BKU - Earnings call transcript Q3 2024

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Operator

Good day. Thank you for standing by. Welcome to BankUnited's Inc.

Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded. the to hand Jackie host, now ]. Brava will conference your over [ I ahead. go Please

Unknown Executive

and morning, BankUnited Results Quarter for for Inc.'s XXXX Call. Good Conference you Third thank joining us today

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

with the achieved. to prospects, the or statements, otherwise. and direct financial developments risks assumptions, as strategy related company's expectations those as circumstances future outside future subject including made forward-looking statements Act adverse to company's everyone call the financial by plans, condition, should company by including results, the regarded as or Private the and impacted uncertainties meaning will during this start, on forward-looking liquidity, events various a to, of Such and on of the impacting that may company the call statements services information, such respect contemplated subsidiaries the Reform reflect external XXXX the we not be views company's company result plans, things, Before current and remind company's to are new inclusion growth or contain forward-looking and this other information estimates I'd the estimates of by industry. not historical any whether control, current business or forward-looking be representation performance the of performance. Securities its obligation any a expectations. like based operations, financial that update review as undertake future the forward-looking within among Litigation and that company financial of statements events Any does The the That to publicly are this

exhaustive. the report Form from by those report A which number be for company's as I'd any or annual Singh. can in materially to considered forward-looking year subsequent cause These quarterly SEC's factors on XX-K to on of results XXXX, the available should on the to be like indicated found Information these X-K, the website. statements. factors over could that, differ XX, call actual are the factors not important XX-Q and Form report on Raj Mr. at ended turn December current With

Raj Singh

you, Thank for call. us Thank for joining [ ]. Jackie you this

start me This in the Let came quarter. a at income $X.XX just quickly $XX.X a or million by going numbers. through Net share. is good

I last checked think were what I were. time were we estimates had year, consensus last at And last quarter, the $X.XX. $X.XX. this quarter week we the

was it think $X.XX. I

little up, in came to up. the happy always margin it foremost, better a at contributed that would we had X.XX%. and than and this? We when consensus. What do -- We was to So First margin. be is fact guided margin

think I X.XX%. were we quarter, last at

quarter been Actually, look year it's of this, X% third nice to margin. I increase growth from a in So margin. our in if last

So we're happy about that.

quarter of the happened X.XX%. even the The cost which we in inflection from quarter. to this the This from declined in acting down inflection -- was slightly came interest-bearing officially quarter of but quarter, to X.XX% cost of pretty last policy late started down bringing X.XX% deposits X.XX% funds that. the before deposits Cost on monetary happened,

pretty in the the late happened Fed remember, quarter. Now move

XX only actually X.XX%. priced that interest-bearing, our APY from monthly. the just it this deposit June of portfolio look X.XX%. it APY on you better taking the that, because some actions in products see XX, include doesn't deposits at June was X.XX%. if of fully Even at deposits X.XX% spot came you And on if rate. the impact was of down our So we're to all And for September to should want spot On you look on get

X stuff of on happened the is outside that. that October So

of had but quarter, us last were $XX changes ]. way which the from point, Period are feeling interest know, have deposits down very million our NIDDA said the the we up where is deposits ratio to -- ahead are NIDDA we we half. I trends very in sorry, million. growth, if long-winded, sorry, has rate had come of Total loan-to-deposit on couple to as quarters, to Loan-to-deposit Leslie, ratio liquidity environment. saying compared being very, in trends [ last million. look go you strong So was that, -- seasonal low some now Average good $XXX you second XX.X%, other the a low was perspective. XX what is being about the we're $XX in fairly for down NIDDA, on we're don't staying down proactive back

things. It's up book, of our number One of title made book. some in especially our a but corporate is also seasonality, in really

-- the it in deposits, high-priced price-sensitive but is we the we money third while those of took actions deposit push didn't some the very Some which trying doing We're to second really out leave actually took. in actions the we quarter, some second until quarter, it quarter. were

even So in still surprised And this that. be game, but of the it's we that to little some money bit move late that a market from also saying I'm saw of happen. some DDA to

So that all contributed this. of to

can still Average our There But million. basis And points. numbers. margins X what's up really our was went important a is $XX in DDA average lot be period-end noise down that, despite NIDDA. of

happy first in seasonal we're much we favor will expect second But NIDDA quarter. when So it best about is flat. guess to and very the our headwinds that fourth -- seasonal Into start again remain. will the quarter very trends be that us expecting that. the growing We're the quarter,

quarter very the fourth looking business We're business still is we've and that closed So close is new of very coming the into this robust. happy in the to that with pipeline quarter.

residential this in time. $XXX bit. a those franchise down for and were into down mostly the get leasing the in of that details been Tom loans So we've as little quite the and in million business quarter, driving some will

NPA guess, think we're again, credit -- terms low. -- digits, million not In quarter correct? to basis it's was ACL I million, guaranteed SBA portion. -- $X.X for this XX up Leslie, of I NPAs did build reserved, [ that reserve basis XX were in $X.X the June, at bit. there did quarter. Single We basis of loans from tick were charge-offs, points portion up the very the XX guarantee ] XX little it points, very, is are XX again a excluding SBA excluding points.

the that loans to C&I quarter NPLs notable time. were It this X The happen book, from in does into episodic. is moved this time

X in to the the are itself. media is We no adequately for these are But in would be very industries. It's is just in. One the that that reserved repeat of the loans. logistics space. that other They portfolio borrowers unique is trends happen to that something the space, in suggest different these this is anywhere situation both would very there in

X.X%. EPA continued accrete value TC [ to to went up $XX.XX. Tangible ] book Capital up to

plus us. Fargo career the late news [ at pretty much runs quarter, commercial earlier Beth JPMorgan X Diaz and small bit that remember, So significant Ernie Wells we ], and decades in you year, We who front. quarter did a good now on We joined as at Hosen another September. this hired time had storied franchise. have little the of as She's well. -- in in a made will our retail pretty for business, hire

