BKU - Earnings call transcript Q2 2021

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Operator

Good day and thank you for standing by. Welcome to the BankUnited 2021 Second Quarter Earnings Call. [Operator Instructions] After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Susan Greenfield, Corporate Secretary. ahead. go Please

Susan Greenfield

Good today Victor. thank for you Thank our morning second us on call. quarter joining you, and results conference

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

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

Raj Singh

you, us and us your Thank you our joining to report. everyone. time listen morning, Susan. Good for Thank earnings to giving

share income million, So net compared came to for per last quarter. our per $XXX $X.XX the quarter, earnings $XX.X share, - at or $X.XX in million

the translates For first the points. ROE six - that We're XX.X%, on out the for happy of of came months where this basis of year with full ROA very things to XXX an interest continue which the liquidity earnings' with think a to sheet, the problem tons front. is income, net balance you grow, and days. on of tons bank every these know, NII, despite, I

that came last because million, level was to the $XXX just it, contracted measure a how the story The at came cost again, this grew, - last was the I mentioned. the was tiny X.XX% quarter Our it of volumes strong front, of across matter you board, down, strong. mix deposit deposit Deposit no quarter. very, the very so side very million, NII X.XX%, NIM million. of liquidity year in it a from mostly elevated $XXX that just bit $XXX quarter improved, again

So quickly getting into the just numbers.

about, of stands And last by was $XXX basis at XX at DDA X of the growth where end million. the deposits dropped for deposits in from points an it The XX our again. spot the year. balances, quarter, of XX% points DDA of basis was to way, by grew that's point cost most DDA reduction. Our just basis last now XX% And

even know, followed I'm happy have who time, land, that than number. think and you for a year promised a recently doesn't a XX% as half we're But mean to So you for more to we a those higher of ago, of not shooting story used as report our year or some XX%. for that

the we lastly, improvement can think at I $XX.X that has Provision bar all this get funding came of reset. into been losses And even that the get the million just we're of how evolved. XX% think credit we the for at mix today. beyond specifics negative actually and in we'll

were actually $XXX They that quarter $XXX temporary, classified Act now the either XX% again CARES million, last of a million and On into declined. Criticized they we, credit by were that's progress. drop. the also front, lots deferred just for million. Loans $XXX and dropped modified or gone

to NPL up of X% X.XX%. however loans little went ratio quarter last from a Our bit,

that from of years the it that a decade bank, or couldn't in were national because It's you so credit, almost a shared credit, $XX last number in that had primary million. It's company was, the largely or they've the - to SBA decade. guaranteed a a is part of loans, If large through we three the C&I so, the got participant in first X.XX%. large the that all for credit, at here This attributable two support relationship really credit for attributable years one large is increase the seven exclude portion relationship And it's needs. Florida. basically to a we them we for become business with a

a the and decade. banks we've known of primary been a in that's participant, So, for we've the country took one company the a that largest over

to loan of it. last the large reserve this Some a a few against holding took the which we taking accounting business, of came up books the is why and irregularities weeks over non-performing this in for stand

the ratio XX $XX this XXXX. the the basis charge-off, of of reserve points We way, net due, a is charge-off full compared for basis million financial against a this loan. - year to points side, million XX Capital, credit net $XX have by was

and $XX.X was in already the we back are is as So And yesterday, tons Capital, adding approved that. of which February, know board what the $XXX of share another to outstanding announced outstanding, capital, left you million on in by know, in fairly of steady. you still met and have and we authorization. top that last still we've buyback million

to over the last I've what reason that by rather very is the think will now. steady volatile little bad which buybacks mentioned every we've day. for more prices of that expect that than can good calls, stock news really we move is, we seeing market. with be just bit this taken I the a a optimistic lot, right a bit couple earnings is be we're a of So, And little news Even stand and

stocks fairly easy decision It's it's our it the a that to on trading and we're goes. use be So going the HoldCo to optimistic. capital XX.X%, while - advantage at CETX bank. XX.X% and with capital

is $XX.XX tangible again book Our is $XX.XX. Book grow. continues value now, value to

about that very progress upwards. happy that So gives -

quarter after I the This longest offer, we've think hiatus had. ever

left We've on business. new gone balance a that the in hires, hires it on business, always business which longest our hiring the made we've starting those service line. producers not this We is a year, the opportunity. business We've full even But We business. of This quarter, the back bringing side. new the and without business we did product right sheet in deposit for separate across will done the exciting, we've ever was And are organized HOA either it both launched a said not and side business couple again, were producers. production the gives we business in of like but the that, base line been And always in be this big line. soon. I

business will what three about excited over course do that very the next of So years. for four us or

quarter know, growth quarter, PPP numbers. you was $XXX The our loans, this other excluding - million, is, thing last negative round loan

quarter decline in look how last to actually And loans still we compared especially a us, had as forward quarter, in it's especially have small the bring the we number, to where This very C&I is, optimistic and fourth commercial business. the but I would what in negative about quarter side, pipeline quarter. I'm to third much

the all little the we pipelines the a excluding Tom PPP animal. better. that different Let's just the this in make as more. loans, getting had C&I the are also can details second get will we've most best but of is, likely a year, pipelines into better, loans, that's on we where front, see the again, But the into much are And will we half of up CRE tell reduction

