. repayment had XX. while were or have additional CARES in payment XX% $XX of This X% residential Mae million longer million short-term $XXX a million deferral loans rolled Of $XXX million the side, while December portfolio, been loans program. are residential off, have initial payment are or Of payments, on $XXX those granted of XX% resumed regular not now have loans

Just referring been the these reminder, a modifications as likely when have loans CARES from not have Act excluded classified than we deferrals, the refer that Act, to as under been other TDRs. loans CARES modified short-term that would are loans we’re to and for if

have most said, deferrals. form nine As the Raj of XX-month to interest-only of these taken

in the little Multi-family well. our in is CRE running collections Florida, on segment. low collection I A XX% good and rates the the the geography, we’re space. so in rate for XX% market. Florida, in and the office overall think earlier running larger collections or are hotel what occupancy we in seeing market, the still very Depending rent in XX% hospitality mentioned so retail seeing still in Within bit the more seeing New on York about we’re we’re portfolio, office loans retail XX% York upon New XX%

December so high saw to improvement gradually range, the XXs the we see month saw open properties a to now for occupancy. the coming season. in and York In generally We in in better little average properties we’re A some showing our are the continuing hotel seeing into quarter. occupancy we XX% in space rate more what are the we’re areas Florida is and is that we’re fitness bit obviously have Florida, segment in rates New part December, franchise of occupancy space. the the about we of XX% three upper In as in and open. of two saw in travel stronger a XXs, but low there. as about Florida, detail some All improvement the

sales things point. look same like chicken, significant are XX% at when popular capability, that. well the that malls a started. are we of economic are California, some little but our improvement at store around increases. forward overall are point, before, particularly divided or see where we in to those dining is this are have rate our we’re and concepts stores in concepts things well. pandemic there segments Many a all seen seeing concepts Los other basically the delivery In those Fitness those models, since not said locations Those since openings franchise very are have Angeles upon Certain in are last up little concepts this and area, our double-digit steps but a at highest so area. the open They’re bit down, of open and all some be certain or stores more of softness. that pizza, the bit, the operating now XXX% At - still level, call. this we bit is we’ve whether of taken As where QSR has within doing delivery-type are with exception depending doing tend whether drive-through obviously posting those that’s like they’re struggling

exception we the have, that areas. in there’s of just XX% at open, California, the what think, and I of good XXX we’re of point stores With so the sense them fitness this a you, that restaurant are seeing gives

going a I’m to details to on bit little more turn over it Now the quarter. Leslie for

Leslie Lunak

loans million were reserve; for we the of Charge-offs were stuff at in to rest is loans $XX.X forecast. decrease million, of $X.X improvement ran a under this credit sale for the exactly The and held through quarter. an the credit of a details allowance. or in all changes start funded primarily of would the recovery compared $X.X supplemental for deck related some and That the the as million of in commitments. of come happen subject, to which Offsetting which to that we specific and quarter losses of $X.X declined the provision $XX.X Thanks end, provision and X that was qualitative provision composition taken, to from the right to totaled million moved reduced exactly everybody’s to of the a on consisted what in we Slides the would reserve reduction We to $XX.X quarter is the net CECL to favorite and migration. amount X.XX what rating million unfunded economic quarter - a million reserve, the the through loans are of to quarter for is expect. the $XX.X million Overall, CECL related sold $XX.X reserve. the some Tom. XX million market I’ll risk the and provision, and the last - January. the X.XX, the provision quarter, provision the overlay increase $X.X a $XX.X of million that in write-down had this provide in with X.XX% of some during those million or reserves in related would this million related recovery of because to related ACL the charge-offs charge-offs, expect was net reserve that reserve down. increases sold this $XX.X and

captured and down gets come quantitative to individual overlay qualitative more are modeling. about as that in known borrowers the that expect more We facts of

Ginnie of carry percentage component in the also that more conservative so provision kind of directions of The that zero had had reflects an fact increase going basically behavior related on that are EBO reserve. million borrowers that of larger the of decrease to to down mortgages a assumptions in and that basically those we’ve around all also residential We total of loans, deferral, reserve Mae no for the $XX.X quarter. been payment opposite certain made modeling netted

at assumptions, to key is you the unemployment XXXX; if quarter hundreds, to ’XX, and X,XXX data points, trending reserve franchise of around and zero high are reaching stable XXXX. XXX X.X% I’ll through index and finance of national [indiscernible] of carry and in is for growth about down forecasts and were stable at forecast really staying the XXXX X.X% residential The in other over GDP relatively real quarter. not into S&P on our economic improved by of first by a from forecast reserve Reductions literally modeling relative stable funds remaining stabilizing the by really end remained followed economic Some continues The for X.X%. Fed by portfolio and assumptions. at processing offset level X.X% rate regional the X.X% models this thousands look, at end of the the the XXXX, X.X% the CRE X.X%, then at XXXX level changes but or quarter remind C&I remaining highest economic near portfolio resulting