We're sure here. make X, team. X happy So she over big the her a she'll years. very X, impact the to I'm joined coming have

in part, September, Quickly portfolio. physical that I'm we closer blow X reopened. X locations had to much yes, through, did the premises either quarter, branches back happy on in in hurricane missed to -- report are to in by hurricanes which business. you really damage hurricane, not looking The no or footprint as do X to most West X our Coast. us September the was updates October. the the right? All All give unfortunately well. Milton, for came We just week, loan damage. last our But are our The

there We loan make the that to no are impact. coming is through sure portfolio

not far, but found have anything, is complete. the So work we not

anything, portfolio, and back. days, give But if there's right through an over you of So will comb we as few report the to nothing the next course we'll now, entire of update.

and of quarter last was asking asked This me, often what And didn't was fourth P&L of remember about of do. you bunch our -- it weekend, And e-mail a year. they out. I It could an that regulators kind stuck walk small us was through questions, our they I what was. charge as from about I in question X detailed got a just it And for was?

Leslie call her memory and on this? do didn't I either. Sunday. said So it you And remember she jogged remember she I

something answer is of fourth to take back Leslie where going pulling still here. myself. I my files don't quarter, to out I could Long that if what charge it find remind apart $X the from So short, to and and story is, it started were million know we myself I took answer. to just go I

But this and few rhythm a for broke And the what quarters an more were little some this I bit for look anywhere. quarters bigger a I a where few can call, I'm deep we to taking the this to me it happened from looking last you you felt. at correct The reading wrong looked earnings And months. share X started gave X year we're -- a ago. started of myself, the press at for me for ago. me over release down this, and force I imagine, the want in that Leslie, I I numbers And picture. call. a can numbers kind that preparing And just opportunity But last on as in to then -- better if I wrote

success the credit we've have basically trying margin, of after strategy to we that [ the EPS, through mean profitability over sentence of Madness ], last it's an ROE. ROA, describes keep course, X eye on, so March quarters, And indicators key sheet I on what do The are embarked So we of and right? to there's this. on transformation. balance improving been really

the back and and anything just then has that. on if then So $X.XX. starting like I or is quarters, the buybacks It's back of EPS now in not last look gone $X.XX X fourth year, of $X.XX core our last at performance. $X.XX go just quarter This

from X.XX% X.XX%. to Our last X.XX% gone, of has year, quarter X.XX% starting fourth to again NIM to

still it mission I not me I then We're in X.X%, we're but there not it's went This then ROA similarly, to yet, share. it's -- now the feel $X.XX last we're moving a kind there. but is that wanted and quarter is X.X%, went to right This X%, a Again, -- and just X.X%. Our direction. not made that was ROE good, was to accomplished of trajectory $XX fourth thing. year, of $XX. $XX

back XX for the We're of is to cost to reserves. XX our Charge-offs of point, And margin from up, up, going not cutting. by a to If back is ACL. bit, low just ROA anything, XX. This bit leading the run ROE XX of going up, make a building commercial to is is going And of is going low, not too is ACL this off almost up. are EPS bank. off

wanted I that of for last I was -- happened with which year, just back I on paying I'd to when forced very at reason, go Sunday that So a to, because thought share not quarter to and and was I look different attention you. share it fourth

of you is That's I best guidance guess the thing other The year would will be. every our give we say January. where

Sometimes accurate. we're

year, Madness Sometimes we saw we're for coming. example, not. March Last

Valley are in shredded So and got coming year, banks. whatever you results right now, the you Well, guidance our you gave March, we we're coming Silicon is We growth. told a gave thanks you. we'll -- with couple in January guidance of we as we just XX.X%. at in guidance this about other to line the that in have of But in just double-digit NIDDA gave

you we high deposits grow that non-broker will digits. single told

said X% and we over We margin into would well, grow said just at would will get X.XX% now. high Xs, we're think right single the I now. high we're digits. Loans, at be right

quarter there, we'll to behind another mid-single probably end the little over go, up a we're we but have think digits. in I

last of has everything increased. and haywire. year, everything into it's everything plan This was kind going, is falling So where opposite the of year, steadily

some our By than big point. These the want numbers make not sheet that. the in look way, improvements took right left do done magically, expenses improve this, next I artificially. balance quarter. a the keep long-term We your are didn't of better approach side, also sustained check. balance just This not by to the to restructure and a balance improve sheet sheet, any in is side, We

everything And but We not over keep just coming get I'm is pull kind share X, it's lost important very time. see to but Let's quarters. X care just and I wanted in the look will often but happy credit to X at that. and check quarter, of to profitability where take of X, -- out. and back itself, immediately, And

with but turn Mr. -- it So will that Cornish. to ran, over I

Thomas Cornish

Thank Raj. you,

I million the for too the didn't either. Just record, remember $X

Leslie Lunak

searched I it it. for and couldn't find

about. don't talking I know they're what So

Raj Singh

I'm sure find we'll it.

Thomas Cornish

So of parts a the different little more business. color on

First, we'll loans. start with

and $XXX in is declined this several million Residential $XXX by for equipment Raj are we're finance were been CRE all up million, Mortgage a down have As what strategically million, franchise, $XXX mentioned, quarters. franchise, Mortgage combined those million. $XX is by million. down $XX the warehouse million. a up businesses, portfolios loans combined million with total, declined quarter. the a by in line doing down $XXX $XXX combined C&I grew municipal last is generally CRE finance was Year-to-date, and looking equipment and $XXX municipal C&I $XXX at and million, which were and warehouse while million. while resi up

all growth. with little So consistent overall although piece, Raj on much a so which, is an this the lighter left Europe forecast, we more I commercial bit pretty sheet. Maybe far side a mid-single-digit bit the year the than as little of on think, loan the color balance solid strategy noted, expecting still, we're originally repositioning

look you performed business I in components, our If consistent has pretty it year. a conviction with early the few kind our think baseline in of at much

in trade you construction like continued and and was I core our up the well. and would other kind this if and commitments things wholesale some example, quarter I daily and that think manufacturing of call the areas C&I look, for business quarter, for to nicely perform

we advantage than less of risk And of been disciplined And and fairly And and a original there take pass. we year much things bit that. little more that have lending areas, call business overall it's has like so on not typically there, I things from demand sensitive a nature. would that been market call were not is our some this like of adequacy perspective. rate a it's view that been But market predictions issues when we What's it. there, the not capital ratings, when the what

of some we've rate, business just seen blend of and in credit So structure, right categories, not quality the those whatnot.