So is signs. New even ahead New Florida the New Florida, like York further York but good I said healing and in economy showing is both than very the past, York in is

at We evolve, been can any time, the healthcare that that an positive do change so overall, it's very closely. we eye watching picture. But a on keep are very obviously how numbers

to a - office. Day, the will completely some But a back of five a We have in a people the week our hybrid calculated is to normal, fashion, goal work work up get into our others in permanently brought a way. back and where remote days work employees Labor at will who by the office. number and new few We're not opened

those Tom, of be to numbers what me. over Again, will which is actually healthcare Leslie art normal. as Day in obviously more I'm details. return more to to will else. get to into the that just Labor played And speak. new we that we expect call we be all office out the we So by the caveat watching. it who is One little pointed What turn a out going we're thing, will

at so, actually very very the New to work into markets, dense beginning with is it's the all taught to at before of last fly to model. you forth on if two to early phases, the flying is on want, have about forth want Florida. don't There's least and Florida but then between first are has of the well back change just and of happens. and where past, about outside and case New time But are geographies it months us strategy other geographic are if to the if markets. about, have there markets. nothing recent cover you to think markets history for we as other these we you discussions we've York share that's just the York will the The as you look and announce, the business I expand to In to markets, three our see these business we because two expansion market or that anything, They're back in the wanted over time are pandemic urban that these beginning much generally that, much company, with the that thinking know, said, it's is know hard, just

we'll So But walk is will terms, also we when more you talk you through are come markets with this of turn that over in added course to just get think to other over at beginning something Miami might Tom, but more there those least concrete, about not I'll a it. to franchise But that, Manhattan who little it a and detail. to time. it's

Tom Cornish

Thanks, Raj. Great.

a let's the little bit So talk about side. deposit

deposits for quarter, basis, First, grew to million grew total quarter On compared million for by average grew on a now and a by DDA bearing the bearing as said, billion $XXX the million, $XXX quarter $X.X overall increased XX% of Raj $XXX non-interest period-end NIDDA XXXX. year-to-date the by by second deposits non-interest while has basis.

fee is, it's up about new another the of So service our our are management income relationships, is of showing a you coming seen really into know NIDDA, new by really relationships, lines, driven new of treasury strongly broad that the business continuance where terms most lines, you of it's support charges. what's based which know, we've growth, of in up strong organization, the XX% at really which logos all growth in quarter good was

Time by at grew areas. and these good we're So declined $XXX seeing market interest-bearing a deposits of $XXX million. support money checking million, total by of all

market said, we've I some actually, money So side, retention movement a of moving and we're has our on money deposits seeing been money accounts. product the this lot to market lowered rates has from been good time CD as the to as

I'll On some Raj's spend on of little bit follow-up and the loans a this on comments. side, of time

as quarter $XXX like decline, the the up quarter, and excluding line It's first including us. blend was loan see. were EBO a nice even has side. loans better good $XX during million good forgiveness the pandemic for residential million. a the or $XXX million. lines, well credit think major began as a by it in relationships the facilities the $XXX that have for know the by normalized bank, good quarter, for into both was just feel which While growth indicator, What residential it's onset million existing It business quarter. importantly, of you as the since most for quarter, as the And also that the one of really, increasing as was so the new this us more is, we a really clients sign really our of In it PPP I to time good is was an C&I to did grown

utilization, So, you line it's for We're a has a challenge rates been, low relatively industry, at historic utilization perspective. the challenge you know know, for a from us. utilization

start it see done transactions normalized M&A being So back done to nice the move basis, was see to see quarter, clients a activity in the quarter. more in being to

were So, the and had the June XX strong business, something point, different business, we the I a XX saw and C&I looked a for at blend in was and we was back June closing within particularly industries. we at deals transactions in of strong end was also number at all the we that good like pipeline industries the it different of looked one if quarter,

nice was from that a diversity to perspective. So see

the to second given now, year. seeing we growth that for activity see of half So we're the pipeline expect the

has a We you you reduction. commercial York New at five-year portfolio our much at see we would And as call from taper level. a point, know, of we're kind now stabilized stabilized $XXX of see had multifamily to information, been the I we're reduced I process kind of This a now can has will CRE this pretty of some a of level. better think kind run to been what now the million supplemental off off real business, pretty know, multifamily of environment this you estate,

The it know, on producers on good brought sheet. deposit key number hires, other we've balance the sides a the of HOA Raj we of the thing as you mentioned, made segment was side, in both

been years. over in few this strong business this significantly opportunity market, next we've to this really know, for a an You I and us player think grow the is

one which practice Florida whatnot. and also to important perspective normalized feels it of core so calling from our added that We kind team C&I us and team, production and us our starting of we a it's in healthcare business the of is and kind return several for - like producers basis capability hired to to to commercial cadence a the our feel,

more of the outstanding, million So the PPP on at the majority of was forgiveness first data first a quick loans And the on applications XXth X little some provides for update and this. the program, Slide draw on June total loan million program forgiven in of are update of million programs. supplemental on a also draw loans PPP Slide PPP. draw process outstanding there $XXX draw at CARE QX, on detail a the $XXX second deck over deferrals first XX modifications. deck in did were A this. $XXX provides the of and