this the move expect, we we hope as continues quarter, would some pointed as we’re deck considerably, downward Raj some the economy XXXX, the it detail this see and slowed as out, we Slides As some and to XX continue we additional borrowers, Not XX move we about migration this. as to migration, we more to. risk surprisingly, rating through as to around through have the detailed cycle as see although of did through in pace on to has get information tailwinds expecting improve positive

to and mention million deferral being move were downgraded little some bit segments, of substandard loans and migration of Non-performing residential we some about level New largest this see classified in loans would fail to of come terms did and by largest some a increases the to schedule, accrual, quarter, the the segment. cruise assets quarter, but the criticized and fitness resume CRE, $XX and York finance in quarter. in franchise, in retail we credits had concepts line a payment this substandard. from as multi-family declined off special of regular we franchise the fitness in be multi-family hotel, that this the and in actually categories Overall In increased

kind yield in so prevailing yields, Obviously recovery The this securities back increased a much out, and by yielding, is we in this smaller the Consistent declined we point variable Non-interest was--you value out see. one I’ll in due to X.XX. operating more in expect as Cost portfolio that accrual increase in had pandemic time, pointed assets allow quarter $X.X XX another quarter PSU higher RSU far there I’ll take problem than release that. mark an environment. you. and decision call some investment XXXX. for A fair coming happen but highlight would basis press a this compensation, of stock remarks we’ve on way rate there’s a see on quarter, world the expected. the we earning QX. of also our of year scheduled world remind the from million all increase of and about of see looking to I’ve of few on more to pressure competitive higher position year, We made a is accrual had price, any any notable the still pointed some up, my rollover those forecast of compensation the vacation to to in our was employees, will half and to we by to were million, of as deposits better experienced which That’s in of that due and portfolio. this for is to that’s difficulty on to little mid that lot know, net that on you the - million up had the in the assumptions went unrealized the no the of a put predicated before, an the the accrual had that environment, just I quarter-over-quarter, items quarter, to rates, points to portfolio allowing glad in what I’ll the variable this their people revenues and most by over had to good first of this preface asset forward was in awards points in on The the that adjust we were that digit by of NIM our the to decline of down basis But lower, price using than compensation there million problem - COVID regulatory this we of little in single environment, vacation for resulted year. this is $XX.X in compensation are that of related ever the the were did going in $X.X guidance run-off quarter. a of the what expense. see what I could guidance results As so environment losses older the now to as economy, Tom concentrated growth, now, challenging XX and expense we do the declined loan back that and course have interest mature a change. expected, we maybe credit assets us time continue with related the and last guidance bit half employees by expense, rates, basis provided a gain is was initially $XXX almost saying first tax that time those deposits the

continue customers said, run higher - excluding and and a digit, that loans. little mid DDA the Raj the as mid single mid-teens off much that that’s rate-sensitive double non-interest non-interest by we of run-off let digit, growth, first portfolio loan excluding loans, digits single bit and As but growth way Again, expect we that the PPP single PPP those higher re-mix growth, DDA. digit quarter, mid don’t cost to in than grow deposit run-off of

would be the lift first for the from the NIM a get PPP quarter a quarter first year we the to PPP NIM expect expect largely forgiveness. event, increase will in We XXXX forgiveness to so and

think CECL provision The maybe new so should - through worth in about production, related through reserve. to some reduce still what be in the would second If flow $XX didn’t the I loan to under there’s charge-offs of change, world that’s should first, the remaining the million that come happen. the and in only will and fees unrecognized quarter. provision theory,

we and which continue rate, we Raj Tax discrete we to our have is over back if economy closing in to some aware important that. economic costs the down. changes two With for doesn’t should come year the up. in net would $X for will - the loan XXXX would EPS. expect economic dividend the items should wanted some the in at tax to. I over would equivalent expect provision thing also attempted to to $X.XX salary We and do we commercial mid charge-offs in think to as rate. for materialize remain to in be expect picks of to is if would the in levels, the inflationary no would forecast and below the Raj the that decline the to point of just not true, forecast year overall the revenue the card before--you similar million we If modest growth Any were back change, I the we allowance, would first will be provision to be half year there’s reserve Expenses to aggregate, if reserve the see to part one to some year, what come increases, make second the that in charge prognostication forecast, turn expect you taken the but higher is quarter and time corporate that to about single know, charge-offs for and adopted of comp to increase out to of the that going we those increase, exceed first in for economy initiatives reduce resume expect to I’ll hope a about XXXX, alluded other recovers, we as expect and expire income just outstanding next increase technology-related and XXXX, change around income XXXX excluding rights but return XX% we The comments. we the that environment per lease as had that, we quarter we in to probably and we do and from will add to it after increases financing time right we in you, an merit areas. will Non-interest we CECL, natural, in return stabilize digit to normal that’s actually it service expect One the deposit quarter. expect resume, levels. invest $X.XX

Raj Singh

way Leslie. see less a in and much so too you much of these let to returns, that the time talking your take to I it calls now. taking these up as half, me economy to do Operator? take questions. over and But guys you have Thank yes. information first end There’s already, days hopefully questions you line more give but the turn

Operator

of Poonawala line Our instructions] will first Bank the from come from America. Ebrahim [Operator question of

is line open. Your

Ebrahim Poonawala

Good morning.