it's long, But in bit core particularly I corporate has there lighter than good originally we year So been Production has pretty business our a in performance area, been been our for planned. banking the think the pretty good. all area year.

better to see available. as pipeline is fourth much started starting year. The been a at second of year piece of We're it is quarter, the the and originally a CRE this we're out down slower. as we see, It's pretty improved, production kind has expecting of In interesting tick watch we're to pipeline CRE the end the capital Each of rates quarter. good our starting to bit and production segment, get the to and as the beginning year.

and for I we'll commercial, the C&I that production of businesses, think in both related corporate, all the year. quarter small think I all seen business, numbers our strongest of whether it's see we've those fourth businesses

lower quarter, typically quarters think kind with than our Fourth pipelines all good. QX I normally see the payoffs we quarter the some a are I and think. higher are did strongest the comes That level mean, see. areas looking than game. of is of in We and we

what quarters we Some think. are

or think. renewals the pricing upsizing Most of a company to position slightly structure we different that is that And of and be those. we some credits Or are do proactive the various hard above the reasons, elected with what quarters what for or the relationship we would which had pretty sales, that economic at either predict. at to had outlook fact of for reasons step to view or credit, reasons a either out of took

a all talent we mentioned in. as optimistic But we're continue think to be we're overall, and The continued strong. I in the QX, couple all that good very all seeing. acquisition was we're our talent for bit continued add us. below our hiring earlier, the the manager markets perspective in The practice QX We've about a and at leader a of but in levels of of that We've ones, headline virtually into geographies more geographies from verticals we're ones hire, in a that to head areas. little the to Raj of level relationship and of quarter groups what

A little bit specifically on more CRE.

to Given little you also Slides a the going I some deck CRE more. would interest continues I'll portfolio refer the topic, Overall, minutes we additional this in spend into the a to detailed through XX supplemental where XX perform provided of disclosure. few this well. bit

remains modest $XXX total in CRE $XX capital medium of June XX% XX% loans. compared comparatively to banks XX% XXX% for Accretive our for Our exposure our of capital space. compared loans [ median billion All total other XXXX. XXX%. level XX, XXX% reports, Was billion CRE CRE the the peers, the to is upon to risk-based ] to the to compared was and ratio risk-based based the

So it's within basis. picture but important, more a sheet it than us. on some good business balance modest overall, It's line big it's other is banks our a for for

York weighted the At in CRE the September watching Florida, LTV other of that X.XX. Tri-State was the we're XX%. in most XX% And be active weighted in. the XX% continues to average service coverage the XX, was XX% portfolio in closely. of we're was ratio portfolio debt area geographies the Office average sector and New

I we're every very front call, it loan office in and watching As now, it carefully. I right have say every of me

story to return office some overall, of how out is in sector, and still office demographics the point. this will seeing but are developing and a We at play the it improvements

suburban, Of segment office area. Tri-State high-performing in of with we portfolio, medical York in the a New portfolio XX% CRE which is which very office that now. $X.X right billion, total Florida, our billion, space, is the predominantly a have of is $X.X $XXX million XX% For in total

traditional just So office $X.X portfolio our was billion. south of

total weighted September average average the weighted debt of was portfolio, the the ratio X.XX service at was office the XX. And portfolio For LTV XX%. stabilized coverage

So well in fixed is mature performing. $XXX Rent that the office XX of of XX% XX next loans portfolio. $XXX months. million office only the is of next months rate. rollover the million in

So I good we're in think a rollover and perspective, from maturity shape.

] next approximately with approximately respect With is the lease XX% XX%. rollover of months XX in New the a York million portfolio, in to Tri-State occupancy -- $XXX [ and Manhattan, XX%

they're think still out in remaining well. positioned lot our I office there's well It's So broadly and to as play in early, sector a portfolio. the

I as caution trends in against in would debt some upticks starting So we overgeneralizing, particularly it quarterly to coverage Florida, but are relates ratio to consistent numbers. good, see, gradually service

Miami see starting are Jacksonville, and and physical coverage a whether Lauderdale look basis Orlando between kind or you Florida, of board. occupancy or ratio is it's some to particularly Fort to occupancy to economic service starting of as Tampa, we kind points abatements quarterly concessions in at see gap are of start up. We or the gradual And roll as narrowing across uptick debt in few the gradual

quarter, that that to loans start office properties. characterized date, total support charge-offs in of well took to related and manageable. asset any the the on to strong office or Overall, specific workout. a in the still comparatively the concerns of of loans To of these underlying million and are generally sponsors is who Most continues was by we've to perform portfolio pandemic loans. we charge-offs small Since very handful X very and X $X.X last continue XXXX, had partial

Of $XX in the portfolio $X excluding consisted against SBA the loans of loans $XX the million, almost totaling million of Overall were $XX portion X million segment. nonperforming CRE as office of guaranteed loans. XX, September billion

we're the can you of in loans. segments nonperforming has remainder virtually as So the see, no

feel we That's around where into overall, now pretty CRE lot So but a detail the will from about Leslie more a of good we are perspective. quarter. detail, get