million $X loans. only side, commercial the of On commercial

- CARES the in were is declined term $XXX under Florida, short $XXX loans seen CARES million under XXst a seen the XXth, deferral of of portfolio made commercial of in Act. it's portfolio, Act $XXX although XX% at still modified largest Now the terms million pretty of We've modified hotel XXth. we're particularly group at June as June is, loans million The on in to hotel total portfolio in tourism. rebound a March about CARES strong Act that we've for loans our the

the and difficult tried in within occupancy, know, Florida, rooms related book. you seeing that a know, beachfront to we're high rebound Florida, recently travel occupancy Florida have found at pretty we're particularly of any in You to overall you it, it strong book property hotel us know, do in rates

improvement of there, or to deferral to you loans loans to regular had the A expect modification have quarter. paid see either in these decline or we $XXX of XXX% off commercial that that. off in So rolled million this continue led significant that know payments. we resumed

were million or that of loans side, On residential off. have at under XXth. have XX% the rolled an Mae deferral longer off, short that of in Ginnie payment the rolled regular million XX% off had run million those either payments. repayment Of excluding buyout initial $XXX the June term making been CARES Of or early modified plan deferral residential paid the loans a granted $XXX or term portfolio $XX Act

data actually, both in Just very and Rent our XX% know, and on XX% in in selected remain, XX% performance portfolio. strong commercial XX% market. in Florida our York, collections to see retail on York CRE know in strong New we Florida larger York continue we and continued the that the multifamily, some New clients portfolio. rent you office New collections were York, at in New improvement retail when we Its selected XX% you see in Florida, look some properties data and collections run have in

mentioned particularly hotel open for New Florida and XXXX, earlier, quarter. the the bit back not I averaging quarter occupancy excluding until second that New XX% properties all stronger. end York one are is little a open, second of market the Florida As of hotel York now did the All

So we're good that market. rebound you seeing in know overall a

for So to it of some more detail with I'll turn Leslie quarter. that, over the

Leslie Lunak

Thanks, Tom.

quarter. to points forgiven added this margin. income X portfolio, Recognition compared mentioned, So fees into yield even the last X.XX% part loans this PPP liquidity from as due anticipated on stronger accretive than down of elevated X.XX% yield deployed quarter points net to was this quarter. from and large was Cash to not basis levels liquidity. was in The while loan of that that X.XX% quarter XX loans to bond X.XX% NIM interest to which headwinds to on accretive is the increased basis to last from Raj slightly were high quarter

to points basis yielding for assets portfolio environment. the have impact turnover by the fees, this on quarter, the origination PPP of in yield without lower the due X of just So the declined would into loans

related recognized. this into draw any remain expect the of third PPP draw million to to see on expect deferred in slower for to We obviously to was that rest in the of accounting in to points and portfolio the the of have that had I second Retrospective program decline that relates prepayments of that yield And be on actually third we the X.XX%, of $X.X in X.XX% relates wouldn't securities first attributable environment. to $X.X securities anticipated. faster The quarter would than really accounted and on adjustments basis just somewhat million and much a method rate more quarter. XX come $X.X the most declined - mortgage-backed the from decline. turn that loans over draw fees quarterly income program, to of first to I million

As Raj X.X%. advances, of of a remainder with that hedges the deposits if quarter-over-quarter estimate of scheduled FHLB by declined XX deposits billion of $X.X X of about total that said, this, mature we there's the on the basis interest-bearing cash if we points. flow FHLB advances against rate points points of by cost weighted over of cost with for of higher NIM still - elevated - accounts X the basis XXXX normalize respective cost declining to basis estimate cash talked We simply that with levels about the average we balances, impact we liquidity, are

basis the points is liquidity if levels impact have it. so that balances NIM that on of would been high and had even normalize we XX basis points, higher. depending about points on of estimate the cash X we we securities, you somewhere how have level between been NIM if X also So think And seen XX basis of would normalized,

pretty So significant.

the the to currently to quarter, headwind continue be we NIM you know, As cost slightly decline to to continue higher Raj currently deposits a stable of to be expect and next may we however, expect there. liquidity said,

due talking the and our related pandemic for allowance basis Slides provision to that was $XX.X in due further Overall, forecasts. the that financial things this were improvement HPI points of in million impact portfolio expected change rates allowance. loss the COVID of the commercial at the statements losses. million some reserve reserve net The to one $XX respect is reserve Most the related The on drivers migration. came includes loans segments elevated. reserve to like about always impacts saw this unemployment million. around XXth. net XX reduction QX again losses income up quarter that - shifted property qualitative loans the With XX and and us. million, as million Couple commercial just that in substandard outlook a the non-accruing quarter XXst a we that and $XX.X reserve an expenses The $XX.X you expense of comp to allowance, one operating $XX.X notes XX large Raj know portfolio and declined insurance credit related million to as classified portfolio, by $XX.X increased lower for down to Similarly June CRE uncertainties on The commercial about. substandard sensitive and a criticized residential, $XX the criticized on that to on by Total to correlating in to mentioned largest increased model unemployment Deposit and of by million of in amount million of changes themselves, and because March related accruing the reduction, XX actually deck had provides in by classified borrower bringing and recovery the we due decreased through of - component provision decline out and that charge-offs loans down risk in The such the portfolio details particularly quarter million, million we've to back on and as rate $XX.X the property $XXX bucket decrease was rating somewhat decrease down $XXX the of this basis the moving Moving this and largest residential the Biggest the HPI. credit forecast. by of the loans declined economic from was been the for at special points as improving basis the to is the saw to that reserve reduction $XX.X again with and relationship of loan. to be to a reserve expense. that million that and the into again and related well to overlays increase resolving in other C&I increase to $XXX loan $XXX seem was that the expected, we some assets. improving that unemployment spoke million, improving the loss decrease million forecasts.