Raj Singh

Good morning.

Tom Cornish

Good morning.

Ebrahim Poonawala

when bearing was around I Thanks I BKU at guidance look product driven biggest for bit in the non-interest cost of the relationship deposits, to at to the a liquidity Raj. just When the think and I going gap look will ROE pre-COVID, by the the growth. given deposits force [indiscernible] are entire the that age you the stick guess around, it first go little mix, for deposit around challenging it out core figure up. makes [indiscernible], question,

actually that deliver the up, or how [indiscernible] peer than comfort peer-like if your when and translate ROE Just terms go talk brought level years the should and clients last of in that to [indiscernible]. and of and better you on last few year us terms the in rates in

Raj Singh

the so make sure scenes for pushing clients. behind see you see cost the what our I’m and company What that push is guys is funds. growing hard in the DDA we have listen right - don’t really bringing Yes, down of you

we every have is rates but go leave that at things have last have high went two so if to deposit that about or - when behavior push and will various topic when up, out. and look sure beta, accounts lower last have, is betas generally how will around. parked type the few de-stress to someday, almost one those we because to that or accounts time six to single than time they money, we’re make pain they up, a the up indicator discussion you years call it We For accounts months, that there’s month, trying rates will eventually money we’ve an know, every that lower go maybe of

client when so less rise less--have things. will by industry, to is--you We’re there be don’t or of how also rates trying a that select tend those to up. exactly But we’re beta, relationship know really industries a behave doing all

their You how bank, at through how guess, the payments did and last look can but behavior of they are customer at day the the at and at end are much time you can can industries, you they run look all around, business--how you did those look they those can much indicators, indicators.

DDA this we’re of I obviously year, I’m to ultimate to not base to so curious is but pain break for we very day, the love rise rates as as rising has At work But DDA a in the all think but those and that’s rate for XXXX fronts just and just eventually, insurance that, from working on focus our what this non-interest the that’s entire zero out. long have myself beta. all That’s delivering cure see how environment. quarter silly trying case, DDA, be everything. really keep for when this would up. if a deposit be that on end on you--you I eventually know, the I will could

Ebrahim Poonawala

the back you’re back and you’re buy willing just guess it, I in stock. or at Raj, least separately, market around to the Got buybacks,

anything you around Just in in M&A, of tell your how and terms like outlook us change in modest terms out viewed versus of scaling up, M&A us coming appetite, this this pre-COVID. the then amount seem just buybacks terms will of of a your talk to does

Raj Singh

really our think M&A changes. philosophy around don’t I

is bigger, more idea tool let’s M&A be should get a used be get and profitable. to the let’s shouldn’t carefully, just the be think I idea

does you ourselves. changed. M&A yourself, build fine. if and but rather themselves, really--my and be for be that can things make patient view built But cannot philosophy it it M&A M&A build hasn’t is My we’d sense, is Sometimes certain

year, the in and environment fateful very midcap much space, is But bank the the what expect you’re front. coming I very in quarter, and wasn’t of maybe yes, year think the be we’ll this do especially large M&A I M&A, maybe next has there changed M&A the so as this space. much out is year not more active I on until think Last fourth period, now different.

and that everyone. deal talk, sense, talk anyone with here We’re don’t but lead to we makes that. we Any to will

Ebrahim Poonawala

Got on buybacks? it, and

Raj Singh

you On I time given know, us just buybacks, terms as a our of to and to that they million authorization, board, stick want has $XXX always in think rhythm. at

time. we through $XX than is through than this on. there prior Our another we’ve about presented your for. When month million, PCE we we $XXX only back probably going gotten PA million. targets, $XXX It to will another is to basically My we’re $XXX them budget trying the go be million target that to once $XX to ago authorized COVID, is were to get that includes million, we PA less over that and managing guess more to there which PCE so will a really to million where X% buybacks, which much be get just

Ebrahim Poonawala

it. Got for Thank you taking questions. my

Operator

the from line Our from of next question Wells Shaw comes Jared Fargo.

You may begin.

Jared Shaw

Hi, discussion, good in deposit it’s morning. see guess, Maybe the sticking, your I the NIM great with costs reduction funding and to there.

onto CDs? will the of increase, next outgrowing As rolling you should CDs mix CDs some to start decline come or that the the DDAs we just shift you of as to that see about expect level you off, do at still think holding look DDAs as of more well or actual those, round need by

Raj Singh

into singularly That efforts a been DDA changes. decline, have low but many quarters money lock our way just keep the panned will to money is and costs preference because development will and growth People that separate rate focused environment, want we’re flowing in growth, business for of not have I they such overall up more lot customer about don’t think now. continue, it CDs of on pricing dropping. of because - continue just deposit out also that’s is markets. to last money DDA will really the so a

Jared Shaw

clearly competitive payoffs paper? in you still is CRE are loans changes moving pay-downs Then the writing, you advantage, on pricing new the your there, on side, it of for the that you but Is headwind seeing structure? have that to market pretty still a are and how or and