Leslie Lunak

Tom. Thanks,

X.XX% down. income line or share. million expectations. per our at production for quarter, to or up higher quarter quarter-over-quarter and basis $X.X loans to was the on So to this last X was X.XX% yielding The well. from securities million $X.XX Yield basis was X.XX% loans the NIM up ] was up as points yield X.XX% Raj quarter, with lower $XX.X [ new from paid on come on Net net continues as rates X% income points as in increased right interest said, X and

X% commercial at fixed by that XX% offset floating, XX% assets was the pay portfolio securities by will reprice remixing fact to commercial that and September CRE. XX, was declined partially that but and assets continuing. average portfolio being total production rate or downtrend spot that be X.XX% very see floating. higher-yielding the from actually as assets. and will the rates the as replaced a down little mature in quarter, portfolio still for said, Obviously, the continues down down, over and QX for are a the rates So those for around that come this impact is The X.XX% averaged deposits our on C&I on Raj to X.XX% to cost happy of X.X% X.XX% from and We're down basis,

We've down on September -- the we did book date in bringing XX. proactive from through -- been down deposits non-maturity XX%. magic to was October the X math, the when did rates interest-bearing beta just the No deposit that very

that down, really, reprice in on for We've deposit down rates rates about maturing a really will example. low we billion bringing that's good bring the down Xs. believe, QX $X.X a on the into start continue at we and got average, low in over in So Xs average CDs to QX, rate will weighted

example So the that of an we're that's making progress there. just

little bit, NIDDA expect to Reason be commercial point we We're would of little terms a for thought previous bit lower going the guidance things couple loans. NIM, I the In a of starting be at NIM tempering to and QX flat we around on. within roughly that for a QX. than guidance

And needs down originally they little we currently down little catch-up that are timing would. bit thing. the or to faster to rates a a than forecasted a but of thought there's So happen come bit there, are coming really that's

just being there. the time catch-up to a little needed back for So

as the continue be our some story be as NIM, on Looking been remains the Fed saying been on it then has for it continue transformation time, will forward all the will sheet balance dependent what on the along, and the on modestly the trajectory both remixing balance does to future more the we've sheet in and asset-sensitive. static ability sides, to

It's Comment just a on normalize. quarter. frankly, activities funding. to little of quarter. you an advances of increase was on reflected leaned really in balances, CDs. in a The cash intraday deposits well this wholesale they also uptick this the inside just elevated more cash broker We going that bit priced the into see some briefly market and saw were will pricing, related FHLB on, in little retail because management did We last of quarter, day dislocation and

over course -- improved over lasted. company of sure resolve temporary, look has and back, the advantage the profile it it was funding took I'm time, but the considerably of that itself If the So of that's we will while it year. I

million. is wholesale by grown XX, For $X.X billion. has by billion. by NIDDA the September X $XXX ended months grown have funding deposits $X.X down Non-brokered

And to franchise basis was quarter C&I, including equipment bit XX and from commercial you to So ratio, good CRE, up the if X $X points. the XX September to finance this XX. than ACL and you view, ACL look million. ratio -- was With if respect X.XX% The at loans it the reserve, very one. a was quarter, the provision story -- take a little provision longer

there. moving few provision, quarter, This parts a in the different

improving June. served some some was changes and qualitative deck on had That's gives and more as X.XX% reserve portfolio you Some we at favorably loan XX than reserve detail specific characteristics was forecast. reserve, in valuation as office in expected. of around an related a for that at This from assumption really much increase changes primarily the where supplemental to XX. economic CRE the that. by in more The an partially offset reserves September updated X.XX% come reduction well additional down to Slide X we

And led see CRE the very news to the the portfolio. that's was what overall that office you also in reduction good reserve. So in

We With is respect Hurricane as there Milton, provisioning to some anything said, reserving quarter. next currently Raj ongoing. expect assessment the around be But material. don't could still

and particular Noninterest So it's this be material. not currently expense, nothing there note. in income going income, on material With respect to expected to nothing quarter. noninterest to

in that company's the led the biggest was increase saw in noninterest comp expense, sure compensation that an an that our increase stock mainly fact you of do I'm well. of increase the and And accruals. as the can every And price, celebrate some line. which we You the happens We to hope in was that driver on all quarter. share-based

as end guided will the mid-single for FDIC maybe in assessments. about previously guidance mid-single digits do retrofit might that year, higher of digits. expense the up noninterest to next special being quarter you costs. We changed. million And expect ignoring is push That that what we thing define railcar hasn't the the One $X guidance to -- towards

other there quarter down NIDDA. We're slightly of expecting out I'll maybe I think in NIDDA. guidance in currently on fourth terms thing is the throw the

Raj Singh

next half Flat again the in of to But slightly down. year. first growing then

Leslie Lunak

be remarks And to over to it your Yes. end my for will then questions. And continue Raj I and back going remarks. closing to expect around take the forward. there we'll turn ETR XX.X%

Raj Singh

quarter. numbers I after be over to rattled my Yes. with forgot mention EPS, I just in CFO the to don't trouble supposed for open first now my questions. the that was but I fourth it's remarks, assessments up exclude But quarter realized, special the it want I I apologize, I and ROA, I we'll meeting. off on assessment, mention ROE forgot, in the FDIC adjusted in for last quarters the X special the to but

Operator

line with Citi. Benjamin question of from [Operator Gerlinger coming Instructions] Our the first

Benjamin Gerlinger

give always guidance at that very scramble. You the of end

to want down all. just make it I it writing I quick, So sure had

railcars, said for to noninterest-bearing also little a nature? probably some softer assuming you quarter, expense said was And onetime in margin there next an seasonality So trends. I'm roughly is then you expense bit flat due

Leslie Lunak

sporadic periodic what nature It's would or I call is in it.

Benjamin Gerlinger

Yes.