We positions management I continue I to see with few increases tax somewhere in rate, recently our want the recently stemming conjunction we real we just to with Consistent benefit in entered the would X.X. tax treasury could more around tax With to matters, deposit recognition to service a XX-K, from expect result State very disclosure there's charges initiated BankUnited discussions of have XX%. it gotten have with next Florida and discussions respect our we One regarding last in in that the just initiatives uncertain fees solutions thing remain several possibility made outstanding quick. underway. These quarters. into of that the in these discussions mention a

So it's be more than me specific much soon that. for too to

to that, turn to it So some Raj for comments. closing going I'm over with

Raj Singh

While report, every up on get just my which was Leslie looked I day. talking, I deposit

was costs at night, last of deposit our basis points. as XX So

as So comfortable early as in quarter, next the I will the teens be that teens might of we in pretty week. feel saying be this

basis think in, that the the spot excited you liquidity ahead end about in while that be growth deposits I'm to will a teens. know in is problem. on of told months know five said that come we the year past the And continue I has say a to So I'm about I've deposit Truth we're grow. very way, by schedule. we happy

have we this deposits an kept would report, to actually you accept better flat. even been So, we if that

are out that when So rise. us in we we're know, we hurt pushing future the you that will is quite rates to trying anything think feeling and sensitive

will you good rates book, the So quality rise. of because increase someday to know, the thing

side, look do know, six play you that I could back what if when it year. you ahead the So of months and we're further ago, know is we thought itself thought of overall much deposit we we out would this

cost than thought see we're and the I for But loan behind standing ever the here loans further six I on find lot further we about there's this the thought than still what we think months, deposit money And news still and could on side, it of because the now to would. are I good good On declining still next still look pipelines front, in on on we front, a normal. do. coming beginning the

also this around when month. been us, maybe think changed gotten you ago has multifamily Tom was that been I repeat because a years want to a literally The that runoff York is exactly he for just made strategy, that from that it's big headwind I New for five So we point headwind have lost, and us. big emphasized may multifamily portfolio in five has know the that anniversary year

that matures, as and accruals portfolio sort runoff, So and of those it's behind us. payoffs

portfolio the of getting forward, same velocity payoffs As don't that look a place. we know to you is see I kind because of normalized happening,

perspective, payoff to story good look compared couple the quarters last So on I a five over our quarters of the next forward last that from of - couple over couple this for also last years. and the is last the

for wanted that will we make the turn moderator it questions. over point. So just I to But to

Leslie Lunak

[indiscernible]

Raj Singh

Yes.

we'll questions. Okay, take

Operator

Instructions] line question come from Ben Group. Hovde of Gerlinger Our first [Operator from the

You may begin.

Ben Gerlinger

Hey, good morning, everyone.

Leslie Lunak

Ben. morning, Good

Ben Gerlinger

that major big C&I direction it was credit. everything quarter back uptick, is A is Slide understand to loans. totally not that it's the right when it's only looks But be credit one working in on if out, roughly the the non-performing seems we can I I information, flat. Tom you as XX, like wondering if positive, through well. worked And but as start

and you the shed I in color called out. more be loan also credit to general, seems on guys then It you curious could million. $XX was So non-performing that some if balances

confidence You there some can performing seems just was reserve if the in this I said It a total of forward. SNIC of terms as $XX million to that reserve. pretty going relative and shed the color curious to loan. you on high be percentage

Raj Singh

We'll we about On a all a loan, capturing of lot more are actually lot weeks' information. there. have coverage Yeah. that we still the evaluating the two collateral exactly will time know about in collateral

was doing and that again. a lot do back obviously, and over best can over we So this our going keep And guess.

the lot took few all reserve. found itself what of over of the because time. irregularities, accounting presented whenever have weeks' you But we been a the weeks, you extent a about really you kind it we understand last played on problem sort conservative So can't in we'll of you. out level that know, that This numbers much have, two becomes the harder with might to appropriate of and to be, just rely know more

know, outside losses, fraud more a credit it you you falls that's, it loss. So like become know, of almost,

that's the It's we're kind on. slowly what get It's written not they're with of here. So how suddenly it with. dealing and situation the back relying to paper this saw of just to That's we're slowdown business predict and like we a what numbers dealing are on up. happening, will come we human the

of lot more, reserve think it'll we made needs work a really conservative for So But to weeks of be. in we're like valuing estimate quarter. appropriate I coming well said, collateral, a we'll couple we know the what and the

Leslie Lunak

the of few quarters, But the and most loans for of part. most just with some the rest population you have small workout ins a them. stagnant a - the are mean, our through is that most - population, know, has been to working this for the and last department, been in Yeah, outs. respect this part relatively recovery there for I

population just little know the Raj most So this that that part, few of we've ins and just other loans for we the a mentioned, for you gradually out we'll see working to is that this than one are last that been down. quarters loan wind but and outs, there's the hopeful start