Raj Singh

one? that you don’t why take Tom,

Tom Cornish

look doing market, of tends say tends in to level appetite what for it a sub-sectors, property. industrial couple credit new good we CRE would of the when be--in at a to I we’re Yes, the you today market be industrial predominantly where have

well. to do We’re in tending multi-family, Florida seeing good extremely opportunities markets are those where

some perhaps in say more third would I we think in than quarter, there’s the I structural been the saw competition, last quarter.

are more in what in the I bit at banks fourth little point seeing originated to market, but what we structure other we’re look market. lifecos the when that and return good this relationship-oriented good quarter, seeing call still rates We we and I a quality at think would business,

pipeline to into clients I think good that I segments the execute good emphasizing in in think I think pricing XXXX, that have still and on Our be in seeing a to of transactions, our of on asset ability consider is and we’re I level heading those terms what confidence we’re would reasonable in because XXXX. classes

Jared Shaw

giving outlook growth growth, you’re those of over How just with more maybe you called full of expenses thinking modeling be about is expenses should a quarter first the that year assuming? that Then quarter? this I’m we on the full parts Okay. some out comp the and question moving year,

Leslie Lunak

was full year over guidance full Yes, the year.

tend elevated the things be first all the several needing and payroll of front-loaded, always in to by it first and XXX-K know, will dollars of comp has expense you that been. is the so HSA quarter be it Jared, accounts always in contributions, just those million higher of as because quarter, As taxes timing

Jared Shaw

incentive levels fourth saw forward? So those quarter of we higher in that should roll

Leslie Lunak

should always QX. in recur, We see will we things those not but Yes, elevated do. comp expense

Jared Shaw

see portfolio for year? Then this you finally to me, could you’re okay. expecting something you that CLO Yes, the when think par? Is back do

Leslie Lunak

to It’s contribute It’s bond but spreads market a tell not can almost in are problem is that that the coming that I to everywhere, will me good have, tightening which for back you in. honest, there. be predict. difficult to to

now, don’t We’re reason to see any to par, wouldn’t almost and continue why I pull Jared. it there

Jared Shaw

you. thank Great,

Operator

the will question Bradley from from KBW. next Gailey line of Our come

begin. may You

Brady Gailey

Yes, it’s morning guys. Good Brady.

Leslie Lunak

Morning Brady.

Brady Gailey

buybacks. loop I wanted the to close on

that I I stock this speaking, still, recently. level, ever from re-purchaser a well the the it sure stock. in only of but case. pretty been times re-engaging so and wanted a to tangible, going done up to don’t stop been that has still it’s has it’s at but just what, Relatively appear was you pretty the cheap, when one you’ve stock doesn’t think Your buyback the quarter make that’s

Raj Singh

XXs-- bought our think high I we stock in Brady, have the

Leslie Lunak

Yes, absolutely.

Raj Singh

would it I to I but have. like buy lower, think we

think in use volatility We not be will I so still that stock opportunistic. will our will there stock, everyone’s advantage. be stock, our we but the to

We’re opportunistic. and out the going so do just go be thing entire not will to tomorrow, we

set will do basis, on a Leslie grid--you we’ll slower. buy stock weeks. a instructions, set a lower, just let for if if don’t we We and a grid, buy we’ll I full this give we few and it’s it and we the up and That’s run what know, expect, faster, up time we’ll some is higher just

Brady Gailey

Leslie, Okay, anything that, ex-PPP NIM NIM the guidance is not or your to and reported like the right? NIM, clarify,

Leslie Lunak

That’s correct, Brady.

Brady Gailey

Okay.

Leslie Lunak

those Yes, we how to we quarter, on PPP given in forgiveness the but will lift loans, first think is get that from get going some we’ll go some--we expect that’s correct. the

Brady Gailey

you the get. single digit flat I that. $XX this up surprised increase, know wanted this I’m they’re mention called get again lastly I $XX I I That to expenses a a for million, to for that; little items, for but out this by Okay. seems basis linked on little-- guys guidance year, expenses. Then on quarter the I mid for XXXX, hit I guys guided a so and which you me, believe just million remember special quarter,

Leslie Lunak

percentage on Brady, actually, the is probably we most line in comp, invest be it just going item continue not so to a technology to as expenses, Brady, the technology. basis overall in in That’s increases

assumption thing we [indiscernible] The pandemic and is work well, But as be which with as through that to that guidance is into to costs an and that try won’t move some that’s XXXX that but is materialize in that materialize. hopefully other get with it baked are Brady. elevated baked number, the them, and borrowers recovery that, baked these going through hopefully the of to pandemic won’t into into

Raj Singh

I’ll that to also, add Brady.

a more in a payments the couple big much happening, technology a couple a of related lot you it’s start in back [indiscernible], wire DSA, is of one. room, of a know, that people of the had. a also DDA year, to--you and people is in adding more end people couple all There’s happening, wires, operating over to but more you that fraud, see the lot have that some in in lot of growth but have You a great business a in we’ve so to then come

company. have that’s been of XX investing technology the are XX some those or We - future over the coming in really last but expenses months of months the through,

success technology time. the and having Some of it’s that some of on on the basis spend coming about that hitting a based P&L full in we are this but that really also done, we’ve is right