Okay. know give guidance. That's 'XX I fair. And you want don't to

into trying idiosyncratic the success, kind Because So half do guys you've is points Do part weak if kind a XXXX? about of the just get you figure cuts pretty think quarterly cadence then seasonality early it or the the do the couple But like I'm of the rates the the of tougher interest quarter of XQ little calendar a kind the of get that Or loop. noninterest-bearing you're kind of into deposits, it's how still lower first it facing where about normal deposits. mortgage of there's and well? noninterest-bearing think tremendous I follows kind you out first the had of think when calendar. you as made? more here is you of the you bit just throw And thinking are seasonality also we to but around

of just kind quarter. curious, So the over your thoughts

Raj Singh

quarter, think title it's I accurate as be the may is a of or space. title choppy of corporate X because but slightly then driven by their starts -- lines and quarter-to-quarter. money. bigger business, lot business not And it our whether is outside the business, NTS, title all you're they each correct as has there for it up picking or most certainly follow swings mid-first business, business from And a those whether you're the business business. the in title own it's has different HOA that very of the summer But our pattern. purchase cadence, the business, it's small our peaks month-to-month for

so for fourth our third think strong strong first second expecting probably not I overall, quarter quarter, and quarters is growth, to quarter, NIDDA So and be accurate.

because the historic a to of forward, pattern year be we are this pattern market there can the unless a our turn. is should big some that turn favor going It only of seeing kind it's pretty mortgage low. of sort kind So

gravy that. be So turn, on of will sitting not top, sort then but sort on of here does counting and that we're it if

Thomas Cornish

comment But your and is The X retrofit required on expense expenses had add of that that. looking at. want I We identified did question. the onetime the to generally we're to railcars railcar do recertification all for

and to amount pretty mandated retrofitting happened all There's that and small federally the we're it last of with Some recertifications year It it point year. is of that we this done of do. that at a year. need Most then much doesn't... next

Leslie Lunak

doesn't it same but happen car, Yes. necessarily. always It's the in quarter onetime per

Thomas Cornish

sort It's it's do But to we we identified, when up. not like just pops it. and know of it have

Benjamin Gerlinger

Got you.

clear as color. I about the mud, but was That appreciate Okay. as

Leslie Lunak

Tom. job, Good

Thomas Cornish

Well, I tried.

Benjamin Gerlinger

have improved. know, have improved. And growth I and going Reserve -- little help similar NIB be is has then Raj, the seems balance to lower softer, sheet. or And earnings both improved. of The through it like with the bit question, talked Capital your rates rest like to has loan my improved. but it industry, also improve of interest-bearing deposits you the should sides a other --

or here, pretty is has have CETX buyback on the curious, So considering outlook great tremendous your Also, of state. does looks it Florida near pretty up term, forward? the going healthy like capital. on of healthy, kind you seem gone considering deployment deployment just capital growth capital a and economic but just thoughts amount in a

Raj Singh

So actively as in in that now discussion topic. speak. We're planning, we right on capital mode budgeting

as Over meeting, again Board recently the at We at the And it's X but next it the about to that August. time, they reconsider authorize to end which our going as year. buyback, not front. this dialogue to of Board course the to did intensive a talk that decided was months, of last be on

is not does we then growth. But we we're is cushion. return deploy able some little way capital. optimistic as And to, the Capital know at building growth capital. next I'd now, this changing. sheet I running it on but I'm have more Yes, up yes, but we're to up balance wasn't quarter, growth building slower share leaning certainly, because there a usual will year. commercial if a buybacks for of look right about growth, and But residential, rather CETX, than eat up, that given it's some that

be of last higher Also, year, XX% pre-pandemic a prices expectation, what or like the a levels XX%. of capital CETX, acceptable used been to pre that to like reset in more think slightly industry-wide maybe terms I has

growth, do you and that buyback we if year. of choice. it not not, in my be think look if about but capital, capital. next that, So And top a doing can we excess If to it's would have we'll like oodles deploy oodles yes, excess

Operator

line KBW. coming Lay our Woody And from next question of the with

Wood Lay

a Or referring had deposit the that to on to end-of-period guidance. average Is I follow-up is deposits? the basis? quick noninterest-bearing the it referring

Leslie Lunak

flat I counts. slightly both, to in Woody. both down say probably Really would

Wood Lay

it. Okay. Got credit. to wanted to then And over shift I

note there like it in XX, is a Or of there past that to looks administrative mostly Looking Is there? at was anything some buckets. Slide pickup CRE issues? just the

Leslie Lunak

Just the a now past just that finally time actually loan in been that's some due, for honestly, that's nonaccrual past through. went

So...

Wood Lay

Got it.

how Okay. quarter, we because loans maybe believe the talked those there XX-month now. I some over the upgraded to moved that were concession the about criticized shifting And then expires? loans concessions. be was and of expectation some back movement of I the once Is first still right the segment, office will those know I in lease think

Unknown Executive

Yes.

Leslie Lunak

Yes. Once has time. Yes. it a for expires collected period and rent been of

Operator

from line coming Jared Our Barclays. Shaw next question with of the

Jared David Shaw

maybe cost broker ability that Just actually you're about that. reprice added of you just looking deposits move, trends, for And the looking of move cost to thinking pricing X this broader or stickier that you at how thought? little of with then funding a expectations? we be line the than borrowings the part duration initially should other the the been Or deposit first in at rate the and the when the duration from is trends is maybe has your lower deposits FHLB

Leslie Lunak

then Raj broker, first I'll that, increase the I'll very The what it's second temporary. FHLB turn to X-month expect the it we mostly of be in part of for is the that to on duration The and take we because put part. money. all short advances, over

Raj Singh

or I'd fairly CDs short whether retail are say broker. all

we out was or In modeled, the not, beta for terms actually has it mentioned this cut sticky deposit that exactly We where pricing, XX% happened. been right? So Leslie of has first or came so. it been

modeling we're think I XX%.