Tom Cornish

Yeah. There's - nothing on really this stands out one

Leslie Lunak

no. No,

Ben Gerlinger

and of the approach get a a can you from great. of your growth helpful in be the from here, being terms the we of of and markets. what the are you've was end of if lenders to at maybe positivity, this pretty you year in transitioned loan growth or really of good And offensive to year kind of you kind now. even of that optimistic frame and of seem just That's Raj mark curious want question giant the might targets to then Any now I you Okay, general, a areas I what your guys beginning gears year a would sense taking loan if have in outside color. you terms mark terms may hiring looking switch could think potentially grow sort do be in of growth? in growth,

Raj Singh

Yeah.

we what been next single digit know, sort negative have quarters we'll environment, quarters. two expecting like. be when in we mean, trajectory past, is the this quarters, the I'm earlier, doubt you the we're normal about positive - hard you really had like. were actually have, to which did very probably which I not annoying would it that payoffs going were from would quarter unexpected the two down It the which the predict try last of is what to happens, day, you a have percent know day, But what the low of payoffs in still but predict environment very the not a In it $X.X I year, to at having nevertheless, the said day to next year And we look one we've even yet, have last for border. dare billion, we way, closed quarter, down over positive $XX quarter So had feels growth, without be kind the things is first this by know, is this million. roughly first

up make quarters. of that's have think the fourth this I importantly, terms lost - next quarter for the And settle quarter us third to for But positive. environment, a for optimism quarter, just my need mean, from we the kind to first two comes down expect quarter, really things be of I over more. see little seeing what but balances we seeing the more pipeline. I in to

the some And June decent it while to trajectory has So the go we increased of at all to June the the sit it - of improving. was will slowly is was, It with had the pipelines weeks, doesn't has And and exception low. to it'll halfway happens, forecast at the when I healthy forecast since year February, surely best in year. it's says month, pandemic last have every of down they've our but commercial end in utilization know, our of end the couple half. The went down was go been pretty our look when Tom whether you been a every by started. you I the when we it still especially that back are that with know that's line pay downs that used if place February little is just need the overall but a back line normal to lowest C&I of second say normal. they're we will bit, bottom It single utilization

Tom Cornish

existing the reasons starting clients is which we from proactively the Yeah, of move And I clients some But portion are why that our is, bringing Raj clients might about that more activity, facilities line and fact didn't pipelines feeling activity, the that think new that comment doing came I of point line revenue these good the one right doing there mentioned, quarter, utilization of we where we our relationships increases that's the quarter. which overall coming downs don't quarter utilization I saw, is of are facilities. in go lot you pay that pretty you into made control seeing we new activity, a you formula-based that second production add control the up, in things credit a because at much know, the while about sentiment had The during more of of calling, production the know, know, the transactions, the now. the to our know clients. at know, end The of you good coming when looks new from look it we bank. you

receivables economy up recover, expect the to as up, sales goes go line to know, would continues you start inventory more goes, you utilization. see, So to as and you're going know, to, we

same we that's time much the think story. in if better to then both the those going at I of get direction, a same going be So

Ben Gerlinger

and get really spend, or is which expenses little bit comp XXX.X's know technology Leslie. of good bit higher this bank. rate can expect a I a going kind volatile, I should that just of an sneak we important the I If a investment helpful. for little forward? something run Is one other in especially That's been Outside with Great. pieces. moving has more always

Leslie Lunak

probably side, I people however hiring think run and going little the going Tom bit, also But flip that's here would we that's a time on to do creep that say on to rate materially to referred the that and to up over you to needle that on they're No. the than the more that Raj, move we're know, doing near-term? not lead both much know, you some I know paper, be in that should are seeing going are you long. these producers

strong of is we I a bit that are right upward that's thing lead hiring. it. increase the increased variable on pickup going over comp accruals in there cost in been And revenue anticipation second year, But pressure and say revenue. little now in in compensation to are an offsetting other half a be to again, prior because the number have would going actively our on think of should So the a I

great news. actually that's So

Ben Gerlinger

guys. appreciate the I great. color Okay,

Leslie Lunak

Yeah.

Operator

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

may You begin.

Jared Shaw

morning, everybody. good Hey,

Leslie Lunak

Hey, Jared.

Tom Cornish

morning. Good

Jared Shaw

loan outlook. Maybe the with sticking growth

franchise the mean You on bank based whatever? on I Or I you to more finance brought in there whether that maybe side. the with strength, is Is able deposit good know, it's, know know, a that you pipeline new that's penetrate really in know, you on are guess that there. color that - side? seeing You those more what start industries or just - you're seeing little the being there the broad to certain you're C&I you to and customers optimism know,

Raj Singh

For our which just very perspective, for careful New not economy But coming especially, is credit. York, from sure. front. months increased rebounding a in just cautious know we credit not deposit we news that very we're now - is from sort I know, you the - on good mean from in healthy coming the and there It's few have that or is it's appetite like, a mostly found in credit still also are harvesting you that's We're over behind. still But we the economy our fact that, not strongly of benefiting a being we're risk Florida, in product. that rebounding more you economy know, it's And and there. a block the, from selling Florida.