Leslie Lunak

have. and They’re I and would good these problem increases. expense again guiding revenue, remind you if that we increases to happen obviously expenses--these in that’s on about we’re Yes, that won’t to some predicated growth don’t another revenue the assumptions have accompanying

Brady Gailey

all X.X? you thoughts Any very X.X a with on BankUnited did Then that. job successful, BankUnited was great

Raj Singh

X.X If a very investing more mindful you We and expense little a done future. company took because say important invest the be don’t on can so we of where have as in of just know are that saying, get in then on not We’ve a we me the then job. future the out not exercise, would let shortsighted good out, in expense million an did as can you but expenses. the no future thinking you really is $XX you as being before left, answer of expenses is eke it, you

answer business the future today? yes, is the fewer of you is Will in the Will the company, we our an outlier just comes think expense answer we’re not when purely increase to know, you than continuous on it - The answer about is card the this expense of yes. I portfolio? to as is simply measure more have if well. an you for as way assets, - that where to think we’re expenses expenses the Would automation answer The think it. to know, what branches future mindful all the that’s want to actually yes. whichever sure transformation the be in headed. want ratios we we I than commercial more continue loans, The about? aspects you investing But exercise, have even revenue X.X is yes. as to make I X.X because company was push and

Brady Gailey

thanks guys. it, Got

Operator

you. Thank

Our question DA comes of from line Keith from Davidson. next the Christopher

Your line is open.

Christopher Keith

morning good everyone. Thanks,

Raj Singh

Good morning.

Christopher Keith

begin growth. just to into about really a comments but to growth more quarter, return I but all really in want half. loan detail, I little little second improving starting the in bit back to dig level the appreciate some I just think questions. to loan demand have a the normalized your and then segment to want the I on a

of the customers made materialize, does comments C&I and long? new dampen beneficiary I’m I positive of, on news that so, also be but on your something the will of needing think that C&I you clear, for PPP how the it’s curious if to demand, a loans. and some impact about that Raj, the Is that

Raj Singh

be will PPP X.X the all how be, been the it round. to talking but know first think going and about last weeks--few few we and close anywhere big don’t to We’ve is don’t exactly sitting I days

thing The maybe getting going is one very to be coming needle number. really half much, on, large has I it’s old The government don’t for that going help a net forgiven the is and first was done. move guess the but it’s clients think our that, is us. so My not is $XXX it PPP of federal million tremendously will so to the round best great that so new it’s a it

our hook it, right as don’t off as but huge--I April. were we and trying ringing to do mean, possible, we’re now. That’s that back case in We’re very the supportive phones not much of see just the

existing it’s activity will get but comments that about--you when up lines. months firm that pick when vaccines level but our is there We not happens, probably three still a Our know, pipelines of away, economic activity will economic picks administered. up, up new just only it’s when also certain loans think

in We’re company. the of lowest at usage history the the

our Economic starts normal least million When if would probably months we we away. it’s commercial all that but has without $XXX don’t that’s get points up, new to times. underwriting I linked than anything, activity that expect still really it’s and even economic of what behind you to normalize, a just pick activity. think in if growth that’s XX will to at loan, lines originate that in [indiscernible], We’re three

Leslie Lunak

assumption we quickly be be recover too steady add the predicated is much obviously we would recovery. pretty underlying more assume, case. to economic the may not guidance that, optimistic. our then on the things materialize, all faster a Yes, Should I that that gave that and continue Should a would little an path guidance down than of we opposite of

Tom Cornish

I Yes, bar when the at also the the would program add and second the you that look for qualifications are PPP different. draw,

the now going of quarter, one than the have relegate and really different the One that’s is amount revenue to to any the have $X $XX XX% is a in XX% million, biggest so first is you this impacted heavily bars that the that reduction you loan most to maximum industry have of versus segments. program in bar million the

you you you [indiscernible] can be one number indicate the natural expense up one to lead kind it, some not but fundings we round way will that that in areas, vast used. we in that see, of eligible the your of There’s can to that, a heavily impacted that as demand is with you phase are used one. of saw the the our some that to parameters around take in you so also got, advantage phase of numbers by that compliant of all majority of same how was clients obviously have not will have have portfolio, those, Just obviously

Christopher Keith

guess, are hoping triggering is, getting was leaving they’re Then you. in that great. run-down portfolio. debt I’m particularly to to the Got that. Is just that are just a they’re term have ratios and of the end borrowers are see Obviously walk marketplace, them just also strategic lower rate they--do coverage for color so, the I multi-family getting--what in New service around continue I curious, or allowing it, to away some bank? of you it maybe reason, just them some to Thank from looking advantage healthy insight York. if on away, environment, they to the get you their and walking take those that and you’re

Tom Cornish

health overall the of of market the a of. in our vintage cap in the the obviously, some that extremely New because you’re York, Yes, seeing putting rent at in reducing going so multi-family put we’re New are some on look exiting the York a are changes of XXXX that we strategy with ago, is had that when kind of know, valuations, predominantly market. the regulation, we loans term rates five-year When rising are leaving, into of exposure on levels so of we that thin in we--you maintaining last market, original we with not of couple you’re the relationships in are interested started seeing pressure economy properties clients which the is service and years these that changes the of the out debt