We'll expectation pretty the far, that down cut, is actually on. will I'm not was of cut, so to market see the what optimistic was. market we'll first the able will it the how that our moves price decrease. we to see. be the So accept and level last and bring is This Fed this close evolves as But

the or decrease. -- rate So

Leslie Lunak

rate outflows really and We heard pushback. seen haven't the that decrease seem of haven't to a be prompted lot by

Jared David Shaw

Yes.

what's look incremental -- that being than So that that flat the year at being just that driving, when to the I ending the relatively the lower margin more Xs, yields? guess, is prior for Is pressure? high is on versus closer DDA around rates expected? we the balances Or guide discussion

Leslie Lunak

there's than lot starting driver, parts, NIDDA. the margin, the Now of the a but obviously, point just primary expected the we in moving primary lower driver is within

said, do. I just like we some catch-up got So to

Raj Singh

gets pattern. grow Our grow. you follow And if will margin, NIDDA. related NIDDA NIDDA to that does that, obviously, our directly margin --

be So but grow in will months. not straight it the last it margin will a over time has as growth line, over XX

be directly much So flattish million we're next is $XXX why margin expected powerful, But the is NIDDA NIDDA of fact that growth. is the very $X of to that is for focused to million the fact on produces which so NIDDA to flattish months. earnings. It's X linked be expected

Jared David Shaw

Okay. And for then finally just me.

side? build mentioning CRE that quarter. Or foreseeable and was Tom paydown think activity paydown the saying the activity starting the -- I the that the do than pipelines are the expect I just of paydowns? guess, strength for of you the stronger Maybe of pipeline in in revisit still future? pay on you versus down terms are level that's the high of fourth to you could levels expected levels

Thomas Cornish

not because at forward, latter be a if from level. be payoffs. level tend sponsor typically are few been expect we outdistance release we've would when would time, to in it information. activity predict difficult that true. normal there's quarters. that than the be we always production to was don't payoff to a Payoffs I this will you tell people the And seen you would higher businesses a expect see going of to levels would days looked the would see QX, we some QX very before be We time the that say is a level for to it's past the say sell expect but would they would I production sponsors than will year. normalized highest There lot But we that don't expect we in until but would and certainly will higher because

Leslie Lunak

and full core for the reiterate, ] commercial I portfolios the still To at year, Yes. growth should think CRE mid-single-digit for [ we combined. land

Operator

Wells next Our Timur Fargo. the coming question from Braziler line of with

Timur Braziler

just circling of maybe uptick pipelines? NII. given the back NII? we flattish the wondering to on the some margin strength we that in volume get that I'm translates means commentary. Again, the just do extrapolate Or Should over to some flattish margin side lending how

Leslie Lunak

for growth the NII mid-single-digit I mean, year, well. I think full see we as in should probably

for from digit the I growth year, the benefit mid-single we're quarter a NII. in anticipating. growth So that probably I some think be the still there'll fourth full think loan But in

Timur Braziler

-- Okay. And what sorry, then was that?

Raj Singh

Sorry, go ahead.

Timur Braziler

out see And balance eventually the sheet. transformation to just maybe so. both bank sides What emerging back in the over comments ROA has on inning either or the do there? where on are taking as your we those look last in Raj, of of endgame or from? into a you at quarters X you going step I ROE, guess BankUnited where then come back terms the the of

Raj Singh

we're innings. early think very in the I somewhere not in game. middle of the the We're

year, still done. of at be clearly think we're late not lot the the year this beginning towards or work was a last probably -- I of and of There's to end the that not game.

back need shoot X.X% or maybe up over near the that. capable is we out transformation, to and than much to this higher for the is our even ROA XX think of. get think where there The basis ROE nowhere NIDDA I franchise I XX% points

over need numbers certainly these X% over for think I to XX% XX%, and -- XX%, range over ROE. get

the trajectory from your down eighth been and there. take the game, just of is, get just gone is our going -- -- budgeting to at just middle not It beginning, we a We'll That, to or up there, give better you will year if ninth kind the question, kind not first it of again, the inning, the to have in of we're what see think original think not get has on of we done next at the pencils I X next you guidance January more line the not the inning. draw everything. But X or part if in quarters. I in and when

here. done still there's be to work So

Timur Braziler

us just me of for Can that last just then book. the on bond And majority what to? Great. you indexed is remind

Raj Singh

It's a mix.

Leslie Lunak

is benchmark and in mostly are X a the book bond bond frequency. in X terms there's It's bit the lot SOFR. the and a timing book of in month rates the thing. of of changes in variety rate of There's But loan Yes. variety terms benchmark not book. more The what quite

Operator

coming the from next question Our David line Point Compass Rochester with Research. of

David Rochester

would guys do sit have those On the average or at business, deposits do balance? great. those quarter? where Whatever And quarter this much you title be how end the declined for

Raj Singh

title I million think X/X of roughly. decline that business the from $XXX was

David Rochester

about now? And deposits sit those where Okay.

Leslie Lunak

get you. somebody got I've to right back that Dave, I'll up, looking

David Rochester

like customer quarter. growth know How business? talked How about XX per was this that the quarter I in does customers XX problem. to you look? No that

Raj Singh

this X,XXX X,XXX, we team in. in if I couple or think, be -- just I maybe are or recall, took but about the relationships X, by or get that just off I it a of was we're entire brought out Saturday, couple this to celebrate could to getting We're actually X,XXX. actually but to think I XX from relationships next a shy customers -- month sometime to X month.

much quarters. with previous in line the very yes, last So quarter was

new it about XX was I think relationships.