Tom Cornish

earlier pretty two There no when I would the referred I broad-based the production industry. the say quarter. at same closing in Yeah, I like were looked it's for deals

company a health you you from ranged you energy that to number it to Orlando the broad renewable that So a a know, we in to manufactures across serve. our, segments paper was the know, multinational know, board and industries cares. toilet It communications of

Jared Shaw

have on primarily expansion? that opportunity that then exclusively or like sounds it to conjunction Okay. a you know, HOA Is an there business now. with right deposit the that's And product become lending in

Raj Singh

I that's know, high that a credit a XX% a probably the in business. know, and And what want it some organized of the does clarify, But for is while, if of business a separate of generally it just number, small demand really been that about. we but in line business. deposit or local do that's there you never was business really Credit not business business. is element line you have a to really, Yeah, is for that you

it actually, New while we have putting lot technology, international Florida, we to we'll go on clients spend do we're York outside. an resources market, So and to us for business then going because a we're some some in of behind do it, money and

without So, up that we actually spending platforms, think can of we bought know, have organically and a tons intangible, and money capital. banks you more goodwill stepped spent that recently on kind some of and grow tons

Tom Cornish

You national a know of of new people the their terms production terms teams have that footprint in in we've hired [indiscernible].

Jared Shaw

has some be other that person geographies do splash that, than or if And know, of a market, potentially team you talk bigger, or being relationships two about to the people? about be a you good know, potentially any when it one just or as a know, entering or in potentially entrance you Raj Okay. branch a across an you we come looking a bigger you or with those? think you identify attractive, a be you BankUnited once how a would should Would market, at you a, that bigger know, acquisition that would

Raj Singh

Yeah.

of we is a be will look separate all, know, grow similar XX last over and first You the are, be over it way at businesses, small small, to new that, geographies then Acquisitions slowly a going time. other always a we it's which team, that chances then we've it entered to to years, tried is other with our But that's the find geography it strategy, will can't special there's you obviously, to lead it, the too. not have always our we do you something ourselves. growth. something And so organic open acquire tell primary ways never history But we're to that with that possible. to

go be a that makes for has sense market, So us, we would our are, to work. be to far was the Seattle that. has be has market market every a model example. know within let's it'll is be it be not market it flung it is an seaboard. to unlikely going a eastern say Not maybe But to It's you business it healthy will where like somewhere to

What know, the see the likeminded people actually family? find all then, our markets? pricing Boston other? know, competition let's Atlanta importantly, of with you different quite markets like? well from and say And the know, and looking what And we get, these engage work we at in the the health you you can They're to are dynamics? from who would most What you one where what's is beginning of markets? the to down So way to teams is health are lending to could the

Jared Shaw

detail you you for know like, Can at changing rate about Great. overall bank? went know, interest And sensitivity finally any me what this and you and for yields the the billion around portfolio duration was know, is Leslie, just then you maybe purchase, quarter. give the for securities the all $X up that,

Leslie Lunak

quarter. duration composition not to know, the decision yields you that they portfolio keep that averaged Jared, been. to is this has they believe the activity. are we've materially it made changed for duration. the what time don't just the And a conscious because So always they're of the X% are of take We the is short, under purchase The are, of depressing portfolio purchase the

So portfolio we're short. duration the still you we're of the keeping know,

Jared Shaw

Yeah, thanks -

Leslie Lunak

be The letting right points bond is earning ideally so. it probably it's like portfolio at little a basis better XX to than we'd But now. larger Fed, sit than the it

Jared Shaw

Great, thank you.

Operator

of line next from Our Dave the Rochester question comes Compass from Point.

You may begin.

Dave Rochester

good Hey, morning, guys.

Leslie Lunak

Good morning, Dave.

Dave Rochester

you all away. on to when the go as well. that bridge you you just to another you'll multifamily for decent you'll some and That take know see But trending going Appreciated with think trajectory multifamily was you've to the color I book Wanted your minute. this bottom definitely for back $XXX the runoff think, quarter? there, So book the hit had $XXX a lifts get that loan get of some top runoff in there? million wanted also million on nice how

Tom Cornish

equipment say and is split answer finance I into that I'd other to two is piece. would One Yeah, franchise the piece the the the pieces.

$XXX at if - franchise million. about first I'll the quarter that take ended So

that think we now I over expect in down continue prove rate We that McDonald's looking out that transactional will opportunity, and right a new would are that quarters. that focus think deals. in couple four to bit five next I at we're some good long-term of the concepts take see are to trend We looking that do bit you probably our deals don't or know, concepts in business and the a

going where you bit on the then that some probably concepts down, clean fitness area. that we a in the year. are the there work that but got we know, couple opportunities where we of or, of We've will stabilize, some aggregation to there up might of want little in fitness end to of volume you continue probably as get drift more the to reduce one will a a see And little operators bit. are sale transactional concepts So

transactional finance CapEx think opportunity in as fairly not there. type that area duration I bit. side, seeing for And much just right down know, frankly, spending seeing you we're equipment little now, trend that the There a the are equipment right much is to opportunities. as On we're stronger return deals will also not the now, long continue

like fairly fed they're So rates.

we'll type doesn't we past now. you of and an better with it think the X% in And were that know, portfolio treasury know tradeoff other businesses the level and give tech, awful so The see credits us make have and you like sort great that at economies look and of sense I years, of returns got in sub right of that then in. deposits and nature. risk opportunities you know, return come areas things we'll just, risk as and for XX And growth doesn't credit lot between other

Dave Rochester

Yeah.