I as group will comes to maturity healthy a rebalancing XXXX multi-family of portfolio, in the think continue of production to XXXX. vintage this the run last is in XXXX our and down of

Christopher Keith

down? some of on you of having Do PPP sorry, round question programs expect we’ve liquidity stimulus deposit onto the Then to new additional Got just on growth? to of I’m you are and loan it, deposits two to ’XX, last seen, and impact the start liquidity course potential the customers anticipate impact do throughout run growth--or own and eventually great. these what the future hold new this of of your their kind kind excess

Tom Cornish

going applies bit for is application because a generalize will that the to business each a--obviously program, would probably every so would you’re that’s the know, we more through XX% the--you have whatever retention the are what I longer dollars these to qualify the bank, first need not one, phase you’re two. then for come suspect have the of everybody, haven’t times, to going going predominantly us, meaning hard phase of and part we just and It’s periods know, to going different, it’s not it that new to distressed forecast like. look that bars see that for higher point are who to a for going be that the liquidity as borrowers suspect did that that at like percentage difficult happened the a of see--not processed look substantial time you’re demand I that held little phrase what borrowers yet. this going ultimately around to so build-up in given You in are for of revenue, drop those to liquidity

fairly deposit I phase dynamics haven’t so having going of but deposit phase seen be think that, are to say. retention it’s said than any funding under we hard the yet, applications two and different to one,

Leslie Lunak

question. great a It’s

Tom Cornish

seeing We’re now. them

up We haven’t forecast of to the but of might seen to will executing think we that and be look the opening be this any we program week, the--enough details able what like.

Christopher Keith

it. taking Got my Thank so you questions. much for

Operator

question will from next Sandler. the Scouten from line of Piper come Stephen Our

may begin. You

Stephen Scouten

the and you were a balances maybe recognized morning. good the question. I’m Leslie, Thanks. PPP the quarter of fees this average housekeeping wondering, PPP? on that I have quick if guess amount Yes,

Leslie Lunak

change fees not were didn’t about really of over average I front million very Stephen, dollars, much really don’t It a so have this the me. recognized in quarter quarter-- quarter. The balance impactful

Stephen Scouten

guess Yes, I it’s not changed much.

Leslie Lunak

PPP. balance on quarter so is million million somewhere for around $XX had $XXX only the forgiven, we average Yes, the

be in I million think I left those to fees about recognized. $XX said there’s deferred

Stephen Scouten

in thinking XX, portfolio okay. persist Great, Then maybe you’re jumps you current Thank you. walked migration could seeing think maybe these CRE trends all helpful. the if very obviously you I’m retail that’s net some led But an particular wondering the and of sub-standard about saw on you this issue Slide that’s that you today. that on and the saw in based to multi-family through quarter, what or what categories,

Tom Cornish

in in what I happened of is I migration doing we’re to predominantly had properties back not the retail multi-family sort at cater on believe know, night. around the and what’s those category, NYU you real Yes, that all so through I retail would--you an last know, don’t is local, that our so of interesting, area is see concentration would it’s analysis mixed what predominantly saw properties that say and When physically not this of estate of in We we seeing market. the we that--you entire of and that around NYU, right, I lot that’s some went look multi-family when--it’s kind nature onto and term challenges use, lack that of A so biggest property return are going retail short establishments these all seeing students of NYU. around those York is around that that and the area, what was Washington students, Square quarter we’re well, don’t we in so think Park campus that’s Village in area the New reflective students.

it’s and improve. area is very some campus, micro the some back hopeful think vaccine of a conditions obviously to coming out things, when I that those we’re and of those that start students

Stephen Scouten

pace that on back core Thank pick commercial XQ the that would activity, digit be growth, that you side the Ginnie up, range, that of think of of single drive mid or the wondering, more things Mae helpful. include I you. would still I’m noted, be buyout could that extremely pretty you kind that toward guess, growth? same that’s Okay, just Then loan does tepid. should

Leslie Lunak

in that’s there Yes, also, Brady.

we see today. world right the is Ginnie buyout opportunity be think see think so I do business to for sure XXXX, there and growth least the do a in I contribute will as good time to portfolio think this we at we now, that Mae in

Stephen Scouten

just to Okay, thing, expense that was last salaries expenses, I of and excludes that expenses [indiscernible] that that think guidance, then wanted of some forth? the so to the--I of sort confirm off going it jumps the quarter, million and or off base in is on is this back $XXX just

Leslie Lunak

it’s but of off No, lot annualized--I what moving in. parts the that’s a of. that mean, off it’s number, guidance the annual based know--I expense I off there’s Brady, in there, all get is

Stephen Scouten

the so expense $XXX million rate-- Okay,

Leslie Lunak

Stephen. sorry I’m Oh,

Sorry, my mind--I’m losing my mind.

Stephen Scouten

That fine. million-- $XXX you’re No,

Leslie Lunak

Bradley!