Thomas Cornish

it's XX area. Generally, to XX that in

David Rochester

Okay. I there in now? that guys back you large XQ. those got How the -- the know XQ. customer deposits they weren't in at about bank Are

Raj Singh

complex. more much is implementation The yet. Not

going and So the is business, going year. -- be doing pretty a to have the that's we're take the we know conversion next to course to it's we won that going actually but -- be time, over of

David Rochester

of can that deposit the front? an How large on add be

Raj Singh

can hundred It's million -- in bring bucks. fairly big. It a is easily couple it of

David Rochester

you you more this? they're you're that everything potentially a larger clients like integrating once them way there -- in win there could and Is that is successful guys that onboard doing, show

Raj Singh

are nature I keep that where And it than price business this clients being getting fine. a this only paid is client But $X complex, that client to million. like size want you're magic smaller to game. rather have because clients, Big service of the like -- average the you the I it business. that's is for

the focused asked needle go small the very easy the can rather move quickly. the big to of I've for that on stay than So sort team end clients

Leslie Lunak

That was also the big learnings from March XXXX. of

Thomas Cornish

entity part relationship. beneath. se, a particular that really talking Yes. we're is of not, per complexity X relationship about, In that entities of owns It's this it's underlying large hundreds the

onboard actually X so the own which trying this. business, each is of to complexity separate And to its it's leads

Raj Singh

a why take multiple time on. -- will long conversions. those It's which X big bring like is every entities not It's it's X Yes, it to of conversion.

David Rochester

Yes.

Okay.

What expense expenses. dollar was you comp stock amount the for a from price Do the railcar component switching the Just quarter? of see to move the sense you have in this could XQ?

Leslie Lunak

about amount XQ, the it and be million is XQ. dollar million The to was probably of railcar in $X going $X a in expense little over

million of some well a also price compensation So increase the increased was have and was stock incentive in accruals. dollars. -- as few million increase $X.X our million, there $X.X Total I we exact that but comp vast as don't of amount, the majority

X So things. those

David Rochester

expenses XQ stock flattish the -- that off down bump the that excluding the curious just roll may I'm you for railcar because are So potentially even or on higher maybe could comp price have trend, that thinking you from be of up, move? expense

Leslie Lunak

What Yes. haven't our we to changed will that full I say year guidance. is

mark. that mid-single-digit of off moved haven't We

David Rochester

and close CETX XX% necessarily XX%? the How in you do we're growing so are like XX%, new now, is and you've that? Board doesn't the X talked of the upcoming. it. you question any curious Board just back? just Board the last looking I about been that's there the for they're Was Maybe you've XX think this is about XX%, how and what's buyback. at where Great. signpost this talked Okay. times, remixing about like And anything, at X, I And Is holding the quarter guys lot aimed sheet? not a at know every to asked meeting then XX% balance go getting know where the new you period

Raj Singh

that [ to second a X you the meeting level. thing. example, just after August not hit context, for think, X was, give days intraday. It's And the It's ] any I XX Board around discussion not is VIX -- it's

haywire, and remember had into that market. when temper I a So the you when in is meeting we little Board market completely going August the tantrum go back in

days after X literally was meeting Board the So that.

So all on? mean? like, was does going the this the what boardroom on What is move

at And we're our so They're looking growth they're might geopolitical the uncertainty in. taking market, of the at also the that situation into from account kind doorstep. be at they're what looking

minuses okay, pluses $XXX also do out, numbers, not and you they're at okay, a and do not EPS say, we $XXX it is So much. we going run so we million, how to material how it through and line what like it's saying, show be and if going looking them big buyback. can the and be? they're will And It's be the is small. when impact, million buyback, it the And bottom it's go to

-- "Well, all let's they light in say, so that, of of So wait.

then -- if we'll Let's do want your planning you us, capital and back something." see do to come to

So X things, happen the might prospects they're be, the what thing for. environment, the of solving Fed only it's It's number including that with including not elections. to what a what think growth do, will we about is

not bottom and All it bottom stuff do what really will of sheet that benchmark them we impact it's and into honestly, that much at could the line that the goes that, much. that is that we show on they very the impact. have. it's not EPS And how against And

Operator

And our from the line coming next David Bishop with question of Hovde Group.

David Bishop

Tom. Question, or Raj

Saw in the of a lending little so. ] side, you're I capacity grow plenty estate real [ at in note or uptick of commercial the this XXX multifamily quarter. You to slide, on think bit

targeting specific any curious, grow Just ratio Are maybe level is that there? to Just do ratio. curious guidelines? of comfort the have sort what you you

Raj Singh

grow. solving there's for number ] are not the to classes plenty asset to are there's We're grow. I is ] or whatever. is not room [ XXX is there There about not that [ Where up go don't that. there XXX of ], restriction think It's of plenty [ we room -- kind of touching. to XXX

So office. office. obvious Nobody touching being is as X an

few to there, very we're but we're careful deals lot. So and and here whole grow that. Hospitality, not also, going not doing very a

There's restriction total level. the at at So There's space. that growth, CRE bit little space. the centers total There's room we lots do level. comes we a a subsegments some room office limited look in to rather perspective. concentration in little no from in we're the like haven't no in past, lot in, new room CRE total than in some in room CRE that the not might There's the are classes asset have done That's where you warehouse, avenues hospitality. the of of restricted we more and data where are at CRE. a whole looking But of there the much ourselves

Thomas Cornish

Yes. I XXX% add would to also that, is Raj, accurate.

generally asset at be booked asset look you now, people months are The at of to As XX what even XX which last pretty was most in and robust classes. construction as the classes those multifamily both industrial. think favorite would right

upticks We seen areas. in both vacancy have rates in those of

picture of have. we a building we them the concentrations cautious when comes deal, sort big we're overall a rather these to up while we that So the number. ensuring that's really limiting asset like and the good are segmentation within it than factor that class And strategy

David Bishop

XXXX year. And I into still you're that pretty to can it. confident XX% noted Got improve probably Do of XX% the preamble, at growth perhaps then, into level Raj, here, pipeline think the this sight of rate that? good you're noninterest-bearing maintain you if you a on even feel line you growth flat, looking and even

Raj Singh

right We'll looking January. you pretty optimistic. stands now, feel I exact just pipeline But the give in Yes. where guidance at

Operator

the And our with coming Sandler. question line Scouten from Piper of next Stephen

Stephen Scouten

and little One any anything of there Or It noting? of occupancy normal there the that's sort like looked question that and equipment on jump is is a a Was that within in the expense quarter. Or bit saw growth here. puts branch takes? expansion? worth

Leslie Lunak

maintenance and Sporadic repair there. in expenses

Stephen Scouten

you. Got

something rate? a run result? normalize is that kind decent So I that a back that mean is Or down should as of

Leslie Lunak

quarters mean I at X decent as maybe would a trailing look I run rate.

run I think you the look at say and quarter dangerous whenever any it's that's rate.