Okay.

got basically siding one you've stabilizing multifamily offs sounds it in of bridge, the like XQ. portfolio So got you've in

- seems So like it

Leslie Lunak

a still be XQ Still down - little bit.

Dave Rochester

Down a little bit, okay.

Leslie Lunak

The rate of decline will slow considerably.

Dave Rochester

that you your in growth positive it point, are But other here areas, the guys fair? significantly of growth and half is know, slowing - on pretty you it just your and to the back decent the seems pretty in of the loan pipelines like like with, Is decline some seems year. that for poised rate commentary

Raj Singh

Yeah.

Tom Cornish

Yeah.

Dave Rochester

Yeah. Good.

stock buyback as the to goes. is where switching like far it as about Just you're capital, perhaps given to aggressive the trading get sounds here, just as that

And see you another you capital to but now? there wrapping far trying do put excess up wanted end more ahead understand part just shorter-term, a on out how think plan? would Not to right you the be get if about behind in to up your willingness So that? here, too excess this capital

Raj Singh

read capital here. can decision. lot that. will will most right [ph] that I there's a excess we board like back of make the doing [XXX] us Yes, after obviously see another the and But

Dave Rochester

to maybe year? in are investment in the if half thinking excess And back then you we're just How that switching growing deposits the rate you strategy. given environment your, up at the Right. newer getting lower end point, and about now, just securities book the more this the

Leslie Lunak

be sheet we would the not And know, securities from we book rate environment see growth you loan but So horizon. a in instead earlier, that growth deposits be rate depositors sensitive desire the seeing the here, the obviously, growing would loan growth we'd will who believe our in book mentioned balance on in on stronger incentivizing that, actively also know, the you are process as securities Raj their be be of it would of book. we be, the And different to elsewhere. take we

would we want quarter, next see didn't NIDDA we disappointed be So not we total to if deposits grow. grow see

So securities see I would, you that quarter. be, know, my desire would grow we don't but materially the next

we're position, if excess find lot a However, where to where there, be of in that's in the put we'll this it. honest, ourselves we we liquidity have same quarter

Raj Singh

Listen. If billion dollars, deposits by declined say. let's were $X

Leslie Lunak

Yeah.

Raj Singh

know, on the you side of the reduce cash we, And other sheet. just balance

not You - you'll up to of $XX lose capital going but any earnings, are free million

Leslie Lunak

- Additional capital

Raj Singh

could you at? stock trading and Which back know, accretive EPS. X.X, to actually what times are we buy you X.X book

Leslie Lunak

Yeah.

Raj Singh

I So if we end you you be concerned wouldn't up a - know know,

Leslie Lunak

- yeah sheet balance a Of

Raj Singh

thing. good a be would sheet balance A

Leslie Lunak

Yeah.

Dave Rochester

yeah. Yeah,

Leslie Lunak

Exactly.

Dave Rochester

on one just saw do this are financing lease last I the that Maybe one know subsided seen side. fee can that the stabilized revenue you past But have a in over bit. going the around you good. still I or finally Sounds - And expecting up that this quarter. bounce little forward see quarters here and several maybe we've to the decline some bump

Leslie Lunak

the much at Dave this foreseeable future. is estimate, point for best pretty that stabilized My it's

Dave Rochester

much. Thank All very right. it. Appreciate Great. you

Leslie Lunak

Yeah.

Tom Cornish

Thank you.

Operator

comes Gailey from Our GBW the KBW]. [sic of from next question Brady line -

You may begin.

Brady Gailey

Good KBW. guys. morning, from Yeah, Thanks.

Leslie Lunak

firm. you switched thought he Brady,

Brady Gailey

that? national wanted What the portfolio, you one I another loans loan remind just to of then non-performing. here. the Still total when that total what can you C&I on And percentage your was ask sure credits? sector look are at us

Raj Singh

retail falls country. equipment the commercials I in that. call the and while distribution of is technically category, is And southeast this part of sector, really The and a largely this wouldn't under heavy wholesale construction of SNIC it

enough, but bank the to that called we and the is relationship This not was thing did of became to to deposit a because the of SNICs of growing a - Overall, one primary size were club have this large your a We has want only typical this sort the where not But here, SNIC. be deal of longest for deal. go. place this time we

Leslie Lunak

in Was markets transaction. the capital

Raj Singh

a business who central Right. This banks and XX a This somebody says, like bank a million money this time. company wasn't you $XX wants bank deal. to known take and - this long and a was large we've calls know, is for

this know So, to even that's which is you it's more why painful way gone. see go the

Tom Cornish

of million $XXX banks. a in credit more or is three Yeah, the definition SNIC over total in commitment

Raj [technical really dollar deal as said, So you I multibillion club mean, banks a it's it's this difficulty] not, deal. have you is where XX and a know

Leslie Lunak

Yeah. us a longstanding Unfortunately, relationship this we with Raj company have makes that like even painful. said, more

Tom Cornish

Yep.

Brady Gailey

okay. back many many you your talk quarter? then you going on maybe you you Can size people. out Yeah, know you mentioned office people maybe forward? you're about people second hired how know, And hire Raj the And hiring in you how could just

Raj Singh

part remember discussions? I do you are ad hoc, hired? we Tom, many having how when of the the couldn't on be it's people how answer question. you you'll know it's, we've to many always bring multiple Because second able

Tom Cornish

or about seven. six it's I would say, probably

Raj Singh

Yeah.