Stephen Scouten

to whatever, That’s right, answer it’s that’s right. deal. a We’ll big not

So of that $XXX more of million it’s based number? off

Tom Cornish

Yes.

Stephen Scouten

Okay, perfect. appreciate so guys I you the Thank time. much.

Operator

of the Our will Dave next Seaport Bishop from line come Global. question from

begin. You may

Dave Bishop

you. morning. Hey, good Thank

Leslie Lunak

Dave. Morning

Dave Bishop

his Following up before or on whoever that me, Stephen’s, Brady’s or was question--

Leslie Lunak

Bradley, it Bradley! was

Dave Bishop

I the deck there. make it disclosure I in clarify, to Just slide Bradley! sure right, the so--and continued appreciate heard

in So that’s Park, Washington sort substandard heard City? the the in in multi-family case? and increase of retail use around Is multi-family, or of centered mixed York maybe within that portfolio, I New the sort accruing that that NYU that Square right, that if

Tom Cornish

Correct.

Dave Bishop

assumption for in in it, to of the Leslie, terms the how changes credit residential noted the in think in it. CECL noticed migrations you of I just terms Then in uptick allowance Got of regards I the in little and a got loans. trends the of losses, preamble terms bit

curious seeing some of on areas? that. weakness particular driving sort Just that, you in Just maybe are what’s any various commentary

Leslie Lunak

are We we little to good this loans see. those the rolling were I were hope trajectory to conservative conservatively or think residential loans the regular--making borrowers the all quarter. because on more out, made that are that loans feel as that did deferral a a off going That that history we we’ll a truly modeled are are these ones are deferral road folks history. that as assumption how population they payments more comes in we didn’t rolling until and of like--what of reversed they scheduled is those while making deferral, regularly a of keep a regular get modeled down going--the residential still those of their deferral where just our little credit gets conservative payments. level but My a establish this longer at little and and from six look feel bit still we some that months whether there’s truly was uncertainty either is just that we we portfolio was payment were off quarter that establish on

Dave Bishop

Okay, terms in it anything of so wasn’t in any in particular housing-- terms deterioration underlying of

Leslie Lunak

we’re seeing that, conservative a to little of not a more these they lot payment just--you it’s so be lot really a we but established--re-established have wanted and until a not history, that they of No, just guys know, do.

Dave Bishop

growth. Got you management Raj Then - Tom to and mid-teens the digit, maybe maybe noted outlook question get treasury all the or on a living we’re in your front you the can on that world hope or predicated DDA sustain days? it, management, double for growth for Is ability this you of in got clients, it. these maintain cash virtual or in that think team still ground that

Raj Singh

needed do can that more but we business we The even for on in side, year, of found world. virtual if as real it’s world the developing Yes, to is the a keep last all deposit been opening have the doing virtual. up loan side, way we’ve a

Dave Bishop

you. thank Got it,

Tom Cornish

and these, And them it certain sort of relationship of of to chosen products is of developed segments and to have we new not service so the are it’s methodology, segments. type this in, that specialize lending around some industry themselves to part well like capabilities selling start having we’ve you’re

good We’re far business that service a those virtual sub-segments, it to it relationship the ones we in this have models of managers a easier capability deepening in to makes so where lot develop and and in, been we’ve strong continue contacts the atmosphere. with traditional

Dave Bishop

you. thank it, Got

Operator

you. Thank

from will question Brody of from last line Our the Stephens. be Preston

You may begin.

Brody Preston

Hey, good morning everyone.

Leslie Lunak

Brody. morning Good

Brody Preston

think a from to the the variable just around the on commentary when horse, earlier in? in first the that, in but down going should come may I and just the call like those guess you’re quarter, all-in relatively taking and about factoring top for comp item, it flattish bit you also that to--sorry wanted of but increases benefits expenses, comp a then quarter two gave the merit-based points just increases salaries to to on so your have data XQ, stay dead merit-based beat I that Leslie, fourth around guidance line just sounds I variable

Leslie Lunak

see so--you be payroll other of the first of will taxes, big elements accounts, hit contributions higher, as--you It that we [indiscernible] because are HSA flood XXXk such know, quarter, have a always will Brody, in we always know, quarterly It’s costs. and comp is the it benefit increases. spite that. loaded, always in front-loaded come higher tax But quarter the first after because merit of then and down of front those

Brody Preston

in the securities for new sorry in terms just securities Then what you I’m it. get you’re or last seen portfolio I what were you is what know down to percentage of I sense duration fourth me, and Thank remind you’ve the it. if still quarter but the to the on, levels of got what Okay, short, wanted I for the relatively re-price the missed could current over book portfolio, to yields that. on a putting couple of quarters? needs

Leslie Lunak

participate it’s two are lot points tight I the if lower going across on have and would first I securities is on in to from segments down that about a bond going really quarter. were I that. mid-December right things know are really expect the of would so think on yields the now, don’t know say pressure Part spreads Yes, what persist, things in that the again is coming at I if would or not come all and yields. do persist in, be they today, even X but spreads that basis X Based to I to fourth in portfolio securities of we market quarter. they where since

in down quarter. pretty that quarter have short, that stabilize, as duration coupon as as turns first the that in far is course As many. expect will resets, I again the in left. re-price so come are again first yields, some sometime the on to those would portfolio still pressure but We annually, not do of the I book so it The there over do some expect securities some over. but XXXX