Stephen Scouten

for where of then Leslie. through over like noninterest-bearing, this you're maybe how long-term or balance continue helpful, transformation for long-term years Yes. you about work to and next And that about a Perfect. up the you potential the build to perfect the you could potential NIM sheet as in couple as thinking process world? through et to get NIM would do cetera, think Very

Raj Singh

over and We we're current without on have change based the you to the model decide this risk, get little changing we get If business, more higher. of much take over on then -- shooting X%. should the business a be can business mix X% to for model. But

Stephen Scouten

Okay. last last there trends then lot about last that's you Great. piece I over the probably the progress still the last guess income really X look me quarters made PPNR And Raj, down just, been talked is from this maybe good. thing is X year. a for time the is missing year. Directional

So what needs BKU to maybe we get Or fix and on happen do of the piece X.X? we grow need that's something kind last PPNR Do actually there? a table? the last of that piece puzzle? that Is to how that

Raj Singh

growing sheet. balance or But maybe we bit, of to going to sheet X% I kind And get busy have we're eventually, think this a transforming is it's growth is to balance shrink it. year that so. of actually the deliberate little because it. The

Leslie Lunak

a spread revenue Stephen. not I in It's [indiscernible]. it's and revenue, incremental mean, also cost. improvements It's

Operator

Montgomery coming of question from next with line Christopher the Janney Marinac Scott. Our

Christopher Marinac

tax credits from disclosed? in lower see to upgrades the commercial either that it's Raj upgrades about the or you borrowers? from some just new have on rates potential interest for potential or curious, information the you I Tom, of What's was and from lines whether

Thomas Cornish

that that we signed is think rent to have of the been which upgrade into I'd because portion office think X. good it get tied portfolio, have good potential, of I one, abatement issue leases we is on we split line in in of it mean, sight I this kind can new a buildings. clearly CRE

rent Leslie is count think when until being we XX there's earlier, leases mentioned -- not after Raj I or paid. do physical occupancy the the days So sign

this So will that that start chart when look to is can downgraded. this we particular properties by And say property at rent out kind count we date, paid. of have those and been of almost we it can property being that

within at a kind loan looking good where because that's kind harder the different I about to C&I CRE see very potential. is more good have the a a it good portfolio nature portfolio, systemic issue. pretty line we the say to would think of and we're So say little it's a feel overall segment, of at sight upgrades what a every a manner. In industry little at. of there's different harder individual generalized we It's we in look some upgrade because

of may take and management ongoing. stuck where model -- time, some of them be may changes a longer changes period are business That they Somewhere are. and more

I will about everything. pick would that. sight, in would optimistic It's help direct that. say, be easier to But the to be I C&I in general, lower about CRE rates the more will portfolio, much harder of it's have and optimistic well. line help I would portfolio It as that. very

Christopher Marinac

over workflow? Raj, curious helpful. And normal the on the weekend. That That's seen we've your compared to past. comments inquiry call on seems a just Great. that's the about what odd in regulatory just I guess

Raj Singh

was Well, vacation on week. I last

was. all I -- on So my that's up catching was it

Operator

Arfstrom are question Jon with from of the line last coming our Capital. RBC And

Jon Arfstrom

clearly He's earnings. before vacation on comfortable. Raj,

Raj Singh

wasn't took I off. It on the the vacation. -- was week hit I hurricane

being hurricane, of So it with and dialing it. going that was much I from interesting other on could not world, side what's the in the finding the about do out

Jon Arfstrom

Right. Right.

point of that have prefer based view. pause questions higher this most that. Obviously, a doing anything a the is margin, of the understand have But quarter, you're like the answered, rate [ what does Fed Fed the a did in there what I from asked I business you is the you and margin perspective? I does? -- from get on on And It if ] would what any been Okay. but have preferences question just March feels the for

Raj Singh

that way balance in our built We've much. us a that really sheet doesn't really. Not it impact

not XXX be points, good. to what that's points to But XXX we're have long of do. house they everyone, a the basis gradual I basis reduction rates Of and side very be a fiscal we'll laundry course, if what the in move going I'd surprise like expecting, is fine. list of and

really I a monetary I job. -- they've done on But side, the good think

Hopefully, have of inflation might all cooler election the that prevail come based have and very we're the all a on spark deficits time. spending ahead difficult of sort I next responsible remain more year fiscal still all heads about will think afraid talking of next will we policy. again they that I during them. task and the about giveaways and year,

they've monetary on done the think we'll continue think good not and I just and markets, on side, But fine. think I surprise a the job if they a I pace be steady

Jon Arfstrom

job. Okay. questions, a send of Leslie, nice I'll couple but you there. leave it I'll

Operator

And I will now Mr. comments. call Raj back turn Singh for closing over the to

Raj Singh

everything we quarter will rare year. -- excited the next came in happened. Thank earlier and has very like this that We're we're All take to said plan right. gone see that I'm Listen, where you. happy has remarks X my can but happy when the I And according I that and out. franchise. X, quarters where be this what about happens, optimistic it It's

days. you thank you indulging listening in for So and us to talk Bye. and story, to we'll again XX our

Operator

that and conclude for now Thank disconnect. your gentlemen, today. for you and may participation, Ladies you conference our does

BankUnited (BKU) 22 Oct 242024 Q3 Earnings call transcript