Brady Gailey

Okay. And then last -

Tom Cornish

producer mean, also, you we I we're the in an or opportunistic a know, Said hire for if talent to I mean, we're is a market, day. whether we very a going them. hunt future the find issue. opening hire you have at every terrific know, not,

Brady Gailey

fees many second The Leslie, have makes then left. you dollar how PPP And Can tell us fees you you heard in of Yeah, amount? actually that $X.X quarter? know, PPP the were million sense. I taken

Leslie Lunak

$X.X Yeah, Brady. million,

Brady Gailey

all. Thank Great. you

Operator

question comes line from Seaport of from next our And Bishop David Research. the

You may begin.

David Bishop

Yeah. Good morning.

Leslie Lunak

Dave. morning, Good

David Bishop

question quick you. a for Leslie,

from that of Just quarter? if change, the looks to curious balance have how quarter-to-quarter an you sheet rate just interest curious in just updated relative position, last terms sensitivity

Leslie Lunak

probably in too. different, a Not but to of sheet a try range. some to we fill ago, little moderately the time it much not for has than was sensitive the sensitive. asset what that's different, much balance bit and continues kind same be more And manage quarter now asset It's Dave, been

David Bishop

terms loan repricing? rates is terms before in just to sense big much impediment I seeing curious of coming these see have floors, of, in through terms guess, floors in some And we of loans rise a how get of their it a we start

Leslie Lunak

is It's big pretty meaningful if me warehouse book operative but Tom, the a low. book, have where of think now impediment. right the not some wrong, we really but only rest but floors, I'm has book they're the mortgage I floors the correct

Tom Cornish

Correct.

David Bishop

it. of And Raj then terms Got in a maybe level high commentary.

nearing that a view grow that You think an general is do point? multifamily here, of point here, just I York you view mentioned that the at as to New in New broader end the will asset class this eventually again, York multifamily and an maybe in guess of runoff probably just begin your

Raj Singh

which know only applies for you compete this have and And is. New in it in that's makes the with mean, it's I which we with. asset hard to class, so very them wholesale, class. banks downturn very And it asset it's overall, than that, more hard It a class. this Florida, you it suffered would think did know to you some would to than is, asset the be deposits you that's to obviously compete you easier generate know really also York market had

bonds, grow So, would we not will very not not loans class, I that left our on that we a meaningfully, as deposits, bought just be measured so sort if at and but grow, we channel from really to entire really the of New not broker-driven can to really it have growth. bullish this York that you can think substantive real through have a relationships billions you you it know, of of a in we least I'm know, want the get have to asset relationship, broker of we would such want with buying know, almost lot course, very we, way dollars, go broker, wholesale is and to still you only multifamily what grow have where business, core it, you growth, of that's industry,

as I it with current right an will have will the end don't in asset form stable lot always I So and now. suspect New that of a multifamily. class But up it growth the is we than in York

Tom Cornish

business. even you regulatory add that went the changed of half know, would dramatically that a prior to through, York, year changes so recently the economics New I the ago Yeah, pandemic, the in a also and it or

Raj Singh

five-year are, economics know, for these are you long-term loans The the most part.

Okay, to out, you that years debt the those going five service cash only So what five if that out you based be look before go say, happened coverage on years or ratios just XX projections changes out. and pandemic is flow that know, those will

in never a used multifamily, that that you put you have concern to into but it's now, got to your So something we is know, math.

Tom Cornish

compression that in in know, than NOI. our And business just grow. You operating growing rolls there's are therefore, just can expenses faster rent

David Bishop

bottom it. to credit, know, having of out moving terms you curious maybe do to maybe, see terms of, perspective lower ratio, from loans to improvement for the the in Got preserving forecast, in you things of yourself provide just obviously, growth, economic loan ahead? when you where the at just ACL percent a driving turning start lastly back know, then And in know, curious you

Raj Singh

right, pandemic Before what was CECL the our ratio? coverage hit,

Leslie Lunak

points. basis XX

say, say see things now, we a would one this going economy when a level. day what at back point with you so said XX is then these toward best But is close basis consistent degree the I've we're a looked composition which to I kinds we Dave, with precision. then like I were, Right composition high that tilted say, to to And put residential and know, little reserve I the of CECL we to portfolio difficult lower know, before, it would really predict would carries than drift where more are reserve. you was on that if portfolio it of

get anything. way get back even - That at depends barring rating risk to Can probably when direction know, would as I say provision my me, XX because looking would back probably positive me there continued where loan definitively a place more sense origination a be we're is you different I that quarter the pleased on some because commercial in there? headed also No, to makes thing. have to in believe production, growth. things But we we basis a the heading of much with upward look as a towards think nature So, a very back good economically. best know, point, you of that it to of I be going migration, best,

David Bishop

Got Appreciate color. it. the

Operator

showing at turn you. Instructions] closing Thank to over for I'd like the I'm And this in further questions Raj Singh the any moment. call remarks. back to [Operator not Mr. any queue

Raj Singh

joining Thank Stay listening us you three again safe. to and story. talk We'll you, everyone for months. our to in Bye.

Operator

participating. concludes This call. today's you for Thank conference

You may now disconnect.

BankUnited (BKU) 22 Jul 212021 Q2 Earnings call transcript