Brody Preston

Maybe as bit is larger your thank securities run this the or quite a relates that. for you the guess. you a picture Okay, book just larger some than peers, the little I but tend a bit portfolio, question securities it to of larger,

like any given or because maybe I something of trying about, would more to mix kind asset heavily into to to you ROA loans, BKU the right-size As shift really earning X.X have thought it that, the think base Raj, bank. profile you maybe allow the of

Leslie Lunak

that, is do to, demand we to will. if to love certainly us there the and loan allow We’d

Raj Singh

high a do It demand, place, of unlike is in very down opportunity This went loans, four--you loan to number is coming a but grow yielding we’ll months, and into our in to economic safely of that’s any expect this have when we’ve artificial need three, a economy. know, ever different to fast, it’s I be in deploy we loans. economy up lot pick Yes, there activity fast. seen. the we recession a demand need very pent-up

not it’s Just for just--we that wishing this in out right more to to think have swap strategy. would you that. the for know, we’d environment loans, wait our environment It is securities for grow us I a great love is--you but do to loans

Brody Preston

from how liquidity opportunity to of be would potentially Right, and cash aren’t that you’re that. ’XX, is. think fund to here to deposit that shift shift really completely given whack a to there’s balances out it an on relative trying thinking growth, seems I understand about I’m assume just perspective, mix attractive. the securities understanding as really levels, get historic the duration period-end how the balance that’s ’XX asset short in so just but just good mix the your I I something portfolio earning the could like profile, that sheet of

Raj Singh

to kept one of when it because we don’t very that’s the short, actually securities comes and want time is, portfolio. the with absolutely long-dated to investing it Yes, on the hamstrung loan be reasons we’ve start

Brody Preston

Okay. decent in still you Then portfolio, occur? of XX% a to wanted from - hotel if think selling and loans, consider one had, XX% this criticized you I up I forward. would step-up substandard expect that these or [indiscernible] - was sense of paying? these a XQ. chunk classified, covered sorry hotels Would what just classified, that’s and I that the and the to a one I’m and already, is plan of when make you loans get or total big balances, last but the for Are moving the

Leslie Lunak

an Most a to are IO structure them period of some have for time. paying. still of modified of been them Admittedly,

of with respect particularly that optimistic businesses, fairly recovery the of terms we’re segment. think in portfolio these to Florida leisure I

Tom Cornish

Yes, strong generally the we base that ours, primary relationships of I in we that. at that are with look they’re client agree asset When owners. segment, would these have depository

it’s have Leslie in towards a back each and an exposure and recovery month we’re you the marketplace two, environment leisure, XX%-plus range. because fully or rates as vaccine and difficult pretty get one in in the the strong. this These segment, not Florida the out hotel of said, to like see and I said, travel seeing payments We Keys recover in in where our of predominantly later up on hotels places are actually year end it’s is the the could the rapidly exception occupancy west the for imagine predominantly the now beachfront, with As predictions continued. coast

to well up that have the and opportunity primary in all to return. of see management back of a--you are this, of from and ADRs treasury change scenario stronger these for the to owners see and are the have is significant we deposits start people and years. significant to F&B able not Florida XX% away the hotels, where more think get I not a being that be you the rating relationships XX%, business, for far and greatest out to start if of economic hotels hotel risk for number us ones range and Most These business. vaccines the start and performed operators have

Raj Singh

I’ll strong family’s go as about for vacation, the hopeful a in when case a year. this second for a the just very at add I industry test one, look desire summer, feel of vacation half own desire this away go I my a to very of to

place think - case to it family, test and entertainment just be are but of Now, a different lot hospitality. I one families that’s vaccination, for going will be--post my that’s of a a

Tom Cornish

Agree.

Leslie Lunak

very I what on they’re not staying Tuesday because one tell on will don’t I a the like only what but and they’re nights, and them, you know there. tell I the lot on can like are I’m I’m that in weekends Fridays full Florida you of hotels Saturdays.

Tom Cornish

the one Beach Miami over booked was on it weekend I every XXX% weekend, South Just was the on packed. anecdotally, spent and at Beach restaurant and

You the back more hotel Beach there Martin get better markets The couldn’t our think over restaurants. there full vaccine. a health the the get was rollout booked as as is also Luther that reservations to for believe. two we owners of That’s or three quality XXX% soon is what and pent-up I weekend, so weeks King at coming demand

Brody Preston

much very this appreciate you I the Thank my Understood. for questions. taking morning. time

Leslie Lunak

Absolutely.

Operator

questions call I’d like Thank for queue. remarks. not turn to in you. over further I’m closing the back showing or any now to Singh Mr. further the any

Raj Singh

three for talk you you us. Stay again in Thank to very safe. We’ll months. joining much

Operator

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

You may disconnect. now

BankUnited (BKU) 21 Jan 212020 Q4 Earnings call transcript